<PAGE>
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Under Rule 14a-12
JWGENESIS FINANCIAL CORP.
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
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<S> <C> <C>
/ / No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------
(5) Total fee paid:
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/X/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
(1) Amount Previously Paid:
$20,587.19
------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
Schedule 14A
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(3) Filing Party:
JWGenesis Financial Corp.
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(4) Date Filed:
October 10, 2000
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<PAGE>
[LETTERHEAD OF JWGENESIS FINANCIAL CORP.]
November 13, 2000
DEAR FELLOW SHAREHOLDERS:
You are probably aware that our board of directors has approved the
acquisition of JWGenesis by First Union Corporation in a merger, and that we
would be calling a special meeting to seek your approval. I am pleased that the
meeting is now scheduled for December 12, 2000, and I personally want to invite
you to participate in the vote on the merger. The merger would allow us and our
clients to have access to the resources of one of the largest banking
organizations in the United States, and it would position us and First Union to
better meet all of our clients' financial needs. For our shareholders, we
believe the merger provides the opportunity to realize an attractive cash price
for their investment, at a time when we believe the future for small,
stand-alone, financial services firms is changing rapidly and becoming
uncertain.
If the merger agreement is completed, each share of our common stock will be
converted into the right to receive a cash payment of between $10 and $12 per
share. The specific amount of the cash payment will not be known until the
closing, because it is based on a formula that considers the number of our
registered representatives who both sign agreements with us for next year and
actually continue as registered representatives on the merger closing date. The
specifics of that formula, and other detailed information about the proposed
merger and the special meeting, are included in the enclosed proxy statement. I
ENCOURAGE YOU TO READ THE ENTIRE DOCUMENT CAREFULLY.
We cannot complete the merger unless, along with fulfilling certain other
conditions, we obtain the approval of the merger agreement by majority vote of
our shareholders. YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend
the special meeting of shareholders, PLEASE TAKE THE TIME TO VOTE BY COMPLETING
AND MAILING THE ENCLOSED PROXY CARD TO US.
With the encouragement and support of our shareholders over the years, we
have been privileged to help build your company into an important financial
services business that has attracted a financial giant like First Union. I
believe it is the right time for this strategic step in the life of your and our
company, and so I enthusiastically join with the other voting members of our
board of directors in recommending that you vote in favor of the merger.
Sincerely,
/s/ Marshall T. Leeds
Marshall T. Leeds
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
[BOTTOM LETTERHEAD ADDRESS OF JWGENESIS FINANCIAL CORP.]
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JWGENESIS FINANCIAL CORP.
980 NORTH FEDERAL HIGHWAY
SUITE 310
BOCA RATON, FLORIDA 33432
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 12, 2000
------------------------
To the Shareholders of
JWGENESIS FINANCIAL CORP.:
Notice is hereby given that a special meeting of shareholders of JWGenesis
Financial Corp., a Florida corporation, will be held on Tuesday, December 12,
2000, at 12:00 p.m. Eastern Time, at the Sheraton of Boca Raton, 2000 N.W., 19th
Street, Boca Raton, Florida, for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement and Plan
of Merger, dated as of August 31, 2000, and amended as of October 24,
2000, by and between JWGenesis and First Union Corporation, a North
Carolina corporation, pursuant to which JWGenesis will merge with a
wholly owned subsidiary of First Union, with JWGenesis being the
surviving corporation and becoming a wholly owned subsidiary of First
Union; and
2. To transact such other business as may properly come before the meeting
or any postponement or adjournment thereof.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE MERGER IS ADVISABLE AND IN
YOUR BEST INTERESTS, AND RECOMMENDS THAT YOU VOTE TO APPROVE THE MERGER
AGREEMENT. The merger and the merger agreement are more fully described in the
accompanying proxy statement, and a copy of the merger agreement is attached as
Annex A to the proxy statement. You should review the proxy statement and the
merger agreement for more complete information regarding the merger proposal.
Approval of the merger agreement requires the affirmative vote of the
holders of a majority of our issued and outstanding shares of common stock. Only
shareholders of record at the close of business on November 10, 2000 are
entitled to notice of and to vote at the special meeting and any adjournment or
postponement of the special meeting.
YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING, PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. ANY EXECUTED BUT UNMARKED
PROXY CARDS WILL BE VOTED IN FAVOR OF THE MERGER. YOUR PROXY MAY BE REVOKED AT
ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE PRESENT AT THE MEETING YOU MAY, IF
YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND EXERCISE THE RIGHT TO VOTE YOUR
SHARES PERSONALLY.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Joel E. Marks
Joel E. Marks
SECRETARY
November 13, 2000
<PAGE>
JWGENESIS FINANCIAL CORP.
------------------
PROXY STATEMENT
DATED NOVEMBER 13, 2000
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 12, 2000
------------------------
This proxy statement is being furnished by the board of directors of
JWGenesis Financial Corp., a Florida corporation, to the holders of outstanding
shares of common stock of JWGenesis in connection with the proposed merger of
JWG Acquisition Sub, Inc., a Florida corporation and a wholly owned subsidiary
of First Union Corporation, a North Carolina corporation, with and into
JWGenesis pursuant to an Agreement and Plan of Merger, dated as of August 31,
2000, and amended as of October 24, 2000, by and between JWGenesis and First
Union, a copy of which is attached as Annex A.
In the merger, if it is approved by the JWGenesis shareholders and
thereafter consummated, JWGenesis will become a wholly owned subsidiary of First
Union, and each issued and outstanding share of common stock of JWGenesis will
be converted into the right to receive a cash payment that will be between $10
and $12 per share.
The specific amount of the cash payment will not be known at the time of the
special meeting, because it will be based on the percentage of aggregate trading
commissions earned by JWGenesis for the twelve months ended July 31, 2000 that
were produced by registered representatives who were affiliated with JWGenesis
as of August 31, 2000, and who both sign agreements to affiliate with JWGenesis
as independent contractors for calendar year 2001 and actually continue as
registered representatives of JWGenesis on the merger closing date. Using this
formula, the cash payment to the JWGenesis shareholders, if the merger is
consummated, will be $10 per share, if the percentage is less than 90%; $11 per
share, if the percentage is at least 90% but less than 95%; or $12 per share, if
the percentage is 95% or more. As of the date of this proxy statement, we have
signed agreements for year 2001 with registered representatives whose aggregate
production under the formula is between 90% and 95%, and we are continuing our
efforts to procure additional agreements and to retain these persons through the
merger closing date. While we have in place a program that uses financial
incentives to help us retain our registered representatives, we can provide no
assurance that the price will be more than $10 per share.
This proxy statement accompanies a Notice of Special Meeting of Shareholders
of JWGenesis to be held on December 12, 2000, at which time the shareholders
will be asked to approve the merger agreement and to transact such other
business as may properly come before the special meeting.
THE BOARD OF DIRECTORS OF JWGENESIS HAS DETERMINED THAT THE MERGER IS
ADVISABLE AND IN THE BEST INTERESTS OF THE SHAREHOLDERS OF JWGENESIS, AND
RECOMMENDS THAT YOU VOTE IN FAVOR OF THE MERGER AGREEMENT.
This proxy statement is first being mailed to shareholders on or about
November 15, 2000.
<PAGE>
FORWARD-LOOKING STATEMENTS
This proxy statement contains statements about future events and
expectations that we refer to as forward-looking statements. We have based these
forward-looking statements on our management's beliefs, assumptions and
expectations of future economic performance, taking into account the information
currently available to them. These statements are not statements of historical
fact. The words "believe", "may", "will", "should", "anticipate", "estimate",
"expect", "intend", "objective", "seek", "strive", "likelihood" or similar
words, or the negatives of these words, identify forward-looking statements.
Forward-looking statements involve risks and uncertainties that may cause actual
results, performance or financial conditions to differ materially from the
expectations of future results, performance or financial condition that we
express or imply in any forward-looking statements. We qualify any
forward-looking statements entirely by these cautionary factors. We undertake no
obligation to update or revise forward-looking statements in this proxy
statement to reflect changes in assumptions, the occurrence of unanticipated
events or changes in future operating results over time.
TABLE OF CONTENTS
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PAGE
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SUMMARY INFORMATION.......................... 3
The Companies.............................. 3
The Special Meeting........................ 4
The Merger................................. 4
What You Will Receive in the Merger........ 4
Payment Procedures......................... 4
Record Date, Voting Securities and Vote
Required................................. 5
Voting and Revocability of Proxies......... 5
Our Recommendation to Shareholders......... 5
Our Financial Advisor Believes the Merger
Consideration is Fair to Shareholders.... 5
Interests of our Directors and Officers in
the Merger May Differ from Your Interests
as a Shareholder......................... 6
Distribution of Interest in
MVP.com, Inc............................. 6
Market Prices for Our Common Stock......... 7
Corporate Reorganization................... 7
General Conditions to Completion of the
Merger................................... 7
Termination of the Merger Agreement........ 8
Treatment of Options and Warrants.......... 8
We Have Established a Program to Retain Our
Brokers.................................. 9
We Must Obtain Regulatory Approvals to
Complete the Merger...................... 9
Financial Ability of First Union........... 9
You Will Not Have Dissenters' or Appraisal
Rights................................... 10
Federal Income Tax Consequences of the
Merger................................... 10
THE COMPANIES................................ 11
THE SPECIAL MEETING.......................... 11
Date, Time and Place Information........... 11
Record Date; Quorum........................ 11
Required Vote.............................. 12
Voting Power of Directors and Officers..... 12
Voting, Revocation and Solicitation of
Proxies.................................. 12
</TABLE>
<TABLE>
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Recommendation of the Board of Directors... 13
Other Matters to be Considered at the
Special Meeting.......................... 13
THE MERGER................................... 14
General.................................... 14
Background and Reasons for the Merger...... 14
Opinion of Berkshire Capital Corporation... 18
Effective Time of the Merger............... 24
Payment for Shares......................... 24
Financing.................................. 25
Distribution of Interest in MVP.com........ 25
Market Prices for Our Common Stock......... 26
Federal Income Tax Consequences of the
Merger................................... 27
Treatment of Options and Warrants.......... 28
Retention Program.......................... 28
Interests of Certain Persons in the
Merger................................... 29
Conditions to Completion of the Merger..... 31
Regulatory Approvals....................... 32
Corporate Reorganization................... 32
Amendment, Waiver and Termination.......... 33
Termination Fee............................ 33
Conduct of Business Pending the Merger..... 34
Management and Operations After the
Merger................................... 36
Post-Merger Compensation and Benefits...... 36
Additional Provisions of the Merger
Agreement................................ 36
Expenses and Fees.......................... 37
Litigation Involving the Merger............ 38
SECURITY OWNERSHIP OF MANAGEMENT AND
OTHERS..................................... 39
APPRAISAL RIGHTS............................. 39
SHAREHOLDER PROPOSALS........................ 40
WHERE YOU CAN FIND MORE INFORMATION.......... 40
ANNEX A--Agreement and Plan of Merger
ANNEX B--Form of Voting Agreement
ANNEX C--Opinion of Berkshire Capital Corporation
</TABLE>
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<PAGE>
SUMMARY INFORMATION
THIS BRIEF SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THE PROXY STATEMENT.
IT DOES NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. WE URGE YOU
TO READ CAREFULLY THE ENTIRE PROXY STATEMENT AND THE OTHER DOCUMENTS TO WHICH WE
REFER IN ORDER TO UNDERSTAND FULLY THE TERMS OF THE MERGER. SEE "WHERE YOU CAN
FIND MORE INFORMATION" ON PAGE 40. EACH ITEM IN THIS SUMMARY OF TERMS REFERS TO
THE PAGE WHERE THAT SUBJECT IS DISCUSSED IN MORE DETAIL.
IN ADDITION, WE HAVE ATTACHED THE MERGER AGREEMENT TO THE PROXY STATEMENT AS
ANNEX A. WE ENCOURAGE YOU TO READ THE MERGER AGREEMENT, FOR IT IS THE LEGAL
DOCUMENT THAT GOVERNS THE TERMS OF THE MERGER. IF THERE IS ANY INCONSISTENCY
BETWEEN THE LANGUAGE IN THIS SUMMARY OF TERMS OR IN THE PROXY STATEMENT AND THE
LANGUAGE IN THE MERGER AGREEMENT, THE LANGUAGE IN THE MERGER AGREEMENT WILL
CONTROL.
- THE COMPANIES (see page 11)
JWGENESIS
We are a diversified financial services holding company, incorporated in
Florida, whose principal operating subsidiaries are JWGenesis Financial
Services, Inc., JWGenesis Securities, Inc., JWGenesis Financial
Markets, Inc. and JWGenesis Financial Group, Inc. On a combined basis, we
operate a full-service securities brokerage and investment banking business
that offers "one-stop-shopping" to our customers and clients. Our stock
trades on the American Stock Exchange under the symbol "JWG". Our principal
executive offices are located at 980 North Federal Highway, Suite 310, Boca
Raton, Florida 33432, and our telephone number at that location is
(561) 338-2600.
FIRST UNION
First Union Corporation, a North Carolina corporation, is a financial and
bank holding company that is subject to the Bank Holding Company Act of
1956. First Union is the sixth largest bank holding company in the United
States, based on assets of $247 billion at September 30, 2000. Through its
full-service banking subsidiaries, First Union provides a wide range of
commercial and retail banking services and trust services and provides
various other financial services, including investment banking and insurance
and securities brokerage services, through other subsidiaries. First Union's
retail brokerage unit, First Union Securities, is the nation's sixth largest
brokerage organization, with more than 7,000 registered representatives in
45 states. First Union's principal executive offices are located at One
First Union Center, Charlotte, North Carolina 28288-1207, and the telephone
number at that location is (704) 374-6565.
JWG ACQUISITION SUB, INC.
JWG Acquisition Sub, Inc., a Florida corporation, is a wholly owned
subsidiary of First Union. JWG Acquisition Sub was incorporated in Florida
on September 28, 2000 and is a company organized for the purpose of
acquiring JWGenesis in the merger. It has not otherwise conducted any
business operations. JWG Acquisition Sub's principal executive offices are
located at One First Union Center, Charlotte, North Carolina 28288-1207, and
the telephone number at that location is (704) 374-6565.
3
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- THE SPECIAL MEETING (see page 11)
We have scheduled a special meeting of our shareholders to be held at
12:00 p.m., Eastern Time, on December 12, 2000, at the Sheraton of Boca
Raton, 2000 N.W., 19th Street, Boca Raton, Florida. At the special meeting,
you will be asked to:
- approve the Agreement and Plan of Merger, dated as of August 31, 2000, and
amended as of October 24, 2000, by and between JWGenesis and First Union;
and
- act on other matters that may properly be submitted to a vote at the
special meeting. We do not expect any other matter to be submitted.
- THE MERGER (see page 14)
First Union will acquire us through the merger of a wholly owned subsidiary
of First Union with us. As a result, we will become a wholly owned
subsidiary of First Union, and our name will be changed to First Union
Genesis Holdings, Inc. The merger will be completed if our shareholders
approve the merger agreement, we obtain all required approvals, and all
other conditions of the merger agreement are satisfied or waived. We expect
to complete the merger early in January 2001. We or First Union may
terminate the merger agreement if the merger is not completed by March 31,
2001.
- WHAT YOU WILL RECEIVE IN THE MERGER (see page 14)
As a result of the merger, each share of our common stock that you hold as
of the closing of the merger will be converted into the right to receive a
cash payment of between $10 and $12 per share, without interest, following
the closing of the merger. We refer to this cash payment as the "merger
consideration."
The specific amount of the merger consideration will not be known at the
time of the special meeting, because it will be based on the percentage of
aggregate trading commissions earned by us for the twelve months ended
July 31, 2000 that were produced by registered representatives who were
affiliated with us as of August 31, 2000, and who both sign independent
contractor agreements with JWGenesis for calendar year 2001 and actually
continue as our registered representatives on the merger closing date. Using
this formula, the merger consideration will be $10 per share, if the
percentage is less than 90%; $11 per share, if the percentage is at least
90% but less than 95%; or $12 per share, if the percentage is 95% or more.
As of the date of this proxy statement, we have signed agreements for year
2001 with registered representatives whose aggregate production under the
formula is between 90% and 95%, and we are continuing our efforts to procure
additional agreements and to retain these persons through the merger closing
date. While we have established a retention program that uses financial
incentives to help us retain our registered representatives, we can provide
no assurance that the level of retention we achieve will cause the merger
consideration to be more than $10 per share.
Any of our registered representatives as of August 31, 2000 who become
employees of First Union, or an affiliate of First Union, and remain as such
as of the merger closing date, will be treated as having met the conditions
for purposes of determining the above percentage levels.
- PAYMENT PROCEDURES (see page 24)
Following the closing of the merger, First Union's paying agent will mail
transmittal materials to our shareholders as of the closing date for their
use in exchanging certificates that previously represented shares of our
common stock for payment of the merger consideration. YOU SHOULD NOT SEND US
YOUR CERTIFICATES UNTIL YOU HAVE RECEIVED THESE TRANSMITTAL MATERIALS.
4
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- RECORD DATE, VOTING SECURITIES AND VOTE REQUIRED (see page 11)
You will be entitled to vote at the special meeting if you owned any shares
of our common stock at the close of business on November 10, 2000. As of
that date, there were 8,534,431 shares of our common stock outstanding and
entitled to be voted at the meeting. You can cast one vote for each share of
our common stock that you owned on that date. If you choose not to vote your
shares of common stock, that will have the effect of a vote "AGAINST"
approval of the merger agreement.
The holders of a majority of our outstanding shares of common stock must
vote "FOR" the approval of the merger agreement in order to approve the
merger agreement. Nine of our directors and officers, holding 2,573,450
shares, or approximately 30.0% of the outstanding shares, of our common
stock have entered into voting agreements with First Union to vote their
shares in favor of approval of the merger agreement (the form of voting
agreement they entered into is attached to this proxy statement as Annex B).
Therefore, approval of the merger agreement will require the additional
affirmative vote of the holders of approximately 20.1% of our outstanding
shares of common stock.
First Union's stockholders are not required to approve the merger agreement.
- VOTING AND REVOCABILITY OF PROXIES (see page 12)
You may vote at the special meeting by either returning the enclosed form of
proxy or by appearing at the special meeting and voting in person. If you
execute and return a proxy, you may revoke that proxy at any time before it
is voted by:
- delivering to our Secretary a written notice, bearing a date later than
the date of your proxy, stating that the proxy is revoked;
- signing and delivering a different proxy relating to the same shares and
bearing a date that is later than the date of your previous proxy; or
- attending the special meeting and voting in person.
- OUR RECOMMENDATION TO SHAREHOLDERS (see page 13)
Our board of directors believes that the merger is advisable and in your
best interests, and recommends that you vote "FOR" the proposal to approve
the merger agreement. In making its recommendation, our board of directors
considered, among other things, the all-cash nature of the consideration and
the likelihood that it will deliver greater value to all of our shareholders
than that reasonably to be expected if JWGenesis were to remain as a
stand-alone company, in light of the paradigm shifts ongoing within the
financial services industry as a result of consolidation, technological
advances and competitive pricing practices that are adversely affecting
margins.
- OUR FINANCIAL ADVISOR BELIEVES THE MERGER CONSIDERATION IS FAIR TO
SHAREHOLDERS (see page 18)
Berkshire Capital Corporation has delivered a written opinion to our board
of directors, dated August 31, 2000 that, based upon and subject to the
matters described in the opinion, the merger consideration is fair to the
holders of our common stock from a financial point of view. We have attached
a copy of Berkshire's opinion to this proxy statement as Annex C. You should
read this opinion completely to understand the assumptions made, matters
considered and limitation of the review undertaken by Berkshire in providing
its opinion. The opinion is subject to the qualifications and limitations
referred to in its text. Berkshire's opinion is directed to our board of
directors, and does not constitute a recommendation to you as to any matter
relating to the merger.
5
<PAGE>
Our fee arrangement with Berkshire is part of an agreement we signed with
them in 1999, and a portion of the amount Berkshire can receive is
contingent upon the merger being completed; or if it is not, upon us
completing some other form of strategic transaction. That fee arrangement is
discussed in more detail under the heading "Opinion of Berkshire Capital
Corporation--Our Financial Arrangements with Berkshire Capital".
- INTERESTS OF OUR DIRECTORS AND OFFICERS IN THE MERGER MAY DIFFER FROM YOUR
INTERESTS AS A SHAREHOLDER (see page 29)
Some of our directors and officers have interests in the merger in addition
to their interests as shareholders generally, including the following:
- In connection with the merger agreement, First Union entered into
employment agreements with Marshall T. Leeds, our Chairman, President and
Chief Executive Officer; Joel E. Marks, our Vice Chairman, Chief Operating
Officer and Secretary; and Gregg S. Glaser, our Executive Vice President,
Chief Financial Officer and Treasurer. These employment agreements will
become effective at the time of the merger, and establish the respective
annual base salaries and bonus arrangements for these executives after the
merger. The employment agreements also prescribe the bonus that JWGenesis
may pay these executives for services during fiscal year 2000, and
establish the payment to be made to them in consideration of the
termination of their existing employment and other agreements with
JWGenesis. A discussion of the financial terms of these agreements
compared to the financial terms of our preexisting arrangements with these
persons is contained under the heading "Interests of Certain Persons in
the Merger".
- All holders of options and warrants to purchase our common stock, whether
vested or unvested, with an exercise price less than the merger
consideration will receive a cash payment equal to the difference between
the merger consideration and the exercise price of their then-unexercised
options or warrants, in connection with which such options and warrants
will be cancelled. Our executive officers and directors, along with many
other personnel, hold options that will be subject to such treatment. Our
executive officers and directors hold options or warrants for an aggregate
of 182,336 shares of the total 2,341,301 shares covered by options and
warrants that would be subject to such treatment. These are described
under the heading "Security Ownership of Management and Others".
- Following the merger, First Union will generally indemnify and provide
liability insurance to our present directors and officers, subject to
certain exceptions.
Our board of directors was aware of these interests, and took them into
account in approving the merger agreement.
- DISTRIBUTION OF INTEREST IN MVP.COM, INC. (see page 25)
First Union is not acquiring the interest we owned in MVP.com, Inc.--which
is a privately-held corporation engaged in the retail sale of outdoor and
sporting goods merchandise equipment and products on the Internet--and we
are distributing the substantial portion of that interest (at least 75%) to
our shareholders whether or not the merger is completed. The distribution to
our shareholders is in the form of a special dividend of units of membership
interest in a special purpose, limited liability company we formed to hold
the MVP.com stock, and it is being paid pro-rata to shareholders of record
as of November 10, 2000. The distribution is described in detail in an
information statement that we mailed to our shareholders of record on or
about October 25, 2000, and which we intend to re-distribute to the
shareholders who receive the distribution, along with certain additional
information about the distribution, as soon as practicable.
6
<PAGE>
We reserved the remaining units of the limited liability company for
transfer to holders of options and warrants for the purchase of our common
stock, in order to obtain their consent (a) to the treatment of their
respective options or warrants in the manner described in the merger
agreement, and (b) if the merger is not completed for any reason, to an
amendment of the terms of their respective options or warrants regarding
treatment of such securities in any potential future acquisition of us by an
unaffiliated third party. A portion of the reserved units will also be
transferred to certain of our registered representatives in lieu of options
that would have been granted to them at the end of fiscal year 2000 under
our Broker Stock Option Program.
Because MVP.com is a privately-held company and there is no trading market
for its capital stock, we cannot advise you as to the value of the
distribution. In any event, that distribution is an entirely separate
transaction from the proposed merger and is not part of the merger
consideration that our shareholders as of the closing date of the merger
will receive if the merger with First Union is completed.
- MARKET PRICES FOR OUR COMMON STOCK (see page 26)
Our stock trades on the American Stock Exchange under the symbol "JWG". On
November 13, 2000, the closing price of our stock was $9.81 per share. We
advise you to obtain current market quotations for your shares.
The closing price of our common stock on August 31, 2000, the last day
before we announced the merger agreement, was $14.94. This price is higher
than the merger consideration. In evaluating the merger, we considered the
unusual trading activity in our stock that led up to that price, which began
on August 22, 2000, when our stock price rose from $7.50 on the preceding
day to a closing price of $10.44 and eventually rose to $14.94 on
August 31, 2000. This spike in our stock price, which was accompanied by a
significant increase in trading volume (approximately 749% of our average
for the prior 90 calendar days), is inconsistent with the range of trading
prices established over the preceding three months. Our board of directors
believed that this unexplained and abnormal activity was an inappropriate
reference point for determining a price for an enterprise transaction in
which all of our shareholders would share, as in the proposed merger with
First Union.
- CORPORATE REORGANIZATION (see page 32)
Under the merger agreement, we have agreed to effect a reorganization of our
existing subsidiaries in which we will transfer all employees, independent
contractors, client relationships and other business relations from each of
our other broker-dealer subsidiaries to our subsidiary, JWGenesis Financial
Services, Inc. In addition, each of the branch offices that are currently
owned directly by one of our broker-dealer subsidiaries will be reorganized
to operate as an independently owned, affiliated branch office of JWGenesis
Financial Services.
- GENERAL CONDITIONS TO COMPLETION OF THE MERGER (see page 31)
For the merger to occur, the holders of shares of our common stock
representing a majority of the votes entitled to be cast at the special
meeting must approve the merger agreement, and we and First Union must
satisfy or otherwise waive all of the other conditions specified in the
merger agreement, which includes the following:
- the receipt of all consents, approvals, permits and authorizations
required to be obtained from any governmental or regulatory agency or from
any third party;
7
<PAGE>
- the absence of any action on the part of any regulatory authority issuing,
enacting, promulgating, enforcing or entering any statute, rule,
regulation, judgment, decree, injunction or other order that is in effect
and prohibits the merger;
- the execution of independent contractor agreements for the calendar year
2001 by our registered representatives that account for at least 70% of
our aggregate trading commissions for the twelve-months ended July 31,
2000 and the continued affiliation of such representatives with us as of
the closing of the merger;
- the corporate reorganization of our subsidiaries and the distribution of
our interest in MVP.com, Inc.;
- options and warrants for no more than 135,000 shares of our common stock
remaining outstanding as of the closing of the merger; and
- the effectiveness as of the closing of the merger of the employment
agreements between First Union and each of Marshall Leeds, Joel Marks and
Gregg Glaser.
- TERMINATION OF THE MERGER AGREEMENT (see page 33)
The merger agreement may be terminated at any time prior to the closing of
the merger by, among other things, the mutual written agreement of us and
First Union. In addition, either we or First Union may independently
terminate the merger agreement if:
- the merger has not been completed by March 31, 2001;
- our shareholders do not vote to approve the merger agreement;
- we do not receive the required regulatory approvals in connection with the
merger; or
- the other party is in material breach of any representation or warranty
contained in the merger agreement, or breaches any covenant in the merger
agreement, and such breach cannot be or has not been cured within 30 days
of written notice to the breaching party.
In addition, First Union may terminate the merger agreement if our board of
directors withdraws or modifies, in a manner materially adverse to First
Union, its approval or recommendation of the merger agreement, or fails to
reconfirm its recommendation after the receipt of an acquisition proposal
from a third party.
We have agreed to pay First Union a termination fee of $3.5 million if:
- any person other than First Union acquires beneficial ownership of 50% or
more of our common stock (or 25% if we have previously breached the "no
shop" provision in the merger agreement);
- we enter into an acquisition transaction without First Union's consent; or
- after any person other than First Union has either made a proposal to
enter into an acquisition transaction with us or initiated a tender or
exchange offer for our common stock, and before the merger agreement is
terminated, our shareholders (1) do not approve the merger agreement,
(2) the shareholder meeting is not held or (3) the shareholder meeting is
cancelled.
- TREATMENT OF OPTIONS AND WARRANTS (see page 28)
Holders of options or warrants, whether vested or unvested, with an exercise
price that is less than the merger consideration will have those options or
warrants cancelled, and will receive a cash payment from First Union equal
to the difference between the exercise price per share of those options and
warrants and the merger consideration, less applicable amounts to cover
withholding
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taxes. Holders of options or warrants, whether vested or unvested, with an
exercise price that is greater than or equal to the merger consideration
will have those options or warrants cancelled, and will not receive payment
from First Union.
It may be necessary to obtain the consent of certain holders to such
treatment of their options or warrants. The merger agreement requires our
board of directors to take such action as is necessary to provide that each
outstanding option or warrant to purchase our common stock will be treated
as described above upon completion of the merger, and it is a condition to
First Union's obligation to complete the merger that options and warrants
for not more than 135,000 shares of common stock remain outstanding as of
the closing of the merger.
- WE HAVE ESTABLISHED A PROGRAM TO RETAIN OUR BROKERS (see page 28)
In connection with the merger, we have established a retention program to
help us retain our current employee registered representatives, who will
become independent contractor registered representatives as a result of the
corporate reorganization we must undertake before the merger. The retention
program is intended both to preserve the value of our business for First
Union following the merger (and for us if the merger is not completed for
any reason) and to try to increase from $10 per share the amount of merger
consideration payable to our shareholders under the price adjustment formula
described herein. We have reserved approximately $10.0 million for payments
or awards to such persons in the form of forgivable loans. We are also
making available some financial incentives to our existing independent
contractor registered representatives to encourage them to sign new
affiliation agreements with JWGenesis Financial Services for the year 2001.
As of the date of this proxy statement, we have signed agreements for year
2001 with registered representatives whose aggregate production under the
formula is between 90% and 95%, and we are continuing our efforts to procure
additional agreements and to retain these persons through the merger closing
date.
We can provide no assurance, however, that our retention efforts will be
sufficiently successful to cause the merger consideration to be more than
$10 per share or to satisfy First Union's closing condition to the merger.
- WE MUST OBTAIN REGULATORY APPROVALS TO COMPLETE THE MERGER (see page 32)
Under the provisions of the Hart-Scott-Rodino Antitrust Improvements Act,
the merger may not be completed until the expiration, or early termination,
of a 30-day waiting period following filing of notifications by both First
Union and us with the Department of Justice and the Federal Trade
Commission. The parties filed the notifications on October 20, 2000, and
received notification of early termination of the waiting period on November
8, 2000.
The merger is also subject to the approval of, or notice to, state and other
regulatory authorities and self-regulatory organizations, including the
National Association of Securities Dealers, Inc. We have agreed to cooperate
with First Union to make all of the necessary filings, and either we or
First Union have filed, or soon will file, all of the required applications
and notices.
While we believe we will obtain the regulatory approvals in a timely manner,
we cannot be certain when or if we will obtain them.
- FINANCIAL ABILITY OF FIRST UNION (see page 25)
First Union has represented in the merger agreement that it has sufficient
cash to pay the merger consideration.
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- YOU WILL NOT HAVE DISSENTERS' OR APPRAISAL RIGHTS (see page 39)
Because our common stock is listed on the American Stock Exchange, you will
not have appraisal rights under the Florida Business Corporation Act in
connection with the merger.
- FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (see page 27)
The receipt of cash pursuant to the merger agreement will be a taxable
transaction for federal income tax purposes. YOU ARE URGED TO CONSULT YOUR
OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE MERGER TO YOU,
INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS.
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THE COMPANIES
JWGENESIS
JWGenesis is a diversified financial services holding company whose
principal operating subsidiaries are JWGenesis Financial Services, Inc.,
JWGenesis Securities, Inc., JWGenesis Financial Markets, Inc. and JWGenesis
Financial Group, Inc. On a combined basis, we operate a full-service securities
brokerage and investment banking business that offers "one-stop-shopping" to our
customers and clients. With over 500 registered representatives in over 34
states, including those operating under our affiliated branch office system, we
provide a wide range of securities brokerage and investment services to a
diversified client base. Our principal executive offices are located at 980
North Federal Highway, Suite 310, Boca Raton, Florida 33432, and out telephone
number at that location is (561) 338-2600.
FIRST UNION
First Union is a Charlotte, North Carolina-based financial and bank holding
company that is subject to the Bank Holding Company Act of 1956. Through its
full service offices along the East Coast, First Union provides a wide range of
commercial and retail banking services and trust services in Connecticut, New
York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, North Carolina,
South Carolina, Georgia, Florida and Washington, D.C. First Union also provides
various other financial services through its subsidiaries, including mortgage
banking, investment banking, insurance and securities brokerage services. First
Union is the sixth largest bank holding company in the United States, based on
assets of $247 billion at September 30, 2000, and its retail brokerage unit,
First Union Securities, is the nation's sixth largest brokerage organization
with more than 7,000 registered representatives in 45 states. First Union's
principal executive offices are located at One First Union Center, Charlotte,
North Carolina 28288-1207, and the telephone number at that location is
(704) 374-6565.
JWG ACQUISITION SUB, INC.
JWG Acquisition Sub, Inc. is a Florida corporation formed solely for the
purpose of merging into JWGenesis and has not conducted any business operations
since its organization on September 28, 2000. JWG Acquisition Sub's principal
executive offices are located at One First Union Center, Charlotte, North
Carolina 28288-1207, and the telephone number at that location is
(704) 374-6565.
THE SPECIAL MEETING
DATE, TIME AND PLACE INFORMATION
The special meeting of our shareholders to consider and vote on the merger
agreement discussed herein will be held on Tuesday, December 12, 2000 at
12:00 p.m., Eastern Time, at the Sheraton of Boca Raton, 2000 N.W., 19th Street,
Boca Raton, Florida.
RECORD DATE; QUORUM
RECORD DATE
Our board of directors has established the close of business on
November 10, 2000 as the record date to determine the shareholders entitled to
vote at the special meeting. As of the close of business on the record date,
there were 8,534,431 shares of our common stock outstanding, which were held by
approximately 150 holders of record. Our common stock represents the only
outstanding class of JWGenesis voting securities. Votes may be cast at the
meeting in person or by proxy.
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QUORUM
The presence at the special meeting, either in person or by proxy, of a
majority of the shares of our common stock outstanding as of the record date is
necessary to constitute a quorum to transact business at the special meeting. If
a quorum is not present, it is expected that the special meeting will be
adjourned or postponed in order to solicit additional proxies.
Abstentions and "broker non-votes" will be counted solely for the purpose of
determining whether a quorum is present. Broker non-votes are shares held by
brokers or nominees on behalf of customers that are represented at the meeting
but with respect to which the broker or nominee has not been instructed how to
vote. Brokers holding shares in street name for customers are prohibited from
voting those customers' shares on whether to approve the merger agreement in the
absence of specific instructions from those customers.
REQUIRED VOTE
Under Florida law and our articles of incorporation, approval of the merger
agreement requires the affirmative vote of the holders of a majority of the
outstanding shares of our common stock. You may cast one vote for each share of
our common stock that you owned on the record date. Abstentions and broker
non-votes will not be deemed to be cast either "FOR" or "AGAINST" approval of
the merger agreement. Because approval of the merger agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of our
common stock, abstentions and broker non-votes will have the same effect as a
vote "AGAINST" the merger agreement.
VOTING POWER OF DIRECTORS AND OFFICERS
As a condition to First Union's willingness to enter into the merger
agreement, nine of our directors and officers, holding 2,573,450 shares, or
approximately 30.2% of the outstanding shares of our common stock, agreed to
vote their shares of our common stock "FOR" approval of the merger agreement.
(The form of voting agreement entered into by these persons is attached as Annex
B to this proxy statement.) Assuming these shares are so voted, approval of the
merger agreement will require the additional affirmative vote of the holders of
approximately 19.9% of our common stock outstanding on the record date. The
description under the heading "Security Ownership of Management and Others"
contains information regarding the security ownership of certain beneficial
owners and management.
As of the record date, to First Union's knowledge, neither First Union nor
any of its directors or executive officers or their affiliates held any of our
common stock.
VOTING, REVOCATION AND SOLICITATION OF PROXIES
The proxy for the special meeting is solicited on behalf of our board of
directors. You are being requested to complete, date and sign the enclosed proxy
card and promptly return it in the accompanying envelope.
Shares represented by properly executed proxies, if such proxies are
received in time and not revoked, will be voted in accordance with the
instructions indicated on the proxies. Except for broker non-votes, if no
instructions are indicated, those proxies will be voted "FOR" approval of the
merger agreement, and in the discretion of the proxy holders designated by our
board of directors as to any other matter that may properly come before the
special meeting.
If a quorum is not present at the time the special meeting is convened, or
if for any other reason we believe that additional time should be allowed for
the solicitation of proxies, we may postpone the special meeting or may adjourn
the special meeting with or without a vote of shareholders. If we propose to
adjourn the meeting by a vote of shareholders, the persons named in the enclosed
form of
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proxy will vote all of the shares of our common stock for which they have
authority in favor of an adjournment, unless the proxy indicates a vote against
approval of the merger agreement.
The grant of a proxy on the enclosed form of proxy card will not prevent you
from voting in person at the special meeting. You may revoke your proxy at any
time before it is voted at the special meeting by doing any one of the
following:
- delivering to our Secretary a written notice, bearing a date later than
the date of your proxy, stating that the proxy is revoked;
- signing and delivering a proxy card relating to the same shares and
bearing a date that is later than the date of your previous proxy card,
before the vote at the special meeting; or
- attending the special meeting and voting in person.
All written notices of revocation and other communications with respect to
revocation of proxies should be addressed to:
JWGENESIS FINANCIAL CORP.
980 NORTH FEDERAL HIGHWAY
SUITE 310
BOCA RATON, FLORIDA 33432
ATTN: SECRETARY
A proxy appointment will not be revoked by death or incapacity of the
shareholder who executed the proxy unless, before the shares are voted, notice
of such death or incapacity is filed with our Secretary or other person
responsible for tabulating votes on our behalf.
Your attendance at the special meeting will not by itself constitute
revocation of your proxy--you must also vote in person at the special meeting.
If your broker previously voted your shares on your behalf, any revocation of
your proxy must be done through your broker, in writing to our Secretary, prior
to the special meeting.
We will bear the cost of soliciting proxies, including the cost of printing
the proxy statement, mailing it and filing it with the Securities and Exchange
Commission. In addition to solicitation by mail, our directors, officers and
certain other employees may solicit proxies by telephone, fax, telegram or in
person. Arrangements will also be made with brokerage houses and other nominees
and fiduciaries for forwarding solicitation material to the beneficial owners of
stock held of record by those persons, and we will reimburse those custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses in
connection therewith. We have retained D.F. King & Co., Inc. to assist in
distributing proxy material to such brokerage houses and other nominees and
fiduciaries, and to assist in solicitation of proxies by contacting record and
beneficial owners of our common stock, for a fee not to exceed $6,000, plus
expenses and certain per-call telephone charges. D.F. King & Co. is located at
77 Water Street, New York, New York 10005, and its telephone number at that
address is (800) 549-6746.
RECOMMENDATION OF THE BOARD OF DIRECTORS
For the reasons discussed in this proxy statement, our board of directors
(with one director, who perceived that he might have a conflict of interests
because of his affiliation with a competitor of First Union, abstaining)
unanimously approved the merger agreement, believes that the merger is advisable
and in your best interests, and recommends that you vote "FOR" approval of the
merger agreement and the consummation of the transactions contemplated therein.
OTHER MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
As of the date of this proxy statement, we are not aware of any business or
matter other than the proposal to approve the merger agreement. If, however, any
additional matter properly comes before the special meeting, the proxy holders
will vote on these matters in their discretion.
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THE MERGER
THE FOLLOWING SECTIONS DESCRIBE CERTAIN INFORMATION PERTAINING TO THE
MERGER. THE DESCRIPTION DOES NOT PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE ANNEXES TO THIS PROXY STATEMENT, INCLUDING THE
MERGER AGREEMENT, WHICH IS ATTACHED AS ANNEX A AND IS INCORPORATED HEREIN BY
REFERENCE. WE URGE ALL SHAREHOLDERS TO READ EACH OF THE ANNEXES IN THEIR
ENTIRETY.
GENERAL
The merger agreement provides for a transaction in which First Union will
acquire JWGenesis by merging JWG Acquisition Sub, a wholly owned subsidiary of
First Union, with and into JWGenesis. At the closing of the merger, each share
of our common stock will cease to be outstanding and, excluding any shares held
by us or First Union (other than in a fiduciary capacity or in connection with
trading activities), will be converted into the right to receive a cash payment,
without interest, of between $10 and $12 per share following the closing of the
merger.
The specific amount of the cash payment will not be known at the time of the
special meeting, because it will be based on the percentage of aggregate trading
commissions earned by JWGenesis for the twelve months ended July 31, 2000 that
were produced by registered representatives who were affiliated with JWGenesis
as of August 31, 2000, and who both sign independent contractor agreements with
JWGenesis for calendar year 2001 and actually continue as our registered
representatives on the merger closing date. Using this formula, the cash payment
to the shareholders will be $10 per share, if the percentage is less than 90%;
$11 per share, if the percentage is at least 90% but less than 95%; or $12 per
share, if the percentage is 95% or more. As of the date of this proxy statement,
we have signed agreements for year 2001 with registered representatives whose
aggregate production under the formula is between 90% and 95%, and we are
continuing our efforts to procure additional agreements and to retain these
persons through the merger closing date. While we have established a retention
program that uses financial incentives to help us retain our registered
representatives, we can provide no assurance that the level of retention we
achieve will cause the merger consideration to be more than $10 per share.
Any individuals who were registered representatives of JWGenesis as of
August 31, 2000, but become employees of First Union, or an affiliate of First
Union, and remain as such as of the merger closing date, will be treated as
having met the conditions for purposes of determining the above percentage
levels.
We and First Union amended the merger agreement on October 24, 2000 for the
sole purpose of including JWG Acquisition Sub as a party to the merger
agreement. A copy of the amendment is included as part of Annex A to this proxy
statement.
BACKGROUND AND REASONS FOR THE MERGER
From time to time over the past several years, our management has reviewed
the potential short-term and long-term impact of various trends in the financial
services industry--including those toward consolidation, massive deployment of
technological innovations (often at significant capital costs), and increased
competition--on our competitive position and our ability to continue to enjoy
financial success and increase shareholder value. Our board regularly discussed
with management the challenges and strategic opportunities for our business. In
1997, we retained Berkshire Capital Corporation as our financial advisor to
assist us in an ongoing strategic review of our business, and in 1999 we asked
Berkshire Capital to help develop and prioritize prospective strategic
transactions.
In 1998, with Berkshire Capital's assistance, we perceived an opportunity to
strengthen both our securities brokerage and capital markets capabilities by
acquiring for shares of our stock the business of Genesis Merchant Group
Securities LLC. That transaction strengthened us as a one-stop-shopping
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financial services business, but continuing rapid changes in the financial
services industry (and cultural incompatibilities with some of the management
personnel of Genesis), eventually led us to divest a portion of the operations
we acquired from Genesis. Later in 1998, we also saw an opportunity to increase
substantially both our number of registered representatives and our geographic
penetration by acquiring several branch offices of Chatfield Dean & Co. That
transaction increased our revenues substantially in 1999 and 2000, and also
directly led to our affiliation with John Elway. Mr. Elway became our corporate
spokesman in 1999 and our partner in an Internet venture that led to our
ownership of an interest in MVP.com, Inc.
Even with these successes, and the ability of our management team to
continue to achieve record financial results for our shareholders, we believed
that further strategic initiatives would be required to remain competitive and
financially successful in the changing industry environment. Our competitors
were becoming larger, with ready access to increased financial resources, as a
result of industry-wide consolidations. We believed the increase in the breadth
of product offerings by such financial services firms was expanding the
expectations of customers for one-stop-shopping and was accompanied by new
pricing practices that were beginning to erode the traditional margins on our
retail securities brokerage transactions. In addition, we were concerned about
the amount of capital that would be required to assume a leading position with
the new technologies being introduced into our business. We believed that large
investments in new technologies would be necessary in order to sustain the high
level of services required by our customers, especially in securities clearing
services operations, which had come to constitute a significant portion of our
profitability. Accordingly, in May 1999, we asked Berkshire Capital to develop,
on a confidential basis, a comprehensive list of prospective partners for a
strategic transaction with us.
As that process was ongoing, we otherwise continued to explore opportunities
to create or realize value for our shareholders, and in June of 1999, we saw an
opportunity to address a significant part of the above concern by selling our
securities clearing business to Fiserv, Inc. for $59 million in cash. That
strategic transaction enabled us to deliver immediate value to our shareholders
in February 2000 by making a tax-advantaged, partial tender offer (in lieu of a
special dividend) that paid $35 million in cash (at $20 per share, on a
post-split basis) on a pro-rata basis to all of our shareholders who chose to
participate.
Following the partial tender offer at $20 per share that resulted in the
purchase of approximately 18.6% of our then outstanding shares, our stock price
declined from $19.01 per share in January 2000 before the tender offer, to $9.50
per share in April 2000, and traded between $12 and $7.81 per share from May
through July 2000. Our management shared with the board of directors its concern
that we might not be able to continue to enhance or realize maximum value for
all our shareholders acting alone, without a strong, national strategic partner.
Between July 1999 and January 2000, acting on our request of May 1999,
Berkshire Capital had contacted and developed a list of 28 financial
institutions for consideration by our management as potential strategic
partners. Of these 28 institutions, 13 expressed an interest in receiving
information about our business. After obtaining appropriate confidentiality
agreements, Berkshire Capital sent each of these 13 institutions a package of
business information about us for their review. Of these 13 institutions, only
First Union--which was interested in adopting our independently-owned,
affiliated branch offices model for part of its brokerage operations--chose to
meet with us to review additional financial and operating information regarding
our business.
Our management had also delivered business information packages to three
other institutions who had come to its attention independently of Berkshire
Capital, and members of our management team had meetings with these institutions
during March and April 2000 to discuss a range of strategic possibilities. None
of these discussions led to an offer or other formal proposal by these
institutions for consideration by our board of directors.
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In April 2000, we held our first meeting with representatives of First Union
to discuss the potential benefits of an affiliation between the two companies.
From April to July of 2000, representatives of JWGenesis held a series of
additional meetings and shared extensive information with representatives of
First Union concerning a possible business combination. On April 5, 2000 and
again on June 7, 2000, senior executives of First Union's retail securities
brokerage unit met with our management and other select key personnel in Boca
Raton, Florida, our headquarters, to have high level discussions about a
possible transaction. On April 17 and 18, 2000, and on August 8 and 9, 2000,
senior executives of JWGenesis visited with executives of First Union's retail
securities brokerage unit in Richmond, Virginia, the national headquarters for
First Union's retail securities brokerage and clearing operations, as part of
those discussions.
Over the course of these discussions and negotiations, our executive
officers had several informal discussions with members of our board of directors
to update them on strategic developments. On July 28, 2000, management discussed
informally with one of the two outside directors of JWGenesis the status of the
discussions with First Union. (Because the other outside director was an
executive of Fiserv, Inc., a competitor of First Union, management determined
not to inform him of the specific developments with First Union at that time.)
During the week of August 28, 2000, several representatives of First Union
traveled to Boca Raton, Florida, to conduct extensive business and legal due
diligence regarding JWGenesis, and the parties and their respective legal
counsel engaged in detailed negotiations of the terms of the definitive
documentation, including preparing drafts of a merger agreement, and various
business and legal requirements for completing a transaction.
On August 31, 2000, our board of directors held a special meeting, at which
representatives of Berkshire Capital and our outside legal counsel participated,
to consider the terms of the proposed merger and to review and discuss the
merger agreement. As part of that meeting, our legal counsel reviewed the terms
of the merger agreement; the terms of the employment agreements being required
by First Union for our three senior executives who are also directors; the
distribution of the interests in a limited liability company being formed to
hold our shares of MVP.com, Inc. capital stock; the terms of the "no shop"
provision and the board's "fiduciary out" and also the termination fee of
$3.5 million to First Union; and other relevant legal issues. Our board of
directors received, and discussed with representatives of Berkshire Capital,
their report and assessment of the merger proposal, including the written
opinion of Berkshire Capital, dated August 31, 2000, that, as of that date, and
subject to certain matters stated therein, the merger consideration set forth in
the merger agreement was fair, from a financial point of view, to the holders of
our common stock.
Wm. Dennis Ferguson, who was our outside director that was affiliated with
Fiserv, Inc., after hearing the specifics of the proposal, chose not to
participate in the board's formal consideration of the proposed merger with
First Union, because he perceived that he may have a conflict of interests in
light of the competition between Fiserv and First Union in the securities
clearing business. (Mr. Ferguson subsequently resigned from the board on
October 31, 2000.)
After discussion and careful consideration of the proposal and related
matters, our board (with Mr. Ferguson abstaining) unanimously approved the
merger agreement, resolved to recommend that our shareholders vote to approve
the merger agreement, authorized the distribution of our interest in MVP.com
prior to the merger, and authorized senior management to take such action as was
needed to finalize these documents and to effectuate the transactions
contemplated in them.
During the evening of August 31, 2000, our representatives and
representatives of First Union finalized the merger agreement and related
documents, which were signed by us and First Union that evening. We each issued
a press release on September 1, 2000 announcing the proposed merger.
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Our board of directors determined to approve the merger agreement and the
proposed merger with First Union because it believes that the merger is
advisable and in the best interests of JWGenesis and its shareholders. In making
this determination, our board of directors considered a number of factors,
including the following:
- the all-cash nature of the consideration our shareholders will receive if
the merger is completed, and the likelihood that it will deliver greater
value to all of our shareholders than that reasonably to be expected if
JWGenesis were to remain a stand-alone company, in light of the paradigm
shifts ongoing within the financial services industry as a result of
consolidation, technological advances, and resulting pricing practices
that are already affecting margins;
- the likelihood of success of proposed retention arrangements with our
registered representatives in connection with the merger, the likelihood
of our achieving a merger consideration above $10 per share, and the
implications of not doing so;
- Berkshire Capital's August 31, 2000 report and presentation, including
Berkshire Capital's written opinion as of that date that the merger
consideration is fair to our shareholders, from a financial point of view;
- the unexplained spike in the trading prices and volume of our common stock
that began on August 22, 2000 (when the closing price went from $7.50 on
the prior day to $10.44 on August 22, 2000 and eventually to $14.94 on
August 31, 2000, the date of the board of directors' meeting), relative to
the range of trading prices that had been established over the past three
months, in determining the appropriateness of a price for an enterprise
transaction in which all of our shareholders would share, as in the
proposed merger with First Union;
- whether the new employment agreements that would be required by First
Union with our three senior executives, who are also directors, impact
either the desirability of the merger to all of our shareholders or the
ability of those persons to discharge their respective fiduciary duty as
directors to consider the best interests of JWGenesis and all its
shareholders;
- our unsuccessful initiatives to identify other more advantageous strategic
alternatives, together with the terms of the "fiduciary out" available
under the merger agreement if an unsolicited bona fide written proposal is
received from another party for a transaction that is reasonably likely to
be consummated and is more favorable to our shareholders from a financial
perspective;
- the complementary nature of our business, services, products and culture
with First Union's, the opportunity to create a combined business that
offers a wider variety of services to our clients and enhances the ability
to attract new clients, and the likelihood of smooth integration of our
business with that of First Union, which gave us confidence that a
transaction with First Union would in fact be consummated;
- the other terms and conditions of the merger agreement; and
- the judgment and advice of our management.
The above list of factors considered by our board of directors is not
intended to be exhaustive, but includes the material factors considered by them.
In reaching its determination to approve the merger agreement, our board of
directors did not assign any relative or specific weight to these various
factors, and individual members of our board of directors may have assigned
differing weights to different factors.
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OPINION OF BERKSHIRE CAPITAL CORPORATION
We retained Berkshire Capital Corporation to act as our financial advisor in
connection with the merger and to render an opinion to our board of directors as
to the fairness of the merger consideration, from a financial point of view, to
our shareholders. Berkshire Capital is a nationally recognized investment
banking firm regularly engaged in the valuation of financial services businesses
and their securities in connection with mergers and acquisitions, competitive
biddings and valuations for estate, corporate and other purposes, and in acting
as financial advisor in connection with other forms of strategic transactions.
Our board of directors selected Berkshire Capital to serve as its financial
advisor in connection with the merger on the basis of this expertise and our
previous engagement of Berkshire Capital as our financial advisor with respect
to other strategic planning analyses.
The full text of Berkshire Capital's written opinion, which sets forth
certain assumptions made, matters considered and limitations on Berkshire
Capital's review, is attached as Annex C to this proxy statement, and is
incorporated herein by reference. It should be read in its entirety in
connection with this proxy statement. This summary of Berkshire Capital's
opinion is qualified in its entirety by reference to the full text of the
Berkshire Capital opinion attached as Annex C. Berkshire Capital's opinion is
directed only to the fairness of the merger consideration, from a financial
point of view, to our shareholders. Berkshire Capital's opinion was provided to
our board of directors to assist it in connection with its consideration of the
merger and does not constitute a recommendation to any of our shareholders as to
how a shareholder should vote on the merger agreement.
In arriving at its opinion, Berkshire Capital reviewed and considered
certain publicly available business and financial information relating to us and
certain other materials, including the following:
- our annual reports to shareholders, annual reports on Form 10-K and
related financial information for the three years ended December 31, 1999;
- our quarterly reports on Form 10-Q for the quarterly periods ended
June 30, 2000 and March 31, 2000;
- certain publicly available information with respect to the historical
market prices and trading activities for our common stock and for certain
publicly traded financial institutions that Berkshire Capital deemed
relevant;
- certain publicly available information with respect to securities firms
and the financial terms of certain other mergers and acquisitions that
Berkshire Capital deemed relevant;
- our merger agreement with First Union;
- other financial information concerning our businesses and operations,
including certain audited financial information of our subsidiaries and
certain financial analyses and forecasts prepared by senior management;
- discussions with a number of potential buyers, including First Union,
based upon the direction of our management;
- such financial studies, analyses, inquiries and other matters as Berkshire
Capital deemed necessary; and
- discussions with our senior management concerning our business and
prospects.
In connection with its review, Berkshire Capital relied upon and assumed the
accuracy and completeness of all of the foregoing information provided to it by
us or publicly available, including our representations and warranties, and
those of First Union, included in the merger agreement, and Berkshire Capital
has not assumed any responsibility for independent verification of such
information. Berkshire Capital relied upon our management as to the
reasonableness and achievability of our
18
<PAGE>
internal financial and operational forecasts and projections, and the
assumptions and bases therefor, provided to Berkshire Capital by our management,
and it assumed that such forecasts and projections reflect the best currently
available estimates and judgments of our management, and that such forecasts and
projections will be realized in the amounts and in the time periods currently
estimated by our management. Berkshire Capital did not make an independent
evaluation or appraisal of our assets or liabilities.
In connection with rendering its opinion, Berkshire Capital performed a
variety of financial analyses. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to
partial analysis or summary description. Moreover, the evaluation of the
fairness of the merger consideration, from a financial point of view, to holders
of our common stock was to some extent a subjective one based on the experience
and judgment of Berkshire Capital and not merely the result of mathematical
analysis of financial data. Accordingly, notwithstanding the separate factors
summarized below, Berkshire Capital believes that its analyses must be
considered as a whole, and that selecting portions of its analyses and of the
factors considered by it, without considering all analyses and factors, could
create an incomplete view of the evaluation process underlying its opinion. The
ranges of valuations resulting from any particular analysis described below
should not be taken to be Berkshire Capital's view of the actual value of
JWGenesis.
In performing its analyses, Berkshire Capital made numerous assumptions with
respect to industry performance, business and economic conditions, and other
matters, many of which are beyond our control or First Union's control. The
analyses performed by Berkshire Capital are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
that suggested by such analyses. Additionally, analyses relating to the values
of businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold.
Berkshire Capital's opinion is just one of the many factors taken into
consideration by our board of directors in determining to approve the merger
agreement. Berkshire Capital's opinion does not address the relative merits of
the merger as compared to any alternative business strategies that might exist
for us, nor does it address the effect of any other business combination in
which we might engage. JWGenesis and First Union determined the amount of merger
consideration to be paid pursuant to the merger agreement as the result of arm's
length negotiations, and Berkshire Capital was not asked to, and did not
propose, the merger consideration to our board of directors.
The following is a summary of the analyses performed by Berkshire Capital in
connection with its opinion expressed to our board of directors on August 31,
2000. Berkshire Capital employed two different methodologies to evaluate the
fairness of the merger consideration, from a financial point of view, to our
shareholders. The methodologies were:
- comparable acquisitions of securities firms; and
- comparison to publicly traded securities firms.
The following two sections provide additional detail regarding comparable
acquisition transactions, publicly traded securities firms, and additional
analyses utilized by Berkshire Capital in preparing its opinion.
COMPARABLE ACQUISITIONS
Berkshire Capital performed an analysis of consideration paid in 18
acquisitions of securities firms completed from 1997 to 2000. The consideration
paid as a multiple of book value, tangible book value, total revenues, net
income and premium to market price (for those publicly traded sellers) in these
19
<PAGE>
selected transactions was compared to the multiples and premiums implied by the
consideration offered by First Union in the merger. The 18 selected transactions
were:
- Oppenheimer Holdings, Inc. and CIBC Wood Gundy Securities Corp.;
- Wheat First Butcher Singer, Inc. and First Union Corporation;
- Roney & Co. and First Chicago Corporation;
- Piper Jaffray Companies, Inc. and U.S. Bancorp;
- The Ohio Company and Fifth Third Bancorp.;
- McDonald & Company Investments, Inc. and KeyCorp.;
- Scott & Stringfellow Financial, Inc. and BB&T Corporation;
- Hilliard-Lyons, Inc. and PNC Bank Corp.;
- Van Kasper & Company and First Security Corporation;
- Interstate/Johnson Lane Inc. and Wachovia Corporation;
- Roney & Co.(BancOne Corporation) and Raymond James Financial, Inc.;
- EVEREN Capital Corporation and First Union Corporation;
- Gibraltar Securities and Freedom Securities Corporation;
- Ragen MacKenzie Inc. and Wells Fargo & Company;
- J.C. Bradford & Co. and Paine Webber Group Inc.;
- Private Client Group of First Albany Companies Inc. and First Union
Corporation;
- Private Client Group of SG Cowen Securities Corp. and Lehman Brothers
Holdings; and
- Advest Group Inc. and Mony Group Inc.
Berkshire Capital compared, to the median and low-high range multiples for
the 18 selected transactions, the merger consideration as a multiple of our:
(1) book value as of June 30, 2000;
(2) tangible book value as of June 30, 2000;
(3) latest three months ended June 30, 2000 annualized revenues;
(4) latest twelve months ended June 30, 2000 revenues;
(5) latest three months ended June 30, 2000 annualized net income; and
(6) latest twelve months net income.
20
<PAGE>
The multiples calculated in (3) and (5) were compared to multiples to latest
twelve month data for the selected transactions in order to better reflect our
ongoing earnings prospects following an industry-wide increase in revenue and
net income in the first quarter of 2000. Berkshire Capital made certain
adjustments to our revenues, net income and book value to normalize for the
impact of certain material non-recurring income events and the proposed
distribution, prior to the merger, of our ownership interest in MVP.com, Inc.
The following chart provides a summary of these analyses:
<TABLE>
<CAPTION>
TRANSACTION MULTIPLES
----------------------------------------------------------------------------
HIGH-LOW RANGE OF
CONSIDERATION TO BE COMPARABLE MEDIAN COMPARABLE
JWGENESIS PAID TO JWGENESIS TRANSACTION FIRM TRANSACTION FIRM
VALUES ($000S) SHAREHOLDERS MULTIPLES MULTIPLES
-------------- ------------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Book Value (6/30/00)................. $ 56,201(1) 1.5x - 1.8x 1.0x - 9.8x(2) 2.6x
Tangible Book Value (6/30/00)........ $ 35,070(3) 2.4x - 2.9x 1.0x - 9.8x(2) 2.6x
Last 12 Months Gross Revenues........ $157,326(4) 0.5x - 0.7x 0.5x - 2.5x 1.1x
Last 12 Months Net Income............ $ 9,235(5) 9.2x - 11.1x 7.9x - 37.7x(6) 16.2x
2Q 2000 Annualized Gross
Revenues(7)........................ $125,928(8) 0.7x - 0.8x 0.5x - 2.5x 1.1x
2Q 2000 Annualized Net Income(7)..... $ 5,556(8) 15.3x - 18.4x 7.9x - 37.7x(6) 16.2x
Premium to Average Price for 30 Days
Prior.............................. $ 8.99(9) 11% - 34% 13% - 53% 25%
Premium to Actual Price 90 Calendar
Days Prior......................... $ 9.38(9) 7% - 28% 2% - 74% 39%
Premium to Actual Price 120 Calendar
Days Prior......................... $ 10.75(9) 7% - 12% 5% - 86% 39%
</TABLE>
------------------------
(1) Excludes book value of $8.5 million associated with JWGenesis' investment in
MVP.com, Inc.
(2) Excluding one transaction in which the consideration paid as a multiple of
book value and tangible book value is significantly higher than in the other
comparable transactions, the high-low range is 1.0x - 4.3x, with a median of
2.6x.
(3) Excludes goodwill, book value associated with JWGenesis' investment in
MVP.com, Inc. and deferred expenses of $14.7 million, $8.5 million and
$6.4 million, respectively. Goodwill relates to the acquisition of Genesis
Merchant Group Securities, LLC in 1998 and the acquisition of certain assets
of six retail securities branch offices in 1999. Deferred expenses are
associated with certain non-solicitation/non-competition agreements and
contracts with certain service providers.
(4) Excludes clearing revenues of JWGenesis Clearing Corp. (that was sold in
June 1999), the mark to market adjustment on JWGenesis' investment in
MVP.com, Inc. and the gain from the exercise of warrants.
(5) Excludes net income from the mark to market adjustment on JWGenesis'
investment in MVP.com, Inc. and the gain from the exercise of warrants.
(6) Excluding one transaction in which the consideration paid as a multiple of
net income is significantly higher than in the other comparable
transactions, the high-low range is 7.9x - 22.7x, with a median of 16.2x.
(7) Multiples on second quarter 2000 annualized revenues and net income were
compared to last twelve months multiples for comparable transactions in
order to better reflect JWGenesis' ongoing earnings prospects following an
industry-wide increase in revenue and net income in the first quarter of
2000.
21
<PAGE>
(8) Adjusted for the gain from the exercise of warrants.
(9) Premium to price prior to August 30, 2000, assuming that the public trading
price for JWGenesis stock reflected no value for JWGenesis' interest in
MVP.com, Inc. Such interest is being distributed to JWGenesis shareholders
prior to completion of the merger, and accordingly its potential value was
not reflected in the merger consideration.
As noted in the chart, the multiple ranges for the merger fall within all of
the indicated comparable transaction multiple ranges (other than those for the
premium to the average stock price for JWGenesis stock during the 30 days prior
to execution of the merger agreement, and for the premium to the actual stock
price for JWGenesis common stock on the 120th day prior to execution of the
merger agreement), and encompass the median comparable transaction multiples for
tangible book value, second quarter 2000 annualized net income, and premium to
the average trading price for JWGenesis stock during the 30 days prior to
execution of the merger agreement. It would be expected that JWGenesis' higher
pay-out levels to its large number of independent contractor registered
representatives, which serve to reduce its net income relative to most of the
companies involved in the comparable transactions, that have no or few
independent contractor registered representatives, as well as JWGenesis' lack of
meaningful investment banking and other higher margin business, would result in
JWGenesis' lower revenue and income multiples. Due to JWGenesis' acquisition
history and other factors, JWGenesis has a significantly higher percentage of
intangibles included in book value relative to firms in the comparable
transactions, making the tangible book value multiple more relevant than the
book value multiple.
It was also noted that one transaction, because of unique circumstances, had
by a large margin the highest multiple for consideration to book value,
consideration to tangible book value and consideration to latest twelve months
annualized net income and, as such, significantly widened the low-high range.
The timing of the transaction, and the particular synergies between the buyer
and seller, accounted for the high multiples. The pricing of the transaction was
agreed upon before a market correction which subsequently caused a significant
downward adjustment in the valuation of securities firms.
No company or transaction used as a comparison in the above analyses is
identical to us, First Union or the merger, as the case may be. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in prevailing market
conditions at the time of each such transaction, financial and operating
characteristics of the companies, and other factors that could affect the public
trading and/or transaction value of the companies used for comparison in the
above analyses.
COMPARISON OF PUBLICLY TRADED SECURITIES FIRMS
Berkshire Capital compared our financial performance to that of a certain
group of securities firms by comparing the book value, total revenues, and
diluted earnings per share of the group's members to their respective stock
prices. This group included Raymond James Financial, Inc.; Dain Rauscher
Corporation; Morgan Keegan, Inc.; Tucker Anthony Sutro; Fahnestock Viner
Holdings Inc.; and Stifel Financial Corp.
22
<PAGE>
Berkshire Capital compared selected market multiples and ratios using
financial data for the latest twelve months ended June 30, 2000 for us and the
group, and market data as of August 30, 2000 for the group. Berkshire Capital
also compared selected market multiples and ratios using financial data for the
three months ended June 30, 2000 annualized for us and the group, and market
data as of August 30, 2000 for the group. In each such case, Berkshire Capital
made certain adjustments to our revenues, diluted earnings per share and book
value to normalize for the impact of certain material non-recurring income
events and our proposed distribution, prior to the merger, of our ownership
interest in MVP.com, Inc. The following chart provides a summary of these
analyses:
<TABLE>
<CAPTION>
PUBLIC FIRM MULTIPLES
---------------------------------------------------------------------
HIGH-LOW RANGE MEDIAN
CONSIDERATION TO BE OF COMPARABLE COMPARABLE
JWGENESIS VALUES PAID TO JWGENESIS PUBLIC FIRM PUBLIC FIRM
($000S) SHAREHOLDERS MULTIPLES MULTIPLES
---------------- ------------------- -------------- -----------
<S> <C> <C> <C> <C>
Book Value (6/30/00)............... $ 56,201(1) 1.5x - 1.8x 1.2x - 2.3x 2.0x
Tangible Book Value (6/30/00)...... $ 35,070(2) 2.4x - 2.9x 1.2x - 3.5x 2.0x
Last 12 Months Gross Revenues...... $157,326(3) 0.5x - 0.7x 0.5x - 1.2x 0.8x
Last 12 Months Diluted Earnings Per
Share............................ $ 0.94(4) 10.7x - 12.8x 6.3x - 12.9x 12.3x
2Q 2000 Annualized Gross
Revenues(5)...................... $125,928(6) 0.7x - 0.8x 0.5x - 1.0x 0.9x
2Q 2000 Annualized Diluted Earnings
Per Share(5)..................... $ 0.62(6) 16.1x - 19.3x 7.8x - 14.9x 11.8x
</TABLE>
------------------------
(1) Excludes book value of $8.5 million associated with JWGenesis' investment in
MVP.com, Inc.
(2) Excludes goodwill, book value associated with JWGenesis' investment in
MVP.com, Inc. and deferred expenses of $14.7 million, $8.5 million and
$6.4 million, respectively. Goodwill relates to the acquisition of Genesis
Merchant Group Securities, LLC in 1998 and the acquisition of certain assets
of six retail securities branch offices in 1999. Deferred expense is
associated with certain non-solicitation/non-competition agreements and
contracts with certain service providers.
(3) Excludes clearing revenues of JWGenesis Clearing Corp. (which was sold in
June 1999), the mark to market adjustment on JWGenesis' investment in
MVP.com, Inc. and the gain from the exercise of warrants.
(4) Excludes net income from the mark to market adjustment on JWGenesis'
investment in MVP.com, Inc. and the gain from the exercise of warrants.
(5) Multiples on second quarter 2000 annualized revenues and net income were
compared to last twelve months multiples for comparable transactions in
order to better reflect JWGenesis' ongoing earnings prospects following an
industry-wide increase in revenue and net income in the first quarter of
2000.
(6) Adjusted for the gain from the exercise of warrants.
As noted in the chart, the multiple ranges for the merger fall within all of
the indicated public firm multiple ranges, and encompass the median public firm
multiples for the last 12 months diluted earnings per share and second quarter
annualized diluted earnings per share. It would be expected that JWGenesis'
higher pay-out levels to its large number of independent contractor registered
representatives, which serve to reduce its net income relative to most of the
companies involved in the comparable transactions, which have no or few
independent contractor registered representatives, as well as its lack of
meaningful investment banking and other higher margin business, would result in
JWGenesis' lower revenue and income multiples.
23
<PAGE>
Berkshire Capital's opinion is dated August 31, 2000, and is based solely
upon the information available to Berkshire Capital and the economic, market and
other circumstances as they existed as of such date. Events occurring after that
date could materially affect the assumptions and conclusions contained in
Berkshire Capital's opinion. Berkshire Capital has not undertaken to reaffirm or
revise its opinion or otherwise comment on any events occurring after that date.
OUR FINANCIAL ARRANGEMENTS WITH BERKSHIRE CAPITAL
Our engagement agreement with Berkshire Capital, pursuant to which it
provided its services as our financial advisor in connection with the merger,
requires us to pay Berkshire Capital fees as follows:
- a cash fee of $110,000, which was paid during the course of Berkshire
Capital's assignment;
- an additional cash fee of $150,000, which was paid upon execution of the
merger agreement; and
- an additional cash fee equal to 3.0% of the first $10 million of aggregate
consideration and 1.0% of aggregate consideration in excess of
$10 million, less $150,000, payable upon closing of the merger.
Aggregate consideration is primarily dependent on the final price per share paid
by First Union, but also includes the value of any retention program payments
made to our employees.
We have also agreed to reimburse Berkshire Capital for its reasonable and
necessary out-of-pocket expenses and to indemnify Berkshire Capital against
certain liabilities, including liabilities under the federal securities laws.
EFFECTIVE TIME OF THE MERGER
The merger will be consummated, if it is approved by our shareholders and
the other conditions to the merger are either satisfied or waived, and will
become effective at the time of filing of the articles of merger with, and
acceptance for recording of the articles of merger by, the Florida Department of
State, or at a later time as specified in the articles of merger. Subject to
these conditions, we expect the merger to become effective early in
January 2001.
PAYMENT FOR SHARES
The merger agreement provides that First Union National Bank will act as the
payment agent for the merger. After the closing date of the merger, the payment
agent will mail transmittal materials to all of our shareholders as of the
closing of the merger for use in exchanging their JWGenesis stock certificates
for payment of the merger consideration. All certificates so surrendered will be
cancelled. Upon surrender to the payment agent of such stock certificates,
together with duly executed transmittal materials, the payment agent will
deliver the merger consideration, without interest, to the shareholder. Neither
the paying agent, First Union nor JWGenesis will be liable to any shareholder
for any property delivered to a public official pursuant to any abandoned
property, escheat, or similar law. After the closing of the merger, there will
be no transfers of JWGenesis common stock on our stock transfer books.
If you are a shareholder of JWGenesis as of the closing of the merger, these
transmittal materials will be delivered to you. If you provide the payment agent
with special delivery or payment instructions, your signatures on the
transmittal materials must be guaranteed by a bank or brokerage firm that is a
participant in the Securities Transfer Agents Medallion Program. Additionally,
if the certificates representing shares of our common stock are registered in
the name of a person other than the signer of the transmittal materials, then
the signature(s) of the registered owner or a person with full authority to sign
on behalf of the registered owner on the transmittal materials, stock power or
certificates must be guaranteed by a bank or brokerage firm that is a
participant in the Securities Transfer Agents Medallion Program.
24
<PAGE>
To prevent backup federal income tax withholding of 31% of the aggregate
merger consideration payable to you, you must provide the payment agent with
your correct taxpayer identification number and certify that you are not subject
to backup federal income tax withholding by completing the substitute Form W-9
that will be included in the transmittal materials sent to you.
The method of delivery of certificates for shares of our common stock, the
transmittal materials and any other required documents is at your options and
risk. If delivery is made by mail, we recommend that you use registered mail
with return receipt requested, properly insured.
DO NOT DELIVER YOUR STOCK CERTIFICATES AT THIS TIME. WAIT UNTIL YOU RECEIVE
THE TRANSMITTAL MATERIALS FROM THE PAYMENT AGENT AFTER THE MERGER IS
CONSUMMATED.
FINANCING
Upon completion of the merger, First Union will pay the merger consideration
of between $10 and $12 per share of common stock, equal to an aggregate of
between $90 million and $110 million, out of cash reserves available to it.
First Union has represented in the merger agreement that it has sufficient cash
to pay the merger consideration.
DISTRIBUTION OF INTEREST IN MVP.COM
First Union is not acquiring the interest we owned in MVP.com, Inc., which
is a privately-held corporation that is engaged in the Internet outdoor and
sporting goods merchandise and insight business. That interest consisted of
1,236,379 shares of Series A Preferred Stock and 117,388 shares of Series C
Preferred Stock of MVP.com, which we believe represented, on a fully-diluted,
as-converted basis, approximately 3% of the outstanding common stock of MVP.com.
(That percentage could be diluted if MVP.com issues more stock in connection
with future financings or other transactions in which it chooses to engage.)
Under the merger agreement, we were and are entitled to distribute that interest
to our shareholders, or otherwise use and realize value from it, before the
closing of the merger, and we will do so, whether or not the merger is
completed.
Our board of directors authorized the use of a substantial portion of our
interest in MVP.com (at least 75%) for a distribution in the form of a special
dividend to our shareholders, consisting of units of membership interest in a
special purpose, limited liability company we formed to hold the MVP.com stock.
That special dividend is being paid pro-rata to our shareholders of record as of
November 10, 2000, based on one unit per share of common stock owned, and is
expected to result in taxable income to the shareholders of $0.30 per share. The
units are not and 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, or otherwise approves a liquidating
distribution by the limited liability company, the shares of MVP.com stock 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.
Our distribution of our interest in MVP.com was structured in this indirect
manner primarily because a direct distribution by us of our actual shares in
MVP.com is prohibited by certain of our agreements with MVP.com. Additional
detailed information about this distribution and the units of the new limited
liability company, including the restrictions on transfer of the interests, is
included in the information statement that we mailed to our shareholders on or
about October 25, 2000. We intend to re-distribute the information statement to
our shareholders who received the special dividend by virtue of being
shareholders on November 10, 2000, along with certain additional information
about the distribution, as soon as practicable.
We reserved approximately 25% of the units of the new limited liability
company for possible transfer to holders of options and warrants for the
purchase of our common stock, in order to obtain their consent (a) to the
treatment of their respective options or warrants in the manner described in the
merger agreement, and (b) if the merger is not completed for any reason, to an
amendment of the
25
<PAGE>
terms of their respective options or warrants regarding treatment of such
securities in any potential future acquisition of us by an unaffiliated third
party. A portion of the reserved units will also be transferred 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. These additional uses are discussed in more detail under the heading
"Treatment of Options and Warrants" below. Any portion of the units reserved for
these purposes that is not used for these purposes may be retained by us for
other corporate purposes or may be cancelled. Cancellation of unused units would
result in a pro-rata increase in the percentage amount owned by shareholders who
receive the special dividend, holders of options and warrants who provide us
with consents, and registered representatives who received units in lieu of
options under the Broker Stock Option Program.
Because MVP.com is a privately-held company and there is no trading market
for its capital stock, we cannot advise you as to the value of the distribution.
In any event, that distribution is an entirely separate transaction from the
proposed merger and is not part of the merger consideration that our
shareholders as of the closing date of the merger will receive if the merger
with First Union is completed.
MARKET PRICES FOR OUR COMMON STOCK
Our stock trades on the American Stock Exchange under the symbol "JWG". The
following table sets forth, for the periods indicated, the quarterly high and
low sales price information for our common stock on the American Stock Exchange.
All per share prices have been adjusted to reflect our three-for-two stock split
effected in the form of a 50% stock dividend on March 24, 2000.
<TABLE>
<CAPTION>
PERIOD HIGH LOW
------ -------- --------
<S> <C> <C>
1998
First Quarter............................................. $ 9.21 $ 7.62
Second Quarter............................................ 8.54 6.62
Third Quarter............................................. 7.67 4.09
Fourth Quarter............................................ 5.17 3.50
1999
First Quarter............................................. $ 9.17 $ 3.99
Second Quarter............................................ 14.42 6.67
Third Quarter............................................. 11.92 9.21
Fourth Quarter............................................ 19.83 9.17
2000
First Quarter............................................. $19.33 $14.21
Second Quarter............................................ 15.00 8.25
Third Quarter............................................. 14.94 7.31
Fourth Quarter (through November 13, 2000)................ 10.38 9.06
</TABLE>
On November 13, 2000, the closing price of our stock was $9.81 per share. We
advise you to obtain current market quotations for your shares.
The closing price of our common stock on August 31, 2000, the last day
before we announced the merger agreement, was $14.94. This price is higher than
the potential merger consideration. In evaluating the merger, we considered the
unusual trading activity in our stock that led up to that price, which began on
August 22, 2000, when our stock price rose from $7.50 on the preceding day to a
closing price of $10.44, and eventually rose to $14.94 on August 31, 2000. This
spike in our stock price, which was accompanied by a significant increase in
trading volume (approximately 749% of our average for the prior 90 calendar
days), is inconsistent with the range of trading prices established over the
preceding three months. Our board of directors believed that this unexplained
and abnormal activity was an inappropriate reference point for determining a
price for an enterprise transaction in which all of our shareholders would
share, as in the proposed merger with First Union.
26
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following summary describes certain material federal income tax
consequences applicable to holders of our common stock, and holders of options
and warrants for the purchase of our common stock, as a result of the
disposition of shares, options and warrants pursuant to the merger. This summary
is based on the provisions of the Internal Revenue Code of 1986, as amended,
final, temporary and proposed United States Treasury regulations promulgated
thereunder, and the administrative and judicial interpretations thereof, all as
in effect as of the date of this proxy statement. Such laws or interpretations
may differ at the date of closing of the merger or thereafter. The effectiveness
of the merger is not conditioned upon the receipt of any ruling from the
Internal Revenue Service or any opinion of counsel as to tax matters.
This summary is for general information only. The tax treatment applicable
to each holder of our common stock, and holders of options and warrants for the
purchase of our common stock, will depend in part upon each holder's particular
situation. Special tax consequences not described below may be applicable to
particular classes of taxpayers, including financial institutions,
broker-dealers, persons who are not citizens of the United States or who are
foreign corporations, foreign partnerships or foreign estates or trusts as to
the United States, and shareholders who acquired their shares of common stock
through the exercise of employee stock options or otherwise as compensation. The
following discussion relates only to shares of our common stock that are held as
capital assets within the meaning of Section 1221 of the Internal Revenue Code.
EACH SHAREHOLDER, OPTIONHOLDER AND WARRANTHOLDER SHOULD CONSULT WITH HIS OR HER
OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE
MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND
FOREIGN TAX LAWS.
The merger will be a taxable transaction to our shareholders for federal
income tax purposes. Each shareholder will recognize gain or loss equal to the
difference between the amount of aggregate cash received pursuant to the merger
agreement and the shareholder's tax basis in shares of our common stock. The
gain or loss will be capital gain or loss if the shares are capital assets in
the hands of the holder. This capital gain or loss will be long term if the
holding period for such shares is more than one year at the time of the merger,
and short-term capital gain or loss if the holding period for such shares is not
more than one year. The maximum federal income tax rate on long-term capital
gain applicable to a non-corporate shareholder is 20%, and the maximum federal
income tax rate on short-term capital gain applicable to a non-corporate
shareholder is 39.6%. Capital gain realized by a corporate shareholder will be
subject to a maximum federal income tax rate of 35%. The current year
deductibility of capital losses recognized by a non-corporate shareholder is
limited to such shareholder's capital gains plus $3,000, and the current year
deductibility of capital losses recognized by a corporate shareholder is limited
to such shareholder's capital gains.
Under the Internal Revenue Code, a shareholder may be subject, under certain
circumstances, to "backup withholding" at a 31% rate on cash payments made in
exchange for our common stock unless the shareholder provides his correct
taxpayer identification number on a Substitute Form W-9, such as will be
included with the letter of transmittal that will be provided to shareholders
after the closing of the merger, or is eligible for an exemption from this
requirement. Exempt persons (including, among others, corporations) are not
subject to backup withholding, provided that they indicate their exempt status
on a Substitute Form W-9. The amount of any backup withholding from a payment to
a shareholder will be allowed as a credit against such shareholder's federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
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TREATMENT OF OPTIONS AND WARRANTS
Under the merger agreement, our board of directors has agreed to take such
action before the closing of the merger, including obtaining any necessary
consents or agreements from holders of outstanding options and warrants, as is
necessary to provide that, at the closing of the merger:
- each outstanding option, whether vested or unvested, or warrant to
purchase our common stock whose exercise price is less than the merger
consideration will be cancelled in exchange for a cash payment from First
Union equal to the difference between the merger consideration and the
exercise price per share of the option or warrant, less applicable amounts
to cover withholding taxes; and
- each outstanding option, whether vested or unvested, or warrant to
purchase our common stock whose exercise price is equal to or greater than
the merger consideration will be cancelled without payment of any
consideration from First Union.
If options and warrants to purchase more than 135,000 shares of our common stock
remain outstanding as of the time for closing of the merger, First Union will
have the right not to close the merger.
It may be necessary to obtain the consent of certain holders to the
treatment of their options or warrants as described above in order to satisfy
this closing condition. In an effort to help obtain such consents (and otherwise
treat fairly other holders of options whose consents may not be necessary), we
intend to offer these holders a portion of our interest in MVP.com. Accordingly,
we intend to request that holders of our options and warrants provide us with
their consent (a) to the treatment of their respective options or warrants in
the manner described above, and (b) if the merger is not completed for any
reason, to an amendment to the terms of their respective options or warrants
regarding treatment of such securities in any potential future acquisition of us
by an unaffiliated third party. Each option or warrant holder who consents to
such treatment will receive one unit of membership interest in the special
purpose limited liability company that we formed to hold our interest in MVP.com
for each share of common stock that the option or warrant holder would be
entitled to purchase if the option or warrant had been exercised rather than
terminated.
In addition, we intend to transfer units 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. Each eligible
registered representative will receive one unit for each share of common stock
that he or she would have been entitled to purchase pursuant to the option if
the option had been granted pursuant to our Broker Stock Option Program.
We have reserved approximately 25% of the membership interests for the above
purposes. Any portion of that reserved amount that is not used for these
purposes may be retained by us for other corporate purposes, or may be
cancelled. Cancellation of unused units would result in a pro-rata increase in
the percentage amount owned by shareholders who receive the special dividend,
holders of options or warrants who provide us with consents, and registered
representatives who received units in lieu of options under the Broker Stock
Option Program.
RETENTION PROGRAM
As described above, completion of the merger and the amount of merger
consideration above $10 per share, if any, to be paid by First Union to our
shareholders is dependent upon us retaining registered representatives who
accounted for certain percentages of our aggregate trading commissions earned
for the twelve months ended July 31, 2000. In addition, it is important that we
take steps to preserve the value of our business following the merger, both for
First Union on a going forward basis, and for us if the merger is not completed
for any reason. Accordingly, under the merger agreement, we have established a
retention program to retain certain of our key employees and registered
representatives.
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The retention program will consist of loans that will be awarded to those of
our current employee registered representatives who sign customary independent
contractor agreements with our subsidiary, JWGenesis Financial Services. The
terms of these loans will be governed by retention agreements between JWGenesis
and the retained individuals. We currently anticipate that 25% of each loan (and
the associated interest) will be forgivable on each of January 1, 2002, 2003,
2004 and 2005. If the recipient of a forgivable loan forfeits his or her right
to receive the loan (not continuing as our registered representative as of the
closing of the merger is one event of forfeiture), that loan will be cancelled,
and the entire amount of the loan plus interest (less any previously forgiven
amounts) shall be repaid to us. We expect to grant up to $10 million in
forgivable loans in connection with the retention program, but we are not
entitled to reuse the amount of any previously granted loan that is forfeited.
We are also making available some financial incentives to our existing
independent contractor registered representatives to encourage them to continue
to affiliate with JWGenesis Financial Services for the year 2001.
As of the date of this proxy statement, we have signed agreements for year
2001 with registered representatives whose aggregate production under the
formula is between 90% and 95%, and we are continuing our efforts to procure
additional agreements and to retain these persons through the merger closing
date. We can provide no assurance, however, that our retention efforts will be
sufficiently successful to cause the merger consideration to be more than $10
per share or to satisfy First Union's closing condition to the merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Individuals involved in our management or on our board of directors, because
of positions or functions as such on behalf of the company, have interests in
the merger in addition to their interests as JWGenesis shareholders. These
interests are discussed below. Our board of directors was aware of these
interests and considered them, among other matters, in approving the merger
agreement.
EMPLOYMENT AGREEMENTS
First Union required, as a condition to entering into the merger agreement,
that our three senior executives enter into employment agreements with First
Union that will become effective on the closing date of the merger and will
terminate their preexisting employment and related agreements with us. Those
executives, each of whom is also a director of JWGenesis, are: Marshall T.
Leeds, our Chairman, President and Chief Executive Officer; Joel E. Marks, our
Vice Chairman, Chief Operating Officer and Secretary; and Gregg S. Glaser, our
Executive Vice President, Chief Financial Officer and Treasurer.
Mr. Leeds' employment agreement expires three years after the closing date
of the merger; Mr. Marks' employment agreement expires one year after the
closing date of the merger; and Mr. Glaser's employment agreement expires two
years after the closing date of the merger. Each employment agreement provides
for compensation consisting of an annual base salary and a minimum cash bonus
that is less than the salary under the executive's current agreement with
JWGenesis and is less than his bonus from JWGenesis for the last fiscal year and
(except for Mr. Glaser) his average annual bonus for the last three fiscal
years. Mr. Leeds will be entitled to a base salary of $250,000 per year and to a
minimum annual bonus of $500,000 for the first year and $250,000 for the second
year; he has no guaranteed minimum bonus for the third year. Mr. Leeds' current
base salary is $516,714, his fiscal 1999 bonus was $2,891,347, and his average
annual bonus for the last three fiscal years was $1,702,155. Mr. Marks, whose
new agreement is for one year, will be entitled to a base salary of $200,000 and
a minimum cash bonus of $250,000. Mr. Marks' current base salary is $258,357,
his fiscal 1999 bonus was $1,096,659, and his average annual bonus for the last
three fiscal years was $625,910. Mr. Glaser will be entitled to a base salary of
$150,000 per year and to a minimum annual bonus of
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$175,000 for both years of his new agreement. Mr. Glaser's current base salary
is $258,357, his fiscal 1999 bonus was $278,635, and his average annual bonus
for the last three fiscal years was $154,040.
Each employment agreement provides that the executive will be eligible to
participate in the group benefit and retirement plans that are generally
available to all similarly situated First Union employees in First Union's
retail securities brokerage unit. The agreement for Mr. Leeds also establishes a
specific performance-based incentive plan by which he may earn bonus
compensation significantly above the minimum annual bonus amounts, if he
continues to be employed with First Union and meets the benchmarks included in
the plan (up to a maximum of $2,000,000 per year). No such incentive plan is
provided for either of Messrs. Marks and Glaser. Each of Messrs. Leeds, Marks
and Glaser will be eligible to receive additional bonus amounts in the sole
discretion of First Union.
Each new employment agreement provides that the fiscal year 2000 bonus
payment to be paid in February 2001 to the executive will be determined by First
Union, but that payments to Messrs. Leeds, Marks and Glaser will not be less
than $1,960,912, $843,192 and $161,056, respectively. These amounts are
comparable to those payable under their existing employment agreements and are
based on a calculation made pursuant to our existing bonus plan by annualizing
our operating results for the first two quarters of fiscal year 2000.
Each employment agreement contains provisions entitling First Union to
terminate the agreement for "cause" and entitling the executive to terminate the
agreement for "good reason", both as defined in the agreement. In addition, the
employment agreement contains confidentiality and other covenants that, upon the
termination of the executive for any reason, restricts the executive for
specified time periods from divulging confidential information of First Union or
soliciting First Union clients or employees and, in Messrs. Leeds' and Marks'
cases, competing with First Union in the retail securities brokerage business in
any location in which First Union or its affiliates have offices engaged in the
sale or provision of retail brokerage services.
Each new employment agreement also sets forth the payment to be made for the
termination of the executive's preexisting employment, nonsolicitation, or
related agreements with us. These payments, each of which in the aggregate is
referred to as a "termination payment", will be made in lieu of any and all
future payments due under these agreements and under any preexisting JWGenesis
bonus plan. Each of Messrs. Leeds, Marks and Glaser will receive a termination
payment from First Union in an amount equal to his current base salary for one
year, annualized bonus payment for one year and, in the case of Messrs. Leeds
and Marks, the payment otherwise due to him on January 15, 2001 under his
nonsolicitation agreement. These respective amounts for Messrs. Leeds, Marks and
Glaser are: current base salaries (as adjusted for inflation)--$530,000,
$266,000 and $266,000; annualized bonus payments--$1,961,000, $843,000 and
$161,000; and payments due under nonsolicitation agreements--$533,750, $214,000
and zero. Each executive's termination payment will be made in three equal
installments, payable on the closing date of the merger, the first anniversary
of the closing date, and the 18-month anniversary of the closing date for
Messrs. Leeds and Glaser; and payable on the closing date of the merger, the
six-month anniversary of the closing date, and the 12-month anniversary of the
closing date for Mr. Marks.
The employment agreements entitle each executive to gross-up payments by
First Union, if necessary, to eliminate the effects of any excise tax levied
under Section 4999 of the Internal Revenue Code of 1986 on any payments or
distributions made to Messrs. Leeds, Marks and Glaser. Each executive is also
entitled to reimbursement of reasonable business expenses and to participate in
First Union's directors' and officers' liability insurance.
OWNERSHIP OF STOCK OPTIONS
In the aggregate, our directors and executive officers hold options to
purchase up to 182,336 shares of our common stock at an average exercise price
of $6.50 per share. Under the merger
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agreement, each outstanding option and warrant, whether vested or unvested,
whose exercise price is less than the merger consideration, will be cancelled in
connection with the merger in exchange for a cash payment from First Union equal
to the difference between the merger consideration and the exercise price per
share of that stock option or warrant, less applicable amounts to cover
withholding taxes. As part of that process, these options held by our directors
and executive officers will be cancelled for the same payments to be made to
others who hold such options or warrants. To the extent that we transfer units
to holders of options or warrants in order to help obtain their consent to the
treatment of their options and warrants as described in the merger agreement, as
discussed above under "Treatment of Options and Warrants", we will treat our
directors and officers who hold options on the same basis.
INDEMNIFICATION AND INSURANCE
The merger agreement provides that, for a period of six years after the
closing date of the merger, First Union will cause JWGenesis to indemnify our
directors and officers against liabilities arising out of facts or events
occurring at or prior to the closing date of the merger to the extent that we
are permitted to indemnify our directors and officers under the Florida Business
Corporation Act, our articles of incorporation and our bylaws.
The merger agreement also provides that, for three years after the closing
date of the merger, First Union will use its reasonable best efforts to maintain
JWGenesis' directors' and officers' liability insurance or provide comparable
insurance for our directors and officers. However, if annual premium payments
will exceed 150% of the annual premium payments on our current directors' and
officers' liability insurance, First Union will only be obligated to obtain such
level of directors' and officers' liability insurance as can reasonably be
obtained by paying 150% of the annual premium payment on our current directors'
and officers' liability insurance.
CONDITIONS TO COMPLETION OF THE MERGER
Both First Union's and our obligations to consummate the merger are subject
to the satisfaction or written waiver of the following conditions:
- our shareholders approving the merger agreement;
- receiving the required regulatory and other approvals described below
under the heading "--Regulatory Approvals", without any conditions that
would, following the closing of the merger, have a material adverse effect
on us or the benefits of the merger to First Union in a material way;
- no court or regulatory authority taking any action prohibiting the
merger's consummation;
- the representations and warranties of the other party being true and
correct in all material respects; and
- the other party performing in all material respects all of the obligations
required to be performed by it pursuant to the merger agreement, and
delivering certificates confirming satisfaction of the foregoing;
First Union's obligation to consummate the merger is further conditioned on
our satisfaction or First Union's written waiver of the following conditions:
- the receipt of all required third party consents or approvals other than
those consents or approvals that would not have a material adverse effect
on JWGenesis or on the benefits of the merger to First Union;
- registered representatives accounting for at least 70% of our aggregate
trading commissions for the twelve-months ended July 31, 2000 entering
into independent contractor agreements with
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our subsidiary, JWGenesis Financial Services, for the calendar year 2001
and continuing their customary business functions as of the closing of the
merger;
- the corporate reorganization of our subsidiaries and the distribution of
our interest in MVP.com, Inc.;
- options and warrants for no more than 135,000 shares of our common stock
remaining outstanding as of the closing time of the merger;
- the three employment agreements discussed above under "--Interests of
Certain Persons in the Merger" remaining in full force and effect except
as a result of death or disability; and
- receipt of an opinion from our legal counsel on certain matters in
connection with the distribution of our interest in MVP.com.
No assurances can be provided that all of these conditions can or will be
satisfied or waived by the appropriate party. As of the date of this proxy
statement, neither we nor First Union have reason to believe that any of the
conditions set forth above will not be satisfied.
REGULATORY APPROVALS
Under the provisions of the Hart-Scott-Rodino Antitrust Improvements Act,
the merger may not be completed until the expiration, or early termination, of a
30-day waiting period following the filing of notifications by both First Union
and us with the Department of Justice and the Federal Trade Commission. The
parties filed the notifications on October 20, 2000, and received notification
of early termination on November 8, 2000.
Approvals from or notices to certain other regulatory agencies, such as the
National Association of Securities Dealers, Inc. and state securities
authorities, may also be required to complete the merger, in light of
contemplated changes in the ownership of certain businesses JWGenesis controls.
THE MERGER CANNOT PROCEED IN THE ABSENCE OF THE REQUISITE REGULATORY
APPROVALS. FIRST UNION AND JWGENESIS HAVE FILED OR SHORTLY WILL FILE ALL
APPLICATIONS AND NOTICES, AND WILL PROMPTLY TAKE OTHER APPROPRIATE ACTION, WITH
RESPECT TO ANY REQUISITE APPROVALS OR OTHER ACTION OF ANY REGULATORY AUTHORITY.
THERE CAN BE NO ASSURANCE, HOWEVER, THAT ALL REGULATORY APPROVALS WILL BE
OBTAINED, OR THAT AN APPROVAL WILL NOT CONTAIN A CONDITION THAT CAUSES IT TO
FAIL TO SATISFY THE MERGER AGREEMENT'S CONDITIONS TO CONSUMMATE THE MERGER.
CORPORATE REORGANIZATION
Under the merger agreement, we have agreed to use our reasonable best
efforts to reorganize our existing subsidiaries in a manner approved by First
Union to facilitate operations after the merger. In the reorganization, we will
transfer all employees, independent contractors, client relationships and other
business relations from each of our other broker-dealer subsidiaries to our
subsidiary, JWGenesis Financial Services, Inc. In addition, each of the branch
offices that are currently owned directly by us or one of our broker-dealer
subsidiaries will be reorganized to operate as an independently owned,
affiliated branch office of JWGenesis Financial Services. Thereafter, we will
wind down the operations of each of our broker-dealer subsidiaries, other than
JWGenesis Financial Services, and file with the Securities and Exchange
Commission all necessary documentation to withdraw their broker-dealer licenses.
We have also agreed to use our reasonable best efforts to secure all permits,
licenses, authorizations and approvals, and to make all registrations with any
regulatory authorities that may be necessary for JWGenesis Financial Services to
own and operate the combined businesses in all material respects as presently
conducted. First Union has agreed to promptly and reasonably consider any
requests for waiver of provisions under the merger agreement that are necessary
to effect the reorganization.
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AMENDMENT, WAIVER AND TERMINATION
Prior to the closing date of the merger, any merger agreement provision may
be waived in writing by the party benefiting from the provision. In addition,
any merger agreement provision may be amended or modified by written agreement
between First Union and us, except that, when and if our shareholders approve
the merger agreement, no amendment that would require further shareholder
approval may be made without such approval.
The merger agreement may be terminated and the merger abandoned at any time
before the closing of the merger upon the mutual consent of First Union and
JWGenesis, or as follows:
- by the non-breaching party, if either party fails to, or cannot, cure a
material breach of any of its representations or warranties, or a breach
of its covenants or agreements, contained in the merger agreement within
30 days after written notice;
- by either party, if the merger is not consummated by March 31, 2001;
- by either party, if the merger is not approved by our shareholders;
- by either party, upon receipt of a written notice stating that any
regulatory approval required under the merger agreement will not be
approved or has been denied; or
- by First Union, at any time prior to the special meeting if our board of
directors withdraws, modifies or changes, in a manner materially adverse
to the interests of First Union, its recommendation that our shareholders
approve the merger agreement, or fails to reconfirm any such
recommendation following the receipt of an acquisition proposal from a
third party.
TERMINATION FEE
Under the merger agreement, we will be obligated to pay to First Union a
termination fee of $3.5 million if any of the following events occurs:
- any person other than First Union acquires beneficial ownership of 50% or
more of our outstanding shares of common stock (or 25% if we have
previously breached certain "no shop" provisions in the merger agreement);
- without First Union's consent, we enter into, or recommend that our
shareholders approve, an acquisition transaction with a third-party
involving a merger, a sale of all or substantially all of our assets, or a
purchase of securities representing 25% or more of the voting power of
JWGenesis; or
- any person other than First Union proposes to enter into an acquisition
proposal transaction with us, or commences a tender offer or exchange
offer for shares of our common stock, and our shareholders fail to approve
the merger agreement or the shareholders meeting is not held or is
cancelled.
However, we will not be obligated to pay a termination fee to First Union if
any of the above events occurs after the following:
- termination of the merger agreement as discussed in the section titled
"Amendment, Waiver and Termination" above, except for termination by First
Union following a material breach by us of any representation or warranty
in the merger agreement or our withdrawal, modification or change, in a
manner materially adverse to the interests of First Union, of the
recommendation of our board of directors that our shareholders approve the
merger agreement, and such
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termination occurs prior to any of the following, each of which is
described in the merger agreement as a "preliminary payment event":
- without First Union's consent, our entering into, or recommending that
our shareholders approve, an acquisition agreement with a third-party
for the purchase of securities representing more than 20% of the voting
power of JWGenesis;
- the acquisition by any person other than First Union of beneficial
ownership of 20% or more of our outstanding common stock;
- the proposal, by any person other than First Union, to us or our
shareholders, by public announcement or written communication, to enter
into an acquisition transaction;
- the filing by any person other than First Union of a registration
statement under the Securities Act of 1933, as amended, with respect to
a tender offer or exchange offer for 20% or more of our outstanding
common stock;
- the material breach by JWGenesis of any representation, covenant or
obligation in the merger agreement after an acquisition proposal is
made by any person other than First Union; or
- any person other than First Union proposes to enter into an acquisition
transaction with us or commences a tender offer or exchange offer for
our common stock and our shareholders fail to approve the merger
agreement or the shareholder meeting is not held or is cancelled.
- termination of the merger agreement following the occurrence of one of the
above preliminary payment events and the passage of 18 months from the
date of such termination; or
- termination of the merger agreement by First Union following a material
breach by us of any representation or warranty in the merger agreement or
our withdrawal, modification or change, in a manner materially adverse to
the interests of First Union, of the recommendation of our board of
directors that our shareholders approve the merger agreement and the
passage of 18 months from the date of such termination.
You are encouraged to refer to the merger agreement, which is attached to
this proxy statement as Annex A, for additional specific details regarding the
termination fee.
If our shareholders do not approve the merger agreement, we or First union
may terminate it. If none of the payment events or preliminary payment events
outlined above has occurred before we terminate, First Union's right to a
termination fee would also terminate. However, if either a payment event or a
preliminary payment event had occurred, First Union's right to the fee would
continue as discussed above.
The provisions relating to a termination fee are intended to increase the
likelihood that the merger will be completed. The fee might discourage a party
who otherwise could be interested in acquiring us from proposing an acquisition
because it would increase the cost of an acquisition to an acquiror by the
amount of the fee.
CONDUCT OF BUSINESS PENDING THE MERGER
The following is a general summary of the material agreements that we and
First Union have regarding actions prior to the merger.
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JWGENESIS
We have agreed that we will operate our business in the ordinary course
consistent with past practice through the closing of the merger. In addition, we
have agreed, other than as contemplated in the merger agreement, not to:
- issue any additional shares of our common stock or any rights to acquire
our common stock (except pursuant to already existing rights to acquire
our common stock or similar stock-based employee rights), make any
distributions with respect to our common stock or change our capital
structure;
- enter into or amend any employment-related agreements, grant any salary or
wage increase or increase any employee-related benefits, except in the
ordinary course of business, as required by law, as required by contract
or in connection with new hires;
- enter into or amend, except as may be required by law or except in the
ordinary course of business, any employee related benefit plan or take any
action to accelerate the vesting or exercisability of any benefits payable
under any employee related benefit plans;
- except in the ordinary course of business, acquire or dispose of assets,
business or properties;
- amend our articles of incorporation or by-laws (or similar governing
documents);
- make any change in our accounting principles, practices or methods, other
than as may be required by generally accepted accounting principles;
- enter into, terminate or amend any material contract, except in the
ordinary course of business consistent with past practice;
- settle any claim or proceeding except for claims involving solely money
damages in an amount not to exceed $300,000 in the aggregate (net of
undisputed insurance proceeds);
- knowingly take any action that is intended or reasonably likely to result
in any of our representations and warranties contained in the merger
agreement becoming untrue in any material respect, any of the conditions
to the merger not being satisfied or resulting in a material violation of
any provision of the merger agreement, except as may be required by
applicable law; or
- borrow money other than in the ordinary course of business, or settle or
forgive any indebtedness for borrowed money owed to us.
We have also agreed to a "no shop" provision, which means that we will not
solicit or encourage inquiries or proposals with respect to, or furnish any
nonpublic information relating to or participate in any negotiations or
discussions concerning, any acquisition proposals, including the acquisition or
purchase of all or a substantial portion of our assets, or a substantial equity
interest in us, or any of our subsidiaries or any merger or other business
combination with us or any of our subsidiaries other than as contemplated by the
merger agreement. We agreed to instruct our officers, directors, agents,
advisors and affiliates to refrain from taking any action that would conflict
with the preceding sentence. However, if we are not otherwise in breach or
violation of this nonsolicitation covenant, until our shareholders approve the
merger agreement, our board of directors has a "fiduciary out" under the merger
agreement, pursuant to which we may:
- provide information in response to a written request by a person who has
made an unsolicited bona fide written acquisition proposal and who has
executed a confidentiality agreement; and
- engage in any negotiations or discussions with any person who has made an
unsolicited bona fide written acquisition proposal.
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The actions described in each of the above cases may be taken only to the
extent that our board of directors determines in good faith that the acquisition
proposal made, if accepted, is reasonably likely to be consummated without
significant delay and, if consummated, would result in a transaction more
favorable to our shareholders from a financial perspective than the merger
contemplated with First Union.
We will immediately notify First Union of the receipt of any acquisition
proposal and will promptly notify First Union of any significant actions taken
with respect thereto.
FIRST UNION
First Union has agreed that it will not knowingly take any action that is
reasonably likely to result in any of its representations and warranties being
untrue in any material respect, any conditions to the merger not being
satisfied, or a material violation of any provision of the merger agreement,
except as required by applicable law or regulation.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
The surviving corporation resulting from the merger will be a wholly owned
subsidiary of First Union, and will be called "First Union Genesis
Holdings, Inc." Under the merger agreement, the directors of the surviving
corporation will be the directors of JWG Acquisition Sub who are in office
immediately prior to the closing of the merger, together with any other director
thereafter elected. The officers of the surviving corporation will be the
officers of JWG Acquisition Sub and JWGenesis in office immediately prior to the
closing of the merger, together with any other officers thereafter elected.
POST-MERGER COMPENSATION AND BENEFITS
As soon as administratively practicable after the closing of the merger, our
employees will be generally entitled to participate in the pension, benefit,
welfare, incentive compensation, sick pay, vacation, fringe benefit and other
similar plans of First Union on substantially the same terms and conditions
applied to employees of First Union in its retail securities brokerage unit. For
the purpose of determining eligibility to participate in those plans and the
vesting of benefits, but not for the accrual of benefits, First Union will give
effect to years of service with us, as if that service had been with First
Union.
ADDITIONAL PROVISIONS OF THE MERGER AGREEMENT
CERTAIN REPRESENTATIONS AND WARRANTIES
The merger agreement contains representations and warranties, subject to
certain qualifications, made by us as to, among other things:
- our organization and the organization of our subsidiaries;
- our capital structure;
- our power and authority to carry on business;
- our authorization to enter into the contemplated transactions;
- our consummation of the transactions not constituting a violation of, or
requiring consent under, our organizational documents, contracts and laws;
- the accuracy of our recent Securities and Exchange Commission and other
reports;
- the accuracy of our financial statements;
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- the absence of material changes or events;
- the absence of litigation and regulatory action;
- the absence of undisclosed broker's and finder's fees;
- the absence of undisclosed liabilities;
- our title to properties;
- our compliance with laws;
- our material contracts;
- our employee benefits and labor matters;
- our insurance;
- state takeover laws;
- environmental matters;
- taxes;
- derivatives;
- our accounting controls;
- aggregate trading commissions of our registered representatives for the
twelve-months ended July 31, 2000;
- our intellectual property; and
- our investment advisory activities.
In addition, the merger agreement contains representations and warranties,
subject to certain qualifications, made by First Union as to, among other
things:
- its authorization to enter into the contemplated transactions;
- its consummation of the transactions not constituting a violation of, or
requiring consent under, its organizational documents, contracts and laws;
and
- its access to adequate cash to pay the merger consideration.
OTHER COVENANTS
The merger agreement contains additional agreements relating to, among other
things:
- the preparation, filing, and distribution of this document;
- the recommendation of the merger by our board of directors;
- our convening and holding a meeting of our shareholders as soon as
practicable;
- access to information and cooperation between First Union and us regarding
certain filings with governmental and other agencies and organizations;
and
- public announcements by us and First Union.
EXPENSES AND FEES
Each party will be responsible for any expenses it incurs in connection with
negotiating and consummating the merger.
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LITIGATION INVOLVING THE MERGER
In September and October 2000, R. R. Rothstein, Andy Johnson, GAF Financial
Corporation, Christopher L. Malley, and William and Jane D. Maczko, holders of
shares of our common stock, each filed separate complaints in the Circuit Court
of the 15th Judicial District for Palm Beach County, Florida, against us and our
directors, purporting to represent a class of all current holders of our common
stock, except for the defendants and their affiliates. Each complaint alleges
that, in connection with the proposed merger with First Union, our directors
breached their fiduciary duty to the shareholders of JWGenesis by failing to
determine accurately the value of JWGenesis, by failing to obtain the highest
price reasonably available to the shareholders, and by agreeing to terms and
conditions in the merger agreement that actively discourage our directors from
exploring alternative offers for the acquisition of JWGenesis and its assets
other than by First Union. The GAF Financial Corporation and the Maczko
complaints also allege that our management directors breached their fiduciary
duty by seeking improper personal benefit in connection with the proposed
merger. The complaints seek both preliminary and permanent injunctive relief to
prevent the consummation of the merger; an order directing our directors to
ensure adequately that no conflict of interests exists between them and their
fiduciary obligations to JWGenesis; an order (should preliminary injunctive
relief be unavailable) requiring our directors to adopt a process or procedure
to obtain the highest possible price for JWGenesis shareholders; rescission or
award of damages if the merger is consummated; and an award of attorney's fees
and litigation costs. The Maczko complaint also seeks to impose a constructive
trust in favor of the plaintiffs upon any benefits that are improperly received
by our directors as a result of any wrongful actions. Mr. Rothstein dropped his
complaint in October 2000.
We do not believe these allegations have merit, including for the reasons
discussed above under the heading "Background and Reasons for the Merger", and
we are vigorously defending against them.
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SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table presents information regarding the beneficial ownership
of our common stock as of November 10, 2000 by (1) each person who beneficially
owned more than 5% of our common stock; (2) each of our directors and named
officers; and (3) all current executive officers and directors as a group.
Beneficial ownership is determined under the rules of the Securities and
Exchange Commission.
To our knowledge, except under applicable community property laws or as
otherwise indicated, the persons named in the table have sole voting and sole
investment control with regard to all shares beneficially owned. The address for
each of these persons is c/o JWGenesis Financial Corp. at 980 North Federal
Highway, Suite 310, Boca Raton, Florida 33432.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS(1)
------------------------ ------------------ -------------------
<S> <C> <C>
Marshall T. Leeds(2)........................................ 1,170,709 13.7%
John A. Elway, Jr.(3)....................................... 640,671 7.1%
Joel E. Marks(4)............................................ 535,714 6.3%
Gregg S. Glaser(5).......................................... 151,995 1.8%
Sanford B. Cohen............................................ -- --
All Executive Officers and Directors as a group
(4 persons)(6)............................................ 1,858,417 21.7%
</TABLE>
------------------------
* Less than one percent.
(1) Based on 8,534,431 shares issued and outstanding, and, as to each owner
separately for such owner's percentage, an additional number of shares not
yet outstanding as to which such person has the right to acquire ownership
within 60 days.
(2) Includes 7,538 shares of common stock issuable upon exercise of currently
exercisable stock options.
(3) Includes 525,000 shares of common stock issuable upon the exercise of
currently exercisable stock options.
(4) Includes 3,241 shares of common stock issuable upon exercise of currently
exercisable stock options, 91,981 shares of common stock owned by
Mr. Marks' wife and 149,664 shares of common stock owned by Mr. Marks as
custodian for his minor children.
(5) Includes 30,000 shares of common stock issuable upon the exercise of
currently exercisable stock options and 231 shares of common stock owned by
Mr. Glaser as custodian for his minor children.
(6) Includes an aggregate of 40,779 shares issuable to members of the group
pursuant to currently exercisable stock options; see notes (2), (4) and
(5) above.
APPRAISAL RIGHTS
Under Florida law, holders of stock that is listed on a national securities
exchange as of the record date for determining shareholders eligible to vote on
a merger may not dissent from the merger and demand payment in cash from the
issuing company or the fair value of their stock. As of the record date, our
common stock was listed on the American Stock Exchange, a national securities
exchange. Holders of our common stock, therefore, are not entitled to appraisal
rights under Section 607.1302 of the Florida Business Corporation Act as to
shares of common stock owned by them.
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SHAREHOLDER PROPOSALS
If the merger is consummated, there will be no public shareholders and no
public participation in any future meetings of the surviving corporation's
shareholders. If, however, the merger is not consummated, our shareholders will
continue to be entitled to attend and participate in our shareholders meetings.
If there is a 2001 annual meeting of shareholders, we expect that it will take
place in June 2001. Shareholders who wish to present proposals appropriate for
consideration at our 2001 annual meeting must submit the proposals in proper
form to us at the address set forth on the first page of this proxy statement no
later than January 18, 2001 in order for the proposals to be considered for
inclusion in our proxy statement and form of proxy relating to such annual
meeting. We must be notified of any other shareholder proposal intended to be
presented for action at the meeting not later than 45 days before the day and
month of mailing proxy statements in 2001, which mailing is expected to occur in
May 2001, or else proxies may be voted on such proposal at the discretion of the
person or persons holding those proxies.
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 also
maintains an internet website at http://www.sec.gov that contains reports, proxy
statements and other information.
Statements contained in this proxy statement or in any document incorporated
in this proxy statement by reference as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an annex to this proxy statement or such other document, each such statement
being qualified in all respects by such reference. All information relating to
First Union or JWG Acquisition Sub, Inc. in this proxy statement has been
provided to us by First Union.
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ANNEX A
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 31st day of August, 2000 (as
it may be amended from time to time hereafter, this "Plan"), by and between
JWGENESIS FINANCIAL CORP. (the "Company") and FIRST UNION CORPORATION ("First
Union").
RECITALS:
(A) THE COMPANY. The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Florida, with its
principal executive offices located in Boca Raton, Florida. As of the date
hereof, the Company has 30,000,000 authorized shares of common stock, each of
$.001 par value ("Company Common Stock") and 5,000,000 authorized shares of
Preferred Stock, each of $.10 par value ("Company Preferred Stock") (no other
class of capital stock being authorized), of which 8,560,702 shares of Company
Common Stock and no shares of Company Preferred Stock were issued and
outstanding as of August 11, 2000.
(B) FIRST UNION. First Union is a corporation duly organized and validly
existing in good standing under the laws of the State of North Carolina, with
its principal executive offices located in Charlotte, North Carolina. First
Union is registered as a financial holding company and a bank holding company
under the Bank Holding Company Act of 1956, as amended.
(C) MERGING ENTITY. Promptly as practicable after the date hereof, First
Union shall cause the formation of a wholly-owned subsidiary of First Union,
which shall be incorporated under the laws of the State of Florida (the "Merging
Entity"). The Merging Entity shall be formed solely for the purpose of engaging
in the transactions contemplated by this Plan.
(D) RIGHTS, ETC. Except as Previously Disclosed (as hereinafter defined),
there are no shares of capital stock of the Company authorized and reserved for
issuance, the Company has no Rights (as hereinafter defined) issued or
outstanding and the Company has no commitment to authorize, issue or sell any
such shares or any Rights, except pursuant to this Plan. There are no preemptive
rights in respect of the Company Common Stock.
(E) APPROVALS. The Board of Directors of the Company and First Union each
has approved this Plan and has authorized the execution hereof in counterparts.
(F) VOTING AGREEMENT. As a condition and inducement to First Union's
willingness to enter into this Plan, certain individuals have entered into an
agreement with First Union in the form attached hereto as ANNEX A (the "Voting
Agreement"), pursuant to which such individuals have agreed to vote all shares
of Company Common Stock owned or acquired by them in favor of approval of the
transactions contemplated by this Plan.
(G) RETENTION PROGRAM. First Union and the Company have agreed, in
connection with the transactions contemplated hereby, to establish a retention
program on substantially the terms described herein, the purpose of which is to
retain the services of certain employees and Independent Contractors (as
hereinafter defined) of the Company and the Company Subsidiaries (as hereinafter
defined) following the consummation of the transactions contemplated hereby.
(H) EMPLOYMENT AGREEMENTS. In connection with the transactions
contemplated hereby, certain employees of the Company identified on ANNEX B
hereto have entered into employment agreements with First Union.
In consideration of their mutual promises and obligations, the parties
hereto adopt and make this Plan and prescribe the terms and conditions thereof
and the manner and basis of carrying it into effect, which shall be as follows:
I. THE MERGER.
1.01. THE MERGER. On the Effective Date (as hereinafter defined):
(A) THE CONTINUING CORPORATION. The Merging Entity shall merge with
and into the Company (the "Merger"), the separate existence of the Merging
Entity shall cease and the
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Company (sometimes hereinafter referred to as the "Continuing Corporation")
shall survive the Merger and the name of the Continuing Corporation shall be
"First Union Genesis Holdings, Inc". The Continuing Corporation shall
continue to be governed by the laws of the State of Florida, and the
separate corporate existence of the Continuing Corporation with all its
rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The Merger shall have the effects specified in the
Florida Business Corporation Act (the "FBCA").
(B) ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS; OFFICERS. The
articles of incorporation and by-laws of the Continuing Corporation shall be
those of the Company in effect immediately prior to the Effective Time (as
hereinafter defined). The directors of the Merging Entity in office
immediately prior to the Effective Time shall be the directors of the
Continuing Corporation and the officers of the Merging Entity and the
Company in office immediately prior to the Effective Time shall be the
officers of the Continuing Corporation, in each case, together with such
additional directors and officers as may thereafter be elected, who in the
case of directors shall hold office until such time as their successors are
elected and qualified.
1.02. EFFECTIVE DATE.
(A) If the conditions set forth in SECTIONS 6.01(A) and (B) and 6.03(C)
through (H) have been satisfied or waived in writing on or before January 2,
2001, the effective date (the "Effective Date") of the Merger shall be
January 2, 2001. If those conditions have not been satisfied or waived on
such date, the Effective Date shall occur on such later date as the parties
hereto mutually agree after such conditions are satisfied or waived;
provided, however, that if the parties are not able to agree upon such date,
the Effective Date shall be such date as First Union shall notify the
Company in writing not less than five days prior thereto, which date shall
not be more than 15 days after the satisfaction or waiver of such
conditions. Notwithstanding anything to the contrary in the preceding, the
occurrence of the Effective Date shall be subject to the satisfaction or
written waiver of all of the conditions set forth in ARTICLE VI.
(B) Prior to the Effective Date, the Merging Entity and the Company
shall execute and deliver to the Department of State of the State of
Florida, articles of merger, in accordance with applicable law, specifying
the date and time at which the Merger shall become effective. The time on
the Effective Date at which the Merger becomes effective is referred to as
the "Effective Time".
II. CONSIDERATION.
2.01. CONSIDERATION. Subject to the provisions of this Plan, at the
Effective Time:
(A) OUTSTANDING MERGING ENTITY COMMON STOCK. Each of the shares of
Merging Entity common stock issued and outstanding immediately prior to the
Effective Time shall by virtue of the Merger, become and be converted into
one share of Company Common Stock, which shall be owned by First Union.
(B) OUTSTANDING COMPANY COMMON STOCK. Each share (excluding shares
held by the Company or any Company Subsidiaries or by First Union or any of
its subsidiaries, in each case other than in a fiduciary capacity, in
connection with any market making or proprietary trading activities or as a
result of debts previously contracted ("Excluded Shares")) of Company Common
Stock issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger, automatically and without any action on the part of
the holder thereof, become and be converted into the right to receive,
subject to any adjustment as provided in this SECTION 2.01(B), $12 in cash
(as the same may be adjusted, the "Merger Consideration"). Notwithstanding
the foregoing, if:
(1) registered representatives of the JWG Broker-Dealers (as
hereinafter defined) as of the date hereof and accounting for at least
95% of the Aggregate Production (as hereinafter
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defined) do not both (i) enter into Independent Contractor agreements
with JWGFS (as hereinafter defined) for the calendar year 2001
(substantially in the customary form provided to First Union before the
date of this Plan) on or prior to the Effective Time and (ii) continue as
registered representatives of JWGFS and engage in their customary
business function as of the Effective Time, then the Merger Consideration
shall be reduced to $11; and
(2) registered representatives of the JWG Broker-Dealers as of the
date hereof and accounting for at least 90% of Aggregate Production do
not both (i) enter into Independent Contractor agreements with JWGFS for
the calendar year 2001 (substantially in the customary form provided to
First Union before the date of this Plan) on or prior to the Effective
Time or (ii) continue as registered representatives of JWGFS and engage
in their customary business function as of the Effective Time, then the
Merger Consideration shall be reduced further to $10.00;
provided, however, that a registered representative of any JWG Broker-Dealer as
of the date hereof will be treated as having met the requirements of
clauses (i) and (ii) of SECTIONS 2.01(B)(1) and (2) if, as of the Effective
Time, the registered representative is an employee of First Union or an
affiliate of it.
2.02. STOCKHOLDER RIGHTS; STOCK TRANSFERS. At the Effective Time, holders
of Company Common Stock shall cease to be, and shall have no rights as,
stockholders of the Company, other than to receive the Merger Consideration
provided under this ARTICLE II, without interest. After the Effective Time,
there shall be no transfers on the stock transfer books of the Company or the
Continuing Corporation of the shares of Company Common Stock which were issued
and outstanding immediately prior to the Effective Time.
2.03. PAYING AGENT AND EXCHANGE PROCEDURES.
(A) First Union shall designate First Union National Bank to act as
agent for the exchange of the certificates representing shares of Company
Common Stock for the Merger Consideration upon surrender of the certificates
for the Company Common Stock (the "Exchange Agent"). As soon as reasonably
practicable after the Effective Date, the Exchange Agent will send or cause
to be sent to each former stockholder of the Company of record immediately
prior to the Effective Time, transmittal materials for use in exchanging
such stockholder's certificates for Company Common Stock for the Merger
Consideration. The Merger Consideration will be delivered to such
stockholder only upon delivery to the Exchange Agent of (i) properly
completed and duly executed transmittal materials (in the form provided by
the Exchange Agent) and (ii) the certificates representing all of such
shares of Company Common Stock (or indemnity satisfactory to First Union and
the Exchange Agent, in their judgment, if any of such certificates are lost,
stolen or destroyed). No interest will be paid or shall accrue on the cash
payable upon surrender of any such certificates.
(B) Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Company Common Stock
for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
2.04. EXCLUDED SHARES. Each of the Excluded Shares shall be canceled and
retired at the Effective Time, and no consideration shall be issued in exchange
therefor.
2.05. COMPANY DERIVATIVE SECURITIES. As soon as practicable after the date
of this Plan, the Board of Directors of the Company (the "Company Board") (or,
if appropriate, any committee administering the Previously Disclosed stock
option plans of the Company (the "Company Stock Option Plans")) shall adopt such
resolutions or take or cause to be taken such other actions (if any) as may be
required, including without limitation, amending the Company Stock Option Plans
and/or obtaining any necessary consents or agreements from holders of Company
Options (as hereinafter defined), holders
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of Non-Plan Company Options (as hereinafter defined) and/or holders of warrants
to purchase shares of Company Common Stock (the "Company Warrants"), to provide
that:
(A) each stock option to purchase shares of Company Common Stock
pursuant to a Company Stock Option Plan (each, a "Company Option")
outstanding immediately prior to the Effective Time (whether vested or
unvested) shall be converted, at the Effective Time, into the right to
receive, in lieu of the shares of Company Common Stock theretofore
purchasable upon the exercise of the Company Option, an amount in cash equal
to (i) the excess, if any, of (1) the Merger Consideration over (2) the
exercise price per share of Company Common Stock subject to such Company
Option, multiplied by (ii) the number of shares of Company Common Stock for
which such Company Option shall not theretofore have been exercised. At the
Effective Time, each Company Option with an exercise price equal to or
greater than the Merger Consideration shall be terminated without payment of
any consideration. The Company shall provide to each holder of a Company
Option any required notice under the Company Option;
(B) each Company Warrant outstanding immediately prior to the Effective
Time shall be converted, at the Effective Time, into the right to receive,
in lieu of the shares of Company Common Stock theretofore purchasable upon
the exercise of the Company Warrant, an amount in cash equal to (i) the
excess, if any, of (1) the Merger Consideration over (2) the exercise price
per share of Company Common Stock subject to such Company Warrant,
multiplied by (ii) the number of shares of Company Common Stock for which
such Company Warrant shall not theretofore have been exercised; PROVIDED
that this Section 2.05(B) does not require the Company to modify any put
right Previously Disclosed with respect to any Warrant. At the Effective
Time, each Company Warrant with an exercise price equal to or greater than
the Merger Consideration shall be terminated without payment of any
consideration. The Company shall provide to each holder of a Company Warrant
any required notice under the Company Warrant; and
(C) each stock option to purchase shares of Company Common Stock that
was not issued pursuant to a Company Stock Option Plan (each, a "Non-Plan
Company Option") outstanding immediately prior to the Effective Time
(whether vested or unvested) shall be converted, at the Effective Time, in
the same manner as Company Options pursuant to Section 2.05(A). The Company
has Previously Disclosed each Non-Plan Option outstanding as of the date of
this Plan.
The Company shall consult with First Union in connection with obtaining any
agreement or consent required in connection with this Section 2.05 and shall
from time to time (or at any time at the request of First Union) notify First
Union of the progress thereof. In furtherance of the preceding, the Company
agrees that, to the extent it determines (and under Applicable Law (as
hereinafter defined) is permitted) to allow holders of Company Options and/or
Non-Plan Company Options, as such, to participate directly or indirectly in the
distribution or transfer contemplated by Section 5.10(D), such participation
will be contingent on the holder consenting to the conversion of the holder's
Company Options and Non-Plan Company Options as provided in this Section 2.05.
2.06. RESERVATION OF RIGHT TO REVISE TRANSACTION. First Union may at any
time change the method of effecting the acquisition of the Company (including
without limitation the provisions of this ARTICLE II) if and to the extent it
deems such change to be desirable; PROVIDED, HOWEVER, that no such change shall
(A) alter or change the amount or kind of consideration to be issued to holders
of Company Common Stock as provided for in this Plan, (B) materially impede or
delay receipt of any approval referred to in SECTION 6.01 or the consummation of
the transactions contemplated by this Plan or (C) materially and adversely
affect the tax consequences to holders of Company Common Stock as a result of
receiving the consideration provided for in this Plan.
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III. ACTIONS PENDING CONSUMMATION.
3.01. FORBEARANCES OF THE COMPANY. From the date hereof until the
Effective Time, except as expressly contemplated by this Plan or as Previously
Disclosed (but subject to SECTIONS 5.10 and 5.11), without the prior written
consent of First Union, which consent shall not be unreasonably withheld, the
Company will not, and will cause each of the Company Subsidiaries not to:
(A) ORDINARY COURSE. Conduct the business of the Company and the
Company Subsidiaries other than in the ordinary and usual course or fail to
use reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
clients, customers, suppliers, employees, business associates and any
independent contractors associated with the Company or the Company
Subsidiaries through the Company's or the Company Subsidiaries' affiliated
branch offices (the "Independent Contractors"), or take any action
reasonably likely to have an adverse effect upon the Company's ability to
perform any of its obligations under this Plan, or engage in any new lines
of business. Without limiting the generality of the definition of
"Independent Contractor" in this SECTION 3.01(A), such term shall include
each person that is a registered representative of the Company or any
Company Subsidiary and is not an employee of the Company or a Company
Subsidiary.
(B) CAPITAL STOCK. Other than pursuant to Rights Previously Disclosed
(on SCHEDULE 3.01(B)) and outstanding on the date hereof, (1) issue, sell or
otherwise permit to become outstanding, or authorize the creation of, any
additional shares of capital stock of the Company or any Rights, (2) enter
into any agreement with respect to the foregoing, or (3) permit any
additional shares of capital stock of the Company to become subject to new
grants of employee or director stock options, other Rights or similar
stock-based employee rights.
(C) DIVIDENDS, ETC. (1) Make, declare, pay or set aside for payment
any dividend (other than dividends from wholly owned Company Subsidiaries to
the Company or another wholly owned Company Subsidiary) on or in respect of,
or declare or make any distribution on, any shares of its capital stock or
(2) directly or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of its capital stock.
(D) COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Enter into, amend,
modify or renew any employment, consulting, severance or similar agreements
or arrangements with any director, officer or employee of the Company or any
Company Subsidiary or with any Independent Contractor, or grant any salary,
pay or wage increase or increase any employee benefit (including incentive
or bonus payments), except (1) for normal individual increases in
compensation to employees in the ordinary course of business consistent with
past practice, (2) for other changes that are required by applicable law,
(3) to satisfy Previously Disclosed (on SCHEDULE 3.01(D)) contractual
obligations existing as of the date hereof, or (4) for employment or other
arrangements for, or grants of awards to, newly hired employees or
Independent Contractors in the ordinary course of business consistent with
past practice and, in the case of non-support personnel or personnel with
annual salaries exceeding $50,000, after prior consultation with First Union
(First Union has Previously Disclosed the person with whom the Company shall
consult, subject to change from time to time on notice by First Union
provided in accordance with Section 8.07).
(E) BENEFIT PLANS. Enter into, establish, adopt or amend (except
(i) as may be required by applicable law or (ii) to satisfy Previously
Disclosed (on SCHEDULE 3.01(E)) contractual obligations existing as of the
date hereof or for employment or other arrangements for, or grants of awards
to, newly hired employees or Independent Contractors in the ordinary course
of business consistent with past practice and after prior consultation with
First Union) any pension, retirement, stock option, stock purchase, savings,
profit sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement,
or any
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trust agreement (or similar arrangement) related thereto, in respect of any
director, officer or employee of the Company or any of the Company
Subsidiaries or in respect of any Independent Contractor, or take any action
to accelerate the vesting or exercisability of stock options, restricted
stock or other compensation or benefits payable thereunder.
(F) DISPOSITIONS. Except for the sale of securities or other
investments or assets in the ordinary course of business consistent with
past practice or as Previously Disclosed (on SCHEDULE 3.01(F)), sell,
transfer, mortgage, encumber or otherwise dispose of or discontinue any of
its assets, business or properties.
(G) ACQUISITIONS. Except for the purchase of securities or other
investments or assets in the ordinary course of business consistent with
past practice or as Previously Disclosed (on SCHEDULE 3.01(G)), acquire any
assets, business, securities or properties of any other entity.
(H) GOVERNING DOCUMENTS. Amend the Company's Articles of
Incorporation, by-laws or the charter or by-laws (or similar governing
documents) of any of the Company Subsidiaries.
(I) ACCOUNTING METHODS. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles and after notifying First Union
of any such required change.
(J) CONTRACTS. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract or amend
or modify in any material respect any of its existing material contracts.
(K) CLAIMS. Settle any claim, action or proceeding, except for any
claim, action or proceeding involving solely money damages in an amount,
individually and in the aggregate for all such settlements, not more than
$300,000 (net of the amount of applicable insurance coverage not disputed by
the insurance carrier) and which is not reasonably likely to establish an
adverse precedent or basis for subsequent settlements.
(L) ADVERSE ACTIONS. Knowingly take any action that is intended or is
reasonably likely to (1) result in any of its representations and warranties
set forth in this Plan being or becoming untrue in any material respect
(excluding any materiality provision relating thereto) at any time at or
prior to the Effective Time, (2) result in any of the conditions to the
Merger set forth in ARTICLE VI not being satisfied or (3) result in a
material violation of any provision of this Plan (excluding any materiality
provision relating thereto) except, in each case, as may be required by
applicable law or regulation.
(M) INDEBTEDNESS. (1) Incur any indebtedness for borrowed money
(including indebtedness relating to acquisitions of Company Common Stock)
other than in the ordinary course of business or (2) settle, modify or
forgive any indebtedness for borrowed money owed to the Company (including
indebtedness relating to acquisitions of Company Common Stock).
(N) COMMITMENTS. Agree, commit to or enter into any agreement to take
any of the actions referred to in SECTION 3.01(A) through (M).
3.02. FORBEARANCES OF FIRST UNION. From the date hereof until the
Effective Time, except as expressly contemplated by this Plan, without the prior
written consent of the Company, which consent shall not be unreasonably
withheld, First Union will not, and will cause each of its Subsidiaries not to,
knowingly take any action that is intended or is reasonably likely to
(1) result in any of its representations and warranties set forth in this Plan
being or becoming untrue in any material respect (excluding any materiality
provision relating thereto) at any time at or prior to the Effective Time,
(2) result in any of the conditions to the Merger set forth in ARTICLE VI not
being satisfied or (3) result in a material violation of any provision of this
Plan (excluding any materiality provision relating thereto) except, in each
case, as may be required by applicable law or regulation.
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IV. REPRESENTATIONS AND WARRANTIES.
4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to First Union as follows:
(A) RECITALS. The facts set forth in the Recitals of this Plan with
respect to it are true and correct.
(B) ORGANIZATION, STANDING, AUTHORITY AND REGISTRATIONS. The Company
is duly qualified to do business and is in good standing in the States of
the United States and foreign jurisdictions where its ownership or leasing
of property or the conduct of its business requires it to be so qualified
and in which the failure to be duly qualified, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect (as
hereinafter defined) on the Company. Each of the Company and the Company
Subsidiaries has in effect all federal, state, local, and foreign
governmental authorizations necessary for it to own or lease its properties
and assets and to carry on its business as it is now conducted, except for
such authorizations, the absence of which, individually or in the aggregate,
is not reasonably likely to have a Material Adverse Effect on the Company.
Each of JWGenesis Financial Services, Inc. ("JWGFS"), JWGenesis Securities,
Inc. ("JWG Securities"), JWGenesis Financial Group, Inc. ("JWGFG"),
JWGenesis Capital Markets, Inc. ("JWG Capital Markets"), and DMG Securities,
Inc. ("DMG" and, together with JWGFS, JWG Securities, JWGFG and JWG Capital
Markets the "JWG Broker-Dealers") is duly registered, qualified to do
business and in good standing as a broker-dealer with the Securities and
Exchange Commission (the "SEC"), each of the JWG Broker-Dealers is
registered with the National Association of Securities Dealers, Inc., (the
"NASD"), JWG Securities is a member in good standing of the New York Stock
Exchange, Inc. (the "NYSE"), and each of the JWG Broker-Dealers is a member
in good standing of all other securities and commodities exchanges in which
the conduct of its business requires membership or registration. JWGenesis
Insurance, Inc. and each of the JWG Broker-Dealers is licensed as an
insurance agent in each state or jurisdiction where the conduct of its
business requires it to be so licensed.
(C) SHARES. The outstanding shares of Company Common Stock are validly
issued and outstanding, fully paid and nonassessable, and are subject to no,
and have not been issued in violation of any, preemptive or similar rights.
As of the date hereof, except as Previously Disclosed, there are no shares
of Company Common Stock authorized and reserved for issuance, the Company
does not have any Rights issued or outstanding with respect to Company
Common Stock, and the Company does not have any commitment to authorize,
issue or sell any Company Common Stock or Rights. The number of shares of
Company Common Stock which are issuable and reserved for issuance upon
exercise of Company Options and Company Warrants as of the date hereof are
Previously Disclosed. No holder of Company Common Stock has any right to
dissent to the Merger under the applicable provisions of the FBCA.
(D) COMPANY SUBSIDIARIES.
(1) The Company has Previously Disclosed a list of all the Company
Subsidiaries, including the states in which such Company Subsidiaries are
organized, a brief description of such Company Subsidiaries' principal
activities, and if any of such Company Subsidiaries is not wholly-owned
by the Company or a Company Subsidiary, the percentage owned by the
Company or any Company Subsidiary and the names, addresses and percentage
ownership by any other individual or corporation, partnership, joint
venture, business trust, limited liability corporation or partnership,
association or other organization (each, a "Business Entity"). No equity
securities of any of the Company Subsidiaries are or may become required
to be issued (other than to the Company or a wholly-owned Company
Subsidiary) by reason of any Rights with respect thereto. Except as
Previously Disclosed, there are no contracts, commitments, understandings
or arrangements by which any of the Company Subsidiaries is or may be
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bound to sell or otherwise issue any shares of its capital stock, and
there are no contracts, commitments, understandings or arrangements
relating to the rights of the Company to vote or to dispose of such
shares. All of the shares of capital stock of each Company Subsidiary are
fully paid and nonassessable and subject to no preemptive rights and,
except as Previously Disclosed, are owned by the Company or a Company
Subsidiary free and clear of any liens, encumbrances, charges, security
interests, restrictions (including restrictions on voting rights or
rights of disposition), defaults, or equities of any character or claims
or third party rights of whatever nature (collectively, "Liens"). Each
Company Subsidiary is in good standing under the laws of the jurisdiction
in which it is incorporated or organized, and is duly qualified to do
business and in good standing in each jurisdiction where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified, except where the failure to be duly qualified is not
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company. The term "Company Subsidiary" means each
JWG Broker-Dealer and any Business Entity in which the Company, directly
or indirectly, (i) owns or controls 50% or more of any class of such
entity's voting securities, (ii) in the case of partnerships, serves as a
general partner, (iii) in the case of a limited liability company, serves
as a managing member, or (iv) otherwise has the ability to elect a
majority of the directors, trustees or managing members thereof.
(2) The Company has Previously Disclosed a list of all equity
securities it or a Company Subsidiary holds for its own account and not
in a bona fide fiduciary capacity, as of the date hereof, involving, in
the aggregate, ownership or control of 5% or more of any class of the
issuer's voting securities or 25% or more of the issuer's equity
(treating subordinated debt as equity). The Company has Previously
Disclosed a list of all partnerships, joint ventures or similar entities
in which it or any Company Subsidiary owns or controls an interest and
the nature and amount of such interest.
(E) CORPORATE POWER. The Company and each of the Company Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own or lease all its material properties and assets.
(F) CORPORATE AUTHORITY. Subject to any necessary receipt of approval
by its stockholders referred to in SECTION 6.01(A), each of this Plan and
the transactions contemplated hereby has been authorized by all necessary
corporate action of the Company, and is a valid and binding agreement of the
Company enforceable in accordance with its terms, subject as to enforcement
to bankruptcy, insolvency and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(G) NO DEFAULTS. Subject to the approval by the stockholders of the
Company holding at least a majority of the votes entitled to be cast, the
required regulatory approvals Previously Disclosed, the Previously Disclosed
required filings under federal and state securities and insurance laws and
the Previously Disclosed approvals of the NYSE and any other applicable
exchange of the Merger and the other transactions contemplated hereby, the
execution, delivery and performance of this Plan and the consummation by the
Company of the transactions contemplated hereby, does not and will not
(1) constitute a breach or violation of, or a default under, or cause or
allow the acceleration or creation of a Lien (with or without the giving of
notice, passage of time or both) pursuant to, any law, rule or regulation or
any judgment, decree, order, governmental or non-governmental permit or
license, or agreement, indenture or instrument of it or any of the Company
Subsidiaries or to which the Company or any of the Company Subsidiaries or
its or their properties is subject or bound, which breach, violation,
default or Lien is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on the Company, (2) constitute a breach or
violation of, or a default under, its Articles of Incorporation, charter or
Bylaws, or similar governing documents of the Company or any Company
Subsidiary, or
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(3) require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental or non-governmental permit or license
or the consent or approval of any other party to any such agreement,
indenture or instrument, other than any such consent or approval, which if
not obtained, would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Company.
(H) COMPANY REPORTS. Except as Previously Disclosed, the Company has
timely filed all material reports, registrations, statements and other
filings, together with any amendments required to be made with respect
thereto, that were required to be filed since December 31, 1995 with (1) the
SEC, (2) any applicable federal, state, local or foreign governmental
authorities and (3) the NASD, the NYSE, the American Stock Exchange, Inc.,
the Municipal Securities Rulemaking Board (the "MSRB") or any other
non-governmental self-regulatory agency, commission or authority (a
"Self-Regulatory Body") (all such reports and statements, including the
financial statements, exhibits and schedules thereto, being collectively
referred to herein as the "Company Reports"), including without limitation,
all material reports, registrations, statements and filings required under
the Investment Company Act of 1940 (together with the rules and regulations
thereunder, the "Investment Company Act"), the Investment Advisers Act of
1940 (together with the rules and regulations thereunder, the "Investment
Advisers Act"), the Securities Exchange Act of 1934 (together with the rules
and regulations thereunder, the "Exchange Act"), the Securities Act of 1933
(together with the rules and regulations thereunder, the "Securities Act")
and any applicable state securities or "blue sky" laws. As of their
respective dates (and without giving effect to any amendments or
modifications filed after the date of this Plan with respect to Company
Reports filed before the date of this Plan), each of the Company Reports
complied in all material respects with the statutes, rules, regulations and
orders enforced or promulgated by the Regulatory Authority (as hereinafter
defined) with which they were filed and did not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(I) FINANCIAL STATEMENTS. The Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999, and all other documents filed or to
be filed by the Company or any Company Subsidiary subsequent to
December 31, 1999, under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act, in the form filed with the SEC (in each case, the "Company Financial
Reports"), did not and will not as of their respective dates contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading; and each of the balance sheets in or incorporated by reference
into the Company Financial Reports (including the related notes and
schedules thereto) fairly presents and will fairly present the financial
position of the entity or entities to which it relates as of its date and
each of the statements of income and changes in stockholders' equity and
cash flows or equivalent statements in the Company Financial Reports
(including any related notes and schedules thereto) fairly presents the
results of operations, changes in stockholders' equity and changes in cash
flows, as the case may be, of the entity or entities to which it relates for
the periods set forth therein, in each case in accordance with generally
accepted accounting principles consistently applied during the periods
involved, except in each case as may be noted therein, subject to normal and
recurring year-end audit adjustments in the case of unaudited statements.
(J) ABSENCE OF UNDISCLOSED LIABILITIES. Except as Previously Disclosed
or disclosed in the Company Financial Statements prior to the date hereof,
none of the Company or the Company Subsidiaries has any obligation or
liability (whether accrued, contingent or otherwise), including liabilities
under Environmental Laws (as hereinafter defined), that, individually or in
the aggregate, is reasonably likely to have a Material Adverse Effect on the
Company.
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(K) ABSENCE OF CERTAIN CHANGES. Since December 31, 1999, the business
of the Company and the Company Subsidiaries has been conducted in the
ordinary and usual course, consistent with past practice and there has not
been:
(1) any event, occurrence, development or state of circumstances or
facts which has had or could reasonably be expected to constitute or
result in a Material Adverse Effect on the Company; or
(2) except as Previously Disclosed or disclosed in the Company
Financial Statements prior to the date hereof, any event, occurrence,
development or state of circumstances or facts which would result in a
violation of the covenants set forth in ARTICLE III of this Plan had such
event, occurrence, development or state of circumstances or facts
occurred after the date hereof.
(L) PROPERTIES; SECURITIES. Except as specifically reserved against or
otherwise disclosed in the Company Financial Statements (including the
related notes and schedules thereto) and except for those properties and
assets that have been sold or otherwise disposed of in the ordinary course
of business, and except as Previously Disclosed, the Company and the Company
Subsidiaries have good and marketable title, free and clear of all Liens, to
all of the properties and assets, tangible and intangible, reflected in the
Company Financial Statements as being owned by the Company or the Company
Subsidiaries as of the dates thereof, other than those Liens that,
individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on the Company. The Company and the Company
Subsidiaries do not, directly or indirectly, control any real property not
used in the ordinary course of their business, except as Previously
Disclosed. All buildings and all fixtures, equipment, and other property and
assets which are held under leases or subleases by any of the Company or the
Company Subsidiaries are held under valid leases or subleases enforceable in
accordance with their respective terms, except for instances where the
failure to be so enforceable is not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect on the Company. Each of the
Company and the Company Subsidiaries has good and marketable title to all
securities held by it (except securities sold under repurchase agreements or
held in any fiduciary or agency capacity), free and clear of any Lien,
except to the extent such securities are pledged in the ordinary course of
business consistent with prudent business practices to secure obligations of
each of the Company or any of the Company Subsidiaries. Such securities are
valued on the books of the Company or the Company Subsidiaries in accordance
with generally accepted accounting principles.
(M) LITIGATION; REGULATORY ACTION. Except as Previously Disclosed, (1)
no litigation, proceeding or controversy ("Litigation") before any court,
arbitrator, mediator or Regulatory Authority (as hereinafter defined) is
pending against the Company or the Company Subsidiaries which, individually
or in the aggregate, has or is reasonably likely to have a Material Adverse
Effect on the Company, and, to the Company's knowledge, no such Litigation
has been threatened; (2) neither the Company nor any of the Company
Subsidiaries or properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or a
commitment letter or similar submission to, any federal, state, local,
municipal or foreign governmental agency or authority or Self-Regulatory
Body (the "Regulatory Authorities") charged with the supervision or
regulation of broker-dealers, securities underwriting or trading, stock
exchanges, commodities exchanges, investment companies, investment advisers
or insurance agents and brokers (including without limitation, the SEC, the
Board of Governors of the Federal Reserve System (the "Federal Reserve
Board"), , the NYSE, the NASD, the American Stock Exchange, Inc., the MSRB,
and the Federal Trade Commission) or the supervision or regulation of the
Company or any of the Company Subsidiaries; and (3) neither the Company nor
any of the Company Subsidiaries has been advised by any such Regulatory
Authority that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing or
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requesting) any such order, decree, agreement, memorandum or understanding,
commitment letter or similar submission. Previously Disclosed is a true and
complete list, as of the date hereof, of all Litigation pending or
threatened relating to the Company or any of the Company Subsidiaries or
arising out of any state of facts relating to the sale of investment
products by the Company, the Company Subsidiaries or any employees thereof
or any Independent Contractor (including without limitation, equity or debt
securities, mutual funds, insurance contracts, annuities, partnership and
limited partnership interests, interests in real estate, investment banking
services, securities underwritings in which the Company or any Company
Subsidiary was a manager, co-manager, syndicate member or distributor,
Derivatives Contracts (as hereinafter defined) or structured notes).
(N) COMPLIANCE WITH LAWS. Except as Previously Disclosed:
(1) each of the Company and the Company Subsidiaries, in the conduct
of its respective business (including without limitation, municipal
securities and NASDAQ market-making activities), is in compliance in all
respects with all applicable federal, state, local and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto or to the employees and Independent Contractors
conducting such businesses, and the rules of all Self-Regulatory Bodies
applicable thereto (collectively, "Applicable Law"), except for such
instances of noncompliance which are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on the Company;
(2) each of the Company, the Company Subsidiaries, their respective
officers and employees of any of the preceding and the Independent
Contractors has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Regulatory Authorities that are required in order to permit the
Company and the Company Subsidiaries to own and operate their businesses
as presently conducted and that are material to the business of the
Company and the Company Subsidiaries, taken as a whole; all such permits,
licenses, certificates of authority, orders and approvals are in full
force and effect and, to the Company's knowledge, no suspension or
cancellation of any of them is threatened or reasonably likely; and all
such filings, applications and registrations are current;
(3) None of the Company or the Company Subsidiaries has received a
notification or communication from any Regulatory Authority
(a) asserting that any of them (or any of their respective directors,
officers, employees or controlling persons or any Independent Contractor)
is not in compliance with any of the statutes, rules, regulations or
ordinances which such Regulatory Authority enforces, or has otherwise
engaged in any unlawful business practice, which, as a result of such
noncompliance in any such instance, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company,
(b) threatening to revoke any license, franchise, permit, or governmental
authorization which revocation, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on the Company,
(c) requiring any of them (or any of their respective directors,
officers, employees or controlling persons or any Independent Contractor)
to enter into a cease and desist order, agreement, or memorandum of
understanding (or requiring the board of directors of any of them to
adopt any resolution or policy) or (d) restricting or disqualifying the
activities of the Company or any of the Company Subsidiaries (except for
restrictions generally imposed by rule, regulation or administrative
policy on broker-dealers generally);
(4) To the knowledge of the Company, there is no pending or
threatened investigation, review or disciplinary proceeding by any
Regulatory Authority against the Company, any Company Subsidiary or any
officer, director, employee or Independent Contractor thereof, except for
such investigation, review or disciplinary proceedings which are not
reasonably likely, individually or in the aggregate, to have a Material
Adverse effect on the Company;
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(5) None of the Company, the Company Subsidiaries or, to the
Company's knowledge, any "affiliated person" (as defined in the
Investment Company Act) of any of the preceding is ineligible pursuant to
Section 9(a) or 9(b) of the Investment Company Act to serve as an
investment advisor (or in any other capacity contemplated by the
Investment Company Act) to an Investment Company. None of the Company,
the Company Subsidiaries or any "associated person" (as defined in the
Investment Advisers Act) of any of the preceding is ineligible pursuant
to Section 203 of the Investment Advisers Act to serve as an investment
advisor or as an associated person to a registered investment advisor;
(6) None of the Company, the Company Subsidiaries or, to the
Company's knowledge, any affiliate of any of the preceding is subject to
a "statutory disqualification" as defined in Section 3(a)(39) of the
Exchange Act or is subject to a disqualification that would be a basis
for limitations on the activities, functions or operations of, or
suspension or revocation of the registration of any broker-dealer Company
Subsidiary as a broker-dealer, municipal securities dealer, government
securities broker or government securities dealer under Section 15,
Section 15B or Section 15C of the Exchange Act and, to the Company's
knowledge, there is no reasonable basis for, or proceeding or
investigation, whether preliminary or otherwise, that is reasonably
likely to result in, any such limitations, suspension or revocation;
(7) None of the Company or the Company Subsidiaries is required to be
registered as an investment company, commodity trading advisor, commodity
pool operator, futures commission merchant, introducing broker, or
transfer agent under any federal, state, local or foreign statutes, laws,
rules or regulations;
(8) None of the Company or the Company Subsidiaries, in the conduct
of its business with respect to employee benefit plans subject to
Title I of ERISA (as hereinafter defined), has (a) breached any
applicable fiduciary duty under Part 4 of Title I of ERISA which would
subject it to liability under Sections 405 or 409 of ERISA or
(b) engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975(c) of the Code (as hereinafter
defined) which would subject the Company to liability or Taxes (as
hereinafter defined) under Sections 409 or 502(i) of ERISA or
Section 4975(a) of the Code, except for such instances of the foregoing
which are not reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on the Company;
(9) Each of the Company and the Company Subsidiaries has conducted a
"reasonable investigation" of the business and affairs of each person the
securities of which it has underwritten (within the meaning of
Section 2(11) of the Securities Act) within the three years preceding the
date of this Plan or within the period between the date of this Plan and
the Effective Time; and
(10) None of the Company or the Company Subsidiaries is subject to
regulation under the Investment Company Act. The Company and the Company
Subsidiaries are and, except for instances of noncompliance which are not
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company, each of their employees and each of the
Independent Contractors which are or who are required to be registered as
a broker-dealer, an investment advisor, a registered representative, an
insurance agent or a sales person (or in similar capacity) with the SEC,
the securities or insurance commission of any state or foreign
jurisdiction or any Self-Regulatory Body are duly registered as such and
such registrations are in full force and effect. All federal, state,
local and foreign registration requirements have been complied with in
all material respects and such registrations as currently filed, and all
periodic reports required to be filed with respect thereto, are accurate
and complete in all material respects. The Company has made available to
First Union true and correct copies of (a) each Form G-37/G-38 filed by
the Company (or any predecessor) with the MSRB since
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January 1, 1996, and (b) all records required to be kept by the Company
under Rule G-8(a)(xvi) of the MSRB. There has been no contributions or
payments, and there is not any other information, that would be required
to be disclosed by the Company or any of the Company Subsidiaries under
MSRB rules and regulations, except for noncompliance of the foregoing
which is not reasonably likely, individually or in the aggregate, to have
a Material Adverse Effect on the Company.
(O) CONTRACTS.
(1) MATERIAL CONTRACTS. The Company has Previously Disclosed each
of the following contracts, agreements, commitments, arrangements,
leases, insurance policies, or other instruments to which either the
Company or any Company Subsidiary is a party, or by which any of them is
bound or to which any of their properties or assets is subject (each, a
"Material Contract"):
(i) any contract providing for annual payments in excess of
$50,000 or aggregate payments in excess of $100,000;
(ii) any lease of real property;
(iii) any partnership, joint venture or similar contract, or any
Rights to acquire from any person any capital stock, voting
securities or securities convertible into or exchangeable for capital
stock or voting securities of such person;
(iv) any executory contract relating to the acquisition or
disposition of any business (whether by merger, sale of stock, sale
of assets or otherwise);
(v) any outstanding indenture, mortgage, promissory note, loan
agreement, guarantee or other contract or commitment for the
borrowing of money by the Company or any Company Subsidiary or the
deferred purchase price of property in excess of $50,000 (in either
case, whether incurred, assumed, guaranteed or secured by any asset);
(vi) any license, franchise or similar contract material to the
Company or any Company Subsidiary or any agreement relating to any
trade name or Intellectual Property (as hereinafter defined) that is
material to the Company or any Company Subsidiary;
(vii) any exclusive dealing arrangement or other contract or
arrangement containing covenants which limit the ability of the
Company or any Company Subsidiary to compete in any line of business
or with any person or which involve any restriction of geographical
area in which, or method by which, the Company or any Company
Subsidiary may carry on its business (other than as may be required
by law or any applicable Regulatory Authority);
(viii) any contracts between any affiliate (for purposes of this
SECTION 4.01(O), within the meaning of Rule 144 under the Securities
Act) of the Company, on the one hand, and the Company or any Company
Subsidiary, on the other hand; and
(ix) any other contract that is material to the Company; provided
that any such contract made in the ordinary course of business need
not be Previously Disclosed under this SECTION 4.01(O) unless it is
of the type specified in Item 601(b)(10(ii) of the SEC's
Regulation S-K.
A copy of each such contract has been supplied or made available to
First Union.
(2) DEFAULTS. Except as Previously Disclosed, as of the date
hereof, neither the Company nor any Company Subsidiary is in default
under any Material Contract or any other contract, agreement, commitment,
arrangement, lease, insurance policy, or other instrument to
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which it is a party, by which its respective assets, business, or
operations may be bound or affected, or under which it or its respective
assets, business, or operations receives benefits (each, collectively
with the Material Contracts, a "Contract"), which default, individually
or in the aggregate, is reasonably likely to have a Material Adverse
Effect on the Company, and there has not occurred any event that, with
the lapse of time or the giving of notice or both, would constitute such
a default.
(3) CONTRACTS WITH CLIENTS. Except for instances of noncompliance
with the following representations (SECTION 4.01(O)(3)(A-B)) which would
not be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect on the Company:
(A) Each of the Company and the Company Subsidiaries is in
compliance with the terms of each contract with any customer to whom
the Company or any Company Subsidiary provides services (a "Client"),
and each such contract is in full force and effect with respect to
the applicable Client. There are no disputes pending or, to the
Company's knowledge, threatened with any Client under the terms of
any such contract or with any former Client. The Company has provided
or made available to First Union true and complete copies of the
standard form of all advisory, sub-advisory and similar agreements
with Clients; and
(B) Each extension of credit by the Company or any of the Company
Subsidiaries or, to the knowledge of the Company, by Fiserv Clearing,
Inc. ("Fiserv") or Bear Stearns Clearing, Inc. ("Bear Stearns") to
any Client (i) is in full compliance with Regulation T of the Federal
Reserve Board or any substantially similar regulation of any
Regulatory Authority, (ii) is fully secured, and (iii) the Company or
a Company Subsidiary or, to the knowledge of the Company, Fiserv or
Bear Stearns, as the case may be, has a first priority perfected
security interest in the collateral securing such extension.
(P) NO BROKERS. All negotiations relative to this Plan and the
transactions contemplated hereby have been carried on by it directly with
the other parties hereto and no action has been taken by it that would give
rise to any valid claim against any party hereto or its affiliates for a
brokerage commission, finder's fee or other like payment, excluding a fee
Previously Disclosed to First Union to be paid by the Company to Berkshire
Capital Corporation.
(Q) EMPLOYEE BENEFIT PLANS.
(1) Previously Disclosed is a complete list of all bonus, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock
and stock option plans, all employment or severance contracts, all
medical, dental, health and life insurance plans, all other employee
benefit plans, contracts or arrangements and any applicable "change of
control" or similar provisions in any plan, contract or arrangement
maintained or contributed to by it or any of the Company Subsidiaries for
the benefit of employees, former employees, directors, former directors
or their beneficiaries (the "Compensation and Benefit Plans"). True and
complete copies of all Compensation and Benefit Plans, including, but not
limited to, any trust instruments and/or insurance contracts, if any,
forming a part thereof, and all amendments thereto have been supplied to
First Union.
(2) All "employee benefit plans" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), other than "multiemployer plans" within the meaning of
Section 3(37) of ERISA ("Multiemployer Plans"), covering employees or
former employees of the Company and the Company Subsidiaries (the "ERISA
Plans"), to the extent subject to ERISA, are in substantial compliance
with ERISA. Each ERISA Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified, under Section 401(a) of the
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Code, has received a favorable determination letter from the Internal
Revenue Service with respect to "TRA" (as defined in Section 1 of
Internal Revenue Service Revenue Procedure 93-39), and it is not aware of
any circumstances reasonably likely to result in the revocation or denial
of any such favorable determination letter. There is no pending or, to
its knowledge, threatened litigation relating to the Compensation and
Benefit Plans. Neither the Company nor any of the Company Subsidiaries
has engaged in a transaction with respect to any ERISA Plan that would
subject it or any of the Company Subsidiaries to a tax or penalty imposed
by either Section 4975 of the Code or Section 502(i) of ERISA in an
amount which would be material.
(3) No liability under Subtitle C or D of Title IV of ERISA has been
or is expected to be incurred by it or any of the Company Subsidiaries
with respect to any ongoing, frozen or terminated "single-employer plan",
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity
which is considered one employer with it under Section 4001(a)(15) of
ERISA or Section 414 of the Code (an "ERISA Affiliate"). Neither it nor
any of the Company Subsidiaries presently contributes to a Multiemployer
Plan, nor have they contributed to such a plan within the past five
calendar years. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not
been waived, has been required to be filed for any Pension Plan or by any
ERISA Affiliate within the past 12-month period or will be required to be
filed in connection with the transactions contemplated by this Plan.
(4) All contributions required to be made under the terms of any
Compensation and Benefit Plan have been timely made. Neither any Pension
Plan nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA. Neither it
nor any of the Company Subsidiaries has provided, or is required to
provide, security to any Pension Plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(5) Neither the Company nor its ERISA Affiliates have at any time
sponsored, contributed to, or been obligated under Title I or IV of ERISA
to contribute to a "defined benefit plan" (as defined in ERISA
Section 3(35)). Neither the Company nor its ERISA Affiliates have had an
"obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Section 4001(a)(3)
and 3(37)(A)) on or after September 26, 1980.
(6) Neither the Company nor any of the Company Subsidiaries has any
obligations for retiree health and life benefits under any plan. There
are no restrictions on the rights of the Company or any of the Company
Subsidiaries to amend or terminate any such plan without incurring any
liability thereunder. Except as Previously Disclosed, there has been no
amendment to, announcement by the Company or any of the Company
Subsidiaries relating to, or change in eligibility criteria for employee
participation or coverage under, any Compensation and Benefit Plan which
would increase materially the expense of maintaining such Plan above the
level of the expense incurred therefor for the most recent fiscal year.
(7) Except as Previously Disclosed, neither the execution and
delivery of this Plan nor the consummation of the transactions
contemplated hereby will (a) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of it or any of
the Company Subsidiaries under any Compensation and Benefit Plan or
otherwise from it or any of the Company Subsidiaries, (b) increase any
benefits otherwise payable under any Compensation and Benefit Plan,
(c) result in any acceleration of the time of payment, vesting or funding
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through a grantor trust, or otherwise of any such benefit, or (d) result
in the imposition to the recipient of any excise tax pursuant to
Section 4999 of the Code.
(R) NO KNOWLEDGE. It knows of no reason why the regulatory approvals
referred to in SECTION 6.01(B) should not be obtained without the imposition
of any condition of the type referred to in the proviso following such
SECTION 6.01(B).
(S) LABOR RELATIONS. Each of the Company and the Company Subsidiaries
is in material compliance with all currently applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including, without limitation, the Immigration Reform and
Control Act, the Worker Adjustment and Retraining Notification Act, any such
laws respecting employment discrimination, disability rights or benefits,
equal opportunity, plant closure issues, affirmative action, workers'
compensation, employee benefits, severance payments, labor relations,
employee leave issues, wage and hour standards, occupational safety and
health requirements and unemployment insurance and related matters. None of
the Company or any of the Company Subsidiaries is engaged in any unfair
labor practice and there is no unfair labor practice complaint pending or
threatened against any of the Company or the Company Subsidiaries before the
National Labor Relations Board. Neither it nor any of the Company
Subsidiaries is a party to, or is bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union
or labor organization, nor is it or any of the Company Subsidiaries the
subject of a proceeding asserting that it or any such Company Subsidiary has
committed an unfair labor practice (within the meaning of the National Labor
Relations Act) or seeking to compel it or such subsidiary to bargain with
any labor organization as to wages and conditions of employment, nor is
there any strike or other labor dispute involving it or any of the Company
Subsidiaries, pending or, to the best of its knowledge, threatened, nor is
it aware of any activity involving its or any of the Company Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in any
other organization activity.
(T) INSURANCE. The Company and the Company Subsidiaries are insured
with reputable insurers against such risks and in such amounts as the
management of the Company reasonably has determined to be prudent in
accordance with industry practices. All of the insurance policies, binders,
or bonds maintained by the Company or the Company Subsidiaries are in full
force and effect; the Company and the Company Subsidiaries are not in
default thereunder; and all claims thereunder have been filed in due and
timely fashion. Previously Disclosed is a list of all insurance policies
maintained by or for the benefit of the Company or the Company Subsidiaries
or their directors, officers, employees, agents or independent contractors.
(U) STATE TAKEOVER LAWS; ARTICLES OF INCORPORATION. The Company has
taken all necessary action to exempt this Plan and the transactions
contemplated hereby from, and this Plan and the transactions contemplated
hereby are exempt from, (1) any applicable state takeover laws, including,
without limitation, the provisions of the Florida Control Share Acquisition
Act (FBCA 607.0902), (2) any applicable takeover provisions in the Company's
Articles of Incorporation or by-laws, and (3) except as Previously
Disclosed, any change of control or other takeover provisions set forth in
any agreement to which the Company is a party or may be bound.
(V) NO FURTHER ACTION. The Company has taken all action so that the
entering into of this Plan, and the consummation of the transactions
contemplated hereby (including without limitation the Merger) or any other
action or combination of actions, or any other transactions, contemplated
hereby do not and will not (1) require a vote of stockholders (other than
the affirmative vote of a majority of the votes entitled to be cast by the
holders of shares of Company Common Stock), or (2) result in the grant of
any rights to any person under the Articles of Incorporation, charter or
by-laws of the Company or any Company Subsidiary or under any agreement to
which the Company or any of the Company Subsidiaries is a party (except as
provided in 8.09), or (3) restrict or impair in any way the ability of First
Union to exercise the rights granted hereunder. The
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Company Board has received the opinion of its financial advisors, Berkshire
Capital Corporation, to the effect that the consideration to be received by
the holders of shares of Company Common Stock in the Merger is fair to such
holders from a financial point of view. It is agreed and understood that
such opinion is for the benefit of the Company Board and may not be relied
on by First Union.
(W) ENVIRONMENTAL MATTERS. The Company and the Company Subsidiaries
have obtained and maintained in effect all material licenses, permits and
other authorizations required under all applicable laws, regulations and
other requirements of governmental or regulatory authorities relating to
pollution or to the protection of the environment ("Environmental Laws") and
is in compliance in all material respects with all Environmental Laws and
with all such licenses, permits and authorizations. It has not received
notice of liability to any person, governmental entity or Business Entity
under the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Section 9601 et seq. or any other Environmental Laws with
respect to real property owned or leased by the Company or the Company
Subsidiaries.
(X) TAXES. Except as Previously Disclosed, (1) all reports and returns
with respect to Taxes (as defined below) and Tax related information
reporting requirements that are required to be filed with any taxing
authority or retained by or with respect to it or the Company Subsidiaries,
including without limitation consolidated federal income tax returns of it
and the Company Subsidiaries that are includible therein (collectively, the
"Company Tax Returns"), have been duly filed or in the case of Company Tax
Returns to be retained by the Company or the Company Subsidiaries has
properly completed Company Tax Returns in the Company's or Company
Subsidiaries' files, or requests for extensions have been timely filed and
have not expired, and such Company Tax Returns were true, complete and
accurate in all material respects, (2) all taxes (which shall mean federal,
state, local or foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise, franchise, employment,
premium, recording, documentary, documentary stamps, real estate transfer,
transfer, back-up withholding or similar taxes imposed on the income,
properties or operations of it or the Company Subsidiaries, together with
any interest, additions, or penalties with respect thereto and with respect
to any information reporting requirements imposed by the Code or any similar
provision of foreign, state or local law, together with any interest in
respect of such additions or penalties, collectively the "Taxes") shown to
be due on the Company Tax Returns have been paid in full, (3) the Company
Tax Returns have been examined by the Internal Revenue Service or the
appropriate state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Company Tax Returns were
required to be filed has expired, (4) all Taxes due with respect to
completed and settled examinations have been (or prior to the Effective Time
will be) paid in full, (5) no issues have been raised by the relevant taxing
authority in connection with the examination of any of the Company Tax
Returns which are reasonably likely, individually or in the aggregate, to
result in a determination that would have a Material Adverse Effect on the
Company, except as reserved against in the Company Financial Statements
prior to the date of this Plan, (6) no currently effective waivers of
statutes of limitations have been given by or requested with respect to any
Taxes of the Company or the Company Subsidiaries, (7) none of the Company,
the Company Subsidiaries, First Union or any direct or indirect subsidiary
of First Union, as a consequence of the Company's actions prior to the
Effective Time, will be obligated to make a payment to an individual that
would be a "parachute payment" as such term is defined in Section 280G of
the Code without regard to whether such payment is to be paid in the future
and (8) the Company and the Company Subsidiaries have never been a member of
an affiliated, combined, consolidated or unitary tax group for purposes of
filing any consolidated Company Tax Return, other than, for purposes of
filing U.S. federal income tax returns, groups of which the Company is, and
JWGenesis, Inc. was, the common parent.
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(Y) ACCURACY OF INFORMATION. The statements with respect to the
Company and the Company Subsidiaries contained in this Plan, the Schedules,
the Exhibits, the Annexes and any other written documents executed and
delivered by or on behalf of it (by an authorized officer of the Company)
pursuant to the terms of this Plan (and designated as such) are true and
correct in all material respects, and such statements and documents do not
omit any material fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading.
(Z) ACCOUNTING CONTROLS. Each of the Company and the Company
Subsidiaries has devised and maintained systems of internal accounting
controls sufficient to provide reasonable assurances, that all material
transactions are recorded as necessary to permit the preparation of
financial statements in conformity with generally accepted accounting
principles consistently applied with respect to broker-dealers or any other
criteria applicable to such statements.
(AA) PROPRIETARY RIGHTS. The Company and the Company Subsidiaries have
the right to use the names, servicemarks, trademarks and other intellectual
property (collectively, "Intellectual Property") material to the conduct of
their business, all such Intellectual Property has been Previously
Disclosed, such right of use is free and clear of any Liens and no other
person has the right to use any such Intellectual Property except for
instances which are not reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on the Company.
(BB) INVESTMENT ADVISORY ACTIVITIES.
(1) Except as Previously Disclosed, none of the Company Subsidiaries
provide investment management, investment advisory, sub-advisory,
administration, distribution or certain other services to persons
registered under the Investment Company Act.
(2) Except as Previously Disclosed, none of the Company or any
Company Subsidiary is or has been during the past five years an
"investment adviser" (within the meaning of the Investment Advisers Act),
required to be registered, licensed or qualified as an investment advisor
under the Investment Advisers Act or subject to any material liability or
disability by reason of any failure to be so registered, licensed or
qualified, except for any such failure to be so registered, licensed or
qualified that would not, individually or in the aggregate, reasonably be
likely to have a Material Adverse Effect on the Company.
(CC) DISCRETIONARY ACCOUNTS. Each of the Company and the Company
Subsidiaries has operated its investment accounts for which it has
investment discretion in accordance with the investment objectives and
guidelines in effect for each such investment account, except when lack of
compliance would not be reasonably likely, individually or in the aggregate,
to have a Material Adverse Effect on the Company.
(DD) DERIVATIVES. All exchange-traded or over-the-counter swap,
forward, future, option, cap, floor or collar financial contract or any
other similar arrangement, whether entered into for the Company's account,
or for the account of one or more of the Company Subsidiaries or their
customers (except for transactions entered into by the Company or the
Company Subsidiaries on listed options effected on an agency basis for
customers), were entered into (1) in accordance with prudent business
practices and all applicable laws, rules, regulations and regulatory
policies and (2) with counterparties believed to be financially responsible
at the time; and each of them constitutes the valid and legally binding
obligation of the Company or Company Subsidiary, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors'
rights or by general equity principles), and are in full force and effect,
except to the extent the failure of any of the foregoing is not reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect
on the Company. Neither the
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Company nor a Company Subsidiary, nor to the Company's knowledge any other
party thereto, is in material breach of any of its obligations under any
such agreement or arrangement except for such instances which are not
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Company. As of their respective dates, the Company's
Financial Reports disclose the value of such agreements and arrangements on
a mark-to-market basis in accordance with generally accepted accounting
principles and, since December 31, 1999, there has not been a change in such
value that, individually or in the aggregate, has resulted or is reasonably
likely to result in a Material Adverse Effect on the Company.
(EE) AGGREGATE PRODUCTION. The Company has Previously Disclosed the
correct amount of the aggregate trading commissions earned for the twelve
months ended July 31, 2000 by each registered representative (as of
August 30, 2000) of the Company or any Company Subsidiary. The Company will
update such Previously Disclosed amounts before the close of business on
September 5, 2000 to provide the correct amount of such aggregate trading
commissions for each such registered representative as of the close of
business on the date of this Plan. (To the Company's knowledge, there is no
reason why such update should differ materially from the Previously
Disclosed amounts.) Such updated amounts will be used to determine the
Merger Consideration pursuant to SECTION 2.01(B) and the satisfaction of
SECTION 6.03(E), and the aggregate of all such updated amounts is referred
to in this Plan as the "Aggregate Production"; provided that, if a
registered representative dies or becomes disabled before the Effective
Time, the registered representative will be excluded from the calculation of
Aggregate Production and from the calculations of SECTIONS 2.01(B)
and 6.03(E).
4.02. FIRST UNION REPRESENTATIONS AND WARRANTIES. First Union hereby
represents and warrants to the Company, as follows:
(A) RECITALS. The facts set forth in the Recitals of this Plan with
respect to First Union are true and correct.
(B) CORPORATE AUTHORITY. Subject to the required regulatory approvals
referred to in SECTION 6.01(B), this Plan has been authorized by all
necessary corporate action of First Union and is a valid and binding
agreement of it enforceable against First Union in accordance with its
terms, subject as to enforcement to bankruptcy, insolvency and other similar
laws of general applicability relating to or affecting creditors' rights and
to general equity principles.
(C) NO DEFAULTS. Subject to any required filings under federal and
state securities and insurance laws, and the approvals of the NYSE and the
other securities exchanges referred to in SECTION 4.01(G), of the Merger and
the other transactions contemplated hereby, the execution, delivery and
performance of this Plan, and the consummation of the transactions
contemplated hereby by it, does not and will not (1) constitute a breach or
violation of, or a default under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of it or of any of its subsidiaries or to which it
or any of its subsidiaries or properties is subject or bound, which breach,
violation or default is reasonably likely to have a Material Adverse Effect
on First Union, (2) constitute a breach or violation of, or a default under,
its Certificate of Incorporation or by-laws, or (3) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, or the consent or approval of any other
party to any such agreement, indenture or instrument other than such consent
or approval, which if not obtained, would not be reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on First
Union.
(D) NO KNOWLEDGE. It knows of no reason why the regulatory approvals
referred to in SECTION 6.01(B) should not be obtained without the imposition
of any condition of the type referred to in the proviso following such
SECTION 6.01(B).
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(E) ACCURACY OF INFORMATION. The statements with respect to First
Union contained in this Plan, the Schedules, the Exhibits, the Annexes and
any other written documents executed and delivered by or on behalf of it
pursuant to the terms of this Plan are true and correct in all material
respects, and such statements and documents do not omit any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(F) CAPITAL RESOURCES. First Union has sufficient cash to provide for
payment of the Merger Consideration in accordance with the provisions set
forth on ARTICLE II.
V. COVENANTS.
The Company hereby covenants to First Union, and First Union hereby
covenants to the Company, as applicable, that:
5.01. EFFORTS. Subject to the terms and conditions of this Plan, it shall,
and shall cause its subsidiaries to, use reasonable best efforts in good faith
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or desirable, or advisable under applicable laws, so as
to permit consummation of the Merger as promptly as reasonably practicable and
to otherwise enable consummation of the transactions contemplated hereby and
shall cooperate fully with each other to that end. Without limiting the
generality of the foregoing, the Company agrees to use its reasonable best
efforts, and to cause the Company Subsidiaries to use reasonable best efforts,
to obtain (A) any consents of Clients necessary in connection with the
"assignment" of the Contracts pursuant to which the Company or any Company
Subsidiary provides investment advisory, sub-advisory or management services to
a Client within the meaning of the Investment Advisers Act ("Advisory
Agreements") resulting from the consummation of the Merger; provided that First
Union agrees that other than with respect to any Advisory Agreement which by its
terms expressly requires written consent to its assignment, effective consent to
such "assignment" of an Advisory Agreement may be obtained for all purposes
hereunder and under applicable law by informing such Client of (1) the intention
to complete the Merger, which may result in a deemed assignment of such Advisory
Agreement, (2) the Company's or the Company Subsidiaries' intention to continue
the advisory services pursuant to the existing Advisory Agreement with such
Client after the Effective Date if such Client does not terminate such agreement
prior to the Effective Date, and (3) that the consent of such Client will be
deemed to have been granted if such Client continues to accept such advisory
services for at least 40 days after receipt of such notice without termination,
and (B) the consent or approval of all persons party to a Contract with the
Company, to the extent such consent or approval is required in order to
consummate the Merger and for the Continuing Corporation to receive the benefits
thereof.
5.02. COMPANY PROXY STATEMENT; STOCKHOLDER APPROVAL. As promptly as
reasonably practicable following the date hereof, the Company shall prepare and
file with the SEC a proxy statement (the "Proxy Statement"), and the Company
shall use its reasonable best efforts to respond as promptly as practicable to
any comments of the SEC or its staff with respect thereto and to cause the Proxy
Statement to be mailed to the holders of Company Common Stock in connection with
the transactions contemplated hereby as promptly as practicable following the
date hereof. The Company shall notify First Union upon the receipt of any
comments from the SEC or its staff or any request from the SEC or its staff for
amendments or supplements to the Proxy Statement and shall provide First Union
with copies of all correspondence between the Company and its representatives,
on the one hand, and the SEC and its staff, on the other hand. Notwithstanding
the foregoing, prior to filing or mailing the Proxy Statement (or any amendment
or supplement thereto) the Company (i) shall provide First Union an opportunity
to review and comment on such document or response and (ii) shall include in
such document or response all comments reasonably proposed by First Union. In
connection with the foregoing, the Company shall call a special meeting (the
"Meeting") of the holders of Company
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Common Stock to be held as soon as practicable for purposes of voting upon the
approval of this Plan and the Company shall use its reasonable best efforts to
solicit and obtain votes of the holders of Company Common Stock in favor of the
approval of this Plan. The Company Board shall recommend approval of this Plan
by such holders, unless the Company Board determines in good faith after
consultation with outside legal counsel that withdrawal of its recommendation is
required in order for its directors to comply with their fiduciary duties under
applicable law.
5.03. COMPLIANCE WITH SECURITIES LAWS. The Company shall ensure that the
Proxy Statement and all amendments or supplements thereto (A) will comply in all
material respects with the provisions of the Exchange Act and any other
applicable statutory or regulatory requirements, and (B) will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein not
misleading; PROVIDED, HOWEVER, in no event shall the Company be liable for any
untrue statement of a material fact or omission to state a material fact in the
Proxy Statement made in reliance upon, and in conformity with, written
information concerning First Union or the Merging Entity furnished by or on
behalf of First Union or the Merging Entity specifically for use in the Proxy
Statement.
5.04. PRESS RELEASES. The Company will not, without the prior approval of
First Union (which approval shall not be unreasonably withheld or delayed), and
First Union will not, without the prior approval of the Company (which approval
shall not be unreasonably withheld or delayed), issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, or otherwise publicly disclose the terms and conditions of
such transactions, except as otherwise required by law.
5.05. ACCESS; INFORMATION. (A) Subject to applicable law, upon reasonable
notice, the Company shall afford First Union and its officers, employees,
counsel, accountants and other authorized representatives, access, during normal
business hours throughout the period prior to the Effective Time, to all of its
properties, books, contracts, data processing system files, commitments and
records and, during such period, the Company shall furnish promptly to First
Union (1) a copy of each material report, schedule and other document filed by
the Company and the Company Subsidiaries with any Regulatory Authority, and
(2) all other information concerning the business, properties and personnel of
the Company and the Company Subsidiaries as First Union may reasonably request,
PROVIDED that no investigation pursuant to this SECTION 5.05 shall affect or be
deemed to modify or waive any representation or warranty made by the Company or
the conditions to the obligations of the Company or First Union to consummate
the transactions contemplated by this Plan; and (B) First Union will not use any
information obtained pursuant to this SECTION 5.05 for any purpose unrelated to
the consummation of the transactions contemplated by this Plan and, if this Plan
is terminated, will hold all information and documents obtained pursuant to this
paragraph in confidence (as provided in SECTION 8.06) unless and until such time
as (i) such information or documents become publicly available other than by
reason of any action or failure to act by First Union, (ii) any such information
or document is required by law or applicable published stock exchange rule to be
disclosed, or (iii) First Union determines, in its reasonable discretion, that
such information or document is responsive to any examination or similar request
of a Regulatory Authority charged with supervision of it or any of its
subsidiaries or that prudent business practices require its disclosure to such
Regulatory Authority (subject to prior notice to, and consultation with, the
Company, if the circumstances reasonably permit in light of customary practice
with such Regulatory Authority). In the event of the termination of this Plan,
First Union will, upon request by the Company, deliver to the Company or destroy
all documents so obtained by First Union (except to the extent such information
is incorporated into the minutes of its board of directors or similar corporate
records, in which case it will continue to be held in confidence as provided in
this SECTION 5.05).
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5.06. ACQUISITION PROPOSALS. In the case of the Company, it shall not, and
it shall cause the Company Subsidiaries not to, solicit or encourage inquiries
or proposals with respect to, or furnish any nonpublic information relating to
or participate in any negotiations or discussions concerning, any acquisition or
purchase of all or a substantial portion of the assets of, or a substantial
equity interest in, the Company or any of the Company Subsidiaries or any merger
or other business combination with the Company or any of the Company
Subsidiaries other than as contemplated by this Plan; it shall instruct its and
the Company Subsidiaries' officers, directors, agents, advisors and affiliates
to refrain from taking any action that would violate or conflict with any of the
foregoing; and it shall notify First Union immediately if any such inquiries or
proposals are received by, or any such negotiations or discussions are sought to
be initiated with, the Company or any of the Company Subsidiaries. However,
nothing in this Plan will prevent the Company or the Company Board from
(1) providing information in response to a request therefor by a person who has
made an unsolicited BONA FIDE written proposal for an acquisition or purchase of
the type described in the preceding sentence, if the Company receives from the
person an executed confidentiality agreement on terms substantially similar to
those contained in SECTION 5.05, or (2) engaging in any negotiations or
discussions with any person who has made such an unsolicited BONA FIDE written
proposal, if and only to the extent that, (A) in each such case referred to in
clause (1) or (2), the Company Board determines in good faith (after
consultation with its financial advisor) that the proposal, if accepted, is
reasonably likely to be consummated without significant delay, taking into
account all legal, financial and regulatory aspects of the proposal and the
person making the proposal, and would, if consummated, result in a transaction
more favorable to the holders of shares of Company Common Stock from a financial
point of view than the Merger. If negotiations or discussions are initiated in
accordance with the preceding sentence, the Company agrees that it will notify
First Union immediately and will from time-to-time (or at any time at the
request of First Union) notify First Union of the progress thereof (including
all current terms and any other information that First Union may from
time-to-time request). The Company agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any such acquisition or
purchase. The Company agrees to use all reasonable efforts to enforce any
confidentiality and/or "stand-still" contract to which it is a party and not to
amend, terminate, waive or release any provision of any such contract in a
manner that is material and adverse to its rights under the contract.
5.07. STATE TAKEOVER LAWS; ARTICLES OF INCORPORATION. In the case of the
Company, it shall not take any action that would cause the transactions
contemplated by this Plan to be subject to any applicable state takeover statute
and the Company shall take all necessary steps to exempt (or ensure the
continued exemption of) the transactions contemplated by this Plan from (A) any
applicable state takeover law, as now or hereafter in effect, (B) any applicable
takeover provisions in the Company's Articles of Incorporation or By-laws, and
(C) any takeover provisions set forth in any agreement to which the Company or
any Company Subsidiary is a party or may be bound.
5.08. REGULATORY APPLICATIONS. In the case of each of the parties hereto,
it shall use its reasonable best efforts (A) promptly to prepare and submit
applications to the appropriate Regulatory Authorities for approval of the
Merger, and (B) promptly make all other appropriate filings to secure all other
approvals, consents and rulings which are necessary for the consummation of the
Merger. Each of the parties hereto agrees to cooperate with the other and,
subject to the terms and conditions set forth in this Agreement, use its
reasonable best efforts to prepare and file all necessary permits, consents,
orders, approvals and authorizations of, or any exemption by, all third parties
and regulatory authorities necessary or advisable to consummate the transactions
contemplated by this Agreement, including, without limitation, the regulatory
approvals referred to in SECTION 6.01. Each of the Company and First Union shall
have the right to review in advance, and to the extent practicable each will
consult with the other, in each case subject to applicable laws relating to the
exchange of information, with respect to all written information submitted to,
any third party or any regulatory authorities in connection with the
transactions contemplated by this Plan. In exercising the foregoing right, each
of the parties hereto
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agrees to act reasonably and as promptly as practicable. Each party hereto
agrees that it will consult with the other party hereto with respect to the
obtaining of all material permits, consents, approvals and authorizations of all
third parties and regulatory authorities necessary or advisable to consummate
the transactions contemplated by this Plan and each party will keep the other
party apprised of the status of material matters relating to completion of the
transactions contemplated hereby.
5.09. CURRENT INFORMATION.
(A) During the period from the date of this Plan to the Effective Date,
each of the Company and First Union shall, and shall cause its
representatives to, confer on a regular and frequent basis with
representatives of the other, including without limitation, with respect to
all aspects of the Reorganization (as hereinafter defined).
(B) The Company shall promptly notify First Union of (1) any material
change in the business or operations of the Company or any Company
Subsidiary, including without limitation, any actions with respect to the
Reorganization, (2) any material complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any
Regulatory Authority relating to the Company or any Company Subsidiary,
(3) the institution or the threat of material Litigation involving or
relating to the Company or any Company Subsidiary, or (4) any event or
condition that might be reasonably expected to cause any of the Company's
representations or warranties set forth herein not to be true and correct as
of the Effective Time or prevent the Company from fulfilling its obligations
hereunder; and in each case shall keep First Union informed with respect
thereto.
(C) First Union shall notify the Company of (1) any event or condition
that might reasonably be expected to cause any of First Union's
representations or warranties set forth herein not to be true and correct as
of the Effective Date or prevent First Union from fulfilling its obligations
hereunder and (2) of any denial of any application filed by First Union with
any Regulatory Authority with respect to this Plan, and in each case shall
keep the Company informed with respect thereto.
5.10. COMPANY REORGANIZATION. As promptly as reasonably practicable
following the date of this Plan, the Company shall use its reasonable best
efforts to take all action necessary to effect the Previously Disclosed
reorganization of the Company's and the Company Subsidiaries' operations, in
each case in compliance with Applicable Law (the "Reorganization"). The Company
shall consult with First Union on a regular and frequent basis with respect to
the implementation of the Reorganization, all aspects of which shall be
completed not later than December 31, 2000 and shall be in form and substance
reasonably satisfactory to First Union. First Union recognizes that, in order to
complete the Reorganization, the Company will require the waiver of provisions
of this Plan. First Union agrees to consider promptly and reasonably each
request for such a waiver. If First Union denies a waiver requested in
connection with the Reorganization, the Company and First Union agree to
negotiate in good faith with a view toward permitting the Company to complete
the Reorganization on mutually satisfactory terms in compliance with the terms
of this Section 5.10.
5.11. RETENTION PROGRAM. As promptly as practicable following the date of
this Plan, the Company shall establish a retention program to retain certain key
employees and Independent Contractors of the Company and the Company
Subsidiaries (the "Retention Program"). The total amount of the Retention
Program and the amount allocated to each employee and Independent Contractor has
been Previously Disclosed by the Company. The Form of documentation relating to
the Retention Program (and any waiver or modification of, or consent or similar
action under, any such documentation) shall be subject to First Union's consent
(not to be unreasonably withheld or delayed). If an employee or Independent
Contractor who has been selected to participate in the Retention Program
forfeits the amount (or any portion thereof) allocated to that individual, such
amount (or portion) shall be cancelled and not re-allocated. To the extent that
implementation of the Retention
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Program requires the waiver of provisions of this Plan, First Union agrees to
consider promptly and reasonably each request for such a waiver.
5.12. TERMINATION OF STOCK PURCHASE PLANS. Prior to the Effective Time,
the Company shall suspend all payroll deductions and cash contributions to the
Company's stock purchase plans and shall take all actions necessary to
discontinue and terminate such plans prior to the Effective Time.
5.13. INDEMNIFICATION/LIABILITY COVERAGE.
(A) For six years after the Effective Date, First Union shall cause the
Continuing Corporation to indemnify, defend and hold harmless the present
and former directors, officers and employees of the Company and the Company
Subsidiaries (each, an "Indemnified Party") against all liabilities arising
out of actions or omissions occurring at or prior to the Effective Date
(including, without limitation, the transactions contemplated by this Plan)
to the extent such persons are indemnified under the FBCA and the Company's
Articles of Incorporation and by-laws as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the
defense of any litigation.
(B) First Union shall use its reasonable best efforts to maintain the
Company's existing directors' and officers' liability insurance policy (or a
policy, including First Union's existing policy, providing comparable
coverage amount on terms no less favorable) covering persons who are
currently covered by such insurance for a period of three years after the
Effective Date; PROVIDED, that First Union shall not be obligated to make an
annual premium payment in respect of such policy (or replacement policy)
which exceeds, for the portion related to the Company's directors and
officers, 150% of the annual premium payment on the Company's current policy
in effect as of the date of this Plan; PROVIDED, FURTHER, that if such
coverage can only be obtained upon the payment of an annual premium in
excess of 150% of the annual premium payment of the Company's current
policy, First Union shall obtain such coverage as can reasonably be obtained
by paying a premium of 150% of the annual premium payment of the Company's
current policy in effect as of the date of this Plan.
(C) Any Indemnified Party wishing to claim indemnification under
SECTION 5.13(A), upon learning of such claim, action, suit, proceeding or
investigation, shall promptly notify First Union thereof; PROVIDED, that the
failure so to notify shall not affect the obligations of First Union and the
Continuing Corporation under SECTION 5.13(A) (unless such failure materially
increases First Union's liability under such Section). In the event of any
such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Date), (1) First Union or the Continuing
Corporation shall have the right to assume the defense thereof, if it so
elects, and First Union or the Continuing Corporation shall pay all
reasonable fees and expenses of counsel for the Indemnified Parties promptly
as statements therefor are received; PROVIDED, HOWEVER, that First Union
shall be obligated pursuant to this subsection (C) to pay for only one firm
of counsel for all Indemnified Parties in any jurisdiction for any single
action, suit or proceeding or any group of actions, suits or proceedings
arising out of or related to a common body of facts, (2) the Indemnified
Parties will cooperate in the defense of any such matter, and (3) First
Union shall not be liable for any settlement effected without its prior
written consent.
5.14 CLEARING AGREEMENT. As promptly as practicable following the date of
this Plan, the parties will cause JWGFS and First Clearing Corporation to enter
into a correspondent clearing agreement containing customary terms and
conditions and will negotiate in good faith in that regard.
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VI. CONDITIONS TO CONSUMMATION OF THE MERGER.
6.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of First Union and the Company to consummate the
Merger is subject to the fulfillment or written waiver by First Union and the
Company prior to the Effective Time of each of the following conditions:
(A) STOCKHOLDER APPROVALS. This Plan and the Merger shall have been
duly adopted by the requisite vote of the stockholders of the Company.
(B) REGULATORY APPROVALS. All regulatory approvals required to
consummate the Merger, shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall
have expired; provided, however, no such approvals shall contain any
conditions, restrictions or requirements which First Union reasonably
determines would, following the Effective Time, have a Material Adverse
Effect on the Continuing Corporation or a material adverse effect on the
benefits of the transactions contemplated hereby to First Union.
(C) NO INJUNCTION. No Regulatory Authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Plan.
6.02. CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to consummate the Merger is also subject to the fulfillment or written
waiver by the Company prior to the Effective Time of each of the following
conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of First Union set forth in this Plan shall be true and correct in all
material respects (excluding the effect of any qualification set forth
therein relating to "materiality" or "Material Adverse Effect") as of the
date of this Plan and as of the Effective Date as though made on and as of
the Effective Date (except that representations and warranties that by their
terms speak as of the date of this Plan or some other date shall be true and
correct as of such date), and the Company shall have received a certificate,
dated the Effective Date, signed on behalf of First Union by an officer of
First Union to such effect.
(B) PERFORMANCE OF OBLIGATIONS OF FIRST UNION. First Union shall have
performed in all material respects all obligations required to be performed
by it under this Plan at or prior to the Effective Time, and the Company
shall have received a certificate, dated the Effective Date, signed on
behalf of First Union by an officer of First Union to such effect.
6.03. CONDITIONS TO OBLIGATION OF FIRST UNION. The obligation of First
Union to consummate the Merger is also subject to the fulfillment or written
waiver by First Union prior to the Effective Time of each of the following
conditions:
(A) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company set forth in this Plan shall be true and correct in all
material respects (excluding the effect of any qualification set forth
therein relating to "materiality" or "Material Adverse Effect") as of the
date of this Plan and as of the Effective Date as though made on and as of
the Effective Date (except that representations and warranties that by their
terms speak as of the date of this Plan or some other date shall be true and
correct as of such date), and First Union shall have received a certificate,
dated the Effective Date, signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to such
effect.
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(B) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all obligations required to be performed
by it under this Plan at or prior to the Effective Time, and First Union
shall have received a certificate, dated the Effective Date, signed on
behalf of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company to such effect.
(C) COMPANY THIRD PARTY CONSENTS. The Company shall have obtained the
consent or approval of each individual or Business Entity whose approval
shall be required under any Contract in order to consummate the transactions
contemplated by this Plan, except for those the failure of which to obtain,
individually or in the aggregate, is not reasonably likely to have a
Material Adverse Effect on the Continuing Corporation or a material adverse
effect on the benefits of the transactions contemplated hereby to First
Union.
(D) THE REORGANIZATION. The Reorganization shall have been effected in
accordance with the provisions set forth in SECTION 5.10.
(E) EXISTING REGISTERED REPRESENTATIVES. Registered representatives of
the JWG Broker-Dealers (as hereinafter defined) as of the date hereof and
accounting for at least 70% of the Aggregate Production shall (i) have
entered into Independent Contractor agreements with JWGFS for the calendar
year 2001 (substantially in the customary form provided to First Union
before the date of this Plan) and (ii) continue as registered
representatives of JWGFS and engage in their customary business function as
of the Effective Time; provided, however, that a registered representative
of any JWG Broker-Dealer as of the date hereof will be treated as having met
the requirements of clauses (i) and (ii) of this SECTION 6.03(E) if, as of
the Effective Time, the registered representative is an employee of First
Union or an affiliate of it.
(F) COMPANY DERIVATIVE SECURITIES. The events contemplated by
SECTION 2.05 shall have been effected as set forth therein; PROVIDED that
this Section 6.03(F) will be satisfied if the holders of Company Options,
Non-Plan Company Options and Warrants collectively representing no more than
135,000 shares of underlying Company Common Stock fail to convert as
contemplated by SECTION 2.05(A), (B) and (C).
(G) EMPLOYMENT AGREEMENTS. The Employment Agreements referred to in
RECITAL H of this Plan shall be in effect (other than as a consequence of
death or disability).
(H) MVP.COM DISTRIBUTION. The Company shall have received the opinion
of Kilpatrick Stockton LLP, counsel to the Company, to the effect that any
direct or indirect distribution of its interest in MVP.Com, Inc. was not
required to be registered under the Securities Act or was appropriately
registered (such opinion to be reasonably satisfactory to First Union in
form and substance).
VII. TERMINATION.
This Plan may be terminated prior to the Effective Date, either before or
after receipt of required stockholder approvals:
7.01. MUTUAL CONSENT. By the mutual consent of First Union and the
Company.
7.02. BREACH. By First Union or the Company, in the event of (A) a breach
by the other party of any representation or warranty contained herein, which
breach cannot be or has not been cured within thirty (30) days after the giving
of written notice to the breaching party of such breach (provided that a party
may terminate this Plan pursuant to this SECTION 7.02(A) only with respect to a
breach or breaches that would permit such party not to consummate the Merger
under the standards set forth in SECTION 6.02(A) or SECTION 6.03(A), as the case
may be), or (B) a breach by the other party of any of the covenants or
agreements contained herein, which breach cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching party of
such breach.
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7.03. DELAY. By First Union or the Company, in the event that the Merger
is not consummated by March 31, 2001.
7.04. NO STOCKHOLDER OR REGULATORY APPROVAL. By the Company or First
Union, in the event that any stockholder approval contemplated by
SECTION 6.01(A) is not obtained at the Meeting, including any adjournment or
adjournments thereof, or in the event that written notice is received which
states that any required regulatory approval contemplated by SECTION 6.01(B)
will not be approved or has been denied.
7.05. FAILURE TO RECOMMEND, ETC. At any time prior to the stockholder
approval contemplated by SECTION 6.01(A), by First Union if the Company Board
shall have (i) failed to make its recommendation referred to in SECTION 5.02,
(ii) withdrawn such recommendation, (iii) modified or changed such
recommendation in a manner materially adverse to the interests of First Union,
or (iv) failed to reconfirm such recommendation following the receipt of an
inquiry or proposal of a type referred to in SECTION 5.06 within five business
days after a written request by First Union to do so.
7.06. TERMINATION FEE. (A) The Company hereby agrees to pay First Union and
First Union shall be entitled to payment of, a nonperformance fee (the
"Termination Fee") of $3.5 million following the occurrence of a Payment Event
(as hereinafter defined). Such payment shall be made in immediately available
funds within five business days after delivery of a notice from First Union
requesting such payment. The right to receive the Termination Fee shall
terminate if any of the following (a "Fee Termination Event") occurs prior to a
Payment Event: (i) the Effective Date, (ii) termination of this Plan in
accordance with the provisions hereof if such termination occurs prior to the
occurrence of a Preliminary Payment Event (as defined below), except a
termination by First Union pursuant to SECTION 7.02 or 7.05, (iii) termination
of this Plan following the occurrence of a Preliminary Payment Event and the
passage of eighteen (18) months after such termination, or (iv) termination of
this Plan by First Union pursuant to SECTION 7.02 or 7.05, and the passage of
eighteen (18) months after such termination.
(B) The term "Preliminary Payment Event" shall mean any of the following
events or transactions occurring after the date hereof:
(1) The Company without having received First Union's prior written
consent, shall have entered into an agreement to engage in any
Acquisition Transaction (as hereinafter defined) with any person (the
term "person" for purposes of this SECTION 7.06 having the meaning
assigned thereto in Section 3(a)(9) and 13(d)(3) of the Exchange Act)
other than First Union or any of its subsidiaries or affiliates, or the
Company Board shall have recommended that the stockholders of the Company
approve or accept any Acquisition Transaction with any person other than
First Union or any of its subsidiaries or affiliates. For purposes of
this Plan, "Acquisition Transaction" shall mean (a) a merger or
consolidation, or any similar transaction, involving the Company, (b) a
purchase, lease or other acquisition of all or substantially all of the
assets of the Company, (c) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of securities
representing 20% or more of the voting power of the Company; PROVIDED
that the term "Acquisition Transaction" does not include any internal
merger or consolidation involving only the Company and/or any of the
Company Subsidiaries;
(2) (a) any person other than First Union or any of its subsidiaries
or affiliates shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 20% or more of the outstanding shares of
Company Common Stock (the term "beneficial ownership" for purposes of
this SECTION 7.06 having the meaning assigned thereto in Section 13(d) of
the Exchange Act, or (b) any group (as such term is defined in
Section 13(d)(3) of the Exchange Act), other than a group of which any of
First Union or any of its subsidiaries or affiliates is a member, shall
have been formed that beneficially owns 20% or more of the Company Common
Stock then outstanding;
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(3) any person other than First Union or any of its subsidiaries or
affiliates shall have made a proposal to the Company or its shareholders,
by public announcement or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction
(including, without limitation, any situation in which any person other
than First Union or any of its subsidiaries or affiliates shall have
commenced (as such term is defined in Rule 14d-2 under the Exchange Act)
or shall have filed a registration statement under the Securities Act,
with respect to, a tender offer or exchange offer to purchase any shares
of Company Common Stock such that, upon consummation of such offer, such
person would own or control 20% or more of the then outstanding shares of
Company Common Stock (such offering referred to herein as a "Tender
Offer" or an "Exchange Offer", respectively));
(4) after a proposal is made by a third party to the Company or its
shareholders to engage in an Acquisition Transaction, or such third party
states its intention to the Company to make such a proposal, the Company
shall have breached any representation, covenant or obligation contained
in this Plan and such breach would entitle First Union to terminate this
Plan under SECTION 7.02 (without regard to the cure period provided for
therein unless such cure is promptly effected without jeopardizing
consummation of the Merger); or
(5) the holders of shares of Company Common Stock shall not have
approved this Plan at the Meeting or the Meeting shall not have been held
or shall have been canceled prior to termination of this Plan, in each
case after any person other than First Union or any of its subsidiaries
or affiliates shall have (a) made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction or (b) commenced a
Tender Offer or filed a registration statement under the Securities Act,
with respect to an Exchange Offer.
(C) The term "Payment Event" shall mean either of the following events
or transactions occurring after the date hereof:
(1) the acquisition by any person other than First Union or any of
its subsidiaries or affiliates, alone or together with such person's
affiliates and associates, or any group (as defined in
Section 13(d)(3) of the Exchange Act), of beneficial ownership of 50% or
more of the outstanding shares of Company Common Stock (unless the
Company shall have breached Section 5.06, in which case the percentage
referred to in this SECTION 7.06(C)(1) shall be reduced to 25%); or
(2) the occurrence of a Preliminary Payment Event described in (x)
clause (B)(1) above, except that the percentage referred to in clause (c)
thereof shall be 25%, or (y) clause (B)(5) above.
(D) The Company shall notify First Union promptly in writing of its
knowledge of the occurrence of any Preliminary Payment Event or Payment
Event; PROVIDED, HOWEVER, that the giving of such notice by the Company
shall not be a condition to the right of First Union to the Termination Fee.
VIII. OTHER MATTERS.
8.01. SURVIVAL. SECTION 5.12 and this ARTICLE VIII (OTHER THAN
SECTION 8.10) shall survive the Effective Time. If this Plan is terminated
pursuant to ARTICLE VII prior to the Effective Time, SECTIONS 4.01(Q), 5.05(B),
7.06 AND this ARTICLE VIII (OTHER THAN SECTION 8.10) shall survive such
termination. All other representations, warranties, covenants and agreements in
this Plan will not survive the Effective Time or termination pursuant to Article
VII, PROVIDED that no such termination will relieve any party of any liability
or damages resulting from any willful or intentional breach of this Plan.
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8.02. WAIVER; AMENDMENT. Prior to the Effective Date, any provision of
this Plan may be (A) waived in writing by the party benefiting by the provision
or (B) amended or modified at any time, in either case by an agreement in
writing among the parties hereto approved or authorized by their respective
Boards of Directors and executed in the same manner as this Plan, except that,
after the vote by the stockholders of the Company, no amendment may be made that
requires further approval of such stockholders under applicable law without
obtaining such approval.
8.03. COUNTERPARTS. This Plan may be executed in one or more counterparts,
each of which shall be deemed to constitute an original. This Plan shall become
effective when one counterpart has been signed by each party hereto.
8.04. GOVERNING LAW. This Plan shall be governed by, and interpreted in
accordance with, the laws of the State of North Carolina.
8.05. EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Plan and the transactions contemplated hereby.
8.06. CONFIDENTIALITY. Except as otherwise provided in SECTION 5.05(B),
each of the parties hereto and their respective agents, attorneys and
accountants will maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed.
8.07. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
<TABLE>
<S> <C>
If to First Union,
to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-1207
Telecopy Number: (704) 715-4401
Attention: Donald McMullen
Copy to: First Union Corporation
One First Union Center
Charlotte, North Carolina 28288-0013
Telecopy Number: (704) 374-3425
Attention: Mark C. Treanor
General Counsel
If to the Company,
to: JWGenesis Financial Corp.
980 North Federal Highway, Suite 210
Boca Raton, Florida 33432
Telecopy Number: (561) 338-2727
Attention: Marshall Leeds
Copy to: W. Randy Eaddy, Esq.
Kilpatrick Stockton LLP
1100 Peachtree Street
Atlanta, Georgia 30309
Telecopy Number: (404) 815-6555
</TABLE>
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8.08. DEFINITIONS. Any term defined anywhere in this Plan shall have the
meaning ascribed to it for all purposes of this Plan (unless expressly noted to
the contrary). In addition:
(A) the term "Material Adverse Effect", when applied to a party, means
an event, occurrence or circumstance (including without limitation, any
breach of a representation or warranty contained herein by such party) which
(1) has a material adverse effect on the financial condition, results of
operations, business or prospects of such party and its subsidiaries, taken
as a whole, or (2) would materially impair any party's ability to timely
perform its obligations under this Plan or the consummation of any of the
transactions contemplated hereby; PROVIDED, that a Material Adverse Effect
with respect to a party shall not include events or conditions generally
affecting the securities industry or effects resulting from general economic
conditions (including changes in interest rates), changes in accounting
practices or changes to statutes, regulations or regulatory policies, that
do not have a materially more adverse effect on such party than that
experienced by similarly situated financial services companies, and PROVIDED
FURTHER, a Material Adverse Effect with respect to First Union shall not
include events, occurrences, circumstances, conditions, charges or effects
relating to, or otherwise resulting from, any acquisitions by First Union or
any of its subsidiaries or any dispositions of any of its subsidiaries or
any of First Union's or its subsidiaries' assets or lines of business or any
terminations of, or reductions in, any lines of business;
(B) the term "individually or in the aggregate" as used in ARTICLE IV of
this Plan includes all events, occurrences and circumstances described in
any paragraph of ARTICLE IV, and is not linked to any specific paragraph;
(C) the term "Previously Disclosed" by a party means information set
forth in a Schedule, correspondingly enumerated to the representation,
warranty or covenant to which it relates, that is delivered by such party to
the other party contemporaneously with the execution of this Plan (it being
understood that notwithstanding any other provision herein such information
shall be disclosed in light of the particular standard of "materiality" set
forth in the representation, warranty or covenant to which such information
relates); and
(D) the term "Rights" means securities or obligations convertible into
or exchangeable for, or giving any person any right to subscribe for or
acquire, or any options, calls or commitments relating to, shares of capital
stock (and shall include stock appreciation rights and all similar
derivative rights).
8.09. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Plan and
all Schedules, Exhibits and Annexes hereto represents the entire understanding
of the parties hereto with reference to the transactions contemplated hereby and
supersede any and all other oral or written agreements heretofore made. Nothing
in this Plan, expressed or implied, is intended to confer upon any person, other
than the parties hereto or their respective successors, any rights, remedies,
obligations or liabilities under or by reason of this Plan, except that
Section 5.12 is intended to confer on the persons named therein those rights
expressly stated in such Section.
8.10. EMPLOYEE MATTERS. (a) As soon as administratively practicable after
the Effective Time, employees of the Company and the Company Subsidiaries shall
be generally entitled to participate in the pension, benefit, welfare, incentive
compensation, sick pay, vacation, fringe benefit and similar plans of First
Union, such participation shall be on substantially the same terms and
conditions applied to retail securities brokerage employees of First Union
Securities, Inc. and its subsidiaries from time to time. For the purpose of
determining eligibility to participate in such plans and the vesting of benefits
under such plans (but not for the accrual of benefits under such plans), First
Union shall give effect to years of service with the Company or the Company
Subsidiaries, as the case may be, as if such service had been with First Union
or its subsidiaries. No employee of the Company who elects coverage under a
First Union medical insurance plan shall be excluded from coverage under such
plan (for such
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employee or any other covered person) on the basis of a pre-existing condition
that was not also excluded under the Company's medical insurance plans.
(b) The Company hereby agrees to provide to First Union the federal and
state employment history and data related to the Company, as necessary. The
Company understands that in order to obtain certain favorable state unemployment
rates and any related transfer of state unemployment wage history for optimal
rate calculations, it may be necessary to file certain documents with applicable
state authorities and provide certain payroll data. It is also understood by the
Company that certain states have statutory time limitations for filing such
documents to allow these transfers. The Company hereby agrees to complete such
state unemployment documents and provide such data as is necessary to effectuate
the transfer of unemployment history and unemployment rates in the respective
states, and to execute these documents within the time necessary to complete the
transfer.
8.11. HEADINGS. The headings contained in this Plan are for reference
purposes only and are not part of this Plan.
8.12. INTERPRETATION; EFFECT. When a reference is made in this Plan to
Sections, Exhibits, Annexes or Schedules, such reference shall be to a
Section of, or Exhibit or Annex or Schedule to, this Plan unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Plan, they shall be deemed to be followed by the words "without
limitation". No provision of this Plan shall be construed to require the
Company, First Union or any of their respective Subsidiaries, affiliates or
directors to take any action which would violate applicable law (whether
statutory or common law), rule or regulation.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
<TABLE>
<S> <C> <C>
FIRST UNION CORPORATION
By: /s/ DANIEL J. LUDEMAN
-----------------------------------------
Name: Daniel J. Ludeman
Title: SENIOR VICE PRESIDENT
JWGENESIS FINANCIAL CORP.
By: /s/ MARSHALL LEEDS
-----------------------------------------
Name: Marshall Leeds
Title: PRESIDENT
</TABLE>
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AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This Amendment, made and entered into as of this 24th day of October, 2000
(this "Amendment"), by and among JWGenesis Financial Corp. (the "Company"),
First Union Corporation ("First Union"), and JWG Acquisition Sub, Inc. ("JWG
Acquisition Sub"), amends the Agreement and Plan of Merger, dated as of the
31st day of August, 2000 (the "Plan"), by and between the Company and First
Union.
WHEREAS, the Company and First Union entered into the Plan, pursuant to
which, among other things, First Union agreed to acquire the Company through the
merger (the "Merger") of a wholly-owned subsidiary of First Union (the "Merging
Entity") with and into the Company; and
WHEREAS, First Union agreed to cause the formation of the Merging Entity
after the date of the Plan for purposes of effecting the Merger, and First Union
has formed JWG Acquisition Sub for such purposes; and
WHEREAS, the parties desire to cause JWG Acquisition Sub to become a party
to the Plan;
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereby agree as follows:
1. JWG Acquisition Sub, a Florida corporation and a wholly-owned subsidiary
of First Union, hereby agrees to become a party to the Plan. All references to
the "Merging Entity" in the Plan shall mean "JWG Acquisition Sub, Inc".
2. Except as expressly amended by this Amendment, all terms, conditions and
provisions of the Plan shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
<TABLE>
<S> <C> <C>
FIRST UNION CORPORATION
By: /s/ DANIEL J. LUDEMAN
-----------------------------------------
Name: Daniel J. Ludeman
Title: SENIOR VICE PRESIDENT
JWG ACQUISITION SUB, INC.
By: /s/ DANIEL J. LUDEMAN
-----------------------------------------
Name: Daniel J. Ludeman
Title: SENIOR VICE PRESIDENT
JWGENESIS FINANCIAL CORP.
By: /s/ JOEL E. MARKS
-----------------------------------------
Name: Joel E. Marks
Title: CHIEF OPERATING OFFICER
</TABLE>
A-32
<PAGE>
ANNEX B
FORM OF VOTING AGREEMENT
AGREEMENT, dated as of August 31, 2000, by and between the undersigned
stockholder of JWGenesis Financial Corp. (the "Stockholder") and First Union
Corporation ("First Union").
WHEREAS, the Stockholder is the beneficial owner of and has the right to
vote shares (the "Shares") of common stock, $.001 par value, of JWGenesis
Financial Corp. (the "Company");
WHEREAS, First Union and the Company have entered into an Agreement and Plan
of Merger (the "Plan"), pursuant to which First Union will acquire the Company,
subject to the terms and conditions of the Plan;
WHEREAS, as a condition and inducement to First Union's willingness to enter
into the Plan, the Stockholder has agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the parties hereto agree as follows:
1. The Stockholder shall vote (including by proxy or written consent to
action without a meeting) all the Shares, and any other shares of stock of the
Company owned or controlled by him or her entitled to be voted, in favor of the
Plan and the transactions contemplated thereby. The Stockholder also agrees
that, to the extent he has authority or power to vote or direct the voting of
any additional Shares, he shall vote or direct the voting of such Shares in
favor of approval of the Plan.
2. The Stockholder agrees that he will not sell or transfer any Shares to
any other party unless such party enters into an agreement, satisfactory to
First Union, to abide by all the terms of this Agreement.
3. The parties hereto agree that this Agreement shall terminate and be of
no further force and effect if the Plan is terminated in accordance with its
terms.
4. The Stockholder represents and warrants to First Union as follows:
(i) the Stockholder has good title to the Shares and owns the Shares
free and clear of any rights, claims, encumbrances, liens, interests or
restrictions of any nature whatsoever, including, without limitation, any
restrictions on the voting of the Shares or any rights of others to vote, or
to participate (including by consultation) in the voting of, the Shares;
(ii) this Agreement is a valid and legally binding agreement enforceable
against the Stockholder in accordance with its terms, subject to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and
(iii) the execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby by the Stockholder, do
not and will not constitute a breach or violation of, or a default under,
any law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of the Stockholder
or to which the Stockholder is subject or bound, or require any consent or
approval under such law, rule, regulation, judgment, decree, order,
governmental permit or license or the consent or approval of any other party
to any such agreement, indenture or instrument.
5. The Stockholder hereby agrees that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed by the
Stockholder in accordance with their specific terms or were otherwise breached.
Accordingly, the Stockholder agrees that First Union shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement by the
Stockholder and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which First Union may be entitled at law or in
equity.
1
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<PAGE>
6. This Agreement shall be governed and construed in accordance with the
laws of the State of North Carolina without regard to any applicable conflicts
of law rules.
7. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to constitute an original. This Agreement shall become
effective when one counterpart has been signed by each party hereto.
IN WITNESS WHEREOF, the parties have caused this instrument to be executed
as of the day and year first above written.
<TABLE>
<S> <C> <C>
FIRST UNION CORPORATION
By:
-----------------------------------------
Name:
Title:
---------------------------------------------
(the Stockholder)
</TABLE>
2
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<PAGE>
ANNEX C
BERKSHIRE CAPITAL CORPORATION
535 MADISON AVENUE - 19TH FLOOR - NEW YORK, NEW YORK 10022
TEL.: (212) 207-1000 FAX: (212) 207-1019
www.berkcap.com
Board of Directors August 31, 2000
JWGenesis Financial Corp.
900 North Federal Highway
Boca Raton, Florida 33432
Gentlemen:
You have advised us that, pursuant to an Agreement and Plan of Merger (the
"Agreement") to be dated as of August 31, 2000, by and between First Union
Corporation, a North Carolina corporation ("FTU"), and JWGenesis Financial
Corp., a Florida corporation ("JWG" or the "Company"), a wholly-owned subsidiary
of FTU will be merged with and into the Company (the "Transaction"). You have
further advised us that pursuant to the Agreement, at the closing of the
Transaction, each issued and outstanding share of JWG common stock will be
converted into the right to receive between $10.00 to $12.00 in cash (the
"Transaction Consideration"), depending on the level of broker production
retained as of the closing date. The terms and conditions of the Transaction are
set forth in more detail in the Agreement, a copy of which you have provided for
us.
You have requested our opinion as to whether the Transaction Consideration
to be received in the Transaction by the shareholders of JWG is fair to the
shareholders of JWG from a financial point of view, as of the date hereof.
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and financial information relating to JWG;
(ii) reviewed certain internal financial information and other data provided to
us by the management of JWG relating to the business and prospects of JWG,
including financial projections for JWG; (iii) conducted discussions with
members of the senior management of JWG concerning the operations of JWG,
historical financial information of JWG, future prospects of JWG and other
matters relating to JWG; (iv) reviewed the Agreement; (v) reviewed the financial
terms, to the extent publicly available, of certain acquisition transactions
which we considered relevant; (vi) reviewed publicly available financial and
securities market data pertaining to certain publicly held companies in lines of
business we considered to be generally comparable to those of JWG; (vii) based
upon the direction of JWG management, contacted and spoken to a number of
potential buyers including FTU; and (viii) conducted such other financial
studies, analyses and investigations, and considered such other information we
deemed necessary and appropriate.
In conducting our review and arriving at our opinion, with your consent, we
have not assumed any responsibility for independent verification of any of the
foregoing information. We have, with your consent, relied upon the information
described in the preceding paragraph (exclusive of the information referred to
in clauses (vii) and (viii) and financial projections and information concerning
future prospects of JWG referred to in clause (ii)) being complete and accurate
in all material respects, and have relied upon the assurances of the members of
management of JWG that they are unaware of any facts that would make the
information or projections provided to us incomplete or misleading. We have not
been requested to make, and have not made, an independent evaluation or
appraisal of any assets or liabilities (contingent or otherwise) of JWG or any
of its affiliates, nor have we been furnished with any such evaluation or
appraisal. Further, we have assumed, with your consent, that all of the
information prepared by the management of JWG provided to us for purposes of
this opinion,
1
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<PAGE>
Board of Directors August 31, 2000
JWGenesis Financial Corp. Page 2
including the projections for JWG, was prepared in good faith and on a basis
reflecting the best currently available estimates and judgments of the
management of JWG as to the future financial performance of JWG, and the
assumptions underlying such projections were viewed by management as being
reasonable at the time made. We have not undertaken any independent legal
analysis of the Transaction, any related transactions, the Agreement or any
legal or regulatory proceedings pending or threatened related to JWG. We have
not been asked to, and do not, express any opinion as to the after-tax
consequences of the Transaction to the shareholders of JWG. In addition, our
opinion is based on economic, monetary and market conditions existing on the
date hereof. We have assumed that the Transaction will be consummated on the
terms described in the Agreement without any waiver of any material terms or
conditions by the shareholders of JWG.
In rendering this opinion, we are not rendering any opinion as to the value
of JWG as a whole or making any recommendations to the board of directors of JWG
or any shareholders of JWG with respect to the advisability of approving,
recommending or voting in favor of the Transaction.
Berkshire Capital Corporation, as part of its investment banking business,
is engaged in the business of providing financial advisory services with regard
to mergers and acquisitions. We have acted as financial adviser to JWG in
connection with the Transaction, have received retainer fees for such services,
and will receive a fee for our services which is contingent upon the
consummation of the Transaction. In addition, JWG has agreed to reimburse us for
our reasonable expenses, including attorneys' fees, and to indemnify us against
certain liabilities that may arise out of this assignment, including the
rendering of this opinion. Berkshire Capital Corporation has provided, and may
from time to time in the future provide, investment banking services to FTU and
its subsidiaries.
This opinion is for the use and benefit of the Board of Directors of JWG and
is rendered to the Board of Directors of JWG in connection with its
consideration of the Transaction. This letter is not to be used for any other
purpose, or reproduced, disseminated, quoted to or referred to at any time or in
any manner, in whole or in part, without our written consent; provided, however,
that this letter may be included in its entirety in any proxy statement to be
distributed to the holders of JWG common stock in connection with the
Transaction.
Based upon and subject to the foregoing, we are of the opinion that the
Transaction Consideration to be received in the Transaction by the shareholders
of JWG is fair to the shareholders of JWG from a financial point of view, as of
the date hereof.
<TABLE>
<S> <C> <C>
Very truly yours,
BERKSHIRE CAPITAL CORPORATION
By: /s/ RICHARD D. MILES
-----------------------------------------
Richard D. Miles
Managing Director
</TABLE>
2
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<PAGE>
JWGENESIS FINANCIAL CORP.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 12, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Special Meeting of
Shareholders and revoking all prior proxies, hereby appoints MARSHALL T. LEEDS
and JOEL E. MARKS, and each of them, attorneys or attorney of the undersigned,
with full power of substitution in each of them, for and in the name of the
undersigned, to attend the Special Meeting of Shareholders of JWGenesis
Financial Corp. (the "Company") to be held at the Sheraton of Boca Raton,
2000 N.W., 19th Street, Boca Raton, Florida on December 12, 2000 at 12:00 p.m.,
Eastern Time, and any postponement or adjournment thereof, and to vote and act
upon the following matters in respect to all shares of common stock of the
Company that the undersigned will be entitled to vote or act upon, with all
powers the undersigned would possess, if personally present.
<TABLE>
<S> <C>
1. APPROVAL OF THE AGREEMENT AND PLAN OF MERGER, DATED AS OF
AUGUST 31, 2000, AND AMENDED AS OF OCTOBER 24, 2000, BY AND
BETWEEN JWGENESIS FINANCIAL CORP. AND FIRST UNION
CORPORATION (THE "AGREEMENT").
/ / FOR APPROVAL OF THE AGREEMENT
/ / AGAINST APPROVAL OF THE AGREEMENT
/ / ABSTAIN WITH RESPECT TO APPROVAL OF THE AGREEMENT
2. IN ACCORDANCE WITH THEIR BEST JUDGMENT WITH RESPECT TO ANY
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY POSTPONEMENT, ADJOURNMENT, OR ADJOURNMENTS THEREOF.
</TABLE>
<PAGE>
The shares represented by this Proxy will be voted as directed by the
undersigned and indicated herein. IF NO DIRECTION IS GIVEN WITH RESPECT TO THE
APPROVAL OF THE AGREEMENT, THIS PROXY WILL BE VOTED "FOR" THE APPROVAL OF THE
AGREEMENT, AND THE PROXIES IN THEIR DISCRETION WILL VOTE ON SUCH OTHER BUSINESS
AS MAY BE PROPERLY COME BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT OR
ADJOURNMENTS THEREOF.
Attendance of the undersigned at the Special Meeting or any postponement or
adjournment thereof will not be deemed to revoke this Proxy unless the
undersigned shall affirmatively indicate at such meeting the intention of the
undersigned to vote such shares in person.
<TABLE>
<S> <C>
Dated: ---------------------------------------------------,
2000
(BE SURE TO DATE THE PROXY)
------------------------------------------------------------
Signature
------------------------------------------------------------
Print Name
If shares are held by more than one owner, each must sign.
Executors, administrators, trustees, guardians, and others
signing in a representative capacity should give their full
titles.
</TABLE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN ABOVE
AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
