<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 11, 1996
REGISTRATION NO. 333-8855
________________________________________________________________________________
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 2 TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 7941 22-3393152
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
29 NORTHFIELD AVENUE, SUITE 200
WEST ORANGE, NEW JERSEY 07052
(201) 325-3244
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PLACE OF
BUSINESS)
MARC ROBERTS, PRESIDENT
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
29 NORTHFIELD AVENUE, SUITE 200
WEST ORANGE, NEW JERSEY 07052
(201) 325-3244
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
CRAIG S. LIBSON, ESQ. STEVEN SCHUSTER, ESQ.
PARKER DURYEE ROSOFF & HAFT MCLAUGHLIN & STERN, LLP
529 FIFTH AVENUE 380 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10168
(212) 599-0500 (212) 867-2500
FAX: (212) 972-9487 FAX: (212) 599-2332
</TABLE>
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ].
------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED
MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
<S> <C> <C> <C> <C> <C>
Units (each consisting of one
share of Common Stock, $.01
par value, and one
Redeemable Warrant)......... 1,725,000 Units(2) $ 6.00 $10,350,000 $3,568
Common Stock, $.01 par
value....................... 1,725,000 Shares(3) $ 7.20 $12,420,000 $4,282
Underwriter's Units (each Unit
consisting of one share of
Common Stock and one
Redeemable Warrant)......... 150,000 Units(4) $ 7.20 $ 1,080,000 $ 372
Common Stock, $.01 par
value....................... 150,000 Shares(5) $ 7.20 $ 1,080,000 $ 372
----------------- ------------
TOTAL.................... $24,930,000 $8,597(6)
</TABLE>
(footnotes on following page)
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
<PAGE>
(footnotes from front cover)
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933.
(2) Includes 225,000 Units issuable upon exercise of the Underwriter's over
allotment option.
(3) Pursuant to Rule 416(a), there are hereby being registered an indeterminate
number of additional shares of Common Stock which may be issued pursuant to
the anti-dilution provisions of the Redeemable Warrants. No additional
registration fee is included for those shares.
(4) Represents Units to be sold to the Underwriter.
(5) Reserved for issuance upon exercise of the Redeemable Warrants underlying
the Underwriter's Units.
(6) $6,877.00 of such fee was previously paid.
<PAGE>
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, SEPTEMBER 11, 1996
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
1,500,000 UNITS
EACH COMPRISED OF
ONE SHARE OF COMMON STOCK AND
ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT
Worldwide Entertainment & Sports Corp. (the 'Company') hereby offers
1,500,000 Units, each comprising one share of its common stock, $.01 par value
('Common Stock'), and one redeemable common stock purchase warrant ('Redeemable
Warrants'). The shares of Common Stock and the Redeemable Warrants will be
separately tradeable and transferrable from and after the date of this
Prospectus. Each Redeemable Warrant entitles the holder to purchase one share of
Common Stock at $7.20 commencing , 1997 until ,
2001. Commencing , 1997, the Redeemable Warrants are subject to
redemption at $.05 per warrant on 30 days' prior written notice provided the
last sale price of the Common Stock for any 20 consecutive trading days ending
within 15 days of the notice of redemption averages in excess of $9 per share.
The exercise prices of the Redeemable Warrants are subject to adjustment under
certain circumstances. See 'Description of Securities -- Redeemable Warrants.'
Prior to this offering, there has been no public market for the Units, the
Common Stock or the Redeemable Warrants (collectively, the 'Securities'). The
Company has applied for the quotation of the Units, the Common Stock and the
Redeemable Warrants on the Nasdaq SmallCap Market under the symbols 'WWESU',
'WWES' and 'WWESW', respectively. There can be no assurance that a public market
will develop or be sustained for any of the Securities, in which event holders
may experience difficulty in selling their Securities. The offering price of the
Units and the exercise price and other terms of the Redeemable Warrants have
been arbitrarily determined by negotiation between the Company and William Scott
& Company, L.L.C. (the 'Underwriter'), are not related to the Company's asset
value, net worth or other established criteria of value and are not necessarily
indicative of the value of the Company. See 'Risk Factors' and 'Underwriting.'
------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND SUBSTANTIAL
DILUTION. SEE 'RISK FACTORS' AND 'DILUTION.'
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION, NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Unit................................................. $6.00 $.60 $5.40
Total(3)............................................ $9,000,000 $900,000 $8,100,000
</TABLE>
(1) Does not reflect additional compensation to the Underwriter in the form of
(i) a non-accountable expense allowance of up to $180,000 ($207,000 if the
over-allotment option is exercised in full); (ii) an option, exercisable
over a period of four years commencing one year from the date of this
Prospectus, to purchase up to 150,000 Units at $7.20 per Unit (the 'Unit
Purchase Option'); (iii) a five year preferential right of first refusal for
certain future financings; and (iv) a consulting fee of $50,000 pursuant to
a two year consulting agreement of which $25,000 is payable at the closing
of this Offering and $25,000 one year thereafter. In addition, the Company
has agreed to indemnify the Underwriter against certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended. See
'Underwriting.'
(2) Before deducting expenses of the offering payable by the Company, estimated
at $550,000 (approximately $.37 per Unit), including the Underwriter's
non-accountable expense allowance and the consulting fee payable to the
Underwriter.
(3) The Company has granted the Underwriter an option, exercisable within 45
days of the date of this Prospectus, to purchase up to 195,000 additional
Units on the same terms and conditions as set forth above to cover
over-allotments, if any. If the over-allotment option is exercised in full,
the total Price to Public, Underwriting Discounts and Commissions and
Proceeds to Company will be increased to $10,350,000, $1,035,000 and
$9,315,000, respectively. See 'Use of Proceeds' and 'Underwriting.'
The Units are offered on a 'firm commitment' basis by the Underwriter when,
as and if delivered to and accepted by the Underwriter, and subject to prior
sale, withdrawal or cancellation of the offer without notice. It is expected
that delivery of the certificates representing the Units will be made at the
offices of the Underwriter, 1030 Salem Road, Union, NJ 07083, on or about
, 1996.
------------------------
WILLIAM SCOTT & COMPANY, L.L.C.
------------------------
THE DATE OF THIS PROSPECTUS IS , 1996
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.
<PAGE>
<PAGE>
[PHOTOGRAPH -- RAY MERCER, SHANNON BRIGGS, CHARLES MURRAY AND TRACY PATTERSON
POSING IN BOXING TRUNKS WITH THE NAME 'WORLDWIDE.' CAPTION --
'BOXERS 'MERCILESS' RAY MERCER, SHANNON BRIGGS, CHARLES 'THE
NATURAL' MURRAY AND TRACY HARRIS PATTERSON, EACH UNDER THE
COMPANY'S MANAGEMENT.']
[PHOTOGRAPH -- SAMAKI WALKER WEARING WORLDWIDE BASEBALL CAP. CAPTION --
'WORLDWIDE CLIENT SAMAKI WALKER, DALLAS MAVERICK'S FIRST ROUND
DRAFT PICK.']
[PHOTOGRAPH -- STEPHEN DAVIS WEARING WORLDWIDE T-SHIRT AND BASEBALL CAP.
CAPTION -- 'WORLDWIDE CLIENT STEPHEN DAVIS, RUNNING BACK FOR THE
WASHINGTON REDSKINS.']
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AND/OR THE REDEEMABLE WARRANTS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
------------------------
The Company will furnish its stockholders and holders of Redeemable
Warrants with annual reports containing audited financial statements and such
interim reports as it deems appropriate.
2
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety. Unless otherwise indicated, all share and per share
data and all information in this Prospectus assumes no exercise of: (i) the
Underwriter's over-allotment option; (ii) the Redeemable Warrants; (iii) the
Unit Purchase Option; (iv) outstanding options; or (v) options available for
grant under the Company's 1996 Stock Option Plan. Except as otherwise noted, all
references to the Company include all activities of its predecessors in
interest, and the operations of the Company's subsidiaries, Worldwide Team
Sports, Inc. and Worldwide Basketball Management, Inc.
THE COMPANY
Worldwide Entertainment & Sports Corp. (the 'Company') was established in
1995 to engage in the business of providing management, agency and marketing
services to professional athletes and entertainers. To date, the Company has
provided such services principally to boxers. While the Company intends to
expand its roster of boxers, the Company also intends to provide its services to
athletes in other professional sports, initially to football and basketball
players, and ultimately to entertainment personalities. In addition to the
career management and contract negotiation functions customarily provided by
sports agents, the Company intends to develop a marketing division to seek to
maximize the commercial opportunities available to its clients through product
endorsements and other activities.
The Company has succeeded to the business operations of entities previously
operated by Marc Roberts, the Company's Chief Executive Officer. Mr. Roberts has
been engaged in the management of professional boxers for over 17 years. The
Company currently is a party to exclusive management contracts with four
boxers -- Ray Mercer, Tracy Patterson, Charles Murray and Shannon Briggs --
pursuant to which the Company retains a percentage, ranging from 15% to 27 1/2%,
of the boxers' purses from all professional boxing contests and exhibitions
during the term of the contracts, as well as 10% to 20% of all fees, honoraria
or other compensation payable to the boxers for product endorsements, speaking
engagements, personal appearances or other commercial performances. These boxers
have engaged in 77 professional bouts while under Mr. Roberts' management. For
the year ended December 31, 1995 and the six months ended June 30, 1996, boxers'
purse payments from all bouts engaged in by such boxers aggregated $431,500 and
$575,000, respectively, and the Company's share of such purse income aggregated
$75,794 and $122,187, respectively. The Company has not received any material
income from fees, honoraria or other compensation earned by its boxers. For such
periods, the Company incurred net losses of $(869,303) and $(703,794),
respectively. The Company's success will depend in part on the ability of its
boxers to attain and sustain championship or, in the case of Messrs. Mercer and
Briggs, the two heavyweight boxers, top contender status and consequently engage
in matches with substantially higher purses.
The Company's Worldwide Team Sports, Inc. ('WWTS') subsidiary was organized
in January 1996 to employ or enter into consulting arrangements with agents and
contract advisors registered with the appropriate professional sports governing
organizations to represent athletes in professional team sports. To date, WWTS
has employed one National Football League ('NFL') contract advisor ('Agent') who
has executed representation agreements with seven players under contract with
NFL franchises. The Company is continually seeking to add to its roster of
players by signing additional representation agreements, but anticipates that
any significant expansion of this division will be accomplished by retaining the
services of additional established Agents. There can be no assurance that the
Company will be successful in accomplishing this goal. Agents are compensated
based upon a percentage of their clients' salaries, and are paid as and when the
client is paid by the team. Agency fees for professional football player
contracts are limited to 4% by the NFL Collective Bargaining Agreement, although
lesser percentage fees are sometimes applied. Each of the Company's existing
representation agreements with professional football players provides for the
Company to share its fee on a 50/50 basis with third parties. Because NFL player
contracts customarily are negotiated and signed in
3
<PAGE>
<PAGE>
the late summer and early fall months and revenues therefrom are first received
during the football season, the Company's Team Sports subsidiary has not
generated significant revenues to date from the negotiation of player contracts.
In August 1996, the Company formed Worldwide Basketball Management, Inc.
('WWBM') for the purpose of providing agency, marketing and management services
to professional basketball players. WWBM is owned 80% by the Company and 20% by
Erik Rudolph and Michael Goodson, WWBM's President and Executive Vice President,
respectively. WWBM has been assigned the revenues resulting from the existing
representative agreements signed by Mr. Rudolph as a registered NBA Agent. Mr.
Rudolph has representative agreements with three players on National Basketball
Association ('NBA') rosters, including Samaki Walker, the ninth player selected
in the 1996 NBA draft. Because the 1996-1997 NBA season has not begun as of the
date of this Prospectus, WWBM has not received revenues to date. The aggregate
Agency fees expected to be received during the 1996-1997 NBA season from the
three existing player contracts are anticipated to be approximately $60,200,
exclusive of revenue which may be generated from endorsement or other sources of
marketing income.
The Company's executive offices are located at 29 Northfield Avenue, West
Orange, NJ 07052 and its telephone number is (201) 325-3244. The Company also
leases and operates a boxing training facility in West Orange, New Jersey.
THE OFFERING
<TABLE>
<S> <C>
Securities Offered............... 1,500,000 Units, each comprised of one share of Common Stock and one
Redeemable Warrant. Each Redeemable Warrant entitles the holder to purchase
one share of Common Stock at $7.20 from the first through fifth anniversary of
the date of this Prospectus. The exercise prices and number of shares issuable
upon exercise of the Redeemable Warrants are subject to adjustment in certain
circumstances. See 'Description of Securities.'
Common Stock Outstanding Before
Offering....................... 3,753,255(1)
Common Stock Outstanding After
Offering....................... 5,253,255(1)(2)
Use of Proceeds.................. Repayment of debt; payment of training expenses; recruitment of athletes and
agents; relocation to new office and training facility space; employee bonuses
and working capital. See 'Use of Proceeds.'
Proposed NASDAQ
Symbols........................ Units -- WWESU
Common Stock -- WWES
Redeemable Warrants -- WWESW
</TABLE>
- ------------
(1) Does not include up to 1,020,000 additional shares of Common Stock which may
be acquired upon the exercise of warrants to purchase shares of Common
Stock. See 'Certain Transactions' and 'Legal Matters'.
(2) Does not include shares which may be issued upon the exercise of the
Redeemable Warrants, the Unit Purchase Option or the Redeemable Warrants
contained therein.
4
<PAGE>
<PAGE>
RISK FACTORS
An investment in the Units offered hereby entails a high degree of risk,
including the following factors, and substantial dilution. See 'Risk Factors'
and 'Dilution'.
A history of operating losses
Recently organized company
Need for expanded operations
Dependence upon Chief Executive Officer
Dependence upon clients' athletic success
Competition
SUMMARY FINANCIAL INFORMATION
The summary financial information set forth below is derived from the
financial information appearing elsewhere in this Prospectus. This information
should be read in conjunction with such financial statements and the notes
thereto.
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
YEAR ENDED DECEMBER 31, 30,
-------------------------- ------------------------
1994 1995 1995 1996
--------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Total Income...................................... $ 20,200 $ 241,621 $ 186,646 $ 157,036
Total Expenses.................................... 396,700 1,077,037 340,303 787,719
Loss from Operations.............................. (376,500) (835,416) (153,657) (630,683)
Net Loss.......................................... $(381,786) $ (869,303) $(153,809) $(703,794)
</TABLE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JUNE 30, 1996
----------------- -----------------------------
<S> <C> <C> <C>
ACTUAL AS ADJUSTED(1)
Current Assets................................................ $ 698,719 $ 527,019 $6,192,467
Total Assets.................................................. 784,670 714,882 6,278,509
Current Liabilities........................................... 1,585,126 2,197,132 210,759
Total Liabilities............................................. 1,585,126 2,219,132 232,759
Stockholders Equity (deficiency).............................. $ (800,456) $(1,504,250) $6,045,751
</TABLE>
- ------------
(1) Adjusted to reflect the anticipated application of the net proceeds from the
sale of the 1,500,000 Units offered hereby, including repayment of
$2,113,000 of certain outstanding indebtedness from a private placement of
promissory notes, $1,986,373 of which was outstanding at June 30, 1996. See
'Use of Proceeds' and 'Management's Discussion and Analysis of Financial
Condition and Results of Operations.'
5
<PAGE>
<PAGE>
THE COMPANY
The Company was incorporated in Delaware on August 15, 1995. Since
inception, the Company (i) acquired all of the assets, assumed the liabilities,
and succeeded to the business of Shannon Briggs I, L.P., a New Jersey limited
partnership (the 'Partnership'), which had managed one of the boxers currently
under contract with the Company and (ii) acquired and merged into the Company
five corporations previously conducting the Company's other boxing operations,
including the management of the Company's other three boxers. In January 1996
and August 1996, the Company organized WWTS and WWBM, respectively. See
'Business -- Organization' and 'Certain Transactions.'
RISK FACTORS
An investment in the Units entails a high degree of risk and immediate
substantial dilution. Prospective investors should give careful consideration to
the following factors, in addition to the other information contained in the
Prospectus, in evaluating an investment in the Units.
LOSSES TO DATE
The Company has continued to incur losses since inception and expects to
continue to incur losses until such time, if ever, as one or more of the
Company's four boxers receive bout purses large enough at least to offset the
Company's operating costs or the Company generates significant revenues from its
WWTS or WWBM subsidiaries. To date, the Company has received limited revenues
from purse income (an aggregate of approximately $75,794 for the year ended
December 31, 1995 and $122,187 for the six months ended June 30,1996). The
Company has generated minimal revenues from ancillary and marketing activities
to date, and as of June 30, 1996 had generated no revenues from negotiation of
team sports player contracts. During such periods, the Company sustained net
losses of $(869,303) and $(703,794), respectively. At June 30, 1996, the Company
had an accumulated deficit of $(1,607,903) and a working capital deficit of
$(1,504,250). Moreover, the likelihood of the success of the Company must be
considered in light of the difficulties and risks inherent in the creation and
development of a business which is dependent upon the athletic and artistic
performance of individuals and upon the level of popularity attained by such
individuals with the general public. There can be no assurance that the boxers'
earnings will increase significantly, that the Company will attract a sufficient
number of additional professional athletes, or that the Company will be able to
commercially exploit those currently under contract, such that the Company will
ever achieve profitable operations. See 'Selected Consolidated Financial Data',
'Management's Discussion and Analysis of Financial Condition and Results of
Operations,' and 'Report of Independent Certified Public Accountants.'
UNCERTAINTY IN ACCOUNTANTS' REPORT
The report of the Company's independent certified public accountants
contains an explanatory paragraph as to the Company's ability to continue as a
going concern. See 'Management's Discussion and Analysis of Financial Condition
and Results of Operations,' and 'Report of Independent Certified Public
Accountants.'
NEED FOR ADDITIONAL CLIENTS; LIMITED TEAM SPORTS EXPERIENCE
The success of the Company will be dependent upon the ability of the
Company to expand its WWTS and WWBM operations so as to represent both a
substantially greater number of athletes as well as athletes with significantly
greater earning and marketing potential, and on its ability to attract and to
develop promising new boxing talent. Of WWTS' employees, only one is a
registered NFL Agent, and such employee has limited experience negotiating
player contracts. Consequently, unless the Company is able to recruit and employ
one or more Agents with significant experience negotiating player contracts,
particularly for professional football players, the Company may be compelled to
retain the services of independent consultants to perform such services on
behalf of WWTS. In such event the Company would be required to share revenues
generated from player contract negotiations. Only one of WWBM's employees is a
registered NBA Agent. The Company anticipates that in order to attract an
adequate number and caliber of professional athletes, the Company will need to
enter into employment
6
<PAGE>
<PAGE>
or consulting agreements with registered Agents who have existing representation
agreements with professional athletes and who have experience negotiating such
agreements. There can be no assurance that the Company will be able to attract
the quantity or caliber of Agents and/or professional athletes necessary to
achieve and sustain profitable operations. In addition, there can be no
assurance that professional athletes who are currently, or who may in the future
be, under management or representation contracts with the Company, will continue
to engage in professional sports through the term of their contracts or will
renew such contracts upon their expiration. The Company will need to incur
significant promotional, marketing, travel and entertainment expenses in the
recruitment of professional team sports athletes without any guarantee that the
targeted athletes will enter into representation agreements with the Company.
The recruitment, training, housing and management of athletes who are beginning
professional boxing careers requires significant up-front expenses to be
incurred by the Company. For example, between July 1992 and September 30, 1995,
the Company incurred approximately $820,000 of such expenses relating to Shannon
Briggs. There can be no assurance that the Company will be able to enter into
management agreements with boxers who will have successful professional careers
or that the Company will be able to fund the up front expenses necessary to
sustain the careers of such boxers to the point, if ever, that such boxers
engage in bouts with significant purses. See 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' and 'Business -- Team
Sports Division, -- The Boxing Division -- Professional Boxing.'
DEPENDENCE UPON ATHLETES
Because the Company's revenues are derived from a specified percentage of
the income generated by the Company's clients, both the amount of the Company's
revenues and the likelihood that the Company will continue to receive revenues
is dependent upon the professional success of its athlete clients. The Company
has management agreements with four professional boxers, has one employee with
representation agreements with seven football players under contract with NFL
franchises and one employee with representation agreements with three basketball
players under contract with NBA franchises. The income levels of the Company's
potential clients, both boxers and team sport athletes, and therefore the
revenues of the Company, can be subject to wide fluctuations, in most cases due
to circumstances beyond the control of the Company. The Company's success will
be dependent in part upon the four professional boxers currently under contract
with the Company achieving championship status (or in the case of the two
heavyweight boxers, top contender status) and participating in bouts with
substantially higher purses, which in turn will depend on such factors as the
continued success of the boxers and the ability of the Company to arrange
contests and exhibitions of sufficient interest to the public to warrant purses
substantially greater than those earned to date. Historically, substantial
purses have been available primarily to heavyweight boxers. There are a limited
number of potential participants for bouts with significant purses and a limited
number of promoters to organize such bouts. Consequently, there can be no
assurance that the Company will be able to arrange bouts for its boxers
generating significant purses. In addition, there can be no assurance that the
boxers will continue to win their professional bouts. The Company's success will
also be dependant upon the athletic performance of and commercial marketing
opportunities for its team sports athlete clients. The Company's professional
team sports athletes face similar barriers to success as do the boxers.
Professional sports are subject to volatile shifts in popularity which affect
the revenues generated by the respective leagues. The number of roster positions
available, and salaries paid, to athletes are dependent upon, among other
factors, the profitability of the respective teams and leagues and upon the
negotiated terms of such leagues' collective bargaining provisions. The Company
can exercise no control over such developments and their effect on the Company's
athletes' ability to stay on team rosters. Team sports player contracts do not
always provide for salary guarantees in the event the player is injured or cut
from the roster. Therefore, the Company's revenues from its team sports athletes
cannot be guaranteed. Further, there can be no assurance that the Company's
boxers or team sports athletes will achieve or sustain a level of success in
their respective sports to command substantial salaries and generate marketing
income, or that any of such individuals will not sustain an injury or meet with
other personal, medical or professional difficulties that could severely limit
their earning capacity or terminate their career. For example, Shannon Briggs,
one of the Company's heavyweight boxers has from time to time experienced
breathing difficulties from an asthmatic condition. Should such difficulties
persist, Mr.
7
<PAGE>
<PAGE>
Briggs' professional boxing career could be adversely affected. See
'Business -- Team Sports Division, -- The Boxing Division.'
DEPENDENCE UPON CHIEF EXECUTIVE OFFICER AND OTHERS
The Company is highly dependent on Marc Roberts, the Company's President
and Chief Executive Officer. Mr. Roberts is the only executive officer of the
Company who has had prior experience in managing professional boxers. Due to the
personal nature of boxer management relationships, there is a limit on the
number of boxers who can be effectively managed by Mr. Roberts. The number of
boxers which Mr. Roberts can effectively manage may vary, depending upon the
stage of the boxers' careers, their level of bout frequency and their success.
Although the Company has entered into a five-year employment agreement with Mr.
Roberts, and has obtained a $2,000,000 key person life insurance on Mr. Roberts'
life, the loss of the services of Mr. Roberts would likely have a material
adverse effect on the Company's business. Because neither NFL nor NBA player
representation agreements are permitted to be in the name of a corporation, the
Company is expected to be dependent upon retaining its relationships with
registered Agents employed by the Company to sustain the Company's relationships
with the team sports athletes. The Employment Agreements between the Company and
Messrs. Rudolph and Goodson provide for a sharing of agency fees generated by
them in the event of a termination of their employment. See 'Business -- The
Boxing Division', ' -- Team Sports Division', and ' -- Competition', and
'Executive Compensation.'
BROAD DISCRETION BY MANAGEMENT IN USE OF PROCEEDS; PROCEEDS TO REPAY
INDEBTEDNESS
The Company intends to use $2,113,000 (approximately 33%) of the net
proceeds of this offering to repay outstanding indebtedness. Management will
have broad discretion over the use of the remaining $5,437,000 (72%) of such
proceeds. A significant portion of such proceeds, approximately $1,100,000 are
expected to be applied to management salaries over the next 18 months. While the
Company intends to apply a portion thereof to acquiring and equipping new
facilities and to the recruitment of new athletes, there can be no assurance
that Management's application of the proceeds will result in adequate growth of
the Company. See 'Use of Proceeds'.
NEED FOR REGULATORY COMPLIANCE; REGULATIONS
The management of professional boxers and the recruitment and
representation of other athletes is subject to regulation on a state by state
basis as well as by sports leagues and governing agencies. For example, state
athletic commissions and agencies have rules governing boxing contests and
exhibitions taking place within their state, including the content of boxer-
manager contracts. In addition, the sport of boxing is overseen by four primary
organizations -- the World Boxing Association, the World Boxing Council, the
World Boxing Organization and the International Boxing Federation - which, among
other things, establish rules and regulations governing conduct in the ring,
create rankings, require boxers to engage in bouts with designated opponents,
impose sanctioning fees and designate 'champions.' Each of the professional
sports leagues requires player contract advisors and agents to be registered
under, and to operate in strict compliance with, rules and regulations,
including maximum commission structures, set forth in collective bargaining
agreements with players' unions or other published guidelines. The National
Collegiate Athletic Association ('NCAA') also regulates recruitment practices
for student athletes. The NCAA is currently preparing amendments to its
regulations. There can be no assurance that newly adopted regulations will not
inhibit the Company's ability to attract athletes. In addition, many colleges
are adopting regulations restricting student-athletes recruitment by Agents.
Difficulties in obtaining or maintaining required licenses, registrations or
approvals, failure in complying with applicable rules, or observing any
applicable regulations could have a material adverse effect on the Company's
business. See 'Business -- Boxing Division, -- Boxing Regulations' and ' -- Team
Sports Division.'
8
<PAGE>
<PAGE>
COMPETITION
The Company's boxing and team sports divisions each faces significant
competition in obtaining and maintaining management relationships with athletes.
While the sports agency market is comprised of numerous registered agents and
business managers, the industry is dominated by a small number of agencies which
manage the more successful and marketable athletes. A great many of these
agencies have significantly greater financial and personnel resources and
recognition in the industry than the Company. There can be no assurance that the
Company will be able to compete effectively in these markets. In addition, the
Company's clients face intense competition in achieving success and recognition
in their respective sports. There can be no assurance that any of the Company's
clients will achieve or sustain success or realize the financial rewards
thereof. See 'Business -- Competition.'
PERSONAL INJURY LIABILITY; INSUFFICIENCY OF INSURANCE COVERAGE
The use of the training facility by professional boxers and others entails
a risk of liability claims for injuries sustained while training or using
equipment. The Company maintains liability insurance coverage in the amount of
$1,000,000 per occurrence and $2,000,000 in the aggregate. There can be no
assurance that such insurance will be sufficient to cover all possible
liabilities. In particular, the Company's insurance policies do not insure
against claims by participants in bouts or sparring sessions for injuries
sustained during such activities. In the event of a successful suit against the
Company, lack or insufficiency of insurance coverage could have a material
adverse effect on the Company. See 'Business -- The Boxing Division -- Personal
Injury Liability.'
SEASONALITY
Because revenues generated by negotiation of team sports player contracts
are received at the time the athlete receives his salary from the team,
generally during the season for such sport, the Company's revenues from such
operations will be concentrated primarily in the Fall and Winter months, unless
and until the Company is able to offset such seasonal concentration by expanding
into representation of athletes in sports with complementary seasons, or into
another line of business without a seasonal revenue stream. However, to date,
the Company's revenues have been generated by its boxing division, which is not
subject to seasonal variability in its revenue generation. See 'Management's
Discussion and Analysis of Financial Condition and Results of Operations.'
POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company incurred net losses of $(869,303) and $(703,794)during the year
ended December 31, 1995 and the six months ended June 30, 1996, respectively. At
June 30, 1996, the Company had a working capital deficit of $(1,504,250) and an
accumulated deficit of $(1,607,903). The Company expects to continue to incur
net losses for an indefinite period subsequent to the Offering as it attempts to
enhance the visibility and potential earning power of its boxers while also
seeking to increase the number of athletes under Company management. Although
the Company believes the proceeds from this offering will enable it to fund its
operations for approximately 18 months, there can be no assurance that the
Company will have sufficient revenues after such time to fund its operating
requirements. In such event, the Company would seek additional financing through
debt or equity financings, bank borrowings, or otherwise. There can be no
assurance that any such financing will be available to the Company on acceptable
terms, if at all. In the past, Mr. Roberts has, from time to time, financed
certain operations of the Company with personal loans which have been repaid as
and when the Company has generated adequate cash resources. As of the date of
this prospectus, no loan balance was due to or from Mr. Roberts. Based upon the
current financial condition of the Company, it is unlikely that credit
facilities from banks or financial institutions would be available without
personal guarantees of members of management or principal stockholders. Neither
Mr. Roberts nor any other member of management or stockholder has any obligation
or plan to continue to make such loans to the Company in the future or to
personally guarantee credit facilities sought by the Company. The Company cannot
look to the proceeds from the exercise of the Redeemable Warrants as a source of
capital until such time, if ever, that the market price of the Common Stock
rises above the exercise price of the
9
<PAGE>
<PAGE>
Redeemable Warrants. The Company has no current arrangements or understandings
with respect to any future sources of financing. See 'Management's Discussion
and Analysis of Financial Condition and Results of Operations' and 'Description
of Securities.'
IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of the Units offered hereby will incur an immediate dilution of
approximately $4.87 per share (applying the full purchase price to the shares of
Common Stock) innet tangible book value from the public offering price of $6.00
per Unit (an 81% dilution). Additional dilution is likely to be experienced by
investors purchasing the Redeemable Warrants at the time of the exercise of such
Warrants by the investor. To the extent the Company issues additional shares of
common stock in the future for non-cash consideration, the existing stockholders
are likely to experience additional dilution. See 'Dilution.'
CONCENTRATION OF SHARE OWNERSHIP; ANTI-TAKEOVER EFFECT
Following this offering, the Company's officers and directors will
beneficially own approximately 42.1% of the outstanding shares of Common Stock.
Accordingly, these officers, directors, stockholders and their affiliates may
have the ability to determine the outcome of most corporate actions requiring
stockholder approval, including the election of the entire Board of Directors,
and to influence the policies and direction of the Company. There are no
provisions for cumulative voting by stockholders and, accordingly, holders of a
majority of the outstanding shares can elect all of the Company's directors.
These facts may tend to discourage attempts to acquire control of the Company by
persons other than those holders. In addition, the employment agreements of Marc
Roberts, Eric Rudolph and Michael Goodson provide for certain termination rights
which could discourage attempts to acquire control of the Company by others.
Upon a change in control, Mr. Roberts would have the right to terminate his
employment agreement or to be assigned the Company's management agreements with
its current boxers. Messrs. Rudolph and Goodson have the right to terminate
their employment agreements in the event that Marc Roberts is no longer the
Chief Executive Officer. See 'Principal Stockholders' and 'Management.' The
Company is authorized to issue 5,000 shares of Preferred Stock in one or more
series, having terms fixed by the Board of Directors without stockholder vote.
Issuance of these shares could also be used as an anti-takeover device. The
Board of Directors has no current intentions or plans to issue any Preferred
Stock. See 'Description of Capital Stock--Preferred Stock.'
LIMITED EXPERIENCE OF UNDERWRITER
The Underwriter has acted as lead underwriter in connection with only one
firm commitment public offering and as co-manager in two firm commitment public
offerings. No assurance can be given that William Scott & Company's limited
public offering experience will not affect the subsequent development of a
trading market.
FUTURE SALES OF COMMON STOCK
All of the Company's shares of Common Stock currently outstanding are
'restricted securities' as that term is defined in Rule 144 promulgated under
the Securities Act of 1933, as amended, (the 'Act') and under certain
circumstances may be sold without registration pursuant to such Rule. The
outstanding shares will be eligible for sale under Rule 144 at varying periods
commencing September 1997. The Company is unable to predict the effect that
sales made under Rule 144, or otherwise, may have on the then prevailing market
price of the Common Stock, although any substantial sale of restricted
securities pursuant to Rule 144 may have an adverse effect. The Company's
officers and directors have agreed not to sell, transfer or assign any of their
shares of Common Stock (2,170,801 shares) for a period of 18 months after the
date of closing of this offering without the prior written consent of the
Underwriter. See 'Underwriting' and 'Description of Securities.'
10
<PAGE>
<PAGE>
DIVIDENDS UNLIKELY
The Company does not intend to declare or pay cash dividends in the
foreseeable future. Earnings are expected to be retained to finance and expand
its business. See 'Dividend Policy' and 'Description of Securities.'
ABSENCE OF PUBLIC MARKET; ARBITRARY DETERMINATION OF OFFERING AND EXERCISE
PRICES
Prior to this offering, there has been no public market for any of the
Company's securities and there is no assurance that a market will develop, or if
one does develop, that it will be sustained or that the market price of a Unit
will not decline below the public offering price or be subject to wide
fluctuations in response to quarterly variations in operating results and other
events or factors. Recent history relating to the market price of newly public
companies indicates that the market price of the Units, the Common Stock and the
Warrants may be highly volatile following this Offering. In the absence of an
established trading market, holders of the Company's securities may be unable to
sell their holdings in an efficient manner. The public offering price for the
Units and the exercise price of the Redeemable Warrants have been determined by
negotiation between the Company and the Underwriter and are not necessarily
related to the Company's asset value, net worth or other established criteria of
value. See 'Underwriting' and 'Description of Securities.'
POSSIBLE DELISTING OF SECURITIES FROM NASDAQ AND CHARACTERIZATION AS 'PENNY
STOCK'
The National Association of Securities Dealers, Inc. ('NASD') imposes
stringent criteria for continued listing of securities on the NASDAQ SmallCap
Market. To maintain the listing of its securities on the NASDAQ SmallCap
Market, the Company must have, among other things, total assets of $2,000,000,
capital and surplus of $1,000,000 and, in certain circumstances, a minimum bid
price for its common stock of $1.00 per share. In the event the Units, Common
Stock and Redeemable Warrants are delisted from the NASDAQ SmallCap Market as a
result of continuing losses or otherwise, trading, if any, would thereafter be
conducted in the over-the-counter market in the so-called 'pink sheets' or the
NASD's 'Electronic Bulletin Board.' As a consequence of delisting, an investor
could find it more difficult to dispose of, or to obtain accurate quotations as
to the price of, the Company's securities. The Company could also suffer a loss
of news coverage, and information relating to the Company may become more
difficult to obtain, which could in turn result in a decline in the market for
the Company's securities and make it more difficult for the Company to obtain
additional financing. The Securities would then also be subject to the risk that
they could become characterized as low priced or 'penny stock', which
characterization could severely affect market liquidity. The regulations
governing low-priced or penny stocks could limit the ability of broker-dealers
to sell the Securities and thus the ability of purchasers in this Offering to
sell such Securities in the secondary market.
UNDERWRITER'S POTENTIAL INFLUENCE ON THE MARKET
A significant number of the Securities offered hereby may be sold to
customers of the Underwriter. Such customers subsequently may engage in
transactions for the sale or purchase of such Securities through or with the
Underwriter. Although it has no obligation to do so, the Underwriter intends to
make a market in the Securities and may otherwise effect transactions in such
securities. If it participates in such market, the Underwriter may influence the
market, if one develops, for the Securities. Such market-making activity may be
discontinued at any time. Moreover, if the Underwriter sells the securities
issuable upon exercise of the Unit Purchase Option or acts as warrant
solicitation agent for the Redeemable Warrants, it may be required under the
Securities Exchange Act of 1934, as amended, to temporarily suspend its
market-making activities. The prices and liquidity of the Securities may be
significantly affected by the degree, if any, of the Underwriters participation
in such market. See 'Underwriting.'
11
<PAGE>
<PAGE>
NON-REGISTRATION IN CERTAIN JURISDICTIONS OF SHARES UNDERLYING THE WARRANTS;
NEED FOR CURRENT PROSPECTUS
The Company intends to register or qualify the Units for sale in
Connecticut, Colorado, Delaware, District of Columbia, Florida, Georgia, Hawaii,
Illinois, Louisiana, Maryland, New Jersey, New York, Nevada, Rhode Island and
West Virginia. Although the Units will not knowingly be sold to purchasers in
jurisdictions in which the Units are not registered or otherwise qualified for
sale, purchasers may buy the Units in the aftermarket in, or may move to,
jurisdictions in which the shares underlying the Redeemable Warrants are not so
registered or qualified during the period that the Redeemable Warrants are
exercisable. In this event, the Company would be unable to issue shares to those
persons desiring to exercise their Redeemable Warrants unless and until the
shares could be qualified for sale in jurisdictions in which such purchasers
reside, or an exemption to such qualification exists in such jurisdiction.
Although the Company is not aware of any states which prohibit the registration
or qualification of securities of the type offered by the Company (i.e. common
stock and transferable warrants), and anticipates that it will qualify for
available after-market exemptions in all but a few states within six months
after the offering permitting holders to sell their Redeemable Warrants, there
can be no assurance that an exemption permitting the exercise of the Redeemable
Warrants will be available in any jurisdictions other than those listed above at
the time a holder wishes to exercise Redeemable Warrants. In addition, investors
in this offering will not be able to exercise their Redeemable Warrants unless
at the time of exercise the Company has a current prospectus covering the shares
of Common Stock underlying the Redeemable Warrants. This Prospectus will not
remain current past , 1997. No assurances can be given that
the Company will be able to effect any required registration or qualification or
maintain a current prospectus. See 'Description of Securities -- Redeemable
Warrants.'
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS
The Redeemable Warrants may be redeemed by the Company at a redemption
price of $.05 per Redeemable Warrant upon 30 days' notice provided the last sale
price of the Common Stock for any 20 consecutive trading days ending within 15
days of the notice of redemption averages in excess of $9 per share. Redemption
of the Redeemable Warrants could force the holders to exercise the Redeemable
Warrants and pay the exercise price at a time when it may be disadvantageous for
the holders to do so, to sell the Redeemable Warrants at the then current market
price when they might otherwise wish to hold the Redeemable Warrants, or to
accept the redemption price, which is likely to be substantially less than the
market value of the Redeemable Warrants at the time of redemption. See
'Description of Securities -- Redeemable Warrants.'
EFFECT OF OUTSTANDING OPTIONS AND WARRANTS
For the respective terms of the Redeemable Warrants, the Unit Purchase
Option and the currently outstanding options and warrants, the holders thereof
are given an opportunity to profit from a rise in the market price of the
Company's Common Stock with a resulting dilution in the interests of the other
stockholders. Further, the terms on which the Company may obtain additional
financing during that period may be adversely affected by the existence of such
options and warrants. The holders of the options and warrants may exercise them
at a time when the Company might be able to obtain additional capital through a
new offering of securities on terms more favorable than those provided by
therein. In addition, holders of the Unit Purchase Option have registration
rights with respect to such option and the underlying securities. Exercise of
the registration rights may involve substantial expense to the Company. See
'Management -- Stock Option Plan' 'Underwriting' and 'Description of
Securities.'
12
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<PAGE>
DILUTION
As of June 30, 1996, the Company had a deficiency in net tangible book
value of $(1,606,741), or ap-proximately $(.43) per share of Common Stock. Net
tangible book value per share represents the amount of the Company's total
tangible assets, less liabilities, divided by the number of shares of Common
Stock outstanding. Giving retroactive effect to the sale of the 1,500,000 shares
of Common Stock comprising the Units offered hereby, assuming estimated expenses
of $550,000 (exclusive of underwriting discounts and commissions), the pro forma
net tangible book value at June 30, 1996 would have been $5,943,259, or $1.13
per share, representing an immediate increase in net tangible book value of
$1.56 per share to the present stockholders, and an immediate dilution of $4.87
(or 81%) per share to public investors from the public offering price. Dilution
per share represents the difference between the public offering price and the
pro forma net tangible book per share value after the offering.
The following table illustrates the per share dilution to be incurred by
public investors from the public offering price:
<TABLE>
<S> <C> <C>
Public offering price.............................................................. $6.00
Net tangible book value (deficiency) before offering.......................... $ (.43)
Increase attributable to public investors..................................... $ 1.56
Pro forma net tangible book value after offering................................... $1.13
Dilution of net tangible book value to public investors............................ $4.87
</TABLE>
The following table sets forth the difference between the present
stockholders and the public investors with respect to the number of shares of
Common Stock purchased from the Company, the total consideration paid and the
average price per share:
<TABLE>
<CAPTION>
AVERAGE
PERCENTAGE PERCENTAGE OF PRICE
SHARES OF OF TOTAL TOTAL PER SHARE OF
COMMON STOCK COMMON STOCK CONSIDERATION CONSIDERATION COMMON STOCK
------------ ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Present Stockholders............. 3,753,255 71.4% $ 37,533(1) 0.4% $ .01
Public Investors................. 1,500,000 28.6% $ 9,000,000 99.6% $ 6.00
</TABLE>
- ------------
(1) Represents only cash consideration paid for the shares, and does not give
effect to other forms of consideration (e.g., interests in predecessor
entities).
------------------------
The above discussion and tables assume no exercise of the over-allotment
option, the exercise of which in full would reduce the dilution to public
investors to $4.70, as the pro forma net tangible book value per share after the
offering would increase from $5,943,259 to $7,131,259.
13
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<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Units offered hereby
are estimated to be approximately $7,550,000 ($8,765,000 if the Underwriter's
over allotment option is exercised), after deducting underwriting discounts and
commissions and other expenses of the Offering payable by the Company. Such net
proceeds are expected to be used for the following purposes:
<TABLE>
<CAPTION>
APPROXIMATE AMOUNT PERCENTAGE OF
APPLICATION OF NET PROCEEDS NET PROCEEDS
- ------------------------------------------------------------------ ------------------ -------------
<S> <C> <C>
Repayment of Debt(1).............................................. $2,113,000 28.0%
Training Expenses................................................. $ 475,000 6.3%
Recruitment Expenses(2)........................................... $ 700,000 9.3%
Relocation of Facility Expenses(3)................................ $ 400,000 5.3%
Employee Bonuses.................................................. $ 100,000 1.3%
Working Capital(4)................................................ $3,762,000 49.8%
TOTAL................................................... $7,550,000 100%
</TABLE>
- ------------
(1) Represents repayment of an aggregate of $1,990,000 of principal plus
approximately $123,000 of accrued interest pursuant to outstanding unsecured
promissory notes bearing interest at a rate of 10% per annum. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and 'Certain Transactions.'
(2) Represents an estimate of costs and expenses to be incurred, primarily
travel and entertainment expenses, in connection with the recruitment of
potential athletes for representation by the Company and the recruitment of
agents to join the Company's WWTS and WWBM subsidiaries.
(3) Represents the anticipated costs of relocating and equipping the Company's
executive offices and boxing training facility.
(4) To be used for general corporate purposes, including general and
administrative expenses of approximately $1,600,000 over the next 18 months,
of which approximately $1,100,000 represents salaries for executive officers
of the Company and its subsidiaries during such period, inclusive of the
anticipated salary of a Marketing Director who may be hired after the
Offering. See 'Management' and 'Certain Transactions.'
------------------------
The foregoing represents the Company's best estimate of the allocation of
the net proceeds of this Offering during approximately the next 18 months. It is
the Company's intention, when management deems appropriate, to expand the number
of athletes under Company management and/or to actively engage in the management
or other representation of entertainers by hiring persons or acquiring existing
businesses engaged in the management, agency and marketing of sports or
entertainment personalities and complementary or other businesses. Accordingly,
a portion of the proceeds of this Offering allocated to working capital may be
used in conjunction with such an acquisition or acquisitions. The Company
currently has no agreements to make any such acquisition. In addition, future
events, such as (i) the problems, delays, expenses and complications frequently
encountered by early stage companies, (ii) changes in competitive or regulatory
conditions of the Company's business and (iii) the success or lack thereof of
the athletes under contract with the Company, may make shifts in the allocation
of funds necessary or desirable.
Prior to expenditure, the net proceeds will be invested in government
securities, certificates of deposit or similar investment grade securities. Any
proceeds received upon exercise of the Underwriter's over-allotment option, the
Redeemable Warrants or the Unit Purchase Option, as well as income from
investments, will be used to fund operations.
DIVIDEND POLICY
The Company has never paid a cash dividend and does not anticipate the
payment of cash dividends in the foreseeable future as earnings are expected to
be retained to finance the Company's growth. Declaration of dividends in the
future will remain within the discretion of the Company's Board of Directors,
which will review its dividend policy from time to time.
14
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1996 and as adjusted to give effect to the issuance and sale of the Units
offered hereby and the application of the proceeds therefrom:
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED (1)
----------- ---------------
<S> <C> <C>
Current Liabilities.................................................... $ 2,197,132 $ 210,759
Long-Term Debt......................................................... 22,000 22,000
Stockholders' Equity (Deficit):
Preferred Stock, $.01 par value, 5,000 shares authorized; no
shares issued and outstanding................................... 0 0
Common Stock, $.01 par value, 20,000,000 shares authorized;
3,753,755 shares issued and outstanding; 5,253,755 shares issued
and outstanding as adjusted(2).................................. 37,534 52,538
Additional Paid In Capital............................................. 78,803 7,613,799
Accumulated Deficit.................................................... (1,607,903) (1,607,903)
Demand Note Receivable on Private Issuance of Common Stock............. (12,684) (12,683)
Total Stockholders' Equity (Capital Deficiency)........................ (1,504,750) 6,045,751
Total Capitalization................................................... 714,882 6,278,510
</TABLE>
- ------------
(1) Gives effect to the repayment of $2,113,000 of outstanding indebtedness,
$1,986,373 of which was outstanding at June 30, 1996. See 'Use of Proceeds',
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and 'Certain Transactions.'
(2) Does not include: (i) 1,500,000 shares issuable upon the exercise of the
Redeemable Warrants; (ii) 225,000 shares of Common Stock included in the
Units which may be sold pursuant to the over-allotment option or the 225,000
shares issuable upon exercise of the Redeemable Warrants included in the
Units which may be sold pursuant to the Underwriter's over-allotment option;
(iii) 130,000 shares which may be issued upon the exercise of the Unit
Purchase Option or the 130,000 shares issuable upon exercise of the
Redeemable Warrants included in the Units which may be issued upon the
exercise of the Unit Purchase Option; (iv) 1,020,000 shares issuable upon
exercise of warrants; or (v) 500,000 shares issuable upon exercise of
options available for grant pursuant to the Company's 1996 Stock Option
Plan. See 'Management -- Stock Option Plan', 'Certain Transactions',
'Description of Securities', 'Underwriting' and 'Legal Matters.'
15
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<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table summarizes certain selected financial data and is
qualified by, and should be read in conjunction with, the Company's consolidated
financial statements and related notes thereto included elsewhere in this
Prospectus and with 'Management's Discussion and Analysis of Financial Condition
and Results of Operations.' The selected financial data of the Company with
respect to the years ended December 31, 1995 and 1994 has been derived from the
consolidated financial statements of the Company which were audited by Rosenberg
Rich Baker Berman & Company, independent certified public accountants, as
indicated in their report contained elsewhere herein which contains an
explanatory paragraph as to the Company's ability to continue as a going
concern. The financial information for the six months ended June 30, 1996 and
for the six months ended June 30, 1995 are derived from unaudited financial
statements. The unaudited financial statements include all adjustments,
consisting only of normal recurring accruals the Company considered necessary
for a fair presentation of the financial position and results of operations for
these periods on a basis consistent with that of the audited financial
information. Interim results are not necessarily indicative of results for the
year.
STATEMENT OF OPERATIONS DATA:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED JUNE 30,
------------------------- ----------------------------
1994 1995 1995 1996
--------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Purse Income....................................... $ 5,200 $ 75,794 $ 35,650 $ 122,187
Total Income....................................... 20,200 241,621 186,646 157,036
Training and Related Expenses...................... 101,492 223,413 127,343 52,573
Promotion and other Operating Expenses............. 295,208 645,124 212,960 735,146
Total Expenses..................................... 396,700 1,077,037 340,303 787,719
--------- ---------- ----------- -----------
Loss from Operations............................... (376,500) (835,416) (153,657) (630,683)
--------- ---------- ----------- -----------
Net Loss........................................... (381,786) (869,303) (153,809) (703,794)
Loss Per Share..................................... $ (.12) $ (.27) $ (.05) $ (.18)
</TABLE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash................................................................................ $ 547,136 $ 435,974
Due from Related Parties............................................................ -- 2,906
Due from Boxers..................................................................... 151,358 84,319
------------ -----------
Total Current Assets................................................................ 698,719 527,019
------------ -----------
Total Assets........................................................................ 784,670 714,882
Notes and Loans Payable............................................................. 1,198,806 1,988,205
------------ -----------
Total Current Liabilities........................................................... 1,585,126 2,197,132
------------ -----------
Total Liabilities................................................................... 1,585,126 2,219,132
Stockholders' Equity (Capital Deficiency)...........................................
Common Stock, $.01 Par Value; Authorized 20,000,000 Shares, 3,753,255 issued and
outstanding....................................................................... 37,200 37,533
Additional Paid-in Capital.......................................................... 78,803 78,803
Accumulated (deficit)............................................................... (904,109) (1,607,903)
Demand Note Receivable on Private Issuance of Common Stock.......................... (12,350) (12,683)
Stockholders Equity (deficiency).................................................... (800,456) (1,504,250)
</TABLE>
16
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<PAGE>
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
Worldwide Entertainment & Sports Corp. was organized in August 1995, and
since such date has succeeded to the business operations of various entities
engaged in the management of professional boxers, each previously controlled by
the Company's Chief Executive Officer. In addition, in January 1996, the Company
formed Worldwide Team Sports, Inc. ('WWTS') and hired a registered NFL contract
advisor. In August 1996, for the purpose of providing agency, marketing and
management services to professional basketball players, the Company formed
Worldwide Basketball Management, Inc. ('WWBM'), a corporation 80% owned by the
Company and 20% owned by Erik Rudolph and Michael Goodson, WWBM's President and
Executive Vice President, respectively. The Company continues to seek to develop
relationships with other persons and entities in the sports agency and
management fields. However, to date, the Company's operations have been
concentrated primarily in the sport of boxing. See 'Business -- Organization'
and 'Certain Transactions'. The Company's predecessors-in-interest and its Chief
Executive Officer have significant experience in the management of boxers. While
the Company has succeeded to the operations of these businesses, the prior
operating results of such separate businesses should not be viewed as
representative of the future results of operations of the Company. The Company
has only recently expanded into the field of player agency and contract advisory
services. To date, the Company has not generated revenues from contract advisory
services to professional football players and has only limited experience in the
negotiation of player contracts. Consequently, the Company may seek to retain
the services of other registered NFL contract advisors on an independent
contractor or consultancy basis and share a portion of fees generated therefrom
with such persons. The Company anticipates such revenue stream to commence in
September 1996, as the players represented by the Company receive their salaries
and/or negotiate and sign their contracts for the 1996-1997 NFL season. However,
the Company's registered NFL Agent currently has representation agreements with
only seven NFL players. Such Agent has agreed to share a portion of his fee, on
a 50/50 basis, with his prior employer. Consequently, revenues therefrom are
expected not to exceed $30,000 for the 1996-1997 NFL season. WWBM has been
assigned the revenues resulting from each of the three existing Representative
Agreements between Mr. Rudolph, a registered NBA Agent, and players on National
Basketball Association ('NBA') rosters. Because the 1996-1997 NBA season has not
begun as of the date of this Prospectus, WWBM has not received revenues to date.
The aggregate Agency fees expected to be received during the coming NBA season
from the existing player contracts are anticipated to be approximately $60,200,
exclusive of revenue which may be generated from endorsement or other sources of
marketing income.
The Company's objective, in addition to maximizing the revenues which may
be generated through services provided to its current roster of athletes, is to
broaden the range of services it offers, to branch into additional sports and to
expand the roster of its athletes in boxing, basketball and football. The
Company was organized with the intention of expanding its operations to the
management and representation of entertainment personalities in addition to
athletes. To date, the Company has not actively engaged in such operations. In
order to accomplish such expansion, the Company will need to employ persons or
acquire existing businesses engaged in such fields. There can be no assurance
that the Company will be able to penetrate the entertainment market or
significantly expand its initial player agency business, each of which
constitutes a highly competitive field.
The Company's revenues are directly related to the earnings of its clients.
The Company derives revenues based upon a percentage, currently ranging from 15%
to 27-1/2%, of the boxers' purses from professional bouts. The Company also
derives revenues based upon a percentage of salaries and other income received
from contracts, endorsement arrangements and other income producing activities
of athletes for whom the Company or its management acts as agent or
representative. These percentages currently range from 4% for professional
basketball and football player contracts (although occasionally lower
percentages are agreed upon) to 10% or 20% for endorsement and marketing
revenues.
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Establishing and maintaining a presence in each of the Company's areas of
concentration, (i.e., boxing management and team sports player agency) require
significant expenditures. Each sports specific division must develop a roster of
clients, establish relationships within their prospective sports and develop
support services to provide to the athletes. Only a portion of such expenses
incurred by the Company will result in the engagement by a client of the
Company's services, and it is often uncertain the extent to which, even if
retained, a target client will generate significant revenues to the Company. For
example, prior to joining WWBM, Messrs. Rudolph and Goodson expended
approximately $169,000, primarily in travel and entertainment, promotional,
salaries and overhead expenses during the period January 1995 through August
1996, in connection with such efforts, while no revenues were received during
such period. In order for the Company to expand its operations and counteract
client loss due to player retirement, injury, competition changes in public
demand or preference, the Company must constantly engage in recruitment
activities. In addition, the Company incurs significant training expenses for
the boxers under the Company's management, not all of which are directly
reimbursed pursuant to bout agreements for such boxers. In the development of a
boxer, particularly a young amateur boxer, into a professional boxer who can
command significant purses, such expenses can be incurred over a period of years
and constitute hundreds of thousands of dollars or more. The Company incurred
expenses aggregating approximately $820,000 from July 1992 through September 30,
1995 relating to the development of Shannon Briggs. Of such expenses,
approximately $401,000 were related to fight and training costs, and
approximately $419,000 related to living and day to day expenses. Mr. Briggs is
under no obligation to repay the Company for these expenses and the Company will
only be able to recoup these expenses out of its percentage of Mr. Briggs' bout
purses. In contrast to its experience with Mr. Briggs, during the last 12 months
the Company substantially recouped the expenses it has incurred with respect to
its more experienced boxers, Ray Mercer, Charles Murray and Tracy Patterson
either from its percentage of their respective purses or by their direct
repayment of advances made on their behalf by the Company. The Company has not
allocated any such expenses among its four boxers since September 30, 1995. The
Company must continuously incur such expenses in contemplation of future
revenues, the receipt of which is uncertain. The Company believes that the net
expenditures it will be required to incur with respect to its four boxers
currently under contract, other than training expenses which are generally
constant from year to year subject to inflationary increases, will be
significantly lower during the balance of 1996 as contrasted with 1995 levels as
a result of the maturation of such boxers' careers, their increased visibility
and contender status and the consequent likelihood, although by no means
assured, of increased bout purses.
The timing of receipt of revenues by the Company is subject to seasonal
variations with respect to revenues generated from the negotiation of player
contracts and subject to irregular patterns in the case of boxing purse revenues
as a result of the irregular occurrence of the bouts. In addition, the magnitude
of the Company's revenues can be expected to experience wide fluctuations based
upon the success or failure of the Company's boxers or the negotiation of player
contracts with significant bonus provisions. The Company's Team Sports
subsidiary can be expected to incur significant expenditures during the first
eight months of each calendar year (particularly March through July) for
recruitment and related expenses, and to receive its revenues during the last
four and first three months of the year during the NFL and NBA seasons. If the
Company were to expand into the representation of baseball players (or other
professional athletes with a spring/summer season), of which there can be no
assurance, the effects of such seasonality would be diminished. Finally, the
Company has committed to approximately $1,100,000 of base salary payments over
the next 18 months to five of its executive officers and a Marketing Director
who may be hired after the Offering. The Company will be required to
significantly increase its level of operations in order to generate adequate
revenues to fund its salary and other operating expenses.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1995
During the six months ended June 30, 1996, the Company was actively engaged
in the management of its four boxers, as compared to the comparable 1995 period
during much of which the Company was actively managing only one boxer, Mr.
Briggs. Purse income increased to $122,187 for the six months ended June 30,
1996 as compared to $35,650 for the six months ended June 30, 1995 as a result
of an increase in the number of bouts and an increase in the level of the
purses. Promotion and other
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operating expenses increased to $735,146 for the six months ended June 30, 1996
as compared to $212,960 for the corresponding 1995 period as a result of (i)
$103,374 of travel and entertainment expenses incurred in connection with the
recruitment of professional football players and Agents for the Team Sports
Division and in connection with bouts for three of the Company's four boxers,
and (ii) $214,500 in payroll expenses as a result of the hiring of the
registered NFL Agent for the Team Sports subsidiary and additional staff
personnel. Prior to January 1, 1996, no executive officer of the Company
received a salary. In addition, there were approximately $170,370 of expenses
for promotional materials and other public relations expenses for such period as
well as $46,712 of expenses related to the purchases of tickets for the boxers'
bouts, none of which was recouped through ticket sales during such quarter. The
six month period ended June 30, 1996 also included $72,807 of interest expense
attributable to the 10% promissory notes issued in connection with the Company's
private placement which originated in September 1995. Accordingly, the Company's
net loss for the six months ended June 30, 1996 increased to $(703,794) from
$(153,809) for the corresponding 1995 period.
YEAR ENDED DECEMBER 31, 1995 COMPARED WITH THE YEAR ENDED DECEMBER 31, 1994
Purse income increased to $75,794 for the year ended December 31, 1995 from
$5,200 for the year ended December 31, 1994. During most of 1994, the Company
had a management agreement with only one boxer, Shannon Briggs, who was
beginning his professional career at such time. In December 1994 and early 1995,
the Company executed management agreements with Ray Mercer, Charles Murray and
Tracy Patterson. Therefore, purse income in 1995 increased as a consequence of
the resulting increase in the number of bouts and size of the purses. Revenues
for the year ended December 31, 1995 included $144,227 of revenues generated by
ticket sales processed through the Company for bouts. Operating expenses
increased from $396,700 in 1994 to $1,077,037 in 1995 due to a $189,700 increase
in training expenses as a result of the increased number of bouts during
calendar 1995 and increased promotional expenses in connection with the
assumption by the Company of the management of Messrs. Mercer, Murray and
Patterson. In addition, and for the same reasons, travel and entertainment
expenses increased to $91,507 from $15,758 for the prior year, promotional
expenses increased to $87,751 from $13,478 for the prior year and ticket
purchase expense was $104,763 as compared to less than $500 for the prior year.
During the year ended December 31, 1995, the Company incurred a non-recurring
expense in the amount of $208,500 relating to the repurchase of a co-manager's
interest in one of the boxers. Accordingly the Company's loss from operations
increased to $(835,416) for the year ended December 31, 1995 from $(376,500) for
the year ended December 31, 1994. During such period, the Company also incurred
interest expense of $32,245 relating to notes issued through the private
placement commenced in 1995. As a result of these expenses, the net loss for
1995 was $(869,303).
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's principal source of operating capital has been
provided by loans and capital contributions from the Company's stockholders as
well as private sales of the Company's debt securities. At June 30, 1996, the
Company had a working capital deficit of $1,504,250 which amount has since
increased. The report of the Company's independent certified public accountants
contains an explanatory paragraph with respect to the Company's ability to
continue as a going concern without obtaining additional financing such as that
contemplated by this Offering. See 'Report of Independent Certified Public
Accountants.'
As of the date hereof, the Company had approximately $1,990,000 of
outstanding indebtedness to several individuals holding promissory notes issued
pursuant to a private placement, all of which, plus accrued interest of
approximately $123,000, will be repaid from the proceeds of the Offering.
After completion of the Offering, the Company will seek to relocate its
administrative offices and boxing facility. It is anticipated that the Company
will incur expenditures of $300,000 to $500,000 in connection therewith.
Management salaries (aggregating approximately $700,000 per annum) and
anticipated training expenses (estimated at approximately $475,000, depending
upon the number of bouts) represent the expected significant uses of working
capital during the next twelve months, as well as recruitment expenses
(estimated to approximate $500,000, subject to variations depending upon player
availability and recruiting success) and rent (approximately $108,000 per
annum). Prior to
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January 1, 1996, no officer of the Company was paid a salary nor were there any
salaries accrued therefor.
Although the Company believes that the proceeds of this offering will be
sufficient to fund its operations over the next 18 months or longer, there can
be no assurance that the Company will have sufficient revenues after such time
to fund its operating requirements. Accordingly, the Company may be required to
seek additional financing through bank borrowings, debt or equity financings or
otherwise. There can be no assurance that any such financing will be available
to the Company on favorable terms, if at all.
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BUSINESS
ORGANIZATION
The Company was organized in August 1995 for the purposes of succeeding to
the boxing management operations conducted by various entities controlled by
Marc Roberts and to engage in management of, and to provide agency services to,
athletes in other sports and entertainers. In November 1995, the Company entered
into a management agreement with heavyweight prospect Shannon Briggs, and
acquired all of the assets and assumed all of the liabilities of Shannon Briggs
I, L.P., an entity controlled by Marc Roberts which had previously managed Mr.
Briggs. In 1995, the Company acquired Marc Roberts Boxing, Inc., Merciless
Management, Inc. and The Natural Management, Inc., entities owned by Marc
Roberts through which he managed Tracy Patterson, Ray Mercer and Charles Murray,
respectively. Such corporations, together with Marc Roberts Inc. and SB Champion
Management Inc., corporations also owned by Mr. Roberts, were subsequently
merged into the Company, and the Company entered into new management agreements
with these boxers. See 'Certain Transactions.'
The business of managing the boxers is conducted through the Boxing
Division of the Company. In January 1996, the Company established its Team
Sports Division through the formation of WWTS, initially concentrating in the
business of representing professional football players, and employed a
registered NFL contract advisor in connection therewith. In August 1996, for the
purpose of providing agency, marketing and management services to professional
basketball players, the Company formed Worldwide Basketball Management, Inc.
('WWBM'), a corporation 80% owned by the Company and 20% owned by Erik Rudolph
and Michael Goodson, WWBM's President and Executive Vice President,
respectively. The Company intends to establish additional divisions within its
Team Sports Division for each additional team sport into which the Company
expands its operations. The Company is currently developing a marketing division
to cater to the development of commercial and marketing opportunities for
athletes and entertainers, including the Company's clients.
THE BOXING DIVISION
The Company's boxing division is under the direct supervision of Marc
Roberts, the Company's President. Mr. Roberts has over 17 years experience in
the management of professional boxers. The Company's four boxers have engaged in
77 professional bouts while under Mr. Roberts' management. In addition to the
continuing management of the boxers identified below, the Company seeks to
selectively identify promising young boxers to solicit management opportunities.
While the Company intends to actively recruit the best amateur boxers (once such
boxers renounce their amateur status) and promising professional boxers, there
can be no assurance that the Company will be successful in signing management
agreements with any boxers pursued by the Company or, if signed, that such
boxers will develop successful professional boxing careers. The Company's
success is and will continue to be dependent upon the ability of one or more of
its boxers to attain championship or, in the case of heavyweight boxers, top
contender status.
PROFESSIONAL BOXING
The sport of boxing is overseen primarily by four organizations -- the
World Boxing Association ('WBA'), the World Boxing Council ('WBC'), the
International Boxing Federation ('IBF') and the World Boxing Organization
('WBO') -- which have established rules and regulations governing conduct in the
ring. Each of such entities, which are comprised of various foreign national
boxing commissions and certain state bodies, set their own rules, establish
their own medical and safety standards, create their own rankings and designate
their own 'world champions.' Each sanctions particular championship and official
title-elimination bouts. To hold a title in any of such organizations, a boxer
must compete in places, against opponents and under conditions specified by the
sanctioning body, one or more of which may sanction a particular bout.
Professional boxers are divided into 17 weight classes ranging from the
'heavyweight' division (190 lbs. and over) to the 'strawweight' division (108
lbs. and under). Boxers are ranked within their weight class and predominantly
box opponents of the same or reasonably similar weight. Champions are
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crowned in each division as well. Bouts can be as long as 12 rounds, usually
reserved for championship bouts, or as short as four rounds for bouts between
young, untested boxers.
Boxing matches are judged by three judges under the rules dictated by the
state boxing authority of the state in which the bout is located. If the bout is
to decide a championship, the judges are appointed by the sanctioning
body/bodies whose titles are being decided. If not a championship bout, the
judges are appointed by the appropriate state boxing authority. Unless decided
by a knockout or disqualification, bouts are won or lost according to a system
of points awarded to the boxer who landed the most, and most effective punches
during a bout. A referee presides over a match as the third party in the ring,
insuring that the boxers box in accordance with the rules. The referee also is
empowered with the authority of stopping a bout if, in his judgment, one of the
boxers is in danger of serious injury or is no longer able to defend himself,
and with the authority to deduct points from a boxer or disqualify a boxer from
a bout for violation of boxing rules during the bout. While the judgment of the
referees and the judges is generally not subject to further review, the nature
of bout judging is largely subjective. Therefore, it is impossible to predict
the outcome of a bout or, in turn, the professional success of a boxer. A
decision against a boxer can seriously set back his development into a contender
and thus his ability to earn substantial purses.
In addition to the boxers, judges and referees, the business of
professional boxing is driven by promoters and managers. Promoters are
responsible for contracting boxers to bout agreements with designated opponents,
arranging sites, negotiating broadcast rights contracts and establishing and
paying the gross purses to the boxers. Promoters generally are also authorized
to sell tickets for the matches they promote and to exploit and market all
ancillary rights to the bout, including without limitation, the broadcasting,
telecasting, recording or filming of such contests for exhibition on a live or
delayed basis in any and all media.
The role of a manager, such as the Company, is to advise its boxers on
career development, training and business planning matters, to solicit the
arrangement of matches with potential opponents, to advise the boxers regarding
participation in bouts requested by others, and to negotiate the terms thereof,
including purse payments, and the selection of opponents with promoters of
bouts. A manager's success is dependent upon, among other factors, its boxers
participating in bouts with increasingly higher purses, which is directly
related to such factors as the continued success of the boxers and the ability
of the manager to arrange contests and exhibitions of sufficient interest to the
public to warrant substantially greater purses. The Company believes that unless
and until a boxer attains championship or, in the case of a heavyweight, top
contender status, his purses will not be at a level which will generate
sufficient revenues for the Company to offset its costs and advances.
The availability of increasing purse amounts will be subject, in part, to
the continuation of a significant level of public interest in the sport of
boxing, which is dependent in part upon the marketability of the top contenders
at any given time and the public's perception of the sport in general. From time
to time in recent years journalists, broadcasters and other public figures have
questioned the propriety of the current governance system for professional
boxing and suggested changes (i.e., use of protective headgear) which may affect
the popularity of professional boxing.
The recruitment and development of young professional boxers is a major
expense of boxer management. A would-be manager faces stiff competition from
other entities in pursuit of quality boxers. There are a limited number of
potential participants for bouts with significant purses and a limited number of
promoters to organize such bouts. The securing of a boxer as a client requires a
great deal of attention and a demonstration of a willingness and ability to
understand and appropriately handle the professional and personal needs and
aspirations of the athlete. The process can be time consuming and costly. Early
in a boxer's career, when revenues from his matches are too low to cover his
expenses and cost of living, a manager must advance the costs for the boxer's
professional and often personal needs, including, but not limited to, training
expenses, personal services, cost of food, clothing, shelter and medical costs.
It usually takes several years of boxing before a boxer reaches a level of
professional success whereupon the revenue from his boxing is sufficient to
support his career and to pay off his manager's advances. By way of example,
between July 1992 and September 30, 1995, the Company has expended approximately
$820,000 on the development of Shannon Briggs. Of such expenses, approximately
$401,000 related to fight and training costs and approximately $419,000 related
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to living and day to day expenses. Mr. Briggs is under no obligation to repay
the Company for these expenses, the Company's only possible source of recoupment
being out of its percentage of Mr. Briggs' bout purses. To date Mr. Briggs has
not reached the level that would allow him to command purses sufficient to
permit the Company to recoup a significant portion of such expenses. Although
Mr. Briggs had reached the point of near contender status, a recent defeat has
set back his progress toward contention for a championship. In contrast to its
experience with Mr. Briggs, in the last twelve months the Company has
substantially recouped the expenses it has incurred with respect to its more
experienced boxers, Ray Mercer, Charles Murray and Tracy Patterson, either from
its percentage of their respective purses or by their direct repayment of
advances made on their behalf by the Company. The Company has not allocated any
such expenses among its four boxers since September 30, 1995. There can be no
assurance that Mr. Briggs, or any other boxer either managed, or who may be
managed by the Company in the future, will ever generate sufficient revenues to
allow the Company to recoup its expenditures.
THE BOXERS
The Company currently manages the following four professional boxers
pursuant to exclusive management contracts:
<TABLE>
<CAPTION>
MANAGEMENT'S MOST RECENT PURSE
NAME WEIGHT CLASS AGE RECORD PERCENTAGE AMOUNT AND DATE
- --------------------- -------------------- --- ---------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Tracy Harris
Patterson.......... Junior Lightweight 31 54-4-1 15% $ 17,500
w/39 April 14, 1996
knockouts
Charles 'The Natural'
Murray............. Junior 27 35-3-0 17.5% $10,000
Welterweight........ w/21 June 25, 1996
knockouts
Ray 'Merciless'
Mercer............. Heavyweight 35 23-4-1 20% $450,000
w/16 May 10, 1996
knockouts
Shannon Briggs....... Heavyweight 24 25-1-0 27.5% $67,500
w/20 March 15, 1996
knockouts
</TABLE>
Tracy Harris Patterson is the former World Champion in two different weight
classes: WBC Super Bantamweight Champion and IBF Junior Lightweight Champion
(Patterson recently lost his Junior Lightweight title in a split decision to
Arturo Gatti in December 1995, but is expected to have a rematch with Gatti in
late 1996). Patterson has been boxing professionally since 1985.
Charles 'The Natural' Murray has been boxing professionally since March
1989. Mr. Murray holds the North American Boxing Federation (a lesser
sanctioning body) Junior Welterweight Championship and is ranked in the top ten
by each of the WBC, IBF and WBA. Mr. Murray previously held the IBF Junior
Welterweight World Championship.
Raymond 'Merciless Ray' Mercer was the 1988 Olympic heavyweight gold
medalist and has been boxing professionally since February 1989. Mr. Mercer was
formerly the WBO Heavyweight World Champion and the IBF Intercontinental
Champion. Mr. Mercer is ranked by the WBC as the No. 6 heavyweight contender.
Shannon Briggs has been boxing professionally since July 1992. Mr. Briggs
has been identified by Ring Magazine as being among the more promising young
heavyweights in boxing today.
Each of these boxers has entered into a management agreement with the
Company pursuant to which the Company will supervise and direct the boxer's
training activities, negotiate business opportunities on behalf of the boxer and
oversee all marketing and promotional activities regarding the boxer. The
Company negotiates with promoters on behalf of its boxers to determine which
bouts each boxer will engage in and the terms of the purses to be paid for such
bouts. In exchange for providing
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such services, the Company retains a percentage of the purses from all
professional boxing contests and exhibitions ranging from 15% to 27.5% and also
receives 10% to 20% of all fees, honoraria or other compensation payable to the
boxer for product endorsements, speaking engagements, personal appearances or
other commercial performances. An amount equal to 10% each of the purses as well
as all fees, honoraria or other compensation payable to the boxer is generally
paid by the boxer to his trainer. The balance of the purse is retained by the
boxer. See 'Management's Discussion and Analysis of Financial Condition and
Results of Operations -- General.' The initial term of each of the management
contracts is five years expiring in 2001 or late 2000. Although the Company's
management agreements are not subject to cancellation by the boxers, there can
be no assurance that any of such individuals will not fail to honor his contract
during its term.
For the year ended December 31, 1995 and the six months ended June 30,
1996, the Company recognized purse income of $75,794 and $122,187, respectively.
The Company has recognized limited revenues relating to product endorsements,
speaking engagements, personal appearances or other commercial performances from
its boxers. Historically, boxers have not been actively solicited for such
opportunities, and therefore the generation of significant revenue in this
regard is uncertain. The Company nevertheless intends to seek to maximize these
opportunities for its boxers through the efforts of its Marketing Division.
There can be no guaranty of success in these efforts.
BOXING REGULATION
The management of professional boxers and other athletes is subject to
licensing and regulation by state athletic commissions and agencies. Managers of
boxers are required to be licensed by the State athletic commission. The
Company's President, Marc Roberts, has obtained licenses to act as a manager
from the state athletic commissions of New Jersey and Nevada. Management
licenses were obtained in the other host states immediately prior to the bouts
held therein, and the Company, or its employees or representatives, as
applicable, will seek the appropriate licenses from other states as warranted.
The various state athletic commissions have their own rules and regulations
which govern boxing contests and events taking place in their states and have
promulgated their own standards for boxer-management contracts, including
maximum permissible duration and management fees. In some instances, such
provisions conflict with the legislation and rules and regulations of other
states, as well as with the terms of the Company's management agreements. To
date, the terms of the Company's management agreements have not restricted the
Company's boxers from engaging in bouts in other states. The Company's
management agreements provide, however, that in the event any provision of such
agreements is held invalid or unenforceable by a host state, such provision
shall be deleted or construed in accordance with the rules of the host state.
Difficulties or failure in obtaining or maintaining required licenses or
approvals from state athletic commissions or agencies or otherwise complying
with their rules or regulations could prevent the Company from enforcing its
rights under its management contracts or placing its boxers in contests or
exhibitions in certain states. To date, there have been no such difficulties
with the Company's management agreements.
PERSONAL INJURY LIABILITY
The use of the Company's boxing training facility by professional boxers
and others entails a risk of liability claims for injuries sustained while
training or using equipment. The Company maintains liability insurance coverage
in the amount of $1,000,000 per occurrence and $2,000,000 in the aggregate. In
particular, the Company's insurance policies do not insure against claims by
participants in bouts or sparring sessions for injuries sustained during such
activities. In the event of a successful suit against the Company, lack or
insufficiency of insurance coverage could have a material adverse effect on the
Company.
TEAM SPORTS DIVISION
The Company's Team Sports Division is currently comprised of two
subsidiaries, Worldwide Team Sports, Inc. ('WWTS') and Worldwide Basketball
Management, Inc. ('WWBM').
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The Team Sports Division was formed for the purpose of engaging in the
business of providing contract negotiation and advisory services to, and on
behalf of, professional team sport athletes. The Company intends to operate
through sport-specific divisions (which, as in the case of basketball, may be
separate subsidiaries) employing professionals with experience as agents and
contract advisors ('Agents') in their respective sports. Currently, the Team
Sports Division has established only its Football Division and its Basketball
Division. There can be no assurance that any such additional divisions will be
successfully created or that acquisitions of established sports agency practices
will be successfully completed. To accomplish this goal, the Company will need
to establish direct connections with players in the various professional sports
leagues and, in accordance with established guidelines, establish relationships
with collegiate athletes across all of college sports after termination of their
eligibility to participate in collegiate sports. The Company intends to seek to
hire or engage as consultants established professionals with rosters of athletes
in various professional sports. The Company will seek to integrate the
operations of WWTS with its other divisions so as to provide its clients with
professional and commercial services intended to enable athletes to maximize
their earning potential during their playing careers and to capitalize on the
recognizability, popularity and marketability of professional athletes in
today's media saturated sports environment.
Agents conduct compensation negotiations on behalf of individual players
and also provide advice and counsel in all other areas of the players'
professional careers, including career management decisions (e.g., free agency
options), the development and execution of marketing strategies and endorsement
opportunities. In addition to establishing a relationship with the athletes, a
knowledge of the league, team personnel, the league collective bargaining
agreements and the mechanics of the league's salary cap structure, which limits
the aggregate amount of salaries a team can pay its players, is material to
fulfilling the Agent's function. Agents must be able to assist their clients in
all stages of their careers. They must be familiar with the personnel needs of
the teams in the league to appropriately market and arrange showcases for their
rookie clients, and also must be familiar with each team's salary cap
limitations to best position veteran free agents to sign with a particular team.
In exchange for such services, an Agent generally receives 2% to 4% of his
player's team salary each season (which includes the player's base salary,
signing bonus and any performance bonus actually received by the player), during
the length of the contract which the Agent negotiated for his client with the
team. That revenue stream continues for so long as the player is paid pursuant
to such contract, even if the client changes Agents during that span. Once that
contract is completed, a player is free to use another Agent with no obligation
to his former Agent. An Agent's success therefore depends as much on his ability
to maintain a long term relationship with his players and his ability to attract
new valuable veteran and rookie talent as on his ability to negotiate favorable
contracts for his players. Revenues generated by the renegotiation of a contract
originally negotiated by another Agent are based solely on the incremental
salary increase, if any, resulting from such renegotiation.
THE FOOTBALL DIVISION
Through WWTS, the Company intends to develop a football player agency
business primarily through the acquisition of existing agency businesses and
also through additions to WWTS' existing athlete clientele. The Company does not
currently have any agreement or understanding to acquire any agency businesses.
Marc Roberts currently acts as WWTS' President and Chief Executive Officer. Mr.
Roberts has minimal background in professional team sport athlete
representation. The Company has employed Ryan Schinman, an NFL registered Agent
with three years experience, to be WWTS' Vice President. The Company believes it
will be necessary to add more experienced management personnel to WWTS to
achieve its growth objectives. WWTS' success will depend on its ability to
acquire existing sports agency practices, attract and retain the services of
football industry professionals, and in turn on the ability of those
professionals to undertake the representation of successful professional
athletes and to maintain such relationships for a substantial period of time.
The NFL Collective Bargaining Agreement prohibits an organization from serving
as a player's Agent, and therefore WWTS' business growth will be dependant upon
its ability to retain the services, as employees or consultants, of Agents able
to secure athletic talent and who are also willing to assign the commissions
generated thereby to the Company in exchange for a salary, stock and other
compensation.
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Currently, Mr. Schinman has assigned to WWTS his right to receive the
revenues due him after January 1, 1996 from the seven professional football
players he has signed to representation agreements. Each of these agreements
provides for a 4% fee. However, these agreements are subject to revenue sharing
arrangements between Mr. Schinman and former associates of Mr. Schinman whereby
such associates are entitled to receive 50% of the full Agent's commission
percentage. The Company expects the existing player representation agreements to
generate limited revenues to the Company, not exceeding $30,000 for the
1996-1997 NFL season. WWTS also retains two talent scouts on a commission basis
to refer athletes to the Company. Mr. Schinman has limited experience in
negotiating NFL player contracts. See 'Management'. Accordingly, unless the
Company employs an additional Agent with significant experience negotiating
player contracts, the Company may be compelled to retain the services of
independent consultants to perform such services on behalf of the Company. In
such event, the Company would be required to share revenues generated from
player contract negotiations. For WWTS to reach profitability, it must retain
the services of other Agents with existing player business.
The financial success of WWTS will be dependent upon many factors beyond
the control of the Company. Such success will be highly dependent upon the
athletic success of the athletes represented by WWTS, which will determine the
salary and marketing potential of such athletes. In addition, due to the
physical nature of professional football, there can be no assurances that key
players will not suffer injury or otherwise be incapable of fulfilling their
obligations as professional athletes under their player's agreements with
professional franchises. Because football players' salaries generally are not
guaranteed for the life of their contracts, such unexpected interruptions of the
athletes' professional careers could have a deleterious affect on the
profitability of WWTS. The ongoing success of the Football Division therefore
will depend in large part on the Football Division's ability to sign new players
to represent. Because of the high degree of competition among agents, such as
Leigh Steinberg and Marvin Demoff, and the limited number of active football
players playing professionally, however, there can be no assurance that the
Football Division will be successful in achieving its goals. The Company
believes that the relatively small size of the Football Division will enable it
to offer its clients more personalized attention than its most prominent
competitors and that the combination of the financial backing of the Company and
the interplay of the Marketing Division, will enable WWTS to distinguish itself
and successfully develop the business. There can be no assurance of success in
this regard.
BASKETBALL DIVISION
In August 1996 the Company formed WWBM for the purpose of providing player
agent services to professional basketball players, including, but not limited
to, contract negotiation, professional and personal advisory services, and the
identification and exploitation of endorsement and marketing opportunities.
Initially, WWBM intends to focus on players in the National Basketball
Association ('NBA'), but in the future may expand to other professional leagues
in the United States and in other countries as well. WWBM intends to seek to
identify and establish relationships primarily with those athletes whose
athletic abilities and personal attributes make them, in the opinion of WWBM's
management, most likely to realize the maximum financial benefit from their
athletic careers under WWBM's direction.
NBA player agents are certified by the National Basketball Players
Association ('NBPA') and are regulated by the terms of the Regulations Governing
Player Agents which were adopted by the NBPA pursuant to the authority and duty
conferred upon the NBPA as the exclusive bargaining representative of NBA
players pursuant to Section 9(a) of the National Labor Relations Act. By
regulation, a player agent must be an individual and not a corporation or other
entity. Although the maximum fees which an Agent can charge or collect is 4% of
a player's compensation from the team, if an Agent negotiates a contract where
the player receives only the minimum season's compensation under the Collective
Bargaining Agreement, the Agent is entitled to only a $2,000 fee for such
season. One of the Company's NBA player clients earns the minimum season
compensation. An Agent may also receive a greater percentage, often 15% to 20%,
of a player's compensation from endorsements and other sources of income. As a
rule, an Agent can receive a commission only on monies actually received by the
player and cannot force the player to pre-pay any commissions on monies not yet
received by the player.
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WWBM is owned 80% by the Company and 10% by each of Erik Rudolph and
Michael Goodson who will manage the operations of WWBM as its President and
Executive Vice President, respectively. Mr. Rudolph is an attorney and has been
a certified NBA player agent since 1995. Mr. Goodson was a professional
basketball player for three years. He has played in the Continental Basketball
Association ('CBA'), the United States Basketball League ('USBL') and also
played with the San Antonio Spurs and the Philadelphia 76ers of the NBA. Since
his retirement as a player, Mr. Goodson has worked as a personal manager and
advisor for professional basketball players in collaboration with other NBA
agents, and, most recently, has worked in such capacity with Mr. Rudolph from
January 1995 through August 1996 as co-founders of Impact Sports Management
Group, LLC. Mr. Rudolph is the exclusive player agent for Samaki Walker, the
1996 NBA first round draft choice (number nine overall) of the Dallas Mavericks,
Jason Osborne, a free agent guard signed with the Indiana Pacers of the NBA, and
Shawnelle Scott, for whom Mr. Rudolph negotiated an agreement with the Cleveland
Cavaliers of the NBA.
In connection with the formation of WWBM, Messrs. Rudolph and Goodson
signed five year employment agreements with WWBM, effective September 1, 1996,
pursuant to which Messrs. Rudolph and Goodson assigned their respective rights
and interests in the revenues generated by (i) Messrs. Walker, Osborne and
Scott, and (ii) any players they sign to valid player's representation
agreements during their employment by WWBM.
The financial success of WWBM will be dependent upon factors beyond its
control. As with any endeavor relying upon the achievement of professional
athletes for its success, the revenues generated by WWBM can be negatively
affected by injury or other personal problems impeding the professional progress
of the athletes under contract, a depletion of available positions for its
players due to player competition or a shrinkage in the number of available
franchises, or collective bargaining stand-offs suspending play in a particular
league, all of which would reduce the amount of compensation received by WWBM's
athletes and in turn WWBM's commission. WWBM's ongoing success therefore will
depend in large part on its ability to continue to attract and represent new
players. There can be no guaranty of WWBM's success in this endeavor as there is
a proliferation of Agents entering professional basketball as the sport
increases in global popularity while the number of professional basketball
players with large earnings potential remains relatively small. This increased
competition is compounded by the existence of certain agents, such as David
Falk, who represent a disproportionately high number of the most successful NBA
professionals thereby further diluting the available pool of such talent.
Finally, there can be no guaranty that the marketing and endorsement
opportunities, to which WWBM looks for much of its future profits, will be
available in sufficient quantity and quality to generate substantial revenues.
Although the Company believes WWBM's chances of succeeding are enhanced by the
Company's simultaneous presence in several different sports and the attendant
relationships the Company will seek to develop with individuals and businesses
involved in licensing, marketing and product endorsements, there can be no
assurance of success in this regard.
CONSULTING AGREEMENT
WWTS has entered into a Consulting Agreement with Summit Management Group
('SMG'), a business management firm located in South Carolina. Pursuant to that
agreement, SMG, primarily through its principals James E. Brown and Darnell
Jones, will assist the Team Sports Division in identifying and recruiting
players for whom WWTS and WWBM can act as agent. SMG will receive a fee, based
upon an agreed upon percentage (to be agreed upon on a player by player basis)
of the Company's net revenues generated by athletes referred by SMG, after
deduction of direct expenses relating to such athlete. To date, SMG has not
referred any athletes to the Company who have signed representation agreements
with the Company. There is no minimum number of referrals which SMG is required
to make pursuant to the Consulting Agreement. Consequently, there can be no
assurances that the relationship between SMG and WWTS will be ongoing or that
any additional athletes will be referred to Team Sports by SMG. SMG holds 33,334
shares of Common Stock.
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MARKETING DIVISION
The Company is developing a marketing division to cater to the development
of commercial and marketing opportunities for athletes and entertainers,
including the Company's clients. Initially, Ryan Schinman, who has three years
of experience marketing endorsement opportunities for athletes, will be
primarily responsible for identifying and exploiting marketing opportunities for
athletes and entertainers, whether represented by the Company, its subsidiaries
or by third parties. The Marketing Division will seek to generate opportunities
for non-sport exploitation of all of the Company's clients' names and
personalities by focusing on the lucrative merchandising, endorsement, public
appearance and licensing opportunities available to today's better known
athlete. For these efforts, the Company will receive a stated percentage of any
revenues generated by these opportunities as a commission, customarily ranging
from 10% and 20%. The Marketing Division will also endeavor to arrange marketing
opportunities and public appearances for the athletes of other agencies, in
which event the Company would customarily share up to 50% of the commission.
Currently, the Marketing Division acts as non-exclusive licensing and marketing
agent for the popular music groups 'The FuGees' and '98 Degrees'. The Company
also entered into an exclusive agreement to provide athletes to Gulf Stream Mint
for their commemorative sports card collectors series. To date, the Company has
generated minimal revenues from such operations.
COMPETITION
The Company faces intense competition from an increasingly crowded field of
sports agents. As professional athletes' salaries continue to grow, and the
opportunities for additional revenues from commercial exploitation and
endorsements expand, more agents enter into this field, which has limited
barriers to entry. In spite of the growing number of agents, each major
professional sport is dominated by one or two major agencies. For example, six
Agents, including Leigh Steinberg and Marvin Demoff, represent one third of all
players in the NFL, including those generating the highest salaries. This
concentration of the recognized revenue generating athletes in the hands of a
few agents presents a potential barrier which could prevent WWTS and WWBM from
realizing their growth objectives.
The Marketing Division also faces competition from more established and
experienced agencies such as Nike Sports Management, Steiner Sport Marketing,
Athletes & Artists and Advantage International, which currently provide
endorsement opportunities to athletes. There are no barriers to entry in this
industry and success is dependent upon successfully establishing and maintaining
relationships with persons and entities capable of providing endorsement
opportunities and identifying trends and issues to capitalize on fleeting
popular currents.
The boxers managed by the Company face intense competition from numerous
professional boxers in their respective weight classes both in the boxing ring
as well as for participation in bouts and press coverage. Such individuals also
compete for access to the services of promoters who have sufficient resources to
arrange bouts with large purses. Many boxers have long-term arrangements with
promoters, potentially providing such boxers with an advantage in arranging such
bouts. There can be no assurance that the individuals managed by the Company
will be able to compete successfully on any of these levels. Further, the
Company will be competing with numerous other managers and promoters, including
Don King Productions, Top Rank, Shelly Finkel Management, Cedric Kushner and
Main Events, many of which may have greater financial resources or recognition
in the industry than the Company, in the recruitment of new boxing talent and in
the management of existing professional boxers.
EMPLOYEES
At August 31, 1996, the Company had eight employees. Three of such persons
perform executive functions and five perform clerical or administrative
functions. The Company believes the number of persons currently employed is
adequate to conduct the Company's current level of business operations. Because
of the service nature of the sports management industry, the Company intends to
continue to seek to add new management personnel to expand into additional
sports and to add to the number of players represented by the Company. See
'Management.'
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PROPERTIES
The Company's principal executive offices are currently located in West
Orange, New Jersey on a month-to-month rental basis pursuant to an oral lease
arrangement after the expiration, without renewal, of a prior written lease. The
Company currently occupies approximately 1,000 square feet of space, for which
the Company pays a monthly base rental of approximately $850. The Company leases
its boxing training facility, comprising approximately 2,000 square feet, on a
month-to-month basis, at a base monthly rental of $1,280 pursuant to an oral
lease arrangement after the expiration, without renewal, of a prior written
lease. The Company intends to relocate its executive offices and training
facility after the completion of this Offering. The Company believes it will
be able to locate suitable space at base rental amounts similar to those
currently paid by the Company.
LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company is a party.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------------- --- ------------------------------------------------------
<S> <C> <C>
Marc Roberts....................................... 36 President, Chief Executive Officer, President of
Worldwide Team Sports, Inc. and Director
Roy Roberts........................................ 57 Chief Financial Officer, Director
Allan Cohen, M.D................................... 54 Director
Dan Drykerman...................................... 48 Director
Herbert F. Kozlov.................................. 43 Director
Harvey Silverman................................... 55 Director
Erik Rudolph....................................... 34 President, Worldwide Basketball Management, Inc.
</TABLE>
Marc Roberts has been President and Chief Executive Officer of the Company
since its inception in August 1995. See 'Business Organization' and 'Certain
Transactions.' Mr. Roberts is involved in various real estate, restaurant and
other business ventures as a passive investor, none of which occupies any
significant portion of his business time. Mr. Roberts is also a director of
Linda's Diversified Holdings, Inc.
Roy Roberts has been Chief Financial Officer of the Company since its
inception and as a director of the Company since July 1996. Since 1991, Mr.
Roberts serves as the President of Sparkle Industries, a commercial maintenance
company in New Jersey. He also served, until 1995, as the Chairman and Chief
Operating Office of Palisades Entertainment, Inc., a motion picture film
distributor specializing in special interest, rock and roll and animation films.
Mr. Roberts has been in the movie and video-cassette distribution industry since
1983, specializing in wholesale distribution of entertainment media. Upon the
completion of this Offering, Mr. Roberts intends to devote his full time and
attention to the Company. Mr. Roberts received a Bachelor of Sciences Degree
from New York University in 1960. Mr. Roberts is Marc Roberts' father.
Allan Cohen, M.D. has been a director of the Company since July 1996. Dr.
Cohen is engaged in the practice of medicine, specializing in gastroenterology,
and has been President of Gastroenterology Associates, a professional
corporation, since 1974 and is President of the Medical Staff at Muhlenburg
Hospital in Plainfield, New Jersey. Dr. Cohen is Marc Robert's uncle. Dr. Cohen
received a Bachelor of Arts Degree from Lafayette College in 1963 and an M.D.
Degree from N.Y. Medical College in 1967.
Dan Drykerman has been a director of the Company since July 1996, and as
the Operating Partner of Drykerman Investment Group, an investment partnership
(f/k/a Drykerman Enterprises) since 1976. Mr. Drykerman received a Bachelors
Degree from Wesleyan University in 1969.
Herbert F. Kozlov has served as general counsel to the Company since its
inception, and as a director of the Company since July 1996. Mr. Kozlov has been
a practicing attorney for more than the past fifteen years and is currently a
partner in the firm of Parker Duryee Rosoff & Haft A Professional Corporation.
Mr. Kozlov is also a member of the Board of Directors of HMG Worldwide
Corporation. Mr. Kozlov received a Bachelors Degree in 1974 from Rutgers College
and a J.D. Degree from New York University School of Law in 1977.
Harvey Silverman has been a director of the Company since July 1996. Mr.
Silverman is a Senior Managing Director of Spear Leeds & Kellogg in New York,
where he has been employed since 1963. Mr. Silverman is a Governor on the
American Stock Exchange and a director of Intermarket Clearing Corp. Mr.
Silverman received his Bachelor of Sciences Degree from Brooklyn College in
1967.
Erik Rudolph has served as President of WWBM since September 1, 1996. Mr.
Rudolph has been an attorney in private practice for more than the past five
years and has been a certified NBA Agent since 1995. From January 1995 through
August 1996 Mr. Rudolph was a principal of Impact Sports Management Group,
L.L.C.
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Directors serve until the next annual meeting or until their successors are
elected and qualified. Officers serve at the discretion of the Board of
Directors, subject to rights, if any, under contracts of employment. Directors
will receive no cash compensation for their services to the Company as
directors, but will be reimbursed for expenses actually incurred in connection
with attending meetings of the Board of Directors and are eligible to
participate in the Company's Stock Option Plan.
The General Corporation Law of Delaware permits a corporation through its
Certificate of Incorporation to eliminate the personal liability of its
directors to the corporation or its stockholders for monetary damages for breach
of fiduciary duty of loyalty and care as a director, with certain exceptions.
Exceptions include a breach of the director's duty of loyalty, acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of law, improper declarations of dividends, and transactions from which the
directors derived an improper personal benefit. The Company's Certificate of
Incorporation exonerates its directors from monetary liability to the fullest
extent permitted by this statutory provision.
The Company has been advised that it is the position of the Securities and
Exchange Commission that insofar as the foregoing provision may be invoked to
disclaim liability for damages arising under the Act, that provision is against
public policy as expressed in the Act and is therefore unenforceable.
KEY EMPLOYEES
The Company has executed a five year employment agreement with Ryan
Schinman, a registered contract advisor with the NFL. In addition to acting as
contract advisor for athletes, both alone and in conjunction with outside
contract advisors, Mr. Schinman devotes a significant portion of his time and
attention to developing marketing opportunities for the Company and its
clientele. Mr. Schinman is 24 years old and, prior to joining the Company in
January 1996, was employed for three years by Athletes and Artists Ltd., a
sports and entertainment management agency. Pursuant to his employment
agreement, Mr. Schinman receives a salary of $100,000 per annum plus bonuses in
the discretion of the board of directors.
Michael Goodson will co-manage the operations of WWBM as its Executive Vice
President. Mr. Goodson was a professional basketball player for three years,
having played in the CBA, USBL and also as a member of the San Antonio Spurs and
the Philadelphia 76ers of the NBA. Since his retirement as a player, Mr. Goodson
has worked as a personal manager and advisor for professional basketball players
in collaboration with other NBA Agents, and, most recently, has worked in such
capacity with Erik Rudolph from January 1995 through August 1996 as co-founders
of Impact Sports Management Group, LLC.
EXECUTIVE COMPENSATION
Prior to January 1, 1996, neither Marc Roberts, President, Chief Executive
Officer and Director of the Company, nor any other officer, received
compensation from the Company.
Marc Roberts has entered into a five-year employment agreement with the
Company commencing January 1, 1996 which provides for a base annual salary of
$190,000 with annual minimum guaranteed increases of $25,000. Mr. Roberts shall
also be paid an annual bonus of an amount equal to a minimum of 10% of the
pretax operating income of the Company before income taxes, depreciation and
amortization. Bonuses in excess of that amount shall be determined by the
Company's Board of Directors or its executive compensation committee, if any.
Mr. Roberts shall also be entitled to participate in the Company's incentive
stock option plan and shall be granted a minimum of 30% of the stock options to
be issued by the plan at an exercise price of 110% of the fair value of the
stock, as determined by the Board of Directors, on the date of grant. Payment of
Mr. Roberts' compensation from January 1, 1996 has been deferred until the
completion of this Offering. The agreement provides that upon termination of Mr.
Roberts' employment without cause or upon certain changes in control of the
Company resulting in Mr. Roberts' termination, he will be entitled to receive
any accrued but unpaid amounts due him under the agreement from the period prior
to his termination. In addition, the Company is obligated to pay Mr. Roberts (i)
within five (5) days of notice of termination, an amount equal to sixty percent
(60%) of the present value of the sum of (x) all salary which would have been
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earned but for such termination for a period of 2.99 years commencing on the
date of such termination based on Mr. Roberts' then current salary, plus (y) the
present value of an amount determined by multiplying the amount of incentive
compensation earned by Mr. Roberts for the last fiscal year of the Company
preceding termination by 2.99 ('Severance Compensation') . The remaining forty
percent (40%) of the Severance Compensation shall be paid to Mr. Roberts in
twelve (12) equal monthly installments commencing on the first month after the
month in which he was terminated. In the event of Mr. Roberts' termination for
cause, or if Mr. Roberts voluntarily terminates the agreement within its first
two years, the Company is under no obligation to pay him his compensation beyond
the date of termination. If Mr. Roberts voluntarily resigns from the Company
after the second anniversary of his agreement, he shall be entitled to receive
all of the compensation and benefits he would be afforded if he had been
terminated without cause. Mr. Roberts' agreement provides that Mr. Roberts will
not compete with the Company for a one (1) year period after the termination of
his employment. The Company has obtained a $2,000,000 key person life insurance
policy on Mr. Roberts' life naming the Company as beneficiary.
In connection with the formation of WWBM, Messrs. Rudolph and Goodson
signed five year employment agreements with WWBM, effective September 1, 1996,
pursuant to which Messrs. Rudolph and Goodson assigned their respective rights
and interests in the revenues generated by (i) Samaki Walker, Jason Osborne and
Shawnelle Scott, and (ii) any players Messrs. Rudolph and Goodson sign to valid
player's representation agreements during their employment by WWBM. Messrs.
Rudolph and Goodson shall each receive a salary of $130,000 per annum, and shall
each also receive a signing bonus of $50,000 upon the completion of this
Offering. Messrs. Goodson and Rudolph shall also be entitled to divide, as
annual bonus compensation, 10% of the annual net revenues of WWBM up to $250,000
and 17% of the annual net revenues of WWBM above $250,000. The Company is
committed to fund up to $700,000 of operating expenses of WWBM which will
increase to up to $1,000,000 if WWBM achieves certain performance goals tied to
the successful recruitment of NBA players. The Company has the right to
terminate the agreements if WWBM's aggregate costs of operations exceeds the
above stated funding obligations. In the event of the non-renewal of the
employment agreements, or their termination for any reason, Messrs. Goodson and
Rudolph will (i) be reassigned the rights to the revenues from Messrs. Walker
and Osborne's contracts, and (ii) pay WWBM (a) 50% of the revenues from all
other players signed during the terms of their employment (including Mr. Scott)
until the Company recoups all of the amounts funded by the Company, and (b) 30%
of such revenues thereafter. In the event Messrs. Goodson and Rudolph
voluntarily terminate their employment without cause, however, the revenues from
the contracts of Messrs. Walker and Osborne shall not be reassigned and the
revenue generated thereby will be treated like the other players.
Mr. Schinman has entered into a five-year employment agreement with the
Company commencing January 1, 1996, which provides for an annual base salary of
$100,000. Mr. Schinman shall be entitled to a discretionary bonus to be
determined by the Chief Executive Officer of the Company based on Mr. Schinman's
performance. Mr. Schinman has agreed not to compete with the Company for a
period of six months after the termination of his Agreement.
STOCK OPTION PLAN
On July 1, 1996, the Company adopted the 1996 Stock Option Plan (the 'SOP')
covering 500,000 shares of the Company's Common Stock, $.01 par value, pursuant
to which officers, directors and key employees of the Company are eligible to
receive incentive and/or non-qualified stock options. The SOP will be
administered by the Board of Directors or a committee designated by the Board of
Directors. The selection of participants, allotment of shares, determination of
price and other conditions of purchase of options will be determined by the
Board or committee at its sole discretion. The purpose of the SOP is to attract
and retain persons instrumental to the success of the Company. Incentive stock
options granted under the SOP are exercisable for a period of up to 10 years
from the date of grant at an exercise price which is not less than the fair
market value of the Common Stock on the date of the grant, except that the term
of an incentive stock option granted under the SOP to a stockholder owning more
than 10% of the outstanding Common Stock may not exceed five years and its
exercise price may
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not be less than 110% of the fair market value of the Common Stock on the date
of the grant. To date, no options have been granted under the SOP.
CERTAIN TRANSACTIONS
In August 1995, the Company issued 150 shares of its Common Stock to Marc
Roberts for a purchase price of $150, and 30 shares of its Common Stock to
Herbert Kozlov for a purchase price of $30. In September 1995, the Company
authorized a 10,000 for 1 stock split converting these outstanding 180 shares of
Common Stock to 1,800,000 shares. Also in September 1995, the Company issued to
55 persons an aggregate of 1,234,955 shares, of which 185,835 were issued to
officers and directors of the Company.
Commencing in September 1995 and ending in June 1996, the Company privately
sold an aggregate of 39.8 units ('Units'), resulting in net proceeds to the
Company of $1,990,000, each consisting of (a) a $50,000 promissory note bearing
interest at a rate of 10% per annum payable in full upon the earlier of (i) the
Company's receipt of at least $3,000,000 from an underwritten public offering of
the Company's securities (the 'Initial Public Offering') or (ii) 18 months after
the date of the closing of the unit investment (the 'Placement Closing Date')
and (b) a warrant to purchase 25,000 shares of the Company's Common Stock
exercisable for a period of five years from the Placement Closing Date, provided
that an Initial Public Offering is consummated during such five year exercise
period, at an exercise price per share equal to 120% of the price per share in
the Initial Public Offering. Messrs. Drykerman and Cohen purchased 1.5 and 1
Unit, respectively, through such private placement.
In November 1995, the Company entered into an Asset Acquisition Agreement
with Shannon Briggs Boxing I, L.P. (the 'Briggs Partnership') to acquire all of
the assets and assume all of the liabilities of the Briggs Partnership. Pursuant
to the Asset Acquisition Agreement, the Briggs Partnership received 500,000
shares of Common Stock. The number of shares of Common Stock was determined
based upon management's estimation of the value to the Company of the management
rights to Mr. Briggs relative to the Company's other three boxers. The shares of
Common Stock were distributed on a pro rata basis to the limited partners of the
Briggs Partnership upon the dissolution of such partnership. Marc Roberts was
the principal of the general partner of the Briggs Partnership, S.B. Champion
Management, Inc. In accordance with the terms of the Asset Acquisition
Agreement, the then existing management agreement with Shannon Briggs, pursuant
to which the Briggs Partnership was entitled to participate in the fees
generated by the management of Shannon Briggs, was terminated, and a new
management agreement was entered into between the Company and Shannon Briggs.
In December 1995, the Company issued 184,966 shares to Marc Roberts in
exchange for all of the outstanding shares of Merciless Management Inc., The
Natural Management, Inc., S.B. Championship Management, Inc., Marc Roberts Inc.
and Marc Roberts Boxing Inc. Subsequent thereto, each of the management
agreements between such corporations and Ray Mercer, Charles Murray and Tracy
Patterson were terminated and such boxers executed new management agreements
with the Company. In July 1996, each of those corporations was merged into the
Company.
From time to time Marc Roberts has made loans and advances to the Company
and the Company has advanced funds to Mr. Roberts. In June 1996, Mr. Roberts
repaid $200,000 of amounts due to the Company, thereby eliminating the balance
due from Mr. Roberts. The Company does not intend to lend to, or borrow from,
its officers, directors or principal stockholders in the future.
Commencing in November 1995, the Company paid $4,500 per month to Marc
Roberts for the use of a portion of Mr. Roberts' personal residence to house
certain of the Company's boxers and other related personnel, such as strength
coaches, from time to time and to offset the costs and expenses of food and
other living expenses of such persons. In April 1996 such monthly payment was
increased to $5,700.
The Company believes the terms and conditions of the foregoing transactions
are no less favorable to the Company than those available from unaffiliated
parties. Future transactions between the Company and any affiliate will be on
terms and conditions approved by this Board of Directors.
Pursuant to a Shareholders Agreement among Goodson, Rudolph and the
Company, upon the occurrence of certain events, including the termination of the
employment of Messrs. Rudolph and
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Goodson, the shares of WWBM held by Messrs. Rudolph and Goodson (representing
20% of the outstanding shares of WWBM) will be exchanged for up to an aggregate
of 300,000 shares of Common Stock of the Company, depending upon the time of
such exchange and the financial condition of WWBM as of the time of such
exchange.
Marc Roberts was the President and a director of Triple Threat Enterprises,
Inc. ('Triple Threat'), and Harvey Silverman and Allan Cohen, directors of the
Company, were also directors of Triple Threat. In November 1990, Triple Threat
completed an initial public offering of its common stock. At the time of Triple
Threat's initial public offering, Triple Threat was engaged in the business of
managing three boxers, two of whom were Ray Mercer and Charles Murray. In
February 1991, Mr. Roberts resigned as President and Chief Executive Officer as
a result of a difference of opinion with certain members of management and
controlling stockholders of such company. Mr. Roberts, Mr. Silverman and Dr.
Cohen subsequently resigned as directors of such company; Messrs. Roberts and
Cohen so resigned in 1991, and Mr. Silverman in 1992. Triple Threat subsequently
changed its name to Capital Gaming International Inc.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially 5% or more of
the outstanding shares of the Company's Common Stock, each director, and all
officers and directors of the Company as a group, as of the date of this
Prospectus and their percentage ownership of Common Stock after completion of
this offering:
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
NUMBER OF SHARES COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED BENEFICIALLY OWNED BENEFICIALLY OWNED
NAME AND ADDRESS AS OF JUNE 30, 1996 AS OF JUNE 30, 1996 (2) AFTER THE OFFERING (2)
- ----------------------------------- ------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Marc Roberts (1)................... 1,684,966 44.9% 32%
Roy Roberts (1).................... 83,334 2.2% 1.6%
Allan Cohen, M.D. ................. 41,667(3) 1.1% *
41 Christie Drive
Warren, NJ 07059
Dan Drykerman ..................... 40,000(4) 1.1% *
2555 N.W. 59th Street
Boca Raton, FL. 33496
Herbert F. Kozlov ................. 300,000(5) 8.0% 5.7%
529 Fifth Avenue
New York, NY 10017
Harvey Silverman .................. 83,334 2.2% 1.6%
120 Broadway
New York, NY 10271
All officers and directors as a
group (6 persons)................ 2,233,301(3)(4)(5) 58.5% 42.1%
</TABLE>
- ------------
* Less than 1%
(1) The address of the beneficial owner is that of the Company's principal
executive office.
(2) Based on 3,753,255 shares outstanding prior to, and 5,253,255 shares
outstanding upon consummation of Offering.
(3) Includes 25,000 shares which may be acquired upon the exercise of currently
exercisable warrants.
(4) Includes 37,500 shares which may be acquired upon the exercise of currently
exercisable warrants.
(5) Does not include 50,000 shares and warrants to purchase an additional 25,000
shares held by members of a law firm of which Mr. Kozlov is a member. Mr.
Kozlov disclaims beneficial ownership of such shares.
Marc Roberts and Herbert Kozlov may each be deemed a 'promoter' of the
Company.
34
<PAGE>
<PAGE>
DESCRIPTION OF SECURITIES
UNITS
The Offering consists of Units, each comprised of one share of Common
Stock, $.01 par value, and one Redeemable Warrant. Each Redeemable Warrant
entitles the holder to purchase one share of Common Stock. The Common Stock and
Redeemable Warrants are transferable separately from and after the date of this
Prospectus. The following are brief descriptions of the Securities. The rights
of the stockholders of the Company are established by the Company's Certificate
of Incorporation, its By-laws and the law of the State of Delaware. The
descriptions set forth below are intended as summaries only and are qualified in
their entirety by reference to the Company's Certificate of Incorporation, its
By-laws and relevant Delaware law.
COMMON STOCK
GENERAL
The Company is authorized to issue 20,000,000 shares of Common Stock, $.01
par value. As of the date hereof, 3,753,255 shares of Common Stock were
outstanding held by approximately 55 shareholders. Immediately following the
Offering (assuming the Underwriter's over-allotment option is not exercised)
5,253,255 shares of Common Stock will be issued and outstanding (excluding
shares of Common Stock underlying outstanding but unexercised Warrants.
Holders of Common Stock have one vote for each share held of record on all
matters to be voted on by the stockholders. The Common Stock does not have
cumulative voting rights. Holders of Common Stock have equal rights to receive
dividends when, as and if declared by the Board of Directors, out of funds
legally available therefor.
Holders of Common Stock are entitled upon liquidation of the Company to
share ratably in the net assets available for distribution, subject to the
rights, if any, of holders of any preferred stock then authorized and
out-standing. Shares of Common Stock are not redeemable and have no preemptive
or similar rights. The shares of Common Stock offered hereby will upon issuance
be fully paid and nonassessable.
DIVIDEND POLICY
The Company does not anticipate paying cash dividends on its Common Stock
in the foreseeable future.
POTENTIAL FUTURE SALES OF COMMON STOCK PURSUANT TO RULE 144
All of the shares of Common Stock presently outstanding are 'restricted
securities' as that term is defined in Rule 144 promulgated under the Act and
may be sold only in compliance with such Rule, pursuant to registration under
the Act or pursuant to exemption therefrom. Generally, under Rule 144, each
person holding restricted securities for a period of two years may, every three
months after such two-year holding period, sell in ordinary brokerage
transactions or to market makers an amount of shares equal to the greater of one
percent of the Company's then outstanding Common Stock or the average weekly
trading volume during the four weeks prior to the proposed sale. This limitation
on the number of shares which may be sold under the Rule does not apply to
restricted securities sold for the account of a person who is not and has not
been an affiliate of the Company during the three months prior to the proposed
sale and who has beneficially owned the securities for at least three years. The
outstanding shares will be eligible for sale under Rule 144 commencing September
1997. Further, the officers and directors of the Company have agreed not to
sell, assign or transfer any such shares for a period of 18 months from the date
of this Prospectus without the prior written consent of the Underwriter.
35
<PAGE>
<PAGE>
REDEEMABLE WARRANTS
The Redeemable Warrants will be issued pursuant to a warrant agreement (the
'Warrant Agreement') among the Company, the Underwriter and American Stock
Transfer & Trust Company, New York, New York, as warrant agent, and will be
evidenced by Redeemable Warrant certificates in registered form. The Redeemable
Warrants provide for adjustment of the exercise price and for a change in the
number of shares issuable upon exercise to protect holders against dilution in
the event of a stock dividend, stock split, combination or reclassification of
the Common Stock.
Each Redeemable Warrant entitles the registered holder to purchase one
share of Common Stock at an exercise price of $7.20 at any time until 5:00 P.M.,
New York City time, on the fifth anniversary of the date of this Prospectus. The
Redeemable Warrants are redeemable by the Company on 30 days' prior written
notice at any time subsequent to one year from the date of this Prospectus at a
redemption price of $.05 per Redeemable Warrant provided the last sale price of
the Common Stock for any 20 consecutive trading days ending within 15 days of
the notice of redemption averages in excess of $9 per share. 'Closing price'
shall mean the closing bid price if listed in the over-the-counter market or the
closing sale price if listed on the National Market System of NASDAQ or a
national securities exchange. All Redeemable Warrants must be redeemed if any
are redeemed.
The exercise prices of the Warrants were determined by negotiation between
the Company and the Underwriter and should not be construed to be predictive of
or to imply that any price increases in the Company's securities will occur.
A Redeemable Warrant may be exercised upon surrender of the Redeemable
Warrant certificate on or prior to its expiration date (or earlier redemption
date) at the offices of American Stock Transfer & Trust Company, New York, New
York, the warrant agent with the form of 'Election to Purchase' on the reverse
side of the Redeemable Warrant certificate completed and executed as indicated,
accompanied by payment of the full exercise price (by certified or bank check
payable to the order of the Company for the number of shares with respect to
which the Redeemable Warrant is being exercised. Shares issued upon exercise of
Redeemable Warrants and payment in accordance with the terms of the Redeemable
Warrants will be fully paid and nonassessable.
The Redeemable Warrants do not confer upon the Redeemable Warrant holder
any voting or other rights of a stockholder of the Company. Upon notice to the
Redeemable Warrant holders, the Company has the right to reduce the exercise
price or extend the expiration date of the Redeemable Warrants. In the event the
Company should determine to temporarily reduce the exercise price of the
Redeemable Warrants, it will comply with Rule 13E-4 of the Securities Exchange
Act of 1934 and related Schedule 13E-4 applicable to issuer tender offers.
WARRANTS
In connection with a private placement commenced in September 1995 through
July 1996 of an aggregate of $1,990,000 of promissory notes, the Company issued
warrants to purchase up to 995,000 shares of Common Stock at an exercise price
of $7.20 at any time commencing on the date hereof and prior to the fifth
anniversary of their issuance. The Warrants provide for adjustment of the
exercise price and for a change in the number of shares issuable upon exercise
to protect holders against dilution in the event of a stock dividend, stock
split, combination or reclassification of the Common Stock. The Warrants do not
confer upon the Warrant holder any voting or other rights of a stockholder of
the Company. The holders of these warrants were not granted any registration
rights relating to the warrants or the shares underlying such warrants.
TRANSFER AGENT AND WARRANT AGENT
American Stock Transfer & Trust Company, New York, New York will serve as
transfer agent for the Common Stock and warrant agent for the Warrants.
36
<PAGE>
<PAGE>
PREFERRED STOCK
The Certificate of Incorporation of the Company authorizes the issuance of
5,000 shares of preferred stock. The Board of Directors, within the limitations
and restrictions contained in the Certificate of Incorporation and without
further action by the Company's stockholders, has the authority to issue shares
of preferred stock from time to time in one or more series and to fix the number
of shares and the relative rights, conversion rights, voting rights, and terms
of redemption, liquidation preferences and any other preferences, special rights
and qualifications of any such series. Any issuance of preferred stock could,
under certain circumstances, have the effect of delaying or preventing a change
in control of the Company and may adversely affect the rights of holder, of
Common Stock. The Company has no present plans to issue any shares of preferred
stock.
DELAWARE ANTI-TAKEOVER STATUTE
The Company is subject to Section 203 of the Delaware General Corporation
Law ('Section 203') which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any 'business combination' with any 'interested
stockholder' for a period of three years following the date that such
stockholder became an interested stockholder, unless: (i) prior to such date,
the Board of Directors of the corporation, approved either the business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder; (ii) upon consummation of the transaction which resulted
in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned by persons who
are directors and also officers and by employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer; or
(iii) on or subsequent to such date, the business combination is approved by the
Board of Directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least
66-2/3% of the outstanding voting stock which is not owned by the interested
stockholder. Under Section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of one of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors and which transaction is approved or not opposed by the majority of
the board of directors then in office.
Section 203 generally defines a business combination to include: (i) any
merger or consolidation involving the corporation and the interested
stockholders; (ii) any sale, transfer, pledge or other disposition of 10% or
more of the assets of the corporation to the interested stockholder; (iii)
subject to certain exceptions, any transaction which results in the issuance or
transfer by the corporation of any stock of the corporation to the interested
stockholder; (iv) any transaction involving the corporation which has the effect
of increasing the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder; or (v) the receipt
by the interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
UNDERWRITING
William Scott & Company, L.L.C., the Underwriter, has agreed, subject to
the terms and conditions of the Underwriting Agreement, to purchase 1,500,000
Units offered hereby from the Company on a 'firm commitment' basis, if any are
purchased.
The Underwriter has advised the Company that it proposes to offer the Units
to the public at the public offering price set forth on the cover page of this
Prospectus and that it may allow to selected dealers who are members of the
National Association of Securities Dealers, Inc. concessions of not in excess of
$ per Unit, of which not more than $ may be reallowed to certain other
dealers. After
37
<PAGE>
<PAGE>
the initial public offering, the public offering price, concessions and
reallowances may be changed by the Underwriter.
The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriter against certain liabilities in connection with
this offering, including liabilities under the Act.
The Company has agreed to pay the Underwriter a non-accountable expense
allowance equal to 2% of the aggregate offering price of the Securities offered
hereby (including any Units purchased pursuant to the over-allotment option). To
date, the Company has paid $25,000 toward such fees.
The Company has granted an option to the Underwriter, exercisable during
the 45-day period from the date of this Prospectus, to purchase up to 225,000
additional Units at the public offering price, less underwriting discounts and
commissions, solely to cover over-allotments in the sale of the Units.
The Underwriter has informed the Company that any sales of the Securities
offered hereby to be made to discretionary accounts will not exceed 2% of the
total number of Securities offered.
The Company has agreed to sell to the Underwriter or its designees, for
nominal consideration, the Unit Purchase Option to purchase up to 150,000 Units,
except that the Redeemable Warrants are not subject to redemption by the
Company. The Unit Purchase Option will be exercisable during the four-year
period commencing one year from the date of this Prospectus at an exercise price
of $7.20 per Unit, subject to adjustment in certain events to protect against
dilution, and are not transferable for a period of one year from the date of
this Prospectus except to officers of the Underwriter. The Company has agreed to
register during the four-year period commencing one year from the date of this
Prospectus, on two separate occasions upon request of the holder(s) of a
majority of the Unit Purchase Option, the securities issuable upon exercise
thereof under the Act, the initial such registration to be at the Company's
expense and the second at the expense of the holders. The Company has also
granted certain 'piggyback' registration rights to holders of the Unit Purchase
Option.
For the life of the Unit Purchase Option, the holders are given, at nominal
cost, the opportunity to profit from a rise in the market price of the Company's
securities with a resulting dilution in the interest of other stockholders.
Further, the holders may be expected to exercise the Unit Purchase Option at a
time when the Company would in all likelihood be able to obtain equity capital
on terms more favorable then those provided in the Unit Purchase Option.
The Company and its principal stockholders have granted the Underwriter a
preferential right of first refusal for three years from the date of the
Prospectus to underwrite certain subsequent public or private offerings of the
Company's securities registered under the Act.
The Company has agreed to enter into a two-year agreement providing for the
payment of a fee to the Underwriter ranging from 2% to 5% of the consideration
paid, in the event the Underwriter is responsible for a merger or other
acquisition transaction to which the Company is a party. In addition, the
Company shall retain the Underwriter as management and financial consultants for
such two-year period commencing as of the date of this Prospectus at an
aggregate fee of $50,000, of which $25,000 shall be payable on the closing of
this offering and the balance of $25,000 one (1) year thereafter.
The Company has agreed that for a three-year period commencing on the date
of this Prospectus, the Company will nominate a designee of the Underwriter to
serve as a member of the Board of Directors of the Company and that such
designee, if elected, shall be appointed as a member of the audit committee and
the compensation committee of the Board of Directors.
The Company's officers, directors and 5% stockholders have agreed not to
sell, transfer or assign any of their shares of Common Stock for a period of 18
months from the date of this Prospectus without the prior written consent of the
Underwriter.
The initial public offering price of the Units and the exercise prices and
other terms of the Warrants have been determined by negotiation between the
Company and the Underwriter. Factors considered in determining the offering
price of the Units and the exercise prices of the Redeemable Warrants include
the business in which the Company engages, the Company's financial condition, an
assessment of management, the general condition of the securities markets and
the demand for similar securities of comparable companies.
38
<PAGE>
<PAGE>
The Company has engaged the Underwriter, on a non-exclusive basis, as its
agent for the solicitation of the exercise of the Redeemable Warrants. To the
extent not inconsistent with the guidelines of the NASD and the rules and
regulations of the Commission, the Company has agreed to pay the Underwriter for
bona fide services rendered a commission equal to 7% of the exercise price for
each Redeemable Warrant exercised more than one year after the date of this
Prospectus if the exercise was solicited by the Underwriter and the Underwriter
is specifically identified in writing by the holder of the Redeemable Warrant as
the soliciting broker. In addition to soliciting, either orally or in writing,
the exercise of the Redeemable Warrants, such services may also include
disseminating information, either orally or in writing, to Warrantholders about
the Company or the market for the Company's securities, and assisting in the
processing of the exercise of Redeemable Warrants. No compensation will be paid
to the Underwriter in connection with the exercise of Redeemable Warrants if the
market price of the underlying shares of Common Stock is lower than the exercise
price, the Redeemable Warrants are held in a discretionary account, the
Redeemable Warrants are exercised in an unsolicited transaction or the
arrangement to pay the commission is not disclosed in the prospectus provided to
Warrantholders at the time of exercise. In addition, unless granted an exemption
by the Commission from Rule 10b under the Exchange Act, while it is soliciting
exercise of the Redeemable Warrants, the Underwriter will be prohibited from
engaging in any market making activities or solicited brokerage activities with
regard to the Company's securities unless it has waived its right to receive a
fee for the exercise of the Redeemable Warrants.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by Parker Duryee Rosoff & Haft A Professional Corporation, New York, New
York. Certain legal matters will be passed upon for the Underwriter by
McLaughlin & Stern, LLP, New York, New York. Herbert F. Kozlov, a member of
Parker Duryee Rosoff & Haft, beneficially owns 300,000 shares of Common Stock.
Other members of such firm own an aggregate of 50,000 shares of Common Stock, as
well as five year warrants to purchase an additional 25,000 shares of Common
Stock at an exercise price of $6.00 per share. Mr. Kozlov also serves as
Secretary and a director of the Company.
EXPERTS
The financial statements (except as they apply to unaudited periods) and
schedules of the Company included in this Prospectus and Registration Statement
have been audited by Rosenberg Rich Baker Berman & Company, independent
certified public accountants, as stated in their reports, which call attention
to an uncertainty as to the Company's ability to continue as a going concern,
appearing elsewhere herein and therein and are included in reliance upon such
reports given upon the authority of that firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement on Form SB-2 under the Act, covering
the securities offered by this Prospectus. For further information with respect
to the Company and the securities offered, reference is made to the Registration
Statement and the exhibits filed as part thereof, which may be examined without
charge and copies of such material can be obtained at prescribed rates from the
Public Reference Section maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, Statements contained in this Prospectus as to the
contents of any contract or other document referred to are not necessarily
complete. In each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference.
39
<PAGE>
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report............................................................................... F-2
Consolidated Balance Sheets as of June 30, 1996 (Unaudited) and December 31, 1995.......................... F-3
Consolidated Statements of Operations for the six months ended June 30, 1996 and 1995 (Unaudited) and for
the years ended December 31, 1995 and 1994............................................................... F-4
Consolidated Statements of Stockholders' Equity (Capital Deficiency) as of June 30, 1996 (Unaudited) and
December 31, 1995 and 1994............................................................................... F-5
Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and 1995 (Unaudited) and for
the years ended December 31, 1995 and 1994............................................................... F-6
Notes to the Consolidated Financial Statements............................................................. F-7
</TABLE>
F-1
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
29 Northfield Avenue
West Orange, NJ 07052
We have audited the accompanying balance sheet of Worldwide Entertainment &
Sports Corp. as of December 31, 1995 and the related statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1995 and
1994. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Worldwide Entertainment &
Sports Corp. as of December 31, 1995 and the results of its operations and its
cash flows for the years then ended December 31, 1995 and 1994 in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A(2) to the
financial statements, the Company has suffered losses since inception and has a
capital deficiency and a working capital deficiency that raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note A(2). The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Maplewood, New Jersey
February 5, 1996
Except for Notes A(2), C, F, H and K, which are dated July 17, 1996 and Note L
which is dated September 1, 1996
F-2
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash........................................................................... $ 435,974 $ 547,136
Accounts receivable............................................................ 3,820 --
Due from related party......................................................... 2,906 --
Due from boxers................................................................ 84,319 151,358
Other current assets........................................................... -- 225
----------- ------------
527,019 698,719
----------- ------------
Property and equipment -- at cost (less accumulated depreciation)................... 66,734 30,161
----------- ------------
Other assets:
Cash surrender value of life insurance......................................... 2,313 2,313
Deferred costs of securities registration...................................... 101,821 47,148
Organization costs (net of accumulated amortization)........................... 670 1,004
Other assets................................................................... 16,325 5,325
----------- ------------
121,129 55,790
----------- ------------
$ 714,882 $ 784,670
----------- ------------
----------- ------------
LIABILITIES
Current liabilities:
Current portion of long-term debt.............................................. $ 7,399 $ --
Notes and loans payable:
Other..................................................................... 10,900 10,900
Promissory notes.......................................................... 1,890,000 1,165,000
Escrow funds payable...................................................... 57,906 22,906
Due to related party........................................................... -- 6,159
Accrued expenses............................................................... 134,259 355,291
Accrued interest............................................................... 96,618 24,570
Income taxes payable........................................................... 50 300
----------- ------------
2,197,132 1,585,126
Long-term debt net of current portion.......................................... 22,000 --
----------- ------------
$ 2,219,132 $1,585,126
----------- ------------
Stockholders' equity (capital deficiency):
Preferred stock, $.01 par value; authorized 5,000 shares; no shares issued..... -- --
Common stock, $.01 par value; authorized 20,000,000 shares; 3,753,255 and
3,719,921 shares issued, respectively......................................... 37,533 37,200
Additional paid-in capital..................................................... 78,803 78,803
Accumulated deficit............................................................ (1,607,903) (904,109)
Demand note receivable on private issuance of Common Stock..................... (12,683) (12,350)
----------- ------------
(1,504,250) (800,456)
----------- ------------
$ 714,882 $ 784,670
----------- ------------
----------- ------------
</TABLE>
See the Notes to the Consolidated Financial Statements.
F-3
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------------------- --------------------------
1996 1995 1995 1994
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Purse income............................................. $ 122,187 $ 35,650 $ 75,794 $ 5,200
Commission income........................................ 22,791 -- 21,600 --
Endorsement income....................................... 11,050 -- -- --
Consulting income........................................ -- -- -- 15,000
Ticket revenues.......................................... -- 150,996 144,227 --
Merchandise revenues..................................... 1,008 -- -- --
----------- ----------- ----------- -----------
157,036 186,646 241,621 20,200
----------- ----------- ----------- -----------
Training and related expenses............................ 52,573 127,343 223,413 101,492
Promotion and other operating expenses................... 735,146 212,960 645,124 295,208
Other expenses........................................... -- -- 208,500 --
----------- ----------- ----------- -----------
787,719 340,303 1,077,037 396,700
----------- ----------- ----------- -----------
Loss from operations..................................... (630,683) (153,657) (835,416) (376,500)
----------- ----------- ----------- -----------
Other income and expenses:
Interest and dividend income........................ 446 -- 323 --
Loss on sale of marketable securities............... -- -- -- (4,590)
Interest expense.................................... (72,807) (3) (33,573) (521)
----------- ----------- ----------- -----------
(72,361) (3) (33,250) (5,111)
----------- ----------- ----------- -----------
Loss before income taxes................................. (703,044) (153,660) (868,666) (381,611)
Income taxes............................................. 750 149 637 175
----------- ----------- ----------- -----------
Net Loss................................................. $ (703,794) $ (153,809) $ (869,303) $ (381,786)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Loss Per Share........................................... $ (0.18) $ (0.05) $ (0.27) $ (0.12)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted Average of Common Shares Outstanding............ 3,807,871 3,122,905 3,222,176 3,122,905
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See the Notes to the Consolidated Financial Statements.
F-4
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(CAPITAL DEFICIENCY) FOR THE SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED) AND THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
DEMAND NOTE
PREFERRED STOCK COMMON STOCK ADDITIONAL RECEIVABLE
--------------- ------------------- PREDECESSORS' PAID-IN ACCUMULATED ON COMMON
SHARES AMOUNT SHARES AMOUNT CAPITAL CAPITAL DEFICIT STOCK
------ ------ --------- ------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance -- January 1, 1994.... 0 $ 0 0 $ 0 $ 168,500 $ 0 $ (62,870 ) $ 0
Capital contributions......... -- -- -- -- 125,001 -- -- --
Net loss for the year ended
December 31, 1994........... -- -- -- -- -- -- (381,786 ) --
Balance -- December 31,
1994........................ 0 0 0 0 293,501 0 (444,656 ) 0
Capital contributions......... -- -- -- -- 220,002 -- -- --
Issuance of Common Stock to
original holders............ -- -- 180 180 -- (180 ) -- --
Stock split; 10,000 for 1..... -- -- 1,799,820 17,820 -- (17,820 ) -- --
Issuance of Common Stock to
original holders............ -- -- 1,234,955 12,350 -- -- -- (12,350)
Issuance of Common Stock to
acquire Shannon Briggs I,
L.P......................... -- -- 500,000 5,000 (513,503) 508,503 -- --
Issuance of Common Stock to
acquire subsidiaries........ -- -- 184,966 1,850 -- (1,850 ) -- --
Reclassification of
Accumulated Deficit from S
corporation subsidiaries.... -- -- -- -- -- (409,850 ) 409,850 --
Net loss for the year ended
December 31, 1995........... -- -- -- -- -- -- (869,303 ) --
------ ------ --------- ------- ------------ ---------- ----------- -----------
Balance -- December 31,
1995........................ 0 0 3,719,921 37,200 0 78,803 (904,109 ) (12,350)
Issuance of common stock...... -- -- 33,334 333 -- -- -- (333)
Net loss for the six months
ended June 30, 1996
(unaudited)................. -- -- -- -- -- -- (703,794 ) --
------ ------ --------- ------- ------------ ---------- ----------- -----------
Balance -- June 30, 1996
(unaudited)................. 0 $ 0 3,753,255 $37,533 $ 0 $ 78,803 $(1,607,903) $ (12,683)
------ ------ --------- ------- ------------ ---------- ----------- -----------
------ ------ --------- ------- ------------ ---------- ----------- -----------
</TABLE>
See the Notes to the Consolidated Financial Statements.
F-5
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------------------- ------------------------
1996 1995 1995 1994
----------- ----------- ---------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Cash flows from Operating activities:
Net loss............................................ $ (703,794) $ (153,809) $ (869,303) $ (381,786)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization.................. 6,956 3,333 7,272 7,837
Loss on sale of marketable securities.......... -- -- -- 4,590
Cash value of life insurance................... -- -- (1,226) (1,087)
Changes in operating assets and liabilities:
Increase accounts receivable................... (3,820) -- -- --
(Increase) decrease due from boxers and
trainers..................................... 67,039 (44,754) (136,379) (14,979)
(Increase) decrease other current assets....... 225 808 (3,385) (258)
Increase other assets.......................... (11,000) -- -- --
Increase escrow funds payable.................. 35,000 20,750 22,906 --
Increase (decrease) accrued expenses........... (221,032) (15,214) 291,057 40,795
Increase accrued interest...................... 72,048 -- 24,570 --
Increase (decrease) income taxes payable....... (250) (38) 75 (7,744)
----------- ----------- ---------- ----------
Net cash used in operating activities:................... (758,628) (188,924) (664,413) (352,632)
----------- ----------- ---------- ----------
Cash flows from investing activities:
Proceeds from sale of marketable securities......... -- -- -- 112,911
Purchase of marketable securities................... -- -- -- (9,517)
Purchase of property and equipment.................. (43,195) -- (13,161) (705)
Advances to stockholder............................. (9,065) 117,789 (100,046) 117,348
----------- ----------- ---------- ----------
Net cash provided by (used in) investing activities...... (52,260) 117,789 (113,207) 220,037
----------- ----------- ---------- ----------
Cash flows from financing activities:
Deferred costs in connection with proposed public
offering.......................................... (54,673) -- (47,148) --
Proceeds from notes payable and debt................ 756,000 -- 1,171,000 --
Repayment of notes payable and debt................. (1,601) (5,000) (5,000) (7,339)
Capital contributions............................... -- 60,000 220,002 125,001
----------- ----------- ---------- ----------
Net cash provided by financing activities:............... 699,726 55,000 1,338,854 117,662
Net increase (decrease) in cash.......................... (111,162) (16,135) 561,234 (14,933)
----------- ----------- ---------- ----------
Cash (overdraft) at beginning of year.................... 547,136 (14,098) (14,098) 835
----------- ----------- ---------- ----------
Cash (overdraft) at end of year.......................... $ 435,974 $ (30,233) $ 547,136 $ (14,098)
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes................................... $ 1,000 $ 187 $ 253 $ 521
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
Interest....................................... $ 758 $ 3 $ 9,159 $ 7,957
----------- ----------- ---------- ----------
----------- ----------- ---------- ----------
</TABLE>
See the Notes to the Consolidated Financial Statements.
F-6
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -- NATURE OF ORGANIZATION AND BASIS OF PRESENTATION
1. NATURE OF ORGANIZATION
Worldwide Entertainment & Sports Corp. (the 'Company') was incorporated in
Delaware on August 15, 1995, for the purpose of providing management, agency,
and marketing services to professional athletes and entertainers. To date, the
Company has provided such services principally to boxers.
The accompanying unaudited financial statements as of June 30, 1996 and for
the six months ended June 30, 1996 and 1995 have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and note disclosures normally included in
financial statements prepared in conformity with generally accepted accounting
principles have been condensed or omitted. In the opinion of the Company, all
adjustments consisting of only normal recurring adjustments, necesssary to
present fairly the financial position, results of operations and changes in cash
flows for the periods presented have been made.
2. BASIS OF PRESENTATION
On December 1, 1995, the Company acquired all of the shares of Marc
Roberts, Inc., Marc Roberts Boxing, Inc., Shannon Briggs Champion Management,
Inc., Merciless Management Inc. and The Natural Management Inc. in exchange for
184,966 shares of Common Stock and acquired the business operations of Shannon
Briggs I, L.P. in exchange for 500,000 shares of Common Stock. The business
combination has been accounted for as a pooling of interests, and, accordingly,
the consolidated financial statements include the combined results of operations
of such companies for the periods presented as though the business combination
were effective as of January 1, 1994. Intercompany balances and transactions
have been eliminated in consolidation. Included are the following results of
operations of such companies:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------- ----------------------
NET NET NET INCOME
REVENUES NET LOSS REVENUES (LOSS)
-------- --------- -------- ----------
<S> <C> <C> <C> <C>
The Company.......................................... $ 58,694 $(524,825) $ -- $ --
Shannon Briggs I, L.P................................ 89,020 (201,520) 5,200 (217,659 )
Marc Roberts, Inc.................................... 93,907 (64,567) 15,000 14,051
Marc Roberts Boxing, Inc............................. -- (30,912) -- (45,110 )
Shannon Briggs Champion Management Inc............... -- (47,229) -- (133,068 )
Merciless Management Inc............................. -- (125) -- --
The Natural Management Inc........................... -- (125) -- --
-------- --------- -------- ----------
Consolidated Amounts................................. $241,621 $(869,303) $ 20,200 $(381,786 )
-------- --------- -------- ----------
-------- --------- -------- ----------
</TABLE>
The Company has incurred substantial losses since inception and, as of June
30, 1996 has a working capital deficiency of $1,504,250. In order to continue
its operations as a going concern, the Company must obtain additional financing
which it is endeavoring to do my means of a public offering of securities. In
addition, the Company's success will depend on the ability of one or more of the
boxers to attain championship status (or in the case of the two heavyweight
boxers, top contender status) and consequently engage in matches with
substantially higher purses. Unless and until such status is achieved, the
boxers' purses will be insufficient for the Company to cover its annual
operating costs. There is no assurance that the Company can complete its
proposed securities offering or that it can obtain adequate additional financing
from other sources or that profitable operations can be attained. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
F-7
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE A -- NATURE OF ORGANIZATION AND BASIS OF PRESENTATION -- (CONTINUED)
The Company is proposing an initial public offering of its securities,
pursuant to which it expects to offer up to 1,500,000 units, each comprising one
share of common stock of the Company and one warrant. Each warrant entitles the
holder to purchase one share of common stock at 120% of the public offering
price of the units for five years commencing one year after the effective date.
Pursuant to a private placement completed in July 1996, the Company issued
five year warrants to purchase up to 995,000 shares of common stock at an
exercise price of $7.20.
Upon consummation of the initial public offering, the underwriter will
receive for nominal consideration, an option to purchase 10% of the number of
units being underwritten for the account of the Company at a price of 1 mil per
warrant. The warrants shall be exercisable during the four year period
commencing one year after the effective date at 120% above the public offering
price.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. DEFERRED COSTS OF SECURITIES REGISTRATION
Deferred offering costs consist of expenses incurred to date with respect
to a public offering which the Company is pursuing. These costs will be charged
against the proceeds of such offering or, in the event the offering is
unsuccessful, against operations in the period in which the offering is aborted.
The Company has incurred $101,821 of costs in connection with the proposed
offering through June 30, 1996, and expects to incur substantial additional
costs in this connection.
2. PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation is computed using
primarily accelerated methods based upon the estimated useful lives of the
assets which range from 5 to 7 years. Repairs and maintenance which do not
extend the useful lives of the related assets are expensed as incurred.
3. ORGANIZATION COSTS
Organization costs of $3,342 are amortized over sixty months on a
straight-line basis. Total amortization expense for the six months ended June
30, 1996 and 1995 (unaudited), and for the year ended December 31, 1995 and
1994, was $334, $334, $668 and $668, respectively.
4. LOSS PER SHARE
Net loss per share is computed based on the weighted average number of
shares outstanding during the period, recognized as a simple capital structure.
5. REVENUE RECOGNITION
Purse revenue is recognized upon completion of a fight, as a percentage of
the boxer's purse. If a fight is canceled, any monies that may have been
received in advance will be recognized as income at that time. Ticket and
commission revenues are recognized upon the commencement of a scheduled fight.
6. USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
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
F-8
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
7. INCOME TAXES
The Company provides Federal and state income taxes in accordance with
Statement of Financial Accounting Standards No. 109, 'Accounting for Income
Taxes' (SFAS 109).
8. STOCK-BASED COMPENSATION
The Financial Accounting Standards Board has issued a new standard,
'Accounting for Stock-Based Compensation' ('SFAS 123'). SFAS 123 requires that
an entity account for employee stock compensation under a fair value based
method. However, SFAS 123 also allows an entity to continue to measure
compensation cost for employee stock-based compensation using the intrinsic
value based method of accounting prescribed by APB Opinion No. 25, 'Accounting
for Stock Issued to Employees' ('Opinion 25'). Entities electing to remain with
the accounting under Opinion 25 are required to make pro forma disclosures of
net income and earnings per share as if the fair value based method of
accounting under SFAS 123 had been applied. The Company will adopt the
disclosure requirements of SFAS 123 during 1996.
NOTE C -- DUE FROM RELATED PARTIES
Amounts due from related parties represent the net balance due of advances
made to the principal officer/shareholder which represents a net accumulation of
loans to and from the principal officer/shareholder of the corporation from the
inception of the various corporations. The loans bear no interest.
NOTE D -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
Gym equipment and furniture................................................ $64,600 $ 52,405
Leasehold improvements..................................................... 7,116 7,116
Transportation equipment................................................... 31,000 --
----------- ------------
Total...................................................................... 102,716 59,521
Less accumulated depreciation and amortization............................. 35,982 29,360
----------- ------------
Balance.................................................................... $66,734 $ 30,161
----------- ------------
----------- ------------
</TABLE>
Depreciation expense amounted to $6,622, $2,999, $6,604 and $7,169 for the
six months ended June 30, 1996 and 1995 (unaudited), the years ended December
31, 1995 and 1994, respectively.
NOTE E -- CASH SURRENDER VALUE OF LIFE INSURANCE
Shannon Briggs I, L.P., an affiliated entity (see Note F), purchased two
life insurance policies on the life of one of the boxers. The combined face
amount totals $400,000. Such policies were acquired by the Company in 1996.
F-9
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE F -- EQUITY TRANSACTIONS
In August 1995 the Company issued 150 shares of its Common Stock to its
president for a purchase price of $150, and 30 shares of its Common Stock to a
director for a purchase price of $30. In September 1995, the Company authorized
the amendment of its Certificate of Incorporation to increase the number and par
value of its common stock. Also in September 1995, the Company authorized a
10,000 for 1 stock split converting these outstanding 180 shares of Common Stock
to 1,800,000 shares.
In September 1995, in connection with the organization of the Company, the
Company issued to 55 persons an aggregate of 1,234,955 shares. Each person paid
a purchase price of $.01 per share price of such common stock.
Commencing in September 1995 and ending in July 1996, the Company conducted
a private placement (the 'Placement') of units, each consisting of (a) a
promissory note in the principal amount of $50,000 bearing interest at a rate of
10% per annum payable in full upon the earlier of (i) the receipt by the Company
of at least $3,000,000 from the closing of an underwritten initial public
offering of the Company's securities (the 'Initial Public Offering') or (ii) 18
months after the date of the closing of the unit investment (the 'Placement
Closing Date') and (b) a warrant to purchase 25,000 shares of the Company's
Common Stock exercisable for a period of five years from the Placement Closing
Date, provided that an Initial Public Offering is consummated during such five
year exercise period, at an exercise price per share equal to 120% of the price
per share in the Initial Public Offering. The purchase price per unit was
$50,000. The Company sold an aggregate 39.8 units, generating net proceeds to
the Company of $1,890,000 as of June 30, 1996 and 1,990,000 as of July 1996.
In November 1995, the Company entered into an Asset Acquisition Agreement
with Shannon Briggs Boxing I, L.P. (the 'Briggs Partnership') to acquire all of
the assets of the Briggs Partnership. Marc Roberts was the sole shareholder of
Shannon Briggs Champion Management, Inc., the general partner of the Briggs
Partnership. In accordance with the terms of the Asset Acquisition Agreement,
the existing management agreement with Shannon Briggs was terminated, and a new
management agreement was entered into between the Company and Shannon Briggs.
Pursuant to the Asset Acquisition Agreement, the Company was authorized to issue
to the Briggs Partnership 500,000 shares of Common Stock.
In December 1995, Marc Roberts assigned all of his shares in Merciless
Management Inc., The Natural Management Inc., Marc Roberts Inc., Shannon Briggs
Champion Management, Inc. and Marc Roberts Boxing, Inc., to the Company in
exchange for an additional 184,966 shares of Common Stock. Each of those
companies was subsequently merged into the Company.
In May 1996, the Company agreed to issue 33,334 shares of its Common Stock
to the Summit Management Group in connection with the execution of a Consulting
Agreement between the Company and Summit Management Group.
NOTE G -- NOTES AND LOANS PAYABLE
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
Other:
Interest-free loan, payable on demand........................................... $ 6,000 $ 6,000
Interest-free loan, payable on demand........................................... 4,900 4,900
----------- ------------
$ 10,900 $ 10,900
----------- ------------
----------- ------------
</TABLE>
F-10
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE G -- NOTES AND LOANS PAYABLE -- (CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
Promissory notes:
Various unsecured promissory notes bearing interest at 10% compounded annually
and payable in full upon the earlier of the receipt by the Company of at
least $3,000,000 from closing of an underwritten initial public offering of
the Company's common stock or 18 months after the date of the closing of the
investment. These notes were issued through a private placement, of units,
each comprising a $50,000 note and a warrant to purchase 25,000 shares of the
Company's common stock, exercisable for a period of 5 years from such
placement closing date, provided that an initial public offering is
consummated during such 5 year exercise period, at an exercise price per
share equal to 120% of the price per share in the initial public offering.... $ 1,890,000 $1,165,000
----------- ------------
----------- ------------
</TABLE>
Escrow funds payable:
The Company has received funds earned by two of the boxers through a
percentage of gross proceeds earned by each of the boxers. These funds are
being held in escrow on behalf of the boxers until such time as their
release is requested.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(UNAUDITED)
<S> <C> <C>
Note payable to bank, payable in monthly installments of $786, including
interest at 10%, loan maturity date February 29, 2000, secured by
automobile, with a net book value of $29,470............................. $29,399 $ --
Less current maturities of long-term debt.................................. 7,399 --
----------- ------------
$22,000 $ --
----------- ------------
----------- ------------
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<S> <C>
June 30, 1997................................................................................ $ 7,399
June 30, 1998................................................................................ 7,575
June 30, 1999................................................................................ 8,369
June 30, 2000................................................................................ 6,056
-------
$29,399
-------
-------
</TABLE>
NOTE H -- CONTINGENT LIABILITY
At November 30, 1994, certain shareholders received a $400,000 personal
line of credit from their bank. This line of credit paid interest monthly at the
prevailing base rate of the bank. As security for this note, borrowers granted
to the bank a lien on, a continuing security interest in, and a right to set off
at any time, without notice, all property and deposit accounts at, under the
control of or in-transit to bank which belonged to borrower, any guarantor or
endorser. As of December 20, 1995 Worldwide Entertainment & Sports Corp. became
a co-guarantor. The outstanding line was $400,000 at December 31, 1995. The
Company paid $9,000 of interest at December 31, 1995, on behalf of such
shareholders. The line was repaid by January 31, 1996 and subsequently renewed.
As of July 2, 1996 the Company was no longer a guarantor.
F-11
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE I -- INCOME TAXES
The income tax provision is comprised of the following at:
<TABLE>
<CAPTION>
JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994
----------- ----------- ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
State current provision....................... $ 750 $ 149 $637 $175
----------- ----------- ------ ------
----------- ----------- ------ ------
</TABLE>
The Company's total deferred tax asset, comprised solely of federal and
state net operating loss carryforwards, and valuation allowance at December 31,
1995 and 1994 are as follows:
<TABLE>
<S> <C> <C>
Total deferred tax asset.................................................................... $94,461 $46,774
Less valuation allowance.................................................................... (94,461) (46,774)
------- -------
Net deferred tax asset...................................................................... $ -- $ --
------- -------
------- -------
</TABLE>
The Company has available an $164,843 net operating loss carryforward which
may be used to reduce future federal taxable income available through December
31, 2010. The Company also has available an $426,829 net operating loss
carryforward which may be used to reduce future state taxable income available
through December 31, 2002.
The above net operating losses were incurred by C corporation entities as
designated by the Internal Revenue Service.
Other entities which were merged into the Company were S corporations.
Management has determined that the net operating losses applicable to these
entities will not be utilized due to the merger.
NOTE J -- LEASE COMMITMENT
The Company leases space which serves as the gym and training facility. The
original lease expired August 31, 1993 with the option to renew for a maximum of
five one year terms. The options have not been exercised, but the Company
continues to occupy such space on a month-to-month basis. The terms of the lease
include escalation for real estate taxes.
The Company pays rent on behalf of the boxers, their personal attendants
and strength coaches.
Total rent expense amounted to the following:
<TABLE>
<S> <C>
December 31, 1995............................................................................ $33,980
December 31, 1994............................................................................ 24,306
</TABLE>
The Company is committed to several operating leases of automobiles.
Approximate future minimum lease payment of all non-cancelable operating leases
for the next three years follow:
<TABLE>
<S> <C>
December 31, 1996............................................................................ $28,698
December 31, 1997............................................................................ 16,456
December 31, 1998............................................................................ 5,935
</TABLE>
The Company is responsible for all taxes, licenses, insurance and general
maintenance related to the above leases.
F-12
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE K -- COMMITMENTS AND OTHER MATTERS
1. MANAGEMENT CONTRACTS
The Company has exclusive management contracts with four boxers:
a) Contract I expires November 7, 2000. The agreement provides for the
boxer to retain 60% of purses from all bouts or exhibitions (purse income)
through November 7, 1995, 72 1/2% through November 7, 2000, and 80% of all
fees for commercials, endorsements, public appearances, etc. The Company is
obligated to provide training facilities, and pay expenses and housing
allowances aggregating no more than $ 1,200 per month. These monthly
stipends are advances and the Company is entitled to deduct them from
proceeds received by the boxer. No such deductions will be made until the
boxer's aggregate purses, income or fees have exceeded $50,000.
b) Contract II expires April 9, 2001 with an option to extend the term
for an additional five-year period immediately following the end of the
initial term. The agreement provides for the boxer to retain 80% of purses
from all bouts or exhibitions (purse income) and 75% of all fees for
product endorsements, speaking engagements, personal appearances or other
commercial performances. The Company shall provide for the boxers the
services of a first-class trainer and the facilities of a complete boxing
training camp.
c) Contract III expires February 20, 2001, with an option to extend
the term for an additional five-year period immediately following the end
of the initial term. The agreement provides for the boxer to retain 80% of
purses from all bouts or exhibitions (purse income). The Company shall
provide for the boxer the services of a first-class trainer and the
facilities of a complete boxing training camp.
d) Contract IV expires January 8, 2001, with an option to extend the
term for an additional five-year period immediately following the end of
the initial term. The agreement provides for the boxer to retain 82 1/2% of
purses from all bouts or exhibitions (purse income). The Company shall
provide for the boxer the services of a first-class trainer and the
facilities of a complete boxing training camp.
2. DUE FROM BOXERS
Pursuant to the boxers' management agreement, the corporation makes
unsecured interest-free loan advances to the boxers who then authorize the
corporation to deduct the amount of their loan advance from the proceeds of
their fight purse.
3. SETTLEMENT AGREEMENT AND RELEASE OF CO-MANAGER
On October 9, 1995 a settlement agreement was reached with a co-manager of
one of the boxers which provided for the termination of a contract which was
previously made with such co-manager. Total payments made to the co-manager for
the release of his contract were $208,500.
NOTE L -- SUBSEQUENT EVENTS
STOCK OPTION PLAN
In July 1996 the Company adopted the 1996 Stock Option Plan covering
500,000 shares of the Company's common stock, $.01 par value, pursuant to which
officers, directors and key employees of the Company are eligible to receive
incentive and/or non-qualified stock options. Incentive stock options granted
under the Stock Option Plan are exercisable for a period of up to 10 years from
the date of grant at an exercise price which is not less than the fair market
value of the Common Stock.
F-13
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE L -- SUBSEQUENT EVENTS -- (CONTINUED)
Options granted under the Stock Option Plan to a stockholder owning more than
10% of the outstanding common stock may not exceed five years, and its exercise
price may not be less than 110% of the fair market value of the common stock on
the date of grant. No options have as yet been granted under the Stock Option
Plan.
FORMATION OF A NEW SUBSIDIARY
In August 1996, the Company formed a new corporation, Worldwide Basketball
Management, Inc. ('WWBM') with an 80% interest owned by the Company. The
remaining 20% interest is owned by two principals formerly associated with
Impact Sports Management, LLC ('Impact'). One of the principals is a certified
NBA player agent. These principals have signed five year employment agreements
with WWBM, effective September 1, 1996. WWBM has been assigned the revenues
resulting from existing representation agreements and future revenues that may
be generated from future agreements. An unaudited condensed balance sheet and
income statement for Impact, of which the two principals collectively owned a
24% partnership interest, is as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Total assets......................................................... $15,173 $32
------------- ---
Total partners' capital......................................... $15,173 $32
------------- ---
------------- ---
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
SIX MONTHS JANUARY 5, 1995
ENDED (INCEPTION) TO
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Total net revenue.................................................... $ -- $ 1,250
Total expenses....................................................... 92,621 76,595
------------- -----------------
Net loss........................................................ $ (92,621) $ (75,345)
------------- -----------------
------------- -----------------
</TABLE>
The Company has agreed to fund the operations and obligations of WWBM up to
$700,000, not to exceed $1,000,000 if certain conditions exist.
SETTLEMENT AGREEMENT AND RELEASE OF BOXERS' TRAINER
On August 29, 1996 a settlement agreement was reached with a trainer for
one of the boxers which provided for the termination of a contract which was
previously made with such trainer. A payment of $50,000 was made on September 6,
1996. Another payment of $50,000 is due not later than October 31, 1996.
F-14
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<PAGE>
_________________________________ ________________________________
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZAED BY THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION
WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................................................................................... 3
The Company................................................................................................................. 6
Risk Factors................................................................................................................ 6
Dilution.................................................................................................................... 13
Use of Proceeds............................................................................................................. 14
Dividend Policy............................................................................................................. 14
Capitalization.............................................................................................................. 15
Selected Financial Data..................................................................................................... 16
Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 17
Business.................................................................................................................... 21
Management.................................................................................................................. 30
Certain Transactions........................................................................................................ 33
Principal Stockholders...................................................................................................... 34
Description of Securities................................................................................................... 35
Underwriting................................................................................................................ 37
Legal Matters............................................................................................................... 39
Experts..................................................................................................................... 39
Additional Information...................................................................................................... 39
Index to Consolidated Financial Statements.................................................................................. F-1
</TABLE>
------------------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMPANY'S SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
WORLDWIDE ENTERTAINMENT
& SPORTS CORP.
1,500,000 UNITS
EACH COMPRISED OF
ONE SHARE OF COMMON STOCK AND
ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT
---------------------
PROSPECTUS
---------------------
WILLIAM SCOTT & COMPANY, L.L.C.
, 1996
_________________________________ ________________________________
<PAGE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article SIXTH, subparagraph 5 of the Certificate of Incorporation of the
Company contains the following provision which provides for the indemnification
of directors and officers of the Company:
SIXTH(5) The Corporation shall, to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law, as amended, from time
to time, indemnify all persons whom it may indemnify pursuant thereto.
In accordance with Section 102(b)(7) of the Delaware General Corporation
Law, Article 6 subparagraph 6 of the Certificate of Incorporation of the Company
eliminates the personal liability of directors to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director
with certain limited exceptions set forth in Section 102(b)(7).
The Underwriting Agreement provides for reciprocal indemnification between
the Company and the Underwriters against certain liabilities in connection with
this offering, including liabilities under the Securities Act of 1933.
The Company intends to enter into an agreement with each of its officers
and directors pursuant to which they will be indemnified to the fullest extent
permitted under the Delaware General Corporation Law. The Company may also
obtain and maintain its own insurance for the benefit of its directors and
officers and the directors and officers of its subsidiaries, insuring such
persons against certain liabilities, including liabilities arising under the
securities laws.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates of the expenses to
be incurred by it in connection with the issuance and distribution of the
securities being registered, other than underwriting discounts and commissions:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......................................... $ 8,596
NASD registration fee....................................................................... $ 2,494
NASDAQ listing fee.......................................................................... $ 1,000
Printing registration statement and other documents......................................... $ 80,000
Fees and expenses of Registrant's counsel................................................... $150,000
Representative's expense allowance.......................................................... $144,000
Underwriter's Consulting fee................................................................ $ 50,000
Accounting fees and expenses................................................................ $ 62,000
Blue Sky expenses and counsel fees.......................................................... $ 35,000
Transfer agent and warrant agent............................................................ $ 10,000
Miscellaneous............................................................................... $ 6,910
--------
Total.................................................................................. $550,000
--------
--------
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Described below is information regarding all securities that have been
issued by the Company since August 15, 1995, its date of incorporation.
In August 1995 the Company issued 150 shares of its Common Stock, to Marc
Roberts for a purchase price of $150, and 30 shares of its Common Stock, to
Herbert Kozlov for a purchase price of $30. In September 1995, the Company
authorized a 10,000 for 1 stock split converting these outstanding 180 shares of
Common Stock to 1,800,000 shares.
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<PAGE>
In September 1995, the Company issued to 55 persons an aggregate of
1,180,757 shares. Each person paid a purchase price of $.01 per share price of
such common stock.
Commencing in September 1995 and ending in June 1996, the Company privately
sold an aggregate of 39.8 units ('Units'), resulting in net proceeds to the
Company of $1,990,000, each consisting of (a) a $50,000 promissory note bearing
interest at a rate of 10% per annum payable in full upon the earlier of (i) the
Company's receipt of at least $3,000,000 from an underwritten public offering of
the Company's securities (the 'Initial Public Offering') or (ii) 18 months after
the date of the closing of the unit investment (the 'Placement Closing Date')
and (b) a warrant to purchase 25,000 shares of the Company's Common Stock
exercisable for a period of five years from the Placement Closing Date, provided
that an Initial Public Offering is consummated during such five year exercise
period, at an exercise price per share equal to 120% of the price per share in
the Initial Public Offering. Messrs. Drykerman and Cohen purchased 1.5 and 1
Unit, respectively, through such private placement.
In November 1995, the Company entered into an Asset Acquisition Agreement
with Shannon Briggs Boxing I, L.P. (the 'Briggs Partnership') to acquire all of
the assets of the Briggs Partnership. Marc Roberts is the sole shareholder of
the general partner of the Briggs Partnership, S.B.Champion Management, Inc. In
accordance with the terms of the Asset Acquisition Agreement, the existing
management agreement with Shannon Briggs was terminated, and a new management
agreement was entered into between the Company and Shannon Briggs. Pursuant to
the Asset Acquisition Agreement, the Company was authorized to issue to the
Briggs Partnership 500,000 shares of Common Stock.
In December 1995, Marc Roberts assigned all of his shares in Merciless
Management Inc., The Natural Management Inc. Marc Roberts Inc., S.B. Champion
Management, Inc. and Marc Roberts Boxing, Inc., to the Company in exchange for
an additional 184,966 shares of Common Stock. Each of those companies was
subsequently merged into the Company.
In May 1996, the Company agreed to issue 33,334 shares of its Common Stock
to Summit Management Group in connection with the execution of a Consulting
Agreement between the Company and Summit Management Group.
The above transactions were private transactions not involving a public
offering and were exempt from the registration provisions of the Securities Act
of 1933, as amended, pursuant to Section 4(2) thereof. No underwriter was
engaged in connection with the foregoing sales of securities.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C>
1.1* -- Form of Underwriting Agreement.
3.1(a)* -- Certificate of Incorporation of the Registrant.
3.1(b)* -- Certificate of Amendment Filed August 21, 1995
3.1(c)* -- Certificate of Amendment filed July 18, 1996
3.1(d)* -- Certificate of Ownership and Merger among the Registrant, Merciles Management Inc., The Natural
Management Inc., Marc Roberts Inc., S.B. Champion Management, Inc. and Marc Roberts Boxing, Inc.
filed July 19, 1996
3.2 -- Amended By-Laws of the Registrant.
4.1** -- Form Certificate representing the Common Stock, par value $.01 per share.
4.2* -- Form of Redeemable Warrant
4.3* -- Form of Warrant issued in private placement
4.4* -- Form of Underwriter's Unit Purchase Option
5.1** -- Opinion of Parker Duryee Rosoff & Haft A Professional Corporation
10.1 -- 1996 Stock Option Plan.
10.2* -- Employment Agreement between Registrant and Marc Roberts
10.3** -- Employment Agreement between Registrant and Ryan Schinman
10.4* -- Management Agreement between the Registrant and Shannon Briggs
10.5* -- Management Agreement between the Registrant and Tracy Patterson
10.6* -- Management Agreement between Registrant and Charles Murray
</TABLE>
II-2
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<PAGE>
<TABLE>
<C> <S>
10.7* -- Management Agreement between Registrant and Ray Mercer
10.8* -- Form of Subscription Agreement between Registrant and Private Placement Investors
10.9* -- Asset Purchase Agreement between Registrant and Shannon Briggs I, L.P., as amended
10.10 -- Employment Agreement between Registrant and Erik Rudolph
10.11 -- Employment Agreement between Registrant and Michael Goodson
10.12 -- Shareholders Agreement among Registrant, Erik Rudolph and Michael Goodson
10.13 -- Consulting Agreement with Summit Management Group
21.1* -- Subsidiaries of the Registrant.
23.1 -- Consent of Rosenberg Rich Baker Berman & Company
23.2 -- Consent of PDRH (to be included in Exhibit 5.1)
24.1 -- Power of Attorney (contained on signature page)
</TABLE>
- ------------
* Previously filed
** To be filed by amendment.
(b) Financial Statement Schedules
All schedules have been omitted because of the absence of conditions under
which they are required, or because the required information is given in the
financial statements or the notes thereto.
ITEM 28. UNDERTAKINGS.
The Company hereby undertakes 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
of 1933; (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 a 20% change in the maximum
aggregate offering price set forth in the 'Calculation of Registration Fee'
table in the effective registration statement; and (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.
The Company hereby undertakes that, for the purpose 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.
The Company hereby undertakes 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 Company hereby undertakes to provide to the Underwriters at the closing
specified in the Underwriting Agreement, certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Company, the Company has been advised that in the opinion of the Securities and
Exchange 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 Company
of expenses incurred or paid by a director, officer or controlling person of the
Company 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 Company will, unless in the opinion of its
counsel the matter has been settled by
II-3
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<PAGE>
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 of 1933 and will be governed by the final
adjudication of such issue.
For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus 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.
II-4
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
hereby certifies that it has reasonable grounds to believe that it meets all of
the requirements of filing on Form SB-2 and authorizes this Amendment to this
registration statement to be signed on its behalf by the undersigned, in the
City of New York, State of New York, on September 11, 1996.
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By: /s/ MARC ROBERTS
...................................
MARC ROBERTS
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Marc Roberts his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this registration statement
and all documents relating thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------- -------------------
<C> <S> <C>
/s/ MARC ROBERTS Director, President and Chief Executive September 11, 1996
......................................... Officer (Principal executive officer)
MARC ROBERTS
* Director (Principal accounting and financial September 11, 1996
......................................... officer)
ROY ROBERTS
* Director September 11, 1996
.........................................
ALLAN COHEN
* Director September 11, 1996
.........................................
DAN DRYKERMAN
* Director September 11, 1996
.........................................
HERBERT KOZLOV
* Director September 11, 1996
.........................................
HARVEY SILVERMAN
* /s/ MARC ROBERTS
.........................................
MARC ROBERTS, Attorney in Fact
</TABLE>
II-5
<PAGE>
<PAGE>
AMENDMENT TO THE BY-LAWS OF
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
Pursuant to the resolution of the Board of Directors of Worldwide
Entertainment & Sports Corp. (the "Company") dated as of September 4, 1996, the
By-laws of the Company were amended by the deletion in its entirety of the
former subpart of Paragraph 5 of the By-laws entitled "CALL" and the replacement
of such subpart with the following:
"CALL. Annual meetings may be called by any directors or by any
officer instructed by any director to call the meeting and
special meetings may be called by any director or by any officer
instructed by any director to call the meeting or by the
affirmative vote or consent of the shareholders holding not less
than ten percent (10%) of the combined voting power of the then
outstanding shares of voting stock entitled to vote or as
otherwise provided in the Corporation's Restated Certificate of
Incorporation.".
This Addendum, when appended to the Company's By-laws and the By-laws
themselves shall together constitute the amended and restated By-laws of the
Company in accordance with the direction of the Board of Directors.
Signed hereunto on this 4th day of September, 1996.
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
____________________________________
By: Marc Roberts, President
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
1996 STOCK OPTION PLAN
Worldwide Entertainment & Sports Corp. (the "Company") hereby
establishes the Worldwide Entertainment & Sports Corp. 1996 Stock Option Plan
(the "Plan").
1. PURPOSE. The Plan is intended to recognize the contributions made to
the Company or an Affiliate by employees of the Company or any Affiliate (as
hereinafter defined), members of the Board of Directors of the Company or an
Affiliate, and certain consultants and advisors to the Company or any Affiliate,
to provide such persons with additional incentive to devote themselves to the
future success of the Company or an Affiliate, and to improve the ability of the
Company or an Affiliate to attract, retain, and motivate individuals upon whom
the Company's sustained growth and financial success depend, by providing such
persons with an opportunity to acquire or increase their proprietary interest in
the Company through receipt of rights to acquire the Company's Common Stock,
$.01 par value (the "Common Stock").
2. DEFINITIONS. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
(a) "Affiliate" means a corporation which is a parent
corporation or a subsidiary corporation with respect to the
Company within the meaning of Section 424(e) or (f) of the Code.
(b) "Board of Directors" means the Board of Directors of
the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Board of Directors or the
committee designated by the Board of Directors in accordance with
the provisions set forth in Section 3 of the Plan.
(e) "Company" means Worldwide Entertainment & Sports
Corp., a Delaware corporation.
(f) "Disability" shall have the meaning set forth in
Section 22(e)(3) of the Code.
(g) "Fair Market Value" shall have the meaning set forth
in Subsection 8(b) of the Plan.
(h) "ISO" means an Option granted under the Plan which is
intended to qualify as an "incentive stock option" within the
meaning of Section 422(b) of the Code.
(i) "Non-qualified Stock Option" means an Option granted
under the Plan which is not intended to qualify, or otherwise
does not qualify, as an "incentive stock option" within the
meaning of Section 422(b) of the Code.
(j) "Option" means either an ISO or a Non-qualified Stock
Option granted under the Plan.
(k) "Optionee" means a person to whom an Option has been
granted under the Plan, which Option has not been exercised and
has not expired or terminated.
(l) "Option Document" means the document described in
Section 8 of the Plan which sets forth the terms and conditions
of each grant of Options.
<PAGE>
<PAGE>
(m) "Option Price" means the price at which Shares may be
purchased upon exercise of an Option, as calculated pursuant to
Subsection 8(b) of the Plan.
(n) "Rule 16b-3" means Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended.
(o) "Shares" means the shares of Common Stock of the
Company which are the subject of Options.
3. ADMINISTRATION OF THE PLAN.
(a) Committee. The Plan shall be administered by a
committee composed of two or more of the members of the Company's Board of
Directors. The Company's Board of Directors in its sole discretion may elect
("Alternative Administration") to have the Plan administered by either (i)
providing that the Committee be composed of directors who are not eligible to
receive options under the Plan, or (ii) designating two committees to operate
and administer the Plan, one of such committees composed of two or more
directors who are not eligible to receive Options under the Plan to operate and
administer the Plan with respect to each person who is a "Principal Officer (as
defined below), and the other such committee composed of two or more directors
(which may include directors who are also employees, consultants or advisors of
the Company) to operate and administer the Plan with respect to each person
other than a "Principal Officer." Any of such committees designated by the Board
of Directors is referred to as the "Committee." As used herein, the term
"Principal Officer" means a person who is an "officer" of the Company, within
the meaning of Rule 16a-1(f) promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any successor regulation.
(b) Meetings. The Committee shall hold meetings at such
times and places as it may determine. Acts approved at a meeting by a majority
of the members of the Committee or acts approved in writing by the unanimous
consent of the members of the Committee shall be the valid acts of the
Committee.
(c) Grants. The Committee shall from time to time, in its
discretion, direct the Company to grant Options pursuant to the terms of the
Plan. The Committee shall have plenary authority to (i) determine the Optionees
to whom, the times at which, and the price at which Options shall be granted,
(ii) determine the type of Option to be granted and the number of Shares subject
thereto, and (iii) approve the form and terms and conditions of the Option
Documents; all subject, however, to the express provisions of the Plan. In
making such determinations, the Committee may take into account the nature of
the Optionee's services and responsibilities, the Optionee's present and
potential contribution to the Company's success and such other factors as it may
deem relevant. The interpretation and construction by the Committee of any
provisions of the Plan or of any Option granted under it shall be final, binding
and conclusive.
(d) Exculpation. No member of the Board of Directors shall
be personally liable for monetary damages for any action taken or any failure to
take any action in connection with the administration of the Plan or the
granting of Options under the Plan, provided that this Subsection 3(c) shall not
apply to (i) any breach of such member's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, (iii) acts or omissions that would
result in liability under Section 174 of the General Corporation Law of the
State of Delaware, as amended, and (iv) any transaction from which the member
derived an improper personal benefit.
(e) Indemnification. Service on the Committee shall
constitute service as a member of the Board of Directors of the Company. Each
member of the Committee shall be entitled without further act on his part to
indemnity from the Company to the fullest extent provided by applicable law and
the Company's Certificate of Incorporation and/or By-laws in connection with or
arising out of any action, suit or proceeding with respect to the administration
of the Plan or the granting of Options thereunder in which he or she may be
involved by reason of his or her being or having been a member of the Committee,
whether or not he or she continues to be a member of the
2
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Committee at the time of the action, suit or proceeding.
(f) Limitations on Grants of Options to Consultants and
Advisors. With respect to the grant of Options to consultants and advisors, bona
fide services shall be rendered by consultants and advisors, and such services
must not be in connection with a capital raising transaction.
4. GRANTS UNDER THE PLAN. Grants under the Plan may be in the form of a
Non-qualified Stock Option, an ISO or a combination thereof, at the discretion
of the Committee.
5. ELIGIBILITY. All employees and members of the Board of Directors of,
and consultants and advisors to, the Company or an Affiliate shall be eligible
to receive Options hereunder. The Committee, in its sole discretion, shall
determine whether an individual qualifies as an employee, consultant or advisor.
6. SHARES SUBJECT TO PLAN. The aggregate maximum number of Shares for
which Options may be granted pursuant to the Plan is five hundred thousand
(500,000), subject to adjustment as provided in Section 9 of the Plan. The
Shares shall be issued from authorized and unissued Common Stock or Common Stock
held in or hereafter acquired for the treasury of the Company. If an Option
terminates or expires without having been fully exercised for any reason, the
Shares for which the Option was not exercised may again be the subject of one or
more Options granted pursuant to the Plan.
7. TERM OF THE PLAN. The Plan was approved by the Board of Directors on
July 1, 1996, and, provided it is approved on or before __________, 1996 by a
majority of the votes cast at a duly called meeting of the stockholders at which
a quorum representing a majority of all outstanding voting stock of the Company
is, either in person or by proxy, present and voting, shall be effective as of
the date of approval by stockholders. No Option may be granted under the Plan
after _____________, 2001.
8. OPTION DOCUMENTS AND TERMS. Each Option granted under the Plan shall
be a Non-qualified Stock Option unless the Option shall be specifically
designated at the time of grant to be an ISO for federal income tax purposes. If
any Option designated as an ISO is determined for any reason not to qualify as
an incentive stock option within the meaning of Section 422 of the Code, such
Option shall be treated as a Non-qualified Stock Option for all purposes under
the provisions of the Plan. Options granted pursuant to the Plan shall be
evidenced by the Option Documents in such form as the Committee shall from time
to time approve, which Option Documents shall comply with and be subject to the
following terms and conditions and such other terms and conditions as the
Committee shall from time to time require which are not inconsistent with the
terms of the Plan.
(a) Number of Option Shares. Each Option Document shall
state the number of Shares to which it pertains. An Optionee may
receive more than one Option, which may include Options which are
intended to be ISO's and Options which are not intended to be
ISO's, but only on the terms and subject to the conditions and
restrictions of the Plan.
(b) Option Price. Each Option Document shall state the
Option Price which, for a Non-qualified Stock Option, may be less
than, equal to, or greater than the Fair Market Value of the
Shares on the date the Option is granted and, for an ISO, shall
be at least 100% of the Fair Market Value of the Shares on the
date the Option is granted as determined by the Committee in
accordance with this Subsection 8(b); provided, however, that if
an ISO is granted to an Optionee who then owns, directly or by
attribution under Section 424(d) of the Code, shares possessing
more than ten percent of the total combined voting power of all
classes of stock of the Company or an Affiliate, then the Option
Price shall be at least 110% of the Fair Market Value of the
Shares on the date the Option is granted. If the Common Stock is
traded in a public market, then the Fair Market Value per share
shall be, if the Common Stock is listed on a national securities
exchange or included in the NASDAQ National Market System, the
last reported sale price thereof on the relevant date, or, if the
Common Stock is not so listed or included, the mean between the
last reported "bid" and "asked" prices thereof on the
3
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relevant date, as reported on NASDAQ or, if not so reported, as
reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as
applicable and as the Committee determines.
(c) Exercise. No Option shall be deemed to have been
exercised prior to the receipt by the Company of written notice
of such exercise and of payment in full of the Option Price for
the Shares to be purchased. Each such notice shall specify the
number of Shares to be purchased and shall (unless the Shares are
covered by a then current and effective registration statement or
qualified Offering Statement under Regulation A under the
Securities Act of 1933, as amended (the "Act")), contain the
Optionee's acknowledgment in form and substance satisfactory to
the Company that (a) such Shares are being purchased for
investment and not for distribution or resale (other than a
distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the
registration provisions of the Act), (b) the Optionee has been
advised and understands that (i) the Shares have not been
registered under the Act and are "restricted securities" within
the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no
obligation to register the Shares under the Act or to take any
action which would make available to the Optionee any exemption
from such registration, (c) such Shares may not be transferred
without compliance with all applicable federal and state
securities laws, and (d) an appropriate legend referring to the
foregoing restrictions on transfer and any other restrictions
imposed under the Option Documents may be endorsed on the
certificates. Notwithstanding the foregoing, if the Company
determines that issuance of Shares should be delayed pending (A)
registration under federal or state securities laws, (B) the
receipt of an opinion of counsel satisfactory to the Company that
an appropriate exemption from such registration is available, (C)
the listing or inclusion of the Shares on any securities exchange
or an automated quotation system or (D) the consent or approval
of any governmental regulatory body whose consent or approval is
necessary in connection with the issuance of such Shares, the
Company may defer exercise of any Option granted hereunder until
any of the events described in this sentence has occurred.
(d) Medium of Payment. An Optionee shall pay for Shares
(i) in cash, (ii) by certified or cashier's check payable to the
order of the Company, (iii) by payment through a broker in
accordance with procedures permitted by Regulation T of the
Federal Reserve Board or (iv) by such other mode of payment as
the Committee may approve. Furthermore, the Committee may provide
in an Option Document that payment may be made in whole or in
part in shares of the Company's Common Stock held by the Optionee
for at least six months. If payment is made in whole or in part
in shares of the Company's Common Stock, then the Optionee shall
deliver to the Company certificates registered in the name of
such Optionee representing the shares owned by such Optionee,
free of all liens, claims and encumbrances of every kind and
having an aggregate Fair Market Value on the date of delivery
that is at least as great as the Option Price of the Shares (or
relevant portion thereof) with respect to which such Option is to
be exercised by the payment in shares of Common Stock, endorsed
in blank or accompanied by stock powers duly endorsed in blank by
the Optionee. In the event that certificates for shares of the
Company's Common Stock delivered to the Company represent a
number of shares in excess of the number of shares required to
make payment for the Option Price of the Shares (or relevant
portion thereof) with respect to which such Option is to be
exercised by payment in shares of Common Stock, the stock
certificate issued to the Optionee shall represent (i) the Shares
in respect of which payment is made, and (ii) such excess number
of shares. Notwithstanding the foregoing, the Committee may
impose from time to time such limitations and prohibitions on the
use of shares of the Common Stock to exercise an Option as it
deems appropriate.
(e) Termination of Options.
(i) No option shall be exercisable after the first
to occur of the following:
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(A) Expiration of the Option term specified
in the Option Document, which shall occur on or
before (1) ten years from the date of grant, or (2)
five years from the date of grant of an ISO if the
Optionee on the date of grant owns, directly or by
attribution under Section 424(d) of the Code,
shares possessing more than ten percent (10%) of
the total combined voting power of all classes of
stock of the Company or of an Affiliate;
(B) Expiration of three months from the date
the Optionee's employment or service with the
Company or its Affiliates terminates for any reason
other than disability or death or as otherwise
specified in Subsection 8(e)(i)(D) or 8(e)(i)(E)
below;
(C) Expiration of one year from the date
such employment or service with the Company or its
Affiliates terminates due to the Optionee's
Disability or death;
(D) A finding by the Committee, after full
consideration of the facts presented on behalf of
both the Company and the Optionee, that the
Optionee has breached his employment or service
contract with the Company or an Affiliate, or has
been engaged in disloyalty to the Company or an
Affiliate, including, without limitation, fraud,
embezzlement, theft, commission of a felony or
proven dishonesty in the course of his employment
or service, or has disclosed trade secrets or
confidential information of the Company or an
Affiliate. In such event, in addition to immediate
termination of the Option, the Optionee shall
automatically forfeit all Shares for which the
Company has not yet delivered the share
certificates upon refund by the Company of the
Option Price. Notwithstanding anything herein to
the contrary, the Company may withhold delivery of
share certificates pending the resolution of any
inquiry that could lead to a finding resulting in a
forfeiture.
(E) The date, if any, set by the Board of
Directors as an accelerated expiration date in the
event of the liquidation or dissolution of the
Company.
(ii) Notwithstanding the foregoing, the Committee
may extend the period during which all or any
portion of an Option may be exercised to a date no
later than the Option term specified in the Option
Document pursuant to Subsection 8(e)(i)(A),
provided that any change pursuant to this
Subsection 8(e)(ii) which would cause an ISO to
become a Non-qualified Stock Option may be made
only with the consent of the Optionee.
(f) Transfers. No Option granted under the Plan may be
transferred, except by will or by the laws of descent and
distribution. During the lifetime of the person to whom an Option
is granted, such Option may be exercised only by him.
Notwithstanding the foregoing, a Non-qualified Stock Option may
be transferred pursuant to the terms of a "qualified domestic
relations order," within the meaning of Sections 401(a)(13) and
414(p) of the Code or within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, as amended.
(g) Limitation on ISO Grants. In no event shall the
aggregate fair market value of the shares of Common Stock
(determined at the time the ISO is granted) with respect to which
incentive stock options under all incentive stock option plans of
the Company or its Affiliates are exercisable for the first time
by the Optionee during any calendar year exceed $100,000.
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(h) Other Provisions. Subject to the provisions of the
Plan, the Option Documents shall contain such other provisions
including, without limitation, provisions authorizing the
Committee to accelerate the exercisability of all or any portion
of an Option granted pursuant to the Plan, additional
restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee shall
deem advisable.
(i) Amendment. Subject to the provisions of the Plan, the
Committee shall have the right to amend Option Documents issued
to an Optionee, subject to the Optionee's consent if such
amendment is not favorable to the Optionee, except that the
consent of the Optionee shall not be required for any amendment
made pursuant to Subsection 8(e)(i)(E) or Section 9 of the Plan,
as applicable.
9. ADJUSTMENTS ON CHANGES IN CAPITALIZATION. The aggregate number of
Shares and class of shares as to which Options may be granted hereunder, the
number and class or classes of shares covered by each outstanding Option and the
Option Price thereof shall be appropriately adjusted in the event of a stock
dividend, stock split, recapitalization or other change in the number or class
of issued and outstanding equity securities of the Company resulting from a
subdivision or consolidation of the Common Stock and/or, if appropriate, other
outstanding equity securities or a recapitalization or other capital adjustment
(not including the issuance of Common Stock on the conversion of other
securities of the Company which are convertible into Common Stock) affecting the
Common Stock which is effected without receipt of consideration by the Company.
The Committee shall have authority to determine the adjustments to be made under
this Section, and any such determination by the Committee shall be final,
binding and conclusive.
10. AMENDMENT OF THE PLAN. The Board of Directors of the Company may
amend the Plan from time to time in such manner as it may deem advisable.
Nevertheless, the Board of Directors of the Company may not change the class of
individuals eligible to receive an ISO or increase the maximum number of shares
as to which Options may be granted without obtaining approval, within twelve
months before or after such action, by vote of a majority of the votes cast at a
duly called meeting of the stockholders at which a quorum representing a
majority of all outstanding voting stock of the Company is, either in person or
by proxy, present and voting on the matter. No amendment to the Plan shall
adversely affect any outstanding Option, however, without the consent of the
Optionee.
11. NO COMMITMENT TO RETAIN. The grant of an Option pursuant to the Plan
shall not be construed to imply or to constitute evidence of any agreement,
express or implied, on the part of the Company or any Affiliate to retain the
Optionee in the employ of the Company or an Affiliate and/or as a member of the
Company's Board of Directors or in any other capacity.
12. WITHHOLDING OF TAXES. Whenever the Company proposes or is required
to deliver or transfer Shares in connection with the exercise of an Option, the
Company shall have the right to (a) require the recipient to remit or otherwise
make available to the Company an amount sufficient to satisfy any federal, state
and/or local withholding tax requirements prior to the delivery or transfer of
any certificate or certificates for such Shares or (b) take whatever other
action it deems necessary to protect its interests with respect to tax
liabilities. The Company's obligation to make any delivery or transfer of Shares
shall be conditioned on the Optionee's compliance, to the Company's
satisfaction, with any withholding requirement.
13. INTERPRETATION. It is the intent of the Company that, if Alternative
Administration is selected by the Company's Board of Directors, transactions
under the Plan with respect to directors and officers (within the meaning of
Section 16(a) under the Securities Exchange Act of 1934, as amended) satisfy the
conditions of Rule 16b-3. To the extent that any provision of the Plan would
result in a conflict with such conditions, such provision shall be deemed null
and void. This Section shall not be applicable if no class of the Company's
equity securities is then registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended.
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14. GOVERNING LAW. The Plan shall be governed by, and all questions
arising hereunder shall be determined in accordance with, the laws of the State
of New York.
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of September 1, 1996, between WORLDWIDE BASKETBALL
MANAGEMENT, INC. a Delaware corporation having its principal offices at 1200
Tices Lane, Suite 201, East Brunswick New Jersey 08816 (the "Corporation"), and
Erik Rudolph, ("Employee") residing at 78 Old York Road, Ringoes, NJ 08551.
W I T N E S S E T H:
WHEREAS, the Corporation is a subsidiary of Worldwide Entertainment &
Sports Corp. ("WW");
WHEREAS, the Corporation intends to engage in the business of providing
career management, professional representation, contract negotiation, the
identification and procurement of endorsements and personal appearances,
business management and related services as well as the development of
non-professional basketball related opportunities for professional basketball
players (the "Corporation's Business");
WHEREAS, the Employee has significant experience in the Corporation's
Business and the Corporation wishes to assure itself of the continued
availability of the advice and services of Employee in connection with the
Corporation's Business; and
WHEREAS, Employee wishes to be employed by the Corporation;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
1. Employment and Term. Subject to the terms and conditions of this
Agreement, the Corporation shall employ Employee, and Employee hereby accepts
employment by the Corporation, for a period of five (5) years.
2. Employee's Duties; Employee's Representations and Warranties.
(a) Employee shall serve the Corporation as its President and in
such other executive capacities as may be determined by either the Chairman of
the Board of Directors of the Corporation or the Chief Executive Officer and
President of WW and as are consistent with the performance of his duties
hereunder. Employee shall perform and be responsible for the provision of such
executive, administrative, client development, client managerial, marketing and
other services and duties (including, without limitation, the preparation of
periodic reports regarding the business and affairs of the Corporation), as are
required by or incidental to the
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positions he holds or as may, from time to time, be requested by the Chairman of
the Board of Directors of the Corporation, the Board of Directors of WW, or the
Chief Executive Officer or President of WW, and the Employee shall report
directly to such persons. During the term of this Agreement, Employee shall
devote his entire business time, attention and energies, on a full-time basis,
to the Corporation's Business and he shall not be required by the Corporation to
relocate his permanent residence for the performance of his duties hereunder.
(b) The Employee represents and warrants to the Corporation as
follows:
(i) Employee is currently listed by the National
Basketball Players Association ("NBPA") as being a duly certified
player agent in accordance with its role as exclusive bargaining
agent for NBA players.
(ii) Exhibit A is a complete and accurate schedule
of: (i) the individuals that Employee represents as a duly
certified player agent listed with the NBPA; (ii) the current
annual compensation amounts of each individual (including
revenues from endorsement income broken out and so identified)
and; (iii) the percentage of the respective annual compensation
amounts of the listed individuals that Employee has contracted to
receive as commission (cumulatively, "Employees Client Business")
pursuant to signed and valid agent agreements, which to his best
knowledge have not been or are not being terminated or breached
by any party thereto. There are no unpaid fees due to the
Employee from any such individuals.
(iii) Neither the execution and delivery of this
Agreement by the Employee, the engagement by the Corporation of
the Employee nor the performance of the activities to be
conducted by the Employee contemplated hereby will be in
violation of, or contradict with, the provisions of any agreement
or other instrument or restriction, or any judgment, order or
decree to which the Employee is a party or which is binding upon
the Employee.
(iv) The Employee has not been, nor is he currently,
the subject of any formal or informal inquiry or investigation
with respect to violation of any regulatory organization, nor has
the Employee been found or alleged to have been in violation of,
or entered into any consent decree or other settlement of any
allegations of, any securities regulation or self-regulatory
organization rules or regulations.
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(v) The Employee hereby represents that he does not
currently have, nor will he have at any time in the future, any
direct or indirect financial interest in or with any individual
unless disclosed in writing to the President of WW prior to
providing any services to such client.
3. Client List Assignment. By executing this Agreement, and as more
fully set forth in Exhibit B hereof, Employee hereby assigns to the Corporation,
subject to revocation by the Employee upon the termination of this Agreement,
all of Employee's rights and interests to the revenue generated by Employee's
Client Business as set forth on Exhibit A . In addition, Employee hereby
irrevocably assigns the rights and interests to the revenue generated by any
individuals or entities signed to a valid representation agreement, or with whom
material discussions regarding entering a representation agreement were had, by
the Employee, the Corporation or any of its employees or affiliates during the
period commencing with the start of Employee's employment, and continuing for
the duration of this Agreement and any extensions hereof (the "Corporation's
Clients"). Employee hereby also assigns to the Corporation all other revenues
generated by the performance of any of his duties hereunder during the term
of this Agreement.
4. Employee Certification. Employee covenants to maintain his listing
with the NBPA and to do nothing during the term of this Agreement to jeopardize
such certification. In addition, Employee agrees to apply for any additional
certifications as from time to time may be deemed necessary by the Chairman of
the Board of the Corporation for the development of the Corporation's Business.
5. Corporation's Budget.
(a) Attached hereto as Exhibit C is a projected one year budget
which the Employee has prepared and which reasonably and accurately estimates
the income from, expenses associated with, and capital needed for, the operation
of the Corporation and the development of the Corporation's Business. Employee
covenants to adhere, within a range of 15%, to the projected expense budget as
set forth on Exhibit C and as administered or modified by the Employee in such
manner as approved by the Board of Directors of the Corporation.
(b) Subject to this Agreement remaining in full force and effect,
WW agrees to make payments to fund the operations and obligations of the
Corporation through the payment of invoices submitted by the Employee or by
Michael Goodson to WW from time to time or as
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may otherwise be required to be in accordance with the Budget, not to exceed an
aggregate of $700,000 ("WW's Initial Funding Obligation"). Any sums repaid by
the Corporation to WW shall be treated as a recoupment by WW of monies expended
pursuant to the Funding Obligation ("Recoupment") and the Funding Obligation
shall be increased by the amount of such Recoupment. If, however the
Corporation, through any of its executive officers, both signs an enforceable
representation agreement with, and negotiates a valid player's agreement on
behalf of:
(i) four (4) players who are drafted within the top twenty (20)
picks of the first rounds of either or both of the 1997 or 1998 NBA Drafts
collectively (each a "First Round Draft Pick"); or
(ii) three (3) active NBA players who in the most recently
completed NBA season played more minutes than the league average for players at
their respective positions and whose NBA player contracts either terminate with,
or are subject to renegotiation before, the commencement of the 1998 NBA season
(each a "Quality Starter"); or
(iii) any three (3) player combination of First Round Draft Picks
and Quality Starters (the "Minimum Player Threshold"), WW's Initial Funding
Obligation shall be increased from $700,000 to $1,000,000 (WW's "Additional
Funding Obligation"). WW's Additional Funding Obligation shall be funded and
accounted for on the same terms as WW's Initial Funding Obligation. WW shall
have no liability hereunder as to Employee other than to satisfy WW's Initial
Funding Obligation and, to the extent applicable, WW's Additional Funding
Obligation.
(c) Where "Special Opportunities" are presented to the
Corporation that may be costly, the parties hereto shall endeavor to agree on an
appropriate portion, if any, of such costs to amortize rather than to expense
for the purposes of calculating the earnings of the Corporation in connection
with Sections 6(c) hereof and the extent to which such costs are to be charged
against WW's Funding Obligation. To the extent that any costs are excluded in
calculating the earnings of the Corporation, any revenues generated as a
consequence of the opportunities associated with such costs shall likewise be
excluded for purposes of calculating After-tax earnings in Section 6(c) hereof.
As used herein, "Special Opportunities" shall include, but shall not be limited
to, the costs associated with the recruitment of superstar players or other high
profile athletes.
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6. Compensation.
(a) Signing Bonus. In addition to the compensation more fully set
forth below, Employee shall receive a cash payment of $50,000, payable upon the
completion of the initial public offering of the common stock of WW (the "IPO").
(b) Salary. During the term of this Agreement, the Corporation
shall pay to Employee, in equal installments no less frequently than two (2)
times per month, a base salary at the rate of $130,000 per annum.
(c) Bonus.
(i) Annual Cash Bonus. The Corporation shall pay the
Employee annual cash bonuses based on the annual net after tax
income of the Corporation for that twelve month period between
January and December, inclusive, coincidental with the
Corporations fiscal year (a "Year"), or in the case of the years
1996 and 2001, the portion thereof during which the Employee is
employed hereunder, and determined in accordance with Generally
Accepted Accounting Principles ("GAAP"), consistently applied
("After-tax Earnings"), as set forth below. In addition, a
portion of the revenues of any activities outside of the
Corporations Business to which the Employee, at the request of
or with the consent of the Chief Executive Officer of WW, devotes
his time and energies, if any, will be allocated to the
Corporation for purposes of this calculation in relation to the
relative role which the Employee played with respect to such
activities, as such allocation may be agreed upon by the
Employee and the Chief Executive Officer of WW. The annual bonus
payable to Employee shall be (i) 10% of the After-tax Earnings
of the Corporation up to $250,000 inclusive; and (ii) 17% of
After-tax Earnings of the Corporation above $250,000.
(ii) Stock Option Bonus. After the Corporation
realizes cumulative After-tax Earnings of $6,000,000 during the
Term hereof, the Corporation shall grant to the Employee five
year options to purchase up to 25,000 shares of WW Common Stock,
at the prevailing market price for such Shares on the option
grant date, for each $1,000,000 of After-tax Earnings subject to
pro-ration for amounts achieved less than $1,000,000. Such grants
shall occur annually when WW calculates and reports its year-end
results.
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(iii) Calculation of Earnings for Bonus. It is
acknowledged that for purposes of calculating an annual bonus
payable to Employee under this paragraph 6(c), accumulated losses
from September 1, 1996 through December 31, 1997 shall not be
taken into account. Cumulative losses incurred after December 31,
1997 shall be taken into account for the purposes of calculating
annual bonuses earned by Employee commencing on January 1, 1998.
(d) Stock Option Plan. Employee shall be eligible to receive
options to purchase shares of the Common Stock of WW ("Options") under the WW
Stock Option Plan, pursuant to the terms and conditions set forth therein as
applicable to employees of WW's subsidiaries, subject to the discretion of the
WW Board of Directors or any committee thereof.
(e) Travel and Entertainment Reimbursement.
(i) Each month during the Term of this Agreement,
Employee shall submit to the Corporation an employee expense
reimbursement form with respect to all reasonable expenses
incurred by Employee in connection with the performance of his
duties hereunder, including without limitation expenses incurred
in connection with local travel expenses set forth in paragraph
(f), below. Employee acknowledges that he shall obtain the prior
written approval of WW before incurring any commitment, expense
or other expenditure in excess of $3,000. Each reimbursement form
shall be accompanied by copies of appropriate receipts and/or
invoices and shall be in a form and in sufficient detail so as to
facilitate compliance with applicable Internal Revenue Service
guidelines and regulations. The Corporation shall reimburse
Employee for such reasonable expenses within fifteen (15) days of
the date of the submission of Employee's monthly reimbursement
form.
(ii) Employee shall be given a corporate credit card
or access to other corporate credit facilities for use in
Corporation matters coincidental with their establishment by WW
or the Corporation.
(f) Automobile Credits. Employee shall be reimbursed for up to
$1,000 per month during the term of this Agreement for local travel expenses
incurred, including, in his discretion, for the rental, leasing, purchase or
other procurement, parking, maintenance and operation of an automobile. Employee
shall submit to the Corporation appropriate expense reimbursement forms to
receive such reimbursement.
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(g) Disability Compensation. If the Employee becomes unable to
substantially perform his duties hereunder due to physical or mental disability
or incapacity (is "Disabled") he shall be allowed to continue to receive payment
of his salary, at his base salary rate set forth in 6(b) above, for a period of
time totaling either: (i) three (3) consecutive months; or (ii) an aggregate of
six (6) months during the Term of this Agreement ("Disability Compensation").
Non-consecutive periods of absence for Disability taken during the Term shall be
aggregated and counted against such six (6) month period. The amount of
Disability Compensation payable to Employee shall be reduced by the aggregate
amount of all income disability benefits which for such period he may receive or
to which he may be entitled by reason of (i) any group health insurance plan
which is intended to function as a salary replacement plan, (ii) any applicable
compulsory state disability law, (iii) the Federal Social Security Act, (iv) any
applicable workmen's compensation law or similar law, (v) any plan towards which
the Corporation or any parent, subsidiary or affiliate of the Corporation has
contributed or for which it has made payroll deductions, such as group accident
or health policies, other than those which reimburse for actual medical
expenses, and (vi) any income Employee may receive from third parties for his
performance of any services.
(h) Medical Insurance; Life Insurance. Employee shall be provided
Medical Insurance benefits commensurate, in amount and scope of coverage, with
those benefits generally provided by WW to its employees consistent with the
policies and practices established from time-to-time by WW's Board of Directors.
The Corporation shall purchase a term life insurance policy for the benefit of
the Employee with an annual premium payout obligation not to exceed $750.
7. GAAP Accounting to be Used. Except as otherwise specifically stated
herein, all calculations made by either party for any purpose set forth in this
Agreement shall be made in accordance with GAAP.
8. Termination on Disability or Death. In the event that Employee is
Disabled for: (i) a period of three (3) or more consecutive months; or (ii) six
(6) months in the aggregate during the Term of this Agreement, either the
Corporation or the Employee shall have the right to terminate this Agreement and
Employee's employment hereunder upon five (5) days' prior written notice. In the
event that Employee is able to render, and recommences rendering, services and
performing his duties hereunder to the satisfaction of WW's Board of Directors
within such five (5)-day notice period, Employee shall be reinstated. If
Employee dies during the term of this Agreement, this Agreement shall terminate
immediately upon his death and any
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benefits or Options unvested as of such date shall lapse unless otherwise
specifically made to vest by other written agreement.
9. Termination; Termination for Certain Causes; Failure of the IPO.
(a) Either party may terminate this Agreement at any time "for
cause." As used herein, "for cause" shall mean: (i) the Employee's gross
negligence, misfeasance, malfeasance, commission of any fraud or felony, or the
"Employees" misappropriation of funds; or (ii) the failure of WW to satisfy
WW's Funding Obligation or, if applicable, WW's Additional Funding Obligation.
(b) From and after the date upon which WW has satisfied WW's
Initial Funding Obligation or, if applicable WW's Additional Funding Obligation,
the Corporation may, but is not obligated to, terminate this Agreement on thirty
(30) days' prior written notice to Employee.
(c) In the event the IPO is not completed prior to January 1,
1997 the Employee, at his sole option may prior to January 9, 1997 elect in
writing to terminate this Agreement.
(d) In the event of a termination by either party for any reason
(other than the voluntary termination by the Employee not as a result of a
material breach of this Agreement by the Corporation) or for the non-renewal of
this Agreement at the end of the Term hereof, the Client List assignment
relating to the Employee Client Business made herein in paragraph 3 shall
terminate, and such assignment shall revert to the Employee. In the event of a
termination by either party for any reason, the Employee shall, upon receipt,
pay to the Corporation 50% of all gross revenues, from any source ("Revenues")
received by Employee or his future employers, affiliates, representatives, or
those acting in concert therewith (the "Replacement Agency"), generated by each
of the Corporations Clients (and, in the event of a voluntary termination by the
Employee other than as a result of a material breach of this Agreement by the
Corporation, 50% of all Revenues received by the Employee and any Replacement
Agency generated by the Employee Client Business as well) until the Corporation
has recouped an amount equal to the amounts funded by WW pursuant to its Initial
Funding and Additional Funding Obligations hereunder less the sum of (i) any
Recoupments WW had received prior to such termination, and (ii) cash balances or
money instruments or liquid investments of the Corporation. Once such monies
have been recouped, the Employee shall thereafter pay 30% of such Corporation's
Client Revenues to the Corporation for as long as the Replacement Agency has any
affiliation with any of such Corporation's Clients. The payments under this
paragraph 9(d) shall be in lieu of any other claims for damages as a result of
such termination.
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10. Confidentiality.
(a) Employee understands and acknowledges that as a result of
Employee's involvement with the Corporation's Business he is or shall
necessarily become informed of, and have access to, confidential information of
the Corporation, WW and their respective affiliates, clients, licensees,
franchises, subsidiaries and joint ventures (collectively the "Worldwide
Network"), including without limitation, trade secrets, know-how, plans,
specifications and the identity of clients. The Employee understands and
acknowledges that such information, even though it may have been or may be
developed or otherwise acquired by Employee during his employment with the
Corporation, is the exclusive property of the Worldwide Network to be held by
Employee in trust and solely for the Worldwide Network's benefit and Employee
shall not at any time, either during or subsequent to his employment hereunder,
reveal, report, publish, transfer or otherwise disclose to any person,
corporation or other entity, or use, any of the Worldwide Network's confidential
information, without the written consent of the Corporation's or WW's Board of
Directors, except for use on behalf of the Corporation in connection with the
Corporation's Business, and except for such information which legally and
legitimately is or becomes of general public knowledge from authorized sources
other than Employee.
(b) Upon the termination of his employment with the Corporation
for any reason, Employee shall promptly deliver to the Corporation all manuals,
letters, notes, notebooks, reports and copies thereof and all other materials,
including, without limitation, those of a secret or confidential nature,
relating to the Corporation's Business which are in Employee's possession or
control. The Corporation shall reimburse Employee for any packing or moving
costs reasonably incurred by Employee in connection with the foregoing delivery.
11. Non-Competition.
(a) During his employment with the Corporation, Employee shall
not, anywhere in the United States of America, or elsewhere in the world (or for
such lesser area as may be determined by a court of competent jurisdiction to be
a reasonable limitation on the competitive activity of the Employee), directly
or indirectly:
(i) engage in any activities directly or indirectly
competitive with the Corporation's Business or with the interests
of the Worldwide Network or any of them;
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(ii) otherwise divert or attempt to divert any
business whatsoever from the Worldwide Network; solicit or
attempt to solicit, for any non-Corporation business endeavor,
any employee of the Worldwide Network or any of them; or
(ii) interfere in any material respect with any
business relationship between any of the Worldwide Network and
any other person.
12. Remedies and Survival. Because the Corporation does not have an
adequate remedy at law to protect its business from Employee's competition or to
protect its interest in its trade secrets, privileged, proprietary or
confidential information and similar commercial assets, the Corporation shall be
entitled to injunctive relief, in addition to such other remedies and relief
that would, in the event of a breach of the provisions of Paragraphs 10 and 11,
be available to the Corporation. The provisions of Paragraphs 3,10 and 11, and
this Paragraph 12, shall survive any termination of Employee's employment with
the Corporation.
13. Entire Agreement. This Agreement sets forth the entire understanding
of the parties hereto with respect to its subject matter, merges and supersedes
any prior or contemporaneous understanding with respect to its subject matter,
and shall not be modified or terminated except by another agreement in writing
executed by the Corporation and Employee. Failure of a party to enforce one or
more of the provisions of this Agreement or to require at any time performance
of any of the obligations hereof shall not be construed to be a waiver of such
provisions by such party nor to in any way affect the validity of this Agreement
or such party's right thereafter to enforce any provision of this Agreement, nor
to preclude such party from taking any other action at any time which it would
legally be entitled to take.
14. Severability. If any provision of this Agreement is held to be
invalid or unenforceable by any court or tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and such
provision shall be carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
15. Successors and Assigns. Neither party shall have the right to assign
this personal agreement, or any rights or obligations hereunder, without the
consent of the other party; provided, however, that upon the sale of all or
substantially all of the assets and business of the Corporation to another party
under the control of Marc Roberts, or upon the merger or consolidation of the
Corporation with another corporation under the control of Marc Roberts, this
Agreement shall inure to the benefit of, and be binding upon, both Employee and
such party
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purchasing such assets, business and goodwill, or surviving such merger or
consolidation, as the case may be, in the same manner and to the same extent as
though such other party were the Corporation. Subject to the foregoing, this
Agreement shall inure to the benefit of, and bind, the parties hereto and their
legal representatives, heirs, successors and assigns. For the purpose of this
paragraph, "control" means the ownership of at least a numerical majority of the
equity ownership of the company.
16. Communications. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given at the
time when mailed in any United States post office enclosed in a registered or
certified postage-paid envelope and addressed as set forth at the beginning of
this Agreement, or to such other address as any party may specify by notice to
the other parties, or delivered by Federal Express or a similar overnight
courier to such address; provided, however, that any notice of change of address
shall be effective only upon receipt.
17. Construction; Counterparts. The headings contained in this Agreement
are for convenience only and shall in no way restrict or otherwise affect the
construction of the provisions hereof. References in this Agreement to
Paragraphs are to the sections of this Agreement. This Agreement may be executed
in multiple counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
18. Governing Law Jurisdiction. This Agreement and the exhibits hereto
shall be construed in accordance with and governed by the laws of the State of
New York without giving effect to that State's conflict of laws principles. By
executing this Agreement, the Corporation and the Employee consent to the
exclusive personal jurisdiction and venue of the State and Federal courts
sitting in New York County for any action or proceedings arising out of this
Agreement or the subject matter hereof and the Corporation and the Employee
irrevocably waive any defense or claims in any such actions or proceedings based
on lack of personal jurisdiction, improper venue, forum non conveniens or any
similar basis, to the maximum extent permitted by law.
19. No Third Party Beneficiary. No provision in this Agreement shall
constitute any person or entity a third party beneficiary. Without limiting the
foregoing, in no event shall any person, other than the parties hereto and their
successors or assigns have any claims for breach of this Agreement.
20. Product of Negotiation. The terms of this Agreement are the product
of mutual negotiation and compromise between Employee and the Corporation. The
meaning, effect and terms of this Agreement have been discussed by both parties
with their respective counsel and
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are fully understood and agreed upon by the parties hereto. In the event of an
ambiguity in the interpretation of this Agreement and its Exhibits, neither
party shall be deemed to have been the draftsman thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
/s/ Eric Rudolph
_____________________________________
Erik Rudolph
WORLDWIDE BASKETBALL MANAGEMENT, INC.
By: /s/ Marc Roberts
_________________________________
Marc Roberts
Chairman of the Board
ACKNOWLEDGED AND AGREED
TO WITH REGARD TO
PARAGRAPHS 5(b), 5(c) AND 6(d):
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By: /s/ Marc Roberts
______________________________________
Marc Roberts
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EMPLOYMENT AGREEMENT
AGREEMENT, dated as of September 1, 1996, between WORLDWIDE BASKETBALL
MANAGEMENT, INC. a Delaware corporation having its principal offices at 1200
Tices Lane, Suite 201, East Brunswick New Jersey 08816 (the "Corporation"), and
Michael Goodson ("Employee") 73 International Avenue, Piscataway, New Jersey.
W I T N E S S E T H:
WHEREAS, the Corporation is a subsidiary of Worldwide Entertainment &
Sports Corp. ("WW");
WHEREAS, the Corporation intends to engage in the business of providing
career management, professional representation, contract negotiation, the
identification and procurement of endorsements and personal appearances,
business management and related services as well as the development of
non-professional basketball related opportunities for professional basketball
players (the "Corporation's Business");
WHEREAS, the Employee has significant experience in the Corporation's
Business and the Corporation wishes to assure itself of the continued
availability of the advice and services of Employee in connection with the
Corporation's Business; and
WHEREAS, Employee wishes to be employed by the Corporation;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements set forth herein, the parties hereto agree as follows:
1. Employment and Term. Subject to the terms and conditions of this
Agreement, the Corporation shall employ Employee, and Employee hereby accepts
employment by the Corporation, for a period of five (5) years.
2. Employee's Duties; Employee's Representations and Warranties.
(a) Employee shall serve the Corporation as its Executive Vice
President and in such other executive capacities as may be determined by either
the Chairman of the Board of Directors of the Corporation or the Chief Executive
Officer and President of WW and as are consistent with the performance of his
duties hereunder. Employee shall perform and be responsible for the provision of
such executive, administrative, client development, client
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managerial, marketing and other services and duties (including, without
limitation, the preparation of periodic reports regarding the business and
affairs of the Corporation), as are required by or incidental to the positions
he holds or as may, from time to time, be requested by the Chairman of the Board
of Directors of the Corporation, the Board of Directors of WW, or the Chief
Executive Officer or President of WW, and the Employee shall report directly to
such persons. During the term of this Agreement, Employee shall devote his
entire business time, attention and energies, on a full-time basis, to the
Corporation's Business and he shall not be required by the Corporation to
relocate his permanent residence for the performance of his duties hereunder.
(b) The Employee represents and warrants to the Corporation as
follows:
(i) Employee is currently listed by the National
Basketball Players Association ("NBPA") as being a duly certified
player agent in accordance with its role as exclusive bargaining
agent for NBA players.
(ii) Exhibit A is a complete and accurate schedule
of: (i) the individuals that Employee represents as a duly
certified player agent listed with the NBPA; (ii) the current
annual compensation amounts of each individual (including
revenues from endorsement income broken out and so identified)
and; (iii) the percentage of the respective annual compensation
amounts of the listed individuals that Employee has contracted to
receive as commission (cumulatively, "Employee's Client
Business") pursuant to signed and valid agent agreements, which
to his best knowledge have not been or are not being terminated
or breached by any party thereto. There are no unpaid fees due to
the Employee from any such individuals.
(iii) Neither the execution and delivery of this
Agreement by the Employee, the engagement by the Corporation of
the Employee nor the performance of the activities to be
conducted by the Employee contemplated hereby will be in
violation of, or contradict with, the provisions of any agreement
or other instrument or restriction, or any judgment, order or
decree to which the Employee is a party or which is binding upon
the Employee.
(iv) The Employee has not been, nor is he currently,
the subject of any formal or informal inquiry or investigation
with respect to violation of any regulatory organization, nor has
the Employee been found or alleged to have been in violation of,
or entered into any consent decree or other settlement of any
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allegations of, any securities regulation or self-regulatory
organization rules or regulations.
(v) The Employee hereby represents that he does not
currently have, nor will he have at any time in the future, any
direct or indirect financial interest in or with any individual
unless disclosed in writing to the President of WW prior to
providing any services to such client.
3. Client List Assignment. By executing this Agreement, and as more
fully set forth in Exhibit B hereof, Employee hereby assigns to the Corporation,
subject to revocation by the Employee upon the termination of this Agreement,
all of Employee's rights and interests to the revenue generated by Employee's
Client Business as set forth on Exhibit A . In addition, Employee hereby
irrevocably assigns the rights and interests to the revenue generated by any
individuals or entities signed to a valid representation agreement, or with whom
material discussions regarding entering a representation agreement were had, by
the Employee, the Corporation or any of its employees or affiliates during the
period commencing with the start of Employee's employment, and continuing for
the duration of this Agreement and any extensions hereof (the "Corporation's
Clients"). Employee hereby also assigns to the Corporation all other revenues
generated by the performance of any of his duties hereunder during the term of
this Agreement.
4. Employee Certification. Employee covenants to maintain his listing
with the NBPA and to do nothing during the term of this Agreement to jeopardize
such certification. In addition, Employee agrees to apply for any additional
certifications as from time to time may be deemed necessary by the Chairman of
the Board of the Corporation for the development of the Corporation's Business.
5. Corporation's Budget.
(a) Attached hereto as Exhibit C is a projected one year budget
which the Employee has prepared and which reasonably and accurately estimates
the income from, expenses associated with, and capital needed for, the operation
of the Corporation and the development of the Corporation's Business. Employee
covenants to adhere, within a range of 15%, to the projected expense budget as
set forth on Exhibit C and as administered or modified by the Employee in such
manner as approved by the Board of Directors of the Corporation.
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(b) Subject to this Agreement remaining in full force and effect,
WW agrees to make payments to fund the operations and obligations of the
Corporation through the payment of invoices submitted by the Employee or by Erik
Rudolph to WW from time to time or as may otherwise be required to be in
accordance with the Budget, not to exceed an aggregate of $700,000 ("WW's
Initial Funding Obligation"). Any sums repaid by the Corporation to WW shall be
treated as a recoupment by WW of monies expended pursuant to the Funding
Obligation ("Recoupment") and the Funding Obligation shall be increased by the
amount of such Recoupment. If, however the Corporation, through any of its
executive officers, both signs an enforceable representation agreement with, and
negotiates a valid players' agreement on behalf of:
(i) four (4) players who are drafted within the top twenty (20)
picks of the first rounds of either or both of the 1997 or 1998 NBA Drafts
collectively (each a "First Round Draft Pick"); or
(ii) three (3) active NBA players who in the most recently
completed NBA season played more minutes than the league average for players at
their respective positions and whose NBA player contracts either terminate with,
or are subject to renegotiation before, the commencement of the 1998 NBA season
(each a "Quality Starter"); or
(iii) any three (3) player combination of First Round Draft Picks
and Quality Starters (the "Minimum Player Threshold") , WW's Initial Funding
Obligation shall be increased from $700,000 to $1,000,000 (WW's "Additional
Funding Obligation"). WW's Additional Funding Obligation shall be funded and
accounted for on the same terms as WW's Initial Funding Obligation. WW shall
have no liability hereunder as to Employee other than to satisfy WW's Initial
Funding Obligation and, to the extent applicable, WW's Additional Funding
Obligation.
(c) Where "Special Opportunities" are presented to the Corporation
that may be costly, the parties hereto shall endeavor to agree on an appropriate
portion, if any, of such costs to amortize rather than to expense for the
purposes of calculating the earnings of the Corporation in connection with
Sections 6(c) hereof and the extent to which such costs are to be charged
against WW's Funding Obligation. To the extent that any costs are excluded in
calculating the earnings of the Corporation, any revenues generated as a
consequence of the opportunities associated with such costs shall likewise be
excluded for purposes of calculating After-tax earnings in Section 6(c) hereof.
As used herein, "Special Opportunities" shall include,
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but shall not be limited to, the costs associated with the recruitment of
superstar players or other high profile athletes.
6. Compensation.
(a) Signing Bonus. In addition to the compensation more fully set
forth below, Employee shall receive a cash payment of $50,000, payable upon the
completion of the initial public offering of the common stock of WW (the "IPO").
(b) Salary. During the term of this Agreement, the Corporation
shall pay to Employee, in equal installments no less frequently than two (2)
times per month, a base salary at the rate of $130,000 per annum.
(c) Bonus.
(i) Annual Cash Bonus. The Corporation shall pay the
Employee annual cash bonuses based on the annual net after tax
income of the Corporation for that twelve month period between
January and December, inclusive, coincidental with the
Corporation's fiscal year (a "Year"), or in the case of the years
1996 and 2001, the portion thereof during which the Employee is
employed hereunder, and determined in accordance with Generally
Accepted Accounting Principles ("GAAP"), consistently applied
("After-tax Earnings"), as set forth below. In addition, a
portion of the revenues of any activities outside of the
Corporation's Business to which the Employee, at the request of
or with the consent of the Chief Executive Officer of WW, devotes
his time and energies, if any, will be allocated to the
Corporation for purposes of this calculation in relation to the
relative role which the Employee played with respect to such
activities, as such allocation may be agreed upon by the Employee
and the Chief Executive Officer of WW. The annual bonus payable
to Employee shall be (i) 10% of the After-tax Earnings of the
Corporation up to $250,000 inclusive; and (ii) 17% of After-tax
Earnings of the Corporation above $250,000.
(ii) Stock Option Bonus. After the Corporation
realizes cumulative After-tax Earnings of $6,000,000 during the
Term hereof, the Corporation shall grant to the Employee five
year options to purchase up to 25,000 shares of WW Common Stock,
at the prevailing market price for such Shares on the option
grant
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date, for each $1,000,000 of After-tax Earnings subject to
pro-ration for amounts achieved less than $1,000,000. Such grants
shall occur annually when WW calculates and reports its year-end
results.
(iii) Calculation of Earnings for Bonus. It is
acknowledged that for purposes of calculating an annual bonus
payable to Employee under this paragraph 6(c), accumulated losses
from September 1, 1996 through December 31, 1997 shall not be
taken into account. Cumulative losses incurred after December 31,
1997 shall be taken into account for the purposes of calculating
annual bonuses earned by Employee commencing on January 1, 1998.
(d) Stock Option Plan. Employee shall be eligible to receive
options to purchase shares of the Common Stock of WW ("Options") under the WW
Stock Option Plan, pursuant to the terms and conditions set forth therein as
applicable to employees of WW's subsidiaries, subject to the discretion of the
WW Board of Directors or any committee thereof.
(e) Travel and Entertainment Reimbursement.
(i) Each month during the Term of this Agreement,
Employee shall submit to the Corporation an employee expense
reimbursement form with respect to all reasonable expenses
incurred by Employee in connection with the performance of his
duties hereunder, including without limitation expenses incurred
in connection with local travel expenses set forth in paragraph
(f), below. Employee acknowledges that he shall obtain the prior
written approval of WW before incurring any commitment, expense
or other expenditure in excess of $3,000. Each reimbursement form
shall be accompanied by copies of appropriate receipts and/or
invoices and shall be in a form and in sufficient detail so as to
facilitate compliance with applicable Internal Revenue Service
guidelines and regulations. The Corporation shall reimburse
Employee for such reasonable expenses within fifteen (15) days of
the date of the submission of Employee's monthly reimbursement
form.
(ii) Employee shall be given a corporate credit card
or access to other corporate credit facilities for use in
Corporation matters coincidental with their establishment by WW
or the Corporation.
(f) Automobile Credits. Employee shall be reimbursed for up to
$1,000 per month during the term of this Agreement for local travel expenses
incurred, including, in his
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discretion, for the rental, leasing, purchase or other procurement, parking,
maintenance and operation of an automobile. Employee shall submit to the
Corporation appropriate expense reimbursement forms to receive such
reimbursement.
(g) Disability Compensation. If the Employee becomes unable to
substantially perform his duties hereunder due to physical or mental disability
or incapacity (is "Disabled") he shall be allowed to continue to receive payment
of his salary, at his base salary rate set forth in 6(b) above, for a period of
time totaling either: (i) three (3) consecutive months; or (ii) an aggregate of
six (6) months during the Term of this Agreement ("Disability Compensation").
Non-consecutive periods of absence for Disability taken during the Term shall be
aggregated and counted against such six (6) month period. The amount of
Disability Compensation payable to Employee shall be reduced by the aggregate
amount of all income disability benefits which for such period he may receive or
to which he may be entitled by reason of (i) any group health insurance plan
which is intended to function as a salary replacement plan, (ii) any applicable
compulsory state disability law, (iii) the Federal Social Security Act, (iv) any
applicable workmen's compensation law or similar law, (v) any plan towards which
the Corporation or any parent, subsidiary or affiliate of the Corporation has
contributed or for which it has made payroll deductions, such as group accident
or health policies, other than those which reimburse for actual medical
expenses, and (vi) any income Employee may receive from third parties for his
performance of any services.
(h) Medical Insurance; Life Insurance. Employee shall be provided
Medical Insurance benefits commensurate, in amount and scope of coverage, with
those benefits generally provided by WW to its employees consistent with the
policies and practices established from time-to-time by WW's Board of Directors.
The Corporation shall purchase a term life insurance policy for the benefit of
the Employee with an annual premium payout obligation not to exceed $750.
7. GAAP Accounting to be Used. Except as otherwise specifically stated
herein, all calculations made by either party for any purpose set forth in this
Agreement shall be made in accordance with GAAP.
8. Termination on Disability or Death. In the event that Employee is
Disabled for: (i) a period of three (3) or more consecutive months; or (ii) six
(6) months in the aggregate during the Term of this Agreement, either the
Corporation or the Employee shall have the right to terminate this Agreement and
Employee's employment hereunder upon five (5) days' prior written notice. In the
event that Employee is able to render, and recommences rendering,
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services and performing his duties hereunder to the satisfaction of WW's Board
of Directors within such five (5)-day notice period, Employee shall be
reinstated. If Employee dies during the term of this Agreement, this Agreement
shall terminate immediately upon his death and any benefits or Options unvested
as of such date shall lapse unless otherwise specifically made to vest by other
written agreement.
9. Termination; Termination for Certain Causes; Failure of the IPO.
(a) Either party may terminate this Agreement at any time "for
cause." As used herein, "for cause" shall mean: (i) the Employee's gross
negligence, misfeasance, malfeasance, commission of any fraud or felony, or the
Employee's misappropriation of funds; or (ii) the failure of WW to satisfy WW's
Funding Obligation or, if applicable, WW's Additional Funding Obligation.
(b) From and after the date upon which WW has satisfied WW's
Initial Funding Obligation or, if applicable WW's Additional Funding Obligation,
the Corporation may, but is not obligated to, terminate this Agreement on thirty
(30) days' prior written notice to Employee.
(c) In the event the IPO is not completed prior to January 1,
1997 the Employee, at his sole option may prior to January 9, 1997 elect in
writing to terminate this Agreement.
(d) In the event of a termination by either party for any reason
(other than the voluntary termination by the Employee not as a result of a
material breach of this Agreement by the Corporation) or for the non-renewal of
this Agreement at the end of the Term hereof, the Client List assignment
relating to the Employee Client Business made herein in paragraph 3 shall
terminate, and such assignment shall revert to the Employee. In the event of a
termination by either party for any reason, the Employee shall, upon receipt,
pay to the Corporation 50% of all gross revenues, from any source ("Revenues")
received by Employee or his future employers, affiliates, representatives, or
those acting in concert therewith (the "Replacement Agency"), generated by each
of the Corporation's Clients (and, in the event of a voluntary termination by
the Employee other than as a result of a material breach of this Agreement by
the Corporation, 50% of all Revenues received by the Employee and any
Replacement Agency generated by the Employee Client Business as well) until the
Corporation has recouped an amount equal to the amounts funded by WW pursuant to
its Initial Funding and Additional Funding Obligations hereunder less the sum of
(i) any Recoupments WW had received prior to such termination, and (ii) cash
balances or money instruments or liquid investments of the Corporation. Once
such monies have been recouped, the Employee shall thereafter pay 30% of such
Corporation's Client Revenues to the Corporation for as long as the Replacement
Agency has any affiliation with any
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of such Corporation's Clients. The payments under this paragraph 9(d) shall be
in lieu of any other claims for damages as a result of such termination.
10. Confidentiality.
(a) Employee understands and acknowledges that as a result of
Employee's involvement with the Corporation's Business he is or shall
necessarily become informed of, and have access to, confidential information of
the Corporation, WW and their respective affiliates, clients, licensees,
franchises, subsidiaries and joint ventures (collectively the "Worldwide
Network"), including without limitation, trade secrets, know-how, plans,
specifications and the identity of clients. The Employee understands and
acknowledges that such information, even though it may have been or may be
developed or otherwise acquired by Employee during his employment with the
Corporation, is the exclusive property of the Worldwide Network to be held by
Employee in trust and solely for the Worldwide Network's benefit and Employee
shall not at any time, either during or subsequent to his employment hereunder,
reveal, report, publish, transfer or otherwise disclose to any person,
corporation or other entity, or use, any of the Worldwide Network's confidential
information, without the written consent of the Corporation's or WW's Board of
Directors, except for use on behalf of the Corporation in connection with the
Corporation's Business, and except for such information which legally and
legitimately is or becomes of general public knowledge from authorized sources
other than Employee.
(b) Upon the termination of his employment with the Corporation
for any reason, Employee shall promptly deliver to the Corporation all manuals,
letters, notes, notebooks, reports and copies thereof and all other materials,
including, without limitation, those of a secret or confidential nature,
relating to the Corporation's Business which are in Employee's possession or
control. The Corporation shall reimburse Employee for any packing or moving
costs reasonably incurred by Employee in connection with the foregoing delivery.
11. Non-Competition.
(a) During his employment with the Corporation, Employee shall
not, anywhere in the United States of America, or elsewhere in the world (or for
such lesser area as may be determined by a court of competent jurisdiction to be
a reasonable limitation on the competitive activity of the Employee), directly
or indirectly:
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(i) engage in any activities directly or indirectly
competitive with the Corporation's Business or with the interests
of the Worldwide Network or any of them;
(ii) otherwise divert or attempt to divert any
business whatsoever from the Worldwide Network; solicit or
attempt to solicit, for any non-Corporation business endeavor,
any employee of the Worldwide Network or any of them; or
(iii) interfere in any material respect with any
business relationship between any of the Worldwide Network and
any other person.
12. Remedies and Survival. Because the Corporation does not have an
adequate remedy at law to protect its business from Employee's competition or to
protect its interest in its trade secrets, privileged, proprietary or
confidential information and similar commercial assets, the Corporation shall be
entitled to injunctive relief, in addition to such other remedies and relief
that would, in the event of a breach of the provisions of Paragraphs 10 and 11,
be available to the Corporation. The provisions of Paragraphs 3,10 and 11, and
this Paragraph 12, shall survive any termination of Employee's employment with
the Corporation.
13. Entire Agreement. This Agreement sets forth the entire understanding
of the parties hereto with respect to its subject matter, merges and supersedes
any prior or contemporaneous understanding with respect to its subject matter,
and shall not be modified or terminated except by another agreement in writing
executed by the Corporation and Employee. Failure of a party to enforce one or
more of the provisions of this Agreement or to require at any time performance
of any of the obligations hereof shall not be construed to be a waiver of such
provisions by such party nor to in any way affect the validity of this Agreement
or such party's right thereafter to enforce any provision of this Agreement, nor
to preclude such party from taking any other action at any time which it would
legally be entitled to take.
14. Severability. If any provision of this Agreement is held to be
invalid or unenforceable by any court or tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and such
provision shall be carried out as nearly as possible according to its original
terms and intent to eliminate such invalidity or unenforceability.
15. Successors and Assigns. Neither party shall have the right to assign
this personal agreement, or any rights or obligations hereunder, without the
consent of the other party;
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provided, however, that upon the sale of all or substantially all of the assets
and business of the Corporation to another party under the control of Marc
Roberts, or upon the merger or consolidation of the Corporation with another
corporation under the control of Marc Roberts, this Agreement shall inure to the
benefit of, and be binding upon, both Employee and such party purchasing such
assets, business and goodwill, or surviving such merger or consolidation, as the
case may be, in the same manner and to the same extent as though such other
party were the Corporation. Subject to the foregoing, this Agreement shall inure
to the benefit of, and bind, the parties hereto and their legal representatives,
heirs, successors and assigns. For the purpose of this paragraph, "control"
means the ownership of at least a numerical majority of the equity ownership of
the company.
16. Communications. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given at the
time when mailed in any United States post office enclosed in a registered or
certified postage-paid envelope and addressed as set forth at the beginning of
this Agreement, or to such other address as any party may specify by notice to
the other parties, or delivered by Federal Express or a similar overnight
courier to such address; provided, however, that any notice of change of address
shall be effective only upon receipt.
17. Construction; Counterparts. The headings contained in this Agreement
are for convenience only and shall in no way restrict or otherwise affect the
construction of the provisions hereof. References in this Agreement to
Paragraphs are to the sections of this Agreement. This Agreement may be executed
in multiple counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
18. Governing Law Jurisdiction. This Agreement and the exhibits hereto
shall be construed in accordance with and governed by the laws of the State of
New York without giving effect to that State's conflict of laws principles. By
executing this Agreement, the Corporation and the Employee consent to the
exclusive personal jurisdiction and venue of the State and Federal courts
sitting in New York County for any action or proceedings arising out of this
Agreement or the subject matter hereof and the Corporation and the Employee
irrevocably waive any defense or claims in any such actions or proceedings based
on lack of personal jurisdiction, improper venue, forum non conveniens or any
similar basis, to the maximum extent permitted by law.
19. No Third Party Beneficiary. No provision in this Agreement shall
constitute any person or entity a third party beneficiary. Without limiting the
foregoing, in no event shall any person, other than the parties hereto and their
successors or assigns have any claims for breach of this Agreement.
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20. Product of Negotiation. The terms of this Agreement are the product
of mutual negotiation and compromise between Employee and the Corporation. The
meaning, effect and terms of this Agreement have been discussed by both parties
with their respective counsel and are fully understood and agreed upon by the
parties hereto. In the event of an ambiguity in the interpretation of this
Agreement and its Exhibits, neither party shall be deemed to have been the
draftsman thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
/s/ Michael Goodson
_____________________________________
Michael Goodson
WORLDWIDE BASKETBALL MANAGEMENT, INC.
By: /s/ Marc Roberts
_________________________________
Marc Roberts
Chairman of the Board
ACKNOWLEDGED AND AGREED
TO WITH REGARD TO
PARAGRAPHS 5(B), 5(C) AND 6(D):
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By: /s/ Marc Roberts
___________________________________
Marc Roberts
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WORLDWIDE BASKETBALL MANAGEMENT, INC.
SHAREHOLDERS AGREEMENT
AGREEMENT, dated as of the 1st day of September, 1996, by and
among WORLDWIDE BASKETBALL MANAGEMENT, INC., a Delaware corporation with its
principal address at 1200 Tices Lane, Suite 201, East Brunswick, New Jersey
08816 (the "Corporation"), ERIK RUDOLPH, residing at 78 Old York Road, Ringoes,
NJ ("Rudolph"), WORLDWIDE ENTERTAINMENT & SPORTS CORP., a Delaware corporation
with its principal address at 29 Northfield Avenue, West Orange, New Jersey
07052 ("Worldwide") and MICHAEL GOODSON residing at 73 International Avenue,
Piscataway, NJ ("Goodson").
Rudolph, Goodson and Worldwide (collectively, the "Shareholders")
have caused the Corporation to be formed under the corporate laws of the State
of Delaware for the purpose of engaging in the management and representation of
professional basketball players. Messrs. Rudolph and Goodson have contributed
certain assets to the Corporation, including certain existing contractual rights
and obligations, and Worldwide has contributed certain assets, including cash
and commitments to provide certain future financing to the Corporation.
The authorized capital stock of the Corporation consists of three
thousand shares of common stock, par value $.01 per share (the "Shares"). In
accordance with Subscription Agreements executed concurrently herewith, Goodson
and Rudolph (together, the "Management Shareholders") each owns 10 Shares, which
together constitutes 20% of the outstanding Shares, and Worldwide owns 80
Shares, which constitutes 80% of the outstanding Shares.
The parties believe it to be in the best interest of the
Corporation and the Shareholders to set forth certain understandings with
respect to certain matters.
In consideration of the foregoing and of the mutual promises and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
1. Management and Internal Affairs.
(A) Directors. The number of directors constituting the
entire Board of Directors of the Corporation shall be five. The Shareholders
agree, subject to the provisions of this Agreement, to nominate and to vote
their Shares for the election as directors of the Corporation of three persons
designated by Worldwide, one person designated by Rudolph, and one person
designated by Goodson. The By-Laws of the Corporation are hereby deemed amended
so as to conform with this Section.
The foregoing notwithstanding, each of Rudolph and Goodson shall
have the right to designate one person for nomination and election to the board
only so long as he continues to own the Shares held by him or he continues to be
employed by the Corporation. In the event that either
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Rudolph or Goodson is neither the holder of Shares nor an employee of the
Corporation, the Shareholders shall be free to nominate and vote for election as
a director, in place of the person previously designated by Rudolph and Goodson,
as the case may be, any person without restriction.
(B) Officers. The Shareholders agree to use their best
efforts to secure the election and continuation in office, and to cause their
nominees serving as Directors to vote for the following persons as officers as
follows:
Chairman of the Board Marc Roberts
President Erik Rudolph
Executive Vice President Michael Goodson
(C) Efforts of Worldwide, Rudolph and Goodson.
Concurrently herewith, each of Rudolph and Goodson is
executing an Employment Agreement to serve as an executive officer of the
Corporation for a five year period. Pursuant to such Employment Agreements,
Worldwide has agreed to provide certain financing to the Corporation (the
"Worldwide Funding Obligation").
2. General Issue and Transfer Restrictions.
(A) Prohibition of Issuance or Transfer. The Corporation shall
not hereafter issue any Shares and neither the Corporation nor any Shareholder
shall sell, assign, pledge, hypothecate or otherwise alienate, encumber or
otherwise dispose of, in any manner (including, without limitation, by will or
intestacy), whether or not for consideration (hereinafter referred to as a
"Transfer"), any Shares except as expressly permitted by the terms of this
Agreement. Any attempted issue or Transfer of Shares of other securities of the
Corporation in violation of this Agreement shall not be recognized and shall be
deemed void ab initio.
(B) General Conditions Upon Waiver of Prohibition. In addition to
and not in limitation of any of the other restrictions and conditions, but
except as otherwise herein provided, no Shares shall hereafter be issued without
the consent of all Shareholders and no Shares shall be transferred unless each
of the following conditions is met with respect to such an issue or Transfer:
(1) the transferee agrees in writing to be bound by
all of the provisions of this Agreement to the same extent
as if he were a party to this Agreement and a Shareholder,
and a copy of such written agreement is given to the
Corporation;
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(2) the transferee executes and delivers to the
Corporation an investment letter in form and substance
satisfactory to the Corporation and its counsel, the terms
of which shall include an appropriate investment
representation; and
(3) the Transfer or issue is made pursuant to (a)
an effective registration statement under the Securities
Act of 1933 and applicable state securities laws, or (b)
an appropriate exemption therefrom, in which event the
transferee, if any, shall furnish to the Corporation an
opinion of counsel, reasonably satisfactory to the
Corporation and its counsel, that the Transfer is exempt
from such registration requirements.
(C) Restrictive Legend. Any certificate issued at any time
representing Shares shall have the following endorsement written, printed or
stamped upon the face thereof:
"NOTICE: the securities represented by this
Certificate have not been registered under the Securities
Act of 1933 and applicable state securities law, and are
subject to the terms, conditions and restrictions of a
Shareholders Agreement among the Corporation and its
Shareholders, dated as of September 1, 1996, a copy of
which is on file with the Secretary of the Corporation,
and which includes, without limitation, certain provisions
for the election of specific directors and officers named
therein and for the issuance of securities of the
Corporation. Said securities may not be offered for sale,
sold, assigned, pledged or otherwise transferred,
encumbered or disposed of, except as expressly provided in
the Shareholders Agreement."
(D) First Refusal. If a Shareholder at any time, or from time to
time receives a bona fide offer from a person or entity not a party to this
Agreement to purchase any Shares (the "Third Party Offer"), prior to the
acceptance thereof, such Shareholder (the "Offering Shareholder") shall give
notice thereof to the other parties hereto. Such notice (the "Offering Notice")
shall contain a detailed description of the Third Party Offer, including, but
not limited to, the name and address of the offeror and the price at which and
terms upon which such Shares (the "Offered Shares") are proposed to be
transferred. The Offering Notice shall be deemed to be an offer by the Offering
Shareholder to sell all Offered Shares to the other parties hereto, who shall
have the following options to accept such offer in accordance with the terms of
the Offering Notice:
(1) The Offering Shareholder shall first offer the
Offered Shares to the Corporation, which shall have sixty
days in which to accept all of the Offered Shares at the
purchase price and other terms and conditions set forth in
the Third Party Offer.
(2) If the Offered Shares offered pursuant to the
foregoing offer is not accepted, the Offered Shares shall
be offered to the other Shareholders,
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who shall have sixty days in which to accept, pro rata in
accordance with the relative shareholdings of those
Shareholders so electing, all of such Offered Shares at
the purchase price and other terms and conditions set
forth in the Third Party Offer.
(3) All acceptances of Offered Shares shall be
effected by notice (the "Acceptance Notice") given to the
Offering Shareholder within the applicable time limits
hereinabove specified.
(4) If all of the Offered Shares are not accepted
pursuant to the foregoing clauses 1 and 2 of this
subsection (A), then all, but not less than all, of the
Offered Shares may be transferred by the Offering
Shareholder, at any time within thirty days after the last
Acceptance Notice was permitted to have been given, to the
proposed offeree named in the Offering Notice at the price
and upon the other terms and conditions set forth in the
Offering Notice; provided, however, that the Offering
Shareholder is able to certify and certifies to the other
parties hereto that the transfer of the Offered Shares is
to the proposed offeree named in the Offering Notice and
pursuant to the terms and conditions set forth in the
Offering Notice.
(5) Contemporaneously with the giving of an
Offering Notice, the Offering Shareholder shall seek to
assure that such notice is actually received by the
non-Offering Shareholders by making a good faith attempt
to orally notify the non-Offering Shareholders or their
respective agents of the Offering Notice at whatever place
the non-Offering Shareholders are thought by the Offering
Shareholder.
(6) The offer made in any Offering Notice shall be
deemed to be a firm non-withdrawable offer for the
applicable periods hereinabove provided.
(7) Any Shareholder transferring all of his Shares,
other than pursuant to Section 3 hereof, if an officer,
director or employee of the Corporation, shall tender his
resignation from all such positions simultaneously with
the closing of the transfer of his Shares, and the other
parties hereto shall forthwith do all acts necessary to
modify all applicable documents filed by the Corporation
with various regulatory authorities.
(8) During any period beginning on the giving of an
Offering Notice and ending upon the closing of the
Transfer of the Shares offered thereunder, such Shares
shall not be voted and the holder thereof shall not
exercise any of the rights attendant to ownership thereof.
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(E) Drag-Along and Come-Along Requirements. If at any time
Worldwide desires to sell all of its shares of Common Stock to an unrelated
third-party purchaser, and the purchaser of such Common Stock requires, as a
condition of such sale, that such purchaser acquire all of the shares of Common
Stock of all Management Shareholders, then all of the Management Shareholders
shall be required to (i) sell all of their shares of Common Stock to such
purchaser on the same price and other terms and conditions as those offered to
Worldwide, or (ii) effect the Share Exchange set forth in Section 3 hereof. If
at any time Worldwide desires to sell all of its shares of Common Stock to an
unrelated third-party purchaser, Worldwide shall not consummate such purchase
and sale transaction unless such purchaser also offers to purchase all of the
shares of Common Stock owned by the Management Shareholders, on the same price
and other terms and conditions as those offered to Worldwide, if the Management
Shareholders so demand.
(F) Bankruptcy, Incapacity or Death of a Shareholder. Anything in
this Agreement to the contrary notwithstanding, if any Shareholder dies or
becomes bankrupt or incapacitated (which incapacity results in the appointment
by the Court of a guardian to act on behalf of such Shareholder), then neither
such Shareholder nor his executor, heir, guardian, trustee or receiver (a "Legal
Substitute") shall be entitled thereafter to be offered or to purchase any
Shares pursuant to any of the provisions of this Agreement, and such
Shareholder's interests shall be disregarded for all such purposes hereof;
provided, however, that such Shareholder or his Legal Substitute, in such an
event, shall be bound, with respect to his Shares, to all of the restrictions
and obligations imposed under this Agreement. Notice of the death, bankruptcy or
incapacity of the Affected Shareholder shall be given promptly after its
occurrence (which shall be within thirty days after the qualification of a
decedent or incompetent Shareholder's Legal Substitute in the event of a
Shareholder's death or incompetency or within ten days of any event constituting
bankruptcy) by the affected Shareholder to the Corporation and to the other
Shareholders. Such notice shall be deemed to be a notice of election to
effectuate a Share Exchange in accordance with the provisions of Section 3 of
this Agreement.
3. Exchange of Shares.
Upon the termination of the employment of either of the
Management Shareholders by the Corporation or the Management Shareholders,
either (i) the Management Shareholder whose employment has been terminated or
(ii) the Corporation may, upon 15 days written notice, elect to effectuate a
share for share exchange of the Shares held by such Management Shareholder for
shares of Common Stock of Worldwide based upon the exchange ratios set forth on
Exhibit A, annexed hereto (the "Share Exchange"). The Management Shareholders
shall also have the right to elect to effectuate the Share Exchange, upon 15
days written notice, in the event that either (i) the Minimum Player Threshold
set forth in his Employment Agreement is met or (ii) the Corporation has
achieved After-tax Earnings (calculated in accordance with Section 6(c) of the
Employment Agreement) of at least $6,000,000. Worldwide agrees to reserve shares
of its Common Stock for issuance upon the effectuation of a Share Exchange.
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4. Registration Rights.
(A) Demand Registration. Worldwide, upon written demand of
the Management Shareholders (the "Demand Notice"), agrees to register on one
occasion, up to the lesser of (i) 25,000 of the shares of Common Stock of
Worldwide held by each of the Management Shareholders, or (ii) 25% of the shares
of Common Stock of Worldwide held by each of the Management Shareholders (the
"Registrable Securities"). On such occasion, Worldwide shall file a Registration
Statement covering the Registrable Securities within thirty (30) days after
receipt of the Demand Notice and shall use its best efforts to have such
registration statement declared effective promptly thereafter.
(B) "Piggy-Back" Registration. In addition to the demand
right of registration, the Management Shareholders shall have the right for a
period of four years after the date hereof, to include shares of Common Stock of
Worldwide as part of any other registration of securities filed by Worldwide
(other than in connection with a transaction contemplated by Rule 145(a)
promulgated under the Act or pursuant to Form S-4 or Form S-8) provided,
however, that the Chief Executive Officer of Worldwide participates in such
registration of shares. In the event of such a proposed registration, Worldwide
shall furnish the then Management Shareholders with not less than twenty days'
written notice prior to the proposed date of filing of such registration
statement. The holders of the Registrable Securities shall exercise the
"piggyback" rights provided for herein by giving written notice, within ten days
after the receipt of Worldwide's notice of its intention to file a registration
statement. The Management Shareholders shall not be entitled to register
pursuant to piggyback registration rights in any twelve month period in excess
of 10% of the shares of Common Stock of Worldwide held by them unless another
executive officer of the Corporation is entitled to register a greater
percentage of his shares.
(C) Terms. Worldwide shall bear all fees and expenses
attendant to registering the Registrable Securities, but the Management
Shareholders shall pay any and all underwriting commissions and the expenses of
any legal counsel selected by the Management Shareholders to represent them in
connection with the sale of the Registrable Securities and any applicable
transfer taxes. Worldwide agrees to use its prompt best efforts to cause the
filing required herein to become effective and to qualify or register the
Registrable Securities in such states as are reasonably requested by the
Management Shareholders; provided, however, that in no event shall Worldwide be
required to register the Registrable Securities in a state in which such
registration would cause (i) Worldwide to be obligated to qualify to do business
as a foreign corporation in such State or to pay income, franchise or other
similar taxes solely as a result of such registration or to be subject to
service of general process, or (ii) the principal stockholders of Worldwide to
be obligated to escrow their shares of capital stock of Worldwide. Worldwide
shall cause any such registration statement to remain effective for a period of
at least nine consecutive months after the effective date of such registration
statement.
(D) Indemnification. Worldwide shall indemnify the
Management Shareholders against all loss, claim, damage, expense or liability
(including all reasonable attorneys'
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fees and other expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement other than to the extent claims arise from information relating to the
Management Shareholders. The Management Shareholders shall severally, and not
jointly, indemnify Worldwide against all loss, claim, damage, expense or
liability (including all reasonable attorneys' fees and other expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which they may become subject under the Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf of such Management
Shareholders in writing, for specific inclusion in such registration statement.
5. Books of Account.
Books and records of account of the Corporation shall be
maintained at its principal office, and true and accurate entries of all
transactions had by and on behalf of the Corporation shall be set down therein.
Such books and records, accounts and all other documents of the Corporation, at
all times during normal business hours, shall be open to the inspection of the
Shareholders and their authorized designees, who shall be entitled to make
copies therefrom and to take extracts thereof. Notwithstanding whether any of
the parties hereto remains a Shareholder, all such records and books of account,
together with all files and documents prepared on behalf of the Corporation,
shall remain in the exclusive possession of the Corporation.
6. Obligations of the Corporation; Conflict with By-Laws.
The parties hereto agree that all of the terms, covenants
and conditions of this Agreement shall supplement the By-Laws of the
Corporation, and, in the event of conflict therewith, shall prevail. The
Corporation shall not be deemed a party to, nor be directly obligated with
respect to, any of the voting, consent or approval provisions hereof; provided,
however, that nothing in this Section 6 or elsewhere set forth shall affect the
rights and obligations of the Shareholders among themselves under any of the
provisions of this Agreement. Wherever in any section of this Agreement
reference is made to any action to be taken or not be taken by the Corporation
or otherwise or in accordance with specified procedures, such reference shall be
deemed to mean that the Shareholders shall cast their votes and take such other
action as reasonably may be necessary or desirable or otherwise appropriate to
cause the Corporation to take or not to take such action or otherwise to
effectuate such provisions and in accordance with the procedures therein
specified.
7. Binding Agreement; Assignment; Survival.
Except to the extent otherwise expressly provided herein,
this Agreement shall be binding upon the present and future parties hereto,
their respective successors, assigns, heirs, legatees and Legal Substitutes and
all persons and other entities who otherwise may derive any rights or interests
hereunder from or through any of the parties hereto, regardless, in any event,
of whether any certificate representing Shares bears the legend provided for in
section 2(C) hereof. Except to the extent otherwise expressly provided herein,
this Agreement shall inure to the benefit of the
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present and future parties hereto, their respective heirs and legatees and, to
the extent that a transfer of their Shares is effected pursuant to the
provisions of this Agreement, their assigns. All agreements, covenants,
representations, and warranties made herein shall survive the execution and
delivery of this Agreement and the agreements made pursuant hereto or referred
to herein.
8. Communications.
All notices, demands, requests, offers, approvals,
consents, acceptances, waivers, reports and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given, received and dated when delivered personally or, if sent by overnight
courier, three days after being deposited with such courier addressed to the
parties at their addresses respectively set forth above or at such other address
as any party may give by notice. Any party may change its address by sending
notice thereof to the other parties in the manner prescribed above, except that
notice of change of address shall not be effective until actually received.
9. Construction; Headings; Word Meanings.
This Agreement, and all related agreements, instruments
and documents, shall be construed and enforced in accordance with the laws of
the State of New York without giving effect to the principles of conflict of
laws. Headings and titles are for convenience of reference only and shall not
control the construction or interpretation of any provision hereof.
10. No Third Party Beneficiaries.
Nothing in this Agreement shall be construed as conferring
upon any person or other entity, other than the parties hereto and their Legal
Substitutes (to the extent provided herein), any right, remedy or claim under or
by reason of this Agreement.
11. Entire Agreement; Modification; Consents; Waivers.
This Agreement and the agreements and instruments referred
to herein represent the entire agreement of the parties with respect to the
subject matter hereof and no interpretation, change, termination or waiver of or
extension of time for performance under, any provision of the Agreement shall be
binding upon any party unless in writing and signed by the party intended to be
bound thereby. Any provision of this Agreement can be modified if consented to
by all of the parties hereto. Receipt by any party of money or other
consideration due under this Agreement, with or without knowledge of breach,
shall not constitute a waiver of such breach or of any provision of this
Agreement. Except as otherwise provided herein, no waiver of or other failure to
exercise any right under, or default or extension of time for performance under,
any of the provisions of this Agreement shall affect the right of any party to
exercise any subsequent right under or otherwise enforce said provision or any
other provision hereof or to exercise any right or remedy in the event of any
other default, whether or not similar. Without limitation to the generality
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of the foregoing and except as otherwise provided herein, the failure of any
party to exercise any right of first refusal or any Put or Call hereunder
(hereinafter collectively referred to as "said rights") shall not in any way
constitute a waiver of or otherwise affect such party's right to exercise any of
the other said rights or to exercise any subsequent said rights to which such
party may otherwise be entitled hereunder.
12. Severability.
The invalidity or unenforceability of any particular
provision of this Agreement shall not affect any of the other provisions hereof
and this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and date first set forth above.
WORLDWIDE BASKETBALL MANAGEMENT, INC.
By: /s/ Marc Roberts, President
__________________________________
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By: /s/ Marc Roberts, President
__________________________________
/s/ Erik Rudolph
______________________________________
Erik Rudolph
/s/ Michael Goodson
______________________________________
Michael Goodson
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EXHIBIT A
Exchange Ratios for Share Exchange
Each share of Worldwide Basketball Management, Inc. (the "Corporation shall be
exchanged for the number of shares of Worldwide Entertainment & Sports Corp. set
forth in Subsection A plus the number of shares set forth in Subsection B.
A
1,250 shares - if the notice of election causing the Share Exchange is given
on or before March 31, 1997
2,500 shares - if the notice of election causing the Share Exchange is given
after March 31, 1997 and before September 1, 1997
5,000 shares* - if the notice of election causing the Share Exchange is given
on or after September 1, 1998 OR the Minimum Player Threshold
has been met OR the notice of election causing the Share
Exchange results from a termination of the employment of the
Management Shareholder by the Corporation without "cause" as
defined in Section 9(a)(i) of the Employment Agreement of such
Management Shareholder
B
1,250 shares - if the After-tax Earnings of the Corporation (calculated in
accordance with the Employment Agreement of the Management
Shareholder) is at least $750,000 but less than $1,500,000
2,500 shares - if the After-tax Earnings of the Corporation is at least
$1,500,000 but less than $2,250,000 OR only 1/4 of the Minimum
Player Threshold has been met
3,750 shares - if the After-tax Earnings of the Corporation is at least
$2,250,000 but less than $3,000,000
5,000 shares - if the After-tax Earnings of the Corporation is at least
$3,000,000 but less than $3,750,000 OR only 1/2 of the Minimum
Player Threshold has been met
6,250 shares - if the After-tax Earnings of the Corporation is at least
$3,750,000 but less than $4,500,000
7,500 shares - if the After-tax Earnings of the Corporation is at least
$4,500,000 but less than $5,250,000 OR only 3/4 of the Minimum
Player Threshold has been met
8,750 shares - if the After-tax Earnings of the Corporation is at least
$5,250,000 but less than $6,000,000
10,000 shares** - if the After-tax Earnings of the Corporation is at least
$6,000,000 OR the full Minimum Player Threshold (as defined in
the Employment Agreement of the Management Shareholder) has
been met.
* In no event shall the number of shares represented by Subsection A exceed
5,000 shares
** In no event shall the number of shares represented by Subsection B exceed
10,000 shares
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CONSULTING AGREEMENT
This Agreement is made and entered into as of the 10th day of
May, 1996, by and between Summit Management Group, Ltd., a South Carolina
corporation with its principal address at Suite 1980, 1201 Main Street,
Columbia, SC 29201 (the "Consultant") and Worldwide Entertainment & Sports
Corp., a Delaware corporation with its principal address at 29 Northfield
Avenue, Suite 200, West Orange, NJ 07052 (the "Company").
WITNESSETH:
WHEREAS, the Consultant is engaged in certain business
operations related to the business conducted by the Company; and
WHEREAS, James Brown and Darnell Jones, the principal owners
and controlling persons of the Consultant (the "Principals"), possess certain
skills and expertise related to the business conducted by the Company, and
WHEREAS, the Company and the Consultant wish to enter into an
Agreement whereby Consultant will render consulting services to the Company; and
WHEREAS, the Company desires to retain the Consultant upon
the terms and conditions hereinafter set forth, and the Consultant is willing
to be so retained;
NOW, THEREFORE, in consideration of the premises and the
covenants herein contained, the parties hereto do hereby agree as follows:
1. RETENTION; TERM
(a) The Company hereby retains the Consultant and the
Consultant hereby agrees to serve the Company as a consultant for the
five-year period commencing May 10, 1996 (the "Initial Term"), and the
Consultant hereby accepts such retention.
(b) The Initial Term of this Agreement shall automatically be
extended for consecutive one year periods each, unless either party shall give
notice to the other at least 90 days prior to the expiration of the Initial Term
or the then current renewal term.
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2. DUTIES
(a) Subject at all times to the supervision and direction of
Marc Roberts, Chief Executive Officer of the Company, the Consultant shall
during the term hereof render advisory and consultation services to the Company.
Such advisory and consultation services shall relate to the identification for
and introduction to the Company of athletes and entertainers ("Clients") to whom
the Company may provide agency, management, marketing or other services which
may be offered by the Company from time to time (including without limitation
negotiation of player contracts with professional sports teams). The Consultant
shall render as much time as the Consultant deems proper to the performance of
its services hereunder. The Consultant shall perform its duties as an
independent contractor, and no person acting on its behalf, including without
limitation the Principals, shall be deemed an employee of the Company. The
Consultant shall act with reasonable prudence and diligence in the performance
of its obligations hereunder.
(b) Upon the identification by the Consultant of a prospective
Client whom the Consultant proposes to introduce to the Company, the Consultant
shall submit to the Company a notification (the "New Client Notice") in the form
annexed hereto as Exhibit A. Upon the acceptance by the Company of a prospective
Client, the Company and the Consultant will agree in writing as to the
commission percentage which shall be applicable to such Client for the purposes
of Section 3 below, taking into consideration factors such as the relative
contributions of the Consultant and the Company in retaining the Client, the
level of expenses and revenues expected to be generated as a result of providing
services to the Client, and the nature of the services expected to be provided
to the Client. It is understood that the Company shall have the sole and
exclusive right to accept or reject any consulting service offered, and the sole
and exclusive right to determine the extent, if any, to which a prospective
Client shall be further pursued and/or provided services by the Company. The
Company will consult with and follow the recommendations of the Consultant with
respect to matters relating to Clients introduced to the Company by the
Consultant.
(c) The Company acknowledges that the Consultant is engaged in
the business of providing money management and related advisory services to
Clients, and that the Consultant is under no obligation to refer any Clients to
the Company for such services or such other services which the Consultant may
provide to Clients in the ordinary course of its business.
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3. COMPENSATION
(a) As the initial compensation due to the Consultant
hereunder, the Company shall issue to the Consultant, or at the Consultant's
direction to the Principals, shares of the common stock of the Company in such
number of shares as shall equal $200,000 divided by the price per share at which
the Company's common stock is offered for sale through its initial public
offering.
(b) Consultant shall receive, as incentive compensation, an
amount equal to fifty (50%) percent (or such other percentage as may be agreed
upon between the parties and set forth on the New Client Notice) of the Net
Revenues (as herein defined) received by the Company as a result of services
provided by the Company to Clients. The amounts payable to the Consultant
pursuant to the two preceding sentences shall be referred to herein as
"Commissions". "Net Revenues" shall mean, with respect to a Client, the fees and
other remuneration retained by the Company resulting from services provided by
the Company to or on behalf of the Client after deduction of all expenses
incurred in connection with providing such services to the Client.
(c) The Consultant will have the option to receive its
Commissions, in whole or in part, in cash or in shares of common stock of the
Company (based upon the then current market value of the common stock, if then a
public company) having a market value equal to 110% of the amount of cash
compensation which would be payable to the Consultant. Regardless of any
increases in the market value of the common stock following an initial public
offering ("IPO") of the Company's common stock, for the purposes of this
calculation, the first $1,000,000 of compensation which is payable to the
Consultant the first 36 months of this agreement which the Consultant elects to
receive in shares of the Company's common stock will be calculated utilizing a
per share value equal to the offering price of the Company's common stock in the
IPO. Payments made in cash shall be made on a gross basis, without deduction of
withholding tax, FICA, etc.
4. ENTIRE AGREEMENT AND MODIFICATION
This Agreement constitutes and contains the entire agreement
of the parties and supersedes any and all prior negotiations, correspondence,
understandings and agreements between the parties respecting the subject matter
hereof. This Agreement may only be amended by a written instrument signed by
each of the parties to this Agreement. Failure of a party to enforce one or more
of the provisions of this Agreement or to require at any time performance of any
of the obligations hereof shall not be construed to be a waiver of such
provisions by such party nor to in any way affect the validity of this Agreement
or such party's right thereafter to enforce any provision of this
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Agreement, nor to preclude such party from taking any other action at any time
which it would legally be entitled to take. If any provision of this Agreement
is held to be invalid or unenforceable by any court or tribunal of competent
jurisdiction, the remainder of this Agreement shall not be affected by such
judgment, and such provision shall be carried out as nearly as possible
according to its original terms and intent to eliminate such invalidity or
unenforceability.
5. NOTICE
Any notice or other communication under this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
against receipt therefor or when mailed registered or certified mail, postage
prepaid, return receipt requested, to the parties at their respective addresses
given above, or to such other address as either party shall have given by notice
hereunder to the other.
6. BINDING EFFECT
The rights, benefits, duties and obligations under this
Agreement shall inure to, and be binding upon the Company and its respective
successors and assigns and upon the Consultant and his legal representatives,
heirs, and legatees. The Consultant may not assign his rights or obligations
under this Agreement without the prior written consent of the Company.
7. GOVERNING LAW JURISDICTION
This Agreement and the exhibits hereto shall be construed in
accordance with and governed by the laws of the State of New York without giving
effect to that State's conflict of laws principles. By executing this Agreement,
the Company, the Consultant and the Principals consent to the exclusive personal
jurisdiction and venue of the State and Federal courts situated in New York
County for any action or proceedings arising out of this Agreement or the
subject matter hereof and the Company, the Consultant and the Principals
irrevocably waive any defense or claims in any such actions or proceedings based
on lack of personal jurisdiction, improper venue, forum non conveniens or any
similar basis, to the maximum extent permitted by law.
8. HEADINGS
The headings of the paragraphs herein are inserted for
convenience and shall not affect the interpretations of this Agreement.
-4-
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IN WITNESS WHEREOF, the parties have executed this Agreement
the day and year first above written.
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By: /s/ Marc Roberts, President
------------------------------
SUMMIT MANAGEMENT GROUP, LTD.
By: /s/ Marion Darnell
-------------------------------
/s/ Marion Darnell
-------------------------------
Marion Darnell Jones
/s/ James E. Brown
-------------------------------
James E. Brown
-5-
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[ROSENBERG RICH BAKER BERMAN & COMPANY LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
To the Board of Directors of
Worldwide Entertainment & Sports Corp.
We consent to the use in this Registration Statement of Worldwide Entertainment
& Sports Corp. on Form SB-2 of our report dated February 5, 1996 (except as to
Notes A(2), C, F, H and K which are dated July 17, 1996 and Note L which is
dated September 1, 1996), appearing in the Prospectus, which is part of this
Registration Statement.
We also consent to the reference to us under the headings "Selected Consolidated
Financial Data" and "Experts" in such Prospectus.
Rosenberg Rich Baker Berman & Co.
Maplewood, New Jersey
September 10, 1996
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