<PAGE>
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 11, 1996
REGISTRATION NO. 333-8855
________________________________________________________________________________
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4 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 [ ].
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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)......... Units(2) $ 6.00 $ 8,970,000 $3,093
Common Stock, $.01 par
value....................... 1,495,000 Shares(3) $ 7.20 $10,764,000 $3,448
Underwriter's Units (each Unit
consisting of one share of
Common Stock and one
Redeemable Warrant)......... 130,000 Units(4) $ 7.20 $ 936,000 $ 322
Common Stock, $.01 par
value....................... 130,000 Shares(5) $ 7.20 $ 936,000 $ 322
----------------- ------------
TOTAL.................... $21,606,000 $7,450(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 195,000 Units issuable upon exercise of the Underwriters'
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 Representative.
(5) Reserved for issuance upon exercise of the Redeemable Warrants underlying
the Representative's Units.
(6) Such fee was previously paid.
<PAGE>
<PAGE>
SUBJECT TO COMPLETION, OCTOBER 11, 1996
PROSPECTUS
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
1,300,000 UNITS
EACH COMPRISED OF
ONE SHARE OF COMMON STOCK AND
ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT
Worldwide Entertainment & Sports Corp. (the 'Company') hereby offers
1,300,000 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 representative of the several underwriters (the
'Representative'), 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' ON PAGES 6 THROUGH 13 OF THIS
PROSPECTUS.
------------------------
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)................................................. $7,800,000 $780,000 $7,020,000
</TABLE>
(1) Does not reflect additional compensation to the Representative in the form
of (i) a non-accountable expense allowance of up to $156,000 ($179,400 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 130,000 Units at $9.90 per Unit (the 'Unit
Purchase Option'); and (iii) 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 Underwriters 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 $.42 per Unit), including the Representative's
non-accountable expense allowance and the consulting fee
payable to the Representative.
(3) The Company has granted the Underwriters 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 $8,970,000, $897,000, and
$8,073,000, respectively. See 'Use of Proceeds' and 'Underwriting.'
The Units are offered on a 'firm commitment' basis by the Underwriters
when, as and if delivered to and accepted by the Underwriters, 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 Representative, 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>
<TABLE>
<S> <C> <C> <C> <C>
[PHOTO] [PHOTO] [PHOTO] [PHOTO] [PHOTO]
CHARLES "THE NATURAL" MURRAY STEPHEN DAVIS SAMAKI WALKER WILLIAM GAINES SHANNON BRIGGS
Current NABF Junior Welterweight Running Back, Forward, Dallas Mavericks, Defensive Tackle 24 year old
Champion of the World Washington Redskins No. 9 pick in First Round Washington Redskins Heavyweight Prospect
of the 1996 NBA Draft
</TABLE>
[Worldwide Entertainment and Sports Corp. Logo]
<TABLE>
<S> <C> <C> <C> <C>
[PHOTO] [PHOTO] [PHOTO] [PHOTO] [PHOTO]
SHAWNELLE SCOTT FRANKIE SMITH RAY "MERCILESS" MERCER JASON OSBORNE TRACY HARRIS PATTERSON
Center/Forward, Cornerback 1988 Olympic Heavyweight Guard, Indiana Pacers Junior Lightweight
Cleveland Cavaliers San Francisco 49'ers Gold Medalist, 2 time World Champion
former Heavyweight
Champion of the World
</TABLE>
The foregoing atletes are among those represented by Worldwide Entertainment &
Sports Corp.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS 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 assume no exercise of: (i) the
Underwriters' 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............... 1,300,000 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....................... 5,053,255(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 $5,152,467
Total Assets.................................................. 784,670 714,882 5,398,509
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) $4,765,750
</TABLE>
- ------------
(1) Adjusted to reflect the anticipated application of the net proceeds from the
sale of the 1,300,000 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; WORKING CAPITAL DEFICIT
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
$(1,304,250). 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 $4,357,000 (67%) 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 $(1,304,250) 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 $5.04 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 84% 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 44.2% 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, Erik 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 REPRESENTATIVE
The Representative 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.
RELATIONSHIPS AMONG DIRECTORS
Marc Roberts, the principal stockholder of the Company, is the son of Roy
Roberts and the nephew of Allan Cohen. Each of such persons serves as a
director of the Company. As a result of such relationships, such persons could
be expected to vote in a similar manner with respect to matters submitted to the
Board of Directors.
LIMITATION ON THE LIABILITY OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation and bylaws contain certain
provisions permitted under the Delaware General Corporation Law relating to the
liability of directors and officers. These provisions eliminate a director's
personal liability for monetary damages resulting from a breach of fiduciary
duty of care to the Company or its stockholders, except in certain circumstances
involving certain wrongful acts, and also contain provisions indemnifying the
directors and officers of the Company to the fullest extent permitted by
Delaware General Corporation Law. Accordingly, except in certain circumstances,
in the event that monetary damages are granted against a director or officer of
the Company (including damages awarded in connection with an action brought by
the stockholders of the Company) the Company may be obligated to indemnify such
director or officer to the extent of such damages. Damages in any such
circumstances could be substantial and the resulting indemnification obligation
could have a material adverse effect on the Company's financial condition.
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 (2,233,301 shares) for a period of 18 months after the
date of closing of this offering without the prior written consent of the
Representative. 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 Representative 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.
REPRESENTATIVE'S POTENTIAL INFLUENCE ON THE MARKET
A significant number of the Securities offered hereby may be sold to
customers of the Representative. Such customers subsequently may engage in
transactions for the sale or purchase of such Securities through or with the
Representative. Although it has no obligation to do so, the Representative
intends to make a market in the Securities and may otherwise effect transactions
in such securities. If it participates in such market, the Representative may
influence the market, if one develops, for the Securities. Such market-making
activity may be discontinued at any time. Moreover, if the Representative 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 Representative's
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
<PAGE>
<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 1,300,000 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 $4,863,259, or $.96 per
share, representing an immediate increase in net tangible book value of $1.39
per share to the present stockholders, and an immediate dilution of $5.04 (or
84%) 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...................................... $1.39
-----
Pro forma net tangible book value after offering.................................... $ .96
-----
Dilution of net tangible book value to public investors............................. $5.04
-----
-----
</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 74.3% $ 37,533(1) 0.5% $ .01
Public Investors................. 1,300,000 25.7% $ 7,800,000 99.5% $ 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 $4.88, as the pro forma net tangible book value per share after the
offering would increase from $4,863,259 to $5,892,859.
13
<PAGE>
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Units offered hereby
are estimated to be approximately $6,470,000 ($7,523,000 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 33.0%
Training Expenses(2).............................................. $ 475,000 7.3%
Recruitment Expenses(3)........................................... $ 700,000 10.8%
Relocation of Facility Expenses(4)................................ $ 400,000 6.2%
Employee Bonuses.................................................. $ 100,000 1.5%
Working Capital(5)................................................ $2,682,000 41.5%
TOTAL................................................... $6,470,000 100%
</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 expenses of trainers, strength coaches, sparring partners and
training supplies.
(3) 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.
(4) Represents the anticipated costs of relocating and equipping the Company's
executive offices and boxing training facility.
(5) 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
<PAGE>
<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;
3,753,255 shares issued and outstanding; 5,053,255 shares issued
and outstanding as adjusted(2).................................. 37,533 50,533
Additional Paid In Capital............................................. 278,470 6,735,470
Accumulated Deficit.................................................... (1,607,903) (1,607,903)
Demand Note Receivable on Private Issuance of Common Stock............. (12,350) (12,350)
Total Stockholders' Equity (Capital Deficiency)........................ (1,304,250) 5,165,750
Total Capitalization................................................... 914,882 5,398,509
</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) 1,300,000 shares issuable upon the exercise of the
Redeemable Warrants; (ii) 195,000 shares of Common Stock included in the
Units which may be sold pursuant to the over-allotment option or the 195,000
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
<PAGE>
<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................................................................ 698,719 567,019
Total Assets........................................................................ 784,670 914,882
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.......................................................... 78,803 278,470
Accumulated (deficit)............................................................... (904,109) (1,607,903)
Demand Note Receivable on Private Issuance of Common Stock.......................... (12,350) (12,350)
Stockholders Equity (Deficiency).................................................... (800,456) (1,304,250)
</TABLE>
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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 $1,304,250 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% $5,000
Welterweight........ w/21 September 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% $5,000
w/20 September 25, 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
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boxer will engage in and the terms of the purses to be paid for such bouts. In
exchange for providing 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. Summit has
provided its business management services to professional football, baseball and
basketball players for over six years, but does not act as an Agent for its
clients. 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.
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. Such arrangement may be terminated by the Company or Mr.
Roberts at any time.
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>
37 President, Chief Executive Officer, President of
Worldwide Team Sports, Inc. and Director
Marc Roberts.......................................
57 Chief Financial Officer, Director
Roy Roberts........................................
54 Director
Allan Cohen, M.D...................................
48 Director
Dan Drykerman......................................
43 Director
Herbert F. Kozlov..................................
55 Director
Harvey Silverman...................................
34 President, Worldwide Basketball Management, Inc.
Erik Rudolph.......................................
</TABLE>
Marc Roberts has been President and Chief Executive Officer of the Company
since its inception in August 1995. Since 1992, Mr. Roberts has been engaged in
the management of the Company's boxers through the Company's predecessors. 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., which
operates rotisserie chicken restaurants under the tradename 'Linda's Flame
Roasted Chicken' and is a federally licensed lender for home improvement loans.
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 is a director and Vice Chairman of Options Clearing
Corp. Mr. Silverman received his Bachelor of Sciences Degree from Brooklyn
College in 1967.
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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.
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
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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 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
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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
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.
33
<PAGE>
<PAGE>
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 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. and is currently engaged
in casino development and management. Such company is a public company filing
reports under the Exchange Act.
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 (1) AFTER THE OFFERING (1)
- ----------------------------------- ------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Marc Roberts ...................... 1,684,966 44.9% 33.3%
29 Northfield Avenue
West Orange, NJ 07052
Roy Roberts........................ 83,334 2.2% 1.6%
Allan Cohen, M.D................... 41,667(2) 1.1% *
Dan Drykerman...................... 40,000(3) 1.1% *
Herbert F. Kozlov ................. 300,000(4) 8.0% 5.9%
529 Fifth Avenue
New York, NY 10017
Harvey Silverman................... 83,334 2.2% 1.6%
All officers and directors as a
group (6 persons)................ 2,233,301(2)(3)(4) 58.5% 44.2%
</TABLE>
- ------------
* Less than 1%
(1) Based on 3,753,255 shares outstanding prior to, and 5,053,255 shares
outstanding upon consummation of Offering.
(2) Includes 25,000 shares which may be acquired upon the exercise of currently
exercisable warrants.
(3) Includes 37,500 shares which may be acquired upon the exercise of currently
exercisable warrants.
(4) 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)
5,053,255 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 after the first
anniversary of the date of this Prospectus 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 Representative 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
The Underwriters named below (the 'Underwriters'), for whom William Scott &
Company, L.L.C. is acting as the representative (the 'Representative'), has
severally agreed, subject to the terms and conditions of the Underwriting
Agreement between the Company and the Representative (the 'Underwriting
Agreement'), to purchase from the Company, and the Company has agreed to sell to
the Underwriters, the number of Units set forth in the table below at the price
set forth on the cover page of this Prospectus under 'Proceeds to Company.'
37
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF UNITS
- ---------------------------------------------------------------------------- ---------------
<S> <C>
William Scott & Company, L.L.C..............................................
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters to purchase such Units are subject to certain conditions. The
Underwriters are committed to purchase all of the Units offered by this
Prospectus, if any are purchased.
The Representative has advised the Company that the Underwriters propose 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 the initial public offering, the public offering
price, concessions and reallowances may be changed by the Representative.
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 Act.
The Company has agreed to pay the Representative 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 $30,000 toward such fees.
The Company has granted an option to the Underwriters, exercisable during
the 45-day period from the date of this Prospectus, to purchase up to 195,000
additional Units at the public offering price, less underwriting discounts and
commissions, solely to cover over-allotments in the sale of the Units. To the
extent such option is exercised, each Underwriter will become obligated, subject
to certain conditions, to purchase approximately the same percentage of such
additional Units as the percentage it was obligated to purchase pursuant to the
Underwriting Agreement.
The Underwriter has informed the Company that no sales of the Securities
offered hereby will be made to discretionary accounts.
The Company has agreed to sell to the Representative or its designees, for
nominal consideration, the Unit Purchase Option to purchase up to 130,000 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 $9.90 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 or partners of the Underwriters. The Company
has agreed to register during the four-year period commencing one year from the
date of this Prospectus, on one occasion upon request of the holder(s) of a
majority of the Unit Purchase Option, the securities issuable upon exercise
thereof under the Act, such registration to be at the Company's expense. 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 has agreed to enter into a two-year agreement providing for the
payment of a fee to the Representative ranging from 2% to 5% of the
consideration paid, in the event the Representative is responsible for a merger
or other acquisition transaction to which the Company is a party. In addition,
the Company shall retain the Representative 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.
38
<PAGE>
<PAGE>
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 Representative
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
Representative.
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 Representative. 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.
The Company has engaged the Representative, individually and not as
Representative, 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 Representative 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 Representative and the Representative 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
Representative 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 Representative 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.
39
<PAGE>
<PAGE>
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.
40
<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.
Rosenberg Rich Baker Berman & Company
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
Prepaid consulting expense..................................................... 40,000 --
----------- ------------
567,019 698,719
----------- ------------
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
Deferred consulting expense.................................................... 160,000 --
Organization costs (net of accumulated amortization)........................... 670 1,004
Other assets................................................................... 16,325 5,325
----------- ------------
281,129 55,790
----------- ------------
$ 914,882 $ 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..................................................... 278,470 78,803
Accumulated deficit............................................................ (1,607,903) (904,109)
Demand note receivable on private issuance of Common Stock..................... (12,350) (12,350)
----------- ------------
(1,304,250) (800,456)
----------- ------------
$ 914,882 $ 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 -- 199,667 -- --
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 $ 278,470 $(1,607,903) $ (12,350)
------ ------ --------- ------- ------------ ---------- ----------- -----------
------ ------ --------- ------- ------------ ---------- ----------- -----------
</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 $1,304,250. 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 1,300,000 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
The loss per share calculation assumes that the shares issued at par value
are reacquired using the treasury stock method at the initial public offering
price. This is figured according to SAB4:D. These shares are assumed to be
reacquired and are included as such in common shares outstanding for all periods
presented even if the effect is anti-dilutive (APB 15). The effective dilution
is not substantial. Therefore the Company is considered to have a simple capital
structure and does not need to present primary or fully-diluted loss per share.
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.
F-8
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
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 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.
F-9
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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. These shares have
been valued at $200,000, which is based upon the price per share at which the
Company's common stock is offered for sale through its initial public offering.
F-10
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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>
<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>
F-11
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
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>
F-12
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE J -- LEASE COMMITMENT -- (CONTINUED)
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.
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 85% 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.
F-13
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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. 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, 1996 DECEMBER 31,
------------- 1995
(UNAUDITED) -----------------
(UNAUDITED)
<S> <C> <C>
Total assets......................................................... $15,173 $32
------------- ---
Total partners' capital......................................... $15,173 $32
------------- ---
------------- ---
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS FOR THE PERIOD
ENDED JANUARY 5, 1995
JUNE 30, 1996 (INCEPTION) TO
------------- 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
<PAGE>
<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...................................................................................................... 40
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.
1,300,000 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.
In September 1995, the Company issued to 55 persons an aggregate of
1,234,955 shares. Each person paid a purchase price of $.01 per share price of
such common stock. The Company believes that the issuance of the shares was
exempt from registration under the Securities Act of 1933 in reliance on
II-1
<PAGE>
<PAGE>
the exemption afforded by Section 4(2) thereunder. Each of such persons was
either a member of management of the Company, a relative of such person, or a
person having a personal or business relationship with a member of management.
The issuances to these persons occurred prior to the Company commencing active
business operations and were issued at par value ($.01). Such issuances were not
undertaken for the purpose of raising capital, nor did such issuances involve
the solicitation of investors. The participants in such issuance are identified
below.
<TABLE>
<CAPTION>
NUMBER
OF
NAME SHARES
- ----------------------------------------------------------------------------------- -------
<S> <C>
Shannon Briggs..................................................................... 33,334
Arnie Budin........................................................................ 3,334
Leonard Byam....................................................................... 835
Karen Camacho...................................................................... 6,000
Michael Cantor..................................................................... 37,500
Ron Cantor......................................................................... 2,500
Bill Cayton........................................................................ 5,000
Alan Cohen......................................................................... 16,667
Richard Davimos, Jr................................................................ 62,361
Robert Davimos..................................................................... 66,667
Dan Drykerman...................................................................... 2,500
Isaac Dweck........................................................................ 8,334
Russell Fishkind................................................................... 25,000
Thomas Gallahger................................................................... 8,334
Steve Goldstein.................................................................... 4,167
Jeff Greenman...................................................................... 3,334
William Grafton.................................................................... 25,000
Ray Greenman....................................................................... 3,334
Sam Hampton........................................................................ 5,000
Tom Hauser......................................................................... 2,000
Alyssa Held........................................................................ 5,000
Drew Holder........................................................................ 4,166
Gary Hollander..................................................................... 83,334
Morris Husarsky.................................................................... 104,167
Erica June......................................................................... 1,667
Howard Kessler..................................................................... 29,166
Stewart Koenig..................................................................... 25,000
Hersh Kozlov....................................................................... 5,000
Ronald Kramer...................................................................... 12,500
Jeff Langendorff................................................................... 1,667
Joseph Marino...................................................................... 41,666
Kevin Masarik...................................................................... 1,667
Marlin Merritt..................................................................... 415
Ray Mercer, Sr..................................................................... 50,000
Charles Murray..................................................................... 16,667
Parker Duryee Rosoff & Haft........................................................ 50,000
Thomas Parks....................................................................... 50,000
Tracy Patterson.................................................................... 16,667
Susan Rauch........................................................................ 50,000
Ali Roberts........................................................................ 8,334
Cari Roberts....................................................................... 8,334
David Roberts...................................................................... 8,334
Roy Roberts........................................................................ 83,334
Roz Roberts........................................................................ 16,666
</TABLE>
(table continued on next page)
II-2
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
NUMBER
OF
NAME SHARES
- ----------------------------------------------------------------------------------- -------
<S> <C>
Terry Rucker....................................................................... 39,166
Ryan Schinman...................................................................... 25,000
Robert Schultz..................................................................... 16,667
Corey Shapiro...................................................................... 4,167
Eugene Silverman................................................................... 22,500
Harvey Silverman................................................................... 83,334
Vicki Strowe....................................................................... 8,334
Troy Taylor........................................................................ 1,667
Lawrence Twill..................................................................... 20,000
Russell Weisman.................................................................... 4,167
Morris Wolfson..................................................................... 8,334
Jerry Ziering...................................................................... 6,667
</TABLE>
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. The Company believes that
the placement of the Units was exempt from registration under the Securities Act
of 1933 in reliance on the exemption afforded by Section 4(2) thereunder. The
offer of the units was made on a private basis, without general solicitation or
other indicia of a public offering. The units were offered by Company management
to a limited number of persons, each of whom had a direct or indirect personal
or business relationship with the Company's management, and each of whom were
'accredited investors' who possessed sufficient business sophistication to
analyze the merits of an investment in the units. The particpants in such
private placement are identified below.
<TABLE>
<CAPTION>
NAME UNITS
- --------------------------------------------------------------------------------------- -----------
<S> <C>
Frank Duchon........................................................................... 1/2
Howard J. Trinker...................................................................... 1/2
Gary Rein.............................................................................. 1/2
Vincent Fogliano....................................................................... 1/2
Eugene D. Crittenden Jr................................................................ 1
Marc R. Eisner & Billie B. Eisner...................................................... 1/2
Andrew Constantine II.................................................................. 1/2
Barrett L. Silver...................................................................... 1/2
Russell J. Weisman..................................................................... 1/4
Douglas C. Wilkins..................................................................... 1/2
Dan Drykerman.......................................................................... 1 1/2
Dr. Phil Lifschitz..................................................................... 1
Steven DaPuzzo......................................................................... 1/2
Robert Schultz......................................................................... 1/4
David I. Shapiro....................................................................... 1/2
Gary Wood.............................................................................. 1/2
Lawrence B. Lewis...................................................................... 1/4
David H. Meyrowitz..................................................................... 1/2
</TABLE>
(table continued on next page)
II-3
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
NAME UNITS
- --------------------------------------------------------------------------------------- -----------
<S> <C>
Harry A. Danz.......................................................................... 1/2
Bruce A. Sussman....................................................................... 1/2
William B. Marcus...................................................................... 1/2
Ann Silver & Linda Silver.............................................................. 1/2
Robert Rosenberg....................................................................... 1/4
Stuart D. Goldman...................................................................... 1/2
Allan B. Cohen......................................................................... 1
Manhattan Funding Group................................................................ 1
Bonnie S. Grossman..................................................................... 1/2
Andrew A. Holder....................................................................... 1/2
Bernard M. Weiss....................................................................... 1/4
Dr. Joseph Ferrante III................................................................ 1/4
Michael T. Lamoretti................................................................... 1/4
Paul V. Profeta........................................................................ 1
Thomas L. Parks and Easter C. Parks.................................................... 1/2
Eugene Silverman....................................................................... 3/4
Peggy Ann Garjian & Kenneth J. Santiamo................................................ 1 1/2
Michael M. Cantor...................................................................... 2
Momentum Enterprises Inc............................................................... 1
Gary C. Nassau/Martin Katz............................................................. 1/2
Bruce A. Lipnick....................................................................... 1/4
Isaac R. Dweck......................................................................... 2
Bruce Fischer.......................................................................... 1
Jeffrey Fischer........................................................................ 1
Peter T. Roselle....................................................................... 1
Howard Kessler......................................................................... 1/2
Renaissance Associates................................................................. 1/2
Nelson Garjian......................................................................... 1/2
Danielle & Nicole Mongelli............................................................. 1/2
Richard Garjian........................................................................ 1
Michael J. Frielander.................................................................. 1/2
Vasant Chmeda.......................................................................... 1
John F. Casey.......................................................................... 1/4
John Dichiara.......................................................................... 1
Richard Buchaniec...................................................................... 1/2
Irving and Anne Freedberg.............................................................. 1/2
Barbara E. Zimmer...................................................................... 1/2
Morris Wolfson Family L.P.............................................................. 2
Kayasan S.A............................................................................ 1
Ira Stern.............................................................................. 1/2
</TABLE>
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.
II-4
<PAGE>
<PAGE>
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
- ---------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1* -- Form of Underwriting Agreement.
1.2 -- Agreement Among Underwriters
1.3 -- Financial Advisory and Investment Banking Agreement
1.4 -- Unit Purchase Option 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
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
(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
II-5
<PAGE>
<PAGE>
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 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-6
<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 October 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
- ------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
/S/ MARC ROBERTS Director, President and Chief Executive October 11, 1996
......................................... Officer (Principal executive officer)
MARC ROBERTS
* Director (Principal accounting and financial October 11, 1996
......................................... officer)
ROY ROBERTS
* Director October 11, 1996
.........................................
ALLAN COHEN
* Director October 11, 1996
.........................................
DAN DRYKERMAN
* Director October 11, 1996
.........................................
HERBERT KOZLOV
* Director October 11, 1996
.........................................
HARVEY SILVERMAN
* /S/ MARC ROBERTS
.........................................
MARC ROBERTS, ATTORNEY IN FACT
</TABLE>
II-7
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
1,300,000 UNITS
1,300,000 SHARES OF COMMON STOCK
WITH
WARRANTS TO PURCHASE 1,300,000 SHARES OF COMMON STOCK
AGREEMENT AMONG UNDERWRITERS
New York, New York
, 1996
To: Each of the Underwriters named
in Schedule A to the attached
Underwriting Agreement
Dear Sirs:
Worldwide Entertainment & Sports Corp., a Delaware corporation
(the "Company"), proposes to enter into an underwriting agreement, substantially
in the form attached hereto as Exhibit A (the "Underwriting Agreement"), with
William Scott & Company, LLC (the "Representative") of the Underwriters named in
Schedule A hereto(the "Underwriters"), acting severally and not jointly, with
respect to the purchase from the Company of an aggregate of 1,300,000 units (the
"Offered Units") consisting of an aggregate of 1,300,000 shares of common stock,
$.01 par value (the "Common Shares"), and 1,300,000 Common Share purchase
warrants (the "Warrants") entitling the holder of each Warrant to purchase one
Common Share during the five-year period commencing one year after the original
issuance of the Warrants. Such Common Shares and Warrants will be offered to the
public in Units, each Unit consisting of one Common Share and one Warrant. The
Underwriting Agreement also provides for the grant to the Representative,
individually, and not as representative of the Underwriters, of up
1
<PAGE>
<PAGE>
to an additional 195,000 Units (the "Optional Units"), at its option, for the
sole purpose of covering over-allotments in the sale of the Offered Units. The
Units are described in the Registration Statement and Prospectus (as defined in
the Underwriting Agreement). The Representative will, unless otherwise
specified, act as the representative of the Underwriters in the transactions
described herein and in the Underwriting Agreement.
1. AUTHORITY OF THE REPRESENTATIVE. Each Underwriter hereby
severally authorizes the Representative on such Underwriter's behalf to (a)
enter into an Underwriting Agreement with the Company substantially in the form
attached hereto as Exhibit A; (b) fix the initial public offering price per Unit
and the discount in connection therewith; (c) fix the exercise price for the
Warrants; (d) extend, at the Representative's discretion, the date specified in
Section 6(a) of the Underwriting Agreement by which the Registration Statement
is to become effective and fix and extend, to not later than 10:00 a.m., New
York City time, on the third full business day after the Registration Statement
shall have become effective (or any postponed date pursuant to Section 10 of the
Underwriting Agreement), the Closing Date (referred to in Section 3 of the
Underwriting Agreement) for the purchase of Offered Units; (e) act as such
Underwriter's representative to carry out the Underwriting Agreement and this
Agreement and the purchase, sale and distribution of the Offered Units hereunder
and thereunder; (f) exercise the authority and discretion vested in the
2
<PAGE>
<PAGE>
Underwriters by the Underwriting Agreement; (g) obtain loans or advance the
Representative's own funds for the account of such Underwriter, charging current
interest rates, and, in connection therewith, execute and deliver any notes or
other instruments and hold or pledge as security therefor any of the Units
acquired pursuant to Section 5 hereof; and (h) take such other action as the
Representative deems necessary or advisable in order to carry out the provisions
of the Underwriting Agreement and this Agreement, including authority to agree
to any variation of the terms of the Underwriting Agreement which, in the
Representative's judgment, is necessary or advisable.
Any lender may rely on the Representative's instructions in all
matters relating to any loans referred to in clause (g) of Section 1 above.
The initial public offering of the Units is to be made on the
date and at the public offering price fixed by the Representative. The
Representative may vary such price and the dealers' concession and reallowance
from time to time after the initial public offering.
The initial public advertisement will appear on the date of the
public offering of the Units or the day following and will be over the
Representative's name and the names of such other Underwriters as the
Representative may determine. After such
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advertisement has appeared, but not before, any Underwriter may advertise at its
own risk and expense.
2. SALES TO INSTITUTIONS, DEALERS, ETC. Each Underwriter
authorizes the Representative to reserve for sale and to sell for the account of
such Underwriter all or part of the Offered Units which such Underwriter has
agreed to purchase (a) to institutions and other retail purchasers, in the
proportion, except as adjusted by the Representative to eliminate fractional
Units, that the underwriting commitment of each underwriter to purchase the
Offered Units bears to the aggregate underwriting commitments of all
Underwriters, and (b) to securities dealers selected by the Representative (the
"Dealers"), who may include any of the several Underwriters, in such proportion
as the Representative may determine. Each Dealer will be a member of the
National Association of Securities Dealers, Inc. (the "NASD") or, if a foreign
dealer not eligible for membership in the NASD, will agree to conform to the
provisions of the Rules of Fair Practice of the NASD in making sales outside the
United States and to maker no sales within the United States or to persons who
are citizens thereof or residents therein. Sales to Dealers will be made less
such Dealers' selling concession as the Representative will determine and will
be subject to the terms and conditions of a selected dealer agreement
substantially in the form attached hereto as Exhibit B (the "Selected Dealer
Agreement").
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3. SALES BY UNDERWRITERS. Each Underwriter agrees that, until the
termination of the Selected Dealer Agreement, if a selling group is formed, or
if not, for 25 days after the initial public offering of the Offered Units or
until notification by the Representative terminating this provision, whichever
is earlier, all sales of the Units by it or on its behalf will be made in all
respects in compliance with and subject to the provisions of the Selected Dealer
Agreement, provided that (a) the Representative may make sales for its account
pursuant to this Agreement, and (b) any Underwriter, without the
Representative's consent, may sell Offered Units to any other Underwriter at the
initial public offering price, less the Dealers' selling concession, and with
the Representative's consent may sell Offered Units to any other Underwriter
upon such terms as the Representative may in each instance, or generally,
approve.
Each Underwriter agrees to advise the Representative, upon the
Representative's request, of the number of Offered Units purchased pursuant to
the Underwriting Agreement remaining unsold by it and to release to the
Representative for sale any part or all of such unsold Offered Units not in
excess of the Dealers' selling concession as the Representative may determine.
4. REPURCHASED UNITS. Any Units sold by an Underwriter, except
through the Representative, which will be purchased or contracted for by the
Representative in the open
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market or otherwise during the term of this Agreement may be redelivered by the
Representative to such Underwriter at a price equal to the Representative's
cost, including any commissions paid thereon and transfer taxes on redelivery.
Units so redelivered need not be represented by the identical certificates
purchased by such Underwriter. In lieu of redelivering such Units, the
Representative may sell such Units for the account of such Underwriter publicly
or privately, at such price and upon such terms and to such persons, including
the Representative or any of the Underwriters, as the Representative may
determine, charging the amount of any loss and expense or crediting the amount
of any profit, less any expense resulting from such sale, to the account of such
Underwriter, or the Representative may charge its account with an amount not in
excess of the Dealers' selling concession.
5. PAYMENT AND DELIVERY. The Representative will give each
Underwriter at least 24 hours' notice of the Closing Date. At or before 8:45
a.m., New York City time, on the Closing Date, each Underwriter agrees to
deliver to the Representative at its offices at 1030 Salem Road, Union New
Jersey 07083, a certified or official bank check payable to William Scott &
Company, LLC. in New York Clearing House funds, in an amount equal to the full
purchase price of the Offered Units which such Underwriter is to purchase on
such date pursuant to the Underwriting Agreement. Each Underwriter authorizes
the Representative, for such Underwriter's account, (a) to deliver the
Representative's check or checks in payment for the
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Offered Units which such Underwriter is to purchase, and (b) to receive the
certificates for the Common Shares and Warrants comprising the Offered Units
registered in the name of such Underwriter or in any other name or form as the
Representative deems desirable.
Certificates for the Common Shares and Warrants received by the
Representative for the account of any Underwriter, and not reserved, will be
delivered to that Underwriter following payment therefor as stated above.
Certificates for Common Shares and Warrants reserved for the account of any
Underwriter which remain unsold at any time prior to the settlement of accounts
hereunder may, in the Representative's discretion, and will, upon the request of
such Underwriter, be delivered to such Underwriter (but until the settlement of
accounts hereunder, unless otherwise determined by the Representative, the
delivery will be for carrying purposes only).
6. STABILIZATION.
(a) Each Underwriter authorizes the Representative, until
the termination of this Agreement and subject to the applicable
provisions of the statutes administered by the Securities and Exchange
Commission (the "Commission") and its rules and regulations, to make
purchases and sales of any Units or the Warrants and Common Shares
included therein,
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either for long or short account and on such terms and at such prices as
the Representative determines; and to make over-allotments of the
Offered Units and to make purchases for the purpose of covering any
over-allotments so made. Except as a result of the exercise of the
overallotment option pursuant to Section 3 of the Underwriting
Agreement, such purchases, sales and over-allotments will be for the
accounts of the several Underwriters in proportion as nearly as
practicable to their respective commitments to purchase Offered Units.
Each Underwriter agrees upon the Representative's request to take up at
cost (but until the settlement of accounts hereunder, unless otherwise
determined by the Representative, for carrying purposes only) any Units
so purchased by the Representative for its account, and on request to
deliver to the Representative, against payment therefor, any Units so
sold for its account through over-allotment or otherwise, provided that
at no time will the resulting net commitment of any Underwriter on long
or short account exceed 10% of the aggregate number of Offered Units
which such Underwriter is obligated to purchase under the Underwriting
Agreement. The Representative will have authority to pay on behalf of
the respective Underwriters such commissions, taxes and other expenses
as the Representative may deem proper in connection with such purchases
and sales and to charge the respective accounts of the Underwriters with
commissions, taxes and appropriate expenses on purchases and sales
effected by the
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Representative. This provision is not an assurance that the price of the
Units, Warrants or the Common Stock will be stabilized or that
stabilization, if commenced, will not be discontinued at any time.
(b) Each Underwriter authorizes the Representative to file
with the Commission any and all reports required by Rule 17a-2 under the
Securities Act of 1934, as amended (the "Exchange Act"), or any other
applicable rule of the commission, in connection with any purchases or
sales made by the Representative for the respective accounts of the
Underwriters pursuant to the foregoing authorization. The Representative
will advise each Underwriter promptly of the dates on which the
Representative commences and terminates any such transactions. Each
Underwriter has, and assumes for itself, the responsibility for making
the reports required by such rules with respect to its own transactions
which are subject thereto. Each Underwriter shall retain the records
required by such rules with respect to its own transactions which are
subject thereto.
(c) Until the termination of this Agreement or prior
notification by the Representative, the Representative will have the
sole right to effect stabilizing transactions in the Units. Each
Underwriter agrees that until such time it will not make any purchases
or sales of the Units of the
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Company except (i) pursuant to the Underwriting Agreement or this
Agreement, (ii) pursuant to authorization received from the
Representative, or (iii) in the ordinary course of business as broker or
agent for a customer pursuant to an unsolicited order.
7. COMPENSATION AND EXPENSES OF THE REPRESENTATIVE. The
Representative may charge against the account of each Underwriter when the final
accounting is made:
(a) as the Representative's compensation for services
pursuant to this Agreement, an aggregate amount equal to $______ per
Unit for each Offered Unit purchased by such Underwriter pursuant to the
Underwriting Agreement;
(b) all transfer taxes paid on the Underwriter's behalf on
sales or transfers made for its account and its proportionate part of
all expenses, other than those specifically provided for in other
sections of this Agreement, incurred by the Representative hereunder;
(c) the Underwriter's proportionate part of all other
expenses, in excess of those reimbursed by the Company pursuant to
Section 5(i) of the Underwriting Agreement, incurred by the
Representative under the terms of this Agreement or in connection with
the purchase, carrying, sale
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or distribution of the Units: and
(d) the Underwriter's proportionate part of the expenses
chargeable against any Underwriter failing to perform its obligations
under this Agreement or under the Underwriting Agreement and of any
additional losses or expenses arising from such failure, without,
however, relieving such Underwriter from its liability therefor.
The Representative's determination and apportionment of such
expenses shall be conclusive.
8. BLUE SKY QUALIFICATION. The Representative will advise each
Underwriter as to the states or jurisdictions under the securities or Blue Sky
laws of which the Representative believes the Units are eligible for sale, but
the Representative will assume no responsibility as to such eligibility or as to
the right of any Underwriter to sell any Units in any state or jurisdiction. The
Representative has caused to be filed a Further State Notice respecting the
Units to be offered to the public in New York in the form required by, and
pursuant to, the provisions of Article 23A of the General Business Law of the
State of New York.
9. INDEMNIFICATION. Each Underwriter, severally, will indemnify
and hold harmless each other Underwriter, any person who may be deemed to
control any other Underwriter within the meaning
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of Section 15 of the Securities Act of 1933, as amended (the "Securities Act"),
and each officer, director, partner, employee and agent of any other
Underwriter, to the extent and upon the terms set forth in the Underwriting
Agreement. Such indemnity will survive the termination of this Agreement and
will remain in full force and effect regardless of any investigation made by, or
on behalf of, such other Underwriter or such persons.
10. TERMINATION OF AGREEMENT. Except as to accrued obligations
and except as otherwise provided herein, this Agreement will terminate (a) at
the close of business on the 20th day following the effective date of the
Registration Statement, or (b) at such other date, but in no event more than 40
days following such effective date, as the Representative may fix by notice to
each Underwriter, or (c) if the Underwriting Agreement will be terminated, in
accordance with its terms. Such termination, however, will not relieve any
Underwriter from its proportionate share of any charges, liabilities or expenses
incurred prior thereto.
11. SETTLEMENT OF ACCOUNTS. Accounts will be closed and settled
under this Agreement as soon as practicable after termination. At such time any
Units held by the Representative for the account of an Underwriter shall be
distributed by the Representative to such Underwriter, and the net credit or
debit balance of each Underwriter will be paid to it or collected from it
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by the Representative, but the Representative may establish reasonable reserves
against any claims and expenses not then ascertained. No statements by the
Representative of the amount of credit or debit balance or payment or reserve
will constitute a representation as to the existence or nonexistence of any
other charges, liabilities or expenses, for all of which the several
Underwriters will continue to be liable as provided for in this Agreement. Any
Units which are held by the Representative for the account of any Underwriter by
reason of a default by a retail purchaser or a Dealer will be purchased by the
Underwriter for whose account the Units have been sold by the Representative to
such retail purchasers or Dealers, as the case may be, and the Representative is
authorized to make appropriate charges and credits to the account of each such
Underwriter for this purpose. Notwithstanding any distribution or settlement on
the termination of accounts, each Underwriter will remain liable for its proper
proportion of any tax or other liability which may be asserted against any one
or more of the Underwriters in respect of this Agreement or the Underwriting
Agreement based upon the claim that the Underwriters constitute a partnership,
an association, an unincorporated business or other separate entity, and each
Underwriter agrees to pay its proper proportion of the expenses of resisting any
such claim. The provisions of this Section 11 will survive the termination of
this Agreement.
12. COMPLIANCE WITH EXCHANGE ACT, ETC. Each Under-
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writer will comply with any applicable provisions of the Exchange Act or
regulations of the Commission. Each Underwriter represents that it is a member
in good standing of the NASD and agrees to comply with all applicable provisions
of the Rules of Fair Practice of the NASD including, without limitation,
Sections 8, 24 and 36 of the Rules of Fair Practice. Each Underwriter represents
that its commitment hereunder will not place such Underwriter in violation of
Rule 15c3-1 of the rules of the Commission under the Exchange Act. Each
Underwriter will notify each of its customers with respect to whose account it
has investment discretion and to whose account it proposes to sell any of the
Units that it proposes to sell to such customer's account as a principal and to
obtain the written consent of such customer to any such sale.
13. REGISTRATION STATEMENT; PROSPECTUS. Each Underwriter confirms
(a) that it has examined each Preliminary Prospectus, the Registration
Statement and the form of Prospectus (and any amendments or supplements thereto)
referred to in the Underwriting Agreement; (b) that the information therein is
correct and not misleading insofar as such information relates to such
Underwriter; (c) that copies of the Preliminary Prospectus complying with Rule
430 under the Securities Act have been expeditiously distributed to all persons
to whom it was then expected to mail confirmations of sale not less than 48
hours prior to the time it was expected to mail confirmations of sale; and (d)
that it is willing to accept the responsibilities under the
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Securities Act of an underwriter named in the Registration Statement and is
willing to proceed with the underwriting in the manner contemplated thereby.
Each Underwriter authorizes the Representative, with the approval of counsel for
the Underwriters, on behalf of such Underwriter, to consent to the filing of any
further amendments or supplements to any Preliminary Prospectus, the
Registration Statement or the Prospectus.
14. STATUS OF REPRESENTATIVE AND UNDERWRITERS. In any action
taken hereunder, except in the sale of the Units underwritten by the
Representative and in the performance of the Representative's own obligations
hereunder, under the Underwriting Agreement and the Selected Dealer Agreement,
the Representative will act only as the representative of the several
Underwriters. Nothing contained herein shall constitute the Underwriters, or any
of them, partners or any of them liable to make payments otherwise than
as herein provided, or impair the several nature of their obligations under this
Agreement and the Underwriting Agreement.
15. DEFAULT BY AND UNDERWRITER. If any Underwriter shall fail or
refuse to purchase any of the Offered Units that it has severally agreed to
purchase and arrangements satisfactory to the Representative and the Company for
the purchase of such amount of Offered Units are not made within 48 hours after
such default, this Agreement will terminate without liability on the part of the
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non-defaulting Underwriters for the purchase or sale of any of the Offered Units
under the Underwriting Agreement. In any such case, either the non-defaulting
Representative or the Company shall have the right to postpone the Closing Date
but in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this section
shall not relieve the defaulting Underwriter from liability in respect of its
default under this Agreement.
16. INTEREST ON FUNDS. The Representative will not be under any
duty to account for any interest on funds of any of the Underwriters at any time
in the Representative's hands, and such funds may be held by the Representative
unsegregated from its general funds.
17. LIABILITY OF REPRESENTATIVE. Except as expressly stated
herein, or as may arise under the Securities Act, the Representative will not be
under any liability for, or in respect of: the validity or value of the Units;
the form of, or the statements contained in, the Registration Statement, any
Preliminary Prospectus, the Prospectus (or any amendments or supplements
thereto), or any supplemental sales data or other letters or instruments
executed by, or obtained from, the Company; the form or validity of the
Underwriting Agreement, the Selected Dealer Agreement or this Agreement; the
eligibility of the Units
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for sale under the laws of any state or jurisdiction; the delivery of the Units;
the performance by the Company or others of any agreement on its or their part;
or any matter in connection with any of the foregoing, except the
Representative's own lack of good faith.
18. NOTICES. Any notice to any Underwriter will be deemed to have
been duly given if mailed, telegraphed or delivered to such Underwriter at the
address set forth in the Underwriter's questionnaire provided to the
Representative.
19. CONSTRUCTION OF AGREEMENT. This Agreement will be governed
by, and construed and enforced in accordance with, the laws of the State of New
York applicable to contracts made and to be wholly performed in such State.
20. HEADINGS. The headings in this Agreement are for purposes of
reference only and will not limit or otherwise affect any of the terms or
provisions hereof.
21. COUNTERPARTS. This Agreement may be signed in any number of
counterparts which, taken together, will constitute one and the same instrument.
If the foregoing meets with your approval, please sign
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and return to the Representative one counterpart of this Agreement. Upon your
confirmation hereof and upon confirmation of identical agreements by each of the
other Underwriters, covering in the aggregate all the Offered Units, this
Agreement will constitute a valid and binding contract between you and the
Representative.
Very truly yours,
WILLIAM SCOTT & COMPANY, LLC
As Representative of
the Underwriters
By: _________________________
Confirmed as of the date first above written:
______________________________________
By:__________________________________
Authorized Signature
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<PAGE>
FINANCIAL ADVISORY AND INVESTMENT BANKING AGREEMENT
This Agreement is made and entered into as of the th day of
, 1996, between William Scott & Company LLC, with an office at 1030 Salem Road,
Union New Jersey 07083 ("Advisor"), and Worldwide Entertainment & Sports Corp.,
with an office at 29 Northfield Aveue, West Orange, New Jersey 07052 (the
"Company").
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. PURPOSE: The Company hereby engages Advisor for the term specified
in Paragraph 2 hereof to consulting advice to the Company as an
investment banker relating to financial and similar matters upon the terms and
conditions set forth herein.
2. TERM: Except as otherwise specified in paragraph 5 hereof, this
Agreement shall be effective for a period of two years, commencing on the
closing date of the Company's public offering pursuant to the Registration
Statement on Form SB-2 (the "Closing Date"). This Agreement may not be
terminated by the Company. This Agreement may be terminated by the Advisor at
any time upon 30 days' notice; provided the Advisor shall repay any portion of
its fee which was not earned on the effective date of such termination
($2,083.33 multiplied by the number of months paid in advance).
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3. DUTIES OF ADVISOR: During the term of this Agreement, Advisor shall
provide the Company with such regular and customary consulting advice as is
reasonably requested by the Company, provided that Advisor shall not be required
to undertake duties not reasonably within the scope of the financial advisory or
investment banking services contemplated by this Agreement. It is understood and
acknowledged by the parties that the value of Advisor's advice is not readily
quantifiable, and that Advisor shall be obligated to render advice upon the
request of the Company, in good faith, but shall not be obligated to spend any
specific amount of time in so doing. Advisor's duties may include, but will not
necessarily be limited to, providing recommendations concerning the following
financial and related matters:
a. Disseminating information about the Company to the
investment community at large;
b. Rendering advice and assistance in connection with
the preparation of annual and interim reports and
press releases;
c. Assisting in the Company's financial public
relations;
d. Arranging, on behalf of the Company, at appropriate
times, meetings with securities analysts of major
regional investment banking firms;
e. Rendering advice with regard to internal operations,
including:
(1) the formation of corporate goals and their
implementation;
(2) the Company's financial structure and its
divisions or subsidiaries;
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(3) securing, when and if necessary and possible,
additional financing through banks and/or
insurance companies; and
(4) corporate organization and personnel; and
f. Rendering advice with regard to any of the following
corporate finance matters:
(1) changes in the capitalization of the Company;
(2) changes in the Company's corporate structure;
(3) redistribution of shareholdings of the
Company's stock;
(4) offerings of securities in public transac-
tions;
(5) sales of securities in private transactions;
(6) alternative uses of corporate assets;
(7) structure and use of debt; and
(8) sales of stock by insiders pursuant to Rule 144
or otherwise.
In addition to the foregoing, Advisor agrees to furnish advice to the
Company in connection with (i) the acquisition and/or merger of or with other
companies, divestiture or any other similar transaction, or the sale of the
Company itself (or any significant percentage, assets, subsidiaries or
affiliates thereof), and (ii) bank financings or any other financing from
financial institutions (including but not limited to lines of credit,
performance bonds, letters of credit, loans or other financings not provided for
in paragraph 4 hereof).
Advisor shall render such other financial advisory and
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investment and/or investment banking services as may from time to time be agreed
upon by Advisor and the Company.
4. COMPENSATION: In consideration for the services rendered by Advisor
to the Company pursuant to this Agreement (and in addition to the expenses
provided for in Paragraph 6 hereof), the Company shall compensate Advisor as
follows:
a. The Company shall pay an aggregate of $50,000 which amount
equals a monthly fee of $2,083.33 for 24 months, with $25,000 to be paid in
full at the Closing Date and $25,000 payable one year thereafter.
b. In the event that Advisor introduces to the Company any party
who enters into a transaction with the Company regarding the acquisition
and/or merger of or with other companies, divestiture or any other similar
transaction, or the sale of the Company itself (or any significant
percentage, assets, subsidiaries or affiliates thereof) and any such
transactions occurs during the three years after the Closing Date, the
Company shall pay fees to Advisor as follows:
<TABLE>
<CAPTION>
CONSIDERATION FEE
------------- ---
<S> <C>
$ up to $1,000,000 5% of Consideration
$1,000,001 to $2,000,000 4% of Consideration
$2,000,001 to $3,000,000 3% of Consideration
over $3,000,000 2% of Consideration in excess of
$3,000,000
</TABLE>
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For the purposes of this Agreement, "Consideration" shall mean the
total market value on the day of the closing of stock, cash, assets and all
other property (real or personal) exchanged or received, directly or indirectly
by the Company or any of its security holders in connection with any
transaction, including without limitation any amounts paid by the Company or any
person or entity to holders of warrants, stock purchase rights, straight or
convertible securities of the Company or any affiliate thereof, options or stock
appreciation rights issued by the Company or any affiliate thereof, options or
stock appreciation rights issued by the Company, whether or not vested, and to
holders of any other securities of any kind whatsoever of the Company, or
pursuant to any employment agreement, consulting agreement, covenant not to
compete, earnout or contingent payment right or similar arrangement, agreement
or understanding, whether oral or written. Any co-broker retained by Advisor
shall be paid by Advisor.
5. EXPENSES OF ADVISOR: In addition to the fees payable hereunder, and
regardless of whether any transaction set forth in Paragraphs 4 hereof is
proposed or consummated the Company shall reimburse Advisor for all reasonable
fees and disbursements, upon prior written approval by the Company of Advisor's
travel and out-of-pocket expenses incurred in connection with the services
performed by Advisor pursuant to this Agreement, including without limitation,
hotels, food and associated expenses and long-distance telephone calls. Such
reimbursement shall be paid monthly upon presentation of receipts.
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6. LIABILITY OF ADVISOR:
a. The Company acknowledges that all opinions and advice (written
or oral) given by Advisor to the Company in connec tion with Advisor's
engagement are intended solely for the benefit and use of the Company in
considering the transaction to which they relate, and the Company agrees that no
person or entity other than the Company shall be entitled to make use of or rely
upon the advice of Advisor to be given hereunder, and no such opinion or advice
shall be used for any other purpose or reproduced, disseminated, quoted or
referred to at any time, in any manner or for any purpose, nor may the Company
make any public references to Advisor, or use Advisor's name in any annual
reports or any other reports or releases of the Company without Advisor's prior
written consent.
b. The Company acknowledges that Advisor makes no commitment
whatsoever as to making a market in the Company's securities or to recommending
or advising its clients to purchase the Company's securities. Research reports
or corporate finance reports that may be prepared by Advisor will, when and if
prepared, be done solely on the merits or judgment of analysis of Advisor or any
senior corporate finance personnel of Advisor.
7. ADVISOR'S SERVICES TO OTHERS: The Company acknowledges that Advisor
or its affiliates are in the business of providing financial services and
consulting advice to others.
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Nothing herein contained shall be construed to limit or restrict Advisor in
conducting such business with respect to others, or in rendering such advice to
others.
8. COMPANY INFORMATION: The Company recognizes and confirms that, in
advising the Company and in fulfilling its engagement hereunder, Advisor will
use and rely on data, material and other information furnished to Advisor by the
Company. The Company acknowledges and agrees that in performing its services
under this engagement, Advisor may rely upon the data, material and other
information supplied by the Company without independently verifying the
accuracy, completeness or veracity of same.
9. INDEMNIFICATION: Since Advisor will be acting on behalf of the
Company in connection with its engagement hereunder, the Company and Advisor
hereby each agree to indemnify and hold harmless each other, their partners,
employees, agents, representatives and controlling persons (and the officers,
directors, employees, agents, representatives and controlling persons of each of
them) from and against any and all losses, claims, damages, liabilities, costs
and expenses (and all actions, suits, proceedings or claims in respect thereof)
and any legal or other expenses in giving testimony or furnishing documents in
response to a subpoena or otherwise (including, without limitation, the cost of
investigating, preparing or defending any such action, suit, proceeding or
claim, whether or not in connection with any action, suit, proceeding or
7
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claim in which the Advisor is a party), as and when incurred, directly or
indirectly, caused by, relating to, based upon or arising out of the services
pursuant to this Agreement so long as the other party has not committed an
intentional or willful misconduct, or shall not have acted grossly negligent, in
connection with the services which form the basis of the claim for
indemnification. The parties further agree that neither party shall incur any
liability on account of this Agreement or any acts or omissions arising out of
or related to the actions of each relating to this 'Agreement or the performance
or failure to perform any services under this Agreement except for such parties
intentional or wilful misconduct. This paragraph shall survive the expiration or
termination of this Agreement.
10. ADVISOR AN INDEPENDENT CONTRACTOR: Advisor shall perform its
services hereunder as an independent contractor and not as an employee of the
Company or an affiliate thereof. It is expressly understood and agreed to by the
parties hereto that Advisor shall have no authority to act for, represent or
bind the Company or any affiliate thereof in any manner, except as may be agreed
to expressly by the Company in writing from time to time.
11. MISCELLANEOUS:
a. Any notice or communication permitted or required hereunder
shall be in writing and shall be deemed sufficiently given if hand-delivered or
sent (i) postage prepaid by registered mail,
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return receipt requested, or (ii) by facsimile, to the respective parties as
firt set forth above, or to such other address as either party may notify the
other in writing:
b. This Agreement shall be binding upon and inure to the benefit
of each of the parties hereto and their respective successors, legal
representatives and assigns.
c. This Agreement may be executed in any number of counterparts,
each of which together shall constitute one and the same original document.
d. No provision of this Agreement may be amended, modified or
waived, except in a writing signed by all of the parties hereto.
e. This Agreement shall be construed in accordance with and
governed by the laws of the State of New Jersey, without giving effect to its
conflict of law principles. The parties hereby agree that any dispute which may
arise between them arising out of or in connection with this Agreement shall be
adjudicated before a court located in New Jersey, and they hereby submit to the
exclusive jurisdiction of the courts of the State of New Jersey with respect to
any action or legal proceeding commenced by any party, and irrevocably waive any
objection they now or hereafter may have respecting the venue of any such action
or proceeding brought in such a court or respecting the fact that such court is
an inconvenient
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forum, relating to or arising out of this Agreement, and consent to the service
of process in any such action or legal proceeding by means of registered or
certified mail, return receipt requested, in care of the address set forth in
Paragraph 12(b) hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
WILLIAM SCOTT & COMPANY LLC
By:________________________________
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By:________________________________
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WORLDWIDE ENTERTAINMENT & SPORTS CORP.
AND
WILLIAM SCOTT & COMPANY, LLC
UNDERWRITER'S
WARRANT AGREEMENT
<PAGE>
<PAGE>
UNIT PURCHASE OPTION AGREEMENT dated as of __________, 1992 by and between
WORLDWIDE ENTERTAINMENT & SPORTS CORP., a Delaware corporation (the "Company"),
and WILLIAM SCOTT & COMPANY, LLC (hereinafter referred to variously as the
"Holder" or the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Underwriter warrants
("Warrants") to purchase up to 130,000 units (the "Units") each unit consisting
of one share of common stock, $.01 par value, of the Company ("Common Stock")
and one redeemable warrant to purchase one share of Common Stock (the
"Redeemable Warrants"); and
WHEREAS, the Underwriter has agreed pursuant to the underwriting agreement
(the "Underwriting Agreement") dated __________ 1996 by and between the
Underwriter and the Company to act as the underwriter in connection with the
Company's public offering of up to 1,300,000 Units; and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) and on each subsequent
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Closing Date by the Company to the Underwriter in consideration for, and as part
of the Underwriter's compensation in connection with, the Underwriter's acting
as the underwriter pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Underwriter to the Company of ten dollars ($10.00), the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Holder is hereby granted the right to purchase, at
any time from ___________, 1997 until 5:00 p.m., New York time, on
_______________, 2002, up to ten percent (10%) of the Units sold by the
Underwriter in the Public Offering at an initial exercise price (subject to
adjustment as provided in Article 8 hereof) of $_____ per Unit (165% of the
Public Offering price per Unit, subject to the terms and conditions of this
Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrants. The Warrants are exercisable during the
term set forth in Section 1 hereof at the Exercise Price per unit set forth in
Section 6 hereof payable by certified
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or cashier's check or money order payable in lawful money of the United States,
subject to adjustment as provided in Article 8 hereof. Upon surrender of a
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
unit (and such other amounts, if any, arising pursuant to Section 4 hereof) at
the Company's principal offices located at 29 Northfield Avenue, West Orange,
New Jersey 07052, the registered holder of a Warrant Certificate ("Holder" or
"Holders") shall be entitled to receive a certificate or certificates for the
securities comprising the units so purchased. The purchase rights represented by
each Warrant Certificate are exercisable at the option of the Holder thereof, in
whole or in part (but not as to fractional units). The Warrants may be exercised
to purchase all or part of the units represented thereby. In the case of the
purchase of less than all the units purchasable on the exercise of Warrants
represented by a Warrant Certificate, the Company shall cancel the Warrant
Certificate represented thereby upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the units
purchasable thereunder.
4. Issuance of Certificates. Upon the exercise of the Warrants
and payment of the Exercise Price therefor, the issuance of certificates for the
Common Stock, Redeemable Warrants or other securities, properties or rights
underlying such Warrants shall be made forthwith (and in any event within three
(3) business days
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thereafter) without further charge to the Holder thereof, and such certificates
shall (subject to the provisions of Sections 5 and 7 hereof) be issued in the
name of, or in such names as may be directed by, the Holder thereof; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificates in a name other than that of the Holder, and the Company shall
not be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid. The Warrant certificates and the certificates
representing the Common Stock or other securities, property or rights (if such
property or rights are represented by certificates) shall be executed on behalf
of the Company by the manual or facsimile signature of the then present Chairman
or Vice Chairman of the Board of Directors or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the then present Secretary or Assistant Secretary or
Treasurer or Assistant Treasurer of the Company. Warrant Certificates shall be
dated the date of execution by the Company upon initial issuance, division,
exchange, substitution or transfer.
5. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate (and its Permitted Transferee, as defined below), by its acceptance
thereof, covenants and agrees that the
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Warrants are being acquired as an investment and not with a view to the
distribution thereof; that the Warrants may be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part, to any person (a
"Permitted Transferee"), provided such transfer, assignment, hypothecation or
other deposition is made in accordance with the provisions of the Securities Act
of 1933, as amended (the "Act"); and provided, further, that until __________,
1997 only officers and directors of the Underwriter, and any co-underwriter,
selling group member and their respective officers and directors shall be
Permitted Transferees.
6. Exercise Price.
a. Initial and Adjusted Exercise Price. Except as
otherwise provided in Section 8 hereof, the initial exercise price of each
Warrant shall be $7.20 per Share. The adjusted exercise price shall be the price
which shall result from time to time from any and all adjustments of the initial
exercise price in accordance with the provisions of Section 8 hereof.
b. Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price, depending upon
the context.
7. Registration Rights.
a. Registration Under the Securities Act of 1933. The
Warrants have not been registered under the Act. The Warrant certificates shall
bear the following legend:
The securities represented by this certificate
have not been registered under the Securities
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Act of 1933, as amended (the "Act"), and may not be offered for
sale or sold except pursuant to (i) an effective registration
statement under the Act, or (ii) an opinion of counsel, if such
opinion shall be reasonably satisfactory to counsel to the
issuer, that an exemption from registration under such Act is
available.
b. Demand Registration. (1) At any time commencing one (1)
year and expiring five (5) years after the effective date of the Company's
Registration Statement relating to the Public Offering (the "Effective Date"),
the Underwriter shall have the right, exercisable by written notice to the
Company, to have the Company prepare and file with the Securities and Exchange
Commission (the "Commission"), on one (1) occasion, a registration or offering
statement on Form S-1 and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Underwriter and the Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale, for a period of nine (9) months, of
the shares underlying the Warrants ("Warrant Securities") by such Holders and
any other Holders of the Warrants and/or Warrant Securities who notify the
Company within fifteen (15) business days after receipt of the notice described
above. The Underwriter may demand registration on behalf of the Holders without
exercising the Underwriter's Warrants, and are never required to exercise same.
(2) The Company covenants and agrees to give written
notice of any registration request under this Section 7(b) by the Underwriter to
all other registered Holders of the Warrants
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and the Warrant Securities within ten (10) days from the date of the receipt of
any such registration request.
c. Piggyback Registration. If, at any time within the four
(4) year period commencing one (1) year and expiring five (5) years after the
Effective Date, the Company should file a registration statement with the
Commission under the Act (other than in connection with a merger or pursuant to
Forms S-4 or S-8) it will give written notice by registered mail, at least
thirty (30) days prior to the filing of each such registration statement, to the
Underwriter and to all other Holders of the Warrants and/or the Warrant
Securities of its intention to do so. If the Underwriter or other Holders of the
Warrants and/or the Warrant Securities notify the Company within twenty (20)
days after receipt of any such notice of its or their desire to include any such
securities in such proposed registration statement, the Company shall afford the
Underwriter and such Holders of the Warrants and/or Warrant Securities the
opportunity to have any such Warrant Securities registered under such
registration statement. Notwithstanding the provisions of this Section 7(c), the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7(c) (irrespective of whether a written request
for inclusion of any such securities have shall have been made) to elect not to
file any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof. If a subsequent underwriter
objects to the above piggy-back rights,
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such objection would preclude such inclusion. However, in such event, the
Company will, within six (6) months of completion of such subsequent
underwriting, file at its sole expense a registration statement relating to
such excluded securities, which shall be in addition to any registration
statement required to be filed pursuant to Section 7(b).
d. Covenants of the Company With Respect to Registration.
In connection with any registration under Sections 7(b) and 7(c) hereof, the
Company covenants and agrees as follows:
(1) The Company shall use its best efforts to file a
registration statement within thirty (30) days of receipt of any demand
therefor, shall use its best efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each Holder
desiring to sell Warrant Securities such number of prospectuses as shall
reasonably be requested.
(2) The Company shall pay all costs (excluding fees
and expenses of Holder(s)' counsel and any underwriting discounts or selling
fees, expenses or commissions), fees and expenses in connection with the first
registration statement filed pursuant to Section 7(b) and any registration
statement filed pursuant to Section 7(c) hereof including, without limitation,
the Company's legal and accounting fees, printing expenses, blue sky fees and
expenses. If the Company shall fail to comply with the provisions of Section
7(d)(1), the Company shall, in addition to any other equitable or other relief
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available to the Holder(s), be liable for any or all incidental, special and
consequential damages and damages due to loss of profit sustained by the
Holder(s) requesting registration of their Warrant Securities.
(3) The Company will take all necessary action which
may be required to qualify or register the Warrant Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(4) The Company shall indemnify the Holder(s) of the
Warrant Securities to be sold pursuant to any registration statement and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all 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 but only to the same extent and with the same effect as the provisions
pursuant to which the Company has agreed to indemnify the Underwriter contained
in Section 8 of the Underwriting Agreement, and the
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Holder(s) shall indemnify the Company to the same extent and with the same
effect as the provisions pursuant to which the Underwriter has agreed to
indemnify the Company contained in Section 8 of the Underwriting Agreement.
(5) The Holder(s) of the Warrant Securities to be
sold pursuant to a registration statement, and their successors and assigns,
shall severally, and not jointly, indemnify the Company, its officers and
directors and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage or expense or liability (including all 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 Holders, or their
successors or assigns, for specific inclusion in such registration statement to
the same extent and with the same effect as the provisions contained in Section
8 of the Underwriting Agreement pursuant to which the Underwriter has agreed to
indemnify the Company.
(6) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
(7) The Company shall not be entitled to include any
securities other than the Warrant Securities in any
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registration statement filed pursuant to Section 7(b) hereof without the prior
written consent of the Underwriter and the Holders of the Warrants and Warrant
Securities representing a Majority of such securities (assuming exercise of all
of the Warrants).
(8) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter of (i) an opinion of
counsel to the Company, dated the effective date of such registration statement
(and if such registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement), and (ii) a
"cold comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by the
independent public accounts who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letter, with respects to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in
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underwritten public offerings of securities.
(9) The Company shall as soon as practicable after
the effective date of the registration statement, and in any event within 15
months thereafter, make "generally available to its security holders" (within
the meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(10) The Company shall deliver promptly to each
Holder participating in the offering requesting the correspondence described
below and any managing underwriter copies of all correspondence between the
Commission and the Company, its counsel or auditors with respect to the
registration statement and permit each Holder and underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. ("NASD"). Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
shall reasonably request.
(11) The Company shall enter into an underwriting
agreement with the managing underwriter selected for
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such underwriting by Holders holding a Majority of the Warrant Securities
requested to be included in such underwriting, except that in connection with an
offering for which the Holders have piggyback rights, the Company shall have the
sole right to select the managing underwriter. Such underwriting agreement shall
be satisfactory in form and substance to the Company, a Majority of such Holders
and such managing underwriters, and shall contain such representations,
warranties and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter. The
Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Warrant Securities and may, at their option, require
that any or all the representations, warranties and covenants of the Company to
or for the benefit of such underwriters shall also be made to and for the
benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their intended
methods of distribution.
(12) For purposes of this Agreement, the term
"Majority" in reference to the Holders of the Warrants or Warrant Securities,
shall mean in excess of fifty percent (50%) of the then outstanding Warrants or
Warrant Securities that (i) are not held by the Company, an affiliate, officer,
creditor, employee or agent thereof or any of their respective affiliates,
members of their family, persons acting as nominees or in conjunction there-
with, or (ii) have not been resold to the public pursuant to a
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registration statement filed with the Commission under the Act.
e. Repurchase of Warrants. In the event the Company shall
fail to file the registration statement required by Section 7(b), or such
registration statement shall not be declared effective within 150 days of the
written request, then the Underwriter may require the Company to purchase, on
the 151st day, the Underwriter's Warrants at a price equal to the difference
between the Exercise Price and the market price per share of Common Stock as
averaged over the mean between the "bid and "asked" price as of the close of
each business day during the two-week period immediately preceding the 151st
day; provided, however, that at the time of such purchase the average market
price shall be more than $7.20 further provided that the Company's net worth, at
such time, is at least three (3) times the amount of the aggregate purchase
price for such Underwriter's Warrants to be purchased.
f. Further Registrations. The Company will cooperate with
the Holder(s) of the Warrants and Warrant Securities in preparing and signing
any registration statement, in addition to the registration statements discussed
above, required in order to sell or transfer the Warrant Securities and will
supply all information required therefor, but such additional registration
statement expenses or offering statement expenses will be prorated between the
Company and the Holders of the Warrants and Warrant Securities according to the
aggregate sales price of the securities being issued. The provision of Section
7(d) other than subsection (2) shall apply to any such
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registration statement.
8. Adjustments to Exercise Price and Number of Securities.
a. Subdivision and Combination. In case the Company shall
at any time subdivide or combine the outstanding shares of Common Stock, the
Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
b. Adjustment in Number of Securities. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Section 8,
the number of Securities issuable upon the exercise of each Warrant shall be
adjusted to the nearest full amount by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number of
Securities issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
c. Definition of Common Stock. For the purpose of this
Agreement, the term "Common Stock" shall mean (i) the class of stock designated
as Common Stock in the Certificate of Incorporation of the Company as it may be
amended as of the date hereof, or (ii) any other class of stock resulting from
successive changes or reclassification of such Common Stock consisting solely of
changes in par value, or from par value to no par value, or from no par value to
par value. In the event that the Company shall after the date hereof issue
securities with greater or
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superior voting rights than those of the shares of Common Stock outstanding as
of the date hereof, the Holder, at its option, may receive upon exercise of any
Warrant either shares of Common Stock or a like number of such securities with
greater or superior voting rights.
d. Reclassification, Merger or Consolidation. The Company
will not merge, reorganize or take any other action which would terminate the
Underwriter's Warrant without first making adequate provision for the
Underwriter's Warrants. In case of any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), or in case of any consolidation of the Company with, or merger of
the Company with, or merger of the Company into, another corporation (other than
a merger with a subsidiary in which merger the Company is the continuing
corporation and other than a consolidation or merger which does not result in
any reclassification or change of the outstanding Common Stock except a change
as a result of a subdivision or combination of such shares or a change in par
value, as aforesaid), the Holder of each Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of such
Warrant) to receive, upon exercise of such Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock of
the Company for which such Warrant might have been
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exercised immediately prior to such reclassification, consolidation, merger,
sale or transfer, and in the event of a consolidation, merger or sale of
property, the corporation formed by such consolidation or merger or acquired
such property shall execute and deliver to the Holder a supplemental warrant
agreement to such effect. Such supplemental warrant agreement shall provide for
adjustments which shall be identical to the adjustment to those provided in
Section 8. The provisions of this Section 8(d) shall similarly apply to
successive consolidations or mergers.
e. No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(1) Upon the issuance or sale of the Warrants
or the shares of Common Stock issuable upon the exercise of (i) the Warrants, or
(ii) the options, warrants, stock purchase agreements and convertible or
exchangeable securities outstanding or in effect on the date hereof as described
in the prospectus relating to the Public Offering; or
(2) If the amount of said adjustment shall be
less than five (5) cents per Share, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to at least five (5) cents per Share.
f. Dividends and Other Distributions. In the event that
the Company shall at any time prior to the exercise of
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all the Warrants declare a dividend (other than a cash dividend or a dividend
consisting solely of shares of Common Stock) or otherwise distribute to its
stockholders any assets, property, rights, evidences of indebtedness, securities
(other than shares of Common Stock), whether issued by the Company or by
another, or any other thing of value, the Holders of the unexercised Warrants
shall thereafter be entitled, in addition to the shares of Common Stock and
Redeemable Warrants or other securities and property receivable upon the
exercise thereof, to receive, upon the exercise of such Warrants, the same
property, assets, rights, evidences of indebtedness, securities or any other
thing of value that they would have been entitled to receive at the time of such
dividend or distribution as if the Warrants had been exercised immediately prior
to such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make appropriate reserves to ensure the timely
performance of the provisions of this Section 8(f).
9. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Units in such denominations as shall be
designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably
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satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
or public warrants upon the exercise of the Warrant, nor shall it be required to
issue script or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests; provided, however, that if a Holder
exercises all Warrants held of record by such Holder the fractional interests
shall be eliminated by rounding any fraction up to the nearest whole number of
shares of Common Stock, Redeemable Warrants or other securities, properties or
rights.
11. Reservation and Listing of Securities. The Company shall at
all times reserve and keep available out of its authorized shares of Common
Stock and Redeemable Warrants, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock, Redeemable
Warrants or other securities, properties or rights as shall be issuable upon the
exercise thereof. The Company covenants and agrees that, upon exercise of the
Warrants and payment of the
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Exercise Price therefor, all shares of Common Stock, Redeemable Warrants and
other securities issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
stockholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause the Common Stock and Redeemable Warrants to be listed
(subject to official notice of issuance) on all securities exchanges on which
the Common Stock and Redeemable Warrants issued to the public in connection
herewith may then be listed or quoted on NASDAQ.
12. Notices to Warrant Holders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders the right to vote or
to consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
a. the Company shall take a record of the holders of its
shares of Common Stock and Redeemable Warrants for the purpose of
entitling them to receive a dividend or distribution payable otherwise
than in cash, or a cash dividend or distribution payable otherwise than
out of current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on
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the books of the Company; or
b. the Company shall offer to all the holders of its
Common Stock and/or Redeemable Warrants, any additional shares of
capital stock of the Company or securities convertible into or
exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or
c. a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed; then, in any one or more of said events, the
Company shall give written notice of such event at least fifteen (15)
days prior to the date fixed as a record date or the date of closing the
transfer books for the determination of the stockholders entitled to
such dividend, distribution, convertible or exchangeable securities or
subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the
validity of any action taken in connection with the declaration or
payment of any such dividend, or the issuance of any convertible or
exchangeable securities, or subscription rights, options or warrants, or
any proposed dissolution,
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liquidation, winding up or sale.
13. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
a. If to the registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
b. If to the Company to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice
to the Holders.
14. Supplements and Amendments. The Company and the Underwriter
may from time to time supplement or amend this Agreement without the approval of
any Holders of Warrant Certificates (other than the Underwriter) in order to
cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and the Underwriter may deem necessary or desirable and which the
Company and the Underwriter deem shall not adversely affect the interests of the
Holders of Warrant Certificates.
15. Successors. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the Company, the
Underwriter, the Holders and their respective successors and assigns hereunder.
22
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16. Termination. This Agreement shall terminate at the close of
business on _____________, 2002. Notwithstanding the foregoing, the
indemnification provisions of Section 7 shall survive such termination until the
close of business on the later of the expiration of any applicable statue of
limitations or ______________, ____.
17. Governing Law; Submission to Jurisdiction. This Agreement and
each Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws. The Company, the Underwriter and the
Holders hereby agree that any action, proceeding or claim against it arising out
of, or relating in any way to, this Agreement shall be brought and enforced in
the courts of the State of New York or of the United States of America for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company, the Underwriter and the
Holders hereby irrevocably waive any objection to such exclusive jurisdiction or
inconvenient forum. Any such process or summons to be served upon any of the
Company, the Underwriter and the Holders (at the option of the party bringing
such action, proceeding or claim) may be served by transmitting a copy thereof,
by registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 13 hereof.
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Such mailing shall be deemed personal service and shall be legal and binding
upon the party so served in any action, proceeding or claim.
18. Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof. Subject to Section 14, this Agreement may not be modified
or amended except by a writing duly signed by the party against whom enforcement
of the modification or amendment is sought.
19. Severability. If any provision of this Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not intended, nor should
they be construed as, a part of this Agreement and shall be given no substantive
effect.
21. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and the
Underwriter and any other registered Holder(s) of the Warrant Certificates or
Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and the Underwriter and any
24
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other Holder(s) of the Warrant Certificates or Warrant
Securities.
22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counter parts shall together constitute but one and the
same instrument.
23. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, the Underwriter and their respective
successors and assigns and the Holders from time to time of the Warrant
Certificate or any of them.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
WORLDWIDE ENTERTAINMENT
& SPORTS CORP.
By:__________________________
WILLIAM SCOTT & COMPANY, LLC
By:___________________________
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EXHIBIT A
WARRANT CERTIFICATE
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
offered for sale or sold except pursuant to (i) an effective
registration statement under the Act, or (ii) an opinion of counsel, if
such opinion shall be reasonably satisfactory to counsel to the issuer,
that an exemption from registration under such Act is available.
THE TRANSFER OR EXCHANGE OF THE WARRANT REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE COMMENCING _______________, 1997 THROUGH
5:00 P.M., NEW YORK __________, 2002
No. W-1 ______ Warrants
This Warrant Certificate certifies that William Scott & Company,
LLC (the "Underwriter") or registered assigns, is the registered holder of
______ Warrants to purchase initially, at any time from _______, 1997, until
5:00 p.m., New York time on _________, 2002 ("Expiration Date"), up to ______
units (the "Units"). Each unit consists of ___ shares of common stock $.001 par
value (the "Common Stock"), of Trans Energy, Inc., a Nevada corporation (the
"Company") and one Warrant to purchase one share of Common stock (the
"Redeemable Warrants"), at the exercise price of $.10 per Share (the "Exercise
Price"), and upon the surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the warrant agreement dated as of
____________, 1996 by and between the Company and the Underwriter (the "Warrant
Agreement"). Payment of the Exercise Price shall be made by certified or
cashier's check or money order payable to the order of the Company.
No Warrant may be exercised after 5:00 p.m., New York time, on
the Expiration Date, at which time all Warrants
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evidenced hereby, unless exercised prior thereto, hereby shall thereafter be
void.
The Warrants evidenced by this Warrant Certificate are part
Underwriter's of a duly authorized issue of Warrants issued pursuant to the
Warrant Agreement between the Company and the Underwriter (the "Warrant
Agreement"), which Warrant Agreement is hereby incorporated by reference in and
made a part of this instrument and is hereby referred to for a description of
the rights, limitation of rights, obligations, duties and immunities thereunder
of the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange as provided herein,
without any charge except for any tax or other governmental charge imposed in
connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by
this Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as
the absolute owner(s) of this Warrant Certificate (notwithstanding any notation
of ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in
the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
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IN WITNESS WHEREOF, the undersigned has executed this certificate
this __ day of ____________, 1996.
WORLDWIDE ENTERTAINMENT
& SPORTS CORP.
By:__________________________
ATTEST:
By:_________________
Secretary
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<PAGE>
[FORM OF ELECTION OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED___________________________
hereby sells, assigns and transfers unto _____________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
Signature_____________________
(Signature must conform in all
respects to the name of holder as
specified on the face of the Warrant
Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
<PAGE>
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase:
________ Units
and herewith tenders in payment for such securities a certified or cashier's
check or money order payable to the order of Worldwide Entertainment & Sports
Corp. in the amount of $______, all in accordance with the terms hereof. The
undersigned requests that a certificate for such securities be registered in the
name of ___________________________ whose address is _____________________ and
that such Certificate be delivered to _____________________________________
whose address is
- --------------------------------------------------------------.
Dated:
Signature_______________________
(Signature must conform in all
respects to the name of holder as
specified on the face of the Warrant
Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
<PAGE>
FORM OF COMMON STOCK
CERTIFICATE
Certificate No. No. of Shares
CUSIP: 98157 10 4
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
This is to certify that
is the owner of
FULLY-PAID AND NON-ASSESSABLE SHARES, OF THE PAR VALUE OF
$.01, EACH, OF THE COMMON STOCK OF Worldwide Entertainment & Sports Corp. (the
"Corporation") transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this Certificate properly endorsed. This
Certificate is not valid unless countersigned by the Transfer Agent and
registered by the Registrar.
Witness the seal of the Corporation and the facsimile signatures of its
duly authorized officers.
Dated:
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
Corporate
Seal
1995
SECRETARY PRESIDENT
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PARKER DURYEE ROSOFF & HAFT
529 FIFTH AVENUE
NEW YORK, NEW YORK 10017
October 10, 1996
Worldwide Entertainment & Sports Corp.
29 Northfield Avenue
Suite 200
West Orange, NJ 07052
Re: Registration Statement on Form SB-2
Under the Securities Act of 1933
-----------------------------------
Gentlemen:
In our capacity as counsel to Worldwide Entertainment & Sports Corp., a
Delaware corporation (the "Company"), we have been asked to render this opinion
in connection with the registration statement on Form SB-2, as amended,
heretofore filed by the Company with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Registration Statement"),
covering (i) 1,300,000 shares of Common Stock, par value $.01 per share (the
"Common Stock"), (ii) 1,300,000 Class A Warrants to purchase an identical number
of shares of Common Stock (the "Class A Warrants"), (iii) 1,300,000 Units
("Units") each comprised of one share of Common Stock and one Class A Warrant,
(iv) 1,300,000 shares of Common Stock issuable upon exercise of the Class A
Warrants (the "Class A Warrant Stock"), (v) 195,000 shares of Common Stock (the
"Over-Allotment Stock"), (vi) 195,000 Class A Warrants to purchase an identical
number of shares of Common Stock (the "Class A Over-Allotment Warrants"), (vii)
195,000 Units subject to the over-allotment options (the "Over-Allotment
Units"), (viii) 195,000 shares of Common Stock issuable upon exercise of the
Over-Allotment Warrants (the "Over-Allotment Warrant Stock"), (ix) (A) 130,000
shares of Common Stock (the "Underwriters' Stock"), and (B) 130,000 Class A
Warrants to purchase an identical number of shares of Common Stock (the
"Underwriters' Warrants") which may be acquired upon exercise of an option
granted to the underwriter named in the Registration Statement, and (x) 130,000
shares of Common Stock issuable upon exercise of the Underwriters' Warrants (the
"Underwriters' Warrant Stock").
In that connection , we have examined the Certificate of Incorporation,
and the amendment thereto, and the By-Laws of the Company, the Registration
Statement, corporate proceedings of the Company relating to the issuance of the
Common Stock, Class A Warrants, Class A Warrant Stock, Over-Allotment Stock,
Class A Over-Allotment Warrants, Over-Allotment Warrant Stock,
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Worldwide Entertainment & Sports Corp.
October 10, 1996
Page 2
Underwriters' Warrants, Underwriters' Stock, Underwriters' Warrants, the
Underwriters' Warrant Stock, Units and Over-Allotment Units respectively, and
such other instruments and documents as we have deemed relevant under the
circumstances.
In making the aforesaid examinations, we have assumed the genuineness
of all signatures and the conformity to original documents of all copies
furnished to us as original or photostatic copies. We have also assumed that the
corporate records furnished to us by the Company include all corporate
proceedings taken by the Company to date.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State
of Delaware.
2. The Common Stock, the Class A Warrant Stock, Over-Allotment
Stock, Over-Allotment Warrant Stock, Underwriters' Stock and
Underwriters' Warrant Stock have each been duly and validly
authorized and, when issued and paid for as described in the
Registration Statement, will be duly and validly issued, fully
paid and non-assessable.
3. The Units, Over-Allotment Units, Class A Warrants, Class A
Over-Allotment Warrants, and Underwriters' Warrants have
each been duly and validly authorized and, when issued
and paid for as described in the Registration Statement, will
be duly and validly issued.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
PARKER DURYEE ROSOFF & HAFT
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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
October 11, 1996
