SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
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(Amendment No. ___)
JW Charles Financial Services, Inc.
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(Name of Issuer)
Common Stock, par value $.001 per share
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(Title of Class of Securities)
159843-10-1
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(CUSIP number)
Robert H. Stone
Avatex Corporation
5910 North Central Expressway, Suite 1780
Dallas, Texas 75206
(214) 365-7453
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
January 21, 1998
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box [ ].
Note: Six copies of this statement, including exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 0001598431 Page 2 of 8
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1 NAME OF REPORTING PERSON/S.S. or I.R.S. IDENTIFICATION NO. OF
ABOVE PERSON: Avatex Corporation; Tax Id No. 25-1425889
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS: WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [__]
6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF
SHARES 7 SOLE VOTING POWER: 300,000
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER: 0
EACH
REPORTING 9 SOLE DISPOSITIVE POWER: 300,000
PERSON WITH 10 SHARED DISPOSITIVE POWER: 0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON: 300,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [__]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 8.13%
14 TYPE OF REPORTING PERSON: CO
=============== ===============================================================
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SCHEDULE 13D
CUSIP No. 0001598431 Page 3 of 8
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Item 1. Security and Issuer
This statement relates to the Common Stock, par value $.001 per share (the
"Common Stock"), of JW Charles Financial Services, Inc. ("JWC"), a corporation
organized under the laws of the State of Florida with its principal executive
offices at 980 North Federal Highway, Suite 310, Boca Raton, Florida 33432.
Item 2. Identity and Background
(a) This Statement is filed by Avatex Corporation, a Delaware corporation
("Avatex").
(b) The business address of Avatex is 5910 North Central Expressway, Suite
1780, Dallas, Texas 75206.
(c) Avatex is a holding company that, through its subsidiaries, owns
interests in hotels and office buildings, and also owns interests in other
corporations and partnerships. Through Phar-Mor, Inc., its 39.7% owned
subsidiary, Avatex is involved in operating a chain of over 100 discount retail
drugstores devoted to the sale of prescription and over-the-counter drugs,
health and beauty aids and other general merchandise. Attached as Schedule I
hereto and incorporated herein by reference is a list of the directors and
executive officers of Avatex. Schedule I also sets forth the business address
and principal occupation or employment of each individual listed therein.
(d) - (e) During the past five years, neither Avatex nor, to the best of
its knowledge, any of the persons with respect to whom information is given in
response to this Item 2, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violations with
respect to such laws.
(f) All of the individuals listed on Schedule I hereto are citizens of the
United States.
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SCHEDULE 13D
CUSIP No. 0001598431 Page 4 of 8
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Item 3. Source and Amount of Funds or Other Consideration
Avatex paid $3,450,000 for 300,000 shares of Common Stock. The source of
the funds used to purchase the Common Stock was general corporate funds of
Avatex.
Item 4. Purpose of Transaction
Avatex acquired its interests in the Common Stock for investment purposes.
From time to time, Avatex will evaluate its position and may determine to
acquire additional shares of Common Stock of JWC (subject to the availability of
shares at prices deemed favorable and other factors) or dispose of shares of the
Common Stock of JWC, at any time and from time to time. Except as stated above,
Avatex has not formulated any plans or proposals of the type referred to in
clauses (a) through (j) of Item 4 of Schedule 13D, although Avatex reserves the
right to formulate such plans or proposals in the future.
Item 5. Interest in Securities of the Issuer
(a) As of the date hereof, Avatex owns 300,000 shares of Common Stock.
According to JWC's Form 10-Q for the quarterly period ended September 30, 1997,
JWC had 3,688,872 shares of Common Stock outstanding as of November 10, 1997.
Based on such number, as of the date hereof, Avatex has beneficial ownership of
approximately 8.13% of Common Stock.
(b) Avatex has the sole power to vote or to direct the vote of, and to
dispose or to direct the disposition of, all shares of Common Stock owned by
Avatex described in subsection (a) of this Item 5.
(c) On January 21, 1998, Avatex entered into a Stock Sale Agreement with
Marshall T. Leeds, under which Avatex agreed to purchase from Mr. Leeds 300,000
shares of Common Stock at a purchase price of $11.50 per share. No other
transaction in the Common Stock was effected during the past sixty days by
Avatex.
(d) Not applicable.
(e) Not applicable.
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SCHEDULE 13D
CUSIP No. 0001598431 Page 5 of 8
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Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
In connection with the execution of the Stock Sale Agreement described in
Item 5(c) above, Avatex, JWC and Marshall T. Leeds entered into a Registration
Rights Agreement, under which, among other things, JWC agreed to grant Avatex
certain automatic and piggyback registration rights with respect to the shares
of Common Stock owned by Avatex described in Item 5(a) above.
Item 7. Materials to be Filed as Exhibits
Exhibit 1 Stock Sale Agreement dated January 21, 1998 between Avatex
Corporation and Marshall T. Leeds.
Exhibit 2 Registration Rights Agreement dated January 21, 1998 between
Avatex Corporation, JW Charles Financial Services, Inc. and
Marshall T. Leeds.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 26, 1997
AVATEX CORPORATION
/s/ Robert H. Stone
By: -----------------------------------
Robert H. Stone
Vice President
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SCHEDULE 13D
CUSIP No. 0001598431 Page 6 of 8
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF AVATEX CORPORATION
The following information is provided for the directors and executive
officers of Avatex Corporation ("Avatex") listed below: (a) name; (b) business
address; (c) present principal occupation or employment and the name, principal
business and the address of any corporation or other organization in which such
employment is conducted.
(a) Abbey J. Butler, Co-Chairman of the Board and Co-Chief Executive Officer
of Avatex;
(b) 5910 North Central Expressway, Suite 1780, Dallas, Texas 75206 ("Avatex
Address");
(c) Co-Chairman of the Board and Co-Chief Executive Officer of Avatex; Avatex
Address.
(a) Melvyn J. Estrin, Co-Chairman of the Board and Co-Chief Executive Officer
of Avatex;
(b) Avatex Address;
(c) Co-chairman of the Board and Co-Chief Executive Officer of Avatex; Avatex
Address.
(a) Hyman H. Frankel, Director of Avatex;
(b) Avatex Address;
(c) Executive Officer of Human Service Group, Inc. and University Research
Corporation; 7200 Wisconsin Avenue, Bethesda, Maryland 20814-4811.
(a) Fred S. Katz, Director of Avatex;
(b) Avatex Address;
(c) President of First Taconic Capital Corporation; 99 Park Avenue, Suite
2230, New York, New York 10016.
(a) William A. Lemer, Director of Avatex;
(b) Avatex Address;
(c) President of Bethesda Avenue Photo, Inc. and Pentagon Concourse Photo,
Inc.; 4823 Bethesda Avenue, Bethesda, Maryland 20814.
(a) Charles C. Pecarro, Director of Avatex;
(b) Avatex Address;
(c) Chief Financial Officer of Human Service Group, Inc. and University
Research Corporation; 7200 Wisconsin Avenue, Bethesda, Maryland
20814-4811.
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SCHEDULE 13D
CUSIP No. 0001598431 Page 7 of 8
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(a) John L. Wineapple, Director of Avatex;
(b) Avatex Address;
(c) Principal of First Taconic Capitol Corporation; 99 Park Avenue, Suite
2230, New York, New York 10016.
(a) Edward L. Massman, Senior Vice President and Chief Financial Officer of
Avatex;
(b) Avatex Address;
(c) Senior Vice President and Chief Financial Officer of Avatex; Avatex
Address.
(a) John G. Murray, Vice President -- Finance of Avatex;
(b) Avatex Address;
(c) Vice President -- Finance of Avatex; Avatex Address.
(a) Scott E. Peterson, Vice President - Finance and Controller of Avatex;
(b) Avatex Address;
(c) Vice President - Finance and Controller of Avatex; Avatex Address.
(a) Grady E. Schleier, Vice President and Treasurer of Avatex;
(b) Avatex Address;
(c) Vice President and Treasurer of Avatex; Avatex Address.
(a) Robert H. Stone, Vice President, General Counsel and Secretary of Avatex;
(b) Avatex Address;
(c) Vice President and General Counsel of Avatex; Avatex Address.
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SCHEDULE 13D
CUSIP No. 0001598431 Page 8 of 8
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EXHIBIT INDEX
Exhibit
Number Exhibit
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1 Stock Sale Agreement dated January 21, 1998 between Avatex
Corporation and Marshall T. Leeds
2 Registration Rights Agreement dated January 21, 1998 between Avatex
Corporation, JW Charles Financial Services, Inc. and Marshall
T. Leeds
Exhibit 1
STOCK SALE AGREEMENT
January 21, 1998
Avatex Corporation
5910 North Central Expressway
Suite 1780
Dallas, Texas 75206
Gentlemen:
Marshall T. Leeds (sometimes referred to as "Seller") hereby confirms his
agreement with you (sometimes referred to as "Purchaser") as follows:
1. PURCHASE AND SALE OF STOCK
1.1 Financial Terms. On the Closing Date (as defined below), Seller
agrees to sell to you, and you agree to acquire from Seller, 300,000 shares of
common stock of JW Charles Financial Services, Inc. (the "Company"), $.001 par
value (the "Purchased Shares"), at a purchase price of $11.50 per share, for a
total purchase price of $3,450,000.
1.2 Closing. The Purchased Shares will be delivered to you via, and
at the offices of, your legal counsel, Weil, Gotshal & Manges LLP, 767 Fifth
Avenue, New York, New York 10153, against delivery of the purchase price
therefor (which shall be made by wire transfer to the escrow account of legal
counsel to Seller, Kilpatrick Stockton LLP, Atlanta, Georgia, account number
12-659-310, at Wachovia Bank of Georgia, Atlanta, Georgia, ABA Routing Number:
061000010), by 2:00 P.M., Eastern Time, on January 22, 1998, or such other date
or time as shall be mutually agreed upon by Seller and you (the "Closing Date").
2. REPRESENTATIONS AND WARRANTIES
2.1 Representations of Seller. Seller represents and warrants that
(a) Seller has good, valid, and marketable title to the Purchased Shares, free
and clear of liens, claims, restrictions, or encumbrances of any kind, (b) upon
conveyance and delivery of the Purchased Shares and payment therefor by
Purchaser, Purchaser shall be the owner of such Purchased Shares free and clear
of liens, claims, restrictions, or encumbrances attributable to any action by
Seller or the Company, and (c) the documents filed by the Company with the
Securities and Exchange Commission from January 1, 1996 to date pursuant to the
requirements of the Securities Exchange Act of 1934, as amended, did not contain
when filed
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an untrue statement of material fact or, other than disclosure of the proposed
acquisition by the Company of Genesis Merchant Group Securities LLC ("GMG")
described below, omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
2.2 Disclosure of GMG Transaction. Set forth as Exhibit A hereto is
the substantially final form of an Agreement and Plan of Combination (the
"Combination Agreement") that contains the material terms of a proposed business
combination transaction with GMG (the "Combination Transaction"), pursuant to
which the Company and GMG will be combined into a new entity ("Newco") and the
outstanding common stock of the Company, including the Purchased Shares, and at
least 90% of the outstanding equity interests of GMG, will be exchanged for
common stock of Newco. Seller gives no assurance that the proposed Combination
Transaction will be consummated or will be consummated on the terms described in
the Combination Agreement, or that any of the expected benefits of the
Combination Transaction will be achieved. Purchaser hereby acknowledges that it
has reviewed the Combination Agreement, that the information described in the
Combination Agreement is not public information, that it will maintain the
confidentiality of such information in accordance with Section 3.1 hereof, and
that it has sufficient information about the proposed Combination Transaction
(and has reviewed sufficient publicly available information about the Company)
to make an informed and knowledgeable decision to acquire the Purchased Shares.
Purchaser also acknowledges that it has been afforded an opportunity to ask
questions of and to obtain additional information from Seller prior to making
its investment decision.
2.3 Representations of Purchaser. You represent, and in entering
into this Agreement Seller understands, that (i) you are an "accredited
investor" as defined in Rule 501(a) of the General Rules and Regulations under
the Securities Act of 1933, as amended (the "Securities Act") and (ii) you will
not offer or sell any of the Purchased Shares except pursuant to an effective
registration statement under the Securities Act or in transactions that do not
require registration under the Securities Act. You further represent that you
are acquiring the Purchased Shares for your own account and with your general
assets for the purpose of investment and not with a view to the resale or
distribution thereof, and that you have no present intention of selling,
negotiating, or otherwise disposing of any Purchased Shares, except in
accordance with applicable provisions of the Securities Act and other securities
laws or regulations.
3. COVENANTS
3.1 Confidentiality. You understand and agree that the information
set forth on Exhibit A hereto and all other information conveyed to you
concerning the
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Combination Transaction is confidential and has not been publicly disclosed by
the parties thereto, and that such confidential information has been disclosed
to you solely in connection with your proposed purchase of the Purchased Shares.
You agree to maintain the confidential nature of such information, and refrain
from engaging in any public market transaction involving the Common Stock of the
Company, unless and until the material terms of such proposed Combination
Transaction become publicly known or you have been notified by Seller or the
Company that the proposed Combination Transaction has been abandoned. Seller
agrees to notify you promptly at such time that the Company has publicly
disclosed any such information or has abandoned the Combination Transaction.
3.2 Registration of Purchased Shares. Seller agrees to cause the
Company to execute and deliver to you a registration rights agreement in the
form attached as Exhibit B.
Purchaser understands and agrees that the securities purchased
hereunder are restricted securities within the meaning of Rule 144 under the
Securities Act; that such securities are not registered and must be held unless
they are subsequently registered for resale or an exemption from such
registration is available. Furthermore, Purchaser understands that each
certificate representing the Purchased Shares shall be endorsed with the
following restrictive legend, or close facsimile thereof:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "FEDERAL ACT"), OR ANY STATE
SECURITIES LAW, AND HAVE BEEN ACQUIRED BY THE REGISTERED OWNER HEREOF FOR
PURPOSES OF INVESTMENT AND HAVE BEEN ISSUED OR SOLD IN RELIANCE ON
STATUTORY EXEMPTIONS CONTAINED IN THE FEDERAL ACT OR AVAILABLE UNDER
APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE
FEDERAL ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS; IN THE CASE OF RELIANCE
UPON AN EXEMPTION, THE COMPANY MUST HAVE RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT SUCH TRANSACTION IS EXEMPT AND DOES NOT REQUIRE
SUCH REGISTRATION OF THE SHARES."
On the front of each certificate, there may be placed the following notation:
3
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"RESTRICTIONS ON TRANSFER STATED ON REVERSE SIDE"
5. INDEMNIFICATION
Purchaser, on the one hand, and Seller, on the other hand, each hereby
agrees to indemnify the other and hold the other harmless from and against any
liability, obligation, claim, loss, cost, damage, and expense (including
reasonable attorneys' fees and expenses incurred in prosecuting or defending any
claim for any such liability, loss, or damage) arising out of or resulting from
the untruth or inaccuracy of any covenant, representation, or warranty of the
indemnifying party contained in this Agreement. The indemnities contained herein
shall expire two (2) years from the Closing Date, unless prior to such date the
indemnified party shall inform the indemnifying party of a claim hereunder, and
except that indemnity shall be available indefinitely with respect to any
liability, obligation, claim, loss, cost, damage, or expense arising out of or
as a result of any statement of Seller in clause (a) or (b) of Section 2.
6. MISCELLANEOUS
6.1 Further Assurances to Purchaser. If, at any time after the
Closing Date, Purchaser acting reasonably shall consider or be advised that any
further assignments, assurances, or other acts are necessary, desirable, or
proper to (a) vest, perfect, or confirm in Purchaser's name (or the name of any
lawful transferee of Purchaser) title in, interest to, or rights of any of the
Purchased Shares, (b) ensure proper and complete compliance with Federal, state,
and local administrative or regulatory laws, or (c) otherwise carry out the
purposes of this Agreement, Seller agrees to execute and deliver all such
assignments and assurances and do all acts reasonably necessary or proper to
accomplish the same.
6.2 Legality of Sale. The purchase and sale of the Purchased Shares
is subject to the legality of the offer and sale of the Purchased Shares in the
state of domicile of Purchaser. This Agreement does not constitute an offer to
sell, or a solicitation of an offer to buy, the Purchased Shares in any
jurisdiction where it is unlawful to make such offer or solicitation.
6.3 Purchaser Not Liable for Brokerage Commission. Purchaser shall
have no liability or obligation arising as a result of any agreement or
arrangement of Seller or the Company for any broker's commission, finder's fee,
or similar payment in connection with the transaction contemplated by this
Agreement, and Seller agrees to indemnify and hold Purchaser harmless from and
against any such payment.
6.4 Entire Agreement. This Agreement, together with the Exhibits
referred to herein, contains the entire agreement and understanding of the
parties with respect
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to the subject matter hereof, and no representations, promises, agreements, or
understandings regarding the subject matter hereof shall be of any force or
effect unless in writing, executed by the party to be bound, and dated
subsequent to the date hereof.
6.5 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of New York.
6.6 Expenses. Seller and Purchaser will each pay all the costs and
expense of their respective performance, preparation, and execution of, and
compliance with, this Agreement, including, without limitation, all fees and
expense of their respective agents, representatives, counsel, and accountants,
except as may otherwise be provided in the registration rights agreement
attached as Exhibit B.
6.7 Severability. If any provision of this Agreement shall be held
invalid or unenforceable, the remainder nevertheless shall remain in full force
and effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it nevertheless shall remain in full force and effect
in all other circumstances.
6.8. Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of Purchaser, Seller, and their respective successors and
assigns.
6.9 Modifications and Waivers. No change, modification, or waiver of
any provision of this Agreement shall be valid or binding unless it is in a
writing dated subsequent to the date hereof and signed by the party intended to
be bound. No waiver of any breach, term, or condition of this Agreement by
either party shall constitute a subsequent waiver of the same or any other
breach, term, or condition.
The execution hereof by you shall constitute a binding contract between us,
under seal, for the uses and purposes set forth above.
Very truly yours,
Marshall T. Leeds
AGREED AND ACCEPTED as of the
date first above-written:
Avatex Corporation
By:------------------------------
5
Exhibit 2
REGISTRATION RIGHTS AGREEMENT
January 21, 1998
To Avatex Corporation:
Gentlemen:
This Registration Rights Agreement (the "Agreement") confirms that, in
connection with your agreement to purchase of 300,000 shares of common stock of
JW Charles Financial Services, Inc. (the "Company") from Marshall T. Leeds, the
Chairman of the Board and Chief Executive Officer of the Company, without
registration under the Securities Act (as defined below), the Company, Mr.
Leeds, and you covenant and agree as follows:
1. Certain Definitions. As used herein, the following terms shall have the
following respective meanings:
"Commission" means the Securities and Exchange Commission, or any
succeeding federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.001 par value per share, of
the Company.
"Closing Date" has the meaning set forth in that certain Stock Sale
Agreement between you and Mr. Leeds.
"Holders" refers to you and any subsequent holder or holders of
record of any of the shares of Restricted Stock while such shares retain
that status as defined below.
"Restricted Stock" means the aggregate of 300,000 shares of Common
Stock being sold to you by Mr. Leeds on the Closing Date to the extent
that the certificates therefor are required to bear the legend pursuant to
and set forth in Section 2 hereof.
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"Securities Act" means the Securities Act of 1933, as amended, or
any succeeding federal statute, and, as applicable, the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
2. Restrictive Legend. Each certificate representing shares of Restricted
Stock as initially sold to you, and, except as otherwise provided in Section 3,
each certificate issued upon exchange or transfer of any Restricted Stock, has
been or shall be stamped or otherwise imprinted with a legend substantially in
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "FEDERAL ACT"), OR ANY STATE
SECURITIES LAW, AND HAVE BEEN ACQUIRED BY THE REGISTERED OWNER HEREOF FOR
PURPOSES OF INVESTMENT AND HAVE BEEN ISSUED OR SOLD IN RELIANCE ON
STATUTORY EXEMPTIONS CONTAINED IN THE FEDERAL ACT OR AVAILABLE UNDER
APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE
FEDERAL ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS; IN THE CASE OF RELIANCE
UPON AN EXEMPTION, THE COMPANY MUST HAVE RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO IT THAT SUCH TRANSACTION IS EXEMPT AND DOES NOT REQUIRE
SUCH REGISTRATION OF THE SHARES."
3. Notice of Proposed Transfer.
(a) Prior to any proposed transfer or other disposition of any Restricted
Stock (other than under circumstances described in Section 4 or 5), the Holder
shall give written notice to the Company of its intention to do so. Each such
notice shall describe the manner of the proposed transfer or disposition and, if
requested by the Company, shall be accompanied by an opinion of counsel
reasonably satisfactory to the Company to the effect that the proposed
transaction may be effected without registration under the Securities Act and
applicable state securities laws, whereupon the Holder shall be entitled to
transfer or otherwise dispose of such Restricted Stock in accordance with the
terms of its notice. Each certificate for Restricted Stock transferred as
provided above shall bear the legend set forth in Section 2, except that such
certificate shall not bear such legend if (a) such transfer is in accordance
with the provisions of Rule 144 under the Securities Act (or any other rule
under the Securities Act permitting public sale without registration thereunder)
or (b) the opinion of counsel referred to above is to the further effect that
the transferee and any subsequent transferee (other than
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an affiliate of the Company) would be entitled to transfer such securities in a
public sale without registration under the Securities Act or any applicable
state securities law.
(b) The foregoing restrictions on transfer and disposition of Restricted
Stock shall terminate as to any particular shares of Restricted Stock when such
shares shall have been effectively registered under the Securities Act and sold
or otherwise disposed by the seller thereof in accordance with a method of
disposition set forth in the registration statement covering such shares.
Whenever a Holder demonstrates to the Company (and its counsel) that the
provisions of Rule 144(k) of the Securities Act are available to such Holder
without limitation, such Holder shall be entitled to receive from the Company,
without expense, a new certificate representing its shares of Restricted Stock
not bearing the restrictive legend set forth in Section 2.
4. Automatic Registration.
(a) Timing of Registration. The Company agrees to register under the
Securities Act, for public sale in the manner(s) specified by you or any other
Holder, all the shares of Restricted Stock (or such lesser portion thereof as
you or any other Holders thereof may specify) by no later than 90 days after the
Closing Date.
(b) Notice of Filing; Underwriters. The Company shall notify the Holders
not less than 15 days before making its filing under the Securities Act. In
addition to, or in lieu of, the methods of disposition set forth on Exhibit A,
the Company shall use its best efforts to register the Restricted Stock for
public sale in accordance with the methods of disposition specified by Holders
to the Company within ten (10) days of receipt of the Company's notice to them.
If any such method of disposition shall be an underwritten public offering, the
Holders of a majority of the shares of Restricted Stock requesting such method
of distribution shall be entitled to designate the managing underwriter for such
offering, subject to the reasonable approval of the Company. Other possible
underwriters for the offering may be selected by other such requesting Holders,
subject to reasonable approval by the Company and to the customary discretion of
managing underwriters with respect to such matters.
(c) Limitation on Including Other Securities. The Company shall be entitled
to include in any registration statement referred to in this Section 4, for sale
in a manner consistent with any method of disposition specified by requesting
Holders (or for sale pursuant to a firm commitment underwriting), shares of
Common Stock to be sold by or for the account of other persons who may then be
holding "piggyback" registration rights, except as and to the extent that, in
the opinion of the managing underwriter (if the method of disposition for shares
of Restricted Stock and the shares to be sold for such other persons is an
underwritten public offering), such inclusion would not adversely affect the
marketing of the Restricted Stock to be sold.
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<PAGE>
5. Piggyback Registration.
(a) General Availability. If the Company at any time (other than pursuant
to Section 4) proposes to register any of its Common Stock under the Securities
Act for sale to the public for cash, whether for its own account or for the
account of other security holders or both (except with respect to registration
statements on Forms S-4 or S-8, or on another form not generally available for
registering securities such as the Restricted Stock for sale to the public for
cash), the Company will give written notice to all Holders of then outstanding
Restricted Stock of its intention so to do. Upon the written request of any such
Holder, given within ten (10) days after receipt of any such notice, to register
any of its shares of Restricted Stock (which request states the intended method
of disposition thereof), the Company will use its reasonable best efforts to
cause such shares of Restricted Stock to be included among the securities to be
covered by the registration statement otherwise proposed to be filed by the
Company, all to the extent requisite to permit the sale or other disposition of
such Restricted Stock by the Holder in accordance with its written request. The
Company's obligations hereunder shall terminate with respect to any shares of
Restricted Stock that may be sold by the Holder thereof, without limitation,
pursuant to the provisions of Rule 144(k) under the Securities Act.
(b) Certain Volume Limitations. The number of shares of Restricted Stock to
be included pursuant to Section 5(a) in any registration statement that relates
to an underwritten public offering may be reduced (pro rata among the requesting
Holders of Restricted Stock based upon the respective numbers of shares so
requested to be registered) if and to the extent that the managing underwriter
thereof shall be of the opinion that the inclusion of all such shares would
adversely affect the marketing of the securities included in such registration
statement to be sold for the account of the Company or such other security
holders. Such number of shares of Restricted Stock shall not be reduced,
however, if any shares of Common Stock are to be included in such underwriting
for the account of any person other than the Company, a Holder of Restricted
Stock, or a holder of Common Stock pursuant to such holder's exercise of
"demand" registration rights or of "piggyback" registration rights that were
granted prior to the Closing Date.
(c) Certain Other Restrictions. Notwithstanding anything to the contrary
contained in this Section 5, if there is a firm commitment underwritten offering
of securities for the Company pursuant to a registration covering shares of
Restricted Stock, and if a selling Holder of Restricted Stock does not elect to
sell its Restricted Stock to the underwriters of the Company's securities in
connection with such offering, then such Holder (if requested by the managing
underwriter) shall agree to refrain from selling any of its shares of Restricted
Stock that are otherwise registered pursuant to this Section 5 during the period
of distribution of the Company's securities by such underwriter(s) and during
the period in which the underwriting syndicate, as such, participates in the
after-market. Such Holder shall, however, be entitled to sell such shares, in
any event, commencing on the 26th day after the effective date of such
registration statement, if then lawful to do so under applicable securities laws
and rules of the Commission.
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6. Registration Procedures.
(a) Company Obligations and Procedures. Whenever the Company is required
under Section 4 hereof, or is required under Section 5 hereof to use its
reasonable best efforts, to effect the registration of any of the Restricted
Stock under the Securities Act, the Company will:
(i) prepare and file with the Commission a registration
statement on an appropriate form of the Commission, cause such
registration statement to become effective, and use its best efforts to
cause such registration statement to remain effective for the period of
the disposition contemplated thereby (determined as provided in Section
6(b));
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period referred to in clause (i) above and to
comply with the provisions of the Securities Act with respect to the
disposition of all Restricted Stock covered by such registration
statement, in accordance with the sellers' intended method or methods of
disposition set forth in such registration statement, for such period;
(iii) furnish to each seller such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus and each amendment or supplement of a prospectus,
if any) as such persons may reasonably request in order to facilitate the
public sale or other disposition of the Restricted Stock covered by such
registration statement;
(iv) use its best efforts to register or qualify, or to secure
an exemption therefrom, the Restricted Stock covered by such registration
statement under the securities or blue sky laws of such jurisdictions (up
to an aggregate maximum of ten (10), excluding jurisdictions in which an
exemption is readily available) as the sellers of Restricted Stock shall
reasonably request. The foregoing shall not obligate the Company to
qualify to do business, or to subject itself to service of process
generally, in any jurisdiction in which it is not otherwise so qualified
or subject;
(v) immediately notify each seller under such registration
statement and each underwriter, if any, at any time that a prospectus
relating thereto is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus contained
in such registration statement, as then in effect, contains an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing (and each
seller shall similarly immediately notify the Company and each
underwriter);
(vi) if the offering is underwritten, use its best efforts to
furnish, at the request of any seller, on the date that Restricted Stock
is delivered to the underwriter(s) for sale pursuant
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to such registration: (A) an opinion of counsel representing the Company
for the purposes of such registration, addressed to such seller (and to
such underwriter(s), if any) stating that such registration statement has
become effective under the Securities Act, stating that, to the best
knowledge of such counsel, (I) no stop order suspending the effectiveness
thereof has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Securities Act and
(II) the registration statement, the related prospectus, and each
amendment or supplement thereof, comply as to form in all material
respects with the requirements of the Securities Act and the applicable
rules and regulations of the Commission thereunder (except that such
counsel need express no opinion as to financial statements, other
financial information, or any statistical or similar data contained
therein), and to such other customary effect as may reasonably be
requested by such seller or any such underwriter(s), and (B) a "cold
comfort" letter from the independent public accountants of the Company,
addressed to such seller (and to such underwriter(s), if any), in
customary form and covering matters of the type customarily covered by
such letters;
(vii) use its best efforts to cause all such Restricted Stock
to be listed or qualified on each securities exchange or inter-dealer
quotation system on which similar securities issued by the Company are
then listed or qualified on the basis such securities are listed or
qualified;
(viii)if the offering is underwritten, enter into such
customary agreements (including underwriting agreements in customary form)
and take all such other actions as the sellers of the Restricted Stock
being sold or the underwriter(s), if any, reasonably request in order to
expedite or facilitate the disposition of such Restricted Stock, including
without limitation, to the extent reasonably requested, opinions of
counsel customary in such registrations;
(ix) make available for inspection by any seller of Restricted
Stock, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant, or other agent
retained by any such seller or underwriter, all pertinent financial and
other records, pertinent corporate documents, and properties of the
Company, and cause the Company's officers, directors, employees, and
independent accountants to supply all information reasonably requested by
any such seller, underwriter, attorney, accountant, or agent in connection
with such registration statement, provided that the Company receives
assurances satisfactory to it (which may include written agreements) from
each such person as to the confidential treatment and limited use of all
such information; and
(x) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months beginning with the
first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
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(b) Period of Disposition. For purposes of clauses (i) and (ii) of Section
6(a) and for Section 4(c), the period of disposition of Restricted Stock in a
firm commitment underwritten public offering shall extend until each underwriter
has completed the distribution of all securities purchased by it, and the period
of disposition of Restricted Stock in any other offering shall extend until the
earlier of the public sale of all shares of Restricted Stock covered thereby or
the second anniversary of the Closing Date.
(c) Certain Obligations of Sellers. In connection with the registration
hereunder, and as a condition to the Company's obligations hereunder to any such
seller, each seller of Restricted Stock will furnish to the Company in writing
such information with respect to such seller and its proposed disposition as
shall be reasonably necessary in order to assure compliance with the Securities
Act and with other federal and applicable state securities laws. Without
limiting the generality of the foregoing, in connection with an underwritten
public offering, each selling Holder of Restricted Stock electing such method of
disposition agrees to enter into, as required, a written agreement with the
managing underwriter (selected in the manner provided elsewhere herein) in such
form and containing such provisions as are customary in the securities business
for such an arrangement, and to complete and execute all questionnaires, powers
of attorney, indemnities, and other documents or instruments reasonably required
under such terms of the underwriting arrangements.
7. Expenses.
(a) All expenses incurred by the Company in complying with Sections 4 and
5, including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel and independent public accountants
for the Company, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, and costs of insurance,
if any, but excluding any Selling Expenses and excluding the fees and expenses
described in the last sentence of this subparagraph (a), are herein called
"Registration Expenses". All underwriting discounts and selling commissions
applicable to the sale of any Restricted Stock are herein called "Selling
Expenses". Fees and expenses of any counsel, accountant, or other advisor to a
seller of Restricted Stock are not included as either Registration Expenses or
Selling Expenses.
(b) The Company will pay all Registration Expenses; all Selling Expenses
shall be borne by the participating sellers in proportion to the number of
shares sold by each, or by such persons other than the Company (except to the
extent the Company shall be a seller) as they may agree. In connection with the
automatic registration pursuant to Section 4, the Company or Mr. Leeds (as they
may decide between them) will reimburse you for the reasonable fees and
disbursements of one counsel chosen by you to represent you in connection
therewith, up to a maximum of $10,000.
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8. Indemnification.
(a) In connection with a registration of Restricted Stock under the
Securities Act pursuant to Section 4 or 5, the Company will indemnify and hold
harmless, to the extent permitted by law, each seller and each underwriter, if
any, of Restricted Stock thereunder and each other person, if any, who controls
such seller or underwriter within the meaning of the Securities Act, from and
against all losses, claims, damages, or liabilities, joint or several, to which
such seller or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Restricted Stock was registered, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
such seller, underwriter, and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
Company will not be liable in any such case if and to the extent that any such
loss, claim, damage, or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made or
omitted in conformity with information furnished by or on behalf of such seller,
underwriter, or such controlling person in writing for use in such registration
statement, prospectus, or amendment or supplement.
(b) In connection with a registration of Restricted Stock under the
Securities Act pursuant to Section 4 or 5, each seller of such Restricted Stock
thereunder, severally and not jointly, will indemnify and hold harmless, to the
extent permitted by law, the Company and each person who controls the Company
within the meaning of the Securities Act, each officer of the Company who signs
the registration statement, and each director of the Company, from and against
all losses, claims, damages, or liabilities, joint or several, to which the
Company or such officer or director or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages,
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained
in the registration statement under which such Restricted Stock was registered,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company and each such officer, director, and controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that such seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage, or liability arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made or omitted in reliance upon and in conformity
with information pertaining to such seller, as such, furnished in writing to the
Company by or on behalf of such seller for use in such registration statement,
prospectus, amendment, or supplement; provided further, that
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<PAGE>
the liability of each seller hereunder shall be limited to the proportion of any
such loss, claim, damage, liability, or expense that is equal to the proportion
that the public offering price of shares sold by such seller under such
registration statement bears to the total public offering price of all
securities sold thereunder, but not to exceed the proceeds received by such
seller from the sale of Restricted Stock covered by such registration statement.
If the registration relates to an underwritten offering, and the seller sells
its Restricted Stock through the underwriter(s) thereof, the seller (upon
request by the underwriter(s)) will indemnify such underwriters, their officers
and directors, and each person who controls such underwriters within the meaning
of the Securities Act, to the same extent as provided above with respect to the
indemnification of the Company or to such other extent as provided in Section
8(e).
(c) Any person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment (based upon advice in a written opinion of qualified legal counsel) a
conflict of interests between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to assume and
continue the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed and continued, and the
indemnifying party so notifies the indemnified party, the indemnifying party
shall not be liable to such indemnified party under this Section 8 for any legal
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs incurred by the indemnified party
for investigation and liaison with the counsel so selected, and the indemnifying
party will not be subject to any liability for any settlement made by the
indemnified party without the indemnifying party's consent (which consent shall
not be unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume and continue the defense of a claim will be obligated to
pay the fees and expenses of counsel for an indemnified party with respect to
such claim.
(d) If the indemnification provided for in Sections 8(a) and 8(b) is
unavailable or insufficient to hold harmless an indemnified party in respect of
any loss, claim, damage, liability, or action in respect thereof referred to
therein, then each indemnifying party shall (in lieu of or in addition to, as
the case may be, indemnifying such indemnified party) contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage, liability, or action in such proportion as is appropriate to reflect the
relative fault of the Company, on the one hand, and the sellers of such
Restricted Stock, on the other, in connection with the statements or omissions
that resulted in such loss, claim, damage, liability, or action as well as any
other relevant equitable considerations, including any failure to give in a
timely manner any notice required under such Sections. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement or omission or alleged omission of a material fact relates to
information supplied by the Company, on the one hand, or the sellers of such
Restricted Stock, on the other hand, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. The Company and you agree that it would not be just and
equitable if contributions pursuant to this
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Section 8(d) were determined by pro rata allocation (whether or not all of the
sellers of such Restricted Stock were treated as one entity for such purpose) or
by any other method of allocation that did not take account of the equitable
considerations referred to above in this Section 8(d). The amount paid or
payable by an indemnified party as a result of any loss, claim, damage,
liability, or action in respect thereof referred to in this Section 8(d), shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim in the manner provided in Section 8(c). No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any person who is not
guilty of fraudulent misrepresentation.
(e) The indemnification of underwriters provided for in this Section 8
shall be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters.
9. Miscellaneous.
(a) Successors and Assigns. All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties, whether or
not so expressed. Without limiting the generality of the foregoing, the
registration rights conferred herein on you shall inure to the benefit of any
and all subsequent Holders from time to time of the Restricted Stock for so long
as the certificates representing the Restricted Stock shall be required to bear
the legend specified in Section 2 hereof, subject to any time period limitations
otherwise stated herein.
(b) Remedies. Any person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement, and
to exercise all other rights granted by law.
(c) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, if, but only if, the Company has obtained the written consent of Holders of
a majority of the shares of Restricted Stock then outstanding.
(d) Severability. Whenever possible, each provision of this Agreement will
be interpreted in such a manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal, or
unenforceable under any applicable law or rule in any jurisdiction, such
provision will be ineffective only to the extent of such invalidity, illegality,
or unenforceability in such jurisdiction, without invalidating the remainder of
this Agreement in such jurisdiction or any provision hereof in any other
jurisdiction.
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(e) Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original and any one of which need not
contain the signatures of more than one party, but all of which taken together
shall constitute one and the same Agreement.
(f) Descriptive Headings. The descriptive headings in certain portions of
this Agreement are used for convenience of reference only. They do not
constitute a part of this Agreement and shall not influence the construction or
interpretation of any provision hereof.
(g) Notices. All notices, demands, or other communications to be given or
delivered under or by reason of any provision of this Agreement shall be in
writing and shall be deemed to have been given (i) on the date delivered in
person, (ii) on the date indicated on the return receipt if mailed postage
prepaid, by certified or registered U.S. Mail, with return receipt requested,
(iii) on the date transmitted by telecopy facsimile, if sent by 5:00 P.M.,
Eastern Time, and confirmation of receipt thereof is reflected, or (iv) if sent
by Federal Express or other nationally recognized overnight courier service or
overnight express U.S. Mail, with service charges or postage prepaid, then on
the next business day after delivery to the courier service or U.S. Mail (in
time for next day delivery). In each case (except for personal delivery) such
notices, demands, and other communications shall be sent to a Holder of
Restricted Stock, at the address or facsimile number for such Holder on the
Company's stock records (which is, as of the date of this Agreement, the address
and facsimile number specified for you on the signature page hereof) and to the
Company as follows:
JW Charles Financial Services, Inc.
980 North Federal Highway
Suite 210
Boca Raton, Florida 33432
Attention: President
Facsimile No.: 561-338-2827
or to such other address or to the attention of such other person as the
receiving party has specified by prior written notice to the sending party
pursuant to this Section 9(g).
(h) Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of New York, without
regard to conflict of laws rules thereof.
(i) Board Ratification. The Company and Mr. Leeds agree to cause the
execution and delivery of this Agreement by the Company to be ratified by the
Board of Directors of the Company as promptly as practicable and, in any event,
in time to permit the Company to perform on the schedule set forth in Section 4.
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Please confirm your agreement to and acceptance of this Agreement by
countersigning and delivering to the Company and Mr. Leeds a counterpart of this
Agreement, whereupon this Agreement shall be a binding agreement among you, the
Company, and Mr. Leeds.
Very truly yours,
JW CHARLES FINANCIAL SERVICES, INC.
By:--------------------------------------
Joel E. Marks
Vice Chairman and Chief
Financial Officer
AGREED TO AND ACCEPTED as of the
date first above-written:
- -------------------------------------
Marshall T. Leeds
AVATEX CORPORATION
By:----------------------------------
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Exhibit A to
Registration Rights Agreement
dated January 21, 1998
Methods of Disposition of
Restricted Stock in a
Registration Pursuant to Section 4
The shares of Common Stock may be offered and sold by or for the account of
a Selling Shareholder, from time to time as market conditions permit, on The
American Stock Exchange or otherwise, at prices and on terms then prevailing, or
in negotiated transactions. The shares of Common Stock may be sold by one or
more of the following methods, without limitation: (a) a block trade in which a
broker or dealer so engaged will attempt to sell the shares as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer (including a specialist or
market maker) as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by a Selling Shareholder may arrange
for other brokers or dealers to participate. Such brokers or dealers may receive
commissions or discounts from a Selling Shareholder in amounts to be negotiated.
Such brokers and dealers and any other participating brokers or dealers may be
deemed to be "underwriters", within the meaning of the Securities Act, in
connection with such sales.
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