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File No. 333-_____________
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As Filed with the Securities and Exchange Commission on June 3, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
JW CHARLES FINANCIAL SERVICES, INC.
(Exact Name Of Issuer As Specified In Its Charter)
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<S> <C> <C>
FLORIDA 6211 58-1545984
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or Organization) Classification Code Number) Identification Number)
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980 NORTH FEDERAL HIGHWAY, SUITE 210
BOCA RATON, FLORIDA 33432
(561) 338-2600
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrants' Principal Executive Offices)
____________________
JOEL E. MARKS
VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER
JW CHARLES FINANCIAL SERVICES, INC.
1117 PERIMETER CENTER WEST, SUITE 500E, ATLANTA, GEORGIA 30338
(770) 399-8805
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
____________________
Copies To:
W. RANDY EADDY, ESQUIRE
KILPATRICK STOCKTON LLP
1100 PEACHTREE STREET, ATLANTA, GEORGIA 30309-4530
TELEPHONE: (404) 815-6500
____________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as possible after this Registration Statement becomes effective.
____________________
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
____________________
Calculation of Registration Fee
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<CAPTION>
====================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) SHARE(2) PRICE(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock, par value
$.001 per share 49,600 shares 10.25 1,178,360.50 347.62
==================================================================================================================================
</TABLE>
(1) Represents the estimated maximum number of shares of the common stock of JW
Charles Financial Services, Inc. ("JWCFS") issuable in connection with the
merger of The Americas Growth Fund, Inc. into JWCFS based upon a conversion
ratio of .431 of a share of JWCFS Common Stock for each share of the common
stock of AGRO converted in the Merger.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) and (f)(1). Calculated on the basis of $3.688 per
share, the average of the bid and asked prices of the common stock of AGRO
on June 2, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
JW CHARLES FINANCIAL SERVICES, INC. THE AMERICAS GROWTH FUND, INC.
980 North Federal Highway 701 BRICKELL AVENUE
Suite 210 SUITE 2000
BOCA RATON, FLORIDA MIAMI, FLORIDA 33131
NOTICE OF PLAN TO EFFECT "SHORT-FORM" MERGER
WITHOUT SHAREHOLDER VOTE
June __, 1998
To the Shareholders of
The Americas Growth Fund, Inc. ("AGRO"):
This letter and accompanying Prospectus constitute the 30-day notice
required by Section 3-106 of the Maryland General Corporation Law ("MGCL"), to
the shareholders of AGRO prior to the consummation of a "short-form" merger
(the "Merger"), of AGRO with and into JW Charles Financial Services, Inc.
("JWCFS" or the "Company"). Because JWCFS owns more than 90% of the
outstanding shares of the common stock, par value $.01 per share (the "AGRO
Shares"), of AGRO, the Merger can and will be effected without a vote of
AGRO's shareholders under Section 3-106 of the MGCL. The terms of the Merger
provide that AGRO shareholders will be paid in shares of JWCFS common stock
for their AGRO Shares. However, in connection with the Merger, and in
accordance with Section 3-201 et seq of the MGCL, an AGRO shareholder may
-- ---
object to the Merger and demand that JWCFS pay such shareholder the fair value
of his or her AGRO Shares in cash.
The accompanying Prospectus of JWCFS describes in detail the terms of the
Merger, and contains important information about JWCFS and its common stock,
as well as the procedures that must be followed by an AGRO shareholder to
object to the Merger and demand payment in cash. Accordingly, even though no
vote is being taken, and no proxy or other consent is being solicited or
requested, you should read carefully all of the information in the
accompanying Prospectus. This letter is not a summary of that information.
Sincerely,
JW CHARLES FINANCIAL SERVICES, INC. THE AMERICAS GROWTH FUND, INC.
By:___________________________________ By:________________________________
Joel E. Marks Leonard J. Sokolow
Vice Chairman President
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+------------------------------------------------------------------------------+
| Information contained herein is subject to completion or amendment. A |
|registration statement relating to these securities has been filed with the |
|Securities and Exchange Commission. These securities may not be sold nor may |
|offers to buy be accepted prior to the time the registration statement becomes|
|effective. This prospectus shall not constitute an offer to sell or the |
|solicitation of an offer to buy nor shall there be any sale of these |
|securities in any state in which such offer, solicitation or sale would be |
|unlawful prior to registration or qualification under the securities laws of |
|any such state. |
+------------------------------------------------------------------------------+
SUBJECT TO COMPLETION, DATED JUNE ____, 1998
PROSPECTUS
- ----------
JW CHARLES FINANCIAL SERVICES, INC.
This Prospectus relates to the offering by JW Charles Financial Services,
Inc. ("JWCFS" or the "Company") of an aggregate of approximately 49,549 shares
of the common stock of JWCFS, par value $.001 per share (the "JWCFS Shares"), in
connection with the merger (the "Merger") of The Americas Growth Fund, Inc.
("AGRO") with and into JWCFS. Since JWCFS owns more than 90% of the outstanding
shares of the common stock of AGRO, par value $.01 per share (the "AGRO
Shares"), under applicable state law, the Merger will be effected without a vote
of AGRO's shareholders. Upon the consummation of the Merger, among other
things, each outstanding AGRO Share (other than shares as to which the holders
thereof have validly exercised their rights under Maryland Law to demand payment
of the fair value of such shares in cash ("Objecting Shares") and shares held by
JWCFS) will cease to exist and be converted into the right to receive .431 of a
JWCFS Share (the "Conversion Ratio").
In connection with the Merger, in accordance with the Maryland General
Corporation Law, an AGRO shareholder may demand that JWCFS pay such shareholder
the fair value of his or her AGRO Shares in cash by following the procedures set
forth therein. See "The Merger-- Rights of Objecting Shareholders". JWCFS
intends to file Articles of Merger relating to the Merger and to consummate the
Merger as soon as practicable, but no earlier than 30 days following the date
that this Prospectus is first sent to AGRO shareholders.
In September 1997, JWCFS completed an offer to exchange JWCFS Shares for
AGRO Shares on the basis of .431 of a JWCFS Share for each AGRO Share exchanged
(the "Exchange Offer"). Approximately 823,588 shares of AGRO Common Stock were
exchanged for approximately 354,966 JWCFS Shares pursuant to the Exchange Offer.
The AGRO Shares exchanged represented approximately 65% of the then outstanding
AGRO Shares, which, together with the AGRO Shares owned by JWCFS prior to the
Exchange Offer, represented approximately 91% of the AGRO Shares.
The JWCFS Shares are traded on the American Stock Exchange ("AMEX"). On
April 30, 1998, the last reported sale price per JWCFS Share on the AMEX was
$12.38. The AGRO Shares were traded on The Nasdaq Stock Market ("Nasdaq") until
delisted on March 17, 1998. On March 13, 1998, the last day on which the AGRO
Shares traded on Nasdaq, the last reported sale price per AGRO Share was $2.75.
On June __, 1998, the high and low bid prices for the AGRO Shares on the OTC
Bulletin Board were [$2.65] and [$3.125] per share.
SEE "RISK FACTORS" BEGINNING ON PAGE _____ FOR A DISCUSSION OF CERTAIN
MATTERS THAT SHOULD BE CONSIDERED BY AGRO SHAREHOLDERS WITH RESPECT TO THE
MERGER.
------------------------------
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A
---
PROXY. THIS PROSPECTUS AND THE MERGER MADE HEREBY DO NOT CONSTITUTE A
SOLICITATION OF ANY PROXIES.
------------------------------
THE SECURITIES TO WHICH THIS PROSPECTUS RELATES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June ___, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION..................................................... 3
INCORPORATION OF DOCUMENTS BY REFERENCE................................... 3
SUMMARY--GENERAL.......................................................... 4
SUMMARY--THE MERGER....................................................... 6
SUMMARY HISTORICAL FINANCIAL DATA......................................... 9
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA............................ 10
RISK FACTORS.............................................................. 11
MARKETS FOR THE JWCFS AND AGRO SHARES..................................... 17
THE MERGER................................................................ 19
Background............................................................... 19
Conversion of AGRO Shares................................................ 19
Investment Decision...................................................... 19
Exchange of Certificates................................................. 20
Material Federal Income Tax Consequences................................. 20
Rights of Objecting Shareholders......................................... 21
INFORMATION ABOUT JWCFS AND AGRO.......................................... 23
SELECTED HISTORICAL FINANCIAL DATA OF GENESIS............................. 24
GENESIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ........................... 25
BUSINESS OF GENESIS....................................................... 29
UNAUDITED PRO FORMA CONSOLIDATED.......................................... 31
DESCRIPTION OF CAPITAL STOCK OF JWCFS..................................... 36
DESCRIPTION OF CAPITAL STOCK OF JWGENESIS................................. 37
COMPARISON OF RIGHTS OF HOLDERS OF JWCFS SHARES AND HOLDERS OF
JWGENESIS SHARES......................................................... 38
LEGAL MATTERS............................................................. 40
EXPERTS................................................................... 40
APPENDIX A--Plan of Merger
APPENDIX B--Title 3, Subtitle 2 of the Maryland General Corporation Law
-------------------
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THE INFORMATION INCORPORATED HEREIN) ARE AVAILABLE WITHOUT CHARGE, UPON ORAL OR
WRITTEN REQUEST BY ANY PERSON RECEIVING THIS PROSPECTUS, FROM JOEL E. MARKS,
SECRETARY, JW CHARLES FINANCIAL SERVICES, INC., 980 NORTH FEDERAL HIGHWAY, SUITE
310, BOCA RATON, FLORIDA 33432, (561) 338-2600. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE NOT LATER THAN FIVE (5)
BUSINESS DAYS BEFORE THE DATE THE MERGER WILL BE EFFECTIVE UNDER APPLICABLE LAW
WHICH IS EXPECTED TO BE AS SOON AS PRACTICABLE BUT NO EARLIER THAN 30 DAYS
FOLLOWING THE DATE THAT THIS PROSPECTUS IS FIRST SENT TO AGRO SHAREHOLDERS.
JWCFS' Annual Report on Form 10-K/A for the year ended December 31, 1997
and JWCFS' Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
which are incorporated herein by reference, have been reproduced in their
entirety (except for exhibits) and are being delivered with this Prospectus.
AGRO's Annual Report on Form 10-KSB for the year ended December 31, 1997, which
is incorporated herein by reference, has been reproduced in its entirety (except
for exhibits) and is being delivered with this Prospectus.
2
<PAGE>
AVAILABLE INFORMATION
JWCFS has filed a Registration Statement on Form S-4 (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission")
covering the JWCFS Shares that are to be issued in the Merger.
Each of JWCFS and AGRO is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Commission.
The Registration Statement, as well as reports, proxy statements, and other
information filed by JWCFS or AGRO with the Commission pursuant to the
information requirements of the Exchange Act or the Investment Company Act of
1940, as amended (the "1940 Act"), as applicable, may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: New York Regional Office, 7 World Trade Center, 13th Floor, New
York, New York 10048; and Chicago Regional Office, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60606. Copies of such material also can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. JWCFS Shares are
listed for trading on the AMEX, and such reports, proxy statements, and other
information concerning JWCFS may be inspected at the offices of the AMEX, 86
Trinity Place, New York, New York 10006. The Commission maintains an Internet
web site that contains reports, proxy and information statements, and other
information regarding issuers such as JWCFS and AGRO that file electronically
with the Commission. The address of that site is http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed by JWCFS with the Commission
pursuant to the Exchange Act are hereby incorporated herein by reference:
(a) Annual Report on Form 10-K/A of JWCFS for the year ended December 31,
1997 (which has been reproduced in its entirety and is being delivered
with this Prospectus);
(b) Quarterly Report on Form 10-Q of JWCFS for the quarter ended March 31,
1998 (which has been reproduced in its entirety and is being delivered
with this Prospectus); and
(c) All other reports filed by JWCFS pursuant to Sections 13(a) or 15(d) of
the Exchange Act since the filing of its Annual Report on Form 10-K/A
for the year ended December 31, 1997.
AGRO's Annual Report on Form 10-KSB for the year ended December 31, 1997
(which has been reproduced in its entirety and is being delivered with this
Prospectus), previously filed with the Commission pursuant to the Exchange Act,
is hereby incorporated herein by reference.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
3
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SUMMARY--GENERAL
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus. Capitalized terms used and
not otherwise defined in this Summary have the meanings ascribed to them
elsewhere in this Prospectus. As used herein, the terms "JWCFS" and the
"Company" refer to JW Charles Financial Services, Inc., and the term "AGRO"
refers to The Americas Growth Fund, Inc. and, in each case unless the context
otherwise requires, their respective subsidiaries.
THE PARTIES TO THE MERGER
JWCFS. JWCFS is a diversified financial services holding company whose
subsidiaries engage primarily in securities brokerage, investment banking, and
clearing and execution of securities transactions. The foundation of JWCFS'
business lies in providing traditional securities brokerage services to retail,
corporate, and institutional clients. Today, these services are provided
through the Company's three principal operating subsidiaries: JWCharles
Securities, Inc. ("JWCS"), Corporate Securities Group, Inc. ("CSG"), and
JWCharles Clearing Corp. ("JWCC"). All three subsidiaries provide quality
investment products and services, including stocks, municipal and corporate
bonds, unit investment trusts, certificates of deposit, domestic and
international mutual funds, initial and secondary public offerings, life and
long-term care insurance, fixed and variable annuities, equity research,
corporate finance, money market funds, individual and corporate retirement
plans, and cash management accounts.
JWCharles Securities, Inc. is a New York Stock Exchange member firm with
branch offices in South Florida, Georgia, and New York. JWCS' branches
typically are owned and managed by the Company. JWCS' brokers are "full-
service" oriented and receive compensation packages with most regional and
national wire-house brokerage firms. Corporate Securities Group, Inc. is a
general securities broker dealer, which offers its products and services to a
variety of clients through a national network of independently owned offices.
CSG offices offer a full array of investment products and services, and can vary
in size from one investment professional to many. JWCharles Clearing Corp. is a
New York Stock Exchange member firm that provides clearing services on a fully
disclosed basis for a variety of correspondents who are engaged in the
securities brokerage business but who lack the back office or other support
capabilities to process and clear securities transactions for their clients.
Correspondents include broker dealers, banks, and other financial institutions.
JWCharles Securities, Inc. and Corporate Securities Group, Inc. clear trades
through JWCC as well as through an outside clearing arrangement with Bear
Stearns Securities Corp. For more detailed information concerning JWCFS and its
business, as well as JWCFS' financial statements, see JWCFS' Annual Report on
Form 10-K/A for the year ended December 31, 1997 and JWCFS' Quarterly Report on
Form 10-Q for the quarter ended March 31, 1998, which are reproduced in its
entirety (except for exhibits) and are being delivered with this Prospectus.
In September 1997 JWCFS completed an offer to exchange JWCFS Shares for
AGRO Shares on the basis of .431 of a JWCFS Share for each AGRO Share exchanged
(the "Exchange Offer"). Approximately 823,588 AGRO Shares were exchanged for
approximately 354,966 JWCFS Shares pursuant to the Exchange Offer. The shares
of AGRO Common Stock exchanged represented approximately 65% of the then
outstanding AGRO's Shares, which, together with such shares owned by JWCFS prior
to the Exchange Offer, represented approximately 91% of the AGRO Shares.
JWCFS has been a public company since 1984, and its common stock is traded
on the American Stock Exchange under the symbol "JWC". JWCFS is a Florida
corporation with its principal executive offices at 980 North Federal Highway,
Suite 210, Boca Raton, Florida 33432, (561) 338-2600.
AGRO. AGRO was organized in 1994 as a non-diversified, closed-end
investment management company that elected to be regulated as a special type of
investment company known as a business development company (a "BDC") under the
Investment Company Act of 1940, as amended (the "1940 Act"). AGRO's investment
objective has been to achieve long-term capital appreciation of assets by
investing in equity and debt securities of emerging and established companies
("portfolio companies"). As stated at the time of AGRO's August 1994 initial
public offering of AGRO Shares, AGRO's plans were to invest primarily in United
States-based portfolio companies that are "strategically linked" to the
Caribbean and Latin America. Since the completion of its initial public
offering, from which it derived approximately $5.15 million of net proceeds,
AGRO has made investments in a total of six
4
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portfolio companies. As of March 31, 1998, AGRO had investments (for a total of
$_________) in three portfolio companies reflected on its financial statements
as having realizable value, and had approximately $_________ in cash or cash
equivalents and other liquid assets that were not invested in portfolio
companies. For more detailed information concerning AGRO and its business, as
well as AGRO's financial statements, see AGRO's Annual Report on Form 10-KSB for
the year ended December 31, 1997, which is reproduced in its entirety (except
for exhibits) and is being delivered with this Prospectus.
AGRO is a Maryland corporation with its principal executive offices located
at 701 Brickell Avenue, Suite 2000, Miami, Florida 33131, (305) 374-0282.
RECENT JWCFS DEVELOPMENTS
On January 21, 1998, JWCFS publicly announced plans to combine (the
"Combination") with Genesis Merchant Group Securities, LLC ("Genesis") pursuant
to an Agreement and Plan of Combination, which was amended and restated on March
9, 1998 (the "Combination Agreement"), among JWCFS, Genesis, and the holders of
all of the equity interests ("Genesis Membership Interests") of Genesis
("Genesis Members"). Upon consummation of the Combination Agreement, which is
subject to, among other things, JWCFS shareholder approval, JWCFS will become a
wholly owned subsidiary, and Genesis will become at least a 90% owned limited
liability company, of a new publicly held parent corporation with the name of
"JWGenesis Financial Corp." ("JWGenesis"). Shareholders of JWCFS and former
Genesis Members who exchange their Genesis Membership Interests will become
shareholders of JWGenesis. Each outstanding JWCFS Share (including shares
issued to former AGRO shareholders in the Merger) will be exchanged for and
become the right to receive one share of JWGenesis Common Stock, and at least
90% of the Genesis Membership Interests will be exchanged for an aggregate of up
to 1,500,000 shares of JWGenesis Common Stock; if less than 100% of the Genesis
Membership Interests are exchanged, the number of shares of JWGenesis Common
Stock to be issued to the Genesis Members equity will be equal to the product of
1,500,000 and the percentage of the outstanding Genesis Membership equity
interests of Genesis exchanged.
Upon consummation of the Combination, based on the number of JWCFS Shares
expected to be outstanding, and assuming that all of the equity interests of
Genesis are exchanged for JWGenesis Common Stock, the former shareholders of
JWCFS will own approximately 71%, and the former Genesis Members will own
approximately 29%, of the shares of JWGenesis Common Stock expected to be then
issued and outstanding.
Genesis is a San Francisco-based investment banking firm with special
expertise in institutional trading and innovative research focused on high-
growth industries. The predecessor of Genesis, an Illinois limited partnership
("Genesis LP"), was formed in 1989 to provide brokerage, accounting, and
administrative services to investment partnerships. Reference herein to Genesis
prior to June 30, 1996 includes Genesis L.P. As of February 1, 1998, Genesis
had 59 employees (including 28 registered representatives), and its business
activities include research, sales and trading, corporate finance, and brokerage
processing. Genesis provides these services to a select clientele consisting
principally of nationally known corporate and institutional clients and high net
worth individuals. Genesis is a California limited liability company with its
principal executive offices located at 909 Montgomery, Suite 600, San Francisco,
California 94113, (415) 677-1500.
JWGenesis is a Florida corporation and currently a wholly owned subsidiary
of JWCFS formed for the purpose of becoming the parent company of JWCFS and
Genesis as a result of the Combination. The principal executive offices of
JWGenesis will be located at 980 North Federal Highway, Suite 210, Boca Raton,
Florida 33432 and its telephone number will be (561) 338-2600.
JWGenesis will succeed JWCFS as a public company, and the JWGenesis Common
Stock will be listed on the AMEX for trading, immediately upon consummation of
the Combination. See "Unaudited Pro Forma Consolidated Condensed Financial
Statements" and "Genesis Financial Statements" appearing elsewhere in this
Prospectus.
Because of the required 30-day notice to AGRO shareholders under the
Maryland General Corporation Law for consummation of the Merger, and the
expected consummation date for the proposed Combination with Genesis,
5
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it is likely that, by the time the Merger is consummated, the Share Exchange
between JWCFS and JW Genesis will have occurred, and JW Genesis will have
succeeded JWCFS as a publicly held company. In that event, AGRO shareholders
will receive shares of JW Genesis common stock (rather than JWCFS Common Stock)
as their consideration in the Merger, based on the same Conversion Ratio, and on
a share for share basis vis-a-vis the number of shares of JWCFS Common Stock
they were to have received in the Merger as described elsewhere herein.
Information about JW Genesis and its common stock, as well as about the proposed
Combination and Genesis, has been included herein for that reason.
BACKGROUND
Pursuant to the Maryland General Corporation Law and Florida Business
Corporation Act, JWCFS, as the owner of more than 90% of the AGRO Shares, is
merging AGRO into itself without a vote of the AGRO shareholders. Upon the
consummation of the Merger, each AGRO Share then outstanding (other than
Objecting Shares and shares held by JWCFS) will cease to exist and be converted
into the right to receive .431 of a JWCFS Share.
Because the Merger may be deemed to involve the purchase of property of
AGRO by JWCFS, the Merger may be prohibited under Section 57(a)(2) of the
Investment Company Act of 1940 (the "1940 Act") in the absence of exemptive
relief from the Commission. Accordingly, in December 1997, JWCFS and AGRO filed
with the Commission an Application for an Order to Exempt the Merger from
Section 57(a)(2) of the 1940 Act (the "Application"). The Commission published
a public notice regarding the Application on April 23, 1998, and on May 20,
1998, the Commission granted the requested Order.
The Merger will allow JWCFS to acquire sole ownership of the assets of
AGRO. Upon consummation of the Merger, each AGRO Share then outstanding (other
than Objecting Shares, as defined below, and shares held by JWCFS) will be
converted into the right to receive .431 of a JWCFS Share. In connection with
the consummation of the Merger, JWCFS will approve the withdrawal of AGRO's
status as a BDC, and concurrent therewith, as a result of effectiveness of the
Merger, AGRO will cease to exist as a separate entity.
RISK FACTORS
In addition to the other information in this Prospectus, certain factors
should be considered by AGRO shareholders in connection with the Merger.
Ownership of JWCFS Shares involves significant risks. For a detailed discussion
of risks associated with the business of JWCFS and ownership of JWCFS Shares,
see "RISK FACTORS".
SUMMARY--THE MERGER
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INVESTMENT DECISION...................... No vote by AGRO shareholders is required to be (or will be) taken on
the Merger. This is because the Merger can be effected under
applicable laws as a so-called "short-form" merger because JWCFS owns
at least 90% of the AGRO Shares. AGRO shareholders nonetheless have
an investment decision to make concerning JWCFS Shares because of the
applicability to the Merger of Maryland's objecting shareholders'
rights statute. As described elsewhere herein, AGRO shareholders may
object to the Merger and proceed to perfect rights under Maryland law
that would entitle them to be paid the fair value of their AGRO Shares
in cash, rather than receive JWCFS Shares at the Conversion Ratio
described herein. Accordingly, a decision of whether to exercise such
rights is tantamount to an investment decision of whether to become a
holder of JWCFS Shares. There is no investment decision to be made,
however, with respect to whether to continue to hold AGRO Shares,
because the determination to effect the Merger has been made, and the
Merger will result in the conversion or cancellation of all AGRO
Shares as described herein.
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6
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THE MERGER............................... Upon consummation of the Merger, among other things, the separate
existence of AGRO will cease, AGRO will be merged with and into JWCFS,
and all of the assets, liabilities and obligations of AGRO will be
assumed by JWCFS. In addition, each issued and outstanding AGRO Share
(other than Objecting Shares and shares held by JWCFS) will be
converted into the right to receive .431 of a JWCFS Share. As of
March 31, 1998, 114,962 AGRO Shares were issued and outstanding (other
than AGRO Shares held by JWCFS). Assuming no holders of such shares
objects to the Merger, approximately 49,549 JWCFS Shares will be
issued to the AGRO shareholders (other than JWCFS) in connection with
the Merger. No fractional shares of JWCFS Common Stock will be issued
in the Merger, and cash will be paid in lieu of fractional shares.
Such 49,549 JWCFS Shares will represent approximately 1.3% of the
JWCFS Shares outstanding immediately following such issuance (assuming
no other intervening issuances or repurchases of JWCFS Shares after
the date of this Prospectus). In connection with the Merger, AGRO
shareholders who choose to object to the transaction will have the
right to demand payment in cash of the fair value of their AGRO Shares
as provided under Maryland law. See "The Merger--Rights of Objecting
Shareholders". In such latter case, the total number of JWCFS Shares
issued in the Merger would be reduced.
Exchange of certificates evidencing AGRO Shares for certificates
evidencing JWCFS Shares will be made upon surrender of certificates
evidencing AGRO Common Stock to American Stock Transfer & Trust
Company of New York, JWCFS' transfer agent, or to JWCFS. CERTIFICATES
SHOULD NOT BE SURRENDERED FOR EXCHANGE UNTIL FORMER AGRO SHAREHOLDERS
ARE PROVIDED WITH A LETTER OF TRANSMITTAL AND RELATED INSTRUCTIONS AND
MATERIALS FOR EXCHANGE OF THEIR CERTIFICATES AFTER THE CONSUMMATION OF
THE MERGER. SEE "The Merger--Exchange of Certificates".
MATERIAL FEDERAL INCOME
TAX CONSEQUENCES......................... The Merger will constitute a tax-free exchange; and no income, gain,
or loss will be recognized by AGRO shareholders upon the receipt of
JWCFS Shares in the Merger.
RIGHTS OF OBJECTING
SHAREHOLDERS............................. In connection with the Merger, an AGRO shareholder may object and
demand that JWCFS pay such shareholder the fair value of his or her
AGRO shares in cash in accordance with Title 3, Subtitle 2 of the
Maryland General Corporation Law ("MGCL"). JWCFS intends to file the
Articles of Merger relating to the Merger and to consummate the Merger
as soon as practicable, but not earlier than 30 days following the
date this Prospectus is first sent to AGRO shareholders providing
notice of the Merger as required under Maryland law. Pursuant to
Maryland law, an AGRO shareholder must submit a written objection to
the Merger within 30 days after the date notice of the Merger is given
hereby. Promptly following the effectiveness of the Articles of
Merger, JWCFS will notify each objecting shareholder of the date on
which the Articles of Merger were filed and within 20 days of such
notice, an objecting shareholder must make a written demand for
payment of the fair value of his or her shares. For a more detailed
description, see "The Merger--Rights of Objecting Shareholders".
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
DETERMINATION OF THE
CONVERSION RATIO......................... The Conversion Ratio for the Merger is the same as the ratio for which
AGRO Shares were exchanged for JWCFS Shares in the Exchange Offer.
JWCFS did not obtain a fairness opinion or other analysis from an
outside party concerning the fairness or reasonableness of the terms
of the Exchange Offer or the Merger from the perspective of AGRO
shareholders, as a financial matter. In connection with the Exchange
Offer, the Board of Directors of AGRO obtained an opinion as to the
fairness of the consideration to be received by the AGRO Shareholders
in the Exchange Offer. See "The Merger--Conversion of AGRO Shares".
MARKET PRICE............................. JWCFS Shares are traded on the AMEX, and AGRO Shares, which previously
traded on the Nasdaq Small Cap Market, now trade on the OTC Bulletin
Board. For information relating to market prices of JWCFS Shares and
AGRO Shares during the current fiscal year and the past two fiscal
years, see "Markets For The JWCFS and AGRO Shares".
EFFECT OF THE PROPOSED
COMBINATION
WITH GENESIS............................. If the proposed Combination with Genesis described elsewhere herein is
effected, holders of the JWCFS Shares, including former holders of
AGRO Shares who received JWCFS Shares in the Merger, will receive
shares of JWGenesis and will become shareholders of JWGenesis. See
"Description Of JWGenesis Capital Stock" and "Comparison Of Rights Of
Holders Of JWCFS Shares And JWGenesis Shares".
Because of the required 30-day notice to AGRO shareholders under the
Maryland General Corporation Law for consummation of the Merger, and
the expected consummation date for the proposed Combination with
Genesis, it is likely that, by the time the Merger is consummated, the
Share Exchange between JWCFS and JW Genesis will have occurred, and JW
Genesis will have succeeded JWCFS as a publicly held company. In that
event, AGRO shareholders will receive shares of JW Genesis common
stock (rather than JWCFS Common Stock) as their consideration in the
Merger, based on the same Conversion Ratio, and on a share for share
basis vis-a-vis the number of shares of JWCFS Common Stock they were
to have received in the Merger as described elsewhere herein.
Information about JW Genesis and its common stock, as well as about
the proposed Combination and Genesis, has been included herein for
that reason.
</TABLE>
8
<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following tables present summary historical financial information for
JWCFS and AGRO, which is derived from the separate historical financial
statements of JWCFS and AGRO. The historical financial information as of
December 31, 1997, 1996, 1995, 1994, and 1993 (in the case of AGRO, December 31,
1997, 1996, and 1995 only), and for the respective years then ended, has been
derived from audited financial statements of JWCFS and AGRO, respectively. The
financial statements of JWCFS as of December 31, 1997 and 1996, and for each of
the years in the three-year period ended December 31, 1997, are included in
JWCFS' Annual Report on Form 10-K/A for the year ended December 31, 1997 which
is incorporated herein by reference (and a copy of which accompanies this
Prospectus as Appendix A). The financial statements of AGRO as of December 31,
1997 and 1996 and for each of the years in the two-year period ended December
31, 1997, are included in AGRO's Form 10-KSB for the year ended December 31,
1997 which is incorporated herein by reference (and a copy of which accompanies
this Prospectus as Appendix B). In each case, the following summary financial
information should be read along with such financial statements and related
notes.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
JWCFS - HISTORICAL DATA:
Results of Operations for Period:
Revenues........................................ $ 97,182 $ 91,020 $ 80,041 $60,471 $50,066
Income Before Income Taxes and
Cumulative Effect of Change in
Accounting Principle.......................... 9,792 8,232 6,287 5,243 4,944
Net Income...................................... 6,103 6,025 3,810 3,300 3,772
Earnings Per Share
Basic......................................... 1.77 1.42 .65 .56 .63
Diluted....................................... 1.50 1.26 .64 .56 .63
Weighted Average Number of Common
Shares Outstanding
Basic......................................... 3,443 4,246 5,862 5,858 5,975
Diluted....................................... 4,070 4,784 6,000 5,907 6,024
Dividends Per Common Share...................... 0 0 0 0 0
STATEMENT OF FINANCIAL CONDITION DATA:
Cash and cash equivalents....................... $ 11,512 $ 11,836 $ 8,597 $ 5,401 $ 3,289
Total assets.................................... $140,732 $127,331 $115,214 $82,218 $ 77,564
Short term borrowings from banks................ $ 29,423 $ 17,375 $ 28,138 $ 7,303 $ 20,271
Notes payable to affiliates..................... $ 5,113 $ 8,625 $ 3,500 $ 5,161 $ 2,661
Total liabilities............................... $116,066 $111,959 $ 98,643 $69,459 $ 67,454
Mandatorily redeemable common stock............. -- -- $ 7,013 -- --
Total stockholders' equity...................... $ 24,666 $ 15,372 $ 9,558 $12,759 $ 10,110
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
----------------------------------------------------
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
AGRO - HISTORICAL DATA:
Results of Operations for Period:
Revenues........................................ $ 233 $ 194 $ 327
Expenses........................................ 510 516 296
Net Income (loss)............................... (493) (315) 25
Net Income (loss) Per Common Share.............. (0.39) (0.25) 0.02
Average Common Shares Outstanding............... 1,265 1,265 1,265
Dividends Per Common Share...................... 0 0 0
Financial Condition at end of Period:
Total Assets.................................... 4,389 4,939 5,213
Total Liabilities............................... 16 74 33
Net Asset Value Per Share....................... 3.46 3.85 4.09
</TABLE>
9
<PAGE>
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
Set forth below are historical net income and book value per share data for
JWCFS and AGRO, combined pro forma net income and book value per share data for
JWCFS and JWGenesis, and equivalent pro forma net income and book value per
share data for AGRO. The pro forma data give effect to the Merger based upon
the conversion of an AGRO Share into .431 of a JWCFS Share. No cash dividends
were declared or paid during the periods presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------
PRO FORMA
----------------------------------
HISTORICAL JWCFS JWGENESIS
---------------- ------------- ----------
<S> <C> <C> <C>
JWCFS
Book value per share..................... $6.68 $6.59 (2) $8.43 (3)
Net income per share:
Basic............................... $1.77 $1.75 (2) $1.43 (3)
Diluted............................. $1.50 $1.48 (2) $1.27 (3)
AGRO
Net assets per share..................... $3.46 $2.84 (1) $3.63 (1)
Net income (loss) per share:
Basic............................... $(.39) $ .76 (1) $ .61 (1)
Diluted............................. $(.39) $ .65 (1) $ .54 (1)
</TABLE>
______________
(1) Amounts are calculated by multiplying JWCFS' historical amounts and
JWGenesis' pro forma combined amounts by the Conversion Ratio of .431.
(2) Amounts are calculated by dividing JWCFS' historical shareholders' equity or
net income by the sum of total outstanding JWCFS Shares plus new shares to
be issued in the Merger.
(3) Amounts are calculated by dividing JWGenesis' pro forma shareholders' equity
or net income by the sum of total pro forma outstanding JWGenesis shares
plus new shares to be issued in the Merger.
10
<PAGE>
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including those
set forth below and elsewhere in this Prospectus. The following factors should
be considered carefully in addition to the other information contained in this
Prospectus in connection with the Merger.
VOLATILE NATURE OF THE SECURITIES BUSINESS
The securities business is, by its nature, subject to significant risks,
particularly in volatile or illiquid markets, including the risk of trading
losses, losses resulting from the ownership or underwriting of securities,
counterparty failure to meet commitments, customer fraud, employee fraud, issuer
fraud, errors and misconduct, failures in connection with the processing of
securities transactions, and litigation. The Company's principal business
activities consist of retail securities brokerage, investment banking, and
clearing and execution services and are highly competitive and subject to
various risks, volatile trading markets, and fluctuations in the volume of
market activity. The securities business is directly affected by many factors,
including economic and political conditions, broad trends in business and
finance, legislation and regulation affecting the business and financial
communities, currency values, inflation, market conditions, the availability and
cost of short-term or long-term funding and capital, the credit capacity or
perceived creditworthiness of the securities industry in the marketplace and the
level and volatility of interest rates. These and other factors can contribute
to lower price levels for securities and illiquid markets.
Lower price levels of securities may result in (i) reduced volumes of
securities transactions, with a consequent reduction in commission revenues;
(ii) losses from declines in the market value of securities held in trading,
investment, and underwriting positions; and (iii) reduced management fees
calculated as a percentage of assets managed. In periods of low volume, levels
of profitability are further adversely affected because certain expenses remain
relatively fixed. Sudden sharp declines in market values of securities and the
failure of issuers and counterparties to perform their obligations can result in
illiquid markets, which, in turn, may result in the Company having difficulty
selling securities, hedging its securities positions, and investing funds under
its management. Such negative market conditions, if prolonged, may also lower
the Company's revenues from investment banking and other activities. As a
result of the varied risks associated with the securities business, which are
beyond the Company's control, the Company's commissions and other revenues could
be adversely affected. A reduction in revenues or a loss resulting from the
underwriting or ownership of securities could have a material adverse effect on
the Company's results of operations and financial condition. In addition, as a
result of such risks, the Company's revenues and operating results may be
subject to significant fluctuations from quarter to quarter and from year to
year.
INHERENT UNCERTAINTIES RELATING TO CERTAIN EFFECTS OF THE COMBINATION
Coordination of Operations. The success of the Combination in enhancing
long-term shareholder value depends in part on the ability of the respective
managements of the Company and Genesis to coordinate the operations of their two
business enterprises. As in every business combination, such coordination will
require the dedication of management resources, which may temporarily divert
attention from the day-to-day business of JWGenesis. The difficulties of
coordination may be increased by the necessity of managing geographically
separated organizations, in that the Company will remain (and JWGenesis will be)
headquartered in Boca Raton, Florida, whereas Genesis will remain based in San
Francisco. There can be no assurance that the coordination necessary to
maximize the benefits of the Combination will be wholly realized.
Realization of Cost Reductions and Revenue Increases. The senior
managements of the Company and Genesis expect certain increases in revenue as a
result of the Combination, without taking into account or attempting to quantify
any of the incremental operating profits or other cost savings expected to be
realized over time through the Combination. The Board of Directors of the
Company took into account this expectation in deciding to approve the
Combination. There can be no assurance, however, that JWGenesis will be able to
realize, or do so within any particular time frame, the expected revenue
increases.
11
<PAGE>
SIGNIFICANT COMPETITION
All aspects of the Company's business are highly competitive. The Company
competes directly with national and regional full service broker-dealers and, to
a lesser extent, with discount brokers, dealers, investment banking firms,
investment advisors, and certain commercial banks. The financial services
industry has become considerably more concentrated as numerous securities firms
have either ceased operations or have been acquired by or merged into other
firms. Such mergers and acquisitions have increased competition from these
firms, many of which have significantly greater equity capital and financial and
other resources than the Company. With respect to retail brokerage activities,
certain of the regional firms with which the Company competes have operated in
certain markets longer than has the Company and have established long-standing
client relationships. In addition, the Company expects competition from
commercial banks to increase as a result of recent and anticipated legislative
and regulatory initiatives in the United States to remove or relieve certain
restrictions on commercial banks relating to the sale of securities. The
Company also competes with others in the financial services industry with
respect to the recruiting of new employees and the retention of current
employees.
The Company expects to face increasing competition from companies offering
electronic brokerage services, which is a rapidly developing industry. These
competitors may have lower costs or provide fewer services, and may offer
certain customers more attractive pricing or other terms, than the Company
offers. The Company also anticipates competition from underwriters who attempt
to effect public offerings for emerging growth companies through new means of
distribution, including transactions effected using electronic media such as the
Internet. In addition, disintermediation may occur as issuers attempt to sell
their securities directly to purchasers, including sales using electronic media
such as the Internet. To the extent that issuers and purchasers of securities
transact business without the assistance of financial intermediaries such as the
Company, the Company's operating results could be adversely affected.
DEPENDENCE ON KEY PERSONNEL
Most aspects of the Company's business is dependent on highly skilled
individuals. The Company devotes considerable resources to recruiting,
training, and compensating such individuals. In addition, one component of the
Company's strategy will be to increase market penetration by recruiting
experienced investment consultants. There can be no assurance that such
recruiting efforts will be successful or, if successful, that they will enhance
the Company's business, results of operations, or financial condition.
Competition for Professional Employees. From time to time, individuals
employed by the Company may choose to leave at any time to pursue other
opportunities. The Company has experienced losses of research, investment
banking, and sales and trading professionals. The level of competition for key
personnel remains intense. There can be no assurance that losses of key
personnel due to such competition or otherwise will not occur in the future.
The loss of an investment banking, research, or sales and trading professional,
particularly a senior professional with a broad range of contacts in an
industry, could materially and adversely affect the Company's operating results.
Limitations of Employee Retention Mechanisms. The Company depends on many
key employees, and in particular on its senior executive officers, Marshall T.
Leeds, its Chairman, President, and Chief Executive Officer and Joel E. Marks,
its Chief Financial Officer. The loss of any key employee could materially and
adversely affect the Company. While the Company generally does not have
employment agreements with its employees, it attempts to retain its employees
with incentives such as long-term deferred compensation plans, the issuance of
stock subject to continued employment, and the grant of options to buy stock
that vest over a number of years of employment. These incentives, however, may
be insufficient in light of the increasing competition for experienced
professionals in the securities industry, particularly if the Company's stock
price were to decline or fail to appreciate sufficiently to be a competitive
source of a portion of professional compensation.
DEPENDENCE ON OUTSIDE SOURCES OF FINANCING
The Company, like others in the securities industry, relies on external
sources to finance a significant portion of its day-to-day operations,
principally customer margin account balances and certain transactions. The
12
<PAGE>
principal sources of the Company's cash and liquidity are commissions, trading
profits and collateralized bank loans. Liquidity management includes the
monitoring of assets available to hypothecate or pledge against short-term
borrowings. The Company maintains working capital credit lines with banks
aggregating approximately $5.0 million. Availability of financing to the
Company will vary depending on market conditions, the volume of certain trading
activities, credit ratings, credit capacity, and the overall availability of
credit to the financial services industry. There can be no assurance that
adequate financing to support the Company's business will be available in the
future on terms attractive to the Company, or at all.
NET CAPITAL REQUIREMENTS; HOLDING COMPANY STRUCTURE
The Commission, the NYSE, the National Association of Securities Dealers,
Inc. (the "NASD"), and various other regulatory bodies in the United States have
rules with respect to net capital requirements that affect the Company. These
rules have the effect of requiring that at least a substantial portion of a
broker-dealer's assets be kept in cash or highly liquid investments. Compliance
with the net capital requirements by broker-dealer subsidiaries of the Company
could limit operations that require intensive use of capital, such as
underwriting or trading activities. These rules could also restrict the ability
of the Company to withdraw capital from these subsidiaries, even in
circumstances where these subsidiaries have more than the minimum amount of
required capital, which, in turn, could limit the ability of the Company to pay
dividends, implement its strategies and pay interest on and repay the principal
of its debt. In addition, a change in such rules, or the imposition of new
rules, affecting the scope, coverage, calculation, or amount of such net capital
requirements, or a significant operating loss or any unusually large charge
against net capital, could have similar adverse effects.
DEPENDENCE ON SYSTEMS
The Company's business is highly dependent on communications and
information systems. Any failure or interruption of such systems could cause
delays in securities trading activities and an inability to execute client
transactions, which could have a material adverse effect on operating results of
the Company. There can be no assurance that the Company will not suffer any
such systems failure or interruption, whether caused by an earthquake, fire,
other natural disaster, power or telecommunications failure, act of God, act of
war, or otherwise, or that the back-up procedures of the Company and
capabilities in the event of any such failure or interruption will be adequate.
YEAR 2000
The "year 2000 issue" arises from the widespread use of computer programs
that rely on two-digit date codes to perform computations or decision-making
functions. Many of these programs may fail due to an inability to properly
interpret date codes beginning January 1, 2000. For example, such programs may
misinterpret "00" as the year 1900 rather than 2000. In addition, some
equipment, being controlled by microprocessor chips, may not deal appropriately
with the year "00". The Company is evaluating its computer systems to determine
which modifications and expenditures will be necessary to make its systems
compatible with year 2000 requirements. The Company believes that their systems
will be year 2000-compliant upon implementation of such modifications.
The Company currently estimates that the total cost of such modifications
will not be significant. However, there can be no assurance that all necessary
modifications will be identified and corrected or that unforeseen difficulties
or costs will not arise. In addition, there can be no assurance that the
systems of other companies on which the Company systems rely will be modified on
a timely basis, or that the failure by another company to properly modify its
systems will not negatively impact the systems or operations of the Company.
RISK OF REDUCED REVENUES DUE TO DECLINE IN TRADING OF GROWTH COMPANY SECURITIES
The Company's revenues from brokerage transactions are generally
substantially lower when the level of public offering and trading activities of
securities of emerging growth companies declines. The Company derives a
significant portion of its revenues from brokerage transactions related to the
securities of growth companies. In the past, revenues from such brokerage
transactions have declined when underwriting activities in these industry
sectors
13
<PAGE>
declined, the volume of trading on NASDAQ declined or industry sectors or
individual companies reported results below investors' expectations.
RISKS ASSOCIATED WITH REGULATION
The securities industry and the business of the Company are subject to
extensive regulation by the Commission, state securities regulators, and other
governmental regulatory authorities. The business of each company also is
regulated by industry self-regulatory organizations ("SROs"), including the
NASD, the NYSE, the AMEX, and other exchanges. Compliance with many of the
regulations applicable to each company involves a number of risks, particularly
in areas where applicable regulations may be subject to varying interpretation.
In the event of noncompliance by the Company with an applicable regulation,
governmental regulators and SROs may institute administrative or judicial
proceedings that may result in censure, fine, civil penalties (including treble
damages in the case of insider trading violations), the issuance of cease-and-
desist orders, the deregistration or suspension of the non-compliant broker-
dealer, the suspension or disqualification of the broker-dealer's officers or
employees, or other adverse consequences. The imposition of any such penalties
or orders on the Company could have a material adverse effect on the Company's
operating results and financial condition.
The regulatory environment is also subject to change. The Company may be
adversely affected as a result of new or revised legislation or regulations
imposed by the Commission, other federal or state governmental regulatory
authorities, or SROs. The Company also may be adversely affected by changes in
the interpretation or enforcement of existing laws and rules by these
governmental authorities and SROs.
RISK OF LOSSES FROM UNDERWRITING AND TRADING
The Company's underwriting, securities trading, and market-making
activities are conducted by it as principal and subject the company's capital to
significant risks, including market, credit, counterparty, and liquidity risks.
These activities often involve the purchase, sale, or short sale of securities
as principal in markets that may be characterized by relative illiquidity or
that may be particularly susceptible to rapid fluctuations in liquidity. The
Company from time to time has large position concentrations in securities of, or
commitments to, a single issuer, or issuers engaged in a specific industry,
particularly as a result of underwriting activities. The Company expects to
concentrate its trading positions and underwriting activities in a more limited
number of industry sectors and portfolio companies than many other investment
banks, which might result in higher trading losses than would occur if the
Company's positions and activities were less concentrated. In addition, the
trend in all major capital markets, for competitive and other reasons, toward
larger commitments on the part of lead underwriters means that, from time to
time, an underwriter (including a co-manager) may retain significant position
concentrations in individual securities.
RISK OF LOSSES ASSOCIATED WITH LITIGATION AND SECURITIES LAWS
Many aspects of the Company's business will involve substantial risks of
liability. An underwriter is exposed to substantial liability under federal and
state securities laws, other federal and state laws and court decisions,
including decisions with respect to underwriters' liability and limitations on
indemnification of underwriters by issuers. For example, a firm that acts as an
underwriter may be held liable for material misstatements or omissions of fact
in a prospectus used in connection with the securities being offered or for
statements made by its securities analysts or other personnel.
Increasing Frequency of Securities Litigation. In recent years, there has
been an increasing incidence of litigation involving the securities industry,
including class actions that seeks substantial damages. The Company's
underwriting activities will usually involve offerings of the securities of
emerging and mid-size growth companies, which often involve a higher degree of
risk and are more volatile than the securities of more established companies.
In comparison with more established companies, such emerging and mid-size growth
companies are also more likely to be the subject of securities class actions, to
carry directors and officers liability insurance policies with lower limits, or
no such insurance and to become insolvent. Each of these factors increases the
likelihood that an underwriter of an emerging or mid-size growth company's
securities will be required to contribute to an adverse judgment or settlement
of a securities lawsuit.
14
<PAGE>
Frequent Claims Against Underwriters. The plaintiffs' attorneys in
securities class action lawsuits frequently name as defendants the managing
underwriters of a public offering. The Company has not been a named defendant
in any class action lawsuit relating to public offerings in which it served as a
managing underwriter. Plaintiffs' attorneys also name as defendants investment
banks that provide advisory services in corporate finance transactions. The
Company is not a defendant in any such lawsuit. The Company anticipates,
however, that securities class action lawsuits naming the Company as a defendant
may be filed from time to time in the future, particularly if the Company
increases its level of activity in such transactions. In such lawsuits, all
members of the underwriting syndicate typically are included as members of a
defendant class or are required by law, or pursuant to the terms of the
underwriting agreement, to bear a portion of any expenses or losses (including
amounts paid in settlement of the litigation) incurred by the underwriters as a
group in connection with the litigation, to the extent not covered by the
indemnification obligation of the issuer of the securities underwritten. If the
Company were to become a party to such lawsuits, the Company's assets would be
subject to risks. If the plaintiffs in any suits against the Company were to
successfully prosecute their claims, or if the Company were to settle such suits
by making significant payments to the plaintiffs, the Company's operating
results and financial condition could be materially and adversely affected. As
is common in the securities industry, the Company does not carry insurance that
would cover any such payments. In addition, the Company's charter documents
allow indemnification of the Company's officers, directors, and agents to the
maximum extent permitted under Florida law. The Company may be the subject of
indemnification assertions under these charter documents by officers, directors,
or agents of the Company who are or may become defendants in litigation.
In addition, the laws relating to securities class actions are currently in
a state of flux. The eventual impact of the Private Securities Litigation
Reform Act of 1995 on securities class action litigation is not known.
Diversion of Management Attention. In addition to these financial costs
and risks, the defense of litigation can, to a certain extent, divert the
efforts and attention of management and staff. The amount of time that
management and other employees may be required to devote in connection with the
defense of litigation could be substantial and might materially divert their
attention from other responsibilities. Securities class action litigation in
particular is highly complex and can extend for a protracted period of time,
thereby consuming substantial time and effort of management and substantially
increasing the cost of such litigation.
Risks Associated with Other Disputes. In the normal course of business,
the Company is a defendant in various civil actions and arbitrations arising out
of its activities as a broker-dealer in securities, as an underwriter, as an
employer and as a result of other business activities. The Company has in the
past made significant payments in connection with the resolution of disputed
claims, and there can be no assurance that significant payments in connection
with the resolution of disputed claims will not occur in the future with respect
to the Company.
RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH
Over the past several years, the Company has experienced significant growth
in its business activities and the number of its employees, and it is
contemplated that the Company will continue to experience similar growth in the
future. Such growth has required and will continue to require increased
investments in management personnel, financial and management systems and
controls, and facilities, which, in the absence of continued revenue growth,
would cause the Company's operating margins to decline from current levels for
the Company. In addition, as is common in the securities industry, the Company
is highly dependent on the effective and reliable operation of its
communications and information systems. The Company believes that its current
and anticipated future growth will require implementation of new and enhanced
communications and information systems and training of its personnel to operate
such systems. Any difficulty or significant delay in the implementation or
operation of existing or new systems or the training of personnel could
adversely affect the Company's ability to manage growth.
PREVIOUS SCHEDULE 13D FILINGS INVOLVING AGRO
JWCFS filed a Schedule 13D with the Commission in March 1997 to report
certain matters concerning its ownership of shares of common stock (the "AGRO
Shares") of The Americas Growth Fund, Inc. ("AGRO") and its undertaking of
analysis with respect to how to proceed with regard to that ownership and the
activities of JWCFS as
15
<PAGE>
a market maker for the AGRO Shares. In connection with JWCFS' filing of a
registration statement on From S-4 (the "Exchange Offer Registration Statement")
in June 1997 relating to the offer by JWCFS to exchange the then outstanding
AGRO Shares for shares of JWCFS Common Stock (the "Exchange Offer"), the
Commission questioned whether JWCFS was required to file an amendment to its
Schedule 13D to report its acquisition of additional AGRO Shares for shares of
JWCFS Common Stock (the "Exchange Offer"), the Commission questioned whether
JWCFS was required to file an amendment to its Schedule 13D to report its
acquisition of additional AGRO Shares prior to the public announcement or to
report a change in its plans with respect to AGRO, or whether JWCFS should have
ceased market making for AGRO Shares prior to the time that it did so
immediately prior to the filing to the Exchange Offer Registration Statement.
JWCFS does not believe that it was required to take (or should have taken) any
such action in these particular circumstances, and it has informed the
Commission of its belief. It is possible, however, that the Commission or its
staff may disagree with JWCFS and that it (or other possible parties, such as
shareholders of AGRO) may seek to cause JWCFS to rescind the trades with respect
to some or all of the AGRO Shares that were acquired by JWCFS after some date
between March 11, 1997 and June 6, 1997 to permit the sellers of those AGRO
Shares to reacquire those shares for the consideration they received in the
original trade or, depending on the circumstances, for the number of JWCFS
Shares they could have received in the Exchange Offer if they had continued to
own the AGRO Shares and made a decision to tender in the Exchange Offer. JWCFS
purchased a total of 48,500 AGRO Shares during that time period, for which it
paid an aggregate of approximately $129,840, net of commission, to the sellers.
If JWCFS were required to offer to rescind all such trades on the above basis,
and all the sellers accepted the offer, JWCFS would receive the approximately
$129,840 net cash consideration paid to the sellers and the sellers would
receive the 48,500 AGRO Shares they sold or shares of JWCFS Common Stock. In
such latter event, an aggregate of 20,904 JWCFS Shares would be issued if all
the sellers chose to receive only JWCFS Shares. JWCFS does not believe that
such a rescission should be required, or that, if it were to be required, it
would have any material effect on JWCFS' results of operations, financial
condition, prospects, or plans. The Commission or other possible parties (such
as AGRO shareholders) might seek to take other action or pursue other remedies
based on a disagreement with JWCFS' position concerning its Schedule 13D filing
obligations or its acquisition of AGRO Shares. While JWCFS believes that its
positions would be upheld if challenged, there can be no assurance with respect
to that matter.
Subsequent to the effectiveness of the Exchange Offer Registration
Statement, the Commission commenced an informal inquiry relating to JWCFS'
satisfaction of its Schedule 13D filing obligations. JWCFS has provided all
information requested by the Commission in connection with such inquiry and, as
of the date of this Prospectus, has had no communications from the Commission
concerning what if any further action it proposes.
16
<PAGE>
MARKETS FOR THE JWCFS AND AGRO SHARES
JWCFS Shares are traded on the AMEX (symbol: JWC) (prior to May 8, 1997,
JWCFS Shares were traded on Nasdaq under the symbol "KORP"). AGRO Shares were
traded on Nasdaq (symbol: AGRO) until March 17, 1998, when they were delisted.
AGRO Shares currently trade on the OTC Bulletin Board on a limited basis. The
following tables set forth the high and low sales prices per JWCFS Share and
AGRO Share for each period indicated. They also set forth the high bid and low
asked prices quoted by dealers for the JWCFS Shares and the AGRO Shares. The
high bid at any given time is the highest price that a dealer is at that time
offering to pay to an investor who wishes to sell his or her shares, and the low
asked at any given time is the lowest price at which a dealer is at that time
offering to sell shares to an investor who wishes to buy them. For shares with
wide bid-asked spreads, the high bid and low asked prices provide additional
information concerning market prices; because sales prices are reported for
transactions between a dealer and an investor, the reported sales price will be
relatively high if the reported transaction is a sale by a dealer, and
relatively low if it is a purchase by a dealer. However, the bid-asked prices
provide no assurance that the specified prices are available for transactions
involving more than one round lot (100 shares).
Neither JWCFS nor AGRO has paid a cash dividend with respect to its shares.
The fiscal year for each company ends on December 31 of each year. On April 30,
1998, the last reported sale price per JWCFS Share on the AMEX was $12.38. On
March 13, 1998, the last day on which the AGRO Shares traded on Nasdaq, the last
reported sale price per AGRO Share was $2.75. On June __, the bid and ask
prices for the AGRO Shares on the OTC Bulletin Board were [$2.625] and
[$3.125] per share.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT QUOTATIONS FOR JWCFS SHARES AND
AGRO SHARES.
JWCFS SHARES(1)
<TABLE>
<CAPTION>
SALES PRICE
----------------------------------
HIGH LOW HIGH BID LOW ASKED
--------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
1996
First Quarter................................ $ 3.33 $ 2.75 $ 3.17 $2.92
Second Quarter............................... 5.08 3.08 4.67 3.33
Third Quarter................................ 5.00 3.17 4.50 3.67
Fourth Quarter............................... 7.67 3.83 7.17 4.33
1997
First Quarter................................ $12.50 $ 7.17 $12.25 $8.00
Second Quarter............................... 10.13 6.00 NA NA
Third Quarter................................ 8.88 7.25 NA NA
Fourth Quarter............................... 15.88 8.38 NA NA
1998
First Quarter................................ $13.75 $11.38 NA NA
Second Quarter (through June __, 1998)........ NA NA
</TABLE>
17
<PAGE>
AGRO SHARES(1)
<TABLE>
<CAPTION>
SALES PRICE
--------------------------------
HIGH LOW HIGH BID LOW ASKED
-------------- ------------- -------------- -----------------
<S> <C> <C> <C> <C>
1996
First Quarter................................ $3.00 $2.50 $2.63 $ 3.00
Second Quarter............................... 2.75 2.25 2.56 2.75
Third Quarter................................ 3.00 2.00 2.63 2.50
Fourth Quarter............................... 2.88 2.50 2.88 2.75
1997
First Quarter................................ $3.00 $2.69 $2.88 $ 2.81
Second Quarter............................... 3.38 2.69 3.38 2.88
Third Quarter................................ 3.13 2.75 3.00 2.75
Fourth Quarter............................... 4.75 2.88 2.88 3.00
1998
First Quarter................................ $3.00 $2.75 $2.88 $ 3.00
Second Quarter (through June __, 1998)....... [2.75 2.50 2.75 3.13]
</TABLE>
_______________
(1) Sources: The Nasdaq Stock Market, Inc., the OTC Bulletin Board, and the
American Stock Exchange, Inc., as applicable.
18
<PAGE>
THE MERGER
BACKGROUND
On August 19, 1997, JWCharles Financial Services, Inc., a Florida
corporation ("JWCFS"), commenced an offer to exchange all (but not less than
51%) of the then outstanding AGRO Shares for JWCFS Shares. At the commencement
of the Exchange Offer, JWCFS owned 326,550 AGRO Shares (approximately 25.8% of
the then outstanding AGRO Shares), which shares were included for purposes of
determining whether the minimum of 51% of the AGRO Shares were obtained. The
Exchange Offer expired in accordance with its terms at midnight, Atlanta time,
on September 22, 1997. A total of approximately 823,588 AGRO Shares were
accepted by JWCFS for exchange according to the terms of the Exchange Offer on
the basis of .431 of a JWCFS Share for each share of AGRO common stock. JWCFS
issued 354,966 JWCFS Shares in exchange for the AGRO Shares tendered. The AGRO
Shares exchanged represented approximately 65% of the then outstanding AGRO
Shares not owned by JWCFS, and, together with the AGRO Shares already owned by
JWCFS, represented approximately 91% of such shares.
Since JWCFS owns more than 90% of the outstanding AGRO Shares, under the
Maryland General Corporation Law (the "MGCL") and the Florida Business
Corporation Act ("FBCA"), JWCFS may merger AGRO with and into itself without a
vote of AGRO's shareholders. Because the Merger may be deemed to involve the
purchase of property of AGRO by JWCFS, the Merger may be prohibited under
Section 57(a)(2) of the 1940 Act in the absence of exemptive relief from the
Securities and Exchange Commission (the "Commission"). Accordingly, in December
1997, JWCFS and AGRO filed with the Commission an Application for an Order to
Exempt the Merger from Section 57(a)(2) of the 1940 Act. Under Section 57(c) of
the 1940 Act, the Commission may grant such an Order if, among other things, the
terms of the Merger are reasonable and fair, the Merger is consistent with the
policies of the BDC involved, and the Merger is consistent with the purposes of
the 1940 Act. The Commission published a public notice regarding the Application
on April 23, 1998, and on May 20, 1998, the Commission granted the requested
Order.
Upon consummation of the Merger, AGRO's status as a BDC will be withdrawn
and AGRO will cease to exist. In addition, each AGRO Share then outstanding
(other than Objecting Shares and shares held by JWCFS) will be converted into
the right to receive .431 of a JWCFS Share. The Board of Directors of JWCFS has
adopted a plan of merger providing for the Merger (the "Plan of Merger") and the
Board of Directors of AGRO has approved the Merger in accordance with the FBCA
and MGCL. A copy of the Plan of Merger is attached hereto as Appendix A.
CONVERSION OF AGRO SHARES
Upon the consummation of the Merger, each outstanding AGRO Share (other
than Objecting Shares and shares held by JWCFS) will be canceled and
automatically converted into .431 of a JWCFS Share. The Conversion Ratio for
the Merger is the same as the Exchange Ratio for the Exchange Offer. JWCFS has
not obtained a fairness opinion or other analysis from an outside party
concerning the fairness or reasonableness of the terms of the Merger from the
perspective of AGRO shareholders, as a financial matter. In connection with the
Exchange Offer, however, the Board of Directors of AGRO obtained an opinion
that, as of the date of the opinion, and based upon and subject to the
assumptions, reviews, qualifications and limitations set forth in the opinion,
if the JWCFS Shares to be received of as consideration for an AGRO Share in the
Exchange Offer had a value of $3.40 or higher, then the consideration to be
received in the Exchange Offer was fair from a financial point of view to the
shareholders of AGRO. Based on the last sale price per JWCFS Share on June __,
1998, the value of the fraction of the JWCFS Share to be received for each AGRO
Share in the Merger was $____.
No fraction of a JWCFS Share will be issued, but in lieu thereof each
holder of AGRO Shares who would otherwise be entitled to a fraction of a JWCFS
Share (after aggregating all fractional JWCFS Shares to be received by such
holder) will receive from JWCFS an amount of cash (rounded to the nearest whole
cent) equal to the product of (i) such fraction, multiplied by (ii) the last
sale price of a JWCFS Share on the trading day immediately prior to the
consummation of the Merger.
19
<PAGE>
Upon the consummation of the Merger, any holders of AGRO Shares who have
validly exercised and not forfeited their right to demand payment of the fair
value of such shares in cash ("Objecting Shares") in connection with the Merger
under the MGCL, will not have such Objecting Shares converted into JWCFS Shares,
but instead they shall be converted into the right to receive such consideration
as may be determined to be due with respect to such Objecting Shares pursuant to
the MGCL. Each holder of Objecting Shares (an "Objecting Shareholder") who,
pursuant to the provisions of the MGCL, becomes entitled to payment of the value
of AGRO Shares shall receive payment therefor (but only after the value therefor
shall have been agreed upon or finally determined pursuant to such provisions).
In the event of a legal obligation, after the consummation of the Merger, to
deliver JWCFS Shares to any holder of AGRO Shares who shall have failed to make
an effective payment demand or shall have lost his or her status as an Objecting
Shareholder, JWCFS shall issue and deliver, upon surrender by such Objecting
Shareholder of his or her certificate or certificates representing AGRO Shares,
the JWCFS Shares to which such Objecting Shareholder would have been entitled
and cash in lieu of fractional shares.
Upon the consummation of the Merger, all issued and outstanding AGRO Shares
owned by JWCFS shall be canceled without consideration.
Because of the required 30-day notice to AGRO shareholders under the
Maryland General Corporation Law for consummation of the Merger, and the
expected consummation date for the proposed Combination with Genesis, it is
likely that, by the time the Merger is consummated, the Share Exchange between
JWCFS and JW Genesis will have occurred, and JW Genesis will have succeeded
JWCFS as a publicly held company. In that event, AGRO shareholders will receive
shares of JW Genesis common stock (rather than JWCFS Common Stock) as their
consideration in the Merger, based on the same Conversion Ratio, and on a share
for share basis vis-a-vis the number of shares of JWCFS Common Stock they were
to have received in the Merger as described elsewhere herein. Information about
JW Genesis and its common stock, as well as about the proposed Combination and
Genesis, has been included herein for that reason.
Investment Decision
No vote by AGRO shareholders is required to be (or will be) taken on the
Merger. This is because the Merger can be effected under applicable laws as a
so-called "short-form" merger because JWCFS owns at least 90% of the AGRO
shares. AGRO shareholders nonetheless have an investment decision to make
concerning JWCFS Shares because of the applicability to the Merger of Maryland's
objecting shareholders' rights statute. As described elsewhere herein, AGRO
shareholders may object to the Merger and proceed to perfect rights under
Maryland law that would entitle them to be paid the fair value of their AGRO
Shares in cash, rather than receive JWCFS Shares at the conversion ratio
described herein. Accordingly, a decision of whether to exercise such objecting
shareholders' rights is tantamount to an investment decision of whether to
become a holder of JWCFS Shares. There is no investment decision to be made,
however, with respect to whether to continue to hold AGRO Shares, because the
determination to effect the Merger has been made, and the Merger will result in
the conversion or cancellation of all AGRO Shares as described herein.
EXCHANGE OF CERTIFICATES
Following effectiveness of the Merger, a letter of transmittal with
instructions will be mailed to each AGRO shareholder for use in exchanging
certificates representing AGRO Shares for certificates representing JWCFS
Shares. Upon surrender of a certificate representing AGRO Shares for
cancellation to the American Stock and Transfer Trust Company of New York,
JWCFS' transfer agent, or to JWCFS or such other agent or agents as may be
appointed by JWCFS, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holder of such
certificate will be entitled to receive in exchange therefor a certificate
representing the number of whole shares of JWCFS Common Stock equal to .431
multiplied by the number of AGRO Shares represented by the certificate.
Following the Merger, each outstanding AGRO Common Stock certificate will
be deemed for all corporate purposes, other than the payment of dividends, to
evidence the ownership of the number of full JWCFS Shares into which such AGRO
Shares shall have been so converted as a result of the Merger and the right to
receive an amount
20
<PAGE>
in cash in lieu of the issuance of any fractional shares. No dividends or other
distributions in respect of JWCFS Shares with a record date after the
consummation of the Merger will be paid to the holder of any unsurrendered AGRO
Share certificate with respect to the JWCFS Shares represented thereby until the
holder of record of such certificate surrenders such certificate. Subject to
applicable law, following surrender of any such certificate, there will be paid
to the record holder of the certificates representing whole JWCFS Shares issued
in conversion thereof, without interest, at the consummation of such surrender,
the amount of any such dividends or other distributions with a record date after
the Merger theretofore payable with respect to such shares of JWCFS Common
Stock.
HOLDERS OF AGRO COMMON STOCK CERTIFICATES SHOULD NOT
SUBMIT THEIR CERTIFICATES FOR EXCHANGE UNTIL THEY HAVE RECEIVED
THE LETTER OF TRANSMITTAL AND INSTRUCTIONS REFERRED TO ABOVE.
Material Federal Income Tax Consequences
The following discussion summarizes the material federal income tax
consequences of the Merger to holders of AGRO Shares, but does not purport to be
a complete analysis of all of the potential tax effects of the Transaction. The
discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations, Internal Revenue Service ("IRS") rulings, and
judicial decisions now in effect, all of which are subject to change at any time
by legislative, judicial, or administrative action, and any such change may be
applied retroactively. No information is provided herein with respect to
foreign, state, or local tax laws or estate and gift tax considerations. This
information is directed to AGRO shareholders who hold their AGRO Shares as
"capital assets" within the meaning of Section 1221 of the Code. JWCFS does not
intend to request a ruling from the IRS with respect to the Merger. The
following discussion of the material federal income tax consequences relevant to
the Merger constitutes the opinion of Kilpatrick Stockton LLP, tax counsel to
JWCFS ("Tax Counsel"), subject to the qualifications stated herein. Such
opinion, however, has no binding effect on the IRS or the courts.
In the opinion of Tax Counsel, because the Merger and the earlier Exchange
Offer are part of a plan to acquire 100% control of AGRO, the Merger and the
Exchange Offer will be treated as a single integrated transaction. Accordingly,
the Merger will constitute a tax-free exchange under Section 368 of the Code.
In such event, (i) no income, gain, or loss will be recognized by AGRO
shareholders upon the receipt of JWCFS Shares upon conversion of their AGRO
Shares in the Merger, (ii) no income, gain, or loss will be recognized by JWCFS
or AGRO as a result of the Exchange Offer or the Merger, (iii) the tax basis of
the JWCFS Shares received by AGRO shareholders will be equal to their basis in
AGRO Shares immediately before consummation of the Merger, (iv) the holding
period of the JWCFS Shares received by each AGRO shareholder will include the
period for which such shareholder has held the AGRO Shares converted in the
Merger, and (v) the payment of cash in lieu of fractional share interests in
JWCFS will be treated for federal income tax purposes as if the fractional
shares were issued as part of the Merger and then were redeemed by JWCFS. The
cash payments will be treated as having been received as distributions in full
payment in exchange for the shares redeemed as provided in Section 302(a) of the
Code.
If the Merger and the Exchange Offer were not treated as a single
integrated transaction, the Merger would not qualify as a tax-free
reorganization. As a result, (i) AGRO shareholders would recognize gain or loss
upon the receipt of JWCFS Shares upon conversion of their AGRO Shares, (ii) the
tax basis of the JWCFS Shares received would be equal to the fair market value
of those shares, and (iii) the holding period for the JWCFS Shares received
would begin on the date of consummation of the Merger. Any gain or loss
recognized by an AGRO shareholder would be a capital gain or loss if the AGRO
shareholder held the AGRO Shares as a capital asset.
The maximum federal income tax rate applicable to an individual's capital
gains with respect to assets held for greater than one year is currently 28%;
pursuant to recently enacted legislation, the maximum federal income tax rate
applicable to an individual's gains with respect to capital assets held for more
than eighteen months is 20%. Only $3,000 of an individual's capital losses are
currently deductible in any one year against ordinary income. A corporation's
capital gains are taxable currently at the same rate as the corporation's
ordinary income, and a corporation's capital losses are deductible only to the
extent of its capital gains.
RIGHTS OF OBJECTING SHAREHOLDERS
In connection with the Merger and in accordance with Title 3, Subtitle 2 of
the MGCL, an AGRO shareholder may, by following the procedures summarized below,
21
<PAGE>
demand that JWCFS pay the shareholder the fair value of his or her AGRO Shares
in cash. The following summary of the statutory procedures to be followed by a
holder of AGRO Shares in order to object to the Merger and perfect his or her
rights under the MGCL is qualified in its entirety by reference to Title 3,
Subtitle 2 of the MGCL, a copy of which is attached as Appendix B hereto.
In connection with the Merger, no vote of AGRO shareholders is required to
be taken (because JWCFS owns more than 90% of the outstanding AGRO Shares and is
proposing to merge AGRO into JWCFS under applicable law without such a vote).
JWCFS is hereby notifying each record holder of AGRO Shares of the Merger at
least 30 days prior to filing the Articles of Merger under the MGCL and the
FBCA. An AGRO shareholder wishing to demand payment in cash of the fair value
of any part or all of his or her shares of AGRO ("Objecting Shares") must submit
a written notice to the Secretary of AGRO within 30 days after the date this
Prospectus is sent to AGRO shareholders, stating that such shareholder (an
"Objecting Shareholder") objects to the Merger. An AGRO shareholder who holds
AGRO Shares of record for different beneficial owners (e.g., a brokerage firm
who owns AGRO Shares in "street name" for different customers) may, pursuant to
appropriate instructions from one or more such beneficial owners, object to the
Merger and demand payment in cash as to some of the AGRO Shares held of record
and not as to others. However, all or none of the AGRO Shares owned
beneficially by a single person must be Objecting Shares; that is, a person will
not be permitted to object as to some but not all of the AGRO Shares
beneficially owned by the person. For this purpose only, beneficial ownership
of AGRO Shares will be determined without regard to rules of attribution (such
as, between spouses, among siblings, etc.) that may otherwise be applicable
under tax, securities, or other laws for other purposes.
Promptly following the effectiveness of the Merger, JWCFS, as the successor
to AGRO, will notify in writing each Objecting Shareholder of the date on which
the Articles of Merger were accepted for recording. Within 20 days of the date
on which the Articles were accepted for recording, an Objecting Shareholder must
make a written demand for payment in cash of the fair value of his or her stock,
stating the number Objecting Shares for which payment is demanded. The notice
of objection should be sent to JWCFS, 980 North Federal Highway, Suite 310, Boca
Raton, Florida 33432, Attention: Corporate Secretary.
The notice of the date on which the Articles of Merger were accepted may
contain an offer of payment and certain financial disclosures. If an Objecting
Shareholder who has followed all of the procedural steps required to demand
payment in cash of fair value has not received payment for his or her Objecting
Shares, he or she may, or JWCFS may, within 50 days of the acceptance of the
Articles of Merger, petition the court of equity in the appropriate county for
appraisal of the fair value of his or her AGRO Shares as of the date of the
Merger, without including any appreciation or depreciation resulting directly or
indirectly from the Merger or its proposal. Any shareholder who filed a notice
of objection, but fails to file a written demand for payment of the fair value
in a timely manner, will be bound by the terms of the Merger (and thereby would
receive JWCFS Shares on the basis of the Conversion Ratio) and will not be
entitled to receive payment in cash. An Objecting Shareholder will also be
restored to his or her rights as an AGRO shareholder who did not object (and
thereby would receive JWCFS Shares on the basis of the Conversion Radio) if the
demand for payment is withdrawn, a petition of appraisal is not filed within the
time required, or a court determines that the shareholder is not entitled to
relief.
If the court finds that the Objecting Shareholder is entitled to an
appraisal of his or her stock, the court shall appoint three disinterested
appraisers to determine the fair value of the stock. Within 60 days after
appointment (or such longer period as the court may direct), the appraisers
shall file with the court and mail to each Objecting Shareholder their report
stating their conclusion as to the fair value of the stock. Within 15 days
after the filing of the report, any party may object to the report and request a
rehearing. The court, upon motion of any party, will enter an order either
confirming, modifying, or rejecting the report and, if confirmed or modified,
enter judgment directing the time within which payment must be made. If the
report is rejected, the court may determine the fair value or remit the
proceeding to the same or other appraisers. Any judgment entered pursuant to a
court proceeding will include interest from the date notice of the Merger is
given hereby, unless the court finds that the shareholder's refusal to accept a
written offer to purchase the shares was arbitrary, vexatious, or not in good
faith.
In general, the expenses of the appraisal proceedings will be the
responsibility of JWCFS. However, all or any part of such expenses may be
assessed against any Objecting Shareholder to whom an offer to pay for such
22
<PAGE>
shareholder's shares was made by JWCFS, if the court finds the failure to accept
such offer was arbitrary, vexatious, or not in good faith.
INFORMATION ABOUT JWCFS AND AGRO
JWCFS' Annual Report on Form 10-K/A FOR THE YEAR ENDED DECEMBER 31, 1997,
JWCFS' QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1998, AND
AGRO'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1997, ARE
REPRODUCED IN THEIR ENTIRETY (EXCEPT FOR EXHIBITS) AND ARE BEING DELIVERED WITH
THIS PROSPECTUS.
23
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF GENESIS
The selected financial data of Genesis set forth below as of and for the
years ended December 31, 1997, 1996, and 1995 are derived from audited financial
statements of Genesis included elsewhere herein. The selected financial data as
of and for the years ended December 31, 1994 and 1993 are derived from audited
financial statements of Genesis which are not included or incorporated by
reference herein. This summary should be read in conjunction with the financial
statements and other financial information of Genesis included elsewhere herein.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
(In thousands, except per share amounts)
Statements of Operations Data:
Revenues.......................... $30,570 $22,281 $27,588 $24,275 $24,208
Expenses.......................... 26,744 21,792 $21,968 19,262 15,749
Net income........................ 3,826 489 5,620 5,013 8,459
Earnings Per Share Data:
Basic(1).......................... $ 2.55 $ .33 $ 3.75 $ 3.34 $ 5.64
Diluted(1)........................ $ 2.55 $ .33 $ 3.75 $ 3.34 $ 5.64
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
(Inthousands)
Statements of Operations Data:
Total Assets...................... $8,221 $ 5,988 $10,230 $9,268 $7,136
Total Liabilities................. 2,176 2,196 1,770 1,670 1,728
Redeemable preferred members'
capital......................... 1,275 1,289 -- -- --
Members' capital.................. 4,770 2,503 8,460 7,598 5,408
</TABLE>
______________
(1) Genesis, a California LLC, has no shares of common stock outstanding.
Rather, each of its Members owns a certain percentage interest in the net
assets of Genesis. In connection with the Combination, JWGenesis will issue
1,500,000 shares of its common stock in exchange for 100% of the Genesis
Membership Interests. For purposes of this table, the Genesis historical
per share amounts are calculated by assuming that Genesis had 1,500,000
shares outstanding for all periods presented.
24
<PAGE>
GENESIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS'
RESULTS OF OPERATIONS--THREE YEARS ENDED DECEMBER 31, 1997
The following discussion and analysis of financial condition and results of
operations presents significant factors affecting Genesis during the years ended
December 31, 1997, 1996 and 1995. The discussion and analysis should be read in
conjunction with the financial statements of Genesis and related notes and with
the other financial information concerning Genesis appearing elsewhere in this
Prospectus.
The financial information provided below has been rounded in order to
simplify its presentation. However, the percentages are calculated using the
detailed information contained in the consolidated financial statements of
Genesis, the notes thereto and the other financial data concerning Genesis
included elsewhere in this Prospectus.
The following table sets forth summary data for the years ended December 31,
1997, 1996 and 1995. Operating results for any period are not necessarily
indicative of the results for any future period.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------------
1997% 1996% 1995
(000's) Change (000's) Change (000's)
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Commissions $18,073 57 $11,519 (10) $12,834
Commissions --related parties 5,281 11 4,748 48 3,208
Market making and principal
transactions, net 3,372 75 1,932 (57) 4,463
Investment banking 2,760 5 2,633 207 858
Unrealized gains from not readily
marketable securities -- -- 293 (95) 5,413
Interest and dividends 565 6 533 (10) 590
Other 519 (17) 623 181 222
------------------------------------------------------------------------------
Total Revenues $30,570 37 $22,281 (19) $27,588
==============================================================================
Expenses:
Commissions and floor brokerage $10,098 60 $ 6,324 (19) $ 7,796
Personnel and employee benefits 9,329 7 8,726 6 8,253
Communications 1,529 20 1,279 (19) 1,581
Occupancy and equipment rental 765 23 622 45 429
General and administrative 5,023 4 4,840 24 3,908
------------------------------------------------------------------------------
Total Expenses $26,744 23 $21,791 (1) $21,967
==============================================================================
</TABLE>
Revenues of Genesis exceeded $30 million in 1997, compared to $22 million
in 1996 and $28 million in 1995. This increase in revenue in 1997 was largely
due to the fact that Genesis increased its focus on, and the level of resources
devoted to, its institutional client base, coupled with strong equity markets.
The decrease in revenues in 1996 compared to 1995 was due to a restructuring of
Genesis in 1996, explained in more detail below.
A significant portion of the business activities of Genesis consists of
providing brokerage processing services ("BPS") to its clients. BPS includes
the provision of trading processing services and administrative services to
investment managers and investment partnerships.
BPS revenues (approximately $3.5 million) and corporate finance activities
(approximately $2.6 million) contributed to the growth of the revenues of
Genesis in 1997. In 1997, the commissions earned by Genesis,
25
<PAGE>
including from related parties, grew 44% to $23.3 million from approximately
$16.3 million in 1996, due primarily to the increased coverage by Genesis of its
institutional client base and the resulting increased revenues from its BPS
activities.
Approximately $5 million of the decrease in the revenues of Genesis in
1996, as compared to 1995, arose, in large part, out of the fact that 1996 was a
transition year for Genesis. In 1996, realigned several of its business
divisions in order to better provide for future growth including its research
and corporate finance groups. As a result, Genesis was not able to increase its
coverage of its institutional client base in 1996 and build relationships for
growth, resulting in only a 1% increase in commissions for 1996 over 1995
commissions.
Over the last three years, Genesis experienced an increase in BPS revenues
from affiliates with increased assets under management, creating a more stable
revenue stream than traditional transaction-oriented investment banking and
trading revenues. BPS revenues attributable to related parties accounted for
$533,000 of the increase in revenues in 1997 as compared to 1996.
Market making and principal transactions, net, which consists of net
inventory and investment gains and losses, syndicate sales credits and
underwriting income, increased by 75% from 1996 to 1997 and decreased by 57%
from 1995 to 1996 for the reasons discussed below.
Net inventory and investment losses, which result from the purchasing or
selling securities by Genesis to facilitate customer transactions, declined to
$1.0 million in 1997, compared to $1.5 million in 1996. This decrease was due
to better risk management by Genesis in employing capital to facilitate customer
transactions. Syndicate sales credits, or the selling concession received by
Genesis on securities sold in an underwriting, in 1997 were $3.2 million,
representing 17% growth over 1996 levels of $2.7 million. Increased research
coverage by Genesis facilitated its participation in the selling groups of an
increased number of public offerings. Syndicate sales credits increased 91%
from $1.4 million in 1995 to $2.7 million in 1996 due to increased public
offering activity. In 1997, the underwriting income of Genesis reflecting the
increased activity in the public underwriting arena, was $1.1 million (gross of
expenses), a 60% increase from $700,000 in 1996. This increase represents the
results of the increased resources devoted by Genesis to research and investment
banking operations. An 18% increase in underwriting income of Genesis from 1995
to 1996 reflected the increased efforts of Genesis to enhance its public
underwriting presence.
Investment banking income of Genesis, generated from public and private
offering (approximately $1.4 million) as well as merger and acquisition
activities (approximately $1.4 million), was $2.8 million in 1997, up 5% from
its 1996 level of $2.6 million. Due to the lag time between the 1995 and early
1996 addition by Genesis of revenue-producing investment bankers and the closing
of merger and acquisitions transactions, investment banking income fees
increased over 200% from 1995 to 1996.
Unrealized gains from not readily marketable securities, which represents
gains attributable to the increase in value of warrant and option positions
acquired by Genesis and distributed to its members, fluctuates from year to year
based upon the performance of such positions and the decision by Genesis to
distribute such securities to its members.
Although expenses grew during 1997 as a result of Genesis' overall revenue
growth, expense growth trailed revenue growth. The resulting increased
operating margin of 14% for 1997, compared to 1% for 1996 and 1995, was largely
attributable to increased efficiency at Genesis throughout 1997.
Commission and floor brokerage expenses of Genesis, consisting primarily of
the cost to execute and settle transactions, equaled approximately $10.1 million
in 1997, a 60% increase over 1996 levels of approximately $6.3 million. This
increase directly relates to the increase in commission revenue for the same
period. The decrease in commission and floor brokerage expenses from 1995 to
1996 occurred as a result of the negotiation by Genesis of more favorable
clearing contracts and execution arrangements with the clearing and executing
firms utilized by Genesis.
26
<PAGE>
Total personnel expenses for Genesis were approximately $9.3 million in
1997 as compared to $8.7 million in 1996, a 7% increase. The increase in total
personnel expenses for 1997, as well as the increase in total personnel expenses
for 1996 over 1995, is attributable to revenue growth and increased
competitiveness in the marketplace for financial service professionals.
Communications expenses of Genesis, comprised of telephone and quotation
expenses, increased to $1.5 million in 1997, a 20% increase over 1996 levels.
This approximately $250,000 increase in costs is primarily attributable to the
expansion of the internal and external communication and information systems
utilized by Genesis (approximately $250,000), but also reflects increased usage
as a result of Genesis' higher volume of business. The reduction of
communication expenses from 1995 to 1996 is attributable to the successful
negotiation of a variety of contracts for communication services.
Occupancy and equipment rental expenses of Genesis showed steady increases
from 1995 to 1997 due, in large part, to the opening by Genesis of its New York
office in the summer of 1996.
General and administrative expenses, which consist primarily of travel
expenses, dues and subscriptions, office supplies and other expenses of a
similar nature, increased to $5.0 million in 1997 compared to $4.8 million in
1996 and $3.9 million in 1995. The net increase in 1997 is primarily
attributable to a significant increase in travel expenses (approximately
$137,000) due to an increase in sales efforts by professionals and the opening
by Genesis of its New York City office, and a decrease in certain other
operating expenses due to increased controls and efficiency of Genesis.
LIQUIDITY AND CAPITAL RESOURCES
Genesis maintains a liquid balance sheet. A majority of the assets of
Genesis consists of cash, securities and receivables from broker dealers. The
total assets of Genesis can fluctuate significantly depending largely upon
general economic and market conditions, volume of business activity by Genesis,
and underwriting and trading commitments of Genesis. The ability of Genesis to
support increases in its total assets is a function of its ability to generate
funds internally and its ability to obtain short term borrowings.
At December 31, 1997, Genesis had members' capital of approximately
$4,770,000, representing an increase of $2.3 million from its members' capital
at December 31, 1996. Also, at December 31, 1997, Genesis had cash and cash
equivalents of $2.6 million. Genesis believes that its internally generated
funds will be sufficient to fund its financial requirements for the foreseeable
future based on its current level of operations and planned growth. Should
Genesis significantly expand its capital expenditures or enter into any long-
term commitments, Genesis may need to obtain additional capital to support such
activities and to comply with regulatory requirements. If Genesis should find
that its ability to generate funds internally is insufficient to satisfy its
future capital needs, Genesis will require additional financing from outside
sources.
Genesis is subject to the Commission's Uniform Net Capital Rule (Rule 15c3-
1 under the Exchange Act) which requires the maintenance of minimum net capital
and requires that the ratio of the aggregate indebtedness of Genesis to the net
capital of Genesis (excess net capital) as defined by the rules, not exceed 15
to 1. As of December 31, 1997, Genesis had aggregate indebtedness of $1.1
million and net capital of $4.1 million, yielding excess net capital of $4.0
million and a ratio of 0.27 to 1. Accordingly, at December 31, 1997, Genesis
complied with the applicable capital requirements of Rule 15c3-1.
During the year ended December 31, 1997, Genesis generated cash flow from
operating activities of $3.7 million, compared to approximately $622,000 for the
year ended December 31, 1996 and $2.4 million for the year ended December 31,
1995. The increase in cash flow from operating activities in 1997 was due to
the net income of Genesis for 1997. The decrease in cash flow from operating
activities for the year ended December 31, 1996 was due to the reduction in cash
and securities deposited with clearing brokers.
Net cash used in investing activities was $762,000 for the year ended
December 31, 1997, compared to $861,000 for the year ended December 31, 1996.
The increase in net cash used in investing activities of $520,000
27
<PAGE>
for the year ended December 31, 1996 compared to the year ended December 31,
1995 was primarily due to investment in non-marketable securities.
Net cash provided by (used in) financing activities was ($657,000) for the
year ended December 31, 1997 compared to $293,000 for the year ended December
31, 1996 and ($4.0 million) for the year ended December 31, 1995. The
variations in net cash provided by (used in) financing activities for those
years reflect the distribution to the members of Genesis of income
(approximately $6,700,000) as well as the contribution of new capital
(approximately $2,100,000) by the members of Genesis.
28
<PAGE>
BUSINESS OF GENESIS
Genesis is a San Francisco-based investment banking firm offering corporate
finance, institutional sales and trading, and institutionally focused research
and investment advisory services and having special expertise in institutional
trading and innovative research focused on high-growth industries. Its
corporate finance services include equity underwriting and merger and
acquisition advisory services. Its customer base is comprised principally of
institutional, corporate, and high-net worth individual clients. Genesis was
formed in 1989 primarily to provide brokerage, accounting and administrative
services to investment partnerships. As of February 1, 1998, Genesis had 59
employees. Genesis' Research, Capital Markets, Corporate Finance, and Brokerage
Processing Services Departments work closely to allow Genesis to offer a wide
range of resources to its clients, while providing the attention of a smaller
boutique catering to middle market companies.
Corporate Finance
Over the past nine years, Genesis or the three principals in its Corporate
Finance Department have participated in more than 300 public underwritings and
private placements (including 24 in which Genesis served as a manager or co-
manager) and more than 40 mergers, acquisitions, and other recapitalizations.
Working in partnership with the Research and Capital Markets Departments, the
Corporate Finance Department is able to meet most of the financial advisory and
capital funding requirements necessary to develop its clients' businesses.
Following an offering, Genesis maintains after-market support by providing in-
depth research analysis, after-market trading, and sponsorship in the investment
community. Genesis often becomes the dominant force in the after-market trading
of the stock it underwrites.
The Corporate Finance Department has experience in each stage of a merger,
acquisition, divestiture, buyout, and recapitalization transaction, including
the identification of potential acquisitions and/or acquirers, the optimal
"packaging" of a client for a transaction, the preparation of client meetings,
the structuring of merger and sale transactions, and the negotiation of sale and
purchase terms.
The Corporate Finance Department also renders valuation and fairness
opinions for both private and public companies. Its work generally includes a
comprehensive operational and financial review of a client and the development
of financial analyses that incorporate both quantitative and qualitative
factors.
BROKERAGE PROCESSING SERVICES
Genesis' brokerage operations were originally established in 1989 to
support affiliated money management organizations by recapturing trading
commissions, making spreads generated by trading activity, and providing
administrative and other services in exchange for trading and processing
business. Over the years, these various asset management operations have grown
significantly and, with them, so has the firm's brokerage processing unit, which
accounted for approximately 40% of total revenue for the year ended December 31,
1997, compared to approximately 39% for the year ended December 31, 1996.
The Department currently serves two primary types of organizations --
investment partnerships and fee-based investment advisors. Total gross
processing commissions were approximately $12 million for the year ended
December 31, 1997, compared to approximately $8.5 million for the year ended
December 31, 1996.
Genesis also offers trading execution, clearing, and settlement. It
performs record keeping, account balance tracking, and trading strategies
tracking, as well as daily and monthly transaction reporting. Genesis has
clearing agreements with three firms to act as its clearing agent: ABN Amro/The
Chicago Corporation, Alex Brown/Bankers Trust and Morgan Stanley & Co.
In addition, the Department offers financial accounting functions (tax
preparation and certification), legal support (including partnership
documentation, offering memoranda, and investment advisor registration),
administrative resources and systems (hardware, software, and networking), fund
accounting (performance reports and other recordkeeping), custodial accounting,
and compliance services. Investment partnerships accounted for
29
<PAGE>
approximately 68% and 56% of total processing revenues for the years ended
December 31, 1997 and December 31, 1996, respectively.
RESEARCH
Genesis provides comprehensive coverage of a select group of industries and
companies that are not widely followed by the investment community. Genesis
publishes numerous materials for its clients, including quarterly earnings
reports, company updates, company reports, which initiate research coverage,
industry overviews, and emphasis lists, which encompass all covered industries.
The Genesis Research Department follows over 50 companies in principal areas:
correctional services, healthcare technology, retailing, real estate, electronic
commerce, and wireless communications components.
Capital Markets
Working in partnership with its Research Department, the Capital Markets
Department encompasses all of the trading operations at Genesis, including over-
the-counter ("OTC") and listed trading, syndicate, and corporate services.
The Capital Markets Department is a market maker in 75 OTC stocks and has
a significant presence in 75 listed securities--including 58% of the securities
followed by the Research Department. Total OTC trading volume of Genesis for
the year ended December 31, 1997 was approximately 169 million shares compared
to approximately 151 million shares for the year ended December 31, 1996. Total
listed trading volume of Genesis for the year ended December 31, 1997 was
approximately 176 million shares compared to approximately 100 million shares
for the year ended December 31, 1996.
Over the past four years, Genesis has been a syndicate member in 251 public
offerings. Because it believes syndicate participation is becoming an
increasingly important function of an investment bank's research capability,
Genesis expects that it will continue to be involved in a significant number of
offerings every year.
The Corporate Services Group was formed in 1995 to facilitate restricted
securities sales. Genesis is an active market maker with strong block trading
capabilities and it is aware of "unsolicited buyers" and advantageous
opportunities for a client's sale of restricted securities. The Group's members
are cognizant of the Securities and Exchange Commission rules and regulations
that govern restricted sales transactions and are supported by a compliance and
operations group.
FACILITIES AND EMPLOYEES
As of February 1, 1998, Genesis employed 59 persons, eight of whom work in
the firm's New York office which opened in 1996. Genesis leases 22,000 square
feet of space in San Francisco and 3,000 square feet of space in New York.
GOVERNMENT REGULATION
The securities industry and the business of Genesis, similar to the
business of JWCFS, are subject to extensive regulation by the Commission, state
securities regulators, and other governmental regulatory authorities. The
business also is regulated by industry self-regulatory organizations ("SROs"),
including the NYSE, the AMEX, and other exchanges.
LEGAL PROCEEDINGS
Genesis may be involved from time to time in litigation arising in the
normal course of business. As of the date of this Proxy Statement/Prospectus,
the Company is not a party to any material legal proceeding.
30
<PAGE>
JWGENESIS UNAUDITED PRO FORMA CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma consolidated condensed balance sheet of JWGenesis
at December 31, 1997 gives effect to the Combination as if it was consummated on
such date. The unaudited pro forma consolidated statement of operations of
JWGenesis for the year ended December 31, 1997 gives effect to the Combination
as if it had occurred as of January 1, 1997. The unaudited pro forma information
does not take into effect the remaining 9% of AGRO shares. These amounts will
not have a material effect to the JWGenesis unaudited pro forma consolidated
condensed financial statements. The unaudited pro forma consolidated condensed
financial statements should be read in conjunction with (i) the historical
financial statements of JWCFS, including the notes thereto, incorporated herein
by reference, and (ii) the historical financial statements of Genesis, including
the notes thereto, which are contained in this Prospectus. The unaudited pro
forma consolidated condensed financial statements are presented for information
purposes only and are not necessarily indicative of the financial position or
operating results that would have occurred if the Combination had been
consummated as of the dates indicated, nor are they necessarily indicative of
future financial conditions or operating results. JWCFS and Genesis expect to
realize certain revenue enhancements as a result of strategies initiatives
relating to the integration of the operations of Genesis and JWCFS into
JWGenesis; however, such incremental revenue has not been reflected in the
unaudited pro forma consolidated condensed financial statements of operations of
JWGenesis as they are not quantifiable.
31
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AT DECEMBER 31, 1997
(In thousands)
------------------------
AS REPORTED
------------------------
COMPANY GENESIS COMBINED ADJUSTMENTS AS ADJUSTED
-----------------------------------------------------------------
ASSETS
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents................................ $ 11,512 $2,589 $ 14,101 $ 14,101
Commissions and other receivables from clearing
brokers............................................... 716 716 716
Receivable from customers, net........................... 107,507 107,507 107,507
Receivable from brokers and dealers...................... 4,532 1,477 6,009 6,009
Securities owned, at market value........................ 9,010 2,551 11,561 11,561
Furniture, equipment and leasehold improvements,
net................................................... 1,742 1,208 2,950 2,950
Deferred tax asset....................................... 1,621 1,621 1,621
Income tax receivable.................................... 294 294 294
Other, net............................................... 3,798 396 4,194 4,194
Cost in excess of net value of assets acquired........... 17,400 b 17,400
------------------------------------------------ -------------
$140,732 $8,221 $148,953 $17,400 $166,353
================================================ =============
LIABILITIES AND
STOCKHOLDERS' /MEMBERS' EQUITY
Liabilities:
Short-term borrowings from banks......................... $ 29,423 $ 29,423 $ 29,423
Accounts payable, accrued expenses and other 12,043 $ 554 12,597 $ 900 b 13,497
liabilities...........................................
Distributions payable to members......................... 1,770 a 1,770
Payable to customers..................................... 35,055 35,055 35,055
Payable to brokers and dealers........................... 32,975 1,185 34,160 34,160
Securities sold, not yet purchased, at market value...... 567 180 747 747
Notes payable to affiliate............................... 5,113 257 5,370 1,275 e 6,645
Lines of credit.......................................... 890 890 890
------------------------------------------------ -------------
116,066 2,176 118,242 3,945 122,187
------------------------------------------------ -------------
Redeemable preferred members' capital.................... 1,275 1,275 (1,275) e -
Stockholders' equity/Members' capital:...................
Common stock............................................. 4 4 2 b 6
Members' capital......................................... 4,770 4,770 (1,770) a -
(3,000) b
Additional paid-in capital............................... 4,018 4,018 19,498 b 23,516
Retained earnings........................................ 20,651 20,651 20,651
Treasury stock........................................... (7) (7) (7)
------------------------------------------------ -------------
Total stockholders' equity/Members' capital.............. 24,666 4,770 29,436 14,730 44,166
------------------------------------------------ -------------
$140,732 $8,221 $148,953 $17,400 $166,353
================================================ =============
</TABLE>
(See Notes to Pro Forma Consolidated Condensed Financial Statements)
32
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(In thousands, except for per share amounts)
----------------------
AS REPORTED
----------------------
COMPANY Genesis Combined Adjustments As Adjusted
---------------------------------------------- -------------
REVENUES:
<S> <C> <C> <C> <C> <C>
Commissions............................................... $ 49,907 $23,355 $ 73,262 $ 73,262
Market making and principal transactions, net............. 20,836 3,371 24,207 24,207
Interest.................................................. 11,363 565 11,928 11,928
Clearing fees............................................. 12,338 0 12,338 12,338
Other..................................................... 2,738 3,279 6,017 6,017
---------------------------------------------- -------------
$ 97,182 $30,570 $127,752 $ 127,752
---------------------------------------------- -------------
EXPENSES:
Commission and clearing costs............................. 51,238 10,098 61,336 61,336
Employee compensation and benefits........................ 16,278 9,330 25,608 $ 871 f 26,479
Selling, general and administrative....................... 15,487 7,316 22,803 870 c 23,673
Interest.................................................. 4,387 0 4,387 4,387
87,390 26,744 114,134 1,741 115,875
---------------------------------------------- -------------
Income before income taxes................................ 9,792 3,826 13,618 (1,741) 11,877
Provision for income taxes................................ 3,689 3,689 1,111 d 4,800
---------------------------------------------- -------------
Net income................................................ $ 6,103 $ 3,826 $ 9,929 $ (2,852) $ 7,077
============================================== =============
EARNINGS PER COMMON SHARE:
Basic..................................................... $1.77 $1.43
============ =============
Diluted................................................... $1.50 $1.27
============ =============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic..................................................... 3,443,141 1,500,000 4,943,141
============ ============= =============
Diluted................................................... 4,069,594 1,500,000 5,569,594
============ ============= =============
(See Notes to Pro Forma Consolidated Condensed Financial Statements)
</TABLE>
33
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(a) To adjust Genesis equity to the minimum equity required by the Combination
Agreement and record the distribution payable of the excess Genesis equity
to the Genesis Members.
<TABLE>
<CAPTION>
DR.(CR.)
-----------
<S> <C>
Members' capital............................................................................. 1,770,000
Distributions payable to members............................................................. (1,770,000)
</TABLE>
(b) To record the issuance of JWGenesis common stock to acquire 100% of the
Genesis Membership Interests and the related direct costs of the
Combination.
<TABLE>
<S> <C>
Number of shares of JWGenesis Common Stock to be used in the Combination..................... 1,500,000
Per share value at the date the Combination Agreement was executed and announced............. $13.00
Value of shares issued....................................................................... 19,500,000
Direct costs of Combination.................................................................. 900,000
Total........................................................................................ $ 20,400,000
DR.(CR.)
-----------
Accounts payable............................................................................. (900,000)
Common stock................................................................................. (2,000)
Additional paid-in capital................................................................... (19,498,000)
Good will.................................................................................... 17,400,000
Net assets acquired.......................................................................... 3,000,000
(c) To record the amortization of goodwill resulting from the Combination using
the straight-line method of amortization and an estimated useful life of
twenty (20) years.
DR.(CR.)
-----------
Amortization expense......................................................................... 870,000
(d) To record the net effect on income taxes attributable to (i) Genesis
pretax income since Genesis has not recorded such a provision as a result
of its status as a limited liability company and (ii) amortization of the
Special Payment and changes in executive compensation. The income taxes
are being recorded at the JWGenesis' statutory income tax rate of 37.6%.
DR.(CR.)
-----------
Provision for income taxes............................................................... 1,111,000
(e) To reclassify Genesis redeemable preferred members' interests to notes
payable.
DR.(CR.)
-----------
Redeemable preferred members' interests...................................................... 1,275,000
Notes payable................................................................................ (1,275,000)
</TABLE>
34
<PAGE>
(f) To record the amortization of Special Payments using the straight-line
method of amortization over the seven year nonsolicitation period and the
net effect of the new employment agreements expected to be executed by
Messrs. Leeds, Marks, Stapleton, and Weinstein.
<TABLE>
<CAPTION>
DR.(CR.)
-----------
<S> <C>
Employee compensation and benefits........................................................ 871,000
</TABLE>
35
<PAGE>
DESCRIPTION OF CAPITAL STOCK OF JWCFS
The authorized capital stock of JWCFS consists of 9,056,000 shares of
common stock, $.001 par value per share (which are the JWCFS Shares), and
5,000,000 shares of preferred stock, $.001 par value per share, having such
rights and privileges as the JWCFS Board may from time to time determine. As of
the date of this Prospectus, there were 3,319,021 JWCFS Shares and no shares of
preferred stock issued and outstanding.
The following summary of JWCFS capital stock does not purport to be
complete and is qualified in its entirety by reference to the Restated Articles
of Incorporation, as amended, and Bylaws, as amended, of JWCFS that are included
as exhibits to the Registration Statement of which this Prospectus forms a part,
and the applicable provisions of the Florida Business Corporation Act.
JWCFS SHARES
Holders of JWCFS Shares are entitled to one vote per share on any issue
submitted to a vote of the shareholders and do not have cumulative voting rights
in the election of directors. Accordingly, the holders of a majority of the
outstanding JWCFS Shares voting n the election of directors can elect all of the
directors then standing for election, if they choose to do so. All JWCFS Shares
are entitled to share equally in such dividends as the JWCFS Board may, in its
discretion, declare out of sources legally available therefor. Upon
dissolution, liquidation, or winding up of the JWCFS, holders are entitled to
receive on a ratable basis, after payment or provision for payment of all debts
and liabilities of JWCFS and any preferential amount due with respect to
outstanding shares of preferred stock, all assets of JWCFS available for
distribution, in cash or in kind. Holders of JWCFS Shares do not have
preemptive or other subscription rights, conversion or redemption rights, or any
rights to share in any sinking fund. All currently outstanding JWCFS Shares
are, and the shares offered hereby (when issued in exchange for AGRO Shares in
the manner contemplated by this Prospectus) will be, fully paid and
nonassessable.
PREFERRED STOCK
Pursuant to the JWCFS' Restated Articles of Incorporation, the JWCFS Board
from time to time, may authorize the issuance of shares of preferred stock in
one or more series, may establish the number of shares to be included in any
such series, and may fix the designations, powers, preferences, and rights
(including voting rights) of the shares of each such series and any
qualifications, limitations, or restrictions thereon. No shareholder
authorization is required for the issuance of shares of preferred stock unless
imposed by then applicable law. Shares of preferred stock may be issued for any
general corporate purposes, including acquisitions. The JWCFS Board could issue
a series of preferred stock with rights more favorable with regard to dividends
and liquidation than the rights of holders of JWCFS Shares. Such a series of
preferred stock also could be used for the purposes of preventing a hostile
takeover of JWCFS that is considered to be desirable by the holders of JWCFS
Shares, could otherwise adversely affect the voting power of the holders of
JWCFS Shares, and could serve to perpetuate the directors' control of JWCFS
under certain circumstances. No transaction is now contemplated that would
result in the issuance of any such shares of preferred stock.
LIMITATIONS ON LIABILITY OF OFFICERS AND DIRECTORS
JWCFS' Restated Articles of Incorporation provide for indemnification of
directors to the fullest extent permitted by Florida law and, to the extent
permitted by such law, eliminate, or limit the personal liability of directors
to JWCFS and its shareholders for monetary damages for certain breaches of
fiduciary duty and the duty of care. Such indemnification may be available for
liabilities arising in connection with the Merger. Insofar as indemnification
for liabilities under the Securities Act may be permitted to directors,
officers, or persons controlling JWCFS pursuant to the foregoing provisions,
JWCFS has been informed that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. Pursuant to its Bylaws, JWCFS may indemnify its
officers, employees, agents, and other persons to the fullest extent permitted
by Florida law.
36
<PAGE>
MISCELLANEOUS
JWCFS Shares are traded on the AMEX. American Stock Transfer & Trust
Company is the registrar and transfer agent for JWCFS Shares. The issuance of
JWCFS Shares in connection with the Transaction will result in dilution of the
voting power and relative equity interests of the current holders of JWCFS
Shares.
DESCRIPTION OF CAPITAL STOCK OF JWGENESIS
The JWGenesis Articles of Incorporation provide that the authorized capital
stock of JWGenesis consists of 30,000,000 shares of Common Stock, par value
$.001 per share, and 5,000,000 shares of Preferred Stock, par value $.10 per
share ("JWGenesis Preferred Stock"). Except for 100 shares of Common Stock owned
by JWCFS (which will be cancelled in the Combination), no shares of JWGenesis
capital stock is or will be issued and outstanding immediately prior to the
consummation of the Combination.
COMMON STOCK
Each share of JWGenesis Common Stock will entitle its holder of record to
one vote for the election of directors and all other matters to be voted on by
the shareholders. Holders of JWGenesis Common Stock will not have cumulative
voting rights; therefore the holders of a majority of the shares of JWGenesis
Common Stock voting for the election of directors may elect all nominees
standing for election as JWGenesis directors. Subject to the rights of holders
of Preferred Stock, holders of JWGenesis Common Stock will be entitled to
receive such dividends, if any, as may be declared from time to time by
JWGenesis by the JWGenesis Board of Directors in its discretion from funds
legally available for that use. Subject to the rights of holders of Preferred
Stock, holders of JWGenesis Common Stock will be entitled to share on a pro rata
basis in any distribution to shareholders upon liquidation, dissolution, or
winding up of JWGenesis. No holder of JWGenesis Common Stock will have any
preemptive right to subscribe for any stock or other security of JWGenesis.
PREFERRED STOCK
The Board of Directors of JWGenesis, without further action by
shareholders, may from time to time authorize the issuance of shares of
JWGenesis Preferred Stock in one or more series and with certain limitations,
rights, preferences, qualifications, or restrictions thereon and the number of
shares constituting such series and the designation of such series. Satisfaction
of any dividend preferences on outstanding JWGenesis Preferred Stock would
reduce the amount of funds available for the payment of dividends on JWGenesis
Common Stock. Holders of JWGenesis Preferred Stock would normally be entitled to
receive a preference payment in the event of any liquidation, dissolution, or
winding up of JWGenesis before any payment is made to the holders of JWGenesis
Common Stock. In addition, under certain circumstances, the issuance of such
JWGenesis Preferred Stock may render more difficult or tend to discourage a
change in control of JWGenesis. Although JWGenesis currently has no plans to
issue shares of JWGenesis Preferred Stock, the Board of Directors of JWGenesis,
without shareholder approval, may issue JWGenesis Preferred Stock with voting
and conversion rights which could adversely affect the rights of holders of
shares of JWGenesis Common Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for JWGenesis Common Stock is American
Stock Transfer & Trust Company, New York, New York.
INDEMNIFICATION AND LIMITATIONS ON LIABILITY OF OFFICERS AND DIRECTORS
JWGenesis' Articles of Incorporation and Bylaws provide for indemnification
of officers and directors to the fullest extent permitted by Florida law and, to
the extent permitted by such law, eliminate, or limit the personal liability of
directors to JWGenesis and its shareholders for monetary damages for certain
breaches of fiduciary duties. The liability of a director is not eliminated or
limited (i) for any breach of the director's duty of loyalty to JWGenesis or its
shareholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for any improper
distribution under the FBCA; or (iv) for any transaction from which the director
derived an improper personal benefit. Such indemnification may be available for
liabilities arising in
37
<PAGE>
connection with the Share Exchange. Insofar as indemnification for liabilities
under the Securities Act may be permitted to directors, officers, or persons
controlling JWGenesis pursuant to the foregoing provisions, JWGenesis has been
informed that, in the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
CERTAIN ANTI-TAKEOVER MATTERS
No provision of JWGenesis' Articles of Incorporation or Bylaws has been
adopted in order to accomplish any anti-takeover objective of the Board of
Directors or management. However, certain provisions of the JWGenesis Bylaws
and Articles of Incorporation could have the effect of making a hostile,
unsolicited offer to take control of JWGenesis more difficult. See "Comparison
of Shareholder Rights--Special Meetings of Shareholders" and "Comparison of
Shareholder Rights--Shareholder Action Without Meeting". Management does not
believe that any other provisions of JWGenesis' Bylaws or Articles of
Incorporation have such anti-takeover effects, and management does not have any
current plans to adopt or propose for adoption any anti-takeover measure in a
future proxy solicitation.
COMPARISON OF RIGHTS OF HOLDERS OF JWCFS SHARES
AND HOLDERS OF JWGENESIS SHARES
If the Combination is consummated, holders of JWCFS Common Stock (including
former AGRO shareholders whose AGRO Shares are converted into JWCFS Shares in
the Merger) will become holders of JWGenesis Common Stock. The rights of the
former JWCFS shareholders will continue to be governed by the Florida Business
Corporations Act (the "FBCA") because JWGenesis is also a Florida corporation.
However, the JWGenesis Articles of Incorporation and Bylaws differ in certain
respects from the comparable documents of JWCFS. The material differences are
summarized below. This summary is qualified in its entirety by reference to the
full text of the FBCA and the aforementioned documents, which are available from
JWCFS upon request from Joel E. Marks, Vice Chairman and Chief Financial
Officer, 1117 Perimeter Center West, Suite 500E, Atlanta, Georgia 30338.
Authorized Shares
The JWGenesis Articles of Incorporation authorize 35,000,000 shares of
capital stock, consisting of 30,000,000 shares of Common Stock, and 5,000,000
shares of Preferred Stock. As to the Preferred Stock, the JWGenesis Articles of
Incorporation authorize the Board of Directors to determine or alter the
designations, voting powers, preferences, and relative, participating, optional,
or other special rights, and the qualifications, limitations, and restrictions
on such rights, as authorized by resolutions duly adopted prior to the issuance
of any shares of a series of preferred stock.
JWCFS Articles of Incorporation authorize 14,056,000 shares of capital
stock, consisting of 9,056,000 shares of Common Stock and 5,000,000 shares of
special stock, par value $.001, with such designations, voting powers,
preferences, and rights as the board of directors shall determine. JWCFS Board
of Directors had previously established a series of special stock, known as
Series A Special Distribution Stock, none of which is outstanding.
SPECIAL MEETINGS OF SHAREHOLDERS
The JWGenesis Bylaws require a special meeting to be called by the
corporation only upon the written request of the holders of shares representing
40% or more of the votes entitled to be cast on each issue proposed to be
considered at the special meeting. For a special meeting of shareholders to be
called by the corporation, JWCFS requires, by virtue of the operation of the
FBCA, only the written request of 10% of the votes entitled to be cast on any
issue proposed to be considered at a special meeting.
By requiring a shareholder or a group of shareholders to gain the support
of a larger percentage of the holders of shares before the shareholder or group
of shareholders can require JWGenesis to call a special meeting, the JWGenesis
Bylaw provision could have the effect of making a hostile or unsolicited offer
to take control of JWGenesis more difficult. This is because, without the
support of the Board of Directors an acquiror would not be able to call a
38
<PAGE>
meeting to address all of the shareholders until the requisite support was
obtained. On the other hand, requiring a greater percentage of support also
helps to ensure that special meetings are not called to address matters that may
not be important to a significant number of the shareholders.
SHAREHOLDER ACTION WITHOUT MEETING
In its Articles of Incorporation, JWGenesis has elected to opt-out of the
FBCA provision that permits any action required or permitted to be taken at an
annual or special meeting of shareholders to be taken without a meeting if the
action is taken by written consent of not less than the minimum number of votes
with respect to each voting group necessary to authorize or take action at a
meeting at which all voting groups and shares entitled to vote are present and
voted. JWCFS had not opted-out of that provision. Accordingly, unlike with
JWCFS, shareholders of JWGenesis may take action without a vote only if the
action is taken by unanimous written consent of the holders of the outstanding
stock of each voting group entitled to vote thereon.
Because JWGenesis, like JWCFS, will have public shareholders, this
provision will make it impossible, as a practical matter, for actions to be
taken by written consent without a meeting of the shareholders. This provision
could have the effect of making a hostile or unsolicited offer to take control
of JWGenesis more difficult and may discourage the accumulation of substantial
blocks of JWGenesis' stock because, at a meeting, opposing groups would have a
chance to speak out and voice their concerns. The provision does not limit the
actions that the shareholders can take, however it merely limits the way in
which the actions may be taken. This provision was adopted because management
and the Board of Directors believe that the opportunity for a meeting and a full
discussion of matters upon which shareholders may vote is preferable to allowing
the holders of 51% of the shares the ability to act unilaterally by written
consent.
MATTERS CONSIDERED AT ANNUAL MEETINGS
The JWGenesis Bylaws specify that the only business that may be conducted
at an annual meeting of shareholders shall be business brought before the
meeting (i) by or at the direction of the Board of Directors prior to the
meeting; (ii) by or at the direction of the Chairman of the Board, the Chief
Executive Officer, or the President; or (iii) by a shareholder of the
corporation who is entitled to vote with respect to the business and who
complies with certain prior notice procedures. The prior notice procedures
provide that a shareholder must have given timely notice of the proposed
business in writing to the secretary of the corporation. To be timely, a
shareholder's notice must be delivered or mailed to and received at the
principal offices of the corporation on or before the later to occur of (i) 14
days prior to the annual meeting or (ii) five days after notice of the meeting
is provided to the shareholders. A shareholder's notice to the secretary must
set forth a brief description of each matter of business the shareholder
proposes to bring before the meeting and the reasons for conducting that
business at the meeting; the name, as it appears on the corporation's books, and
address of the shareholder proposing the business; the series or class and
number of shares of the corporation's capital stock that are beneficially owned
by the shareholder; and any material interest of the shareholder in the proposed
business. The chairman of the meeting has discretion to declare to the meeting
that any business proposed by a shareholder to be considered at the meeting is
out of order and that such business shall not be transacted at the meeting if
the chairman concludes that the matter has been proposed in a manner
inconsistent with the requirements, or the chairman concludes that the subject
matter of the proposed business is inappropriate for consideration by the
shareholders at the meeting.
JWCFS' Bylaws do not prescribe specific procedures for a shareholder to
bring a matter before an annual meeting. JWCFS' Bylaws state simply that
shareholders may, at the annual meeting, elect a board of directors and transact
such other business as may properly come before the meeting.
VACANCIES ON THE BOARD OF DIRECTORS
The JWGenesis Bylaws provide that a vacancy occurring on the Board of
Directors may be filled for the unexpired term, unless the shareholders have
elected a successor, by the affirmative vote of a majority of the remaining
directors, whether or not the remaining directors constitute a quorum. If the
vacant office was held by a director elected by a particular voting group, only
the holders of shares of that voting group or the remaining directors elected by
that voting group shall be entitled to fill the vacancy. If the vacant office
was held by a director elected by a particular voting
39
<PAGE>
group and there is no remaining director elected by that voting group, the other
remaining directors or director (elected by another voting group or groups) may
fill the vacancy during an interim period before the shareholders of the vacated
director's voting group act to fill the vacancy.
JWCFS' Bylaws state simply that any vacancy shall be filled by a majority
vote of the remaining directors in office.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon for
JWCFS by Kilpatrick Stockton LLP, Atlanta, Georgia. That firm has also
furnished the tax opinion upon which the discussion in "THE MERGER--Material
Federal Income Tax Consequences" is based.
EXPERTS
The consolidated financial statements of JWCFS incorporated in this
Prospectus by reference to JWCFS' Annual Report on Form 10-K for the year ended
December 31, 1997, as amended (a copy of which accompanies this Prospectus as
Appendix A), have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The financial statements of AGRO at December 31, 1997 and 1996 and for each
of the two years in the period ended December 31, 1997 appearing in this
Prospectus and Registration Statement and incorporated by reference elsewhere
herein have been audited by Ernst & Young LLP, independent auditors, as set
forth in their reports appearing herein and incorporated by reference elsewhere
in the Registration Statement and are included in reliance upon such reports
given upon the authority of each firm as experts in accounting and auditing.
The financial statements of Genesis as of December 31, 1996 and 1997 and
for each of the three years ended December 31, 1997 appearing herein have been
audited by Lallman, Feltman, Shelton & Peterson, P.A., independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of such firm as experts in auditing and
accounting.
40
<PAGE>
INDEX TO FINANCIAL STATEMENTS
GENESIS MERCHANT GROUP SECURITIES, LLC
<TABLE>
<CAPTION>
<S> <C>
Independent Auditor's Report............................................................ F-1
Statements of Financial Condition at December 31, 1997 and 1996......................... F-2
Statements of Operations for the Year Ended December 31, 1997, 1996, and 1995........... F-3
Statements of Changes in Members' Capital for the Year Ended Dec. 31, 1997, 1996, 1995.. F-4
Statements of Cash Flows for the Year Ended December 31, 1997, 1996, and 1995........... F-5
Notes to Financial Statements........................................................... F-6
JWGENESIS FINANCIAL CORP.
Report of Independent Certified Public Accountants...................................... F-11
Statement of Financial Condition as of January 16, 1998................................. F-12
Notes to Financial Statements........................................................... F-13
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
January 30, 1998
Members
Genesis Merchant Group Securities, LLC
San Francisco, CA 94133
We have audited the accompanying statements of financial condition of
Genesis Merchant Group Securities, LLC as of December 31, 1997 and 1996, and the
related statements of operations, changes in Members' capital, and cash flows
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material aspects, the financial position of Genesis Merchant Group
Securities, LLC as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principals.
/S/ LALLMAN, FELTMAN, SHELTON & PETERSON, P.A.
Ketchum, Idaho
F-2
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31,
-----------------------------
1997 1996
---------- ----------
<S> <C> <C>
ASSETS:
Assets:
Cash and cash equivalents................................................... $2,588,927 $ 259,523
Receivables from brokers and dealers........................................ 1,477,415 2,697,287
Readily marketable securities owned, at market value........................ 2,281,085 466,882
Not readily marketable securities owned, at market value.................... 269,440 683,812
Furniture, equipment, and leasehold improvements, net of accumulated
depreciation of $1,381,452 and $1,233,377, respectively.................. 1,207,914 1,215,593
Secured demand note from related party...................................... 256,882 --
Other....................................................................... 139,620 664,748
---------- ----------
$8,221,283 $5,987,845
========== ==========
LIABILITIES, MANDATORILY REDEEMABLE PREFERRED
MEMBERS' CAPITAL, AND MEMBERS' CAPITAL
Liabilities:
Accounts payable............................................................ $ 553,976 $ 981,282
Payable to brokers and dealers.............................................. 1,185,138 460,688
Securities sold, not yet purchased, at market value......................... 179,871 298,805
Payables to related parties................................................. -- 455,000
Subordinated borrowings from related party.................................. 256,882 --
---------- ----------
2,175,867 2,195,775
---------- ----------
Mandatorily redeemable preferred members' capital........................... 1,275,174 1,288,778
---------- ----------
Commitments and contingencies (Note 3)
Members' Capital............................................................ 4,770,242 2,503,292
---------- ----------
$8,221,283 $5,987,845
========== ==========
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
----------- ------------ -----------
<S> <C> <C> <C>
Revenues:
Commissions........................................................ $18,073,683 $11,518,563 $12,834,210
Commissions-related parties........................................ 5,281,000 4,748,000 3,208,000
Market making and principal transactions, net...................... 3,371,904 1,932,159 4,462,836
Investment banking................................................. 2,759,567 2,633,040 857,502
Unrealized gain from not readily marketable securities............. -- 292,775 5,413,048
Interest and dividends............................................. 565,113 533,313 590,199
Other.............................................................. 518,501 622,693 222,180
----------- ------------ -----------
30,569,768 22,280,543 27,587,975
----------- ------------ -----------
Expenses:
Commission and floor brokerage..................................... 10,097,656 6,324,226 7,795,721
Personnel and employee benefits.................................... 9,329,277 8,726,101 8,253,440
Communications..................................................... 1,529,390 1,279,141 1,581,035
Occupancy and equipment rental..................................... 765,032 622,290 429,339
General and administrative......................................... 5,022,403 4,840,238 3,908,160
----------- ------------ -----------
26,743,758 21,791,996 21,967,695
----------- ------------ -----------
Net income............................................................ $ 3,826,010 $ 488,547 $ 5,620,280
=========== =========== ===========
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN MEMBERS' CAPITAL
MANDATORILY
REDEEMABLE
PREFERRED
MEMBERS' MEMBERS'
CAPITAL CAPITAL
---------------- ---------------
<S> <C> <C>
Partners' Capital, January 1, 1995................................................ $ -- $ 7,597,938
Contributions of capital....................................................... -- 66,000
Distributions of capital....................................................... -- (4,823,987)
Net income..................................................................... -- 5,620,280
---------------- ---------------
Partners' Capital, December 31, 1995.............................................. -- 8,460,231
---------------- ---------------
Contributions of capital....................................................... -- 1,916,680
Transfer to mandatorily redeemable preferred................................... 1,988,993 (1,988,993)
Distributions of capital....................................................... (791,551) (6,281,837)
Net income..................................................................... 91,336 397,211
---------------- ---------------
Members' Capital, December 31, 1996............................................... 1,288,778 2,503,292
---------------- ---------------
Contributions of capital....................................................... -- 127,664
Transfer to mandatorily redeemable preferred................................... 385,766 (385,766)
Distributions of capital....................................................... (477,245) (1,223,083)
Net income..................................................................... 77,875 3,748,135
---------------- ---------------
Members' Capital, December 31, 1997............................................... $1,275,174 $ 4,770,242
================ ===============
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
Operating activities:
<S> <C> <C> <C>
Net income................................................................ $ 3,826,010 $ 488,547 $ 5,620,280
Adjustment to reconcile net income to cash provided (used) by
operating activities:
Depreciation............................................................ 267,947
Unrealized gain from not readily marketable securities.................. -- (292,775) (5,413,048)
Change in assets and liabilities:
Receivables from brokers and dealers.................................... 1,219,872 252,901 (1,275,547)
Securities owned, at market value....................................... (1,814,203) (147,294) 2,419,395
Other assets............................................................ 525,128 (460,221) 582,393
Accounts payable........................................................ (427,305) 563,114 (34,209)
Payable to brokers and dealers.......................................... 724,450 (44,974) 458,511
Securities sold, net yet purchased...................................... (118,934) (544,765) (318,170)
Payables to related parties............................................. (455,000) 452,530 (6,030)
----------- ----------- -----------
Net cash flows provided by operating activities........................ 3,747,965 621,774 2,369,575
----------- ----------- -----------
Investing activities
(Purchase of) proceeds from not readily marketable securities............. (244,440) (393,358) 132,310
Acquisition of secured demand note from related party..................... (256,882) -- --
Purchase of furniture, equipment, and leasehold
improvements........................................................... (260,268) (468,004) (473,226)
----------- ----------- -----------
Net cash flows used in investing activities............................. (761,590) (861,362) (340,916)
----------- ----------- -----------
Financing activities
Acquisition of subordinated debt.......................................... 256,882 -- --
Distributions paid to members............................................. (1,041,517) (1,623,694) (4,071,836)
Contributions received from members....................................... 127,664 1,916,680 66,000
----------- ----------- -----------
Net cash flows (used) provided by financing
activities........................................................... (656,971) 292,986 (4,005,836)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents......................... 2,329,404 53,398 (1,977,177)
Cash and cash equivalents, beginning of year................................. 259,523 206,125 2,183,302
----------- ----------- -----------
Cash and cash equivalents, end of year....................................... $ 2,588,927 $ 259,523 $ 206,125
=========== =========== ===========
Supplemental information:
Cash paid for interest.................................................... $ 3,853 $ -- $ --
=========== =========== ===========
Noncash transactions:
Distributions of not readily marketable securities to members............. $ (658,812) $(5,449,694) $ (752,151)
=========== =========== ===========
Transfer of members' capital to mandatorily redeemable
preferred members' capital............................................. $ 385,766 $ 1,988,993 $ --
=========== =========== ===========
The accompanying Notes to Financial Statements are
an integral part of these financial statements.
</TABLE>
F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business and Summary of Significant Accounting Policies:
Description of Operations
Genesis Merchant Group Securities, LLC (the "Firm") a California limited
liability company, commenced operations on March 16, 1989. The Firm, formerly
organized as a limited partnership, became a limited liability company ("LLC"),
which is an unincorporated association of members, on July 1, 1996. The Firm
will continue to operate until March 31, 1999 unless the members elect
otherwise.
The Firm is a broker/dealer in securities with customers throughout the
United States. The Firm's primary office is in San Francisco and it maintains a
secondary office in New York City. The Firm's services include investment
banking and investment advisory services. The Firm introduces all of its
trades, on a fully-disclosed basis, to other broker/dealers and is therefore
exempt from SEC Rule 15c3-3 under provisions provided for in subparagraph
(k)(2)(ii).
Management Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash, including cash in banks and
money market funds.
Receivable from Brokers and Dealers
The Firm's receivable from brokers and dealers consists primarily of
amounts due from other broker/dealers for trades initiated by the Firm and
executed and cleared by these other broker/dealers. These amounts due from
other broker/dealers are typically received shortly after the accounting period
in which they are recorded and the Firm has not experienced any significant
uncollectible accounts receivable.
Securities Owned and Securities Sold, Not Yet Purchased
Securities owned and securities sold, not yet purchased are recorded at
market value with unrealized gains or losses reflected in income currently.
Included in securities owned are not readily marketable securities. These
securities are defined as securities (a) for which there is no market on a
securities exchange or no independent publicly quoted market, (b) that cannot
be publicly offered or sold unless registration has been effected, and/or (c)
that cannot be offered or sold because of other arrangements, restrictions, or
conditions applicable to the securities or to the Firm. These securities are
carried at their estimated fair value as determined by management with
unrealized gains and losses included in income.
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Furniture, Equipment and Leasehold Improvements
Assets classified as furniture, equipment, and leasehold improvements are
shown at historical cost and are being depreciated over their estimated useful
lives of five to ten years using accelerated and straight-line methods.
Income Taxes
The financial statements do not reflect a provision or liability for
federal or state income taxes since under the Internal Revenue Code, a LLC is
treated as a partnership. Accordingly, the individual Members report their
share of the Firm's income on each member's individual tax return.
Revenue Recognition
The Firm recognizes all income and expenses relating to security
transactions on a trade date basis and the net realized gain or loss on sales of
securities is determined on a first-in, first-out (FIFO) cost basis. Investment
banking revenue is recognized as follows: Management fees are recognized on
offering date and underwriting fees at the time the underwriting is completed
and the income is reasonably determinable.
Reclassification
Certain amounts from prior years have been reclassified to conform to the
current year presentation. These reclassifications are not material to the
financial statements.
2. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:
Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
Value of Financial Instruments," requires the disclosure of the fair value of
financial instruments, including assets and liabilities recognized and not
recognized in the statement of financial condition.
The Firm's securities owned and securities sold, not yet purchased are
carried at market value.
Management estimates that the aggregate net fair value of other financial
instruments recognized on the statement of financial condition (including cash
and cash equivalents and receivables and payables) approximates their carrying
value, as such financial instruments are short-term in nature, bear interest at
current market rates or are subject to repricing.
3. COMMITMENTS AND CONTINGENCIES:
The Firm rents office space under noncancelable operating leases. Rental
expense under the leases approximated $663,600, $560,000 and $402,000 for the
years ended December 31, 1997, 1996 and 1995, respectively. Future minimum
rental payments under these leases are as follows:
<TABLE>
<S> <C>
1998............................................................................... $ 663,600
1999............................................................................... 669,600
2000............................................................................... 669,600
2001............................................................................... 605,600
2002............................................................................... 516,000
----------
$3,124,400
==========
</TABLE>
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Firm has entered into an operating lease for certain furniture. The
terms of this lease call for monthly payments aggregating $69,500 annually
through December 2000.
In the ordinary course of business, the Firm regularly enters into
agreements for the use of quotation, trading, and other services. These
agreements are typically for periods of one year or less.
The Firm is involved in various claims and possible actions arising out of
the normal course of its business. Although the ultimate outcome of these
claims cannot be ascertained at this time, it is the opinion of the Firm, based
on knowledge of facts and advice of counsel, that the resolution of such claims
and actions will not have a material adverse effect on the Firm's financial
condition or results of operations.
The Firm has adopted a Profit Sharing 401(k) Plan. The Plan is a defined
contribution plan which provides for voluntary employee contributions as well as
discretionary matching allocations by the employer as set forth by the Plan.
The Plan covers substantially all full-time employees who meet the Plan's
eligibility requirements as defined by the Plan. As of December 31, 1997, no
employer contributions had been made to the Plan.
4. SECURED DEMAND NOTE/SUBORDINATED BORROWINGS
Subordinated borrowings consist of loan from a member of the Firm, which is
due by July 31, 1998 and bears interest at 6% per annum, payable quarterly. The
Firm has a secured demand note receivable from this same member in an amount
equal to the subordinated borrowing; this note is collateralized with marketable
securities.
The subordinated borrowings are available in computing net capital under
the SEC's uniform net capital rule. To the extent that such borrowings are
required for the Firm's continued compliance with minimum net capital
requirements, they may not be repaid.
5. RELATED PARTY TRANSACTIONS:
Receivables from and payables to related parties
Periodically, the Firm advances certain payments on behalf of Seneca
Capital Management, LLC (Seneca), an investment advisor which was controlled by
a member and provides services to Seneca. These amounts are reimbursed to the
Firm on a regular basis and, as such, no interest is charged. Total fees earned
from these services amounted to $327,000, $574,000 and $222,000 for the years
ended December 31, 1997, 1996 and 1995, respectively. On July 17, 1997, the
majority interest in Seneca was purchased by an unrelated party; subsequent to
this date, Seneca was no longer considered a related party.
The Firm periodically borrows money from Genesis Merchant Group, L.P., a
registered investment advisor controlled by members of the Firm.
Combined Revenues
The Firm has a number of customers who are related parties. Commissions
earned from these customers amounted to approximately $5,281,000, $4,748,000 and
$3,208,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
F-9
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Expenses paid on behalf of related parties
In exchange for providing brokerage services, the Firm has also agreed to
pay certain operating expenses on behalf of customers who are related parties.
These expenses are included in general and administrative and amounted to
approximately $1,522,000, $1,226,00 and $678,000 for the years ended December
31, 1997, 1996 and 1995, respectively.
6. MANDATORILY REDEEMABLE PREFERRED MEMBERS' CAPITAL:
Mandatorily redeemable preferred members' capital consists of Class C and
Class D membership interests, as defined in the Members' agreement. These
interests are specifically allocated a cumulative, priority return of net
profits equal to 7% of their remaining capital balances. The basis of the Class
C interests was determined at the date of the reduction of the member's profits
interest in the Firm and was based upon the proportionate decrease in the
affected member's capital balance. The basis of Class D interests is determined
at the time of the termination of their employment by the Firm or their
reduction in profit allocation and is based upon their capital balance at time
of employment termination or reduction of profit allocation.
Class C interests are to be redeemed over a five year period and Class D
interests over a two year period. For the year ended December 31, 1997 and
1996, respectively, a total of $385,766 and $426,294 of members' equity was
converted to Class D interests. For the year ended December 31, 1996, a total
of $1,562,699 was converted to Class C interests. If these payments become in
arrears, no distributions to other members may occur until the payments to Class
C and D members become current. The aggregate amount of redemption
requirements, including profit allocation, are as follows:
<TABLE>
<S> <C>
1998............................................................................. $ 468,000
1999............................................................................. 477,000
2000............................................................................. 272,000
2001............................................................................. 153,000
----------
$1,370,000
==========
</TABLE>
7. DISTRIBUTIONS TO MEMBERS:
Included in distributions to members are cash distributions and
distributions of not readily marketable securities. Pursuant to the Members
agreement in effect at the time of the distributions, the distributions of not
readily marketable securities were specifically allocated to certain partners/
members. On January 17, 1998, an additional cash distribution of $933,000 was
paid to members.
8. NET CAPITAL REQUIREMENTS:
The Firm is subject to the Securities and Exchange commission Uniform Net
Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net
capital and provides for certain ratios of aggregate indebtedness to net
capital, both as defined. The Firm has consistently operated in excess of the
minimum net capital requirements imposed by these rules.
F-10
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Net capital positions of the Firm were as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------
1997 1996
---------- --------
<S> <C> <C>
Net capital as a percentage of aggregate debit items...... 27.45% 279.06%
Net capital............................................... $4,129,017 $679,759
Required net capital...................................... $ 156,000 $250,000
</TABLE>
9. CREDIT RISK CONCENTRATION AND OFF-BALANCE SHEET RISK:
Securities sold, not yet purchased
Securities sold, not yet purchased represent obligations of the Firm to
deliver the specified financial instrument at the contracted price, and thereby
create a liability to repurchase the financial instrument in the market at the
then prevailing price. Accordingly, these transactions result in off-balance
sheet risk as the Firm's ultimate obligation to satisfy the sale of securities
sold, not yet purchased may exceed the amount recognized on the statement of
financial condition.
Concentrations
As of December 31, 1997, substantially all of the amounts receivable from
brokers and dealers is due from either ABN AMRO Chicago Corp. or BT Alex Brown.
Cash and securities deposited with clearing brokers and dealers is held by ABN
AMRO Chicago Corp. and the amounts shown as cash and cash equivalents are held
by a single bank.
Credit risk
As a securities broker and dealer, the Firm is engaged in various securities
underwriting, brokerage, and trading activities. These services are provided to
a diverse group of investors. A portion of the Firm's securities transactions
are collateralized and executed with and on behalf of other institutional
investors, including other brokers and dealers. The Firm's exposure to credit
risk associated with the non-performance of these customers and counterparties
in fulfilling their contractual obligations pursuant to securities transactions
can be directly impacted by volatile trading markets, which may impair
customers' and counterparties' abilities to satisfy their obligations to the
Firm.
10. SUBSEQUENT EVENTS:
On January 21, 1998, the Firm executed an Agreement and Plan of Combination
(the "Combination Agreement") with JW Charles Financial Services, Inc.
("JWCFS"). Under the structure of this transaction, the two firms will combine
to create a new holding company with the name "JWGenesis Financial Corp."
("JWGenesis"). The Combination Agreement contemplates, among other things, that
(i) JWGenesis will acquire the outstanding shares of JWCFS Common Stock,
pursuant to a statutory share exchange, in exchange for shares of JWGenesis
Common Stock, on a one-for-one basis, with the result that JWCFS will become a
wholly-owned subsidiary of JWGenesis and each issued and outstanding share of
JWCFS will be exchanged for and become the right to receive one share of
JWGenesis Common Stock and (ii) Genesis Members holding at least 90% of the
Genesis Membership Interests will exchange such interests for up to 1,500,000
shares of JWGenesis Common
F-11
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Stock with the result that Genesis will become at least a 90% owned limited
liability company of JWGenesis.
The Combination, which will be accounted for as a purchase, is expected to
be completed during 1998 and is subject to approval by the shareholders of JWCFS
as well as other customary conditions of closing.
F-12
<PAGE>
APPENDIX A
----------
PLAN OF MERGER
OF
JW CHARLES FINANCIAL SERVICES, INC.
AND
THE AMERICAS GROWTH FUND, INC.
_________________
Section 1
---------
The names of the parties proposing to merge are JW Charles Financial
Services, Inc., a Florida corporation ("JWCFS"), and The Americas Growth Fund,
Inc., a Maryland corporation ("AGRO").
Section 2
---------
At the Effective Time (as defined in Section 3), subject to the applicable
provisions of the Maryland General Corporation Law and the Florida Business
Corporation Act, (a) AGRO shall be merged with and into JWCFS (the "Merger"),
(b) the separate existence of AGRO shall cease, (c) JWCFS shall be the surviving
corporation and (d) all the estate, property (real, personal, and mixed),
rights, powers, privileges, immunities, and franchises of AGRO (public or
private in nature), all the debts due on account to either of them, and all
stock subscriptions and choses in action or other interests of or belonging or
due to either of them, shall be transferred to and vested in JWCFS, the
surviving corporation, without any further act or deed. The title to all real
estate vested in AGRO shall not revert or be in any way impaired by reason of
the Merger, but shall be vested in JWCFS as the surviving corporation.
Section 3
---------
The Merger shall become effective on the later of 12:01 A.M. on
_______________, 1998 or the time and date that the Articles of Merger of JWCFS
are filed with the Department of State of the State of Florida under the Florida
Business Corporation Act and are accepted by the State Department of Assessments
and Taxation of the State of Maryland under the Maryland General Corporation Law
(the "Effective Time").
Section 4
---------
The manner of converting in the Merger shares of the issued and outstanding
common stock, $.01 par value, of AGRO (the "AGRO Common Stock") into shares of
the common stock, $.001 par value, of JWCFS (the "JWCFS Common Stock") is as
follows:
4.1 Each share of AGRO Common Stock issued and outstanding at the Effective
Time (other than shares of AGRO Common Stock (i) held by JWCFS, or (ii) as to
which the holder thereof has validly exercised the right to demand payment in
cash of the fair value of such shares), by virtue of the Merger and without any
further action on the part of the holder thereof, shall be canceled and
converted into and become the right to receive .431 of a fully paid and
nonassessable share of JWCFS Common Stock.
4.2 No fractional shares of JWCFS Common Stock will be issued, but in lieu
thereof, each holder of shares of AGRO Common Stock who would otherwise be
entitled to a fraction of a share of JWCFS Common Stock shall receive from JWCFS
an amount of cash based on the last reported sale price of the AGRO Common Stock
as reported on The American Stock Exchange on the last trading date immediately
prior to the Effective Time.
A-1
<PAGE>
4.3 At the Effective Time, all issued and outstanding shares of AGRO Common
Stock owned by JWCFS, and any shares of AGRO Common Stock held in AGRO's
treasury, shall be canceled without consideration.
4.4 At the Effective Time, JWCFS will cause its transfer agent to make
available for delivery to the shareholders of AGRO the number of shares of JWCFS
Common Stock and cash in lieu of fractional shares to be received by them in the
Merger. From and after the Effective Time, the sole right (except as provided
herein) of the holders of certificates theretofore representing AGRO Common
Stock shall be to receive shares of JWCFS Common Stock or cash as provided
above. As soon as practicable after the Effective Time, each holder of record
as of the Effective Time of any shares of AGRO Common Stock, upon presentation
and surrender of the certificate or certificates representing such shares to
JWCFS or its designee, shall be entitled to receive in exchange therefor
certificates representing the number of shares of JWCFS Common Stock, amount of
cash, or both to which such holder shall be entitled upon the aforesaid basis of
exchange. Until so surrendered, each such outstanding certificate that prior to
the Effective Time represented shares of AGRO Common Stock shall be deemed for
all corporate purposes to evidence ownership of the number of shares of JWCFS
Common Stock or right to receive such amount of cash, or both, into which the
same will have been converted.
4.5 If, as of the Effective Time, any holder of shares of AGRO Common Stock
shall have validly exercised and not forfeited its right to demand payment of
the fair value of such shares in cash ("Objecting Shares") in connection with
the Merger under Maryland Law, such shares shall not be converted into JWCFS
Common Stock but instead shall be converted into the right to receive such
consideration as may be determined to be due with respect to such Objecting
Shares pursuant to the Maryland Law. Each holder of Objecting Shares (an
"Objecting Shareholder") who, pursuant to the provisions of Maryland Law,
becomes entitled to payment in cash of the value of Objecting Shares shall
receive payment therefor (but only after the value therefor shall have been
agreed upon or finally determined pursuant to such provisions). In the event of
a legal obligation, after the Effective Time, to deliver shares of JWCFS Common
Stock to any holder of shares of AGRO Common Stock who shall have failed to make
an effective payment demand or shall have lost his or her status as an Objecting
Shareholder, JWCFS shall issue and deliver, upon surrender by such Objecting
Shareholder of his or her certificate or certificates representing shares of
AGRO Common Stock, the shares of JWCFS Common Stock to which such Objecting
Shareholder would have been entitled under Section 4.1 and cash in lieu of
fractional shares pursuant to Section 4.2.
Section 5
---------
From and after the Effective Time, the effect of the Merger will be as
provided in Section 607.1106 of the Florida Business Corporation Act and Section
3-114 of the Maryland General Corporation Law.
Section 6
---------
Neither the rights of creditors nor any liens or other encumbrances upon
the property of AGRO or JWCFS shall in any manner be impaired by the Merger, but
JWCFS as the surviving corporation shall be deemed to have assumed, and shall be
liable for, all liabilities and obligations of each of AGRO and JWCFS in the
same manner and to the same extent as if JWCFS had itself incurred each such
liability or obligation. No action or proceeding then pending before any court
or tribunal in which AGRO or JWCFS is a party shall abate or be discontinued by
reason of the Merger, but any such action or proceeding may be prosecuted to
final judgment or other determination as though no Merger had taken place, or
JWCFS as the surviving corporation may be substituted as a party in place of
AGRO by the court or other tribunal in or before which such action or proceeding
is pending.
Section 7
---------
If at any time JWCFS as the surviving corporation shall consider necessary
or desirable any further assignments, assurances, or other things in order to
vest in it, according to the terms hereof, the title to any property or to
rights of AGRO, the proper officers and directors of AGRO shall make, execute,
and deliver all such proper assignments and assurances, and do all things
necessary and proper, in order to vest such title in JWCFS as the surviving
corporation, or in order to otherwise carry out the purposes of this Plan of
Merger.
A-2
<PAGE>
Section 8
---------
The Articles of Incorporation and Bylaws of JWCFS in effect immediately
prior to the Effective Time shall be the Articles of Incorporation and Bylaws,
respectively, of the surviving corporation, JWCFS.
Section 9
---------
Concurrently with the Effective Time, the effect of the Merger, before the
cessation of the separate existence of AGRO and the conversion or cancellation
of outstanding shares of AGRO Common Stock as provided in Sections 2, 4, and 5,
shall be that (a) JWCFS shall be deemed the sole owner of all outstanding shares
of AGRO Common Stock, and (b) as such sole owner, JWCFS shall be deemed to have
approved the withdrawal of AGRO's status as a business development company
("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"),
and to have authorized the filing of a Form N-54C notification of such
withdrawal determination with the Securities and Exchange Commission (the
"Commission"), without the necessity for any further action on the part of JWCFS
or AGRO to evidence or effect such approval of withdrawal. Notwithstanding the
foregoing, but without affecting the approval of AGRO's withdrawal of BDC status
provided therein, the concurrent effect of the Merger as of the Effective Time
shall thereafter be as provided in Section 2, 4, and 5. The provisions of this
Section 9 are included solely to comply with certain matters under the 1940 Act
and requirements of the Commission and do not otherwise affect or confer any
right of or upon any other party or person.
IN WITNESS WHEREOF, AGRO and JWCFS have caused this Plan of Merger to be
executed by officers thereunto duly authorized, as of the ____ day of
__________, 1998.
[CORPORATE SEAL] JW CHARLES FINANCIAL SERVICES, INC.
Attest:
By:
- -------------------------------- -------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- ---------------------------------------------------
Secretary or Assistant Joel E. Marks
Secretary Vice Chairman and
Chief Financial Officer
[CORPORATE SEAL] THE AMERICAS GROWTH FUND, INC.
Attest:
By:
- ------------------------------- -------------------------------
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
- -------------------------------------------------------------
Secretary or Assistant Leonard J. Sokolow
Secretary President
A-3
<PAGE>
APPENDIX B
----------
TITLE 3
SUBTITLE 2
OF THE MARYLAND GENERAL CORPORATION LAW
RIGHTS OF OBJECTING SHAREHOLDERS
SECTION 3-201
DEFINITION
(a) In this subtitle, except as provided in subsection (b) of this
section, "successor" includes a corporation which amends its charter in a way
which alters the contract rights, as expressly set forth in the charter, of any
outstanding stock, unless the right to do so is reserved by the charter of the
corporation.
(b) When used with reference to a share exchange, "successor" means
the corporation the stock of which was acquired in the share exchange.
SECTION 3-202
RIGHT TO FAIR VALUE OF STOCK
(a) Except as provided in subsection (c) of this section, a stockholder of
a Maryland corporation has the right to demand and receive payment of the fair
value of the stockholder's stock from the successor if:
(1) The corporation consolidates or merges with another corporation;
(2) The stockholder's stock is to be acquired in a share exchange;
(3) The corporation transfers its assets in a manner requiring action
under (S)3-105(d) of this title;
(4) The corporation amends its charter in a way which alters the
contract rights, as expressly set forth in the charter, of any outstanding stock
and substantially adversely affects the stockholder's rights, unless the right
to do so is reserved by the charter of the corporation; or
(5) The transaction is governed by (S)3-602 of this title or exempted
by (S)3-603(b) of this title.
(b) (1) Fair value is determined as of the close of business:
(i) With respect to a merger under (S)3-106 of this title of a 90
percent or more owned subsidiary into its parent, on the day notice is
given or waived under (S)3-106; or
(ii) with respect to any other transaction, on the day the
stockholders voted on the transaction objected to.
B-1
<PAGE>
(2) Except as provided in paragraph (3) of this subsection, fair value
may not include any appreciation or depreciation which directly or indirectly
results from the transaction objected to or from its proposal.
(3) In any transaction governed by (S)3-602 of this title or exempted
by (S)3-603(b) of this title, fair value shall be value determined in accordance
with the requirements of (S)3-603(b) of this title.
(c) Unless the transaction is governed by (S)3-602 of this title or is
exempted by (S)3-603(b) of this title, a stockholder may not demand the fair
value of his stock and is bound by the terms of the transaction if:
(1) The stock is listed on a national securities exchange or is
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc.:
(i) With respect to a merger under (S)3-106 of this title of a 90
percent or more owned subsidiary into its parent, on the date notice
is given or waived under (S)3-106; or
(ii) With respect to any other transaction, on the record date for
determining stockholders entitled to vote on the transaction objected
to;
(2) The stock is that of the successor in a merger; unless:
(i) The merger alters the contract rights of the stock as expressly
set forth in the charter, and the charter does not reserve the right
to do so; or
(ii) The stock is to be changed or converted in whole or in part in
the merger into something other than either stock in the successor or
cash, scrip, or other rights or interests arising out of provisions
for the treatment of fractional shares of stock in the successor; or
(3) The stock is that of an open-end investment company registered
with the Securities and Exchange Commission under the Investment Company Act of
1940 and the value placed on the stock in the transaction is its net asset
value.
SECTION 3-203
PROCEDURE BY STOCKHOLDER
(a) A stockholder of a corporation who desires to receive payment of the
fair value of his stock under this subtitle:
(1) Shall file with the corporation a written objection to the
proposed transaction:
(i) With respect to a merger under (S)3-106 of this title of a 90
percent or more owned subsidiary into its parent, within 30 days after
notice is given or waived under (S)3-106; or
B-2
<PAGE>
(ii) With respect to any other transaction, at or before the
stockholders' meeting at which the transaction will be considered;
(2) May not note in favor of the transaction; and
(3) Within 20 days after the Department accepts the articles for
record, shall make a written demand on the successor for payment for his stock,
stating the number and class of shares for which he demands payment.
(b) A stockholder who fails to comply with this section is bound by the
terms of the consolidation, merger, share exchange, transfer of assets, or
charter amendment.
SECTION 3-204
EFFECT OF DEMAND ON DIVIDEND AND OTHER RIGHTS
A stockholder who demands payment for his stock under this subtitle:
(1) Has no right to receive any dividends or distributions payable to
holders of record of that stock on a record date after the close of business on
the day as at which fair value is to be determined under (S)3-202 of this
subtitle; and
(2) Ceases to have any rights of a stockholder with respect to that
stock, except the right to receive payment of its fair value.
SECTION 3-205
WITHDRAWAL OF DEMAND
A demand for payment may be withdrawn only with the consent of the
successor.
SECTION 3-206
RESTORATION OF DIVIDEND AND OTHER RIGHTS
(a) The rights of a stockholder who demands payment are restored in full,
if:
(1) The demand for payment is withdrawn;
(2) A petition for an appraisal is not filed within the time required
by this subtitle;
(3) A court determines that the stockholder is not entitled to relief;
or
(4) The transaction objected to is abandoned or rescinded.
(b) The restoration of a stockholder's rights entitles him to receive the
dividends, distributions, and other rights he would have received if he had not
demanded payment for his stock. However, the restoration does not prejudice any
corporate proceedings taken before the restoration.
B-3
<PAGE>
SECTION 3-207
PROCEDURE BY SUCCESSOR
(a) (1) The successor promptly shall notify each objecting stockholder
in writing of the date the articles are accepted for record by the Department.
(2) The successor also may send a written offer to pay the objecting
stockholder what it considers to be the fair value of his stock. Each offer
shall be accompanied by the following information relating to the corporation
which issued the stock:
(i) A balance sheet as of a date not more than six months before
the date of the offer;
(ii) A profit and loss statement for the 12 months ending on the
date of the balance sheet; and
(iii) Any other information the successor considers pertinent.
(b) The successor shall deliver the notice and offer to each objecting
stockholder personally or mail them to him by registered mail at the address he
gives the successor in writing, or, if none, at his address as it appears on the
records of the corporation which issued the stock.
SECTION 3-208
PETITION FOR APPRAISAL; CONSOLIDATION OF PROCEEDINGS;
JOINDER OF OBJECTORS
(a) Within 50 days after the Department accepts the articles for record,
the successor or an objecting stockholder who has not received payment for his
stock may petition a court of equity in the county where the principal office of
the successor is located or, if it does not have a principal office in this
State, where the resident agent of the successor is located, for an appraisal to
determine the fair value of the stock.
(b) (1) If more than one appraisal proceeding is instituted, the court
shall direct the consolidation of all the proceedings on terms and conditions it
considers proper.
(2) Two or more objecting stockholders may join or be joined in an
appraisal proceeding.
SECTION 3-209
CERTIFICATE MAY BE NOTED
(a) At any time after a petition for appraisal is filed, the court may
require the objecting stockholders parties to the proceeding to submit their
stock certificates to the clerk of the court for notation on them that the
appraisal proceeding is pending. If a stockholder fails to comply with the
order, the court may dismiss the proceeding as to him or grant other appropriate
relief.
(b) If any stock represented by a certificate which bears a notation is
subsequently transferred, the new certificate issued for the stock shall bear a
similar notation and the name of the original objecting
B-4
<PAGE>
stockholder. The transferee of this stock does not acquire rights of any
character with respect to the stock other than the rights of the original
objecting stockholder.
SECTION 3-210
APPRAISAL OF FAIR VALUE
(a) If the court finds that the objecting stockholder is entitled to an
appraisal of his stock, it shall appoint three disinterested appraisers to
determine the fair value of the stock on terms and conditions the court
considers proper. Each appraiser shall take an oath to discharge his duties
honestly and faithfully.
(b) Within 60 days after their appointment, unless the court sets a longer
time, the appraisers shall determine the fair value of the stock as of the
appropriate date and file a report stating the conclusion of the majority as to
the fair value of the stock.
(c) The report shall state the reasons for the conclusion and shall
include a transcript of all testimony and exhibits offered.
(d) (1) On the same day that the report is filed, the appraisers shall
mail a copy of it to each party to the proceedings.
(2) Within 15 days after the report is filed, any party may object to
it and request a hearing.
SECTION 3-211
CONSIDERATION BY COURT OF APPRAISERS' REPORT
(a) The court shall consider the report and, on motion of any party to the
proceeding, enter an order which:
(1) Confirms, modifies, or rejects it; and
(2) If appropriate, sets the time for payment to the stockholder.
(b) (1) If the appraisers' report is confirmed or modified by the order,
judgment shall be entered against the successor and in favor of each objecting
stockholder party to the proceeding for the appraised fair value of his stock.
(2) If the appraisers' report is rejected, the court may:
(i) Determine the fair value of the stock and enter judgment for
the stockholder; or
(ii) Remit the proceedings to the same or other appraisers on terms
and conditions it considers proper.
(c) (1) Except as provided in paragraph (2) of this subsection, a
judgment for the stockholder shall award the value of the stock and interest
from the date as to which fair value is to be determined under (S)3-202 of this
subtitle, and
B-5
<PAGE>
(2) The court may not allow interest if it finds that the failure of
the stockholder to accept an offer for the stock made under (S)3-207 of this
subtitle was arbitrary and vexatious or not in good faith. In making this
finding, the court shall consider:
(i) The price which the successor offered for the stock;
(ii) The financial statements and other information furnished to
the stockholder; and
(iii) Any other circumstances it considers relevant.
(d) (1) The costs of the proceedings, including reasonable compensation
and expenses of the appraisers, shall be set by the court and assessed against
the successor. However, the court may direct the costs to be apportioned and
assessed against any objecting stockholder if the court finds that the failure
of the stockholder to accept an offer for the stock made under (S)3-207 of this
subtitle was arbitrary and vexatious or not in good faith. In making this
finding, the court shall consider:
(i) The price which the successor offered for the stock;
(ii) The financial statements and other information furnished to
the stockholder; and
(iii) Any other circumstances it considers relevant.
(2) Costs may not include attorney's fees or expenses. The reasonable
fees and expenses of experts may be included only if:
(i) The successor did not make an offer for the stock under (S)3-
207 of this subtitle; or
(ii) The value of the stock determined in the proceeding
materially exceeds the amount offered by the successor.
(e) The judgment is final and conclusive on all parties and has the same
force and effect as other decrees in equity. The judgment constitutes a lien on
the assets of the successor with priority over any mortgage or other lien
attaching on or after the effective date of the consolidation, merger, transfer,
or charter amendment.
SECTION 3-212
SURRENDER OF STOCK
The successor is not required to pay for the stock of an objecting
stockholder or to pay a judgment rendered against it in a proceeding for an
appraisal unless, simultaneously with payment:
(1) The certificates representing the stock are surrendered to it,
indorsed in blank, and in proper form for transfer; or
(2) Satisfactory evidence of the loss or destruction of the
certificates and sufficient indemnity bond are furnished.
B-6
<PAGE>
SECTION 3-213
RIGHTS OF SUCCESSOR WITH RESPECT TO STOCK
(a) A successor which acquires the stock of an objecting stockholder is
entitled to any dividends or distributions payable to holders of record of that
stock on a record date after the close of business on the day as at which fair
value is to be determined under (S)3-202 of this subtitle.
(b) After acquiring the stock of an objecting stockholder, a successor in
a transfer of assets may exercise all the rights of an owner of the stock.
(c) Unless the articles provide otherwise stock in the successor of a
consolidation merger, or share exchange otherwise deliverable in exchange for
the stock of an objecting stockholder has the status of authorized but unissued
stock of the successor. However, a proceeding for reduction of the capital of
the successor is not necessary to retire the stock or to reduce the capital of
the successor represented by the stock.
B-7
<PAGE>
PART II-INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Florida Business Corporation Act (the "FBCA") authorizes corporations
to limit or eliminate the personal liability of directors to corporations and
their shareholders for monetary damages for breaches of certain of the
directors' fiduciary duties. In general, the duty of care requires that a
director exercise his judgment in good faith on an informed basis, and in a
manner he reasonably believes to be in the best interests of the corporation.
Absent the limitations now authorized by the FBCA, directors are accountable to
corporations and their shareholders for monetary damages only for conduct
constituting gross negligence in the exercise of their duty of care. Although
the statute does not change the directors' duty of care, it enables corporations
to limit available relief to equitable remedies such as injunction or
rescission.
The Registrant's Restated Articles of Incorporation (the "Registrant's
Articles") provide for indemnification of directors to the fullest extent
permitted by Florida law and, to the extent permitted by such law, eliminate, or
limit the personal liability of directors to the Registrant and its
shareholders for monetary damages for certain breaches of fiduciary duty and the
duty of care. Specifically, a director of the Registrant will not be personally
liable to the Registrant or its shareholders for monetary damages for breach of
such fiduciary duty as a director, except for liability for (i) a violation of
the criminal law, (ii) a transaction from which the director received an
improper personal benefit, (iii) an unlawful distribution, (iv) willful
misconduct in a proceeding by or in the right of the corporation or a
shareholder, or (v) recklessness or bad faith in a proceeding by or in the right
of someone other than the corporation or a shareholder.
The inclusion of this provision in the Registrant's Articles may have the
effect of reducing the likelihood of derivative litigation against directors and
may discourage or deter shareholders or management from bringing a lawsuit
against directors for breach of their duty of care, even though such an action,
if successful, might otherwise have benefited the Registrant and its
shareholders.
The Registrant's directors and officers are insured against losses arising
from any claim against them as such for wrongful acts or omissions, subject to
certain limitations.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NUMBER Description of Exhibit
- ------------------- ---------------------------------------------------------------------------------------------
<S> <C>
3(a) Restated Articles of Incorporation of JWCFS (incorporated by reference to Exhibit 3 to
JWCFS' Current Report on Form 8-K dated November 1, 1990).
3(b) Articles of Amendment to Restated Articles of Incorporation of JWCFS (incorporated by
reference to Exhibit 3(b) to JWCFS' Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).
3(c) Articles of Amendment to Restated Articles of Incorporation of JWCFS (incorporated by
reference to Exhibit 3(c) to JWCFS' Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
3(d) By-Laws (incorporated by reference to Exhibit D to Amendment No. 1 to JWCFS' Registration
Statement on Form S-18 (File Number 2-897713-A) filed with the Commission on May 2, 1984).
4(a) Article III--Capitalization of JWCFS' Articles of Incorporation (See Exhibit Number 3(b)
above).
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
5 Opinion of Kilpatrick Stockton LLP.
8 Tax Opinion of Kilpatrick Stockton LLP.
23(a) Consent of Price Waterhouse LLP.
23(b) Consent of Ernst & Young, LLP (accountants for AGRO).
23(c) Consent of Lallman, Feltman, Shelton & Peterson, P.A. (accountants for Genesis).
23(d) Consent of Kilpatrick Stockton LLP (included in Exhibit 5).
24 Power of Attorney (included on Signature Page).
99(a) Articles of Incorporation of JWGenesis, as amended (incorporated by reference to Exhibit 3.1
to JWGenesis' Registration Statement on Form S-4, Registration No. 333-47693 (the "JWGenesis
S-4")).
99(b) Bylaws of JWGenesis (incorporated by reference to Exhibit 3.2 to the JWGenesis S-4).
99(c) Amended and Restated Agreement and Plan of Combination, dated as March 9, 1998, among JWCFS,
JWGenesis, Genesis Merchant Group Securities, LLC ("Genesis") and the owners of all of the
equity interests in Genesis (incorporated by reference to Exhibit 2.1 to the JWGenesis S-4).
99(d) Forms of Employment Agreement between JWGenesis and each of Marshall T. Leeds, Joel E. Marks
and Philip C. Stapleton (incorporated by reference to Exhibit 10.1 to the JWGenesis S-4).
99(e) Form of Employment Agreement between JWGenesis and Will K. Weinstein (incorporated by
reference to Exhibit 10.2 to the JWGenesis S-4).
99(f) Form of Nonsolicitation Agreement between JWGenesis and each of Marshall T. Leeds and Joel
E. Marks (incorporated by reference to Exhibit 10.3 to the JWGenesis S-4)
</TABLE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
II-2
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that (i) and (ii) do not apply if the Registration Statement
is on Form S-3 or Form S-8, and the information required to be included in a
post-effective amendment by (i) and (ii) is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15 of the Exchange Act that
are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this Registration Statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant
to paragraph (a)(iii) immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
II-3
<PAGE>
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia, on May 5, 1998.
JW CHARLES FINANCIAL SERVICES, INC.
By: /s/ Joel E. Marks
-----------------
Joel E. Marks, Vice Chairman and Chief
Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Marshall T. Leeds and Joel E. Marks, attorneys-
in-fact, jointly and severally, each having the power of substitution, for them
in any and all capacities, to sign any amendments to this Registration Statement
and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the 5th day of May, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------------------- -------------------------------------------------------
<S> <C>
/s/ Marshall T. Leeds President, Chief Executive Officer and Chairman of the
- -------------------------------------------------------- Board (Principal Executive Officer
Marshall T. Leeds
/s/ Joel E. Marks Vice Chairman, Chief Financial Officer and Secretary
- -------------------------------------------------------- (Principal Financial and Accounting Officer)
Joel E. Marks
/s/ Wm. Dennis Ferguson Director
- --------------------------------------------------------
Wm. Dennis Ferguson
/s/ Gregg S. Glaser Director
- --------------------------------------------------------
Gregg S. Glaser
Director
- --------------------------------------------------------
Stephen W. Cropper
/s/ John R. Faiella Director
- --------------------------------------------------------
John R. Faiella
Director
- --------------------------------------------------------
Joseph P. Robilotto
/s/ Michael B. Weinberg Director
- --------------------------------------------------------
Michael B. Weinberg
/s/ Curtis Sykora Director
- --------------------------------------------------------
Curtis Sykora
/s/ Jerome Siegel Director
- --------------------------------------------------------
Jerome Siegel
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER Description of Exhibit
- ------------------- ---------------------------------------------------------------------------------------------
<S> <C>
3(a) Restated Articles of Incorporation of JWCFS (incorporated by reference to Exhibit 3 to
JWCFS' Current Report on Form 8-K dated November 1, 1990).
3(b) Articles of Amendment to Restated Articles of Incorporation of JWCFS (incorporated by
reference to Exhibit 3(b) to JWCFS' Annual Report on Form 10-K for the fiscal year ended
December 31, 1993).
3(c) Articles of Amendment to Restated Articles of Incorporation of JWCFS (incorporated by
reference to Exhibit 3(c) to JWCFS' Annual Report on Form 10-K for the fiscal year ended
December 31, 1994).
3(d) By-Laws (incorporated by reference to Exhibit D to Amendment No. 1 to JWCFS' Registration
Statement of Form S-18 (File Number 2-897713-A) filed with the Commission on May 2, 1984).
4(a) Article III--Capitalization of JWCFS' Articles of Incorporation (See Exhibit Number 3(b)
above).
5 Opinion of Kilpatrick Stockton LLP.
8 Tax Opinion of Kilpatrick Stockton LLP.
23(a) Consent of Price Waterhouse LLP.
23(b) Consent of Ernst & Young, LLP (accountants for AGRO).
23(c) Consent of Lallman, Feltman, Shelton & Peterson, P.A. (accountants for Genesis).
23(d) Consent of Kilpatrick Stockton LLP (included in Exhibit 5).
24 Power of Attorney (included on Signature Page).
99(a) Articles of Incorporation of JWGenesis Financial Corp. (JWGenesis), as amended (incorporated
by reference to Exhibit 3.1 to JWGenesis' Registration on Form S-4, Registration No.
333-47693 (the "JWGenesis S-4")).
99(b) Bylaws of JWGenesis (incorporated by reference to Exhibit 3.2 to the JWGenesis S-4).
99(c) Amended and Restated Agreement and Plan of Combination, dated as March 9, 1998, among JWCFS,
JWGenesis, Genesis Merchant Group Securities, LLC ("Genesis") and the owners of all of the
equity interests in Genesis (incorporated by reference to Exhibit 2.1 to the JWGenesis S-4).
99(d) Forms of Employment Agreement between JWGenesis and each of Marshall T. Leeds, Joel E. Marks
and Philip C. Stapleton (incorporated by reference to Exhibit 10.1 to the JWGenesis S-4)
99(e) Form of Employment Agreement between JWGenesis and Will K. Weinstein (incorporated by
reference to Exhibit 10.2 to the JWGenesis S-4)
99(f) Form of Nonsolicitation Agreement between JWGenesis and each of Marshall T. Leeds and Joel
E. Marks (incorporated by reference to Exhibit 10.3 to the JWGenesis S-4)
</TABLE>
<PAGE>
EXHIBIT 5
OPINION OF KILPATRICK STOCKTON LLP
KILPATRICK STOCKTON LLP
ATTORNEYS AT LAW
Suite 2800
1100 Peachtree Street
Atlanta, Georgia 30309-4530
Telephone: 404.815.6500
Facsimile: 404.815.6555
June ___, 1998
JWCharles Financial Services, Inc.
980 North Federal Highway
Suite 210
Boca Raton, Florida 33432
Gentlemen:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 49,600 shares of common stock, par value $.001 per share (the
"Securities"), of JWCharles Financial Services, Inc., a Florida corporation
("JWCFS"), we, as your counsel, have examined such corporate records,
certificates, and other documents, as we have considered necessary or
appropriate for the purposes of this opinion. With your approval, we have
relied as to certain matters on information obtained from public officials,
officers of JWCFS, and other sources believed by us to be responsible, and we
have assumed that the signatures on all documents examined by us are genuine,
which assumption we have not independently verified.
The Securities are intended to be issued by JWCFS in connection with the
merger of The American Growth Fund, Inc., a Maryland corporation ("AGRO"), with
and into JWCFS (the "Merger").
Upon the basis of the aforementioned examination, we advise you that, in
our opinion, when the Registration Statement on Form S-4 relating to the
Securities (the "Registration Statement") has become effective under the Act,
the Merger has been consummated, and the Securities have been delivered as
contemplated by the Prospectus that forms a part of the Registration Statement,
the Securities will be validly issued, fully paid, and nonassessable.
The foregoing opinion is limited to the Federal laws of the United States
and the laws of the State of Florida, and we express no opinion as to the effect
of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading "Legal
Matters" in the Prospectus. In giving such consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act.
Very truly yours,
KILPATRICK STOCKTON LLP
By: /s/W. Randy Eaddy
-----------------
W. Randy Eaddy, A Partner
<PAGE>
EXHIBIT 8
TAX OPINION OF KILPATRICK STOCKTON LLP
KILPATRICK STOCKTON LLP
ATTORNEYS AT LAW
Suite 2800
1100 Peachtree Street
Atlanta, Georgia 30309-4530
Telephone: 404.815.6500
Facsimile: 404.815.6555
June ___, 1998
JW Charles Financial Services, Inc.
980 North Federal Highway
Suite 210
Boca Raton, Florida 33432
Gentlemen:
We have acted as special tax counsel to JW Charles Financial Services,
Inc., a Florida corporation (the "Company" or "JWCFS"), in connection with the
registration under the Securities Act of 1933, as amended, on Form S-4, File No.
333-28809 (the "Registration Statement"), of 49,600 shares of the common stock,
$0.001 par value per share, of JWCFS ("JWCFS Common Stock") for issuance in
connection with the merger (the "Merger") of The Americas Growth Fund, Inc.
("AGRO") with and into the Company. Capitalized terms used and not otherwise
defined in this letter have the meanings set forth in the Prospectus forming
part of the Registration Statement.
We are delivering this opinion at your request in our capacity as such
special tax counsel. In connection with this opinion, we have examined
originals or certified, conformed, or reproduction copies of the Registration
Statement, without independent verification or investigation, have relied upon
the accuracy thereof. We also have examined originals or certified, conformed,
or reproduction copies of such other documents, certificates and records as we
have deemed necessary or appropriate as a basis for the opinions set forth
herein, and, without independent investigation or verification, have relied upon
the accuracy thereof.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies, and the conformity to final
versions of all items submitted to us in draft version. In making our
examination of documents executed by parties other than the Company, we have
assumed that such parties have the power, corporate or otherwise, to enter into
and perform all obligations thereunder, and also have assumed the due
authorization by all requisite action, corporate or otherwise, and the execution
and delivery by such parties of such documents and that such documents
constitute valid and binding obligations of such parties.
We also have assumed, without independent verification or investigation,
that (i) we have been provided with true, correct, and complete copies of the
foregoing documents, (ii) none of such documents has been amended or modified,
(iii) all such documents are in full force and effect in accordance with the
terms thereof, (iv) there are no other documents that affect the opinions
hereinafter set forth, and (v) the documents reviewed by us reflect the entire
agreement of the parties thereto with respect to the subject matter thereof. As
to any facts material to the opinions expressed herein that were not
independently established or verified, we have relied upon oral or written
statements and representations of officers and other representatives of, and
accountants for, the Company and others.
<PAGE>
Our opinion is conditioned upon, among other things, the initial and
continuing accuracy of the facts, information, covenants and representations set
forth in the documents referred to above and the statements and representations
referred to above.
Based upon and subject to the foregoing, (i) we adopt the discussion set
forth under the caption "THE MERGER--Material Federal Income Tax Consequences"
in the Prospectus as our opinion with respect to the material United States
federal income tax consequences of the Merger, and (ii) in our opinion such
discussion accurately describes the material United States federal income tax
consequences of the acquisition, ownership and disposition of JWCFS Shares in
such transaction. Such discussion is limited to the material United States
federal income tax consequences, and it does not purport to discuss all possible
federal income tax consequences, or any state, local or foreign tax
consequences, of the acquisition, ownership and disposition of JWCFS Shares in
such transaction. We express no opinion as to any U.S. federal income tax
consequence other than as specifically set forth herein, and we express no
opinion with respect to any tax issue arising under state, local, or foreign tax
provisions.
This opinion is not binding on the Internal Revenue Service (the
"Service"), and no ruling has been or will be requested from the Service as to
any U.S. federal tax consequence described above. This opinion is based upon
our best interpretation of current provisions of the Internal Revenue Code of
1986, as amended, and the Treasury Department regulations promulgated
thereunder, as well as existing court decisions and administrative rulings, and
sets forth the conclusions we believe would be reached by a court if the issues
were properly briefed and presented to it. We can provide no assurance that the
applicable law will not change in a manner that will adversely affect these
consequences, or that any such adverse change would not be applied
retroactively. We expressly disclaim any duty to update this letter in the
future in the event there are any changes in relevant fact or law that may
affect any of our opinions expressed herein.
We are furnishing the opinions expressed herein for your benefit, and they
may not be relied upon, quoted from, or delivered to any person other than AGRO
shareholders and their legal counsel without our express, prior written consent.
We hereby consent to the filing of this opinion as Exhibit 8 to the Registration
Statement and to the reference to us under the caption "Legal Matters" in the
Prospectus contained therein. In giving this consent, we do not admit that we
are "experts" within the meaning of the Securities Act of 1933, as amended, or
the rules and regulations of the Securities and Exchange Commission promulgated
thereunder.
Very truly yours,
KILPATRICK STOCKTON LLP
By: /s/ Lynn E. Fowler
------------------
Lynn E. Fowler, A Partner
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of JW Charles
Financial Services, Inc., of our report dated March 5, 1998, appearing on
page F-2 of JW Charles Financial Services, Inc.'s Annual Report on Form 10-K/A
for the year ended December 31, 1997. We also consent to the use of our report
dated April 16, 1998 on the financial statement of JWGenesis Financial Corp. as
of January 16, 1998 included in this Registration Statement. We also consent to
the references to us under the headings "Experts" in such Prospectus.
/s/ PRICE WATERHOUSE LLP
Tampa, Florida
June 3, 1998
<PAGE>
EXHIBIT 23(b)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and "Summary
Historical Financial Data" in the Registration Statement on Form S-4 and related
Prospectus of JW Charles Financial Services, Inc. for the registration of 49,600
shares of its common stock and to the incorporation by reference therein of our
report dated March 4, 1998, with respect to the financial statements of The
Americas Growth Fund, Inc. included in it's Annual Report (Form 10KSB) for the
year ended December 31, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Jacksonville, Florida
June 3, 1998
<PAGE>
EXHIBIT 23 (c)
CONSENT OF LALLMAN, FELTMAN, SHELTON & PETERSON, P.A.
INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent (i) to the use of
our reports on financial statements of Genesis Merchant Group Securities, LLC
for the three fiscal years ended December 31, 1997 included in or made a part of
this Registration Statement and (ii) to any reference to our Firm in this
Registration Statement.
/s/ LALLMAN, FELTMAN, SHELTON
& PETERSON, P.A.
------------------------------
LALLMAN, FELTMAN, SHELTON
& PETERSON, P.A.
June 3, 1998
Ketchum, Idaho
