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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ______)*
JW CHARLES FINANCIAL SERVICES, INC.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
0001598431
(CUSIP Number)
Gerard A. Chamberlain, Wilmington Trust Company, Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890 (302) 651-1268 (Name,
Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
January 19, 1996
(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 ( ).
Check the following box if a fee is being paid with the statement (X). (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five
percent or less of such class.) (See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
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Page 2 of 16 pages
*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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Page 3 of 16 pages
SCHEDULE 13D
CUSIP No. 0001598431
<TABLE>
<CAPTION>
<S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WT Investments, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ( )
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 400,000
OWNED BY EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
0
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Page 4 of 16 pages
9 SOLE DISPOSITIVE POWER
400,000
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
400,000
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* ( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.3%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
<PAGE>
Page 5 of 16 pages
SCHEDULE 13D
CUSIP No. 0001598431
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wilmington Trust Company
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ( )
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 0
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
0
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Page 6 of 16 pages
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* (X)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0
14 TYPE OF REPORTING PERSON*
BK, HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
<PAGE>
Page 7 of 16 pages
SCHEDULE 13D
CUSIP No. 0001598431
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Wilmington Trust Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) (X)
(b) ( )
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ( )
ITEMS 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
0
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY EACH
REPORTING
PERSON WITH
9 SOLE DISPOSITIVE POWER
0
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Page 8 of 16 pages
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* (X)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0
14 TYPE OF REPORTING PERSON*
CO, HC
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
</TABLE>
<PAGE>
Page 9 of 16 pages
ITEM 1. SECURITY AND ISSUER.
The issuer of the securities which are the subject of this
Schedule 13D is JW Charles Financial Services, Inc., a Florida corporation
("JW Charles"). JW Charles's address is 980 North Federal Highway, Boca
Raton, Florida 33432.
The class of equity security to which this Schedule 13D relates
is common stock, $.001 par value per share ("Common Stock"), of JW
Charles.
ITEM 2. IDENTITY AND BACKGROUND.
(a-c)The names of the persons filing this Schedule 13D (each a
"Filing Person" and, collectively, the "Filing Persons") are WT
Investments, Inc. ("WTI"), Wilmington Trust Company ("Bank") and
Wilmington Trust Corporation ("Holding Company"). The Bank owns all of
the issued and outstanding stock of WTI. The Holding Company owns all of
the issued and outstanding stock of the Bank.
(1) WTI is a Delaware-chartered corporation. Its
principal business is managing investments. The address of its principal
business and principal office is Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890.
WTI's sole director is Thomas P. Collins. Mr.
Collins' residence address is 513 Country Club Drive, Wilmington, Delaware
19803. He is Vice President and Secretary of the Bank, a Delaware-
chartered bank and trust company whose principal business address and
principal office is Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890. The Bank's principal business is banking.
Mr. Collins is a citizen of the United States.
WTI's executive officers are:
a. Ted T. Cecala. Mr. Cecala's residence address is
11 Boysenberry Drive, Hockessin, Delaware 19707. He is Vice President of
WTI and Vice Chairman and Chief Operating Officer of the Bank. Mr. Cecala
is a citizen of the United States.
b. Matthew J. Lynch, Jr. Mr. Lynch's residence
address is 1402 Riverview Avenue, Wilmington, Delaware 19806. He is
Secretary of WTI and Vice President and Staff Attorney of the Bank. Mr.
Lynch is a citizen of the United States.
(2) The Bank's directors are:
a. Robert H. Bolling, Jr. Mr. Bolling's mailing
address is Box 4300, Wilmington, Delaware 19807. He is the owner of R.
H. Bolling, Jr., P. E., a consulting engineering firm with an office at
4001 Kennett Pike, Suite 314, Two Greenville Crossing, Wilmington,
Delaware 19807. Mr. Bolling is a citizen of the United States.
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Page 10 of 16 pages
b. Carolyn S. Burger. Ms. Burger's residence
address is 354 East Hillendale Road, Kennett Square, Pennsylvania 19348.
She is the President and Chief Executive Officer of Bell Atlantic-
Delaware, a telecommunications company with an office at 901 Tatnall
Street, Wilmington, Delaware 19801. Ms. Burger is a citizen of the
United States.
c. Mr. Cecala.
d. Richard R. Collins. Mr. Collins' residence
address is 1301 North Harrison Street, Dorsett Apartments, Apartment 1007,
Wilmington, Delaware 19806. He is Chairman of Collins, Inc., a
consulting and real estate development firm with a mailing address of P.O.
Box 3980, Wilmington, Delaware 19807, Chairman of Intercontinental
Finance Group, a consultant for insurance and financial service companies,
and a consultant for American International Group and American Life
Insurance Company. Mr. Collins is a citizen of the United States.
e. Charles S. Crompton, Jr. Mr. Crompton's mailing
address is P.O. Box 3946, Greenville, Delaware 19807. He is a partner in
the law firm of Potter, Anderson & Corroon, whose principal business
address and principal office is 350 Delaware Trust Building, P.O. Box 951,
Wilmington, Delaware 19899. Mr. Crompton is a citizen of the United
States.
f. H. Stewart Dunn, Jr. Mr. Dunn's residence
address is 418 South Lee Street, Alexandria, Virginia 22314. He is a
partner in the law firm of Ivins, Phillips & Barker, whose principal
business address and principal office is 1700 Pennsylvania Avenue, N.W.,
Washington, D.C. 20006. Mr. Dunn is a citizen of the United States.
g. Edward B. duPont. Mr. duPont's residence address
is 100 Snuff Mill Road, Wilmington, Delaware 19807. He is a private
investor with an office at 1004 Wilmington Trust Center, Wilmington,
Delaware 19801. Mr. duPont is a citizen of the United States.
h. Robert C. Forney. Mr. Forney's mailing address
is Hilltop View Road, P.O. Box 549, Unionville, Pennsylvania 19375. He
is retired and is a citizen of the United States.
i. Thomas L. Gossage. Mr. Gossage's residence
address is 8 Wood Road, Wilmington, Delaware 19806. He is Chairman of
the Board, President and Chief Executive Officer of Hercules,
Incorporated, a chemical company whose principal business address and
principal office is Hercules Plaza, 1313 North Market Street, Wilmington,
Delaware 19899. Mr. Gossage is a citizen of the United States.
j. Robert V. A. Harra, Jr. Mr. Harra's residence
address is 128 Parrish Lane, Shipley Woods, Wilmington, Delaware 19810.
He is President of the Bank and is a citizen of the United States.
<PAGE>
Page 11 of 16 pages
k. Andrew B. Kirkpatrick, Jr. Mr. Kirkpatrick's
residence address is 9 Barley Mill Drive, Greenville, Delaware 19807. He
is a partner in the law firm of Morris, Nichols, Arsht and Tunnell, whose
principal business address and principal office is 1105 North Market
Street, P.O. Box 1347, Wilmington, Delaware 19899. Mr. Kirkpatrick is a
citizen of the United States.
l. Rex L. Mears. Mr. Mears's mailing address is
Route 4, Box 777, Seaford, Delaware 19973. He is President of Ray S.
Mears and Sons, Inc., a farming corporation with a mailing address of
Route 4, Box 35, Seaford, Delaware 19973. Mr. Mears is a citizen of the
United States.
m. Hugh E. Miller. Mr. Miller's residence address
is 9 Carriage Path, Chadds Ford, Pennsylvania 19317. He is retired and
is a citizen of the United States.
n. Stacey J. Mobley. Mr. Mobley's residence address
is 141 Deer Valley Lane, Wilmington, Delaware 19807. He is Senior Vice
President, External Affairs, E. I. duPont de Nemours and Company,
Incorporated, a chemical company with an office at 9510 Nemours Building,
1007 Market Street, Wilmington, Delaware 19898. He is a citizen of the
United States.
o. Leonard W. Quill. Mr. Quill's residence address
is 1104 Arundel Drive, Wilmington, Delaware 19808. He is Chairman of the
Board of the Bank and is a citizen of the United States.
p. David P. Roselle. Mr. Roselle's residence
address is 47 Kent Way, Newark, Delaware 19711. He is President of the
University of Delaware, with an office at 104 Hullihan Hall, Newark,
Delaware 19716. Mr. Roselle is a citizen of the United States.
q. Thomas P. Sweeney. Mr. Sweeney's residence
address is 2301 Delaware Avenue, Wilmington, Delaware 19806. He is a
partner in the law firm of Richards, Layton & Finger, whose principal
business address and principal office is One Rodney Square, P.O. Box 551,
Wilmington, Delaware 19899. Mr. Sweeney is a citizen of the United
States.
r. Bernard J. Taylor, II. Mr. Taylor's residence
address is 23961 Kinnards Point Drive, Worton, Maryland 21678. He is
retired and is a citizen of the United States.
s. Mary Jornlin Theisen. Ms. Theisen's residence
address is 715 Blackshire Road, Wilmington, Delaware 19805. She is a
citizen of the United States.
t. Robert W. Tunnell, Jr. Mr. Tunnell's residence
address is E 1002 Barb Row, Pot Nets East, Long Neck, Delaware 19966. He
is managing partner of Tunnell Companies, L.P., an owner and developer of
<PAGE>
Page 12 of 16 pages
real estate with a mailing address of R.D. 1, Box 291, Long Neck, Delaware
19966. Mr. Tunnell is a citizen of the United States.
The Bank's executive officers are:
a. Mr. Cecala.
b. Howard K. Cohen. Mr. Cohen's residence address
is 1105 Graylyn Road, Wilmington, Delaware 19803. He is Senior Vice
President of the Bank and is a citizen of the United States.
c. William J. Farrell, II. Mr. Farrell's residence
address is 23 Kenwick Road, Hockessin, Delaware 19707. He is Senior Vice
President of the Bank and is a citizen of the United States.
d. David R. Gibson. Mr. Gibson's residence address
is 10 Sayers Court, Wilmington, Delaware 19803. He is Senior Vice
President of the Bank and is a citizen of the United States.
e. Mr. Harra.
f. George W. Helme, IV. Mr. Helme's residence
address is Park Plaza, No. 202, 1100 Lovering Avenue, Wilmington, Delaware
19806. He is Senior Vice President of the Bank and is a citizen of the
United States.
g. Joseph M. Jacobs, Jr. Mr. Jacobs' residence
address is 1300 Bracken Avenue, Wilmington, Delaware 19808. He is Senior
Vice President of the Bank and is a citizen of the United States.
h. John H. Kipp. Mr. Kipp's residence address is
2649 Cypress Road, Wilmington, Delaware 19810. He is Senior Vice
President of the Bank and is a citizen of the United States.
i. Hugh D. Leahy, Jr. Mr. Leahy's residence address
is 2022 Delaware Avenue, Wilmington, Delaware 19806. He is Senior Vice
President of the Bank and is a citizen of the United States.
j. Robert A. Matarese. Mr. Matarese's residence
address is 225 Hawkes Court, Hockessin, Delaware 19707. He is Senior
Vice President of the Bank and is a citizen of the United States.
k. Mr. Quill.
(3) The Holding Company is a Delaware-chartered bank and
thrift holding company. The address of its principal business and
principal office is Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890. Its directors are the same as the directors
of the Bank. Its executive officers are Messrs. Quill, Cecala and Harra.
Mr. Quill is the Holding Company's Chairman of the Board and Chief
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Page 13 of 16 pages
Executive Officer, Mr. Cecala is its Vice Chairman and Chief Operating
Officer and Mr. Harra is its President and Treasurer.
(d) No Filing Person nor any of its directors or executive
officers has, during the past five years, been convicted in a criminal
proceeding (excluding traffic violations and similar misdemeanors).
(e) No Filing Person nor any of its directors or executive
officers has, during the past five years, been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
and as a result of that 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
violation with respect to those laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On January 19, 1996, JW Charles issued a warrant to WTI in
connection with a loan the Bank made to JW Charles, as more fully
described in Item 4 below.
No other Filing Person nor any director or executive officer of
any Filing Person made any payment to JW Charles for the warrant which is
the subject of this Schedule 13D.
ITEM 4. PURPOSE OF TRANSACTION.
On January 19, 1996, the Bank issued to JW Charles an unsecured,
revolving line of credit in the maximum principal amount of $2,500,000
(the "Line of Credit"). A copy of the Line of Credit is attached hereto
as Exhibit B. The unpaid balance of advances drawn under the Line of
Credit bear interest at a variable rate based on changes in an index which
is designated as the Bank's "National Commercial Rate." That rate
currently is 8.5% per annum. JW Charles must make monthly payments of
interest on the unpaid balance of the Line of Credit, and must pay the
outstanding principal and all unpaid interest on December 31, 2002.
On January 19, 1996, WTI acquired a warrant to purchase up to
400,000 shares of common stock of JW Charles (the "Warrant"). WTI can
exercise the Warrant in whole or in part, at any time and from time to
time, from January 19, 1996 until December 31, 2002. The Warrant may be
exercised by WTI's paying JW Charles an amount equal to the product of
the exercise price as defined therein multiplied by the number of shares
of JW Charles's common stock being purchased. The exercise price per
share under the Warrant is the greater of $5.50 or an amount, calculated
on March 31 of each year based on JW Charles's financial statements for
the preceding year, equal to (1) the sum of JW Charles's total revenues
multiplied by .175 plus (2) its earnings before taxes multiplied by 2.5
divided by (3) the average number of its weighted shares of common stock
outstanding. The Warrant contains certain antidilution provisions and
provides for certain adjustments in the event of dividends and other
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Page 14 of 16 pages
distributions on JW Charles's common stock or upon a reorganization,
reclassification, merger or sale of JW Charles.
WTI acquired the Warrant for investment. The Warrant is not
transferable except to an affiliate of WTI. In addition, neither the
Warrant nor the shares of JW Charles's common stock which WTI would
receive upon exercising the Warrant have been registered under the
Securities Act of 1933 or any state "blue sky" law. The Warrant provides
WTI with certain "piggyback" registration rights for the shares underlying
the Warrant if JW Charles files a registration statement relating to any
of its securities before the end of the Warrant's term. However, WTI has
no other authority to demand registration of the Warrant or the shares of
common stock of JW Charles which would be issued upon the Warrant's
exercise. No Filing Person has exercised the Warrant.
A copy of the Warrant is attached hereto as Exhibit C.
At the present time, (a) no Filing Person nor any of its
directors or executive officers has any plans to purchase additional
warrants for or shares of JW Charles's common stock and (b) WTI has no
plans to dispose of the Warrant.
Under the Line of Credit, JW Charles agreed to use its best
efforts to cause its Board of Directors to include one representative of
the Bank, or representation equal to 10% of JW Charles's Board of
Directors, whichever is greater, for as long as WTI holds the Warrant or
owns more than 4.9% of JW Charles's common stock. However, the Bank has
not exercised its rights under this provision and has no plan at the
present time to do so.
No Filing Person nor any of its directors or executive officers
has any plans or proposals which relate to or would result in:
(a) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving JW Charles or any of its
subsidiaries;
(b) A sale or transfer of a material amount of assets of JW
Charles or any of its subsidiaries;
(c) Any change in the present board of directors or
management of JW Charles, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies on that
board of directors;
(d) Any material change in JW Charles's present
capitalization or dividend policy;
(e) Any other material change in JW Charles's business or
corporate structure;
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Page 15 of 16 pages
(f) Changes in JW Charles's charter or bylaws or other
actions which may impede the acquisition of control of JW Charles by any
person;
(g) Causing a class of JW Charles's securities to be delisted
from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association;
(h) A class of JW Charles's equity securities becoming
eligible for termination of registration pursuant to Section 12(g)(4) of
the Securities Exchange Act of 1934, as amended; or
(i) Any action similar to any of those enumerated above.
The Filing Persons and their directors and executive officers reserve the
right to adopt such plans and proposals in the future, subject to
applicable regulatory requirements, if any.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b) As of January 29, 1996, WTI held the Warrant, which
entitles it to acquire up to 400,000 shares of JW Charles's common stock.
This represents 9.3% of the 4,308,898 shares of JW Charles's common stock
which would be outstanding if the Warrant were exercised in full, based on
the Report on Form 10-Q which JW Charles filed with the Securities and
Exchange Commission in respect of the quarter ending September 30, 1995.
WTI has the sole power to vote and dispose of the shares of common stock
which it may acquire upon exercise(s) of the Warrant. Neither the Bank
nor the Holding Company has any right to vote or dispose of the Warrant
nor the shares of common stock underlying the Warrant.
(c) Except for WTI's acquisition of the Warrant on January
19, 1996, no Filing Person nor, to the best knowledge of each Filing
Person, any of its directors or executive officers has made any purchase
or sale of JW Charles's common stock within 60 days prior to January 29,
1996.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Except for the Line of Credit and the Warrant, there are no
contracts, arrangements, understandings or relationships (legal or
otherwise) among the Filing Persons or any of their directors or executive
officers or between any of the Filing Persons or any of their directors or
executive officers and any other person with respect to JW Charles's
common stock, including but not limited to transfer or voting of any
shares of its common stock, finder's fees, joint ventures, loan or option
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Page 16 of 16 pages
arrangements, puts or calls, guarantees of profits, division of profit or
loss or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Joint Filing Agreement attached hereto as Exhibit A.
Line of Credit attached hereto as Exhibit B.
Warrant attached hereto as Exhibit C.
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.
WT INVESTMENTS, INC.
/s/ Ted T. Cecala
Date: January 29, 1996 By:------------------------
Ted T. Cecala
Vice President
WILMINGTON TRUST COMPANY
/s/ Ted T. Cecala
Date: January 29, 1996 By:------------------------
Ted T. Cecala
Vice Chairman
WILMINGTON TRUST CORPORATION
/s/ Ted T. Cecala
Date: January 29, 1996 By:-------------------------
Ted T. Cecala
Vice Chairman
<PAGE>
<PAGE>
EXHIBIT A
JOINT FILING AGREEMENT
WT Investments, Inc., Wilmington Trust Company and Wilmington
Trust Corporation (the "Filing Persons") hereby agree to file jointly a
Schedule 13D and any amendments thereto relating to the common stock,
$.001 par value per share, of JW Charles Financial Services, Inc., a
Florida corporation, as permitted by Rule 13d-1 promulgated under the
Securities Exchange Act of 1934, as amended. Each of the Filing Persons
agrees that the information set forth in Schedule 13D and any amendments
thereto with respect to that Filing Person will be true, complete and
correct as of the date of that Schedule 13D or that amendment, to the best
of that Filing Person's knowledge and belief, after reasonable inquiry.
Each of the Filing Persons makes no representations as to the accuracy or
adequacy of the information set forth in the Schedule 13D or any
amendments thereto with respect to any other Filing Person. Each of the
Filing Persons shall notify the other Filing Person promptly if any of the
information set forth in the Schedule 13D or any amendments thereto
becomes inaccurate in any material respect or if that person learns of
information which would require an amendment to the Schedule 13D.
IN WITNESS WHEREOF, the undersigned have executed this Joint
Filing Agreement as of the 26th day of January, 1996.
WT INVESTMENTS, INC.
/s/ Ted T. Cecala
By: -----------------------
Ted T. Cecala
Vice President
WILMINGTON TRUST COMPANY
/s/ Ted T. Cacala
By:------------------------
Ted T. Cecala
Vice Chairman
WILMINGTON TRUST CORPORATION
/s/ Ted T. Cecala
By:------------------------
Ted T. Cecala
Vice Chairman
<PAGE>
<PAGE>
EXHIBIT B
PROMISSORY NOTE AND LOAN AGREEMENT
Borrower: JW Charles Financial Services, Inc.
980 North Federal Highway
Boca Raton, Florida
Lender: Wilmington Trust Company
1100 N. Market Street
Wilmington, Delaware
I. LOAN TERMS
1.1. PROMISE TO PAY. JW Charles Financial Services, Inc.
("Borrower") promises to pay to Wilmington Trust Company ("Lender") the
principal amount of Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000) or so much as may be outstanding, together with interest on
the unpaid outstanding principal balance of each advance (the "Loan").
Interest shall be calculated from the date of each advance until repayment
of each advance.
1.2. LINE OF CREDIT. This Note and Loan Agreement ("Note")
evidences a revolving line of credit for the maximum amount of Two Million
Five Hundred Thousand and 00/100 Dollars ($2,500,000.00). The unpaid
principal balance owing on this Note at any time may be evidenced by
Lender's internal records which will be provided to Borrower from time to
time upon Borrower's request, including daily computer print-outs. Lender
will have no obligation to advance funds under this Note if Borrower has
failed to comply with the covenants of Section III or if the Borrower is
in default under the terms of Section IV of this Note, or any agreement
that Borrower has with Lender, including any agreement made in connection
with the signing of this Note.
1.3. PAYMENT. Borrower will pay all outstanding principal
plus all accrued and unpaid interest under this Loan on December 31, 2002.
In addition, Borrower will pay regular monthly payments of accrued and
unpaid interest in arrears beginning January 15, 1996, and all subsequent
interest payments are due on the same day of each month after that.
Interest on this Note is computed on a 365/360 simple interest basis; that
is, by applying the ratio of the annual interest rate over a year of 360
days, multiplied by the outstanding principal balance, multiplied by the
actual number of days the principal balance is outstanding. Borrower will
make all payments to Lender at Lender's address shown above or at such
other place as Lender may designate in writing. Unless otherwise agreed
or required by applicable law, payment will be applied first to accrued
unpaid interest, then to principal, and any remaining amount to any unpaid
collection costs and late charges.
1.4. VARIABLE INTEREST RATE. The interest rate on this Note
is subject to change from time to time based on changes in an index which
<PAGE>
is the WILMINGTON TRUST COMPANY'S NATIONAL COMMERCIAL RATE (the "Index").
The Index is not necessarily the lowest rate charged by Lender on its
loans and is set by Lender in its sole discretion. If the Index becomes
unavailable during the term of this loan, Lender will utilize the prime
lending rate as published in the Wall Street Journal. Lender will tell
Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each day. The Index
currently is 8.50% per annum. The interest rate to be applied to the
unpaid principal balance of this Note will be at a rate equal to the
Index, resulting in an initial rate of 8.50% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum
rate allowed by applicable law.
1.5. PREPAYMENT. Borrower may prepay from time to time in
whole or in part without penalty or premium all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue
to make payments of accrued unpaid interest on the principal which remains
outstanding. Rather, they will reduce the principal balance due.
1.6. LATE CHARGE. If a payment is not made within 15 days of
the date such payment becomes due, Borrower will be charged 5.000% of the
unpaid portion of the regularly scheduled payment or $5.00, whichever is
greater.
1.7. NOTICE AND MANNER OF ADVANCES. Borrower shall give
Lender at least two business days' written notice of any request for
advances under this Note. Such notice shall constitute an affirmative
representation that Borrower is not in default of this Agreement and that
Borrower is in compliance with all of the covenants in Section III hereof.
Such Advances hereunder will be made in immediately available funds by
crediting the amount thereof to the Borrower's account with the Wilmington
Trust Company.
Advances under this Note may be requested in writing by Borrower
or by an Authorized Person (as defined below). All communications,
instructions, or directions by telephone or otherwise to Lender are to be
directed to Lender's office shown set forth in Section 5.1. The following
party or parties are authorized to request advances under the line of
credit until Lender receives from Borrower written notice of revocation of
their authority and\or the designation of the appointment of other
authorized persons: Joel Marks and Marshall Leeds (individually, an
"Authorized Person"). Borrower agrees to be liable for all sums either:
(a) advanced in accordance with the instructions of an Authorized Person;
or (b) credited to any of Borrower's accounts with Lender upon the
instructions of an Authorized Person.
1.8. STOCK WARRANTS. As additional consideration for Lender's
obligations hereunder, Borrower is providing Lender with common stock
warrants issued on the date hereof (the "Warrants"). Such warrants shall
be exercisable according to their terms.
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1.9. BOARD REPRESENTATION. As further consideration for the
Loan described herein, Borrower agrees to use its best efforts to cause
the Board of Directors of Borrower to include one representative of the
Lender, or representation equal to 10% of the Board, whichever is greater,
for such time as it holds the Warrants or owns more than 4.9% of the
common shares of Borrower.
1.10 MARKETING AGREEMENT. As further consideration for the
Loan described herein, Borrower has entered into a Marketing Agreement
with Wilmington Trust Company, dated the date hereof (the "Marketing
Agreement"), to market certain products of Wilmington Trust Company.
II. BORROWER'S REPRESENTATIONS AND WARRANTIES
2.1. ORGANIZATION AND STANDING. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing, and in
good standing under the laws of its state of incorporation and is duly
qualified to do business in each jurisdiction in which the conduct of its
business requires such qualification and would be materially and adversely
affected in the absence thereof. Borrower and each of its Subsidiaries is
in compliance with all applicable law and regulations governing the
conduct of their respective businesses and governing consummation of the
transactions contemplated herein, except for any such failures to so
comply that will or do not, singly or in the aggregate, have a material
adverse effect on the business, assets, financial conditions, operations,
or prospects of Borrower and the Subsidiaries taken as a whole. For the
purposes of this Agreement, a corporation or entity shall be considered to
be a "Subsidiary" of the Borrower if the Borrower owns shares of stock or
other ownership interests having the voting power (other than stock or
other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the directors of such
corporation, or other persons performing functions for such entity are
owned, directly or indirectly, by Borrower.
2.2. CORPORATE POWER AND AUTHORITY. The execution, delivery,
and performance hereof by Borrower are within its corporate powers, have
been duly authorized by all necessary corporate action, and are not in
contravention of law or the terms of its Restated Articles of
Incorporation or Bylaws or any amendment thereto, or any indenture,
agreement, or undertaking to which Borrower is a party or by which it is
bound.
2.3. VALID AND BINDING OBLIGATION. This Agreement constitutes
the legal, valid, and binding obligations of Borrower, enforceable in
accordance with their respective terms, subject to applicable bankruptcy
and insolvency laws and laws affecting creditors' rights and the
enforcement thereof generally.
2.4. NO LEGAL BAR. The execution, delivery, and performance
of this Agreement, and the borrowing contemplated by this Agreement do not
and will not violate any Requirement of Law or any contractual obligation
of Borrower and will not result in, or require, the creation or imposition
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of any lien on any of its properties or revenues pursuant to any
Requirement of Law or any contractual obligation, which violation or lien
would have a material adverse effect on the business, assets, financial
condition, operations, or prospects of Borrower. For the purposes of this
Section, "Requirement of Law" means the Restated Articles of Incorporation
and Bylaws or other organizational or governing documents of a given
entity and any law, treaty, rule or regulation, or determination of any
arbitrator or court or other governmental authority, in each case
applicable to or binding upon such entity or any of its property or to
which such entity or any of its property is subject.
2.5. LITIGATION. There is not now pending against Borrower or
any of its Subsidiaries, nor to the knowledge of the officers of Borrower
or any of its Subsidiaries is there threatened by written communication,
any litigation, investigation, or proceeding the outcome of which would,
in any case or in the aggregate, materially and adversely affect the
assets or financial condition of Borrower and any of its Subsidiaries,
taken as a whole, or seriously affect their continued material operations,
except as disclosed in public filings of Borrower pursuant to Section 13
of the Securities Exchange Act of 1934, as amended, or as otherwise
specifically disclosed to Lender in writing.
2.6. CONSENT OR FILING. No consent, approval, or
authorization of, any court, any governmental body or authority, or any
other person or entity is required in connection with the valid execution,
delivery, or performance of this Agreement or any document required by
this Agreement or in connection with any of the transactions contemplated
thereby.
2.7. DISCLOSURE. No representation or warranty made by
Borrower in this Agreement, in any of the other Loan Documents, or in any
other document furnished in connection herewith or therewith contains any
misrepresentation of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading with
respect to any material facts. There is no fact known to the Borrower
(and not known to Lender) that materially and adversely affects, or that
in the future could reasonably be expected to materially and adversely
affect, the business, assets, financial condition, operations, or
prospects of Borrower.
III. BORROWER'S COVENANTS
3.1. INDEBTEDNESS. Neither Borrower nor any of its
Subsidiaries, without prior written consent of Lender, will create, incur,
assume, or suffer to exist liability for, contingently or otherwise
(including, without limitation, any guaranty of the indebtedness of
another person), any indebtedness for borrowed money if Borrower's
consolidated debt to equity ratio, determined in accordance with GAAP but
after giving effect to such indebtedness and (whether or not in accordance
with GAAP) treating any guaranty of the indebtedness of another person as
an indebtedness of Borrower in the amount covered by such guaranty, shall
be greater than 3 to 1, except that the following shall be permitted in
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any event and shall not be included in the calculation of the above debt
to equity ratio:
(a) current indebtedness of Borrower to Gilman CMG,
Inc.;
(b) unsecured current liabilities incurred with trade
creditors in the ordinary course of business other than those which are
for money borrowed or are evidenced by bonds, debentures, notes or other
similar instruments;
(c) Money borrowed from banks or other financial
institutions in the ordinary course of business and solely for the purpose
of purchasing securities for the account of (i) any Subsidiary of Borrower
that is registered as a broker/dealer under the Securities Exchange Act of
1934, as amended, or (ii) customer margin accounts of any such subsidiary;
(d) notes or similar written instruments executed in
the ordinary course of business and solely for the purpose of providing
fidelity bond insurance and insurance of customer accounts in excess of
the coverage provided by the Securities Investor Protection Corporation
(SIPC); and
(e) purchase money mortgage obligations incurred in
the ordinary course of business that do not exceed $1,000,000 in the
aggregate of Borrower and its Subsidiaries, on a consolidated basis, at
any time.
For purposes of this Section 3.1, equity and
shareholder's equity shall include all preferred stock, whether redeemable
or nonredeemable, regardless of such preferred stock's treatment under
GAAP.
3.2. MINIMUM SHAREHOLDERS' EQUITY. During the term of this
Note, shareholder equity, excluding outstanding preferred stock, and
calculated for each fiscal quarter end period, shall not be less than a
sum equal to $7,000,000, plus 30% of net income for all fiscal quarter
end periods, plus 75% of net proceeds from common stock equity issuances.
3.3. MINIMUM EARNINGS. During the term of this Note,
Borrower's reported net income, as defined by GAAP, plus amortization
expenses reported for the amortization of intangible expenses associated
with the acquisition of assets or equity, for any four quarters within
any consecutive six quarterly periods of time, shall in the aggregate
exceed $1,500,000 for such four quarters taken together.
3.4 MAINTENANCE OF BROKERAGE BUSINESS. During the term of
this Note, Borrower will continue to operate retail securities brokerage
offices through locations owned by Borrower's affiliates, and through
independently owned offices which are correspondents of an affiliate of
Borrower, and such business will remain a substantial part of Borrower's
corporate strategy for growth.
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3.5. KEY MAN LIFE INSURANCE. During the term of this Note or
any extension thereof, Borrower agrees to maintain key man life insurance
on Marshall Leeds in the amount of $1,000,000. Such insurance policy
shall name Lender as beneficiary and such policy shall only be cancelable
upon 30 days written notice to Lender.
3.6. CORPORATE EXISTENCE AND QUALIFICATION. Borrower shall
do, or cause to be done, all things necessary to preserve, renew, and keep
in full force and effect its corporate existence and the corporate
existence of its wholly-owned Subsidiaries Corporate Securities Group,
Inc., JW Charles Securities, Inc., and JW Charles Clearing Corp.
(collectively, the "Principal Subsidiaries') and their respective rights,
licenses, and permits; shall comply, and cause the Principal Subsidiaries
to comply, with all material laws applicable to it, operate it and the
Principal Subsidiaries' business in a proper manner and substantially as
presently operated or proposed to be operated; and at all times shall
maintain, preserve, and protect its franchises and trade names and
preserve its property used or useful in the conduct of its or the
Principal Subsidiaries' business, and keep the same in good repair,
working order, and condition, and from time to time make, or cause to be
made, all needful and proper repairs, renewals, replacements, betterments,
and improvements thereto, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times.
3.7. FINANCIAL STATEMENTS; SEC REPORTS. Borrower shall keep
its books of account in accordance with GAAP and shall furnish to Lender
within 120 days after the close of its fiscal year a balance sheet as of
the close of such year, and statements of income and retained earnings and
statements of cash flows for such year. Such statements shall be
consolidated statements of Borrower and its Subsidiaries and shall be
audited and certified by Borrower's independent public accountants.
Within 60 days after each fiscal quarter, Borrower shall furnish to Lender
a balance sheet and income statement certified by the chief financial
officer of Borrower. Borrower, with reasonable promptness, shall furnish
to Lender such other data as Lender may reasonably request and will at all
times and from time to time permit Lender by or through any of its
officers, authorized agents, employees, attorneys, or accountants to
inspect and make extracts from Borrower's books and records.
Borrower shall also furnish Lender, within five (5) days of the
filing or delivery described below, a copy of all reports on Forms 10-K,
10-Q and 8-K, and of all proxy statements and annual or quarterly reports
to shareholders, that Borrower files with (or is required to deliver to)
the Securities and Exchange Commission pursuant to applicable provisions
of the Securities Exchange Act of 1934, as amended, or regulations
promulgated thereunder.
3.8. TAXES AND CLAIMS. Borrower shall promptly pay and
discharge and shall cause its Subsidiaries to promptly pay and discharge;
(a) all taxes, assessments, and governmental charges upon or against
Borrower, its Subsidiaries, or their assets, including payroll taxes,
prior to the date on which penalties attach thereto, unless and to the
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extent that such taxes are being diligently contested in good faith and by
appropriate proceedings and appropriate reserves therefor have been
established; and (b) all lawful claims, whether for labor, materials,
supplies, services, or anything else that reasonably might or could, if
unpaid, become a lien or charge upon the properties or assets of Borrower
or its Subsidiaries unless and to the extent only that the same are
transferred to bond, being diligently contested in good faith and by
appropriate proceedings, and appropriate reserves therefor have been
established.
3.9. BOOKS AND RECORDS. Borrower shall: (a) maintain at all
times true and complete books, records, and accounts in which true and
correct entries shall be made of its transactions in accordance with GAAP;
and (b) by means of appropriate quarterly entries reflected in its
accounts and in all financial statements furnished pursuant to Section 3.7
of this Agreement, establish proper liabilities and reserves for all taxes
and proper reserves, for depreciation, renewal and replacement,
obsolescence, and amortization of its properties and bad debts, all in
accordance with GAAP.
3.10. INSPECTION BY LENDER; AUDITS. Borrower shall allow any
authorized representative of Lender to visit and inspect any of the
properties of Borrower and its Subsidiaries, to examine the books of
account and other records and files of Borrower or any of its
Subsidiaries, to make copies thereof and to discuss the affairs, business,
finances, and accounts of Borrower or any of its Subsidiaries with its
officers and employees, all at such reasonable times and as often as
Lender may reasonably request.
3.11. PAY INDEBTEDNESS TO LENDER AND PERFORM OTHER COVENANTS.
Borrower shall make full and timely payments of the principal of and
interest on this Note and all other indebtedness of Borrower to Lender
hereunder, whether now existing or hereafter arising, and duly comply with
all the terms and covenants contained in each of the instruments and
documents given to Lender pursuant to this Agreement (including, but not
limited to, the Warrants and Marketing Agreement ) at the times and
places and in the manner set forth herein.
3.12. LITIGATION. Borrower will promptly notify Lender upon
the commencement of any action, suit, claim, counterclaim, or proceeding
against or investigation of Borrower or any of its Subsidiaries where the
damage claim is in excess of $500,000 or where the litigation may
materially and adversely affect the Borrower's or any of its Subsidiaries'
business (except when the alleged liability is fully covered by insurance,
excluding application of any standard deductible). If any such action,
suit, claim, counterclaim, proceeding (where the alleged liability is not
so covered by insurance) involves an amount in excess of $1,000,000 or
where the litigation could reasonably be expected to materially and
adversely affect Borrower's or any of its Subsidiaries' business, Borrower
shall also provide Lender, upon request, with an opinion of counsel
concerning the litigation or investigation and the probable outcome
thereof.
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3.13. REGULATORY ENFORCEMENT ACTIONS. Borrower shall promptly
notify Lender of the institution of: any investigation, any indictment,
the filing of any complaint, the issuance of any cease and desist order or
injunction, or the imposition of any fine or non-monetary sanction, by any
civil or criminal, federal or civil, regulatory enforcement agency,
district attorney's office, attorney general's office or U.S. Attorney's
office which involves Borrower or any of its affiliates and could
reasonably be expected to have a material adverse effect on Borrower or
one of its Subsidiaries. Such notification shall include a description of
the event that led to such action by such enforcement agency.
3.14. DEFAULTS OR ASSESSMENTS. Borrower shall promptly notify
Lender in writing of: (a) any material assessment by any taxing authority
for unpaid taxes as soon as borrower has knowledge thereof and shall
supply Lender with copies of all notices from the Internal Revenue Service
or any other taxing authority with respect to any such matter; and (b) any
default by Borrower or any of its Subsidiaries in the performance of (or
any material modification of, or waivers granted in connection with) any
of the terms or conditions contained in any agreement, mortgage,
indenture, or instrument to which Borrower or any of its Subsidiaries is a
party or which is binding upon Borrower, including, but not limited to,
any default in, material modification of, or waiver granted in connection
with, the Borrower's compliance with any agreement with Gilman CMG, Inc.,
and of any default by Borrower in the payment of any of its indebtedness
which default may, singly or in the aggregate, have a material adverse
effect on the business, assets, financial condition, operations, or
prospects of Borrower and its Subsidiaries taken as a whole.
3.15. CHANGE OF NAME, PRINCIPAL PLACE OF BUSINESS, ETC.
Borrower shall notify Lender immediately of any change in the name of
Borrower, the principal place of business of Borrower, the office where
the books and records of Borrower are kept, or any change in the
registered agent of Borrower for the purpose of service process.
3.16. MERGERS, ETC. Without Lender's consent, Borrower shall
not wind up, liquidate or dissolve itself, reorganize, merge or
consolidate with or into, or convey, sell, assign, transfer, lease, or
otherwise dispose of all or substantially all of its assets to any person.
IV. DEFAULT, RIGHT TO FUTURE ADVANCES AND REMEDIES UPON DEFAULT
4.1. DEFAULT. Borrower will be in default if any of the
following happens: (a) Borrower fails to make any payment within five
(5) business days after the same becomes due to Lender hereunder ; (b)
Borrower fails to comply with or to perform when due any other term,
obligation, covenant, or condition contained in this Note or any agreement
related to this Note, including, but not limited to the Warrants and the
Marketing Agreement, or in any other agreement or loan Borrower has with
Lender, and such failure continues for fifteen (15) business days after
written notice to Borrower that Lender considers such failure to be a
default. (c) Borrower defaults under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other agreement,
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in favor of any other creditor, including, but not limited to any default
under any agreements with Gilman CMG, Inc., or any person that may
materially and adversely affect any of Borrower's property or Borrower's
ability to repay this Note or perform Borrower's obligations under this
Note and such default continues for fifteen (15) business days after
written notice to Borrower that Lender considers such default to be a
default hereunder; (d) Borrower becomes insolvent, a receiver is appointed
for any part of Borrower's property, Borrower makes a general assignment
for the benefit of creditors or any proceeding is commenced either by
Borrower or against Borrower under any bankruptcy or insolvency laws; (e)
Borrower, or any of its affiliates, becomes subject to any civil or
criminal order or decree by any regulatory agency and that action has a
material adverse effect on Borrower, and Borrower fails to have such
action effectively stayed, discharged, vacated or set aside within thirty
(30) days of the institution of such action; (f) Any representation or
statement made or furnished to Lender by Borrower or on Borrower's behalf
is determined to be false or misleading in any material respect at the
time made or furnished; or (g) A material adverse change occurs in
Borrower's financial condition, or Lender in good faith reasonably
believes the prospect of payment or performance of the indebtedness is
materially impaired, provided that Lender notifies Borrower in writing of
such default and Borrower fails to cure such default within ten (10)
business days of such notice .
4.2. BORROWER'S RIGHT TO ADVANCES. Borrower shall not be
entitled to any further Advances under the Line of Credit evidenced by
this Note if any of the following happens: (a) Borrower fails to make any
payment after the same becomes due to Lender hereunder ; (b) Borrower
fails to comply with or to perform when due any other term, obligation,
covenant, or condition contained in this Note or any agreement related to
this Note, including, but not limited to the Warrants and the Marketing
Agreement, or in any other agreement or loan Borrower has with Lender, (c)
Borrower defaults under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any other
creditor, including, but not limited to any default under any agreements
with Gilman CMG, Inc., or any person that may materially and adversely
affect any of Borrower's property or Borrower's ability to repay this Note
or perform Borrower's obligations under this Note; (d) Borrower becomes
insolvent, a receiver is appointed for any part of Borrower's property,
Borrower makes a general assignment for the benefit of creditors or any
proceeding is commenced either by Borrower or against Borrower under any
bankruptcy or insolvency laws; (e) Borrower, or any of its affiliates,
becomes subject to any civil or criminal enforcement order or decree by
any regulatory agency and that action has a material adverse effect on
Borrower; (f) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is determined to be false or
misleading in any material respect at the time made or furnished; or (g) A
material adverse change occurs in Borrower's financial condition, or
Lender in good faith reasonably believes the prospect of payment or
performance of the indebtedness is materially impaired. If the
conditions described herein are addressed by the Borrower in such a way
that default under Section 4.1 is avoided or cured, Borrower shall
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thereafter be entitled to advances under this Note until the reoccurrence
of a condition described herein.
4.3. LENDER'S RIGHTS. Upon default, as set forth in Section
4.1, Lender may declare the entire unpaid principal balance on this Note
and all accrued unpaid interest immediately due, without notice, and then
Borrower will pay that amount. Upon default, including failure to pay
upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note to 3.000
percent points over the Index. The interest rate will not exceed the
maximum rate permitted by applicable law. Lender may hire or pay someone
else to help collect this Note if Borrower does not pay. Borrower also
will pay Lender that amount. This includes, subject to any limits under
applicable law, Lender's reasonable attorney's fees and Lender's legal
expenses whether or not there is a lawsuit, including reasonable
attorneys' fees and legal expenses for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services. If not prohibited
by applicable law, Borrower also will pay any court costs, in addition to
all other sums provided by law.
V. MISCELLANEOUS
5.1. NOTICES. Any notice, consent, request, or other
communication to a party required or permitted hereunder shall be deemed
to have been duly given or made (a) on the date delivered in person, (b)
on the date indicated on the return receipt if mailed postage prepaid, by
certified or registered mail, with return receipt requested, (c) on the
date transmitted by facsimile, if sent by 2:30 P.M. Eastern Time, for
purposes of Advances, and 4:30 P.M. Eastern Time for all other purposes,
and confirmation of receipt thereof is reflected or obtained, or (d) if
sent by Federal Express or other nationally recognized overnight courier
or overnight express U.S. Mail, with service charges prepaid, then on the
next business day after delivery to the courier of mail (in time for and
specifying next day delivery). Such notices shall be sent to a party at
its address or facsimile number as follows, unless otherwise designated in
writing:
If to Borrower: JW Charles Financial Services, Inc.
1117 Perimeter Center West
Suite 500E
Atlanta, Georgia 30338
Attn: Joel Marks, CFO
Telecopy No. (404) 353-5873
If to Lender: Wilmington Trust Company
1100 North Market Street
Wilmington, Delaware 19890
Attn: Douglas Cornforth
Telecopy No. (302) 651-8010
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5.2. RIGHTS AND REMEDIES NOT WAIVED. Lender may delay or
forego enforcing any of its rights or remedies under this Note without
losing them.
5.3. GOVERNING LAW. This Note has been delivered to Lender
and accepted by Lender in the State of Delaware. This Note shall be
governed by and construed in accordance with the laws of the State of
Delaware.
5.4. JURISDICTION. If there is a lawsuit, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of New
Castle County, the State of Delaware.
5.5. JURY TRIAL WAIVER. Lender and Borrower hereby waive the
right to any jury trial in any action, proceeding, or counterclaim brought
by either Lender or Borrower against the other.
5.6. WAIVER OF PRESENTMENT. Borrower and any other person who
signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protest and notice of dishonor.
5.7. AMENDMENTS. Upon any change in the terms of this Note,
and unless otherwise expressly stated in writing, no party who signs this
Note, whether as maker, guarantor, accommodation maker or endorser, shall
be released from liability. All such parties agree that Lender may renew
or extend (repeatedly and for any length of time) this loan, or release
any party or guarantor or collateral; and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such
parties also agree that Lender may modify this loan without the consent of
or notice to anyone other than the party with whom the modification is
made.
5.8. INTEGRATION. The Note contains the entire agreement
between the parties relating to the subject matter hereof and supersedes
all oral statements and prior writings with respect thereto.
IN WITNESS WHEREOF, the parties have caused this Note and Loan
Agreement to be executed by their respective duly authorized officers.
LENDER BORROWER
/s/ Douglas Cornforth /s/ Joel E. Marks
By:-------------------- By:-----------------------
Douglas Cornforth Joel E. Marks
Title: Vice President Title: Chief Financial Officer
Date: 1/19/96 Date: 1/19/96
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<PAGE>
EXHIBIT C
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
HEREOF CAN BE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND
SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT, UNLESS, IN THE OPINION OF COUNSEL TO THE
COMPANY, SUCH REGISTRATION IS NOT THEN REQUIRED.
JWCHARLES FINANCIAL SERVICES, INC.
980 North Federal Highway
Boca Raton, Florida 33432
COMMON STOCK PURCHASE WARRANT
Date of Issuance: Right to Purchase
January __, 1996 400,000 Shares
Expiration Date:
December 31, 2002
THIS CERTIFIES THAT, for value received, the person named
immediately below,
W T INVESTMENTS, INC.
or the registered assigns of such person (the "Registered Holder"), is
entitled to purchase from JWCHARLES FINANCIAL SERVICES, INC., a Florida
corporation (the "Company"), the number of shares of the Company's common
stock, $.001 par value per share, set forth above, subject to adjustment
pursuant to Section 5 hereof, at the Exercise Price (as defined in
subsection 3.1) per Share, subject to adjustment as set forth in Section 4
hereof (the "Exercise Price").
The amount and kind of securities purchasable pursuant to the
rights granted under this Warrant and the purchase price for such
securities are subject to adjustment pursuant to the provisions contained
in this Warrant. This Warrant is also subject to the following
provisions:
1.
CERTAIN DEFINITIONS
As used in this Warrant, the following terms have the meanings
set forth below:
"Affiliate" means any corporation directly under common control
with the Registered Holder.
<PAGE>
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, $.001 par value
per share, as constituted on the Date of Issuance. However, upon the
occurrence of certain events prescribed herein that affect the Common
Stock otherwise issuable upon exercise of this Warrant, Common Stock shall
mean Warrant Stock.
"Common Stock Deemed Outstanding" means, at any given time, the
Weighted Average Common Stock Outstanding plus the number of shares of
Common Stock deemed to be outstanding pursuant to Section 3 of this
Warrant
"Date of Issuance" is the date set forth on the front page of
this Warrant, and the terms "date hereof," "date of this Warrant," and
similar expressions shall be deemed to refer to the Date of Issuance of
this Warrant.
"EBT" means earnings before income taxes determined in accordance
with GAAP.
"Exercise Period" means the period of time commencing on the Date
of Issuance and ending at 12:00 Midnight, Eastern Time, on December 31,
2002.
"GAAP" means generally accepted accounting principles as applied
in the United States and on a basis with respect to the Company that is
consistent for or within each period affected.
"Market Price" means as to any security (i) the average of the
closing prices of such security's sales on the principal domestic
securities exchange on which such security may at the time be listed (but
only if such exchange, as opposed to The Nasdaq Stock Market, is the
principal trading market for such security), or (ii) if there have been no
sales on any such exchange on any day, the average of the highest bid and
lowest asked prices on such exchange at the end of such day, or (iii) if
on any day such security is not so listed and traded, the average of the
representative bid and asked prices quoted in The Nasdaq Stock Market as
of the close of trading in New York City on such day, or, if on any day
such security is not quoted in The Nasdaq Stock Market, the average of the
high and low bid and asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case
averaged over a period of 20 consecutive business days consisting of the
business day immediately preceding the day as of which "Market Price" is
being determined and the 19 consecutive business days prior to such day;
PROVIDED that if such security is listed on any domestic securities
exchange or quoted in The Nasdaq Stock Market, the term "business day" or
"business days" as used in this sentence means a day or days, as
applicable, on which such exchange or The Nasdaq Stock Market is open for
trading or quotation, as the case may be. If at any time such security is
not listed on any domestic securities exchange or quoted in The Nasdaq
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Stock Market or the domestic over-the-counter market, the "Market Price"
will be the fair value thereof determined jointly by the Company and the
Registered Holder; PROVIDED that if such parties are unable to reach
agreement, such fair value will be determined by an appraiser jointly
selected by the Company and the Registered Holder.
"The Nasdaq Stock Market" means the Nasdaq Inter-Dealer Quotation
System or such other similar inter-dealer quotation system as may in the
future be used generally by members of the National Association of
Securities Dealers, Inc. for over-the-counter transactions in securities.
"Person" means an individual, a partnership, a corporation, a
trust, a joint venture, an unincorporated organization, and a government
or any department or agency thereof.
"Total Revenues" mean the amount thereof for the Company
determined in accordance with GAAP.
"Warrant Stock" means shares of the Company's authorized but
unissued Common Stock issued or issuable upon exercise of this Warrant or
any other of the Warrants; PROVIDED that if there is a change such that
the securities issuable upon exercise of a Warrant are issued by an entity
other than the Company, or there is a change in the class of securities so
issuable, then the term "Warrant Stock" will mean one share of the
security issuable upon exercise of the Warrant if such security is
issuable in shares, or will mean the smallest unit in which such security
is issuable if such security is not issuable in shares.
"Warrant" mean this Warrant providing for the purchase of up to
400,000 shares of Common Stock, subject to adjustment as provided herein,
and all common stock purchase warrants issued in exchange or substitution
for this Warrant or any such other common stock purchase warrant issued
pursuant to the terms hereof or thereof, as the case may be.
"Weighted Average Common Stock Outstanding" means, at any given
time, the number of shares of Common Stock deemed to be outstanding in
accordance with GAAP as of the end of the Company s most recent fiscal
quarter ended.
2.
EXERCISE OF WARRANT
2.1 EXERCISE PERIOD. The Registered Holder may exercise this
Warrant, in whole or in part (but not as to a fractional share), at any
time and from time to time, during the Exercise Period.
2.2 EXERCISE PROCEDURE.
(a) This Warrant will be deemed to have been
exercised at such time as the Company has received all of the following
items (the "Exercise Date"):
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(i) a completed Exercise Agreement, as described
below, executed by the Registered Holder
exercising all or part of the purchase rights
represented by this Warrant;
(ii) this Warrant (subject to delivery by the Company
of a new Warrant with respect to any unexercised
portion, as provided in Section 2.2(b)); and
(iii) a certified check or other certified funds
payable to the Company in an amount equal to the
product of the Exercise Price multiplied by the
number of shares of Warrant Stock being purchased
upon such exercise.
(b) Certificates for shares of Warrant Stock
purchased upon exercise of this Warrant will be delivered by the Company
to the Registered Holder within ten days after the Exercise Date. Unless
this Warrant has expired or all of the purchase rights represented hereby
have been exercised, the Company will prepare a new Warrant representing
the rights formerly represented by this Warrant that have not expired or
been exercised. The Company will, within such ten-day period, deliver
such new Warrant to the Registered Holder.
(c) The Warrant Stock issuable upon the exercise of
this Warrant will be deemed to have been issued to the Registered Holder
on the Exercise Date, and the Registered Holder will be deemed for all
purposes to have become the record holder of such Warrant Stock on the
Exercise Date.
(d) The issuance of certificates for shares of
Warrant Stock upon exercise of this Warrant will be made without charge to
the Registered Holder for any issuance tax in respect thereof or any other
cost incurred by the Company in connection with such exercise and the
related issuance of shares of Warrant Stock; PROVIDED, HOWEVER, that the
Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate or instrument in a name other than that of the Registered
Holder of this Warrant, and the Company shall not be required to issue or
deliver any such certificate or instrument unless and until the Person or
Persons requesting the issue thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
(e) The Company will not close its books for the
transfer of this Warrant or of any of the securities issuable upon the
exercise of this Warrant in any manner that interferes with the timely
exercise of this Warrant. The Company will from time to time take all
such action as may be necessary to assure that the par value per share of
the unissued Warrant Stock acquirable upon exercise of this Warrant is at
all times equal to or less than the Exercise Price then in effect.
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2.3 EXERCISE AGREEMENT. The Exercise Agreement will be
substantially in the form set forth as Exhibit I hereto.
2.4 FRACTIONAL SHARES. If a fractional share of Warrant
Stock would be issuable upon exercise of the rights represented by this
Warrant, the Company will, within 20 days after the Exercise Date, deliver
to the Registered Holder a check payable to the Registered Holder, in lieu
of such fractional share, in an amount equal to the Market Price of such
fractional share as of the close of business on the Exercise Date.
3.
EXERCISE PRICE
3.1 GENERAL.
(a) The exercise price per Share shall be the greater
of $5.50 or an amount, calculated on March 31 of each year during the
Exercise Period based on the Company s audited financial statements for
its immediately preceding fiscal year, equal to (i) the sum of (A) Total
Revenues multiplied by .175 PLUS (B) EBT multiplied by 2.5 DIVIDED BY (ii)
the number of shares of Weighted Average Common Stock Outstanding. In
order to prevent dilution of the rights granted under this Warrant, the
Exercise Price will also be subject to adjustment from time to time
pursuant to this Section 3.
(b) If and whenever the Company issues or sells, or
in accordance with subsection 3.2 is deemed to have issued or sold, any
shares of its Common Stock for a consideration per share less than the
lesser of ninety percent (90%) of the Market Price per share of Common
Stock, on the one hand, and the Exercise Price in effect immediately prior
to the time of such issuance or sale, on the other hand (such lesser price
being hereinafter referred to as the "Antidilution Strike Price"), then
immediately upon such issuance or sale the Exercise Price will be reduced
to a price determined by multiplying the Exercise Price in effect
immediately prior to the issuance or sale by a fraction, the numerator of
which shall be the sum of (i) the number of shares of Common Stock
outstanding prior to the issuance or sale PLUS (ii) the number of shares
of Common Stock (in terms of Warrant Stock issuable upon an exercise of
this Warrant) that the maximum aggregate amount receivable by the Company
upon such issuance or sale would purchase at the Antidilution Strike Price
effective immediately prior to the issuance or sale, and the denominator
of which shall be the number of shares of Common Stock Deemed Outstanding
immediately after such issuance or sale.
(c) The following securities or transactions shall be
excluded from the operation of paragraph (b) of this subsection 3.1 and
subsection 3.2:
(i) The existence and any exercise of any option,
warrant, or other right to purchase Common Stock,
or the conversion into or exchange for Common
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Stock of any security of the Company, that is
outstanding on the Issuance Date.
(ii) Any grant or exercise of options for Common Stock
under the Company's 1990 Stock Option Plan.
3.2 EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes
of determining the adjusted Exercise Price under subsection 3.1 above, the
following provisions will be applicable:
(a) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner grants any rights or options to subscribe for or to purchase Common
Stock or any stock or other securities convertible into or exchangeable
for Common Stock (such rights or options being herein called "Options" and
such convertible or exchangeable stock or securities being herein called
"Convertible Securities") and the price per share for which Common Stock
is issuable upon the exercise of such Options or upon conversion or
exchange of such Convertible Securities is less than the Antidilution
Strike Price effective immediately prior to the time of the granting of
such Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon
the exercise of such Options will be deemed to be outstanding and to have
been issued and sold by the Company for such price per share. For
purposes of this paragraph, the "price per share for which Common Stock is
issuable upon exercise of such Options or upon conversion or exchange of
such Convertible Securities" will be determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for
the granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon exercise of all such
Options, plus, in the case of Options that relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the issuance or sale of such Convertible
Securities and the conversion or exchange thereof, by (ii) the total
maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all Convertible
Securities issuable upon the exercise of such Options. Except as
otherwise provided in paragraphs (c) and (d) below, no adjustment of the
Exercise Price will be made when Convertible Securities are actually
issued upon the exercise of such Options or when Common Stock is actually
issued upon the exercise of such Options or the conversion or exchange of
such Convertible Securities.
(b) ISSUANCE OF CONVERTIBLE SECURITIES. If the
Company in any manner issues or sells any Convertible Securities, and the
price per share for which Common Stock is issuable upon such conversion or
exchange is less than the Antidilution Strike Price effective immediately
prior to the time of such issuance or sale, then the maximum number of
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities will be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For the purposes
of this paragraph, the "price per share for which Common Stock is issuable
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upon such conversion or exchange" will be determined by dividing (i) the
total amount received or receivable by the Company as consideration for
the issuance or sale of such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the
Company upon the conversion or exchange thereof, by (ii) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities. Except as otherwise provided in
paragraphs (c) and (d) below, no adjustment of the Exercise Price will be
made when Common Stock is actually issued upon the conversion or exchange
of such Convertible Securities, and if any such issuance or sale of such
Convertible Securities is made upon exercise of any Options for which
adjustments of the Exercise Price had been or are to be made pursuant to
other provisions of this Section 3, no further adjustment of the Exercise
Price will be made by reason of such issuance or sale.
(c) CHANGE IN OPTION PRICE OR CONVERSION RATE. If
the purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock changes at any time
(other than under or by reason of provisions that are designed to protect
against dilution of the type set forth in this Section 3 and that have no
more favorable effect on the holders of such Options or Convertible
Securities than this Section 3 would have if this Section 3 were included
in such Options or Convertible Securities), then the Exercise Price in
effect at the time of such change will be readjusted to the Exercise Price
that would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration, or changed conversion rate, as
the case may be, at the time initially granted, issued, or sold; such
adjustment of the Exercise Price will be made whether the result thereof
is to increase or reduce the Exercise Price then in effect under this
Warrant, provided that no such adjustment shall increase the Exercise
Price above the initial Exercise Price hereof.
(d) TREATMENT OF TERMINATED OR EXPIRED OPTIONS AND
CONVERTIBLE SECURITIES. Upon the expiration or the termination of any
Option or of any right to convert or exchange any Convertible Security,
without the exercise of such Option or right, the Exercise Price then in
effect hereunder will be adjusted to the Exercise Price that would have
been in effect at the time of such expiration or termination had such
Option or Convertible Security never been issued, but such subsequent
adjustment shall not affect the number of shares of Common Stock issued
upon any exercise of this Warrant prior to the date such adjustment is
made.
(e) CALCULATION OF CONSIDERATION RECEIVED. If any
Common Stock, Options, or Convertible Securities are issued or sold or
deemed to have been issued or sold for consideration that includes cash,
then the amount of cash consideration actually received by the Company
will be deemed to be the cash portion thereof. If any Common Stock,
Options, or Convertible Securities are issued or sold or deemed to have
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been issued or sold for a consideration part or all of which is other than
cash, then the amount of the consideration other than cash received by the
Company will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the Market Price thereof as
of the date of receipt. If any Common Stock, Options, or Convertible
Securities are issued in connection with any merger or consolidation in
which the Company is the surviving corporation, then the amount of
consideration therefor will be deemed to be the fair value of such portion
of the net assets and business of the non-surviving corporation as is
attributable to such Common Stock, Options, or Convertible Securities, as
the case may be.
(f) INTEGRATED TRANSACTIONS. If any Option is issued
in connection with the issuance or sale of other securities of the
Company, together comprising one integrated transaction in which no
specific consideration is allocated to such Option by the parties thereto,
the Option will be deemed to have been issued without consideration.
(g) TREASURY SHARES. The number of shares of Common
Stock Deemed Outstanding at any given time does not include shares owned
or held by or for the account of the Company, and the disposition of any
shares so owned or held will be considered an issuance or sale of Common
Stock.
3.3 SUBDIVISION OR COMBINATION OF COMMON STOCK; AND STOCK
DIVIDENDS, ETC. If the Company shall at any time after the date hereof
(a) issue any shares of Common Stock or Convertible Securities, or any
rights to purchase Common Stock or Convertible Securities, as a dividend
or other distribution upon Common Stock, (b) issue any shares of Common
Stock, in subdivision of outstanding shares of Common Stock by
reclassification or otherwise, or (c) combine outstanding shares of Common
Stock, by reclassification or otherwise, then the Exercise Price that
would apply if purchase rights hereunder were being exercised immediately
prior to such action by the Company shall be adjusted by multiplying it by
a fraction, the numerator of which shall be the number of shares of
Weighted Average Common Stock Outstanding immediately prior to such
dividend or other distribution, subdivision, or combination and the
denominator of which shall be the number of shares of Weighted Average
Common Stock Outstanding immediately after such dividend, subdivision, or
combination.
3.4 CERTAIN DIVIDENDS OR DISTRIBUTIONS. If the Company shall
declare a dividend or other distribution upon the Common Stock payable
otherwise than out of earnings or earned surplus AND otherwise than in
Common Stock or Convertible Securities, the Exercise Price that would
apply if purchase rights under the Warrants were being exercised
immediately prior to the declaration of such dividend or distribution
shall be reduced by an amount equal, in the case of a dividend or other
distribution in cash, to the amount thereof payable per share of the
Common Stock or, in the case of any other dividend or distribution, to the
fair value of such dividend or distribution per share of the Common Stock
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as determined in good faith by the Board of Directors of the Company. For
purposes of the foregoing, a dividend or distribution other than in cash
shall be considered payable out of earnings or earned surplus only to the
extent that such earnings or earned surplus are charged with an amount
equal to the fair value of such dividend or distribution as determined in
good faith by the Board of Directors of the Company. Such reductions
shall take effect as of the date on which a record is taken for the
purpose of such dividend or distribution, or, if a record is not taken,
the date as of which the holders of Common Stock of record entitled to
such dividend or distribution are to be determined.
3.5 NO DE MINIMIS ADJUSTMENTS. No adjustment of the Exercise
Price shall be made if the amount of such adjustment would be less than
five cents per share, but in such case any adjustment that otherwise would
be required to be made shall be carried forward and shall be made at the
time and together with the next subsequent adjustment that, together with
any adjustment or adjustments so carried forward, shall amount to not less
than five cents per share.
4.
ADJUSTMENT OF NUMBER OF
SHARES ISSUABLE UPON EXERCISE
If the Company issues or sells, or, in accordance with Section 3
hereof, is deemed to have issued or sold, any shares of its Common Stock
for a consideration per share below the Antidilution Strike Price, then
upon each adjustment of the Exercise Price pursuant to Section 3 hereof,
the Registered Holder of this Warrant shall thereafter (until another such
adjustment) be entitled to purchase, at the adjusted Exercise Price in
effect on the date purchase rights under this Warrant are exercised, the
number of shares of Warrant Stock, calculated to the nearest 1/100th
share, determined by (a) multiplying the number of shares of Warrant Stock
purchasable hereunder immediately prior to the adjustment of the Exercise
Price by the Exercise Price in effect immediately prior to such
adjustment, and (b) dividing the product so obtained by the adjusted
Exercise Price in effect on the date of such exercise. The provisions of
subsection 2.4 shall apply, however, so that no fractional share of
Warrant Stock shall be issued upon exercise of this Warrant.
5.
EFFECT OF REORGANIZATION, RECLASSIFICATION
CONSOLIDATION, MERGER, OR SALE
If at any time while this Warrant is outstanding there shall be
any reorganization or reclassification of the capital stock of the Company
(other than a subdivision or combination of shares provided for in
subsection 3.3 hereof), any consolidation or merger of the Company with
another corporation (other than a consolidation or merger in which the
Company is the surviving entity and which does not result in any change in
the Common Stock), or any sale or other disposition by the Company of all
or substantially all of its assets to any other corporation, then the
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Registered Holder of this Warrant shall thereafter upon exercise of this
Warrant be entitled to receive the number of shares of stock or other
securities or property of the Company, or of the successor corporation
resulting from such consolidation or merger, as the case may be, to which
the Common Stock (and any other securities and property) of the Company,
deliverable upon the exercise of this Warrant, would have been entitled
upon such reorganization, reclassification of capital stock,
consolidation, merger, sale, or other disposition if this Warrant had been
exercised immediately prior to such reorganization, reclassification of
capital stock, consolidation, merger, sale, or other disposition. In any
such case, appropriate adjustment (as determined in good faith by the
Board of Directors of the Company) shall be made in the application of the
provisions set forth in this Warrant with respect to the rights and
interests thereafter of the Registered Holder of this Warrant to the end
that the provisions set forth in this Warrant (including those relating to
adjustments of the Exercise Price and the number of shares issuable upon
the exercise of this Warrant) shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
deliverable upon the exercise hereof as if this Warrant had been exercised
immediately prior to such reorganization, reclassification of capital
stock, consolidation, merger, sale, or other disposition and the
Registered Holder hereof had carried out the terms of the exchange as
provided for by such reorganization, reclassification of capital stock,
consolidation, or merger. If in any such reorganization,
reclassification, consolidation, or merger, additional shares of Common
Stock shall be issued in exchange, conversion, substitution, or payment,
in whole or in part, for or of a security of the Company other than Common
Stock, any such issue shall be treated as an issue of Common Stock covered
by the provisions of Section 3, with the amount of the consideration
received upon the issue thereof being determined in good faith by the
Board of Directors of the Company. The Company shall not effect any such
reorganization, consolidation, or merger unless, upon or prior to the
consummation thereof, the successor corporation shall assume by written
instrument the obligation to deliver to the Registered Holder hereof such
shares of stock or other securities, cash, or property as such Holder
shall be entitled to purchase in accordance with the foregoing provisions.
Notwithstanding any other provisions of this Warrant, in the event of sale
or other disposition of all or substantially all of the assets of the
Company as a part of a plan for liquidation of the Company, all rights to
exercise the Warrant shall terminate 60 days after the Company gives
written notice to the Registered Holder of this Warrant that such sale or
other disposition has been consummated.
6.
NOTICE OF ADJUSTMENT
Immediately upon any adjustment of the Exercise Price, or
increase or decrease in the number of shares of Common Stock purchasable
upon exercise of this Warrant, the Company will send written notice
thereof to the Registered Holder, stating the adjusted Exercise Price and
the increased or decreased number of shares purchasable upon exercise of
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this Warrant and setting forth in reasonable detail the method of
calculation for such adjustment and increase or decrease. When
appropriate, such notice may be given in advance and included as part of
any notice required to be given pursuant to Section 7 below.
7.
PRIOR NOTICE OF CERTAIN EVENTS
If at any time:
(a) the Company shall pay any dividend payable in
stock upon its Common Stock or make any distribution (other than
cash dividends) to the holders of its Common Stock;
(b) the Company shall offer for subscription PRO RATA
to the holders of its Common Stock any additional shares of stock
of any class or any other rights;
(c) there shall be any reorganization or
reclassification of the capital stock of the Company, any
consolidation or merger of the Company with another corporation
(other than a direct or indirect subsidiary of the Company), or a
sale or disposition of all or substantially all its assets; or
(d) there shall be a voluntary or involuntary
dissolution, liquidation, or winding up of the Company,
then, in each such case, the Company shall give prior written notice, by
hand delivery or by certified mail, postage prepaid, addressed to the
Registered Holder of this Warrant at the address of such holder as shown
on the books of the Company, of the date on which (i) the books of the
Company shall close or a record shall be taken for such stock dividend,
distribution, or subscription rights or (ii) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
or winding up shall take place, as the case may be. A copy of each such
notice shall be sent simultaneously to each transfer agent of the
Company's Common Stock. Such notice shall also specify the date as of
which the holders of Common Stock of record shall participate in said
dividend, distribution, or subscription rights or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding up, as the case may be. Such written
notice shall be given at least 30 days prior to the record date or the
effective date, whichever is earlier, of the subject action or other
event.
8.
RESERVATION OF COMMON STOCK
The Company will at all times reserve and keep available for
issuance upon the exercise of Warrants such number of its authorized but
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unissued shares of Common Stock as will be sufficient to permit the
exercise in full of all outstanding Warrants, and upon such issuance such
shares of Common Stock will be validly issued, fully paid, and
nonassessable.
9.
NO STOCKHOLDER RIGHTS OR OBLIGATION
This Warrant will not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company. No provision of
this Warrant, in the absence of affirmative action under Section 2.2
hereof by the Registered Holder to purchase Warrant Stock, and no
enumeration in this Warrant of the rights or privileges of the Registered
Holder, will give rise to any obligation of such Holder for the Exercise
Price of Warrant Stock acquirable by exercise hereof or as a stockholder
of the Company.
10.
NON-TRANSFERABILITY
This Warrant and all rights hereunder are not transferable, in
whole or in part, except to an Affiliate. The Warrant Stock issued upon
exercise hereof may not be offered, sold, or transferred except in
compliance with the Securities Act of 1933, as amended (the "Act"), and
any applicable state securities laws, and then only against receipt of an
agreement of the Person to whom such offer or sale is made to comply with
the provisions of this Section 10 with respect to any resale or other
disposition of such securities; PROVIDED that no such agreement shall be
required from any Person purchasing any security underlying this Warrant
pursuant to a registration statement effective under the Act. The
Registered Holder of this Warrant agrees that, prior to the disposition of
any security purchased on the exercise hereof under circumstances that
might require registration of such security under the Act, or any similar
statute then in effect, the Registered Holder shall give written notice to
the Company, expressing its intention as to such disposition. Promptly
upon receiving such notice, the Company shall present a copy thereof to
its securities counsel. If, in the opinion of such counsel (or of other
securities counsel reasonably acceptable to the Company), the proposed
disposition does not require registration of such security under the Act,
or any similar statute then in effect, the Company shall, as promptly as
practicable, notify the Registered Holder of such opinion, whereupon the
Registered Holder shall be entitled to dispose of such security in
accordance with the terms of the notice delivered by the Registered Holder
to the Company. The above agreement by the Registered Holder of this
Warrant shall not be deemed to limit or restrict in any respect the
exercise of rights set forth in Section 11 hereof.
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11.
REGISTRATION RIGHTS
11.1 "PIGGYBACK RIGHTS". If at any time during the Exercise
Period, the Company shall prepare and file one or more registration
statements under the Act with respect to a public offering of equity or
debt securities of the Company, or of any such securities of the Company
held by its security holders, the Company will include in any such
registration statement such information as is required, and such number of
the Warrant Stock issuable, or previously issued and then outstanding,
pursuant to the exercise of this Warrant (collectively, the "Warrant
Securities") held by the Registered Holders thereof or their respective
designees or transferees as may be requested, to permit a public offering
of the Warrant Securities so requested; PROVIDED, HOWEVER, that if, in the
written opinion of the Company's managing underwriter, if any, for such
offering, the inclusion of the Warrant Securities requested to be
registered, when added to the securities being registered by the Company
or the selling security holder(s), would exceed the maximum amount of the
Company's securities that can be marketed without otherwise materially and
adversely affecting the entire offering, then the Company may exclude from
such offering all or any portion of the Warrant Securities requested to be
so registered, but only if no securities are included in such registration
statement other than securities being sold for the account of the Company
or by Persons pursuant to the exercise of "demand" registration rights or
of "piggyback" registration rights granted prior to the Issuance Date
which are expressly senior to those of the Registered Holder, and then
only on a pro rata basis with respect to all securities not being sold by
the Company or by Persons exercising such "demand" or senior "piggyback"
registration rights. The Company shall bear all fees and expenses
incurred by it in connection with the preparation and filing of such
registration statement. In the event of such a proposed registration, the
Company shall furnish the then Registered Holders of Warrant Securities
with not less than thirty (30) days' written notice prior to the proposed
or expected effectiveness date of such registration statement. Such
notice shall continue to be given by the Company to Registered Holders of
Warrant Securities, with respect to subsequent registration statements
filed by the Company, until such time as all of the Warrant Securities
have been registered or may be sold by the Registered Holders thereof
without registration under the Act or applicable state securities laws and
regulations, and without limitation as to volume, pursuant to Rule 144 of
the Act or any succeeding provision. The holders of Warrant Securities
shall exercise the rights provided for in this subsection 11.1 by giving
written notice to the Company, within twenty (20) days of receipt of the
Company's notice provided for herein.
11.2 CERTAIN PROCEDURES AND REQUIREMENTS OF REGISTERED HOLDER.
(a) INFORMATION TO BE FURNISHED BY REGISTERED HOLDER. In
connection with the registration of the Warrant Securities, and as a
condition to the Company s obligations under subsection 11.1, the
Registered Holder will furnish to the Company in writing such information
with respect to such Registered Holder and its proposed disposition as
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shall be reasonably necessary in order to assure compliance with the Act
and with other federal and applicable state securities laws. Without
limiting the generality of the foregoing, in connection with an
underwritten public offering, such Registered Holder electing such method
of disposition agrees to enter into, as required, a written agreement with
the managing underwriter in such form and containing such provisions as is
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.
(b) EXPENSES OF REGISTERED HOLDER. All underwriting
discounts and selling commissions applicable to the sale of any Warrant
Securities as well as fees and expenses of any counsel, accountant, or
other advisor to the Registered Holder shall be borne by the Registered
Holder.
(c) CERTAIN RESTRICTIONS. Notwithstanding anything to the
contrary contained in this Section 11, if there is a firm commitment
underwritten offering of securities for the Company pursuant to a
registration covering shares of the Warrant Securities, and if the
Registered Holder does not elect to sell its Warrant Securities to the
underwriters of the Company s securities in connection with such offering,
then the Registered Holder (if requested by the managing underwriter)
shall agree to refrain from selling any of its Warrant Securities that are
otherwise registered pursuant to this Section 11 during the period in
which the underwriting syndicate, as such, participates in the after-
market. Such Registered Holder shall, however, be entitled to sell such
securities, in any event, commencing on the 120th day after the effective
date of such registration statement, if then lawful to do so under
applicable securities laws and rules of the Commission.
(d) INDEMNIFICATION BY REGISTERED HOLDER. In connection with
a registration of the Warrant Securities under the Act pursuant to this
Section 11, the Company and the Registered Holder shall enter into
customary indemnification agreements with regard to losses, claims,
damages or liabilities arising therefrom. In addition, if such
registration relates to an underwritten offering, such indemnification
agreements shall include the underwriters thereof as a party thereto.
11.3 SURVIVAL. The rights and obligations set forth in this
Section 11 shall survive the exercise and surrender of this Warrant.
12.
MISCELLANEOUS
12.1 AMENDMENT AND WAIVER. Except as otherwise provided
herein, the provisions of the Warrant 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, only if the Company has obtained the prior
written consent of the Registered Holder.
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12.2 NOTICES. Any notices required to be sent to a Registered
Holder of this Warrant or of any Warrant Stock purchased upon the exercise
hereof will be delivered to the address of such Registered Holder shown on
the books of the Company. All notices referred to herein will be
delivered in person or sent by registered or certified mail, postage
prepaid, and will be deemed to have been given when so delivered in person
or on the third business day following the date so sent by mail.
12.3 DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive
headings of the sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The
construction, validity, and interpretation of this Warrant will be
governed by the laws of the State of Florida.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed and attested by its duly authorized officers under its corporate
seal.
JWCHARLES FINANCIAL SERVICES, INC.
[SEAL] By: Marshall Leeds
-------------------------------
Name: Marshall Leeds
Title: President
------------------------------
Attest:
Joel E. Marks
---------------------------------
Secretary or Assistant Secretary
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EXHIBIT I
---------
EXERCISE AGREEMENT
------------------
To: Dated:
The undersigned Record Holder, pursuant to the provisions
set forth in the within Warrant, hereby subscribes for and purchases _____
shares covered by such Warrant and herewith makes full cash payment of
$__________________ for such Warrant Stock at the Exercise Price provided
by such Warrant.
--------------------------------------
(Signature)
--------------------------------------
(Print or type name)
--------------------------------------
Address
--------------------------------------
--------------------------------------
NOTICE: The signature on this Exercise Agreement must correspond
with the name as written upon the face of the within Warrant, in every
particular, without alteration, enlargement, or any change whatsoever, and
must be guaranteed by a bank, other than a saving bank, having an office
or correspondent in New York, New York, Boca Raton or Miami, Florida, or
Atlanta, Georgia, or by a firm having membership on a registered national
securities exchange and an office in New York, New York, Boca Raton or
Miami, Florida, or Atlanta, Georgia.
SIGNATURE GUARANTEE
Authorized Signature: -------------------------------------------------
Name of Bank or Firm: -------------------------------------------------
Date:------------------------------------------------------------------
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