SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14A-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
meVC Draper Fisher Jurvetson Fund I, Inc.
(Name of Registrant as Specified In Its Charter)
Millenco, L.P.
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule
14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.............................................................................................
2) Aggregate number of securities to which transaction applies:
.............................................................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
.............................................................................................
4) Proposed maximum aggregate value of transaction:
.............................................................................................
5) Total fee paid:
.............................................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ....................................
2) Form, Schedule or Registration Statement No.: ................................
3) Filing Party: ..............................................
4) Date Filed: ................................................
PROXY SOLICITATION IN OPPOSITION
TO THE BOARD OF DIRECTORS OF
MEVC DRAPER FISHER JURVETSON FUND I, INC. (D/B/A MVC CAPITAL)
SOLICITATION STATEMENT OF
MILLENCO, L.P.
---------
This proxy statement and the accompanying GREEN proxy card are being
furnished to you as a holder of common stock of meVC Draper Fisher Jurvetson
Fund I, Inc., d/b/a MVC Capital (the "Fund") in connection with the Fund's 2003
annual meeting of shareholders which is scheduled for February 28, 2003. The
Fund has set February 6, 2003 as the record date for shareholders entitled to
notice of and to vote at the annual meeting. Millenco, L.P. ("Millenco"), the
soliciting shareholder, is soliciting your proxy for a slate of directors who it
will nominate in opposition to the candidates for director who are proposed by
the Fund's current board of directors. Millenco is also soliciting proxies in
favor of the two shareholder proposals.
Millenco, together with its affiliates, owns a total of 1,099,500
shares of common stock, representing 6.7% of the Fund's outstanding common
stock. We are the Fund's largest shareholder. Millenco is a Delaware limited
partnership, which is a broker-dealer and member of the American Stock Exchange.
The general partner of Millenco is Millennium Management, LLC, a Delaware
limited liability company ("Millennium"). The sole manager of Millennium is
Israel A. Englander. The principal office of Millenco, Millennium and Mr.
Englander is 666 Fifth Avenue, New York, New York 10103. Millennium Partners
L.P., the parent of Millenco, together with its affiliates, is a $3.7 billion
multi-strategy private investment fund.
MILLENCO'S INTERESTS ARE ALIGNED WITH YOURS
Millenco has invested more than $10 million in the Fund. One of our nominees,
George W. Karpus, is the principal of Karpus Investment Management, which, on
behalf of both Mr. Karpus and its clients, has invested more than $6 million in
the Fund. As shareholders of the Fund, our interests are aligned with your
interests.
On March 27, 2002, the Fund's shareholders voted overwhelmingly not to
renew the investment advisory contract between the Fund and the investment
advisory company run by the Fund's CEO, John Grillos. Since then, the other four
directors have resigned, but Mr. Grillos refuses to leave voluntarily.
On December 16, 2002, the Delaware Chancery Court held that Mr.
Grillos' election as a director in 2001 was illegally procured through the use
of a materially false and misleading proxy statement. On January 16, 2003,
except for Mr. Grillos, all of the Fund's directors resigned. As a result, none
of the Fund's incumbent nominees for directors has ever been properly elected as
directors by the shareholders.
In the six weeks since the court order, Mr. Grillos dramatically
increased the Fund's rate of investment, reducing the Fund's cash by more than
$23 million, expanded the size of the board from five to seven directors and
nominated seven directors, including himself, for election at this meeting.
Under Mr. Grillos' management, since the Fund's launch, shareholders have
endured a steady decline in the Fund's cash, net asset value and stock price.
Because all of the Fund's directors are being elected at this meeting,
you, the Fund's shareholders, have the ability to liberate our company and
install management whose only goal will be create value for all of the Fund's
shareholders. This election may be your last chance to have your voice heard and
to make a substantive and immediate impact on the future direction of the Fund.
At the annual meeting, Millenco will nominate the seven individuals
named under the caption "Election of Directors (Proposals 1, 2 and 3)" in this
proxy statement. Millenco's nominees for directors are experienced individuals
who will act in the best interests of the Fund's shareholders.
MVC'S POOR PERFORMANCE RECORD
MVC's investment performance has been remarkably poor. The Fund's IPO
price was $20 per share, and currently is trading in the range of $8.25 per
share, a 59% loss. Since launch, MVC's cumulative return on INVESTED CAPITAL as
of the October 31, 2002 year end was -70.0%, including fees and expenses. As a
point of contrast, the Private Equity Performance Index (PEPI) produced by the
National Venture Capital Association (NVCA) indicates that the cumulative return
from September 2000 to September 2002 for late stage venture capital funds was
-30.9%.
In terms of realized investments, MVC has achieved a return of -76.7%.
The following table shows the investments that were realized, with investment
cost and realized loss.
REALIZED
COMPANY COST REALIZED LOSS RETURN
InfoUSA $10,000,000 $3,300,000 -33.0%
EXP Systems $10,000,000 $8,000,000 -80.0%
Personic $10,760,460 $10,760,460 -100.0%
InfoImage $2,356,690 $2,356,690 -100.0%
IQDestination $3,520,000 $3,520,000 -100.0%
Annuncio $5,000,000 $3,400,000 -68.0%
MediaPrise $2,000,000 $2,000,000 -100.0%
========================= =========== ===========
TOTAL $43,637,150 $33,337,150 -76.4%
The shares of MVC have traded at a significant discount to net asset
value ("NAV") since inception. According to data provided by Bloomberg, the
average weekly discount between MVC's share price and NAV from June 2000 until
January 2003 has been 35%. For most of this period the shares have traded below
the level of MVC's uninvested cash. If elected, Millennium's nominees will
consider the elimination of the discount a high priority.
-2-
A NEW DIRECTION
The strategy of our board, if elected, is to appoint a seasoned
investment advisor capable of creating enhanced value for shareholders by
running the Fund as a more traditional business development company, which we
envision will include the following:
o Investing in a more diverse portfolio of companies across a
variety of industries, in contrast to the current's management's
strategy of investing solely in Internet and information
technology companies;
o Investing in income-producing mezzanine and debt securities of
more mature companies;
o Increasing the dividend of the Fund in order to return cash to
shareholders in real time.
Our nominees, if elected, will submit whatever investment management
plan it endorses to the Fund's shareholders for their approval, a pledge made in
stark contrast to the efforts by current management to circumvent the
shareholder approval process.
IMPROVE MVC'S CORPORATE GOVERNANCE
If Millenco's nominees are elected, one of the first matters on the
board's agenda will be the elimination of the anti-shareholder provisions that
exist in the Fund's charter. Millenco believes that these provisions are not in
the best interests of the shareholders. Millenco recognizes that the repeal of
anti-shareholder provisions cannot all be implemented without further
shareholder approval, but the board intends to take all steps necessary to
accomplish this objective.
The specific shareholder-friendly courses of action that the Millenco
nominees will, if elected, seek to implement are:
o The elimination of a classified board. Presently, directors are
elected at staggered terms of three years, with approximately
one-third of the board being elected each year. Millenco's
nominees for director, if elected, will approve the elimination of
classified directors, subject to shareholder approval. If the
proposal is approved, the shareholders will vote for all directors
each year. In the interim, all of Millenco's nominees have agreed
not to serve for more than one year without approval by the Fund's
shareholders. In this manner, the board will be more responsive to
the shareholders.
o The elimination of supermajority voting rights. The Fund's
certificate of incorporation provides that any adoption, amendment
or repeal of our by-laws will require the approval of at least
two-thirds of the total number of the Funds' authorized directors,
irrespective of any vacancies that may exist on the board of
directors at the time, or the holders of at least two-thirds of
the then outstanding shares of capital stock entitled to vote on
the matter. This provision makes it more difficult to amend the
Fund's certificate of incorporation, including an
-3-
amendment to eliminate the classified board.
o Amend the by-laws to make it easier for shareholders to call a
special meeting of shareholders. Shareholders have no power to
call a special meeting of shareholders. If Millenco's nominees are
elected, they will adopt resolutions to amend the by-laws and
certificate of incorporation to permit the holders of 5% of the
outstanding common stock to call a special meeting of
shareholders. This is Proposal 4 on your proxy.
Under the Fund's certificate of incorporation, a vote of two-thirds of
the common stock will be required to implement these three courses of action
once they are adopted by the new directors.
You can change your vote at any time prior to the time the polls for
voting for directors are closed. Only your latest dated proxy card will be
voted.
If your shares are held in a brokerage account, you MUST instruct your
broker as to how you want your shares voted. YOUR BROKER CANNOT VOTE YOUR SHARES
WITHOUT YOUR INSTRUCTIONS.
We urge you to vote FOR Millenco's nominees for election as director
(Proposals 1, 2 and 3) and FOR the two shareholder proposals (Proposals 4 and 5)
by signing and dating the GREEN proxy card and returning it in the enclosed
envelope today.
ELECTION OF DIRECTORS (PROPOSALS 1, 2 AND 3)
There will be three separate votes for each of the three classes of
directors. Two directors will be elected for a term that continues until the
2004 annual meeting (Proposal 1), two directors will be elected for a term that
continues until the 2005 annual meeting (Proposal 2) and three directors will be
elected for a term that continues until the 2006 annual meeting (Proposal 3).
Shareholders will vote on each class of directors separately, and,
provided that there is a quorum, the nominees for each class who receive the
most votes for each class will be elected.
It is the intention of the persons named on the enclosed GREEN proxy
card to nominate and vote for the election of the persons listed below. Millenco
knows of no reason why any of these nominees will be unable to serve, but in the
event of any such inability, the proxies received will be voted for such
substituted nominees as Millenco may recommend.
Millenco will nominate the following individuals as directors of the
Fund:
For two directors with a term ending in 2004*:
Gerald Hellerman
Robert Knapp
For two directors with a term ending in 2005*:
Bruce Shewmaker
-4-
George Karpus
For three directors with a term ending in 2006*:
Emil Dominianni
Terry Feeney
Robert Everett
---------------
* The certificate of incorporation presently provides that the directors are
elected for three-year terms, with the terms of the two directors expiring
in each of 2004 and 2005 and the terms of three directors expiring in 2006.
EACH OF THE MILLENCO NOMINEES FOR DIRECTORS HAS AGREED THAT, UNTIL THE
CERTIFICATE OF INCORPORATION IS AMENDED TO ELIMINATE THE CLASSIFIED BOARD,
HE WILL SERVE AS A DIRECTOR AS IF HE WERE ELECTED FOR A ONE-YEAR TERM AND
WILL NOT USE THE DEVICE OF THE CLASSIFIED BOARD TO ENTRENCH HIMSELF IN
OFFICE. THUS, IF THEY ARE ELECTED AT THIS MEETING, THE MILLENCO NOMINEES
WILL, AT THE 2004 ANNUAL MEETING, AND EACH YEAR THEREAFTER, GIVE THE FUND'S
SHAREHOLDERS THE OPPORTUNITY TO CHOOSE TO RE-ELECT ANY OR ALL OF THE
MEMBERS OF THE BOARD OF DIRECTORS.
Set forth below is information concerning Millenco's nominees,
including their age and principal occupation.
GERALD HELLERMAN, 65, has been the principal of Hellerman Associates, a
financial and corporate consulting firm, since he founded the firm in 1993.
Present clients of Hellerman Associates include the U.S. Department of Justice
and the National Oceanic and Atmospheric Administration, a unit of the U.S.
Department of Commerce. Mr. Hellerman served with the Securities and Exchange
Commission as a financial analyst from 1962 until 1967 and a branch chief from
1967 to 1972. From 1972 until 1976 he served as special financial advisor to the
United States Senate Subcommittee on Antitrust and Monopoly, and from 1976 until
1993 he was chief financial analyst of the Antitrust Division of the U.S.
Department of Justice. Mr. Hellerman has served as a trustee or director of
Third Avenue Value Trust from 1993 until 2002, and trustee of Third Avenue
Variable Series Trust from 1999 until 2002. He is a director and president of
The Mexico Equity and Income Fund, a position he has held since 2001. He also
serves as a director of Innovative Clinical Solutions, Inc., a company that
holds an investment in a privately-owned clinical knowledge company in the
neuropsychiatric illness field, and Frank's Nursery & Crafts, Inc., which
operates the nation's largest chain of lawn and garden retail stores. During the
past five years, he also served as a director of Clemente Global Growth Fund,
Inc. Mr. Hellerman received his B.A. in economics and an M.B.A. from the
University of Massachusetts.
ROBERT C. KNAPP, 36, has been a managing director of Millennium
Partners for more than five years. Mr. Knapp specializes in identifying
undervalued assets and turnaround situations. He successfully led Millennium's
effort to restructure the International Biotechnology Trust in 2000, and
represented Millennium on the creditors committee that helped achieve a dramatic
turnaround in the African mining company Ashanti Goldfields in 2002. In 2001 and
2002, he served as a director of Vietnam Frontier Fund, a Cayman Islands
investment company. Mr. Knapp received his B.Sc. in electrical engineering from
Princeton University and his B.A. in philosophy, politics and economics from
-5-
Oxford University.
BRUCE W. SHEWMAKER, 57, is managing director of Crossbow Ventures Inc.,
a non-registered investment management company, and is a vice president of
Crossbow Venture Partners Corp., the general partner of Crossbow Venture
Partners LP, a licensed small business investment company, positions he has held
since he co-founded Crossbow in 1999. The Crossbow management company is
responsible for $160 million in capital commitments. From 1999 until 2001, he
was also a managing director of E*Offering Corp., an investment banking firm
which merged into Wit SoundView Group in 2000. From 1997 to 1998, he was
president and a director of The U.S. Russia Investment Fund, Inc., an
international private equity and debt fund. The US Russia Investment Fund had
$440 million in committed capital from the US government. Mr. Shewmaker is a
director of three companies in which Crossbow Equity Partners or its affiliates
has an investment - Berdy Medical Systems, Inc., an electronic patient record
software company, eMotion, Inc., a digital media management software company,
and ResQNet.com, Inc., a web-enabling legacy solutions company. During the past
five years he also served as a director of two other Crossbow portfolio
companies - Atlantis Technologies, Inc., a water technology holding company, and
Direct Capital Markets, Inc., an electronic financial services company. Mr.
Shewmaker is also a co-founder and director of Infrared Imaging Systems, Inc., a
medical devices company. During the past five years he also served as a general
partner of ML Oklahoma Venture Partners, L.P. and several of The U.S. Russia
Investment Fund's portfolio companies operating in Russia. Mr. Shewmaker
received his B.S. in finance from The Ohio State University.
GEORGE W. KARPUS, 56, is president and chief executive officer of
Karpus Management, Inc. d/ba/ Karpus Investment Management, a registered
investment advisor with approximately $700 million under management that he
founded in 1986. Karpus Investment Management specializes in investing in
closed-end funds and its portfolio includes approximately $400 million of
investments in closed-end investment companies. He also is a general partner of
Apogee Partners, L.P., Garnsey Partners, L.P., Canalview Partners, L.P. and
Fixed Income Yield Plus Partners, L.P., which are private investment
partnerships. From 1984 to 1986, Mr. Karpus was a senior vice president and
investment officer at Q.C.I. Mr. Karpus received his B.S. in physics from St.
Lawrence University and attended RPI Management School.
EMIL A. DOMINIANNI, 71, is a retired partner of, and is currently a
consultant to, the law firm of Coudert Brothers LLP, where he was a partner
concentrating in corporate finance, acquisitions and corporate taxation matters,
from 1965 until 1997, during which time he served on Coudert's Executive
Committee for 10 years, and served as special counsel from 1998 until 2001. He
is also a consultant to Air Liquide America Corp., an industrial gas
corporation. Mr. Dominianni is director and secretary of American Air Liquide,
Inc. and Air Liquide International Corp, and a director of Mouli Manufacturing
Corp., a kitchen utensil supply company. Mr. Dominianni is a certified public
accountant. He served as a staff sergeant in the in the United States Army 1950
and 1951 and fought in the Korean war. Mr. Dominianni received his B.S. and J.D.
from Fordham University and his LLM in Taxation from New York University School
of Law.
TERRY FEENEY, 45, is vice chairman and chief operating officer of
Millennium Partners, positions he has held since June 2001. From May 1994 until
June 2001, he was a managing director and chief administrative officer of
Millennium Partners. Prior to joining Millennium Partners, Mr. Feeney was an
-6-
audit partner in the financial services division of Ernst & Young, LLP,
specializing in broker dealers. In 2002, Mr. Feeney served as a director of
Vietnam Frontier Fund, an investment fund. From December 1996 until 1998 he was
a director of Horowitz Rae, Inc., a privately-owned printing company in which he
was an investor. Horowitz Rae filed for bankruptcy in November 1998. Mr. Feeney
graduated summa cum laude with a B.S. in accounting from Fordham University. Mr.
Feeney is a CPA and member of the American Institute of Certified Public
Accountants and the Securities Industry Association. Mr. Feeney's experience
encompasses more than 20 years in securities operations.
ROBERT S. EVERETT, 39, is a managing director Everett & Solsvig, Inc.,
a firm that assists equity and debt holders who own positions in troubled
companies, that he co-founded in 2001. He is currently serving as chief
restructuring officer of Cornerstone Propane Partners, L.P., a propane
distribution company, and is also an officer of its subsidiary, Cornerstone
Propane, L.P. He, together with his partner, are heading an effort to sell the
company. Prior to Everett & Solsvig, Mr. Everett was a founder of Kulen Capital,
L.P., a middle market private investment fund. Kulen Capital was formed in 1997
to purchase investments in eight companies from Merrill Lynch Capital Corp.
While at Kulen Capital, Mr. Everett refinanced senior debt holdings,
restructured mezzanine investments and executed add-on acquisitions. Prior to
joining Kulen Capital, Mr. Everett was a vice president at Merrill Lynch Capital
Corp., where he was responsible for managing debt and equity investments in the
firm's $1.2 billion, 60 company portfolio. Mr. Everett represented Merrill Lynch
Capital Corp. on eleven company boards, and specialized in the oversight of
workout and turnaround situations. He received a B.A. in economics from Harvard
College and an M.B.A. from Harvard Business School.
Millenco has entered into agreements with its nominees for director
pursuant to which the nominees agreed to be Millenco's nominees, and Millenco
agreed to indemnify them against liability which they may incur relating to
their nomination or election. If the nominees are elected, the indemnification
provisions applicable to directors under the Fund's certificate of
incorporation, by-laws and Delaware law will replace Millenco's indemnity.
BENEFICIAL OWNERSHIP OF SECURITIES BY MILLENCO'S NOMINEES
Set forth below is information relating to the beneficial stock
ownership of Millenco and its nominees for election as directors as of January
15, 2003:
Name No of Shares Percentage
---- ------------ ----------
Millennium Partners, L.P. 1,099,500 6.7%
Millennium USA, L.P.
Millennium Global Estate, L.P.
Millennium International, Ltd.
Millenco, L.P.
c/o Millennium Management LLC
666 Fifth Avenue
New York, NY 10103
-7-
Name No of Shares Percentage
---- ------------ ----------
Robert Knapp 1,099,500 6.7%
666 Fifth Avenue
New York, NY 10103
Terry Feeney 1,099,500 6.7%
666 Fifth Avenue
New York, NY 10103
George W. Karpus 641,831 3.9%
Emil Dominianni 1,000 *
Bruce Shewmaker 100 *
Robert S. Everett -0- 0%
Gerald Hellerman -0- 0%
All nominees as a group 1,742,431 10.6%
--------------
* Less than 1%.
Millenco is a Delaware limited partnership. Millennium USA, L.P.,
Millennium International, Ltd. and Millennium Global Estate, L.P. are investment
funds that are limited partners of Millennium Partners, L.P. The general partner
of Millennium Partners, L.P. is Millennium Management, LLC. As of January 23,
2003, the shares owned by these companies are as follows:
Name Shares
---- ------
Millennium USA, L.P. 434,771
Millennium International, Ltd. 334,729
Millenco, L.P. 184,300
Millennium Global Estate, L.P. 145,700
---------
1,099,500
The shares listed as being owned by Robert Knapp and Terry Feeney are
the shares that are owned by Millenco and its affiliates. Since Mr. Knapp and
Mr. Feeney, by virtue of their positions with Millennium Partners, have joint
voting and disposition right with respect to the 1,099,500 shares owned by
Millenco and its affiliates, they may also be deemed to beneficially own these
shares, and they may be deemed to be interested directors. However, they
disclaim beneficial interest in these shares. Neither Mr. Knapp nor Mr. Feeney
owns any shares of the Fund's common stock individually.
George W. Karpus owns 6,000 shares personally. The Karpus Investment
Management profit sharing fund owns 3,400 shares of common stock, of which Mr.
Karpus is a co-trustee. Clients of Karpus Investment Management hold 631,831
shares of common stock. Mr. Karpus has either direct or indirect shared
authority to vote and dispose of the shares of common stock owned by the clients
of Karpus Investment Management.
-8-
None of Millenco's nominees has engaged in any business or other
transactions with the Fund.
Millenco has proposed the adoption of Proposal No. 4, and George W.
Karpus has proposed the adoption of Proposal No. 5. Both proposals are advisory.
Millenco sued the Fund and its directors in the Chancery Court of
Delaware alleging breach of the directors' fiduciary duty for making materially
false and misleading statements in its proxy statements. On December 19, 2002
and January 8, 2003, the court granted judgment to Millenco and ordered the Fund
to hold a meeting of shareholders by February 28, 2003 for the purpose of
electing directors to fill the three positions for the directors who were
elected as a result of the misleading proxy statements. This meeting was called
in response to the court's order.
PROPOSAL 4: SHAREHOLDER PROPOSAL
Millenco has submitted the following proposal (the "Millenco Proposal")
for inclusion in this Proxy Statement.
RESOLVED: That the shareholders of meVC Draper Fisher Jurvetson
Fund I, Inc. ("Company"), recommend that the Company's board of directors
take all steps necessary to amend the Company's By-laws to include the
provision set forth below, granting shareholders the limited right to call
special meetings of shareholders, and that the Company's officers and
Board of Directors take all steps necessary to effectuate, and to enable
the shareholders to vote to approve the same amendment to the certificate
of incorporation:
"Any shareholder owning at least 5% of the outstanding common
stock of the Company may demand that the Company's Chairman, Vice
Chairman, Chief Executive Officer or President call a special meeting of
shareholders. The demand shall be in writing and shall state the
purpose(s) of the special meeting. Within five (5) business days of the
Company's receipt of the demand, the officer(s) upon whom the demand is
made shall call such meeting to be held at the Company's principal office
in the United States, on a date within not less than ten (10) nor more
than sixty (60) days after the record date for such meeting. The record
date shall be fixed as of a date not less than fifteen (15) nor more than
thirty (30) days after the date the demand is received."
This proposal is advisory, which means that it is not binding on the
Fund. It expresses the view of the shareholders that they consider it important
that shareholders have the right to call a special meeting.
The certificate of incorporation and by-laws permit only the chairman,
vice chairman, chief executive officer or president of the Fund to call special
meetings of shareholders. The Fund has stated in its proxy statement that it has
amended the by-laws to provide that the holders of 15% of the outstanding common
stock may request that the board of directors call a special meeting. The
certificate of incorporation and by-laws purport to grant shareholders the right
to vote to make certain amendments, but the provision depriving shareholders of
the right to call a special meeting to vote on such amendments makes the right
almost meaningless.
At the 2002 annual meeting, shareholders voted not to renew the
investment advisory agreement with meVC Advisers and the investment sub-advisory
agreement with Draper Advisers. One of the key
-9-
terms of the new agreements which Millenco highlighted in its solicitation in
opposition to the agreements was that, if approved, the new agreements could be
renewed in the future by the board of directors without a vote of shareholders,
in contradiction to historical practice. However, after the Fund's shareholders
rejected the new agreements, rather than recruit new investment advisers and
submit new investment advisory agreements to shareholders for their approval,
the Board of Directors, all of whom were appointed by principals of meVC
Advisers and Draper Advisers, hired executives and employees of meVC Advisers
and Draper Advisers to manage the Company internally.
A shareholder with 5% of the outstanding stock of the Fund has a
sufficient stake in the Fund that it should have the right to call a special
shareholders meeting. Millenco, together with its affiliates, owns 6.7% of the
Fund's common stock, for which it has invested more than $10 million. The board
of directors, collectively, owns less than 0.1%.
Millenco recommends that you execute the GREEN proxy card FOR the
Millenco Proposal.
PROPOSAL 5: SHAREHOLDER PROPOSAL
Karpus Investment Management, Inc. d/b/a Karpus Investment Management,
of which George W. Karpus, one of Millenco's nominees for director, is
president, chief executive officer and chief investment officer, has submitted
the following proposal (the "Karpus Proposal").
RESOLVED: In each year where the fund discount averages over ten percent,
meVC Draper Fisher Jurvetson Fund I (MVC) will conduct a tender offer for
25 percent of the outstanding shares at an amount equal to 95 percent of
the NAV.
This proposal is also advisory, which means that is it not binding on
the Fund. Millenco supports the approval of the Karpus Proposal. Millenco
believes that the shareholders' vote in favor of the proposal will convey to the
board the shareholders' dissatisfaction with the present policies of the board
that have resulted in the common stock trading at a significant discount from
net asset value. Millenco has included Mr. Karpus as one of its nominees for
director. The nominees recognize that the board of directors will not be bound
to make the tender offer.
Millenco recommend that you execute the GREEN proxy card FOR the Karpus
Proposal.
ADDITIONAL INFORMATION
Millenco has engaged the services of Innisfree M&A Incorporated to
assist it in soliciting proxies. Innisfree will be paid a fee of up to $125,000,
plus reasonable out-of-pocket expenses. Innisfree will employ a staff of
approximately 20 persons in connection with this solicitation. The solicitation
will be made by mail as well as by telephone, fax, e-mail, personal interviews
and other methods of communication. In addition, employees of Millenco may also
assist in the solicitation.
Millenco estimates that the total costs incurred and to be incurred
relating to the proxy solicitation (including costs of obtaining the judgment of
the Delaware Chancery Court which makes this election possible) will be
approximately $450,000. These costs will be paid by Millenco. If Millenco's
nominees for director are elected, Millenco will request reimbursement from the
Fund.
-10-
+------------------------------------------------------------------------------+
| IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN VOTING YOUR SHARES, PLEASE |
| CALL OUR PROXY SOLICITOR, INNISFREE M&A INCORPORATED |
| |
| TOLL-FREE AT 1-888-750-5834. |
| |
| BANKS AND BROKERS CALL COLLECT 212 750-5833 |
| |
+------------------------------------------------------------------------------+
-11-
PROXY SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS OF
----------------------------------------------------------
MEVC DRAPER FISHER JURVETSON FUND I, INC. (D/B/A MVC CAPITAL)
2003 ANNUAL MEETING OF STOCKHOLDERS - FEBRUARY 28, 2003
THIS PROXY IS SOLICITED ON BEHALF OF MILLENCO, L.P.
The undersigned hereby appoints Robert Knapp and Richard W. Cohen or
either one of them acting in the absence of the other, with full power of
substitution or revocation, proxies for the undersigned, to vote at the 2003
Annual Meeting of Stockholders of meVC Draper Fisher Jurvetson Fund I, Inc.
(d/b/a MVC Capital) (the "Fund"), to be held at , local time, on Friday,
February 28, 2003, at [location] and at any adjournment or adjournments
thereof, according to the number of votes the undersigned might cast and with
all powers the undersigned would possess if personally present.
IN THE ABSENCE OF ANY CONTRARY INSTRUCTIONS BELOW, THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED FOR MILLENCO L.P.'S NOMINEES FOR DIRECTORS NAMED BELOW
(PROPOSALS 1, 2 AND 3) AND FOR THE TWO STOCKHOLDER PROPOSALS (PROPOSALS 4 AND
5). TO WITHHOLD AUTHORITY FOR AN INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH THAT
NOMINEE'S NAME.
(1) Proposal No. 1. To elect following two (2) directors for a term
ending at the 2004 annual meeting:
Gerald Hellerman, Robert Knapp
(2) Proposal No. 2. To elect the following two (2) directors for a
term ending at the 2005 annual meeting:
Bruce Shewmaker, George Karpus
(3) Proposal No. 3. To elect the following three (3) directors for a
term ending at the 2006 annual meeting:
Emil Dominianni, Terry Feeney, Robert Everett
FOR [ ] the nominees named in Proposals 1, 2 and 3. Withhold authority
[ ] to vote for nominees named in Proposals 1, 2 and 3.
(4) Proposal No. 4. The approval of a proposal that the stockholders
of meVC Draper Fisher Jurvetson Fund I, Inc. recommend that the
Fund's board of directors take all steps necessary to amend the
Fund's By-laws to include the provision granting stockholders the
limited right to call special meetings of stockholders.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(5) Proposal No. 5. The approval of a proposal that in each year where
the fund discount averages over 10%, the Fund will conduct a
tender offer for 25% the outstanding shares at an amount equal to
95% of the net asset value.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
all as set forth in Millenco's Proxy Statement, dated January , 2003.
Dated: , 2003
--------------------------------
------------------------------------
------------------------------------
(Signature(s))
------------------------------------
(Title(s))
PLEASE SIGN EXACTLY AS NAME(S)
APPEAR HEREON. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH.
PLEASE SIGN, DATE AND MAIL THIS
PROXY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.