<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission on July 25, 1996
Registration No.
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
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 22-339-3152
(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:
IRA I. ROXLAND, 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: 599-2332
----------
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. [ ]
<PAGE>
<PAGE>
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
Proposed maximum
maximum aggregate Amount of
Title of each class of Amount to be offering price offering registration
securities to be registered registered per Unit (1) price(1) fee
--------------------------- ------------ -------------- --------- ------------
<S> <C> <C> <C> <C>
Units (each consisting of one share
of Common Stock, $.01 par value,
and one Redeemable Warrant)............. 1,380,000 Units (2) $6.00 8,280,000 $ 2,855.00
Common Stock, $.01 par value............ 1,380,000
Shares (3) $7.20 9,936,000 $ 3,426.00
Underwriter's Units (each Unit
consisting of one share of Common
Stock and one Redeemable Warrant) 120,000 Units (4) $7.20 864,000 $ 298.00
Common Stock, $.01 par value............ 120,000 Shares (5) $7.20 864,000 $ 298.00
TOTAL.................... $19,944,000 $6,877.00
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933.
(2) Includes 180,000 Units issuable upon exercise of the Underwriter's over
allotment option.
(3) Pursuant to Rule 416(a), there are hereby being registered an indeterminate
number of additional shares of Common Stock which may be issued pursuant to the
anti-dilution provisions of the Redeemable Warrants. No additional registration
fee is included for those shares.
(4) Represents Units to be sold to the Underwriter.
(5) Reserved for issuance upon exercise of the Redeemable Warrants underlying
the Underwriter's Units.
<PAGE>
<PAGE>
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.
PROSPECTUS
SUBJECT TO COMPLETION, JULY 25, 1996
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
1,200,000 UNITS
EACH COMPRISED OF
ONE SHARE OF COMMON STOCK AND
ONE REDEEMABLE COMMON STOCK PURCHASE WARRANT
Worldwide Entertainment & Sports Corp. (the "Company") hereby offers
1,200,000 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").
There can be no assurance that a public market will develop or be sustained for
any of the Securities, in which event holders may experience difficulty in
selling their Securities. The offering price of the Units and the exercise price
and other terms of the Redeemable Warrants have been arbitrarily determined by
negotiation between the Company and William Scott & Company, L.L.C. (the
"Underwriter"), are not related to the Company's asset value, net worth or other
established criteria of value and are not necessarily indicative of the value of
the Company. See "Risk Factors" and "Underwriting."
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK
AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AND "DILUTION."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
============================================================================================================
Underwriting
Price to Discounts and Proceeds to
Public Commissions (1) Company (2)
<S> <C> <C> <C>
Per Unit ..................................... $6.00 $.60 $5.40
Total (3) .................................... $7,200,000 $720,000 $6,480,000
============================================================================================================
</TABLE>
(1) Does not reflect additional compensation to the Underwriter in the form
of (i) a non-accountable expense allowance of up to $144,000 ($165,600
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 120,000 Units at $7.20 per
Unit (the "Unit Purchase Option"); (iii) a five year preferential right
of first refusal for certain future financings; and (iv) a consulting
fee of $50,000 pursuant to a two year consulting agreement of which
$25,000 is payable at the closing of this Offering and $25,000 one year
thereafter. In addition, the Company has agreed to indemnify the
Underwriter against certain civil liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses of the offering payable by the Company,
estimated at $550,000 (approximately $.46 per Unit), including the
Underwriter's non-accountable expense allowance and the consulting fee
payable to the Underwriter.
(3) The Company has granted the Underwriter an option, exercisable within 45
days of the date of this Prospectus, to purchase up to 180,000
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 $8,280,000,
$828,000 and $7,452,000, respectively. See "Use of Proceeds" and
"Underwriting."
The Units are offered on a "firm commitment" basis by the Underwriter
when, as and if delivered to and accepted by the Underwriter, and subject to
prior sale, withdrawal or cancellation of the offer without notice. It is
expected that delivery of the certificates representing the Units will be made
at the offices of the Underwriter, 1030 Salem Road, Union, NJ 07083, on or about
___________, 1996
---------------
WILLIAM SCOTT & COMPANY, L.L.C.
---------------
THE DATE OF THIS PROSPECTUS IS ____________, 1996
<PAGE>
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AND/OR THE REDEEMABLE WARRANTS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
---------------
The Company will furnish its stockholders and holders of Redeemable
Warrants with annual reports containing audited financial statements and such
interim reports as it deems appropriate.
<PAGE>
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety. Unless otherwise indicated, all share and per share
data and all information in this Prospectus assumes no exercise of: (i) the
Underwriter's over-allotment option; (ii) the Redeemable Warrants; (iii) the
Unit Purchase Option; (iv) outstanding options; or (v) options available for
grant under the Company's 1996 Stock Option Plan. Except as otherwise noted, all
references to the Company include all activities of its predecessors in
interest, and the operations of the Company's wholly-owned subsidiary, Worldwide
Team Sports, 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 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 three months ended March 31, 1996,
boxers' purse payments from all bouts engaged in by such boxers aggregated
$431,500 and $97,500, respectively, and the Company's share of such purse
income aggregated $75,794 and $25,987, 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 $(372,006), 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. ("Team Sports") 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 the Company 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
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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. 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
provide 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 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
revenues to date from the negotiation of player contracts.
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................................... 1,200,000 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..................................... 4,953,255 (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; and working
capital. See "Use of Proceeds."
Proposed NASDAQ Symbols.............................. Units - WWESU
Common Stock - WWES
Redeemable Warrants - WWESW
</TABLE>
ii
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- ----------------------
(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.
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>
Year Ended December 31, Three Months Ended March 31,
1994 1995 1995 1996
---------------------------- ------------------------------
<S> <C> <C> <C> <C>
Total Income $ 5,200 $ 241,621 $ 76,300 $ 49,786
Total Expenses 396,700 868,537 131,966 389,885
Loss from Operations (391,500) (626,916) (55,666) (340,099)
Net Loss $(381,786) $(869,303) $ (55,766) $(372,006)
</TABLE>
iii
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<PAGE>
BALANCE SHEET DATA:
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1996
----------------- -----------------------------
(Actual) (As Adjusted) (1)
<S> <C> <C> <C>
Current Assets $ 704,044 $ 477,972 $4,898,912
Total Assets 784,670 594,716 5,015,656
Current Liabilities 1,585,126 1,743,398 234,338
Total Liabilities 1,585,126 1,767,178 258,118
Stockholders Equity (deficiency) $ (800,456) $(1,172,462) $4,757,538
</TABLE>
- -------------------
(1) Adjusted to reflect the anticipated application of the net proceeds from
the sale of the 1,200,000 Units offered hereby, including repayment of
$2,090,000 of certain outstanding indebtedness from a private placement
of promissory notes, $1,509,060 of which was outstanding at March 31,
1996. See "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
iv
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<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. 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; UNCERTAINTY IN ACCOUNTANTS' REPORT. 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 to at least offset the Company's operating
costs or the Company generates significant revenues from its Team Sports
subsidiary. 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
$25,987 for the three months ended March 31, 1996), and the Company has
generated minimal revenues from ancillary and marketing activities and no
revenues from negotiation of team sports player contracts. During such periods,
the Company sustained net losses of $(869,303) and $(372,006), respectively. At
March 31, 1996, the Company had an accumulated deficit of $(1,276,115) and a
working capital deficit of $(1,172,462). 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. 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," "Business" 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 Team
Sports 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 the Company's 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, 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. The Company
anticipates that in order to attract an adequate number and caliber of
professional athletes, the Company will need to enter into employment or
consulting agreements with registered Agents who have existing representation
1
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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 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 - 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 and has one employee with representation agreements with seven football
players under contract with NFL franchises. The Company's success will be
dependent in part upon the four professional boxers currently under contract
with the Company achieving championship or 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. The income levels of the
Company's potential clients, 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. See "Business". Finally, there can be no assurance that
the boxers will continue to win their professional bouts or that the Company's
athletes will continue to be active members of professional team rosters.
Generally, team sports player contracts do not provide for salary guarantees in
the event the player is injured or cut from the roster. Further, there can be no
assurance that such 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.
Briggs' professional boxing career could be adversely affected. See
"Business - 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. 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
2
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of Mr. Roberts would likely have a material adverse effect on the Company's
business. Because NFL player representation agreements are not 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. See "Business
- - The Boxing Division," "- Team Sports Division - The Football Division,"
"- Marketing Division" and "- Competition."
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 boxermanager 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 - The Football Division - Boxing
Regulation" and "- Team Sports Division - The Football Division."
COMPETITION. The Company's boxing and marketing divisions, and its Team
Sports subsidiary, 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 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 in the Fall 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
3
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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 $(372,006) during the year ended December 31, 1995 and the three
months ended March 31, 1996, respectively. At March 31, 1996, it had a working
capital deficit of $(1,265,426) and an accumulated deficit of $(1,276,115). 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 bank borrowings, debt or equity
financings 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. Mr. Roberts has no obligation or plan to continue
to make such loans to the Company in the future. 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 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 $5.05 per share (applying the
full purchase price to the shares of Common Stock) in net tangible book value
from the public offering price of $6.00 per Unit. 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 45.5% 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, certain provisions of Mr. Roberts' employment
agreement permitting Mr. Roberts to terminate such agreement or to be assigned
the Company's management agreements with its current boxers upon a change in
control, could discourage attempts to acquire control of the Company by others.
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."
BROAD DISCRETION IN USE OF PROCEEDS. The Company intends to use $2,090,000
(approximately 35%) of the net proceeds of this offering to repay outstanding
indebtedness. Management will have broad discretion over the use of the
remaining $3,840,000 (65%) of such proceeds. 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
4
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<PAGE>
the Company. See "Use of Proceeds".
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, directors and 5% stockholders have agreed not to sell,
transfer or assign any of their shares of Common Stock (2,370,801 shares) for a
period of 18 months after the date of closing of this offering without the prior
written consent of the Underwriter. See "Underwriting" and "Description of
Securities."
DIVIDENDS UNLIKELY. The Company does not intend to declare or pay cash
dividends in the foreseeable future. Earnings are expected to be retained to
finance and expand its business. See "Dividend Policy" and "Description of
Securities."
ABSENCE OF PUBLIC MARKET; ARBITRARY DETERMINATION OF OFFERING AND EXERCISE
PRICES. Prior to this offering, there has been no public market for any of the
Company's securities and there is no assurance that a market will develop, or if
one does develop, that it will be sustained or that the market price of a Unit
will not decline below the public offering price or be subject to wide
fluctuations in response to quarterly variations in operating results and other
events or factors. Recent history relating to the market price of newly public
companies indicates that the market price of the Units, the Common Stock and the
Warrants may be highly volatile following this Offering. In the absence of an
established trading market, holders of the Company's securities may be unable to
sell their holdings in an efficient manner. The public offering price for the
Units and the exercise price of the Redeemable Warrants have been determined by
negotiation between the Company and the Underwriter and are not necessarily
related to the Company's asset value, net worth or other established criteria of
value. See "Underwriting" and "Description of Securities."
POSSIBLE DELISTING OF SECURITIES FROM NASDAQ. The National Association of
Securities Dealers, Inc. ("NASD") imposes stringent criteria for continued
listing of securities on the NASDAQ Small-Cap Market. To maintain the listing of
its securities on the NASDAQ Small-Cap 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 Small-Cap 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.
5
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LIMITED EXPERIENCE OF UNDERWRITER. The Underwriter has acted as lead
underwriter in connection with only one firm commitment public offering and as
co-manager in two firm commitment public offerings. No assurance can be given
that William Scott & Company's limited public offering experience will not
affect the subsequent development of a trading market.
UNDERWRITER'S POTENTIAL INFLUENCE ON THE MARKET. A significant number of
the Securities offered hereby may be sold to customers of the Underwriter. Such
customers subsequently may engage in transactions for the sale or purchase of
such Securities through or with the Underwriter. Although it has no obligation
to do so, the Underwriter intends to make a market in the Securities and may
otherwise effect transactions in such securities. If it participates in such
market, the Underwriter may influence the market, if one develops, for the
Securities. Such market-making activity may be discontinued at any time.
Moreover, if the Underwriter sells the securities issuable upon exercise of the
Unit Purchase Option or acts as warrant solicitation agent for the Redeemable
Warrants, it may be required under the Securities Exchange Act of 1934, as
amended, to temporarily suspend its market-making activities. The prices and
liquidity of the Securities may be significantly affected by the degree, if any,
of the Underwriters participation in such market. See "Underwriting."
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. 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."
6
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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."
DILUTION
As of March 31, 1996, the Company had a deficiency in net tangible book
value of $(1,225,267), or approximately $(.33) 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 1,200,000 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 March 31, 1996 would have been $4,704,733, or $.95
per share, representing an immediate increase in net tangible book value of
$1.28 per share to the present stockholders, and an immediate dilution of $5.05
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 $( .33)
Increase attributable to public investors $ 1.28
Pro forma net tangible book value after offering $ .95
-----
Dilution of net tangible book value to public investors $5.05
=====
</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>
Percentage of Average Price
Shares of Percentage of Total Total per Share of
Common Stock Common Stock Consideration Consideration Common Stock
<S> <C> <C> <C> <C> <C> <C>
Present
Stockholders 3,753,255 75.8% $ 37,533 (1) 0.5% $ .01
Public
Investors 1,200,000 24.2% $7,200,000 95.5% $6.00
</TABLE>
7
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- ----------------------
(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 $4.89, as the pro forma net tangible book value per share after the
offering would increase from $4,704,733 to $5,676,733.
8
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USE OF PROCEEDS
The net proceeds to the Company from the sale of the Units offered
hereby are estimated to be approximately $5,930,000 ($6,902,000 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>
Application Approximate Amount
----------- Net Proceeds
------------------
<S> <C>
Repayment of Debt (1) $2,090,000
Training Expenses $ 475,000
Recruitment Expenses (2) $ 400,000
Relocation of Facility Expenses (3) $ 400,000
Working Capital (4) $2,565,000
</TABLE>
(1) Represents repayment of an aggregate of $1,990,000 of principal plus
approximately $100,000 of accrued interest pursuant to outstanding
unsecured promissory notes bearing interest at a rate of 10% per annum.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Certain Transactions."
(2) Represents an estimate of costs and expenses to be incurred, primarily
travel and entertainment expenses, in connection with the recruitment of
potential athletes for representation by the Company and the recruitment
of agents to join the Company's Team Sports subsidiary.
(3) Represents the anticipated costs of relocating and equipping the Company's
executive offices and boxing training facility.
(4) To be used for general corporate purposes, including general and
administrative expenses of approximately $1,100,000 over the next 18
months, of which approximately $600,000 represents salaries for executive
officers 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 complica tions 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-
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<PAGE>
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.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 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 $1,743,398 $ 234,338
Long-Term Debt 23,780 23,780
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; 3,719,921 shares issued and
outstanding; 4,919,921 shares issued
and outstanding as adjusted(2) 37,199 49,533
Additional Paid In Capital 78,803 5,996,803
Accumulated Deficit (1,276,115) (1,276,115)
Demand Note Receivable on Private Issuance
of Common Stock ( 12,350) ( 12,684)
Total Stockholders' Equity (Capital Deficiency) (1,172,462) 4,757,538
Total Capitalization 594,716 5,015,656
</TABLE>
(1) Gives effect to the repayment of $2,090,000 of outstanding indebtedness,
$1,509,060 of which was outstanding at March 31, 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) 1,200,000 shares issuable upon the exercise of the
Redeemable Warrants; (ii) 180,000 shares of Common Stock included in the
Units which may be sold pursuant to the Underwriter's over-allotment
option or the 180,000 shares issuable upon exercise of the Redeemable
Warrants included in such Units; which may be sold pursuant to the
over-allotment option; (iii) 120,000 shares which may be issued upon the
exercise of the Unit Purchase Option or the 120,000 shares issuable upon
exercise
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<PAGE>
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."
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 three months ended March 31, 1996 and
for the three months ended March 31, 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, Three Months Ended March 31,
1994 1995 1995 1996
----------------------- ------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Purse Income $ 5,200 $ 75,794 $ 3,650 $ 25,987
Total Income 5,200 241,621 76,300 49,786
Training and Related Expenses 101,492 223,413 82,525 39,726
Promotion and other
Operating Expenses 295,208 645,124 49,441 350,159
Total Expenses 396,700 868,537 131,966 389,885
Loss from Operations (391,500) (626,916) (55,666) (340,099)
Net Loss (381,786) (869,303) (55,766) (372,006)
Loss Per Share $ (.13) $ (.28) $ (.02) $ (.10)
</TABLE>
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BALANCE SHEET DATA:
<TABLE>
<CAPTION>
December 31, 1995 March 31, 1996
----------------- --------------
(unaudited)
<S> <C> <C>
Cash $ 547,136 $ 42,304
Due from Related Parties - 197,307
Due from Boxers 151,358 201,421
Total Current Assets 704,044 477,972
Total Assets 784,670 594,716
Notes and Loans Payable 1,198,806 1,520,150
Total Current Liabilities 1,585,126 1,743,398
Total Liabilities 1,585,126 1,767,178
Stockholders' Equity (Capital Deficiency)
Predecessors' Capital 513,503 513,503
Common Stock, $.01 Par Value; 37,199 37,199
Authorized 20,000,000 Shares,
3,719,921 issued and outstanding
Accumulated Income (deficit) (1,313,959) (1,276,115)
Stockholders Equity (deficiency) (800,456) (1,172,462)
</TABLE>
12
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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, the Company hired a
registered NFL contract advisor and has begun to develop relationships with
other persons and entities in the sports agency and management fields. To date,
the Company's operations have been concentrated primarily in the sport of
boxing. See "Business-Organization" and "Certain Transactions". 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's
predecessors-in-interest and its management have significant experience in the
management of boxers. However, 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
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 Agent currently has
representation agreements with only seven NFL players, each of which provides
for the Company to share a portion of its fee, on a 50/50 basis, with third
parties. Consequently, revenues therefrom are expected not to exceed $30,000 for
the 1996-1997 NFL season.
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 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, 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 range from 4% for professional football player
contracts to 10% or 20% for endorsement and marketing revenues.
Each of the Company's areas of concentration, (i.e., boxing management
and team sports player
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agency) requires significant expenditures for the recruitment of clients. Only a
portion of the recruitment expenses incurred by the Company will result in the
engagement by the client of the Company's services, and it is often uncertain
the extent to which, even if retained, the target client will generate
significant revenues to the Company. In order for the Company to expand its
operations and counteract client loss due to player retirement, injury, changes
in public demand or preference or competition, the Company must constantly
engage in such 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 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 pay 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 twelve months the Company substantially recouped the expenses it has
incurred with respect to its relatively seasoned 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 the maturation of such boxers' careers, their increased visibilty 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 for recruitment and related expenses, and to
receive its revenues during the last four months of the year during the NFL
season. 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 $600,000 of base salary
payments to its executive officers over the next 18 months. 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.
Three Months Ended March 31, 1996 Compared with Three Months Ended March
31, 1995
During the three months ended March 31, 1996, the Company was actively
engaged in the management of its four boxers, as compared to the comparable 1995
period during which the Company was actively managing only one boxer, Mr.
Briggs. Purse income increased to $25,987 for the three months ended March 31,
1996 as compared to $3,650 for the three months ended March 31, 1995 as a result
of an increase in the number of bouts and the slight increase in the level of
the purses. Promotion and other operating expenses increased to $350,159 for the
three months ended March 31, 1996 as compared to $49,441 for the corresponding
1995 period as a result of (i) $70,788 of travel and entertainment expenses
incurred in connection with the recruitment of professional football players and
Agents for the Team Sports subsidiary and in connection with bouts for three of
the Company's four boxers which were scheduled to occur between March 15, 1996
and May 10, 1996, and (ii) $118,288 in payroll expenses as a result of the
hiring of the registered NFL Agent for the Team Sports subsidiary and additional
staff personnel. In addition, such expenses included approximately $56,573 of
expenses for promotional materials and other public relations expenses for such
period of well as $46,712 of expenses related to the purchases of tickets for
the boxers' bouts, none of which was recouped through ticket
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sales during such quarter. The three month period ended March 31, 1996 included
$32,245 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 three months ended March 31,
1996 increased to $(372,006) from $(55,766) 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 result 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 $868,537 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.
Accordingly the Company's loss from operations increased to $(626,916) for
the year ended December 31, 1995 from $(391,500) for the year ended December 31,
1994.
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. 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 March 31, 1996,
the Company had a working capital deficit of $1,172,462, 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 $100,000, 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 $400,000 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 $400,000, subject to variations depending upon player
availability and recruiting success) and rent (approximately $108,000 per
annum). Prior to January 1, 1996,
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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 employed a registered NFL
contract advisor in connection with the establishment of the Company's Team
Sports subsidiary, initially concentrating in the business of representing
professional football players. The Company intends to establish additional
divisions within its Team Sports subsidiary 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 competing
at the 1996 Summer Olympic Games in Atlanta, once such boxers renounce their
amateur status, 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.
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
titleelimination 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
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particular bout. The Company's success is dependent upon the ability of one or
more of its boxers to attain championship or, in the case of its heavyweight
boxers Ray Mercer and Shannon Briggs, top contender status.
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 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, 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
are generally unquestioned, 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 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, 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 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 appropriateness of the current governance system for professional
boxing and suggested changes (i.e., use of protective headgear)
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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
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
seasoned 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 Junior Lightweight 31 54-4-1 15% $ 17,500
Patterson w/39 April 14, 1996
knockouts
Charles "The Junior Welterweight 27 35-3-0 17.5% $10,000
Natural" Murray w/21 June 25, 1996
knockouts
Ray "Merciless Heavyweight 35 23-4-1 20% $450,000
Ray" Mercer w/16 May 10, 1996
knockouts
Shannon Briggs Heavyweight 24 25-1-0 27.5% $67,500
w/20 March 15, 1996
knockouts
</TABLE>
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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 on September 20, 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 generally considered one of the top five heavyweight
contenders.
Shannon Briggs has been boxing professionally since July 1992. Mr.
Briggs is widely considered by boxing experts such as Ring Magazine to be among
the more promising young heavyweights in boxing today. Briggs' next bout is
scheduled for August 13, 1996.
Each of these boxers has entered into a management agreement with the
Company pursuant to which the Company will supervise and direct the boxer's
training activities, negotiate business opportunities on behalf of the boxer and
oversee all marketing and promotional activities regarding the boxer. The
Company negotiates with promoters on behalf of its boxers to determine which
bouts each boxer will engage in and the terms of the purses to be paid for such
bouts. In exchange for providing 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 three months ended March
31, 1996, the Company recognized purse income of $75,794 and $25,987,
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.
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Boxing Regulation
The management of professional boxers and other athletes is subject to
licensing and regulation by state athletic commissions and agencies. The
Company's President, Marc Roberts, has obtained licenses to act as a manager
from the governing agencies in 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
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
Worldwide Team Sports, Inc. ("Team Sports"), a Delaware corporation
incorporated in January 1996, is a wholly owned subsidiary of the Company. Team
Sports was organized for the purpose of engaging in the business of providing
contract negotiation and advisory services to, and on behalf of, professional
team sport athletes. Team Sports intends to operate through sport-specific
divisions employing professionals with experience as agents and contract
advisors in their respective sports. To accomplish this goal, Team Sports will
need to establish direct connections with players in the various professional
sports leagues and, in accordance with established guidelines, establish
relationships with graduating collegiate athletes across all of college sports.
Team Sports 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 Team Sports 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.
Marc Roberts currently acts as Team Sports' President and CEO. Mr.
Roberts has minimal
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background in professional team sport athlete representation. The Company has
employed on a full time basis Ryan Schinman, an NFL Registered Agent with three
years experience, to be Team Sports' Chief Operating Officer. The Company
believes it will be necessary to add more experienced management personnel to
Team Sports to achieve its growth objectives. Team Sports' success will depend
on its ability to acquire existing sports agency practices, attract and retain
the services of sports 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.
Currently, Team Sports has established only its Football Division, although the
Company intends to seek to develop professional baseball and basketball
divisions. 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.
The Football Division
Through its Football Division, Team Sports intends to develop a football
player agency business primarily through the acquisition of existing agency
businesses and also through additions to the existing employee's clientele. The
Company does not currently have any agreement or understanding to acquire any
agency businesses. The NFL Collective Bargaining Agreement prohibits an
organization from serving as players' contract advisers ("Agents") and so the
Football Division's 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.
Agents negotiate player contracts and advise players on career
management decisions (e.g. free agency and contract terms). In addition to
establishing a relationship with the athletes, a knowledge of the league, team
personnel, the NFL Collective Bargaining Agreement 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, a contract advisor
generally receives 2% to 4% of his players' NFL salary each season, during the
length of the contract which the advisor negotiated for his client with the
team. That revenue stream continues for so long as the player continues to play
during the term of that 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 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.
Currently, Team Sports employs one Agent, Ryan Schinman, who has
assigned 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. Team Sports also
retains two talent scouts on a commission basis to refer athletes to the
Football Division. Mr. Schinman has limited experience in
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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 the Football Division, and thus Team Sports,
to reach profitability, Team Sports must retain the services of other Agents
with existing player business.
The financial success of the Football Division will be dependent upon
many factors beyond the control of Team Sports. The success of the Football
Division will be highly dependent upon the athletic success of the athletes
represented by Team Sports, 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 a
professional athlete under their player's agreements with a professional
franchise. Because football players' salaries generally are not guaranteed for
the life of their contracts, such unexpected interruptions of the athletes'
athletic careers could have a deleterious affect on the profitability of the
Football Division. 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, which the Company believes makes the Football Division
unique in this field, will enable Team Sports to distinguish itself and
successfully develop the business. There can be no assurance of success in this
regard.
Consulting Agreement
Team Sports has entered into a Consulting Agreement with Summit
Management Group ("SMG"), a business management firm located in South Carolina.
Pursuant to that agreement, SMG, primarily through its principals James E. Brown
and Darnell Jones, will assist Team Sports in identifying and recruiting players
for whom Team Sports 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 Team Sports will be ongoing or that any
additional athletes will be referred to Team Sports by SMG. SMG holds 33,334
shares of Common Stock.
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
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to generate opportunities for non-sport exploitation of all of Team Sports' and
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
Team Sports 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 Team Sports from
realizing its 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. 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 in the
recruitment of new boxing talent at the 1996 Olympics, including Don King
Productions, Top Rank, Shelly Finkel Management and Main Events, many of which
may have greater financial resources or recognition in the industry than the
Company.
EMPLOYEES
At June 30, 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
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to add new management personnel to expand into additional sports and to add to
the number of players represented by the Company. See "Management."
PROPERTIES
The Company's principal executive offices are currently located in West
Orange, New Jersey on a month-to-month rental basis. 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. The Company intends to
relocate its executive offices and training facility after the completion of
this Offering. The Company believes it will be able to locate suitable space at
base rental amounts similar to those currently paid by the Company.
LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company is a party.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Marc Roberts 36 President, Chief Executive Officer,
President of Worldwide Team Sports,
Inc. and Director
Roy Roberts 57 Chief Financial Officer, Director
Allan Cohen, M.D. 54 Director
Dan Drykerman 48 Director
Herbert F. Kozlov 43 Director
Harvey Silverman 55 Director
</TABLE>
Marc Roberts has been President and Chief Executive Officer of the
Company since its inception in August 1995. See "Business Organization" and
"Certain Transactions." Mr. Roberts is involved in various real estate,
restaurant and other business ventures, none of which occupies any significant
portion of his business time. Mr. Roberts is also a director of Linda's
Diversified Holdings, Inc.
Roy Roberts has been Chief Financial Officer of the Company since its
inception and as a director of the Company since July 1996. Since 1991, Mr.
Roberts serves as the President of Sparkle Industries, a commercial maintenance
company in New Jersey. He also served, until 1995, as the Chairman and Chief
Operating Office of Palisades Entertainment, Inc., a motion picture film
distributor specializing in special interest, rock and roll and animation films.
Mr. Roberts has been in the movie and video-cassette distribution industry since
1983, specializing in wholesale distribution of entertainment media. Upon the
completion of this Offering, Mr. Roberts intends to devote his full time and
attention to the Company. Mr. Roberts 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 Medical Staff at
Muhlenburg Hospital in Plainfield, New Jersey. Dr. Cohen is Marc Robert's uncle.
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.
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.
Harvey Silverman has been a director of the Company since July 1996. Mr.
Silverman is a Senior Managing Director of Spear & Kellogg in New York, where he
has been employed since 1963. Mr. Silverman is a Governor on the American Stock
Exchange and a director of Intermarket Clearing Corp.
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Directors serve until the next annual meeting or until their successors
are elected and qualified. Officers serve at the discretion of the Board of
Directors, subject to rights, if any, under contracts of employment. Directors
will receive no cash compensation for their services to the Company as
directors, but will be reimbursed for expenses actually incurred in connection
with attending meetings of the Board of Directors and are eligible to
participate in the Company's Stock Option Plan.
The General Corporation Law of Delaware permits a corporation through
its Certificate of Incorporation to eliminate the personal liability of its
directors to the corporation or its stockholders for monetary damages for breach
of fiduciary duty of loyalty and care as a director, with certain exceptions.
Exceptions include a breach of the director's duty of loyalty, acts or omissions
not in good faith or which involve intentional misconduct or knowing violation
of law, improper declarations of dividends, and transactions from which the
directors derived an improper personal benefit. The Company's Certificate of
Incorporation exonerates its directors from monetary liability to the fullest
extent permitted by this statutory provision.
The Company has been advised that it is the position of the Securities
and Exchange Commission that insofar as the foregoing provision may be invoked
to disclaim liability for damages arising under the Act, that provision is
against public policy as expressed in the Act and is therefore unenforceable.
KEY EMPLOYEE
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.
EXECUTIVE COMPENSATION
Prior to January 1, 1996, neither Marc Roberts, President, Chief
Executive Officer and Director of the Company, nor any other officer, received
compensation from the Company.
Marc Roberts has entered into a five-year employment agreement with the
Company commencing January 1, 1996 which provides for a base annual salary of
$190,000 with annual minimum guaranteed increases of $25,000. Mr. Roberts shall
also be paid an annual bonus of an amount equal to a minimum of 10% of the
pretax operating income of the Company before income taxes, depreciation and
amortization. Bonuses in excess of that amount shall be determined by the
Company's Board of Directors or its executive compensation committee, if any.
Mr. Roberts shall also be entitled to participate in the Company's incentive
stock option plan and shall be granted a minimum of 30% of the stock options to
be issued by the plan at an exercise price of 110% of the fair value of the
stock, as determined by the Board of Directors, on the date of grant. Payment of
Mr. Roberts' compensation from January 1, 1996 has been deferred until the
completion of this Offering. The agreement provides that upon termination of Mr.
Roberts' employment without cause or upon certain changes in control of the
Company resulting in Mr. Roberts' termination, he will be entitled to receive
any accrued but unpaid amounts due him under the agreement from the period prior
to his termination. In
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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.
STOCK OPTION PLAN
On July 1, 1996, the Company adopted the 1996 Stock Option Plan (the
"SOP") covering 500,000 shares of the Company's Common Stock, $.01 par value,
pursuant to which officers, directors and key employees of the Company are
eligible to receive incentive and/or non-qualified stock options. The SOP will
be administered by the Board of Directors or a committee designated by the Board
of Directors. The selection of participants, allotment of shares, determination
of price and other conditions of purchase of options will be determined by the
Board or committee at its sole discretion. The purpose of the SOP is to attract
and retain persons instrumental to the success of the Company. Incentive stock
options granted under the SOP are exercisable for a period of up to 10 years
from the date of grant at an exercise price which is not less than the fair
market value of the Common Stock on the date of the grant, except that the term
of an incentive stock option granted under the SOP to a stockholder owning more
than 10% of the outstanding Common Stock may not exceed five years and its
exercise price may 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%
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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. 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. Pursuant to the Asset Acquisition Agreement, the Briggs Partnership
received 500,000 shares of Common Stock. 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.
In December 1995, the Company issued 184,966 shares to Marc Roberts in
exchange for all of the outstanding share of Merciless Management Inc., The
Natural Management, Inc. and Marc Roberts Boxing Inc. Subsequent thereto, each
of the management agreements between such corporations and Ray Mercer, Charles
Murray and Tracy Patterson, respectively, 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 rent at the rate of $4,500
per month, to Marc Roberts for the use of a portion of Mr. Roberts' personal
residence which is used to house certain of the Company's boxers and other
related personnel, such as strength coaches, from time to time. In April 1996
such monthly rental payment was increased to $5,700.
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 in
1991.
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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>
Number of Shares Percentage of Common Percentage of Common
Beneficially Owned Stock Beneficially owned Stock Beneficially Owned
Name and Address As of June 30, 1996 As of June 30, 1996 (2) After the Offering (2)
---------------- ------------------- ------------------- ----------------------
<S> <C> <C> <C>
Marc Roberts (1) 1,684,966 44.9% 34.0%
Roy Roberts (1) 83,334 2.2% 1.7%
Allan Cohen, M.D. 41,667 (3) 1.1% *
41 Christie Drive
Warren, NJ 07059
Dan Drykerman 40,000 (4) 1.1% *
2555 N.W. 59th Street
Boca Raton, FL. 33496
Herbert F. Kozlov 300,000 (5) 8.0% 6.0%
529 Fifth Avenue
New York, NY 10017
Harvey Silverman 83,334 2.2% 1.7%
120 Broadway
New York, NY 10271
Robert Davimos 200,000 5.3% 4.0%
415 South West
Boca Raton, FL 33432
All officers and directors 2,233,301 (3)(4)(5) 58.5% 44.5%
as a group
(6 persons)
</TABLE>
* Less than 1%
(1) The address of the beneficial owner is that of the Company's principal
executive office.
(2) Based on 3,753,255 shares outstanding prior to, and 4,953,255 shares
outstanding upon consummation of Offering.
(3) Includes 25,000 shares which may be acquired upon the exercise of currently
exercisable warrants.
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(4) Includes 37,500 shares which may be acquired upon the exercise of currently
exercisable warrants.
(5) Does not include 50,000 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.
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 upon the sixtieth day after
issuance. 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 53 shareholders. Immediately following the
Offering (assuming the Underwriter's over-allotment option is not exercised)
4,953,255 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
outstanding. 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.
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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 and the present
stockholders of the Company holding in excess of 5% of the outstanding stock
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.
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 Warrant certificates in registered form. 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.
Each Redeemable Warrant entitles the registered holder to purchase one
share of Common Stock at an exercise price of $7.20 at any time until 5:00 P.M.,
New York City time, on the fifth anniversary of the date of this Prospectus. The
Redeemable Warrants are redeemable by the Company on 30 days' prior written
notice at any time subsequent to one year from the date of this Prospectus at a
redemption price of $.05 per Redeemable Warrant provided the last sale price of
the Common Stock for any 20 consecutive trading days ending within 15 days of
the notice of redemption averages in excess of $9 per share. "Closing price"
shall mean the closing bid price if listed in the over-the-counter market or the
closing sale price if listed on the National Market System of NASDAQ or a
national securities exchange. All Redeemable Warrants must be redeemed if any
are redeemed.
The exercise prices of the Redeemable Warrants were determined by
negotiation between the Company and the Underwriter and should not be construed
to be predictive of or to imply that any price increases in the Company's
securities will occur.
A Redeemable Warrant may be exercised upon surrender of the Redeemable
Warrant certificate on or prior to its expiration date (or earlier redemption
date) at the offices of American Stock Transfer & Trust Company, New York, New
York, the warrant agent with the form of "Election to Purchase" on the reverse
side of the 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 Warrants
and payment in accordance with the terms of the Redeemable Warrants will be
fully paid and nonassessable.
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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 Company has undertaken to register the shares underlying such
warrants upon the first anniversary of the date of this Prospectus.
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 Redeemable
Warrants.
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
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confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer; or (iii) on or subsequent to such date, the business
combination is approved by the Board of Directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the affirmative
vote of at least 66-2/3% of the outstanding voting stock which is not owned by
the interested stockholder. Under Section 203, the restrictions described above
also do not apply to certain business combinations proposed by an interested
stockholder following the announcement or notification of one of certain
extraordinary transactions involving the corporation and a person who had not
been an interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors and which transaction is approved or not opposed by the majority of
the board of directors then in office.
Section 203 generally defines a business combination to include: (i) any
merger or consolidation involving the corporation and the interested
stockholders; (ii) any sale, transfer, pledge or other disposition of 10% or
more of the assets of the corporation to the interested stockholder; (iii)
subject to certain exceptions, any transaction which results in the issuance or
transfer by the corporation of any stock of the corporation to the interested
stockholder; (iv) any transaction involving the corporation which has the effect
of increasing the proportionate share of the stock of any class or series of the
corporation beneficially owned by the interested stockholder; or (v) the receipt
by the interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
UNDERWRITING
William Scott & Company, L.L.C., the Underwriter, has agreed, subject to
the terms and conditions of the Underwriting Agreement, to purchase 1,200,000
Units offered hereby from the Company on a "firm commitment" basis, if any are
purchased.
The Underwriter has advised the Company that it proposes to offer the
Units to the public at the public offering price set forth on the cover page of
this Prospectus and that it may allow to selected dealers who are members of the
National Association of Securities Dealers, Inc. concessions of not in excess of
$_____ per Unit, of which not more than $_____ may be reallowed to certain other
dealers. After the initial public offering, the public offering price,
concessions and reallowances may be changed by the Underwriter.
The Underwriting Agreement provides for reciprocal indemnification
between the Company and the Underwriter against certain liabilities in
connection with this offering, including liabilities under the Act.
The Company has agreed to pay the Underwriter a non-accountable expense
allowance equal to 2% of the aggregate offering price of the Securities offered
hereby (including any Units purchased pursuant to the over-allotment option). To
date, the Company has paid $25,000 toward such fees.
The Company has granted an option to the Underwriter, exercisable during
the 45-day period from the date of this Prospectus, to purchase up to 180,000
additional Units at the public offering price, less underwriting discounts and
commissions, solely to cover over-allotments in the sale of the Units.
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The Underwriter has informed the Company that any sales of the
Securities offered hereby to be made to discretionary accounts will not exceed
2% of the total number of Securities offered.
The Company has agreed to sell to the Underwriter or its designees, for
nominal consideration, the Unit Purchase Option to purchase up to 120,000 Units,
except that the Redeemable Warrants are not subject to redemption by the
Company. The Unit Purchase Option will be exercisable during the four-year
period commencing one year from the date of this Prospectus at an exercise price
of $7.20 per Unit, subject to adjustment in certain events to protect against
dilution, and are not transferable for a period of one year from the date of
this Prospectus except to officers of the Underwriter. The Company has agreed to
register during the four-year period commencing one year from the date of this
Prospectus, on two separate occasions upon request of the holder(s) of a
majority of the Unit Purchase Option, the securities issuable upon exercise
thereof under the Act, the initial such registration to be at the Company's
expense and the second at the expense of the holders. The Company has also
granted certain "piggyback" registration rights to holders of the Unit Purchase
Option.
For the life of the Unit Purchase Option, the holders are given, at
nominal cost, the opportunity to profit from a rise in the market price of the
Company's securities with a resulting dilution in the interest of other
stockholders. Further, the holders may be expected to exercise the Unit Purchase
Option at a time when the Company would in all likelihood be able to obtain
equity capital on terms more favorable then those provided in the Unit Purchase
Option.
The Company and its principal stockholders have granted the Underwriter
a preferential right of first refusal for five years from the date of the
Prospectus to underwrite certain subsequent public or private offerings of the
Company's securities registered under the Act.
The Company has agreed to enter into a two-year agreement providing for
the payment of a fee to the Underwriter ranging from 2% to 5% of the
consideration paid, in the event the Underwriter is responsible for a merger or
other acquisition transaction to which the Company is a party. In addition, the
Company shall retain the Underwriter as management and financial consultants for
such two-year period commencing as of the date of this Prospectus at an
aggregate fee of $50,000, of which $25,000 shall be payable on the closing of
this offering and the balance of $25,000 one (1) year thereafter.
The Company has agreed that for a three-year period commencing on the
date of this Prospectus, the Company will nominate a designee of the Underwriter
to serve as a member of the Board of Directors of the Company and that such
designee, if elected, shall be appointed as a member of the audit committee and
the compensation committee of the Board of Directors.
The Company's officers, directors and 5% stockholders have agreed not to
sell, transfer or assign any of their shares of Common Stock for a period of 18
months from the date of this Prospectus without the prior written consent of the
Underwriter.
The initial public offering price of the Units and the exercise prices
and other terms of the Warrants have been determined by negotiation between the
Company and the Underwriter. Factors considered in determining the offering
price of the Units and the exercise prices of the Redeemable Warrants include
the business in which the Company engages, the Company's financial condition, an
assessment of management, the general condition of the securities markets and
the demand for similar securities of comparable companies.
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The Company has engaged the Underwriter, on a non-exclusive basis, as
its agent for the solicitation of the exercise of the Redeemable Warrants. To
the extent not inconsistent with the guidelines of the NASD and the rules and
regulations of the Commission, the Company has agreed to pay the Underwriter for
bona fide services rendered a commission equal to 7% of the exercise price for
each Redeemable Warrant exercised more than one year after the date of this
Prospectus if the exercise was solicited by the Underwriter. In addition to
soliciting, either orally or in writing, the exercise of the Redeemable
Warrants, such services may also include disseminating information, either
orally or in writing, to Warrantholders about the Company or the market for the
Company's securities, and assisting in the processing of the exercise of
Redeemable Warrants. No compensation will be paid to the Underwriter in
connection with the exercise of Redeemable Warrants if the market price of the
underlying shares of Common Stock is lower than the exercise price, the
Redeemable Warrants are held in a discretionary account, the Redeemable Warrants
are exercised in an unsolicited transaction or the arrangement to pay the
commission is not disclosed in the prospectus provided to Warrantholders at the
time of exercise. In addition, unless granted an exemption by the Commission
from Rule 10b under the Exchange Act, while it is soliciting exercise of the
Redeemable Warrants, the Underwriter will be prohibited from engaging in any
market making activities or solicited brokerage activities with regard to the
Company's securities unless it has waived its right to receive a fee for the
exercise of the Redeemable Warrants.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Parker Duryee Rosoff & Haft A Professional Corporation, New York,
New York. Certain legal matters will be passed upon for the Underwriter by
McLaughlin & Stern, LLP, New York, New York. Herbert F. Kozlov, a member of
Parker Duryee Rosoff & Haft, beneficially owns 300,000 shares of Common Stock.
Other members of such firm own an aggregate of 50,000 shares of Common Stock, as
well as 5 year warrants to purchase an additional 25,000 shares of Common Stock
at an exercise price of $6.00 per share. Mr. Kozlov also serves as Secretary
and a director of the Company.
EXPERTS
The financial statements (except as they apply to unaudited periods) and
schedules of the Company included in this Prospectus and Registration Statement
have been audited by Rosenberg Rich Baker Berman & Company, independent
certified public accountants, as stated in their reports, which call attention
to an uncertainty as to the Company's ability to continue as a going concern,
appearing elsewhere herein and therein and are included in reliance upon such
reports given upon the authority of that firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement on Form SB-2 under the Act, covering
the securities offered by this Prospectus. For further information with respect
to the Company and the securities offered, reference is made to the Registration
Statement and the exhibits filed as part thereof, which may be examined without
charge and copies of such material can be obtained at prescribed rates from the
Public Reference Section maintained
36
<PAGE>
<PAGE>
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.
37
<PAGE>
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report.......................................................... F-2
Consolidated Balance Sheets as of March 31, 1996
and 1995 (Unaudited) and December 31, 1995.......................................... F-3
Consolidated Statements of Operations for the three
months ended March 31, 1996 and 1995 (Unaudited)
and for the years ended December 31, 1995 and 1994 ................................. F-5
Consolidated Statement of Stockholders' Equity (Capital
Deficiency) as of March 31, 1996 (Unaudited) and
December 31, 1995 and 1994.......................................................... F-6
Consolidated Statements of Cash Flows for the three
months ended March 31, 1996 and 1995 (Unaudited)
and for the years ended December 31, 1995 and 1994.................................. F-7
Notes to the Consolidated Financial Statements........................................ F-9
</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.
/s/ Rosenberg Rich Baker
Berman & Company
Maplewood, New Jersey
February 5, 1996
Except for Notes A(2), C, F, H and L, which are dated July 17, 1996
F-2
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 42,304 $ 547,136
Accounts receivable 28,200 -
Due from related party 197,307 -
Due from boxers 201,421 151,358
Prepaid expenses and other current assets 8,740 5,550
----------- -----------
477,972 704,044
----------- -----------
PROPERTY AND EQUIPMENT -
AT COST (less accumulated
depreciation) 61,626 30,161
----------- -----------
OTHER ASSETS:
Cash surrender value of life insurance 2,313 2,313
Deferred costs of securities registration 51,968 47,148
Organization costs (net of accumulated
amortization) 837 1,004
----------- -----------
55,118 50,465
----------- -----------
$ 594,716 $ 784,670
=========== ===========
</TABLE>
See the Notes to the Consolidated Financial Statements
F-3
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES
March 31, December 31,
1996 1995
--------- ------------
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Deferred purse income $ 25,000 $ -
Notes and loans payable:
Other 10,900 10,900
Promissory notes 1,452,500 1,165,000
Escrow funds payable 26,281 22,906
Due to related party - 6,159
Current portion of long-term debt 6,689 -
Accrued expenses 117,668 355,291
Accrued salary 47,500 -
Accrued interest 56,560 24,570
Income taxes payable 300 300
--------- ---------
1,743,398 1,585,126
Long-term debt net of current portion 23,780 -
--------- ---------
1,767,178 1,585,126
--------- ---------
STOCKHOLDERS' EQUITY (CAPITAL
DEFICIENCY)
Preferred stock, $.01 par value; authorized
5,000 shares; no shares issued 0 0
Common stock, $.01 par value; authorized
20,000,000 shares; 3,719,921 shares issued 37,199 37,199
Additional Paid-in Capital 78,803 488,653
Accumulated deficit (1,276,115) (1,313,959)
Demand note receivable on private issuance
of Common Stock (12,350) (12,350)
----------- ---------
(1,172,462) (800,456)
----------- -----------
$ 594,716 $ 784,670
=========== ===========
</TABLE>
See the Notes to the Consolidated Financial Statements
F-4
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
--------------------------- -------------------------
1996 1995 1995 1994
----------- ----------- ----------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Purse income $ 25,987 $ 3,650 $ 75,794 $ 5,200
Commission income 22,792 - 21,600 -
Other boxing income 1,007 72,650 144,227 -
----------- ------------ ------------ ------------
49,786 76,300 241,621 5,200
----------- ------------ ------------ ------------
Training and related expenses 39,726 82,525 223,413 101,492
Promotion and other operating
expenses 350,159 49,441 645,124 295,208
----------- ------------ ------------ ------------
389,885 131,966 868,537 396,700
----------- ------------ ------------ ------------
Loss from operations (340,099) (55,666) (626,916) (391,500)
----------- ------------ ------------ ------------
Other income and expenses:
Consulting income - - - 15,000
Interest and dividend income 438 - 323 -
Loss on sale of marketable
securities - - - (4,590)
Interest expense (32,245) - (33,573) (521)
Other expenses - - (208,500) -
----------- ------------ ------------ ------------
(31,807) - (241,750) 9,889
----------- ------------ -----------
Loss before income taxes (371,906) (55,666) (868,666) (381,611)
Income taxes 100 100 637 175
----------- ------------ ------------ ------------
NET LOSS $(372,006) $ (55,766) $(869,303) $(381,786)
=========== ============ ============ ============
LOSS PER SHARE $ (.10) $ (.02) $ (.28) $ (.13)
=========== ============ ============ ============
WEIGHTED AVERAGE
OF COMMON SHARES
OUTSTANDING 3,719,921 3,034,955 3,134,226 3,034,955
=========== ============ ============ ============
</TABLE>
See the Notes to the Consolidated Financial Statements
F-5
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY(CAPITAL DEFICIENCY)
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
AND THE YEARS ENDED DECEMBER 31, 1994 AND 1995
<TABLE>
<CAPTION>
Demand Note
Pf'd Stock Common Stock Predecessors' Additional Accumulated Receivable
Shs/Amount Shares Amount Capital Paid-in Capital Deficit On Cmn Stk
---------- ------ ------ ------- --------------- ------- ----------
<S> <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 0 293,501 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) - -
Net loss for the year ended
December 31, 1995 - - - - - (869,303) -
---- --------- ------- --------- ----------- ------------ --------
Balance - December 31, 1995 0 3,719,921 37,199 0 488,653 (1,313,959) (12,350)
Reclassification of Accumulated
Deficit from S corporation
subsidiaries - - - - (409,850) 409,850 -
Net loss for the three months
ended March 31, 1996
(unaudited) - - - - 77,912 (372,006) -
---- --------- ------- --------- ----------- ------------ --------
Balance - March 31, 1996 0/$0 3,719,921 $37,199 $ 0 $ 78,803 $ (1,276,115) $(12,350)
==== ========= ======= ========= =========== ============ ========
(unaudited)
</TABLE>
See the Notes to the Consolidated Financial Statements
F-6
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
------------------------- ------------------------
1996 1995 1995 1994
----------- ---------- --------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (372,006) $ (55,766) $ (869,303) $ (381,786)
Adjustments to Reconcile Net
Loss to Net Cash Provided by
(Used in) Operating Activities:
Depreciation and amortization 3,253 1,725 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 (28,200) (1,500) - -
Decrease due from
boxers and trainer (50,063) (59,031) (136,379) (14,979)
(Increase) decrease other
current assets (3,190) 538 (3,385) (258)
Increase deferred purse income 25,000 25,000
Increase escrow funds payable 3,375 750 22,906 -
Increase (decrease) accrued
expenses (237,623) (3,869) 291,057 40,795
Increase accrued salary 47,500 - - -
Increase accrued interest 31,990 - 24,570 -
Increase (decrease) income
taxes payable - 100 75 (7,744)
-------- ------ -------- -------
NET CASH USED IN
OPERATING ACTIVITIES (579,964) (92,053) (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 (34,551) - (13,161) (705)
Advances to stockholder (203,466) 66,987 (100,046) 117,348
-------- ------ -------- -------
NET CASH PROVIDED BY
(USED IN) INVESTING
ACTIVITIES (238,017) 66,987 (113,207) 220,037
-------- ------ -------- -------
</TABLE>
See the Notes to the Consolidated Financial Statements
F-7
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
---------------------- -------------------------
1996 1995 1995 1994
---------- ---------- ------------ ----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM
FINANCING ACTIVITIES:
Deferred costs in connection with
proposed public offering (4,820) -- (47,148) --
Proceeds from notes payable and
debt 318,500 -- 1,171,000 --
Repayment of notes payable and
debt (531) (5,000) (5,000) (7,339)
Capital contributions -- 60,000 220,002 125,001
----------- ----------- ----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 313,149 55,000 1,338,854 117,662
----------- ----------- ----------- -----------
NET INCREASE (DECREASE)
IN CASH (504,832) 29,934 561,234 (14,933)
CASH (OVERDRAFT) AT
BEGINNING OF YEAR 547,136 (14,098) (14,098) 835
----------- ----------- ----------- -----------
CASH (OVERDRAFT) AT END
OF YEAR $ 42,304 $ 15,836 $ 547,136 $ (14,098)
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 100 $ -- $ 253 $ 521
=========== =========== =========== ===========
Interest $ 255 $ -- $ 9,159 $ 7,957
=========== =========== =========== ===========
</TABLE>
See the Notes to the Consolidated Financial Statements
F-8
<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, artists and
entertainers. To date, the Company has provided such
services principally to boxers.
The accompanying unaudited financial statements as of March
31, 1996 and for the three months ended March 31, 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, necessary 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., S.B.
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 Sales Net Loss Net Sales Net Income(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 14,501
Marc Roberts Boxing, Inc. -- (30,912) -- (45,110)
S.B. Champion
Management Inc. -- (47,229) -- (133,068)
Merciless Management Inc. -- (125) -- --
Natural Management Inc. -- (125) -- --
--------- --------- --------- ---------
Consolidated Amounts $ 241,621 $(869,303) $ 20,200 $(381,786)
========= ========= ========= =========
</TABLE>
F-9
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - NATURE OF ORGANIZATION AND BASIS OF PRESENTATION
(CONTINUED):
The Company has incurred substantial losses since inception
and, as of March 31, 1996 (unaudited) has a working capital
deficiency of $1,172,462. In order to continue its
operations as a going concern, the Company must obtain
additional financing which it is endeavoring to do by 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 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.
The Company is proposing an initial public offering of its
securities, pursuant to which it expects to offer up to
1,200,000 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. The Company
has incurred $51,968 of costs in connection with the
proposed offering through March 31, 1996, and expects to
incur substantial additional costs in this connection.
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.
F-10
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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 three months ended March 31, 1996 (unaudited) and
March 31, 1995 (unaudited), and for the year ended December
31, 1995 and 1994, was $167, $167, $668 and $668,
respectively.
4. Loss Per Share:
Net loss per share is computed based on the weighted
average number of shares outstanding during the period,
recognized as a simple capital structure.
5. Revenue Recognition:
Revenue is recognized upon completion of a bout as a
percentage of the boxer's purse. If a fight is canceled, in
certain cases monies received in advance may be recognized
as income at that time.
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).
F-11
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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. On June 30, 1996 the principal officer/
shareholder repaid $200,000 to the Company.
NOTE D - PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
<TABLE>
<CAPTION>
March December
31, 1996 31, 1995
-------- --------
(unaudited)
<S> <C> <C>
Gym equipment and
furniture $ 55,956 $ 52,405
Leasehold improvements 7,116 7,116
Transportation equipment 31,000 -
---------- ---------
Total 94,072 59,521
Less accumulated depreciation
and amortization 32,446 29,360
---------- -----------
Balance $ 61,626 $ 30,161
=========== ===========
</TABLE>
Depreciation expense amounted to $3,086, $1,158, $6,604 and
$7,169 for the three months ended March 31, 1996 (unaudited),
March 31, 1995 (unaudited), the year ended December 31, 1995, and
the year ended December 31, 1994, respectively.
F-12
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE E - CASH SURRENDER VALUE OF LIFE INSURANCE:
Shannon Briggs I LP, 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 June 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 $1,990,000.
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 S.B.
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.
F-13
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE F - EQUITY TRANSACTIONS (CONTINUED):
In December 1995, Marc Roberts assigned all of his shares in
Merciless Management Inc., The Natural Management Inc. Marc
Roberts Inc., S.B. Champion Management, Inc. and Marc Roberts
Boxing, Inc., to the Company in exchange for an additional
184,966 shares of Common Stock. Each of those companies was
subsequently merged into the Company.
In May 1996, the Company agreed to issue 33,334 shares of its
Common Stock to the Summit Management Group in connection with
the execution of a Consulting Agreement between the Company and
Summit Management Group.
NOTE G - NOTES AND LOANS PAYABLE:
Short-term notes and loans payable consist of the following:
<TABLE>
<CAPTION>
March December
31, 1996 31, 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>
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
F-14
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE G - NOTES AND LOANS PAYABLE (CONTINUED):
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 $1,452,500 $1,165,000
========== ==========
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:
March December
31, 1996 31, 1995
-------- ---------
(unaudited)
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 $30,235. $ 30,469 $ -
Less current maturities of
long-term debt 6,689 -
----------- ---------
$ 23,780 $ -
=========== =========
Maturities of long-term debt are as follows:
March 31, 1997 $ 6,689
March 31, 1998 7,390
March 31, 1999 8,163
March 31, 2000 8,227
-------
$30,469
=======
F-15
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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 - OTHER BOXING INCOME:
Other boxing income consists of ticket sales for the year ended
December 31, 1995. For the three months ended March 31, 1996 the
$1,007 represents income from sales of promotional items.
NOTE J - INCOME TAXES:
The income tax provision is comprised of the following at:
<TABLE>
<CAPTION>
Three Months Ended Year Ended
------------------------- ----------------------
March March December December
31, 1996 31, 1995 31, 1995 31, 1994
-------- --------- ---------- ---------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
State current provision $100 $100 $637 $175
==== ==== ==== ====
The Company's total deferred tax asset and valuation allowance at
December 31, 1995 and 1994 are as follows:
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
F-16
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE J - INCOME TAXES (CONTINUED):
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 K - 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 leased office space beginning January 5, 1996. This
lease is a month-to-month lease. No formal lease has been signed
at this time.
The Company pays rent on behalf of the boxers, their personal
attendants and strength coaches.
Total rent expense amounted to the following:
December 31, 1995 33,980
December 31, 1994 24,306
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:
December 31, 1996 $28,698
December 31, 1997 16,456
December 31, 1998 5,935
The Company is responsible for all taxes, licenses, insurance and
general maintenance related to the above leases.
F-17
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE L - 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 December 8, 1998 with an option
to extend the term for an additional two-year
period immediately following the end of the initial
four-year 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.
On April 9, 1996, a new contract was executed. The
contract will expire on April 9, 2001. The new
agreement provides for the boxer to retain 80% of
purses from all bouts or exhibitions (purse
income).
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
F-18
<PAGE>
<PAGE>
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE L - COMMITMENTS AND OTHER MATTERS (CONTINUED):
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 comanager for
the release of his contract were $208,500.
4. 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 ten years from
the date of grant at an exercise price which is not less
than the fair market value of the Common Stock Option date
of the grant, except that the term of an Incentive Stock
Option 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.
F-19
<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:
II-1
<PAGE>
<PAGE>
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............ $ 6,877
NASD registration fee.......................................... $ 2,494
NASDAQ listing fee............................................. $ *
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.................................................. $ *
--------
Total........................................ $550,000
========
</TABLE>
* To be supplied by amendment.
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
1,180,757 shares. Each person paid a purchase price of $.01 per share price of
such common stock.
Commencing in September 1995 and ending in June 1996, the Company
privately sold an aggregate of 39.8 units ("Units"), resulting in net proceeds
to the Company of $1,990,000, each consisting of (a) a $50,000 promissory note
bearing interest at a rate of 10% per annum payable in full upon the earlier of
(i) the Company's receipt of at least $3,000,000 from an underwritten public
offering of the Company's securities (the "Initial Public Offering") or (ii) 18
months after the date of the closing of the unit investment (the "Placement
Closing Date") and (b) a warrant to purchase 25,000 shares of the Company's
Common Stock exercisable for a period of five years from the Placement Closing
Date, provided that an Initial Public Offering is consummated during such five
year exercise period, at an exercise price per share equal to 120% of the price
per share in the Initial Public Offering. Messrs. Drykerman and Cohen purchased
1.5 and 1 Unit, respectively, through such private placement.
In November 1995, the Company entered into an Asset Acquisition Agreement
with Shannon Briggs Boxing I, L.P. (the "Briggs Partnership") to acquire all of
the assets of the Briggs Partnership. Marc Roberts is the sole shareholder of
the general partner of the Briggs Partnership, S.B.Champion Management, Inc. In
accordance with the terms of the Asset Acquisition Agreement, the existing
management agreement with Shannon Briggs was terminated, and a new management
agreement was entered into between the Company and Shannon Briggs. Pursuant to
the Asset Acquisition Agreement, the
II-2
<PAGE>
<PAGE>
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 239,164 shares of Common Stock. Each of those companies was
subsequently merged into the Company.
In May 1996, the Company agreed to issue 33,334 shares of its Common Stock
to Summit Management Group in connection with the execution of a Consulting
Agreement between the Company and Summit Management Group.
The above transactions were private transactions not involving a public
offering and were exempt from the registration provisions of the Securities Act
of 1933, as amended, pursuant to Section 4(2) thereof. No underwriter was
engaged in connection with the foregoing sales of securities.
II-3
<PAGE>
<PAGE>
ITEM 27. Exhibits and Financial Statement Schedules.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<S> <C>
1.1 -- Form of Underwriting Agreement.
3.1(a) -- Certificate of Incorporation of the Registrant.
3.1(b) -- Certificate of Amendment Filed August 21, 1995
3.1(c) -- Certificate of Amendment filed July 18, 1996
3.1(d) -- Certificate of Ownership and Merger among the Registrant, Merciles
Management Inc., The Natural Management Inc., Marc Roberts Inc., S.B.
Champion Management, Inc. and Marc Roberts Boxing, Inc. filed July 19,
1996
3.2 -- By-Laws of the Registrant.
4.1* -- Form of 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
</TABLE>
II-4
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
-------- -----------------------
<S> <C>
10.9 -- Asset Purchase Agreement between Registrant and Shannon Briggs I, L.P.,
as amended
21.01 -- Subsidiaries of the Registrant.
23.01 -- Consent of Rosenberg Rich Baker Berman & Company
23.02 -- Consent of PDRH (to be included in Exhibit 5.1)
24.01 -- Power of Attorney (contained on signature page)
</TABLE>
- -----------------------------
*To be filed by amendment.
(b) Financial Statement Schedules
All schedules have been omitted because of the absence of conditions
under which they are required, or because the required information is given in
the financial statements or the notes thereto.
ITEM 28. Undertakings.
The Company hereby undertakes to file, during any period in which offers
or sales are being made, a post-effective amendment to this Registration
Statement (i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933; (ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
The Company hereby undertakes that, for the purpose of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The Company hereby undertakes to remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
II-5
<PAGE>
<PAGE>
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
registration statement to be signed on its behalf by the undersigned, in the
City of New York, State of New York, on July 23, 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
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 July 23, 1996
- ----------------------------- Officer (Principal executive officer)
Marc Roberts
/s/ Roy Roberts Director (Principal accounting and July 23, 1996
- ----------------------------- financial officer)
Roy Roberts
/s/ Allan Cohen Director July 23, 1996
- -----------------------------
Allan Cohen
/s/ Dan Drykerman Director July 23, 1996
- -----------------------------
Dan Drykerman
/s/ Herbert Kozlov Director July 23, 1996
- -----------------------------
Herbert Kozlov
/s/ Harvey Silverman Director July 23, 1996
- -----------------------------
Harvey Silverman
</TABLE>
STATEMENT OF DIFFERENCES
The section mark symbol shall be expressed as ...... ss.
II-7
<PAGE>
<PAGE>
Exhibit 1.1
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
UNDERWRITING AGREEMENT
New York, New York
____________, 1996
William Scott & Company, LLC
1030 Salem Road
Union, New Jersey 07083
Dear Sirs:
The undersigned, Worldwide Entertainment & Sports, Inc., a Delaware
corporation (the "Company"), hereby confirm their agreement with William Scott &
Company LLC (being referred to herein variously as "you" or the "Underwriter"),
as follows:
I. Introduction. The Company proposes to issue and sell to you 1,200,000
units (the "Units"), with each Unit consisting of one share ("Share") of the
Company's common stock, par value $.001 per share ("Common Stock") and one
redeemable Common Stock purchase warrants (the "Redeemable Warrants") with each
Redeemable Warrant to purchase one share of Common Stock. The Shares and the
Redeemable Warrants will be separately tradeable and transferrable from and
after the __________. Each Redeemable Warrant is exercisable from ____________,
1997 until ____________, 2001 at an initial exercise price of $7.20 for one (1)
share of Common Stock. The 1,200,000 Units are hereinafter referred to as the
"Firm Securities." Upon your request, as provided in Section 4 of this
Agreement, the Company shall also issue and sell to you up to an additional
180,000 Units for the purpose of covering over-allotments in the sale of the
Firm Securities. Such 180,000 Units are hereinafter referred to as the "Option
Securities." The Firm Securities and the Option Securities are hereinafter
referred to as the "Securities."
The Company also proposes to issue and sell to you, pursuant to the terms
of the Underwriter's warrant agreement dated the same date as this Agreement
(the "Underwriter's Warrant Agreement"), warrants (the "Underwriter's Warrants")
for the purchase of an additional 120,000 Units. The Units issuable on the
exercise of the Underwriter's Warrants shall be exercisable at a price equal to
120% of the exercise price of the Redeemable
1
<PAGE>
<PAGE>
Warrants. The Securities issuable upon exercise of the Underwriter's Warrants
are hereinafter sometimes referred to as the "Underwriter's Securities." The
shares of Common Stock issuable upon exercise of the Redeemable Warrants
(including the Redeemable Warrants issuable upon exercise of the Underwriter's
Warrants) are hereinafter sometimes referred to as the "Warrant Shares." The
Units, Shares, the Redeemable Warrants, the Underwriter's Warrants, the
Underwriter's Securities and the Warrant Shares are more fully described in the
Registration Statement and the Prospectus referred to below.
2. Representations and Warranties of the Company. The Company represents
and warrants to the Underwriter that:
a. The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and an amendment or amendments
thereto, on Form SB-2 (No. ________) including any related preliminary
prospectus (the "Pre liminary Prospectus"), for the registration of the
Securities, the Warrant Shares, the Underwriter's Warrants and the Underwriter's
Securities, under the Securities Act of 1933 as amended (the "Act"), which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the rules and
regulations (the "Regulations") of the Commission under the Act. The Company has
not filed any amendment thereto to which you shall have reasonably objected
after having been furnished with a copy thereof. Except as the context may
otherwise require, such registration statement, as amended, on file with the
Commission at the time the registration statement becomes effective (including
the prospectus, financial statements, schedules, exhibits and all other
documents filed as a part thereof or incorporated therein and all information
deemed to be a part thereof as of such time pursuant to Rule 430(A) of the
Regulations, is hereinafter called the "Registration Statement," and the form of
prospectus, in the form filed with the Commission pursuant to Rule 424(b) of the
Regulations, is hereinafter called the "Prospectus."
b. When the Registration Statement becomes effective and at all times
subsequent thereto up to Closing Date I and Closing Date II, if any (as such
terms are defined in subsection 4(d) hereof), the Registration Statement and the
Prospectus will contain all material statements which are required to be stated
therein in accordance with the Act and the requirements of the Act and the
Regulations; neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. When any Preliminary Prospectus was first
filed with the Commission
2
<PAGE>
<PAGE>
(whether filed as part of the registration statement for the registration of the
Securities or any amendment thereto or pursuant to Rule 424(a) of the
Regulations) and when any amendment thereof or supplement thereto was first
filed with the Commission, such Preliminary Prospectus and any amendments
thereof and supplements thereto complied or will comply in all material respects
with the applicable provisions of the Act and the Regulations and did not and
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The representations and warranties made in this subsection (b)
does not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to the
Underwriter by the Underwriter expressly for use in the Registration Statement
or prospectus or any amendment thereof or supplement thereto.
c. This Agreement, the Underwriter's Warrant Agreement and the
Consulting Agreement (as defined in Section 2(a) hereof) have been duly and
validly authorized by the Company, and this Agreement constitutes and the
Underwriter's Warrant Agreement and Consulting Agreement, when executed and
delivered pursuant to this Agreement, will (assuming due execution by the
Underwriter) each constitute a valid and binding agreement of the Company,
enforceable against the Company in accordance with its respective terms, except
(i) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, (ii) as
enforceability of any indemnification provision may be limited under the federal
and state securities laws, and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The Units, the Shares, the Redeemable Warrants, the Warrant
Shares, and the Underwriter's Warrants to be issued and sold by the Company
pursuant to this Agreement and the Underwriters' Warrant Agreement, and the
Underwriter's Securities issuable upon exercise of the Underwriter's Warrants
upon payment therefor, have been duly authorized and, when issued and paid for,
will be validly issued, fully paid and non-assessable; the holders thereof are
not and will not be subject to personal liability by reason of being such
holders; the Shares, the Underwriter's Warrants, the Redeemable Warrants the
Warrant Shares and the Underwriter's Securities are not subject to the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action required to
be taken for the authorization, issuance and sale of the Shares, the Redeemable
Warrants, the Warrant Shares, the Underwriter's Warrants and the Underwriter's
Securities has been duly and validly taken. The Underwriter's Warrants and the
Redeemable Warrants constitute valid and binding obligations of the Company,
enforceable in accordance
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with their respective terms, to issue and sell, upon
exercise in accordance with the terms thereof, the number and type of the
Company's securities called for thereby; except (i) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and (ii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
d. All issued and outstanding securities of the Company have been duly
authorized and validly issued and are fully paid and non-assessable; the holders
thereof to the Company's knowledge have no rights of rescission with respect
thereto, and are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company.
e. The Company has good and marketable title to, or valid and
enforceable leasehold estate in, all items of real and personal property stated
in the Prospectus to be owned or leased by it, free and clear of all liens,
encumbrances, claims, security interests, defects and restrictions of any
material nature whatsoever, and liens for taxes not yet due and payable, other
than those referred to in the Prospectus.
f. There is no action, suit, proceeding, inquiry, investigation,
litigation or governmental proceeding pending or to the Company's knowledge
threatened against, or involving the properties or business of the Company which
might materially and adversely affect the financial position, or prospects, or
value or the operation of the properties or the business of the Company, except
as referred to in the Prospectus.
g. All contracts and other documents required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been described in the Registration Statement or the
Prospectus or filed with the Commission as Exhibits to the Registration
Statement, as required.
h. The financial statements of the Company, together with the related
notes, included in the Registration Statement and Prospectus fairly present the
financial position and the results of operations of the Company at the dates and
for the periods to which they apply; and such financial statements have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved. There has been no material
adverse change in financial condition or results of operations of the Company
since the date of the financial statements included in any Preliminary
Prospectus or the Prospectus.
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i. Rosenberg Rich Baker Berman & Company, whose report is filed with
the Commission as a part of the Registration Statement, are independent
accountants as required by the Act and the Regulations.
j. The Company has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware. Except as
otherwise set forth in the Prospectus, the Company does not own an interest in
any corporation, partnership, joint venture, trust or other business entity. The
Company is duly qualified and licensed and in good standing as a foreign
corporation in each jurisdiction in which operations require such qualification
or licensing. The Company has all requisite corporate power and authority, and
has all necessary authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory officials and bodies to own or
lease its properties and conduct its business as described in the Prospectus,
and the Company is and has been doing business in material compliance with all
such material authorizations, approvals, orders, licenses, certificates and
permits and all federal, state and local laws, rules and regulations. The
disclosures in the Registration Statement concerning the effects of federal,
state and local regulations on the Company's business as currently conducted and
as contemplated are correct in all material respects and do not omit to state a
material fact. The Company has all corporate power and authority to enter into
this Agreement and to carry out the provisions and conditions hereof, and all
consents, authorizations, approvals and orders required in connection therewith
have been obtained. No consent, authorization or order of, and no filing with,
any court, government agency or other body is required for the issuance of the
Units, Shares, the Redeemable Warrants, the Warrant Shares, the Underwriter's
Securities, pursuant to this Agreement, the Warrant Agreement (as defined in
Section 2(x) hereof) and the Underwriter's Warrant Agreement, and as
contemplated by the Prospectus, except with respect to applicable federal and
state securities laws.
k. There has been no material adverse change or any development
involving a prospective materially adverse change in the condition or prospects
of the Company, financial or otherwise, from that on the latest dates as of
which such conditions or prospects are set forth in the Prospectus; and the
outstanding debt, the property and the business of the Company conforms in all
material respects to the descriptions thereof contained in the Registration
Statement and Prospectus.
l. The Units, the Shares, the Redeemable Warrants, the Underwriter's
Warrants, the Warrant Shares, the Underwriter's Securities and other securities
issued or issuable by the Company conform in all respects to all statements with
respect thereto contained in the Registration Statement and the Prospectus.
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m. No material default exists in the due performance and observance of
any term, covenant or condition of any license, contract, indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other agreement
or instrument to which the Company is a party or by which the Company may be
bound or to which any of the property or assets of the Company is subject,
except as described in the Registration Statement.
n. The Company is not in violation of any term or provision of its
respective Certificate of Incorporation or By-Laws. Neither the execution and
delivery of this Agreement, nor the issue and sale of the Units, the
Underwriter's Warrants, the Underwriter's Securities or the Warrant Shares, nor
the consummation of any of the transactions contemplated herein, nor the
compliance by the Company with the terms and provisions hereof has conflicted
with or will conflict with, or has resulted in or will result in a material
breach of, any of the terms and provisions of, or has constituted or will
constitute a default under, or has resulted in or will result in the creation or
imposition of any lien, charge or encumbrance upon the property or assets of the
Company, pursuant to the terms of any indenture, mortgage, deed of trust, note,
loan or credit agreement or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to which the
Company is a party or by which the Company may be bound or to which any of the
property or assets of the Company is subject; nor will such action result in any
violation of the provisions of the respective Certificate of Incorporation or
the By-Laws of the Company or any contract or agreement, or any statute or any
order, rule or regulation applicable to the Company or any other regulatory
authority or other governmental body having jurisdic tion over the Company.
o. All taxes which are due from the Company have been paid in full,
and the Company has no tax deficiency or claim outstanding, proposed or assessed
against it, except as described in the Prospectus.
p. Subsequent to the respective dates as of which information is given
in the most recently circulated Preliminary Prospectus included as a part of the
Registration Statement, and except as may otherwise be indicated or contemplated
herein or therein, the Company has not (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money; (ii) entered
into any transaction other than in the ordinary course of business; or (iii)
declared or paid any dividend or made any other distribution on or in respect to
its capital stock.
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q. The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or part thereof.
r. On the effective date of the Registration Statement, the capital
stock of the Company is as set forth in the Registration Statement, including
the Common Stock or such equivalent securities, issuable upon exercise of
options, warrants and other contract rights, securities convertible directly or
indirectly into shares of Common Stock or such equivalent securities, and
excluding any options or warrants issuable to the Underwriter in connection with
the public offering of the Securities).
s. On or before the effective date of the Registration Statement, the
Company shall have caused to be duly executed and shall have in its possession
and make available to you for review, legally binding and enforceable agreements
pursuant to which holders of 5% or more of the Company's outstanding common
shares issued and outstanding at such effective date and all officers and
directors have agreed that for a period of 18 months following such effective
date, no such person will sell, transfer, assign, or pledge any such shares or
other dispose of any beneficial interest therein, whether pursuant to Rule 144
of the Act or otherwise, except with the prior written consent of the Company
and you. The Company will cause the Transfer Agent to mark an appropriate legend
on the face of stock certificates representing all of such securities.
t. Except for the Underwriter's Warrants, no holders of any securities
of the Company or of any options, warrants or convertible or exchangeable
securities of the Company exercisable for or convertible or exchangeable for
securities of the Company have the right to include any securities issued by the
Company in the Registration Statement or any registration statement to be filed
by the Company within 24 months of the date hereof or to require that the
Company file a registration statement under the Act during such 24 month period.
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u. Except as described in the Prospectus, there are no claims,
payments, issuances, arrangements or understand ings for services in the nature
of a finder's or origination fee with respect to the sale of the Securities
hereunder or any other arrangements, agreements, understandings, payments or
issuance with respect to the Company that may affect the Underwriter's
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
v. The Company has entered into an employment agreement with Marc
Roberts in the form filed as Exhibit 10.3.
w. The Units, Common Stock and the Redeemable Warrants are eligible
for quotation on the NASDAQ Stock Market.
x. The Company has entered into a warrant agreement substantially in
the form filed as Exhibit 4.3 to the Registration Statement ("Warrant
Agreement") with American Stock Transfer & Trust (the "Transfer Agent") in form
and substance satisfactory to the Underwriter, with respect to the Redeemable
Warrants. The Warrant Agreement has been duly and validly authorized by the
Company and, assuming due execution by the Transfer Agent, constitutes a valid
and legally binding agreement of the Company, enforceable against the Company in
accordance with its terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (ii) as enforceability of any indemnification provision may be
limited under the federal and state securities laws, and (iii) that the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
y. Neither the Company nor, to the knowledge of the Company, any of
its respective officers or directors, or any of its respective employees, agents
or any other person acting on behalf of any of the Company has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer, supplier, or official
or governmental agency or instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or foreign) or
other person who was, is, or may be in a position to help or hinder the business
of the Company (or assist it in connection with any actual or proposed
transaction) which (i) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (ii) if not given in
the past, might have had a materially adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Prospectus or (iii) if not continued in the
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future, might adversely affect the assets, business, operations or prospects of
the Company. The Company's internal accounting controls and procedures are
sufficient to cause the Company to comply with the Foreign Corrupt Practices Act
of 1977, as amended.
z. There is no claim or action by any person pertaining to, or
proceeding pending or threatened which challenges the exclusive right of the
Company with respect to any trademarks, service marks, service names, trade
names, patents and patent applications, copyrights and other rights (collec
tively the "Intangibles") used in the conduct of the Company's business except
as described in the Prospectus. To the Company's knowledge, the Company's
current products, services and processes do not infringe on any Intangibles held
by any third party. The Company owns or possesses the requisite licenses or
rights to use all Intangibles described as owned by the Company in the
Registration Statement.
aa. Except as set forth in the Registration Statement, the Company is
not under any obligation to pay royalties or fees of any kind whatsoever to any
third party with respect to technology it has developed, uses, employs or
intends to use or employ.
bb. The Company has generally enjoyed a satisfactory employer/employee
relationship with its employees and is in compliance in all material respects
with all federal, state and local laws and regulations respecting the employment
of its employees and employment practices, terms and conditions of employment
and wages and hours relating thereto. There are no pending investigations
involving the Company by the U.S. Department of Labor, or any other governmental
agency responsible for the enforcement of such federal, state or local laws and
regulations. There is no unfair labor practice charge or complaint against the
Company pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the Company, or any predecessor entity, and none has occurred. No
representation question exists respecting the employees of the Company and no
collective bargaining agreement or modification thereof is currently being
negotiated by the Company. No grievance or arbitration proceeding is pending
under any expired or existing collective bargaining agreements of the Company.
cc. The Company, nor, to its knowledge, any of their employees,
directors or stockholders has taken or will take, directly or indirectly, any
action designed to or which has constituted or which might reasonably be
expected to cause or result in, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
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dd. The Company does not maintain, sponsor or contribute to any
program or arrangement that is an "employee pension benefit plan," an "employee
welfare benefit plan" or a "multiemployer plan" as such terms are defined in
Sections 3(2), 3(1) and 3(37), respectively of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") ("ERISA Plans"). The Company does not
presently or at any time, maintains or contributes to a defined benefit plan, as
defined in Section 3(35) of ERISA.
ee. The Company and the Underwriter have entered into a financial
advisory and consulting agreement ("Consulting Agreement"), in form and
substance satisfactory to the Under writer, substantially in the form filed as
Exhibit 10.1 to the Registration Statement, pursuant to which the Company is
obligated to pay the Underwriter $25,000 per year for two years, with $25,000
paid at the Closing Date I and other fees if the Company were to undertake
certain transactions as specified therein.
ff. Except as set forth in the Prospectus, no officer, director or
stockholder of the Company or any "affiliate" or "associate" (as these terms are
defined in Rule 405 promulgated under the Regulations) of any such person or
entity or the Company, has or has had, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells services or
products which are furnished or sold or are proposed to be furnished or sold by
the Company, or (B) purchases from or sells or furnishes to the Company any
goods or services, or (ii) a beneficial interest in any contract or agreement to
which the Company is a party or by which it may be bound or affected. Except as
set forth in the Prospectus, there are no existing material agreements,
arrangements, understandings or transactions, or proposed material agreements,
arrangements, understandings or transactions, between the Company, and any
officer, director, or Principal Stockholder of the Company, or any affiliate or
associate of any such person or entity.
gg. The minute books of the Company have been made available to
counsel to the Underwriter and contain a complete summary of all meetings and
actions by unanimous consent of directors and stockholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately in all material respects.
ah. The Company has filed a Form 8-A with the Commission providing for
the registration under the Exchange Act of the Units, Shares and the Redeemable
Warrants and such registration has been declared effective.
3. Purchase, Sale and Delivery of the Securities and Underwriter's
Warrants.
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a. On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriter 1,200,000 Units, which Units consist of an
aggregate of 1,200,000 Shares and 1,200,000 Redeemable Warrants and the
Underwriter agrees to purchase from the Company such 1,200,000 Units Redeemable
Warrants at a purchase price of $6.00 per Unit.
b. In addition, upon not less than two (2) days' notice from the
Underwriter to the Company for a period of forty-five business days from the
effective date of the Registration Statement, the Company agrees to sell to the
Underwriter all or any part of the Option Securities to be issued and sold by
the Underwriter hereunder each at a purchase price of $6.00 per Unit. Delivery
of the Option Securities shall be made concurrently with the tender of payment
therefor on Closing Date II, if any. Option Securities may be purchased by the
Underwriter only for the purpose of covering over-allotments in the sale of the
Firm Securities, and the Underwriter shall have no obligation to make any
over-allotments. No Option Securities shall be delivered unless the Firm
Securities shall be simul taneously delivered or shall theretofore have been
delivered as herein provided.
c. On Closing Date I, the Company shall issue and sell to the
Underwriter, the Underwriter's Warrants at a total purchase price of $10.00,
which warrants shall entitle the holders thereof to purchase an aggregate of
120,000 Units. The Underwriter's Warrants shall be exercisable for a period of
four (4) years commencing one (1) year from the effective date of the
Registration Statement at an initial exercise price equal to 120% of the initial
public offering price per Redeemable Warrant. The Underwriter's Warrant
Agreement and form of Warrant Certificate shall be substantially in the form
filed as Exhibit 4.2 to the Registration Statement.
d. Payment for the Underwriter's Warrants shall be made on Closing
Date I. Payment for the Firm Securities and the Option Securities shall be made
on each of Closing Date I and Closing Date II, respectively, at the
Underwriter's election by certified or bank cashier's check in New York Clearing
House funds, payable to the order of the Company and the Selling Securityholders
at the offices of the Underwriter or at such other place as shall be agreed upon
by the Underwriter and the Company or by wire transfer, upon delivery of
certificates (in form and substance satisfactory to the Underwriter)
representing the Securities to the Underwriter for the account of the
Underwriter. Delivery and payment for the Firm Securities shall be made at 10:00
A.M. New York time, on or before the fifth business day following the public
offering or at such earlier time as the Underwriter shall determine, or at such
other time as shall be agreed upon by the Underwriter and the Company. The hour
and date of delivery and payment for the Firm Securities are called "Closing
Date I." The
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Firm Securities shall be registered in such name or names and in such authorized
denominations as the Underwriter may request in writing at least two (2) full
business days prior to Closing Date I. Delivery for each of the Option
Securities as provided above shall be made within the two (2) business day
period after notice of exercise to the Company, and against payment therefor, as
provided above. The hour and date of such delivery and payment made subsequent
to Closing Date I for Option Securities is referred to as "Closing Date II." The
Option Securities shall be registered in such name or names and in such
denominations as the Underwriter may request in writing at the time of exercise
of the over-allotment options.
e. The Company shall not be obligated to sell or deliver Firm
Securities except upon tender of payment by the Underwriter for all the Firm
Securities.
4. Public Offering. The Underwriter is to make a public offering of the
Firm Securities and such of the Option Securities as it may determine. The
Securities are to be initially offered to the public at the offering price set
forth on the cover page of the Prospectus (such price being hereinafter called
the "public offering price"). The Underwriter may from time to time increase or
decrease the public offering price after the distribution of the Securities has
been completed to such extent as the Underwriter, in its sole discretion deems
advisable. The Underwriter may, at its own expense, enter into one or more
agreements as the Underwriter, in its sole discretion, deems advisable, with one
or more broker-dealers who shall act as dealers in connection with such public
offering.
5. Covenants of the Company. The Company covenants and agrees that it will:
a. Use its best efforts to cause the Registration Statement to become
effective and will notify the Underwriter immediately and confirm the notice in
writing, (i) when the Registration Statement and any post-effective amendment
thereto becomes effective, (ii) of the issuance by the Commission of any stop
order or of the initiation, or the threatening, of any proceeding for that
purpose, (iii) of the issuance by any state securities commission of any
proceedings for the suspension of the qualification of the Units, the Warrant
Shares or the Underwriter's Securities for offering or sale in any jurisdiction
or of the initiation, or the threatening, of any proceeding for that purpose,
and (iv) of the receipt of any comments from the Commission. If the Commission
or any state securities commission shall enter a stop order or suspend such
qualification at anytime, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
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b. The Company will file the Prospectus (in form and substance
satisfactory to the Underwriter) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424(b)(1) (or, if applicable and consented to by you, pursuant to Rule
424(b)(4)) not later than the Commission's close of business on the earlier of
(i) the second business day following the execution and delivery of this
Agreement, and (ii) the fifth business day after the effective date of the
Registration Statement.
c. During the time when a prospectus is required to be delivered under
the Act, use all reasonable efforts to comply with all requirements imposed upon
it by the Act and the Exchange Act, as now and hereafter amended and by the
Regulations, as from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Units, Shares, the Redeemable
Warrants, the Warrant Shares and the Underwriter's Securities in accordance with
the provisions hereof and the Prospectus. If at any time when a prospectus
relating to the Units, Shares, the Redeemable Warrants, the Underwriter's
Securities or the Warrant Shares is required to be delivered under the Act, any
event shall have occurred as a result of which, in the opinion of counsel for
the Company or counsel for the Underwriter the Prospectus, as then amended or
supplemented, includes an untrue statement of a material fact or omits to state
any material fact required to be stated in light of the circumstances under
which they were made, not misleading or if it is necessary at any time to amend
the Prospectus to comply with the Act, the Company will notify the Underwriter
promptly and prepare and file with the Commission an appropriate amendment or
supplement in accordance with Section 10 of the Act.
d. Deliver to the Underwriter, without charge, such number of copies
of each Preliminary Prospectus and the Prospectus as the Underwriter may
reasonably request and, as soon as the Registration Statement or any amendment
or supplement thereto becomes effective, deliver to the Underwriter two signed
copies of the Registration Statement, including exhibits, and all post-effective
amendments thereto and copies of all exhibits filed therewith or incorporated
therein by reference and signed copies of all consents of certified experts.
e. Endeavor in good faith, in cooperation with the Underwriter, at or
prior to the time the Registration Statement becomes effective, to qualify the
Shares, the Redeemable Warrants, the Underwriter's Warrants and the Warrant
Shares for offering and sale under the securities laws of such jurisdictions as
the Underwriter may reasonably designate, provided that no such qualification
shall be required in any jurisdiction where, as a result thereof, the Company
would be subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction. In each juris diction where
such qualification
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shall be effected, the Company will, unless the Underwriter agrees that such
action is not at the time necessary or advisable, use all reasonable efforts to
file and make such statements or reports at such times as are or may reasonably
be required by the laws of such jurisdiction.
f. Make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full calendar
month following the effective date of the Registration Statement, an earnings
statement (which need not be certified by independent public or independent
certified public accountants unless required by the Act or the Regulations, but
which shall satisfy the provisions of Section 11(a) of the Act) covering a
period of at least twelve consecutive months beginning after the effective date
of the Registration Statement.
g. For a period of five years from the effective date of the
Registration Statement, furnish to the Underwriter copies of such financial
statements and other periodic and special reports as the company from time to
time furnishes generally to holders of any class of its securities, and promptly
furnish to the Underwriter (i) a copy of each periodic report the company shall
be required to file with the Commission, (ii) a copy of every press release and
every news item and article with respect to the Company or its affairs which was
released by the Company, (iii) copies of each Form SR, (iv) a copy of each Form
8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the Company,
and (v) such additional documents and information with respect to the Company
and its affairs of any future subsidiaries of the Company as the Underwriter may
from time to time reasonably request.
h. Apply the net proceeds from the offering received by it in a manner
consistent with the caption "USE OF PROCEEDS" in the Prospectus.
i. Furnish to the Underwriter as early as practicable prior to the
date hereof and Closing Date I, but not later than two (2) full business days
prior thereto, a copy of the latest available unaudited interim financial
statements of the Company (which in no event shall be as of a date more than
ninety days prior to the effective date of the Registration Statement), which
have been read by the Company's independent accountants as stated in their
letter to be furnished to the Underwriter pursuant to Section 7(g) hereof.
j. Deliver to the Underwriter, prior to filing, any amendment or
supplement to the Registration Statement or Prospectus for a period of 24 months
proposed to be filed after the effective date of the Registration Statement and
not file any such amendment or supplement to which the Underwriter shall
reasonably object, after being furnished such copy, in writing with reasonable
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specificity as to the nature and extent of any objection, unless required by any
state or federal security rules or regulations.
k. On or before the effective date of the Registration Statement,
cause to be duly executed legally binding and enforceable agreements pursuant to
which holders of 5% or more of the Company's Common Stock issued and outstanding
at such effective date and all officers and directors have agreed not to sell,
transfer, assign or pledge any such securities (either pursuant to Rule 144 of
the Regulations or otherwise) or otherwise dispose of a beneficial interest
therein without the prior written consent of the Underwriter and the Company for
a period of 18 months following such effective date.
l. For a period of three (3) years from Closing Date I, furnish to the
Underwriter at the Company's sole expense, weekly consolidated financial
transfer sheets, if and when requested by the Underwriter, relating to the
Common Stock and the Redeemable Warrants. Designate American Stock Transfer &
Trust Company transfer agent for the Company's securities or such other transfer
agent mutually agreeable by the Company and the Underwriter.
m. For a period of five (5) years after the effective date of the
Registration Statement, the Underwriter shall have the right to designate an
individual to become a member of the Board of Directors of the Company (the
"Board"), and the Compensation Committee and Audit Committee of the Board if
requested by the Underwriter. In the event the Underwriter shall not have
designated such individual at the time of any meeting of the shareholders to the
Board or such person has not been elected or is unavailable to serve, the
Company shall notify a person selected by the Underwriter of each meeting of the
Board. An individual selected by the Underwriter shall receive all notices and
other correspondence and communications sent by the Company to members of the
Board. In addition, such individual shall be entitled to receive reimbursement
for all costs incurred in attending such meetings including, but not limited to,
food, lodging, and transportation, only in the event such reimbursements are
given to members of the Board. Further, during such five (5) year period, the
Company and its principal shareholders shall give notice to the Underwriter with
respect to any proposed acquisitions, mergers, reorganizations or other similar
transactions. Any director designated by the Underwriter and elected shall be
entitled to receive the same compensation, expense reimbursements and other
benefits as paid to all directors for their acting as director.
The Company further agrees that, during said five (5) year period, it shall
schedule no less than four (4) formal and "in person" meetings of its Board of
Directors in each such year at which meetings such Director shall be permitted
to attend as set forth herein; said meetings shall be held quarterly each year
and
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thirty (30) days advance notice of such meetings shall be given to the Advisor.
Further, during such five (5) year period, the Company and its principal
shareholders shall give notice to the Director with respect to any proposed
acquisitions, mergers, reorganizations or other similar transactions. In lieu of
the Underwriter's right to designate a Director, the Underwriter shall have the
right during such five-year period, in its sole discretion, to designate one
person to be an advisor to the Board and to the Audit and Compensation
Committees and such person who shall be entitled to receive the same
compensation, expense reimbursements and other benefits set forth above.
In the event that an individual designated by the Underwriter attends a
meeting of the Board, other than as a director, the Company agrees to indemnify
and hold the Underwriter and such individual harmless against any and all
claims, actions, damages, costs and expenses, and judgments arising solely out
of the attendance and participation of the Advisor at any such meeting described
herein. In the event the Company maintains a liability insurance policy
affording coverage for the acts of its officers and directors, it agrees, if
possible to include the designee as an insured under such policy.
The Company shall establish a Compensation Committee and Audit
Committee.
n. For a period equal to the lesser of (i) seven years from the date
hereof, and (ii) the sale to the public of the Underwriter's Securities, the
Company will not take any action or actions which may prevent or disqualify the
Company's use of Form S-1 (or other appropriate form not inclusive of such short
forms such as Form S-3 which requires timely filings of quarterly annual
reports) for the registration under the Act of the Underwriter's Securities.
o. For a period of five years from the date hereof, use its best
efforts to maintain the quotation by NASDAQ of the Common Stock and the
Redeemable Warrants.
p. As soon as practicable, but in no event more than three months from
the date hereof, take all necessary and appropriate actions to be included in
Standard and Poor's Corporation Descriptions or Moody's OTC Manual.
q. Supply the Underwriter and McLaughlin & Stern, counsel to the
Underwriter, with one bound volume each of the underwriting materials within a
reasonable time after the latest Closing Date.
r. For a period of 12 months from the Closing Date, the Company shall
not issue any shares of Common Stock or Preferred Stock or any warrants, options
or other rights to
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purchase Common Stock or Preferred Stock without the prior written consent of
the Underwriter, except with respect to the Company's stock option plan and
shares of Common Stock issuable pursuant t any options or warrants outstanding
as of the date hereof. For a period of 24 months after the Closing Date, no
registration statement will be filed by the Company on Form S-8 or other form.
s. So long as the Units are registered under the Exchange Act, the
Company will hold an annual meeting of shareholders for the election of
directors within 180 days after the end of each of the Company's fiscal years,
or as soon thereafter as is reasonable practicable, and, within 150 days after
the end of each of the Company's fiscal years or as soon thereafter as is
reasonably predictable will provide the Company's shareholders with the audited
financial statements of the Company as of the end of the fiscal year just
completed prior thereto. Such financial statements shall be those required by
Rule 14a-3 under the Exchange Act and shall be included in an annual report
pursuant to the requirements of such Rule.
t. The Board of Directors shall maintain an audit committee, which
committee will be comprised of two outside directors and one inside director.
The Company shall present a written description of each potential conflict of
interest between any of the Company or its officers, directors, employees,
affiliates or associates, and any of their family members or entities in which
any of them own an interest, for review by the audit committee, including, but
not limited to, all agreements and proposed compensation with any of such
officers, directors, employees and affiliates. The audit committee shall review
and resolve any conflicts of interest as set forth in the Prospectus.
6. Payment of Expenses.
a. The Company hereby agrees to pay on each of Closing Date I and
Closing Date II, if any (to the extent not paidat Closing Date I), all expenses
(other than fees of counsel to the Underwriter, except as provided in (iii)
below) in connection with the offering, including but not limited to, (i) the
preparation, printing, filing and mailing (including the payment of postage with
respect to such mailing) of the Registration Statement and the Prospectus and
the printing and mailing of this Agreement and related documents, including the
cost of all copies thereof and of the Preliminary Prospectus and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
Underwriter in quantities as hereinabove stated, (ii) the printing, engraving,
issuance and delivery of the Shares, the Redeemable Warrants and the
Underwriter's Warrants, including any transfer or other taxes payable thereon,
(iii) the qualification of the Shares, the Redeemable Warrants, the
Underwriter's Securities and the Warrant Shares under state orforeign securities
or "Blue Sky" laws and
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determination of the status of such securities under legal investment laws, if
any, and fees of counsel for the Underwriter (which fees shall be payable by the
Company) and disbursements of counsel for the Underwriter, (iv) Tombstone
advertising costs not in excess of $5,000, bound volumes and prospectus
memorabilia, (v) costs and expenses in connection with due diligence
investigations, incurred by us and/or counsel to the Underwriter in connection
with visits to, and examination of, the Company's premises, (vi) fees and
expenses of the transfer agent and warrant agent, (vii) the fees payable to NASD
and NASDAQ and (viii) the costs and expenses of any "road shows" scheduled by
the Underwriter.
b. Non-Accountable Expense Allowance. The Company has paid to the
Underwriter a $25,000 advance towards its non-accountable expense allowance of
two percent of the total gross proceeds of the offering, in addition to the
expenses payable pursuant to subsection (a).
In the event that the Underwriter terminates the offering or is
unable to consummate the offering within 9 months of the date hereof, the
advances toward the non-accountable expense allowance shall become accountable
and shall be returnable to the Company to the extent its out-of-pocket expenses
are less than the $25,000 advanced.
7. Conditions of Underwriter's Obligations. The obligations of the
Underwriter to purchase and pay for the Securities, as provided herein, shall be
subject to the continuing accuracy of the representations and warranties of the
Company as of the date hereof and as of each of the Closing Date, to the
accuracy of the statements of officers of the Company made pursuant to the
provisions hereof and to the performance by the Company of its obligations
hereunder and to the following conditions:
a. The Registration Statement shall have become effective not later
than 5:00 p.m., New York time, on the date of this Agreement or such later date
and time as shall be consented to in writing by you, and, at each of the Closing
Dates, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or shall be pending or contemplated by the Commission and any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of counsel to the Underwriter.
b. At Closing Date I, the Underwriter shall have received the
favorable opinion of Parker Duryee Rossoff & Haft, counsel to the Company dated
Closing Date I, addressed to the Underwriter and in form and substance
satisfactory to McLaughlin & Stern, counsel to the Underwriter, to the effect
that:
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(1) the Company (A) has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, (B) is duly qualified and in good standing as a foreign
corporation in each jurisdiction in which its ownership or leasing of
any properties or the character of its operations requires such
qualification, except where the failure to do so would not have a
material adverse effect on the Company and, to counsel's knowledge (C)
has all requisite corporate power and authority to own or lease its
properties and conduct its business as described in the Prospectus;
(2) the Shares, the Underwriter's Warrants, the Redeemable
Warrants, the Warrant Shares, and the Underwriter's Securities have
been duly authorized and are, or in the case of the Warrant Shares and
the Underwriter's Securities, will be, upon exercise and payment
therefor, validly issued, fully paid and non-assessable securities of
the Company, and the holders thereof will not be subject to personal
liability by reason of being such holders; to counsel's knowledge none
of the Units, Shares, the Redeemable Warrants, the Underwriter's
Warrants, the Warrant Shares are subject to preemptive or similar
contractual rights of any stockholder of the Company, and all
corporate action required to be taken for the authorization, issue and
sale of such securities has been duly and validly taken. The Units,
Redeemable Warrants, the Underwriter's Warrants and the Underwriter's
Securities, if issued, shall constitute, valid and binding obligations
of the Company to issue and sell, upon exercise thereof and payment
therefor, the number and type of securities of the Company called for
thereby; the certificates representing the Shares, the Redeemable
Warrants and the Underwriter's Warrants are in due and proper form;
(3) except as described in the Prospectus, to the best of such
counsel's knowledge, the Company does not own an interest in any
corporation, partnership, joint venture, trust or other business
entity;
(4) this Agreement, the Consulting Agree ment, the Warrant
Agreement and the Underwriter's Warrant Agreement have each been duly
and validly authorized, executed and delivered by the Company,
assuming due execution by the parties thereto other than the Company,
are valid and binding agreements of the Company, enforceable against
the Company in accordance with their respective terms, except (A) as
such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally,
(B)
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as enforceability of any indemnification provision may be limited
under the federal and state securities laws, and (C) that the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought;
(5) to the best of such counsel's knowledge, there are no
contracts or other documents required to be filed as exhibits to the
Registration Statement other than those filed as exhibits thereto, and
to the best of such counsel's knowledge, there are no legal or
governmental proceedings pending or threatened which could materially
adversely affect the business or financial conditions of the Company
which have not been disclosed in the Prospectus;
(6) the Registration Statement is effective under the Act, and,
to the best of such counsel's knowledge, no proceedings for a stop
order are pending or threatened under the Act;
(7) all consents, approvals, authorizations or orders of any
court or governmental agency or body (other than such as may be
required under Blue Sky laws, as to which no opinion need be rendered)
are required in connection with the consummation of the transactions
contemplated by this Agreement have been obtained and are in effect;
(8) neither the execution and delivery of this Agreement, the
Underwriter's Warrant Agreement, the Warrant Agreement or the
Consulting Agreement, or the issue and sale of the Shares, the
Underwriter's Warrants, the Redeemable Warrants, the Warrant Shares,
or the Underwriter's Securities, or the consummation of the
transactions contemplated hereby, or the compliance by the Company
with the terms and provisions hereof, will conflict with, or result in
a breach of, any of the terms and provisions hereof, will conflict
with, or result in a breach of, any of the terms and provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company pursuant to the terms of the Certificate of Incorporation or
the By-Laws of the Company is subject; or will such action result in
any violation of the provisions of the Certificate of Incorporation or
the By-Laws of the Company, or any material agreement to which the
Company is a party or any statute or any order, rule or regulation
applicable to the Company of any court or of any federal, state or
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other regulatory authority or other governmental body having
jurisdiction over the Company;
(9) the Registration Statement, each Preliminary Prospectus and
the Prospectus and any post-effective amendments or supplements
thereto (other than the financial statements included therein, as to
which no opinion need be rendered) comply as to form in all material
respects with the requirements of the Act and Regulations. Such
counsel shall state that such counsel has participated in conferences
with officers and other representatives of the Company,
representatives of the independent public accountants for the Company
and representatives of the Underwriter at which the contents of the
Registration Statement, the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not
assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement and
Prospectus, on the basis of the foregoing, no facts have come to the
attention of such counsel which lead them to believe that either the
Registration Statement or any amendment thereto at the time such
Registration Statement or amendment became effective or the Prospectus
as of the date of such opinion contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading (it being understood that such counsel need express no
opinion with respect to the financial statements and schedules and
other financial and statistical data included in the Registration
Statement or Prospectus);
(10) the terms and provisions of the Units, the Shares, the
Redeemable Warrants, the Underwriter's Warrants, the Warrant Shares,
the Underwriter's Securities and the securities issuable thereunder by
the Company when issued, paid for and delivered in accordance with the
terms thereof, will conform in all material respects to the
description thereof contained in the Registration Statement and the
Prospectus;
(11) to the best of such counsel's knowledge, the Company is not
in breach of, or in default under, any term or provision of any
indenture, mortgage, deed of trust, lease, note, loan or credit
agreement or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to
which the Company is a party or by which the Company or any of its
properties may be bound or affected; the Company is not in violation
of any term or provision of its Certificate of Incorporation or
By-laws or in
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violation of any franchise, license, permit, judgment, decree, order,
statute, rule or regulation;
(12) the statements in the Prospectus under "Risk Factors,"
"Business," "Management," "Certain Transactions," and "Description of
Securities" have been reviewed by such counsel, and insofar as they
refer to statements of law, descriptions of statutes, licenses, rules
or regulations or legal conclusions are correct in all material
aspects;
(13) Units, the Common Stock and Redeemable Warrants are listed
for quotation on NASDAQ;
(14) the authorized and outstanding capital stock of the Company
is as set forth under the caption "Capitalization" in the Prospectus;
all of the issued and outstanding capital stock, options and warrants
of the Company have been duly authorized and validly issued and all of
the issued and outstanding shares of capital stock of the Company are
fully paid and non- assessable; counsel has received no notice and
based on a certificate of the Company's officers has no reason to
believe that any of the holders thereof have rights of rescission with
respect thereto, are subject to personal liability by reason of being
holders;
(15) no statute or regulation or legal or governmental proceeding
required to be described in the Prospectus is not described as
required, nor, to the best of such counsel's knowledge, are any
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as Exhibits to
the Registration Statement not described and filed as required;
(16) to counsel's knowledge, the Company, except as and to the
extent set forth in the Prospectus, is not under any obligation to pay
to any third-party royalties or fees of any kind whatsoever with
respect to any technology or intellectual properties developed,
employed or used;
(17) to counsel's knowledge, there are no claims, payments,
issuances, arrangements or understandings for services in the nature
of a finder's or origination fee with respect to the sale of the
Securities hereunder or financial consulting arrangement or any other
understandings, payments or issuances that may affect the
Underwriter's compensation, as determined by the NASD's rules and
regulations;
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(18) to such counsel's knowledge, based on a review of the
Company's corporate records, persons listed under the caption
"Principal Stockholders" in the Prospectus are the respective
"beneficial owners" (as such phrase is defined in Regulation 13d-3
under the Exchange Act) of the shares of Common Stock set forth
opposite their respective names thereunder as and to the extent set
forth therein;
(19) the minute books of the Company have been made available to
counsel to the Underwriter and contain all meetings and actions by
unanimous consent of directors and stockholders which reflect all
transactions to be undertaken hereby to counsel's knowledge.
(20) to counsel's knowledge, no person, corporation, trust,
partnership, association or other entity has the right to include or
register any securities of the Company in the Registration Statement
or require the Company to file any registration statement or, if
filed, to include any security in such registration statement for a
period of 24 months from the date hereof;
(21) the Company owns or possesses, free and clear of all liens
or encumbrances and rights thereto or therein by third parties, other
than as described in the Prospectus, the requisite licenses or other
rights to use all trademarks, service marks, service names, trade
names (including, without limitation, any such licenses or rights
described in the Prospectus as being owned or possessed by the
Company), and there is no claim or action by any person pertaining to,
proceeding, pending, or threatened, which challenges the exclusive
rights of the Company with respect to any trademarks, service marks,
service names, trade names, patents and licenses used in the conduct
of the Company's business (including without limitations any such
licenses or rights described in the Prospectus as being owned or
possessed by the Company); the Company's current products, services
and processes do not infringe on the patents held by third parties;
(22) assuming due execution by the parties thereto other than the
Company, the agreements referred to in Section 2(s) hereof are valid
and binding agreements of the parties thereto enforceable against the
parties thereto in accordance with the terms thereof and against any
subsequent bona fide purchasers of the Company's securities held
thereby except (A) as such enforceability may be limited by
bankruptcy, insolvency,
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reorganization or similar laws affecting creditors' rights generally,
and (B) that the remedy of specific performance, and injunctive and
other forms of equitable relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding
therefor may be brought;
(23) to the best of such counsel's knowl edge, the Company, any
of its officers, employees or agents, nor any other person acting on
its behalf has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer,
supplier, employee, or agent of a customer or supplier, or official or
employee of any governmental agency or instrumentality of any
government (domestic or foreign) or other person who is or may be in a
position to help or hinder the business of the Company (or assist it
in connection with any actual or proposed transaction) which (A) might
subject the Company to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (B) if not given in the past,
might have had a materially adverse affect on the assets, business or
operations of the Company as reflected in the financial statements
contained in the Registration Statement, or (C) if not continued in
the future, might adversely affect the assets, business, operations or
prospects of the Company;
(24) to counsels knowledge, except as set forth in the
Prospectus, no officer, director or stockholder of the Company, or any
"affiliate" or "associate" (as these terms are defined in Rule 405
promulgated under the Regulations) of any such person or entity or the
Company, has or has had, either directly or indirectly, (i) an
interest in any person or entity which (A) furnishes or sells services
or products which are furnished or sold or are proposed to be
furnished or sold by the Company, or (B) purchases from or sells or
furnishes to the Company any goods or services, or (ii) a beneficial
interest in any contract or agreement to which the Company is a party
or by which it may be bound or affected. Except as set forth in the
Prospectus under "Certain Transactions," there are no existing
material agreements, arrangements, understandings or transactions, or
proposed material agreements, arrangements, understandings or transac
tions, between the Company, and any officer, director, or Principal
Stockholder of the Company, or any affiliate or associate of any such
person or entity;
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(25) the minute books of the Company have been made available to
counsel to the Underwriter and contain a complete summary of all
meetings and actions by unanimous consent of directors and
stockholders since the time of incorporation and reflect all
transactions referred to in such minutes accurately in all material
respects; and
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to Underwriter's
counsel) of other counsel reasonably acceptable to Underwriter's counsel,
familiar with the applicable laws; (B) as to matters of fact, to the extent they
deem proper, on certificates and written statements of responsible officers of
the Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting the
corporate existence or good standing of the Company, provided that copies of any
such statements or certificates shall be delivered to Underwriter's counsel if
requested. The opinion of such counsel for the Company shall state that the
opinion of any such other counsel is in form satisfactory to such counsel and,
in their opinion, the Underwriter and they are justified in relying thereon.
At Closing Date II, the Underwriter shall have received the favorable
opinion of Parker Duryee Rosoff & Haft, counsel to the Company, dated Closing
Date II, addressed to the Underwriter and in form and substance satisfactory to
McLaughlin & Stern, counsel to the Underwriter, confirming as of Closing Date
II, the statements made by such counsel in their opinion delivered on Closing
Date I.
c. On or prior to each of Closing Date I and Closing Date II, if
any, counsel for the Underwriter shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in subsection (b)
of this Section 7, or in order to evidence the accuracy, completeness or
satisfaction of any of the representation, warranties or conditions herein
contained.
d. Prior to each of Closing Date I and Closing Date II, if any
(i) there shall have been no material adverse change nor development involving a
prospective material change in the condition or prospects of the business
activities, financial or otherwise, of the Company from the latest dates as of
which such condition is set forth in the Registration Statement and Prospectus;
(ii) there shall have been no transaction, not in the ordinary course of
business, entered into by the Company from the
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latest date as of which the financial condition of the Company is set forth in
the Registration Statement and Prospectus which is materially adverse to the
Company; (iii) the Company shall not be in default under any provision of any
instrument relating to any outstanding indebtedness which default would have a
material adverse effect on the Company; (iv) no material amount of the assets of
the Company shall have been pledged or mortgaged, except as set forth in the
Registration Statement and Prospectus; (v) no action, suit or proceeding, at law
or in equity, shall have been pending or threatened against the Company wherein
any unfavorable result or decision could materially, adversely affect any of its
respective properties or business before or by any court or federal or state
commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may materially adversely affect the business,
operations, prospects or financial condition or income of the Company, except as
set forth in the Registration Statement and Prospectus; (vi) no stop order shall
have been issued under the Act and no proceedings thereof shall have been
initiated or threatened by the Commission.
e. At each of Closing Date I and Closing Date II, if any, the
Underwriter shall have received a certificate of the Company signed by the
Chairman of the Board or the President and Secretary of the Company, dated
Closing Date I and Closing Date II, if any, respectively, to the effect that the
conditions set forth in subsection (d) above have been satisfied and that, as of
Closing Date I and Closing Date II, if any, respectively, the representations
and warranties of the Company set forth in Section 2 hereof are true and
correct.
f. By Closing Date I, the Underwriter shall have received
clearance from the NASD as to the amount of compensation allowable or payable to
the Underwriter, as described in the Registration Statement.
g. At the time this Agreement is executed, and at each of Closing
Date I and Closing Date II, if any, the Underwriter shall have received a
letter, addressed to the Underwriter and in form and substance satisfactory in
all respects (including the non-material nature of the changes or decreases, if
any, referred to in clause (iii) below) to the Underwriter and to McLaughlin &
Stern, counsel for the Underwriter, from Rosenberg Rich Baker Berman & Co.
dated, respectively, as of the date of this Agreement and as of each of Closing
Date I and Closing Date II, if any,:
(1) confirming that they are independent accountants with
respect to the Company within the meaning of the Act and the
applicable Regulations;
(2) stating that in their opinion the financial statements of
the Company included in the Registration Statement and Prospectus
comply as to form
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in all material respects with the applicable accounting requirements
of the Act and the published Regulations thereunder;
(3) stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim
consolidated financial statements of the Company (with an indication
of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the
stockholders and board of directors and the various committees of the
board of directors of the Company, consultations with officers and
other employees of the Company responsible for financial and
accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe
that (A) either the unaudited financial statements for the six month
periods ended June 30, 1996 of the Company in the Registration
Statement do not comply as to form in all material respects with the
applicable accounting requirements of the Act, and the Regulations or
are not fairly presented in conformity with generally accepted
accounting principles applied on a basis substantially consistent with
that of the audited consolidated financial statements of the Company
included in the Registration Statement, (B) at a date not later than
five (5) days prior to the effective date of the Registration
Statement, there was any change in the capital stock or long-term debt
of the Company, or any decrease in the stockholders' equity of the
Company as compared with amounts shown in the June 30, 1996 balance
sheet included in the Registration Statement, other than as set forth
in or contemplated by the Registration Statement, or, if there was any
decrease, setting froth the amount of such decrease and (C) during the
period from to a specified date not more than five (5) days prior to
the effective date of the Registration Statement there was any
decrease in net revenues, or increase in losses or increase in losses
per common share of the Company, in each case as compared with the
corresponding period beginning other than as set forth in or
contemplated by the Registration Statement, or, if there was any such
decrease, setting forth the amount of such decrease;
(4) stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements
and other financial information pertaining to the Company set forth in
the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be
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derived from the general accounting records, including worksheets, of
the Company and excluding any questions requiring an interpretation by
legal counsel, with the results obtained from the application of
specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with
generally accepted auditing standards) set forth in the letter and
found them to be in agreement;
(6) stating that they have not during the immediately
preceding five (5) year period brought to the attention of the
Company's management any "weakness," as defined in Statement on
Auditing Standards No. 60 -- "Communication of Internal Control
Structure Related Matters Noted in an Audit," in the Company's
internal controls; and
(7) statements as to such other matters incident to the
transaction contemplated hereby as the Underwriter may reasonably
request.
h. All proceedings taken in connection with the authorization,
issuance or sale of the Units, Shares, the Redeemable Warrants, the
Underwriter's Warrants, the Warrant Shares and the Underwriter's Securities as
herein contemplated shall be satisfactory in form and substance to the
Underwriter and to counsel to the Underwriter, and the Underwriter shall have
received from such counsel a favorable opinion, dated Closing Date I and Closing
Date II, if any, with respect to such of these proceedings as the Underwriter
may reasonably require.
i. On each of Closing Date I and Closing Date II, if any, there shall
have been duly tendered to you for your account the appropriate number of
Securities and individually for your own account the appropriate number of
Underwriter's Warrants.
j. No order suspending the sale of the Securities in any jurisdiction
designated by you pursuant to subsection (d) of Section 5 hereof shall have been
issued on either Closing Date I or Closing Date II, if any, and no proceedings
for that purpose shall have been instituted or to its knowledge or that of the
Company shall be contemplated.
Any certificate signed by any officer of the Company and delivered to the
Underwriter or to counsel to the Underwriter shall be deemed a representation
and warranty by the Company to the Underwriter as to the statements made
therein. If any condition to the Underwriter's obligations hereunder to be
fulfilled prior to or at any Closing Date is not so fulfilled, the Underwriter
may terminate this Agreement or, if the Underwriter so elects, waive
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any such conditions which have not been fulfilled or they may extend the time
for their fulfillment.
8. Indemnification.
a. The Company shall indemnify and hold the Underwriter harmless
against any and all liabilities, claims, lawsuits, including any and all awards
and/or judgments to which it may become subject under the Securities Act of
1933, as amended, (the "Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or any other federal or state statute, at common law or
otherwise, insofar as said liabilities, claims and lawsuits (including awards
and/or judgments) arise out of or are in connection with the Registration
Statement, Prospectus and related Exhibits filed under the Act, except for any
liabilities, claims and lawsuits (including awards and/or judgments), arising
out of acts or omissions of the Underwriter. The foregoing shall be set forth as
conditions within the Underwriting Agreement. In addition, the Company shall
also severally indemnify and hold the Underwriter harmless against any and all
costs and expenses, including reasonable counsel fees, incurred or relating to
the foregoing.
The Underwriter shall give the Company prompt notice of any such
liability, claim or lawsuit which the Underwriter contends is the subject matter
of the Company's indemnification and the Company thereupon shall be granted the
right to take any and all necessary and proper action, at its sole cost and
expense, with respect to such liability, claim and lawsuit, including the right
to settle, compromise and dispose of such liability, claim or lawsuit, excepting
therefrom any and all proceedings or hearings before any regulatory bodies
and/or authorities.
The Underwriter agrees to indemnify and hold the Company, each of its
directors and officers who have signed the Registration Statement and each other
person, if any, who controls the Company within the meaning of the Act, and to
hold them harmless against any and all liabilities, claims and lawsuits,
including any and all awards and/or judgments to which it may become subject
under the Act, the Exchange Act, as amended, or any other federal or state
statute, at common law or otherwise, insofar as said liabilities, claims and
lawsuits (including awards and/or judgments) arise out of or are based upon any
untrue statement, or alleged untrue statement of a material fact, or omissions,
required to be stated in the Registration Statement and Prospectus, and all
amendments and supplements, or necessary to make the statement therein, not
misleading, which statement or omission was made in reliance upon information
furnished in writing to the Company by or on behalf of the Underwriter for
inclusion in the Registration Statement or Prospectus or any amendment or
supplement thereto. In
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addition, the Underwriter shall also indemnify and hold the Company harmless
against any and all costs and expenses, including reasonable counsel fees,
incurred or relating to the foregoing.
The Company shall give to the Underwriter prompt notice of any such
liability, claim or lawsuit which they contend is the subject matter of the
Underwriter's indemnification and the Underwriter thereupon shall be granted the
right to a take any and all necessary and proper action, at its sole cost and
expense, with respect to such liability, claim and lawsuit, including the right
to settle, compromise or dispose of such liability, claim or lawsuit, excepting
therefrom any and all proceedings or hearings before any regulatory bodies
and/or authorities.
b. In order to provide for just and equitable contribution under the
Act in any case in which (i) any person entitled to indemnification under this
Section 8 makes claim for indemnification pursuant hereto but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 8 provides for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 8, then, and in each such case, the Company and the Underwriter shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after any contribution from others) in such proportion taking
into consideration the relative benefits received by each party from the
offering covered by the Prospectus (taking into account the portion of the
proceeds of the offering realized by each), the parties' relative knowledge and
access to information concerning the matter with respect to which the claim was
assessed, the opportunity to correct and prevent any statement or omission and
other equitable considerations appropriate under the circumstances; and
provided, that, in any such case, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
Within fifteen (15) days after receipt of any party to this Agreement
(or its representative) of notice of the commencement of any action, suit or
proceeding, such party will, if a claim for contribution in respect thereof is
to be made against another party (the "contributing party"), notify the
contributing party of the commencement thereof, but the omission so to notify
the contributing party will not relieve it from any liability which it may have
to any other party other than for contribution hereunder. In case any such
action, suit or proceeding is brought against any party, and such party notifies
a contributing party or
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his or its representative of the commencement thereof within the aforesaid
fifteen (15) days, the contributing party will be entitled to participate
therein with the notifying party and any other contributing party similarly
notified. Any such contributing party shall not be liable to any party seeking
contribution on account of any settlement of any claim, action or proceeding
effected by such party seeking contribution without the written consent of such
contributing party. The indemnification provisions contained in this Section 8
are in addition to any other rights or remedies which either party hereto may
have with respect to the other or hereunder.
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9. Representations and Agreements to Survive Delivery. Except as the
context otherwise required, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements at the Closing Dates and such representations, warranties and
agreements of the Underwriter, the Company, including the indemnity agreements
contained in Section 8 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any of the
Underwriter, the Company or any controlling person, and shall survive
termination of this Agreement or the issuance and delivery of the Securities to
the Underwriter until the earlier of the expiration of any applicable statute of
limitations and the seventh anniversary of Closing Date II, if any, at which
time the representations, warranties and agreements shall terminate and be of no
further force and effect.
10. Termination.
a. The Underwriter shall have the right to terminate this Agreement at
any time prior to any Closing Date, (i) if any domestic or international event
or act or occurrence has materially disrupted, or in its opinion will in the
immediate future materially disrupt, general securities markets in the United
States; or (ii) if trading on the New York Stock Exchange, the American Stock
Exchange, or in the over-the-counter market by the NASD or by order of the
Commission or any other governmental authority having jurisdiction; or (iii) if
the United States shall have become involved in a war or major hostilities; or
(iv) if a banking moratorium has been declared by a New York State or federal
securities market; or (v) if a moratorium on foreign exchange trading has been
declared which adversely impacts the United States securities market; or (vi) if
the Company shall have sustained a loss material or substantial to the Company
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in the Underwriter's opinion, make it inadvisable to proceed with
the delivery of the Securities; or (vii) if Marc Roberts shall no longer serve
the Company in his present capacity; (viii) if there shall have occurred after
the date hereof of such a material adverse change in general market conditions
as in the Underwriter's judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Securities or to enforce contracts made by
the Underwriter for the sale of the Securities or (ix) in the event of failure
by one or more underwriters or broker-dealers with whom the Underwriter has
entered into an agreement to act as underwriters or dealers in connection with
the public offering to take up and pay for an aggregate of more than 10% of the
aggregate number of Offered Units, including any Units purchased by the
Representative for their respective accounts.
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b. If the Underwriter elects to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 10, the
Company shall be notified on the same day as such election is made by the
Underwriter by telephone or telegram, confirmed by letter.
Notwithstanding any contrary provision contained in this Agreement,
any election hereunder or termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 8 shall not be in
any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
11. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and, if sent to the Underwriter,
shall be mailed, delivered or telegraphed and confirmed to William Scott
Company, 1030 Salem Road, Union, New Jersey 07083, Attention: Joseph W. Glodek,
President, with a copy to McLaughlin & Stern, 380 Lexington Avenue, New York,
New York 10168, Attention: Steven Schuster, Esq., and if to the Company, to 29
Northfield Avenue, West Orange New Jersey 07052, Attention: Marc Roberts, with a
copy to Parker, Duryee Rosoff & Haft, 529 Fifth Avenue, New York, New York 10017
Attention: Herbert F. Kozlov.
12. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriter, the Company and the controlling persons,
directors and officers referred to in Section 9 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained.
13. Construction. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
giving effect to conflict of laws.
14. Entire Agreement. This Agreement, the Under writer's Warrant
Agreement, the Consulting Agreement and the Warrant Agreement contain the entire
agreement between the parties hereto in connection with the subject matter
hereof. The parties agree to submit themselves to the jurisdiction of the courts
of the State of New York which shall be the sole tribunal in which any parties
may institute and maintain a legal proceeding against the other party arising
from any dispute in this Agreement. In the event either party initiates a legal
proceeding in a jurisdiction other than in the courts of the State of New York,
the other party may assert as a complete defense and as a basis for dismissal of
such legal proceeding that the legal proceeding was not initiated and
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maintained in the courts of the State of New York in accordance with the
provisions of this paragraph.
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If the foregoing correctly sets for the understanding among the
Underwriter, the Selling Securityholders and the Company, please so indicate in
the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement between us.
Very truly yours,
WORLDWIDE ENTERTAINMENT
& SPORTS CORP.
By:_____________________________________
President
Accepted as of the date
first above written.
New York, New York
William Scott & Company, LLC
By:__________________________
President
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Exhibit 3.1(a)
CERTIFICATE OF INCORPORATION
OF
MARC ROBERTS SPORTS & ENTERTAINMENT CORP.
The undersigned, in order to form a corporation under and pursuant to the
provisions of the General Corporation Law of the State of Delaware, does hereby
certify as follows:
FIRST: The name of the corporation is "Marc Roberts Sports & Entertainment
Corp."
SECOND: The address of the initial registered and principal office of this
Corporation in this state is c/o Untied Corporation Services, Inc. 15 East North
Street, in the City of Dover, County of Kent, State of Delaware, and the name of
its registered agent at such address is United Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful activity
for which corporations may be organized under the Delaware Corporation Law.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is 1,500 shares of common stock having a no par value.
FIFTH: The name and address of the incorporator are as follows:
Name Address
---- -------
Diane Linder Lavine, L.A. Parker Duryee Rosoff & Haft
A Professional Corporation
529 Fifth Avenue
New York, New York 10017
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and for further
definition, limitation and regulation of the powers of the corporation and of
its directors and stockholders:
(1) The number of directors of the corporation shall be such as from
time to time shall be fixed by, or in the manner provided in the By-laws.
Election of directors need not be by ballot unless the by-laws so provide.
(2) The board of directors shall have power, without the assent or
vote of the stockholders:
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(a) To make, alter, amend, change, add or repeal the By-Laws of
the Corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and
liens upon all of any part of the property of the Corporation; to
determine the use and disposition of any surplus or net profits; and
to fix the times for the declaration of dividends;
(b) To determine from time to time whether, and to what times and
places, and under what conditions the accounts and books of the
Corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders.
(3) The directors in their discretion may submit any contract or act
for approval or ratification at any annual meeting of the stockholders or
at any meeting of the stockholders called for the purpose of considering
any such act or contract, and any contract or act that shall be approved or
be ratified by the vote of the holders of a majority of the stock of the
Corporation which is represented in person or by proxy at such meeting and
entitled to vote thereat (provided that a lawful quorum of stockholders be
there represented in person or by proxy) shall be valid and as binding upon
the Corporation and upon all the stockholders as through it has been
approved or ratified by every stockholder of the Corporation, whether or
not the contract or act would otherwise be open to legal attack because of
directors' interest, or for any other reason.
(4) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this certificate, and to any
By-laws from time to time made by the stockholders; provided, however, that
no By-laws so made shall invalidate any prior act of the directors which
would have been valid if such By-law had not been made.
(5) The Corporation shall, to the full 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.
(6) A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the directors duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
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(7) Each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the
legal representative, is or was a director or officer, of the Corporation
or is or was serving at the request of the Corporation as a director,
officer, employee or agent of another Corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or agent or
in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and
such indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of his
or her heirs, executors and administrators: provided, however, that, except
as provided in paragraph (7) hereof, the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or
part thereof) initiated by such person only if such proceeding (or part
thereof) was authorized by the board of directors of the Corporation. The
right to indemnification conferred in this Article SIXTH shall be a
contract right and shall include the right to be paid by the Corporation
the expenses incurred in defending any such proceeding in advance of its
final disposition; provided, however, that if the Delaware General
Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation, service
to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Article SIXTH or
otherwise. The Corporation may, by action of its Board of Directors,
provide indemnification to employees and agents of the Corporation with the
same scope and effect as the foregoing indemnification of directors and
officers.
(8) If a claim under paragraph (6) of this Article SIXTH is not paid
in full by the Corporation within thirty days after a written claim has
been received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the
claim and, if successful in
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whole or in part, the claimant shall be entitled to be paid also the
expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the
required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which
make it permissible under the Delaware General Corporation Law for the
Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the
failure of the Corporation (including its Board of Directors, independent
legal counsel, or its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor
an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard or conduct, shall be a
defense to the action or create a presumption that the claimant has not met
the applicable standard of conduct.
(9) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in
this Article SIXTH shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(10) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another Corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or
not the Corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Corporation Law.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them, any court of equitable
jurisdiction within the state of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case
maybe, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization
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of this Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
EIGHTH: The Corporation reserves the right to amend, alter, change, repeal
any provision contained in this certificate of Incorporation in the manner now
or hereafter prescribed by law, and all rights and powers conferred herein on
stockhold ers, directors and officers are subject to this reserved power.
IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under penalties of perjury this
14th day of August, 1995.
_______________________________________________
Diane Linder Lavine, Sole Incorporator
PARKER DURYEE ROSOFF & HAFT
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CERTIFICATE OF INCORPORATION
OF
MARC ROBERTS SPORTS & ENTERTAINMENT CORP.
Parker Duryee Rosoff & Haft
A Professional Corporation
529 Fifth Avenue
New York, New York 10017
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Exhibit 3.1(b)
CERTIFICATE OF AMENDMENT
OF
MARC ROBERTS SPORTS & ENTERTAINMENT CORP.
The undersigned being the Sole Incorporator of the Corporation hereby
certifies as follows:
FIRST: The name of the Corporation is:
MARC ROBERTS SPORTS & ENTERTAINMENT CORP.
SECOND: Paragraph First of the Certificate of Incorporation, relating to
the corporate title of the Corporation, is hereby amended to read as follows:
"FIRST: The name of the Corporation is:
WORLDWIDE SPORTS & ENTERTAINMENT CORP."
THIRD: This Certificate of Amendment has been duly adopted in accordance
with the provisions of Section 241 of the General Corporation Law of the State
of Delaware.
FOURTH: The Corporation has not received any payment for any shares of its
stock.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the statements
made herein are true under the penalties of perjury, this 18th day of August
1995.
______________________________
Sole Incorporator
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Exhibit 3.1(c)
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
The undersigned, being the President and Secretary of Worldwide
Entertainment & Sports Corp., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), pursuant to Section 242 of the General Corporation Law of the
State of Delaware, does hereby certify:
1. The name of the Corporation is Worldwide Entertainment & Sports Corp.
2. This Certificate of Amendment and the amendments to the Certificate of
Incorporation of the Corporation set forth herein have been duly approved,
adopted, certified, executed and acknowledged in accordance with Section 242 of
the General Corporation Law of the State of Delaware.
3. The Certificate of Incorporation of the Corporation is hereby amended so
as to increase the number of authorized shares of Common Stock of the
Corporation from 1,500 to 20,000,000 and to change the par value of such shares
from no par value to $.01 par value, and to authorize 5,000 shares of Preferred
Stock, $.01 par value. Accordingly, Article FOURTH of the Certificate of
Incorporation is hereby deleted in its entirety and the following is substituted
therefor:
FOURTH: The total number of shares of common stock which the
Corporation shall have authority to issue is 20,000,000, $.01 par value
(the "Common Stock"). In addition, the Corporation shall have authority to
issue 5,000 shares of $.01 par value Preferred Stock ("Preferred Stock").
All cross-references in each Part of this Article FOURTH refer to other
Sections in such Article unless otherwise indicated.
The following is a statement of the designations and the powers,
preferences and rights, and the qualifications, limitations or restrictions
thereof, in respect of each class of stock of the Corporation.
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I. COMMON STOCK
All shares of Common Stock, $.01 par value, shall be identical and
shall entitle the holders thereof to the same rights and privileges.
1. Dividends. When and as dividends are declared upon the Common
Stock, whether payable in cash, in property or in securities of the
Corporation, the holders of Common Stock shall be entitled to share
equally, share for share, in such dividends.
2. Dissolution. In the event of any dissolution, liquidation or
winding up of the affairs of the Corporation, either voluntarily or
involuntarily, the holders of shares of Common Stock shall be entitled,
after payment or provision for payment of the debts and other liabilities
of the Corporation and the amounts to which the holders of any outstanding
Preferred Stock are entitled pursuant to the provisions of a certificate of
designation with respect to any class or series of Preferred Stock which
may then be outstanding, to share ratably in the remaining assets of the
Corporation.
3. Voting Rights. Except as otherwise provided herein or by law, the
holders of the Common Stock shall be entitled to one vote per share on all
matters upon which Stockholders are entitled to vote.
II. PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in series or
otherwise and the Board of Directors of the Corporation is hereby
authorized, subject to the limitations provided by law, to establish and
designate the series, if any, of the Preferred Stock, to fix the number of
shares constituting any such series, and to fix the voting powers,
designations, and relative, participating, optional, conversion, redemption
and other rights of the shares of Preferred Stock or series thereof, the
qualifications, limitations and restrictions thereof, and to increase and
to decrease the number of shares of Preferred Stock or shares constituting
any such series. The authority of the Board of Directors of the Corporation
with respect to shares of Preferred Stock or any series thereof
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shall include but shall not be limited to the authority to determine the
following:
(a) The designation of any series.
(b) The number of shares initially constituting any such series.
(c) The increase, and the decrease, to a number not less than the
number of the outstanding shares of any such series, of the number of
shares constituting such series theretofore fixed.
(d) The rate or rates and the times at which dividends on the shares
of Preferred Stock or any series thereof shall be paid, and whether or not
such dividends shall be cumulative, and, if such dividends shall be
cumulative, the date or dates from and after which they shall accumulate.
(e) Whether or not the shares of Preferred Stock or series thereof
shall be redeemable, and, if such shares shall be redeemable, the terms and
conditions of such redemption, including but not limited to the date or
dates upon or after which such shares shall be redeemable and the amount
per share which shall be payable upon such redemption, which amount may
vary under different conditions and at different redemption dates.
(f) The amount payable on the shares of Preferred Stock or series
thereof in the event of the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation; provided, however, that the
holders of shares ranking senior to other shares shall be entitled to be
paid, or to have set apart for payment, not less than the liquidation value
of such shares before the holders of shares of the Common Stock or the
holders of any other series of preferred stock ranking junior to such
shares.
(g) Whether or not a sinking fund shall be provided for the redemption
of the shares of Preferred Stock or series thereof, and, if such a sinking
fund shall be provided, the terms and conditions thereof.
(h) Whether or not a purchase fund shall be provided for the shares of
Preferred Stock or series thereof, and, if such a purchase fund shall be
provided, the terms and conditions thereof.
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(i) Whether or not the shares of Preferred Stock or series thereof
shall have conversion privileges, and, if such shares shall have conversion
privileges, the terms and conditions of conversion, including but not
limited to any provisions for the adjustment of the conversion rate or the
conversion price.
(j) Any other relative rights, preferences, qualifications,
limitations and restrictions.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment of Certificate of Incorporation on the day of July, 1996, and affirm
that the statements contained herein are true under the penalty of perjury.
____________________________________________
Marc Roberts, President and Secretary
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Exhibit 3.1(d)
CERTIFICATE OF OWNERSHIP AND MERGER
OF
S.B. Champion Management, Inc.
The Natural Management, Inc.
Marc Roberts Boxing, Inc.
Marc Roberts Inc. and
Merciless Management, Inc.
INTO
Worldwide Entertainment & Sports Corp.
The undersigned, being the President and Secretary of Worldwide
Entertainment & Sports Corp. hereby certifies:
FIRST: The name of the Subsidiary Corporations are S.B. Champion
Management, Inc., The Natural Management, Inc., Marc Roberts Boxing, Inc., Marc
Roberts Inc. and Merciless Management, Inc. and the name of the Surviving
Corporation is Worldwide Entertainment & Sports Corp.
SECOND: That Worldwide Entertainment & Sports Corp. owns 100% of the
outstanding shares of each of S.B. Champion Management, Inc., The Natural
Management, Inc., Marc Roberts Boxing, Inc., Marc Roberts Inc. and Merciless
Management, Inc.
THIRD: That the Board of Directors of Worldwide Entertainment & Sports
Corp. at a meeting called and held on the 1st day of July, 1996, adopted the
following resolution:
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WHEREAS, Worldwide Entertainment & Sports Corp., a corporation of the State
of Delaware, now owns 100 percent of the outstanding shares of each class of
common stock of each of S.B. Champion Management, Inc., The Natural Management,
Inc., Marc Roberts Boxing, Inc., Marc Roberts Inc. and Merciless Management,
Inc. , corporations of the State of New Jersey, and it is deemed expedient that
this corporation shall acquire and become, and be possessed of all the estate,
property, rights, privileges and franchises of the said S.B. Champion
Management, Inc., The Natural Management, Inc., Marc Roberts Boxing, Inc., Marc
Roberts Inc. and Merciless Management, Inc. ;
NOW THEREFORE be it;
RESOLVED, that Worldwide Entertainment & Sports Corp. merge into itself
S.B. Champion Management, Inc., The Natural Management, Inc., Marc Roberts
Boxing, Inc., Marc Roberts Inc. and Merciless Management, Inc. , and assume
all of each of their obligations; and be it further
RESOLVED, that all of the outstanding shares of S.B. Champion Management,
Inc., The Natural Management, Inc., Marc Roberts Boxing, Inc., Marc Roberts
Inc. and Merciless Management, Inc. shall be canceled and eliminated upon
the effective date of the merger; and be it further
RESOLVED, that the officers of this corporation be empowered and are
directed to do all other acts and things whatsoever which may be in any way
requisite or proper for the full and complete accomplishment of said
merger.
IN WITNESS WHEREOF, this certificate is executed this ___ day of _______,
19 .
Worldwide Entertainment & Sports Corp.
(Seal)
ATTEST: By___________________________________
Marc Roberts, President
__________________________________
Secretary
<PAGE>
<PAGE>
Exhibit 3.2
BY-LAWS
OF
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
(A Delaware corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or in the name
of, the Corporation by the Chairman or Vice-Chairman of the Board of Directors,
if any, or by the President or a Vice-President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation certifying the number of shares owned by him in the Corporation. Any
and all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent, or registrar at the date of issue.
The Corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen, or
destroyed, and the Board of Directors may require the owner of any lost, stolen,
or destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft, or destruction of any such
certificate or the issuance of any such new certificate.
2. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the Corporation shall be made
only on the stock ledger of the Corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the Corporation or with a transfer agent or a
registrar, if any, and on surrender of the certificate or certificates for such
shares of stock properly endorsed and the payment of all taxes due thereon.
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3. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or the allotment of any rights, or entitled to exercise any rights
in respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the directors may fix, in advance, a record date, which
shall not be more than sixty days nor less than 10 days before the date of such
meeting, nor more than sixty days prior to any other action. If no record date
is fixed, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held; the record date for determining stockholders entitled to express consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is necessary, shall be the day on which the first written
consent is expressed; and the record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at any meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
4. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the terms "share" or "shares" or "share of stock"
or "shares of stock" or "stockholder" or "stockholders" refers to an outstanding
share or shares of stock and to a holder or holders of record of outstanding
shares of stock when the Corporation has only one class of shares of stock
outstanding; and said reference is also intended to include any outstanding
share or shares of stock and any holder or holders of record of outstanding
shares of stock of any class upon which or upon whom the Certificate of
Incorporation confers the right to vote on matters presented to the stockholders
where there are two or more classes or series of shares of stock or upon which
or upon whom the General Corporation Law confers such right notwithstanding that
the Certificate of Incorporation may provide for more than one class or series
of shares of stock, one or more of which are limited or denied such rights
thereunder. As used herein in respect of the right to notice of a meeting of
stockholders or a waiver thereof, the terms "share" or "shares" or "share of
stock" or "shares of stock" or "stockholder" or "stockholders" refers to any
outstanding share or shares of stock or holder or holders of record of
outstanding shares of stock, regardless of whether such stock or holder of stock
possesses the right to vote.
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5. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time fixed,
from time to time, by the directors, provided, that the first annual meeting
shall be held on a date within thirteen months after the organization of the
Corporation, and each successive annual meeting shall be held on a date within
thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such place,
within or without the State of Delaware, as the directors may, from time to
time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the Corporation's principal office as designated from time to
time.
- CALL. Annual meetings may be called by any directors or by any officer
instructed by any director to call the meeting and special meetings may be
called by any director or by any officer instructed by any director to call the
meeting or by the affirmative vote or consent of the shareholders holding not
less than twenty (20%) percent of the combined voting power of the then
outstanding shares of voting stock entitled to vote or as otherwise provided in
the Corporation's Restated Certificate of Incorporation.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders (whether or not entitled to vote at the meeting) of the Corporation
may be examined. The notice of an annual meeting shall state that the meeting is
called for the election of directors and for the transaction of other business
which may properly come before the meeting, and shall (if any other action which
could be taken at a special meeting is to be taken at such annual meeting) state
the purpose or purposes. The notice of a special meeting shall in all instances
state the purpose or purposes for which the meeting is to be called. The notice
of any meeting shall also include, or be accompanied by, any additional
statements, information, or documents prescribed by the General Corporation Law.
Except as otherwise provided by the General Corporation Law, a copy of the
notice of any meeting shall be given, personally or by mail, not less than ten
days nor more than sixty days before the date of the meeting, unless the lapse
of the prescribed period of time shall have been waived, and directed to each
stockholder entitled to vote at a meeting of stockholders, at his record address
or at such other address which he may have furnished by request in writing to
the Secretary of the Corporation. Notice by mail shall be deemed to be given
when deposited, with postage thereon prepaid, in the United States mail. If a
meeting is adjourned to another time, not more than thirty days hence, and/or to
another place, and if an announcement of the adjourned time and/or place is made
at the meeting, it shall not be necessary to give notice of the adjourned
meeting unless the directors, after adjournment, fix a new record date for the
adjourned meeting. Notice need not be given
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to any stockholder who submits a written waiver of notice signed by him before
or after the time stated therein. Attendance of a stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any annual or special meeting of the stockholders need be
specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the Corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority, if present: the
Chairman of the Board, if any, the President, a Vice-President, if any, or, if
none of the foregoing is in office and present and acting, by a chairman to be
chosen by the stockholders. The Secretary of the Corporation, or in his absence,
an Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the Chairman of the meeting
shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for him by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by his attorney-in-fact. No
proxy shall be voted or acted upon after three years from its date unless such
proxy provided for a longer period. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and, if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the Corporation generally.
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- INSPECTORS. The directors, in advance of any meeting, may, but need not,
appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
- QUORUM. Except as otherwise required by the Certificate of Incorporation
or under applicable law, the holders of shares representing a majority of votes
of the outstanding shares shall constitute a quorum at a meeting of stockholders
for the transaction of any business. The stockholders present may adjourn the
meeting despite the absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to such
number of votes as set forth in the Certificate of Incorporation. Except as
otherwise provided in the Certificate of Incorporation, in the election of
directors, a plurality of the votes cast shall elect. Any other action shall be
authorized by a majority of the votes cast except where the General Corporation
Law prescribes a different percentage of votes and/or a different exercise of
voting power, and except as may be otherwise prescribed by the provisions of the
Certificate of Incorporation or these By-laws, in the election of directors, and
for any other action, voting need not be by ballot.
6. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law or by these By-laws to be taken at any annual or special
meeting of stockholders, or any action which may be taken at any annual or
special meeting of stockholders, including any action with respect to the
election or removal of directors, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were
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present and voted. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing (whether or not such stockholder
is entitled to vote at a meeting of stockholders).
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of Directors
of the Corporation. The use of the phrase "whole board" herein refers to the
total number of directors which the Corporation would have if there were no
vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, or
a citizen or resident of the United States or the State of Delaware. Except as
otherwise provided (A) in the Certificate of Incorporation or (B) in a
stockholder resolution or written unanimous consent of the stockholders, the
number of directors constituting the whole board shall be not less than one nor
more than twelve. The Board of Directors shall have power, from time to time and
at any time to increase or reduce the number of directors constituting the whole
board to such number (subject to any limits provided by law or contained (A) in
the Certificate of Incorporation or (B) in a stockholder resolution or written
unanimous consent of the stockholders) as the Board of Directors shall
determine.
3. ELECTION AND TERM. Any director may resign at any time upon written
notice to the Corporation. Directors who are elected at an annual meeting of
stockholders, and directors who are elected in the interim to fill vacancies and
newly created directorships, shall hold office until the next annual meeting of
stockholders or until their successors are elected and qualified or until their
earlier resignation. In the interim between annual meetings of stockholders or
of special meetings of stockholders called for the election of directors and/or
for the filling of any vacancies in that connection, newly created directorships
and any vacancies in the Board of Directors may be filled by the vote of a
majority of the remaining directors then in office although less than a quorum,
or by the sole remaining director.
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4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board of Directors shall
fix, except that the first meeting of a newly elected Board of Directors shall
be held as soon after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the State
of Delaware as shall be fixed by the board.
- CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the direction
of the Chairman of the Board of Directors, if any, or the President, or by any
three of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. Two (2) business days notice,
specifying the time, place and purpose of the meeting, shall be given to all
directors of meetings, regular or special, of the Board of Directors. Notice
need not be given to any director or to any member of a committee of directors
who submits a written waiver of notice signed by him before or after the time
for the meeting stated therein. Attendance of any such person at a meeting shall
constitute a waiver of notice of such meeting, except when he attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors need be specified in any written
waiver of notice.
- QUORUM AND ACTION. A majority of the total number of directors shall
constitute a quorum. A majority of the directors present, whether or not a
quorum is present, may adjourn a meeting to another time and place. Except as
otherwise provided herein or as otherwise provided by the General Corporation
Law, the vote of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Bard of Directors. The quorum and
voting provisions herein stated shall not be construed as conflicting with any
provisions of the General Corporation Law or these By-laws which govern a
meeting of directors held to fill vacancies and newly created directorships in
the Board of Directors or action of disinterested directors or other matters
upon which the directors may, or are required to, vote.
- CHAIRMAN OF THE MEETING. The Chairman of the Board of Directors, if any
and if present and acting, shall preside at all meetings. Otherwise, the
President, if present and acting, or any other director chosen by the Board of
Directors, shall preside.
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5. COMMITTEES. The Board of Directors may designate one or more
committees. Each committee shall consist of two or more of the directors or
other number as is determined by the Board of Directors from time to time of the
Corporation and the entire number of directors which comprises a committee shall
constitute a quorum of that committee. Any such committee, by a unanimous vote
and to the extent provided in the resolution of the Board of Directors
establishing such committee, shall have and may exercise the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation and may authorize the seal of the Corporation to be
affixed to all papers which may require it; provided, however, (i) no committee
may exercise the powers and authority of the Board of Directors in contravention
of Section 141 of the General Corporation Law, and (ii) no committee may take
any action of the Board of Directors which requires higher than a majority vote.
6. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board of Directors or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee.
7. ELECTRONIC COMMUNICATION. Any member or members of the Board of
Directors or of any committee designated by the Board of Directors may
participate in a meeting of the Board of Directors, or any such committee, as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other.
ARTICLE III
OFFICERS
The officers of the Corporation shall consist of a Chairman of the
Board of Directors, a President, a Secretary, a Treasurer, and, if deemed
necessary, expedient or desirable by the Board of Directors, an Executive
Vice-President, one or more other Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers with such
titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing him, no officer other than the Chairman need be a director.
Any number of offices may be held by the same person.
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Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the Board
of Directors following the next annual meeting of stockholders and until his
successor shall have been chosen and qualified and any officer may be removed,
with or without cause.
The Chairman of the Board of Directors shall be the Chief Executive
Officer of the Corporation and shall have general supervision over the property,
business and affairs of the Corporation and over its several officers, subject
to the control of the Board of Directors. He shall, if present, preside at all
meetings of the stockholders and of the Board of Directors. He may sign, with
the Secretary, Treasurer or any other proper officer of the Corporation
thereunto authorized by the Board of Directors, certificates for shares in the
Corporation. He may sign, execute and deliver in the name of the Corporation all
deeds, mortgages, bonds, leases, contracts, or other instruments either when
specially authorized by the Board of Directors or when required or deemed
necessary or advisable by him in the ordinary conduct of the Corporation's
normal business, except in cases where the signing and execution thereof shall
be expressly delegated by these By-laws to some other officer or agent of the
Corporation or where such signing and execution first requires approval by the
Board of Directors pursuant to these By-laws or shall be required by law or
otherwise to be signed or executed by some other officer or agent, and he may
cause the seal of the Corporation, if any, to be affixed to any instrument
requiring the same.
The President shall be the Chief Operating Officer of the Corporation,
subject to the control of the Board of Directors. He shall, if present, in the
absence of the Chairman of the Board of Directors, preside at all meetings of
the stockholders and of the Board of Directors. He may sign, with the Secretary,
Treasurer or any other proper officer of the Corporation thereunto authorized by
the Board of Directors, certificates for shares in the Corporation. He may sign,
execute and deliver in the name of the Corporation all deeds, mortgages, bonds,
leases, contracts, or other instruments either when specially authorized by the
Board of Directors or when required or deemed necessary or advisable by him in
the ordinary conduct of the Corporation's normal business, except in cases where
the signing and execution thereof shall be expressly delegated by these By-laws
to some other officer or agent of the Corporation or where such signing and
execution first requires approval by the Board of Directors pursuant to these
By-laws or shall be required by law or otherwise to be signed or executed by
some other officer or agent, and he may cause the seal of the Corporation, if
any, to be affixed to any instrument requiring the same.
The Executive Vice President and other Vice Presidents shall have such
powers and duties as may be delegated to them by the President.
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The Treasurer or Assistant Treasurer of the Corporation shall have the
custody of the corporate funds and securities, and shall deposit or cause to be
deposited under his direction all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors or pursuant to authority granted by it. He shall
render to the Chairman of the Board of Directors and the President and the Board
of Directors whenever they may require it an account of all his transactions as
Treasurer and of the financial condition of the Corporation. He shall have such
other powers and duties as may be delegated to him by the President.
The Secretary or Assistant Secretary of the Corporation shall record
all of the proceedings of all meetings and the actions in writing of
stockholders, directors and committees of directors, and shall exercise such
additional authority and perform such additional duties as the Board of
Directors shall assign to him.
All other officers of the Corporation shall have such authority and
perform such duties in the management and operation of the Corporation as may be
prescribed in the resolutions of the Board of Directors designating and choosing
such officers or prescribing the authority and duties of the various officers of
the Corporation, and as are customarily incident to their office, except to the
extent that such resolutions may be inconsistent therewith.
ARTICLE IV
INDEMNIFICATION
Each director or officer who the Corporation is empowered to indemnify
pursuant to the provisions of the General Corporation Law (or any applicable law
at the time in effect) shall be indemnified by the Corporation to the full
extent permitted thereby. The foregoing right of indemnification shall not be
deemed to be exclusive of any other such rights to which those directors and
officers seeking indemnification from the Corporation may be entitled,
including, but not limited to, any rights of indemnification to which they may
be entitled pursuant to any agreement, insurance policy, other by-law or charter
provision, vote of shareholders or directors, or otherwise. No repeal or
amendment of this Article IV shall adversely affect any rights of any person
pursuant to this Article IV which existed at the time of such repeal or
amendment with respect to acts or omissions occurring prior to such repeal or
amendment.
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ARTICLE V
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be as determined from time to
time by resolution duly adopted by the Board of Directors.
ARTICLE VII
CONTROL OVER BY-LAWS
Subject to the provisions of the Certificate of Incorporation and
these By-laws, and the provisions of the General Corporation Law, the power to
amend, alter or repeal these By-laws and to adopt new By-laws may be exercised
by the Board of directors or by the stockholders.
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Exhibit 4.2
_______________
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
REDEEMABLE COMMON STOCK PURCHASE WARRANT
No. ______ Evidencing Right to
Purchase ______ Share
of Common Stock
_______________
This certifies that __________ or registered assigns (the "Registered
Holder") is the owner of __________ Redeemable Common Stock Purchase Warrants
(the "Warrants"). Each Warrant initially entitles the Registered Holder to
purchase, subject to the terms and conditions set forth in this Certificate and
in the Warrant Agreement (as hereinafter defined), one fully paid and
nonassessable share of Common Stock, $.01 par value, of Worldwide Entertainment
& Sports Corp., a Delaware corporation (the "Company"), at any time from the
Effective Date (as hereinafter defined) to the Expiration Date (as hereinafter
defined), upon the presentation and surrender of this Certificate with the
Subscription Form, which is attached hereto, duly executed, at the office of the
Company, accompanied by payment of the Purchase Price (as hereinafter defined),
in lawful money of the United States of America in cash or by check made payable
to the Company.
This Certificate and each Warrant represented hereby are issued pursuant to
and are subject in all respects to the terms and conditions set forth in that
certain warrant agreement (the "Warrant Agreement") proposed to be entered into
between the Company and American Stock Transfer & Trust Company, as warrant
agent (the "Warrant Agent"), of the Company's Redeemable Common Stock Purchase
Warrants that are contemplated as of the date hereof to be offered and sold in
the Company's initial public offering of its equity securities (the "Public
Offering").
Each Warrant represented hereby may be redeemed by the Company at any time
subsequent to the first anniversary of the Effective Date on 30 days' prior
written notice provided the closing 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.
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Each Warrant represented hereby may be exercised at any time after the
Effective Date.
The term "Effective Date" shall mean the date of the Registration Statement
filed with the SEC in connection with the Public Offering becomes effective. The
term "Expiration Date" shall mean ________, 2001 and the term "Purchase Price"
shall mean $7.20 per share of Common Stock.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment for any such contingencies which occur following the
date hereof.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Certificate upon the surrender hereof and shall execute and deliver
a new Certificate or Certificates of like tenor for the balance of such
Warrants.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the Act with
respect to such securities is effective or an exemption from registration
thereunder is available. This Warrant shall not be exercisable by a Registered
Holder in any state where such exercise would be unlawful.
This Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Company for a new Certificate
or Certificates of like tenor representing an equal aggregate number of
Warrants, each of such new Certificates to represent such number of Warrants as
shall be designated by such Registered Holder at the time of such surrender.
Upon due presentment and payment of any tax or other charge imposed in
connection therewith or incident thereto, for registration of transfer of this
Certificate at such office, a new Certificate or Certificates representing an
equal aggregate number of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in this Certificate and in the
Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or receive dividends or other
distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in this Certificate and in the
Warrant Agreement.
2
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Prior to due presentment for registration of transfer hereof, the Company
may deem and treat the Registered Holder as the absolute owner hereof and of
each Warrant represented hereby (notwithstanding any notations of ownership or
writing hereon made by anyone other than a duly authorized officer of the
Company) for all purposes and shall not be affected by any notice to the
contrary, except as provided in this Certificate and in the Warrant Agreement.
This Certificate shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to conflicts of laws.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed by an officer thereunto duly authorized.
Dated: as of ___________, 1996
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By:___________________________________
Marc Roberts, President
3
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SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
__________ Warrants represented by this Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
________________________________________________________________________________
________________________________________________________________________________
(please print or type name and address)
and be delivered to
________________________________________________________________________________
________________________________________________________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Certificate, that a new Certificate for the balance of such Warrants be
registered in the name of, and delivered to, the Registered Holder at the
address stated below.
Dated:__________ X________________________________________________
_________________________________________________
_________________________________________________
Address
_________________________________________________
Social Security or Taxpayer Identification Number
_________________________________________________
Signature Guaranteed
ASSIGNMENT
FOR VALUE RECEIVED, _____________, hereby sells, assigns and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
________________________________________________________________________________
________________________________________________________________________________
(please print or type name and address)
__________ of the Warrants represented by this Certificate, and hereby
irrevocably constitutes and appoints ___________ Attorney to transfer this
Certificate on the books of the Company, with full power of substitution in the
premises.
Dated:__________ ___________________________________________________
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE NEW YORK STOCK EXCHANGE
OR AMERICAN STOCK EXCHANGE.
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Exhibit 4.3
EXHIBIT B
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED FOR SALE, SOLD
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT.
VOID AFTER 5:00 P.M., NEW YORK TIME, ON MARCH __, 2001 OR IF NOT A BUSINESS DAY,
AS DEFINED HEREIN, AT 5:00 P.M., NEW YORK TIME, ON THE NEXT FOLLOWING BUSINESS
DAY.
WARRANT TO PURCHASE
[ ]
SHARES OF COMMON STOCK
OF
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
NO.
TRANSFER RESTRICTED -- SEE SECTION 5.02
This Certifies that, for and in consideration of $.10 per each share of
Common Stock initially purchasable pursuant to the terms of this warrant and
other good and valuable consideration, Michael M. Cantor, and his registered,
permitted assigns (collectively, the "Warrantholder"), is entitled to purchase
from Worldwide Entertainment & Sports Corp., a corporation incorporated under
the laws of the State of Delaware (the "Company"), subject to the terms and
conditions hereof, at any time on or after the date hereof and before 5:00 P.M.,
New York time on _________, 2001 (or, if such day is not a Business Day, at or
before 5:00 P.M., New York time, on the next following Business Day), provided
that an initial public offering of the Company's Common Stock ( "Initial public
Offering") is effected prior to the Expiration Date, the number of fully paid
and non-assessable shares of Common Stock of the Company stated above at the
Exercise Price (as defined herein). The Exercise Price and the number of shares
Purchasable hereunder are subject to adjustment from time to time as provided in
Article III hereof.
ARTICLE I
Section 1.01: Definition of Terms. As used in this Warrant, the following
capitalized terms shall have the following respective meanings:
(a) Business Day: A day other than a Saturday, Sunday or other day on which
banks in the State of New York are authorized by law to remain closed.
(b) Common Stock: Common stock, $0.01 par value per share, of the Company.
(c) Common Stock Equivalents: Securities that are convertible into or
exercisable for shares of Common Stock.
(d) OMITTED
(e) Exchange Act: The Securities Exchange Act of 1934, as amended.
(f) Exercise Price: 120% of the price per share of the Company's Common
Stock offered in the Initial Public Offering, as such price may be adjusted from
time to time pursuant to Article III hereof.
(g) Expiration Date: 5:00 P.M., New York time, on __________, 2001 or if
such day is not a
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Business Day, the next succeeding day which is a Business Day.
(h) OMITTED
(i) Holder: A Holder of Registrable Securities.
(j) NASD: National Association of Securities Dealers, Inc. and NASDAQ: NASD
Automatic Quotation System.
(k) Person: An individual, partnership, joint venture, corporation, trust,
unincorporated organization or government of any department or agency thereof.
(l) Piggyback Registration: See Section 6.01.
(m) Prospectus: Any prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments and all material incorporated by
reference in such Prospectus.
(n) Public Offering: A public offering of any of the Company's equity or
debt securities pursuant to a registration statement under the Securities Act.
(o) Registration Expenses: Any and all expenses incurred in connection with
any registration or action incident to performance of or compliance by the
Company with Article VI, including, without limitation, (i) all SEC, national
securities exchange and NASD registration and filing fees; all listing fees and
all transfer agent fees; (ii) all fees and expenses of complying with state
securities or blue sky laws (including the fees and disbursements of counsel of
the underwriters in connection with blue sky qualifications of the Registrable
Securities); (iii) all printing, mailing, messenger and delivery expenses, (iv)
all fees and disbursements of counsel for the Company and of its accountants,
including the expenses of any special audits and/or "cold comfort" letters
required by or incident to such performance and compliance, and (v) any
disbursements of underwriters customarily paid by issuers or sellers of
securities including the reasonable fees and expenses of any special experts
retained in connection with the requested registration, but excluding
underwriting discounts and commissions, brokerage fees and transfer taxes, if
any, and fees of counsel or accountants retained by the holders of Registrable
Securities to advise them in their capacity as Holders of Registrable
Securities.
(p) Registrable Securities: Any Warrants and/or Warrant Shares issued to
the Warrantholder and/or its designees or transferees as permitted under Section
5.02 and/or other securities that may be or are issued by the Company upon
exercise of this Warrant, including those which may thereafter be issued by the
Company in respect of any such securities by means of any stock splits, stock
dividends, recapitalizations, reclassifications or the like, and as adjusted
pursuant to Article III hereof; provided, however, that as to any particular
security contained in Registrable Securities, such securities shall cease to be
Registrable Securities when (i) a Registration Statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such Registration
Statement; or (ii) they shall have been sold to the public pursuant to Rule 144
(or any successor provision) under the Securities Act; or (iii) they shall have
been sold, assigned or otherwise transferred to any person other than those
persons specified in Section 5.02(i) below ("5.02(i) Persons") and other than to
any spouses, lineal descendants or adopted children of a 5.02(i) Person to whom
such securities are transferred upon the death of any 5.02(i) Person by
operation of law or by request.
(q) Registration Statement: Any registration statement of the Company filed
or to be filed with the SEC which covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including all amendments
(including post-effective amendments) and supplements thereto, all exhibits
thereto and all material incorporated therein by reference.
(r) SEC: The Securities and Exchange Commission or any other federal agency
at the time administering the Securities Act or the Exchange Act.
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(s) Securities Act: The Securities Act of 1933, as amended.
(t) Transfer: See Section 5.02.
(u) Warrants: This Warrant and all other warrants that may be issued in its
or their place (together evidencing the right to purchase an aggregate of
shares of Common Stock), originally issued as set forth in the definition of
Registrable Securities.
(v) Warrantholder: The person(s) or entity(ies) to whom this Warrant is
originally issued, or any successor in interest thereto, or any assignee or
transferee thereof, in whose name this Warrant is registered upon the books to
be maintained by the Company for that purpose.
(w) Warrant Shares: Common Stock, Common Stock Equivalents and other
securities purchased or purchasable upon exercise of the Warrants.
ARTICLE II
DURATION AND EXERCISE OF WARRANT
Section 2.01: Duration of Warrant. The Warrantholder may exercise this
Warrant at any time and from time to time from and after the date hereof and
before 5:00 P.M., New York time, on the Expiration Date, provided that the
Company has consummated an Initial Public Offering prior to the Expiration Date.
If this Warrant is not exercised on the Expiration Date, it shall become void,
and all rights hereunder shall thereupon cease.
Section 2.02: Exercise of Warrant.
(a) The Warrantholder may exercise this Warrant, in whole or in part, by
presentation and surrender of this Warrant to the Company at its principal
corporate office or at the office of its stock transfer agent, if any, with the
Subscription Form annexed hereto duly executed and accompanied by payment of the
full Exercise Price for each Warrant Share to be purchased.
(b) Upon receipt of this Warrant with the Subscription Form fully executed
and accompanied by payment of the aggregate Exercise Price for the Warrant
Shares for which this Warrant is then being exercised, the Company shall cause
to be issued certificates for the total number of whole shares of Common Stock
for which this Warrant is being exercised (adjusted to reflect the effect of the
anti-dilution provisions contained in Article III hereof, if any, and as
provided in Section 2.04 hereof) in such denominations as are requested for
delivery to the Warrantholder, and the Company shall thereupon deliver such
certificates to the Warrantholder. The Warrantholder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Warrantholder. If at the time this Warrant is
exercised, a Registration Statement is not in effect to register under the
Securities Act the Warrant Shares issuable upon exercise of this Warrant, the
Company may require the Warrantholder to make such representations, and may
place such legends on certificates representing the Warrant Shares, as may be
reasonably required in the opinion of counsel to the Company to permit the
Warrant Shares to be issued without such registration.
(c) In case the Warrantholder shall exercise this Warrant with respect to
less than all of the Warrant Shares that may be purchased under this Warrant,
the Company shall execute a new warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new warrant to the
Warrantholder.
(d) The Company shall pay any and all stock transfer and similar taxes
which may be payable in respect of the issue of any Warrant Shares to the Holder
of the Warrant being exercised.
Section 2.03: Reservation of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant such number of shares of Common Stock or other shares of capital stock
of the Company from time to time issuable upon exercise of this Warrant. All
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such shares shall be duly authorized, and when issued upon such exercise, shall
be validly issued, fully paid and nonassessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and
free and clear of all preemptive rights.
Section 2.04: Fractional Shares. The Company shall not be required to issue
any fraction of a share of its capital stock in connection with the exercise of
this Warrant, and in any case where the Warrantholder would, except for the
provisions of this Section 2.04, be entitled under the terms of this Warrant to
receive a fraction of a share upon the exercise of this Warrant, the Company
shall, upon the exercise of this Warrant and receipt of the Exercise Price,
issue the largest number of whole shares purchasable upon exercise of this
Warrant. The Company shall not be required to make any cash or other adjustment
in respect of such fraction of a share to which the Warrantholder would
otherwise be entitled.
Section 2.05: Listing. Prior to the issuance of any shares of Common Stock
upon exercise of this Warrant, the Company shall secure the listing of such
shares of Common Stock upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this Warrant) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing of all shares of Common Stock from time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, and shall maintain such
listing of, any other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same class shall be
listed on such national securities exchange or automated quotation system.
ARTICLE III
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article III.
Section 3.01: Mechanical Adjustments.
(a) If at any time prior to the exercise of this Warrant in full, the
Company shall (i) declare a dividend or make a distribution on the Common Stock
payable in shares of its capital stock (whether shares of Common Stock or of
capital stock of any other class); (ii) subdivide, reclassify or recapitalize
its outstanding Common Stock into a greater number of shares; (iii) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares, or (iv) issue any shares of its capital stock by reclassification of its
Common Stock (including any such reclassification in connection with a
consolidation or a merger in which the Company is the continuing corporation),
the Exercise Price in effect at the time of the record date of such dividend,
distribution, subdivision, combination, reclassification or recapitalization
shall be adjusted so that the Warrantholder shall be entitled to receive the
aggregate number and kind of shares which, if this Warrant had been exercised in
full immediately prior to such event, he would have owned upon such exercise and
been entitled to receive by virtue of such dividend, distribution, subdivision,
combination, reclassification or recapitalization. Any adjustment required by
this Paragraph 3.01(a) shall be made immediately after the record date, in the
case of a dividend or distribution, or the effective date, in the case of a
subdivision, combination, reclassification or recapitalization, to allow the
purchase of such aggregate number and kind of shares.
(b) If at any time prior to the exercise of this Warrant in full, the
Company shall make a distribution to all holders of the Common Stock of stock of
a subsidiary or securities convertible into or exercisable for such stock, then
in lieu of an adjustment in the Exercise Price or the number of Warrant Shares
purchasable upon the exercise of this Warrant, each Warrantholder, upon the
exercise hereof at any time after such distribution, shall be entitled to
receive from the Company, such subsidiary or both, as the Company shall
determine, the stock or other securities to which such Warrantholder would have
been entitled if such Warrantholder had exercised this Warrant immediately prior
thereto, all subject to further adjustment as provided in this Article III, and
the Company shall reserve, for the life of the Warrant, such securities of such
subsidiary or other corporation; provided, however, that no adjustment in
respect of dividends or interest on such stock or other securities shall be made
during the term of this Warrant or upon its exercise.
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(c) Whenever the Exercise Price payable upon exercise of each Warrant is
adjusted pursuant to paragraph 1 (a) of this Section 3.01, the Warrant Shares
shall simultaneously be adjusted by multiplying the number of Warrant Shares
initially issuable upon exercise of each Warrant by the Exercise Price in effect
on the date thereof and dividing the product so obtained by the Exercise Price,
as adjusted.
(d) In the event that at any time, as a result of any adjustment made
pursuant to Section 3.01(a), the Warrantholder thereafter shall become entitled
to receive any shares of the Company other than Common Stock, thereafter the
number of such other shares so receivable upon exercise of any Warrant shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Stock
contained in Section 3.01(a).
Section 3.02: Notices of Adjustment. Whenever the number of Warrant Shares
or the Exercise Price is adjusted as herein provided, the Company shall prepare
and deliver forthwith to the Warrantholder a certificate signed by its
President, and by any Vice President, Treasurer or Secretary, setting forth the
adjusted number of shares purchasable upon the exercise of this Warrant and the
Exercise Price of such shares after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which adjustment was made.
Section 3.03: No Adjustment for Dividends. No adjustment in respect of any
cash dividends shall be made during the term of this Warrant or upon the
exercise of this Warrant.
Section 3.04: Form of Warrant After Adjustments. The form of this Warrant
need not be changed because of any adjustments in the Exercise Price of the
number or kind of the Warrant Shares, and Warrants theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in this Warrant, as initially issued.
Section 3.05: Treatment of Warrantholder. Prior to due presentment for
registration of transfer of this Warrant, the Company may deem and treat the
Warrantholder as the absolute owner of this Warrant (notwithstanding any
notation of ownership or other writing hereon) for all purposes and shall not be
affected by any notice to the contrary.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
Section 4.01: No Rights as Shareholders; Notice to Warrantholders. Nothing
contained in this Warrant shall be construed as conferring upon the
Warrantholder or his, her or its transferee the right to vote or to receive
dividends or to consent or to receive notice as a shareholder in respect of any
meeting of shareholders for the election of directors of the Company or of any
other matter, or any rights whatsoever as shareholders of the Company. The
Company shall give notice to the Warrantholder by certified mail if at any time
prior to the expiration or exercise in full of the Warrants, any of the
following events shall occur:
(a) the Company shall authorize the payment of any dividend payable in any
securities upon shares of Common Stock or authorize the making of any
distribution to all holders of Common Stock;
(b) the Company shall authorize the issuance to all holders of Common Stock
of any additional shares of Common Stock or Common Stock Equivalents or of
rights, options or warrants to subscribe for or purchase Common Stock or Common
Stock Equivalents or of any other subscription rights, options or warrants;
(c) a dissolution, liquidation or winding up of the Company shall be
proposed; or
(d) a capital reorganization or reclassification of the Common Stock (other
than a subdivision or combination of the outstanding Common Stock and other than
a change in the par value of the Common Stock) or any consolidation or merger of
the Company with or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and that does not
result in any reclassification or change of Common Stock outstanding) or in the
case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety.
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Such giving of notice shall be initiated (i) at least 10 Days prior to the
date fixed as a record date or effective date or the date of closing of the
Company's stock transfer books for the determination of the shareholders
entitled to such dividend, distribution or subscription rights, or for the
determination of the shareholders entitled to vote on such proposed merger,
consolidation, sale, conveyance, dissolution, liquidation or winding up. Such
notice shall specify such record date or the date of closing the stock transfer
books, as the case may be. Failure to provide such notice shall not affect the
validity of any action taken in connection with such dividend, distribution or
subscription rights, or proposed merger, consolidation, sale, conveyance,
dissolution, liquidation or winding up.
Section 4.02: Lost, Stolen, Mutilated or Destroyed Warrants. If this
Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms
as to indemnity or otherwise as it may in its discretion impose (which shall, in
the case of a mutilated Warrant, include the surrender thereof), issue a new
Warrant of like denomination and tenor as, and in substitution for, this
Warrant.
ARTICLE V
SPLIT-UP, COMBINATION
EXCHANGE AND TRANSFER OF WARRANTS
Section 5.01: Split-Up, Combination, Exchange and Transfer of Warrants.
Subject to the provisions of Section 5.02 hereof, this Warrant may be split up,
combined or exchanged for another Warrant or Warrants containing the same terms
to purchase a like aggregate number of Warrant Shares. If the Warrantholder
desires to split up, combine or exchange this Warrant, he, she or it shall make
such request in writing delivered to the Company and shall surrender to the
Company this Warrant and any other Warrants to be so split-up, combined or
exchanged. Upon any such surrender for a split-up, combination or exchange, the
Company shall execute and deliver to the person entitled thereto a Warrant or
Warrants, as the case may be, as so requested. The Company shall not be required
to effect any split-up, combination or exchange which will result in the
issuance of a Warrant entitling the Warrantholder to purchase upon exercise a
fraction of a share of Common Stock or a fractional Warrant. The Company may
require such Warrantholder to pay a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any split-up,
combination or exchange of Warrants.
Section 5.02: Restrictions on Transfer. Neither this Warrant nor the
Warrant Shares may be sold, transferred, assigned or hypothecated (any such
action, a "Transfer"), except to any underwriter in connection with a Public
Offering of the Common Stock, provided that this Warrant is exercised upon such
Transfer and the shares of Common Stock issued upon such exercise are sold by
such underwriter as part of such Public Offering and, only in accordance with
and subject to the provisions of the Securities Act and the rules and
regulations promulgated thereunder. If at the time of a Transfer, a Registration
Statement is not in effect to register this Warrant or the Warrant Shares, the
Company may require the Warrantholder to make such representations, and may
place such legends on certificates representing this Warrant, as may be
reasonably required in the opinion of counsel to the Company to permit a
Transfer without such registration.
ARTICLE VI
REGISTRATION UNDER THE SECURITIES ACT OF 1933
Section 6.01:
(a) Right to include Registrable Securities. If at any time or from time to
time prior to the Expiration Date, the Company proposes to register any of its
securities under the Securities Act on any form for the registration of
securities under such Act, whether or not for its own account (other than by a
registration statement on Form S-8 or Form S-4 or other form which does not
include substantially the same information as would be required in a form for
the general registration of securities or would not be available for the
Registrable Securities) (a "Piggyback Registration"), it shall as expeditiously
as possible give written notice to all Holders of its intention to do so and of
such Holders' rights under this Section 6.01. Such rights are referred to
hereinafter as "Piggyback Registration Rights." Upon the written request of any
such Holder made within 20 days after receipt of any such notice (which request
shall specify the Registrable Securities intended to be disposed of by such
Holder), the Company shall include in the Registration Statement the Registrable
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Securities which the Company has been so requested to register by the Holders
thereof and the Company shall keep such registration statement in effect and
maintain compliance with each Federal and state law or regulation for the period
necessary for such Holder to effect the proposed sale or other disposition (but
in no event for a period greater than 120 days).
(b) Withdrawal of Piggyback Registration by Company. If, at any time after
giving written notice of its intention to register any securities in a Piggyback
Registration but prior to the effective date of the related Registration
Statement, the Company shall determine for any reason not to register such
securities, the Company shall give notice of such determination to each Holder
and, thereupon, shall be relieved of its obligation to register any Registrable
Securities in connection with such Piggyback Registration. All best efforts
obligations of the Company pursuant to Section 6.04 shall cease if the Company
determines to terminate prior to such effective date any registration where
Registrable Securities are being registered pursuant to this Section 6.01.
(c) Piggyback Registration of Underwritten Public Offerings. If a Piggyback
Registration involves an offering by or through underwriters, then (i) all
Holders requesting to have their Registrable Securities included in the
Company's Registration Statement must sell their Registrable Securities to the
underwriters selected by the Company on the same terms and conditions as apply
to other selling shareholders and enter into an Underwriting Agreement with such
underwriters and (ii) any Holder requesting to have his, her or its Registrable
Securities included in such Registration Statement may elect in writing, not
later than three Business Days prior to the effectiveness of the Registration
Statement filed in connection with such registration, not to have his, her or
its Registrable Securities so included in connection with such registration.
(d) Payment of Registration Expenses for Piggyback Registration. The
Company shall pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to a Piggyback Registration Right
contained in this Section 6.01.
(e) Priority in Piggyback Registration. If a Piggyback Registration
involves an offering by or through underwriters, the Company, except as
otherwise provided herein, shall not be required to include Registrable Shares
therein if and to the extent the underwriter managing the offering reasonably
believes in good faith and advises in writing each Holder requesting to have
Registrable Securities included in the Company's Registration Statement that
marketing factors require a limitation on the number of shares to be
underwritten; provided that any such reduction or elimination shall be pro rata
to all other holders of the securities of the Company exercising "Piggyback
Registration Rights" similar to those set forth herein in proportion to the
respective number of shares they have requested to be registered.
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Section 6.02: Indemnification.
(a) Indemnification by Company. In connection with each Registration
Statement relating to disposition of Registrable Securities, the Company shall
indemnify and hold harmless each Holder and each underwriter of Registrable
Securities and each Person, if any, who controls such Holder or underwriter
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) against any and all losses, claims, damages and liabilities, joint
or several (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted), to which they, or any of them, may
become subject under the Securities Act, the Exchange Act or other Federal or
state law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or preliminary prospectus or any amendment
thereof or supplement thereto, or arise out of or are based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided, however,
that such indemnity shall not inure to the benefit of any Holder or underwriter
(or any Person controlling such Holder or underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) on account
of any losses, claims, damages or liabilities arising from the sale of the
Registrable Securities if such untrue statement or omission or alleged untrue
statement or omission was made in such Registration Statement, Prospectus or
preliminary prospectus, or such amendment or supplement, in reliance upon and in
conformity with information furnished in writing to the Company by the Holder or
underwriter specifically for use therein. This indemnity agreement shall be in
addition to any liability which the Company may otherwise have.
(b) Indemnification by Holder. In connection with each Registration
Statement, each Holder shall indemnify, to the same extent as the
indemnification provided by the Company in Section 6.02(a), the Company, its
directors and each officer who signs the Registration Statement and each Person
who controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act) but only insofar as such losses, claims,
damages and liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which was made in the
Registration Statement, the Prospectus or preliminary prospectus or any
amendment thereof or supplement thereto, in reliance upon and in conformity with
information furnished in writing by such Holder to the Company specifically for
use therein. In no event shall the liability of any selling Holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Procedure. Any party that proposes to assert
the right to be indemnified hereunder will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served. No indemnification
provided for in Section 6.02(a) or 6.02(b) shall be available to any party who
shall fail to give notice as provided in this Section 6.02(c) if the party to
whom notice was not given was unaware of the proceeding to which such notice
would have related and was prejudiced by the failure to give such notice, but
the omission so to notify such indemnifying party of any such action, suit or
proceeding shall not relieve it from any liability that it may have to any
indemnified party for contribution otherwise than under this Section. In case
any such action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and the
approval by the indemnifying party to such indemnified Party of its election so
to assume the defense thereof and the approval by the indemnified party of such
counsel, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses, except as provided below and except for the
reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
employment of counsel by such indemnified party has been authorized in writing
by the indemnifying parties, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the
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indemnifying parties and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying parties shall not have employed counsel to assume the defense
of such action within a reasonable time after notice of the commencement
thereof, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying parties. An indemnifying party shall not be liable
for any settlement of any action, suit, proceeding or claim effected without its
written consent.
(d) Contribution. In connection with each Registration Statement relating
to the disposition of Registrable Securities, if the indemnification provided
for in subsection (a) hereof is unavailable to an indemnified party thereunder
in respect to any losses, claims, damages or liabilities referred to therein,
then the Company shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities. The amount to be contributed by
the Company hereunder shall be an amount which is in the same proportionate
relationship to the total amount of such losses, claims, damages or liabilities
as the total net proceeds from the offering (before deducting expenses) of the
Registrable Securities bears to the total price to the public (including
underwriters' discounts) for the offering of the Registrable Securities covered
by such registration.
(e) Specific Performance. The Company and the Holder acknowledge that
remedies at law for the enforcement of this Section 6.02 may be inadequate and
intend that this Section 6.02 shall be specifically enforceable.
ARTICLE VII
OTHER MATTERS
Section 7.01: Successors and Assigns. All the covenants and provisions of
this Warrant by or for the benefit of the Company shall bind and inure to the
benefit of its successors and assigns hereunder.
Section 7.02: No Inconsistent Agreements. The Company will not on or after
the date of this Warrant enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holders in this Warrant or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to holders of the Company's securities under any other
agreements.
Section 7.03: Adjustments Affecting Registrable Securities. The Company
will not take any action outside the ordinary course of business, or permit any
change within its control to occur outside the ordinary course of business, with
respect to the Registrable Securities which is without a bona fide business
purpose, and which is intended to interfere with the ability of the Holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement.
Section 7.04: Integration/Entire Agreement. This Warrant is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertaking, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Warrants. This Warrant supersedes all prior agreements, and
understandings between the parties with respect to such subject matter (other
than warrants previously issued by the Company to the Warrantholder.)
Section 7.05: Amendments and Waivers. The provisions of this Warrant,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waiver or consents to departure from the provisions hereof may
not be given unless the Company has obtained the written consent of holders of
at least a majority of the outstanding Registrable Securities. Holders shall be
bound by any consent authorized by this Section whether or not certificates
representing such Registrable Securities have been marked to indicate such
consent.
Section 7.06: Counterparts. This Warrant may be executed in any number of
counterparts, and by the parties hereto in separate counterparts, each of which
so executed shall be deemed to be an original
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and all of which taken together shall constitute one and the same agreement.
Section 7.07: Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York.
Section 7.08: Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions in every other respect and of the
remaining Provisions contained herein shall not be affected or impaired thereby.
Section 7.09: Attorneys' Fees. In any action or proceeding brought to
enforce any provisions of this Warrant, or where any provisions hereof or
thereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorneys' fees and disbursements in addition to its costs
and expenses and any other available remedy.
Section 7.10: Notice. Any notices or certificates by the Company to the
Holder and by the Holder to the Company shall be deemed delivered if in writing
and delivered in person or by registered mail (return receipt requested) to the
Holder at the last address for such Holder as recorded on the books of the
Company or, if the Holder has designated, by notice in writing to the Company,
any other address, to such other address, and if to the Company, addressed to it
at: 29 Northfield Avenue, West Orange, N.J. 07052.
The Company may change its address by written notice to the Holder and the
Holder may change its address by written notice to the Company.
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
under its corporate seal as of the day and year first above written.
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By:___________________________________
Marc Roberts, President
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ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, ______________________hereby sells, assigns and
transfers unto _____________________ the within Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint ______________________ attorney, to transfer said Warrant
Certificate on the books of the within-named Company with respect to the number
of Warrants set forth below, with full power of substitution in the premises:
Name(s) of
Assignee(s) Address No. of Warrants
------------------- ---------------
And if said number of Warrants shall not be all the Warrants represented by the
Warrant Certificate, a new Warrant Certificate is to be issued in the name of
said undersigned for the balance remaining of the Warrants registered by said
Warrant Certificate.
Dated: ____________, 19 Signature ______________________________
Note: The above signature should
correspond exactly with the
name on the face of this
Warrant Certificate
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SUBSCRIPTION FORM
(To be executed upon exercise of Warrant)
__________________________:
The undersigned hereby irrevocably elects to exercise the right of
purchaser represented by the within Warrant Certificate for, and to purchase
thereunder, _________________ shares of Common Stock, as provided for therein,
and tenders herewith payment of the purchase price in full in the form of cash
or a certified or official bank check in the amount of $___________________.
Please issue a certificate or certificates for such Common Stock in the
name of, and pay any cash for any fractional share to:
Name ____________________ (Please
print Name, Address and Social Security
No.)
Signature ________________
Note: The above signature should
correspond exactly with the
name on the first page of this
Warrant Certificate or with the
name of the assignee appearing
in the assignment from below.
If said number of shares shall not be all the shares purchasable under the
within Warrant Certificate, a new Warrant Certificate is to be issued in the
name of said undersigned for the balance remaining of the shares Purchasable
thereunder rounded up to the next higher number of shares.
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Exhibit 4.4
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
AND
WILLIAM SCOTT & COMPANY, LLC
UNDERWRITER'S
WARRANT AGREEMENT
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UNDERWRITER'S WARRANT 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 Under writer warrants
("Warrants") to purchase up to 120,000 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 1,200,000 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 (120% 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 xercise 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 two (2) 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 registra tion 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. Computation of Adjusted Exercise Price. Except as hereinafter provided,
in case the Company shall at any time after the date hereof issue or sell any
shares of Common Stock (other than the issuances referred to in Section 8(g)
hereof), including shares held in the Company's treasury and shares of Common
Stock issued upon the exercise of any options, rights or warrants, to subscribe
for shares of Common Stock and shares of Common Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Common Stock, for a
consideration per share less than the Exercise Price in effect immediately prior
to the issuance or sale of such shares or the "Market Price" (as defined in
Section 8(a)(6) hereof) per share of Common Stock on the date immediately prior
to the issuance or sale of such shares, or without consideration, then forthwith
upon such issuance or sale, the Exercise Price shall (until another such
issuance or sale) be reduced to the price (calculated to the nearest full cent)
equal to the quotient derived by dividing (A) an amount equal to the sum of (X)
the product of (a) the lower of (i) Exercise Price in effect immediately prior
to such issuance or sale or (ii) the Market Price per share of Common Stock on
the date immediately prior to the issuance or sale of such shares, in either
event, reduced, but not below $.01, by the positive
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difference between the (iii) Market Price per share of Common Stock on the date
immediately prior to the issuance or sale and (iv) the amount per share received
in connection with such issuance or sale, multiplied by (b) the total number of
shares of Common Stock outstanding immediately prior to such issuance or sale
plus (Y) the aggregate of the amount of all consideration, if any, received by
the Company upon such issuance or sale, by (B) the total number of shares of
Common Stock outstanding immediately after such issuance or sale; provided,
however, that in no event shall the Exercise Price be adjusted pursuant to this
computation to an amount in excess of the Exercise Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock, as provided by Section 8(c) hereof.
For the purposes of this Section 8 the term "Exercise Price" shall mean the
aggregate Exercise Price per share of Common Stock set forth in Section 6
hereof, as adjusted from time to time pursuant to the provisions of this Section
8.
For the purposes of any computation to be made in accordance with this
Section 8(a), the following provisions shall be applicable:
(1) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by
the Company for such shares (or, if shares of Common Stock are offered by
the Company
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for subscription, the subscription price, or, if either of such securities
shall be sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection
therewith.
(2) In case of the issuance or sale (otherwise than as a dividend or
other distribution on any stock of the Company) of shares of Common Stock
for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash shall be deemed to be
the value of such consideration as determined in good faith by the Board of
Directors of the Company.
(3) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the
record date for the deter mination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued
without consideration.
(4) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock
shall be deemed to involve the issuance of such shares of Common Stock for
a consideration other than cash immediately prior to the close of business
on the date
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fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of
Common Stock shall be determined as provided in Section 8(a)(2).
(5) The number of shares of Common Stock at any one time outstanding
shall include the aggregate number of shares issued or issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of
options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(6) As used herein the phrase "Market Price" at any date shall be
deemed to be the last reported sale price, or, in the case no such reported
sale takes place on such day, the average of the last reported sales prices
for the last three (3) trading days, in either case as officially reported
by the principal securities exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the average closing bid price
as furnished by the NASD through the NASD Automated Quotation System
("NASDAQ") or similar organization if NASDAQ is no longer reporting such
information, or if the Common Stock is not quoted on NASDAQ, as determined
in good faith by resolution of the Board of Directors of the Company, based
on the best information available to it.
b. Options Rights, Warrants and Convertible and
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Exchangeable Securities. In case the Company shall at any time after the date
hereof issue options, rights or warrants to subscribe for shares of Common
Stock, or issue any securities convertible into or exchangeable for shares of
Common Stock, for a consideration per share less than the Exercise Price in
effect or the Market Price immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, or without
consideration, the Purchase Price in effect immediately prior to the issuance of
such options, rights or warrants, or such convertible or exchangeable
securities, or without consideration, the Purchase Price in effect immediately
prior to the issuance of such options, rights or warrants, or such convertible
or exchangeable securities, as the case may be, shall be reduced to a price
determined by making a computation in accordance with the provisions of Section
8(a) hereof, provided that:
(1) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable under such options, rights or warrants shall be
deemed to be issued and outstanding at the time such options, rights or
warrants were issued, and for a consideration equal to the minimum purchase
price per share provided for in such options, rights or warrants at the
time of issuance, plus the consideration (determined in the same manner as
consideration received on the issue or sale of shares in accordance with
the terms of the Warrants), if any, received by the Company for such
options, rights or warrants; provided,
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however, that upon the expiration or other termination of such options,
rights or warrants, if any thereof shall not have been exercised, the
number of shares of Common Stock deemed to be issued and outstanding
pursuant to this Section 8(b)(1) (and for the purposes of Section 8(a)(5)
hereof) shall be reduced by such number of shares as to which options,
warrants and/or rights shall have expired or terminated unexercised, and
such number of shares shall no longer be deemed to be issued and
outstanding, and the Exercise Price then in effect shall forthwith be
readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of shares actually
issued or issuable upon the exercise of those options, rights or warrants
as to which the exercise rights shall not be expired or terminated
unexercised.
(2) The aggregate maximum number of shares of Common Stock issuable
upon conversion or exchange of any convertible or exchangeable securities
shall be deemed to be issued and outstanding at the time of issuance of
such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or
sale of shares of Common Stock in accordance with the terms of the
Warrants) received by the Company for such securities, plus the minimum
consideration, if any, receivable by the Company upon the conversion or
exchange thereof; provided, however, that upon the termination of the right
to convert or exchange such convertible or exchangeable securities (whether
by reason or redemption or
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otherwise), the number of shares deemed to be issued and outstanding
pursuant to this Section 8(b)(2) (and for the purpose of Section 8(a)(5)
hereof) shall be reduced by such number of shares as to which the
conversion or exchange rights shall have expired or terminated unexercised,
and such number of shares shall no longer be deemed to be issued and
outstanding and the Exercise Price then in effect shall forthwith be
readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of the shares
actually issued or issuable upon the conversion or exchange of those
convertible or exchangeable securities as to which the conversion or
exchange rights shall not have expired or terminated unexercised.
(3) If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in Section 8(b)(1), or
in the price per share at which the securities referred to in Section
8(b)(2) are convertible or exchangeable, such options, rights or warrants
or conversion or exchange rights, as the case may be, shall be deemed to
have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the
exercise or conversion or exchange thereof, and the Company shall be deemed
to have issued upon such date new options, rights or warrants or
convertible or exchangeable securities at the new price in respect of the
number of shares issuable upon the exercise of such options, rights or
warrants or the conversion or exchange of such convertible or exchangeable
securities.
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c. 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.
d. 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.
e. 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 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
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or a like number of such securities with greater or superior voting rights.
f. 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
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
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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(f) shall similarly apply to successive consolidations or mergers.
g. 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 ____ (__)
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 ____ (__) cents per Share.
h. Dividends and Other Distributions. In the event that the Company shall
at any time prior to the exercise of all the Warrants declare a dividend (other
than a dividend consisting solely of shares of Common Stock) or otherwise
distribute to its stockholders any assets, property, rights,
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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(h).
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 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
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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 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
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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 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
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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,
liquidation, winding up or sale.
13. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be
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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 Certi ficates (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.
16. Termination. This Agreement shall terminate at the close of business on
_____________, 2002. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall
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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. Such mailing
shall be deemed personal service and shall be legal and binding upon the party
so served in any action, proceeding or claim.
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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 other Holder(s) of the Warrant Certificates
or Warrant Securities.
22. Counterparts. This Agreement may be executed in
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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.
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No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants 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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[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 Trans Energy, Inc. 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>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 1st day of January, 1996, by and
between Worldwide Entertainment and Sports Corp. (the "Company"), a Delaware
corporation, and Marc Roberts (the "Employee").
RECITALS
The Company desires to employ the Employee, and the Employee desires to
accept such employment, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth herein, the parties hereby agree as follows:
AGREEMENT
1. TERM OF EMPLOYMENT: Unless earlier terminated as herein provided, the
Term of Employee's employment with the Company hereunder shall commence on the
date hereof and shall end on the fifth anniversary date of the date of this
Agreement; provided, however, that this Agreement and the Term of the Employee's
employment with the Company hereunder shall automatically be extended for one
year commencing on the fifth anniversary of this Agreement and on each
successive one year anniversary after the fifth anniversary unless the Employee
or the Company shall have given written notice to the other at least ninety (90)
days prior
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to such anniversary that the Term shall expire at the end of the current five
year or one year Term, as applicable. For purposes of this Agreement, the "Term"
of this Agreement shall mean the initial five-year term of this Agreement and
(cumulatively) any and all one-year extension(s) of the initial five-year term
of this Agreement. In the event of the exercise of any of the one-year
extensions of this Agreement, the Employee's salary and other compensation for
the extension year shall be negotiated in good faith; and in the event that
agreement is not reached by the beginning of the one-year extension period, then
all of the terms of this Agreement in effect immediately prior to the
commencement of the one-year extension shall be continued for the then
commencing year. Various provisions of this Agreement are intended to survive
the expiration or termination of the Term as expressly stated therein.
2. DUTIES AND AUTHORITY OF EMPLOYEE: During the Term, the Employee shall
be Chairman, President and Chief Executive Officer of the Company, and shall
devote his best efforts to rendering services to the Company and its
subsidiaries in such capacity. As Chairman, President and Chief Executive
Officer, the Employee shall have those powers and duties set forth in the
Company's By-Laws and all powers exercised by Employee on behalf of the Company
in such positions prior to the date of this Agreement. The exercise of
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these powers shall be subject only to the general supervision and control of the
Board of Directors of the Company (hereinafter the "Board"). The Employee shall
report only to the Board. Employee's powers and authority shall be superior to
those of any officer or employee of the Company, or of any subsidiary thereof.
Employee shall not be required, without his consent, to undertake
responsibilities not commensurate with his position, nor shall the Company limit
or restrict his authority or responsibility in the performance of those duties.
3. DIRECTORSHIP: During the Term, the Company shall cause Employee
to be one of management's candidates for election as Chairman, and Employee
agrees to serve (if elected), on the Board.
4. PLACE AND FACILITIES OF EMPLOYMENT: During the Term, Employee's place
of employment and the corporate office of the Company will primarily be in the
West Orange, New Jersey area and/or New York City. However, the Company and
Employee acknowledge: (i) that Employee may conduct on a regular basis the
duties associated with his employment with the Company from his residence,
provided that such residence remains somewhere within the continental United
States, and (ii) that Employee's employment has and will continue to involve
extensive travel and therefore the Company agrees that Employee shall be
entitled to have his companion travel with him at Company expense, provided that
both
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the Company and Employee are in agreement that the companion's presence on such
trips has a bona fide business purpose.
5. EXCLUSIVITY: It is understood that the Employee's employment during
the Term shall be on an exclusive basis, except that the Employee may, subject
to the provisions of Paragraph 10 hereof, undertake, or continue to conduct,
other business, civic, or charitable activities during the Term if such
activities do not materially interfere, directly or indirectly, with the duties
of the Employee hereunder, and do not compete with any business of the Company;
provided, however, that no additional outside business activities shall be
undertaken without the prior consent of the Board. Notwithstanding the
foregoing, nothing contained in this Employment Agreement shall be deemed to
preclude Employee from owning less than five percent (5%) in market value of the
publicly traded capital stock of an entity, whether or not in competition with
the business of the Company or its subsidiaries or affiliates, or from carrying
on activities normally incident to managing passive investments. Employee shall
be deemed to be engaged in or concerned with a duty or pursuit which is contrary
to any provision of this Agreement only if he has received written notice to
such effect, setting forth with reasonable specificity the basis of such claim,
from the Company and has not, within thirty (30) days from the date of his
receipt of any such written notice, initiated steps
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to eliminate his engagement in or concern with such duties or pursuits as are
specified in such notice as being contrary to this Agreement.
6. COMPENSATION:
a. Salary:
i. During the Term, the Employee shall be paid a
salary (herein "Salary"), which may be increased, from time to time, at the
election of the Board, or any committee of the Board to which such power has
been delegated by the Board. Employee shall be entitled to annual salary reviews
in January of each year of this Agreement (or as soon as is practicable after
the fiscal year-end audit is complete), with a minimum increase of $25,000 per
year. As of July 1, 1996, the annual rate of Employee's Salary shall be One
Hundred Ninety Thousand Dollars ($190,000).
ii. The Employee's Salary shall be paid in the same
installments which prevail for other senior corporate officers of the Company
(but in no event less frequently than monthly), or such other installments as
are agreed upon between the Employee and the Company.
b. Bonus and Incentive Compensation:
i. Employee shall b paid bonus or other additional
cash compensation (herein "Incentive Compensation") in such amounts and at such
times as shall be determined before the end of each
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fiscal year by the Executive Compensation Committee of the Board of Directors.
Such bonus shall be, at a minimum, 10% of the annual pretax operating income
(before income taxes, depreciation, and amortization) of the Company over
$250,000. In addition, if the Company does not have operating income in a given
year but has materially improved its financial performance from the previous
year, Employee shall be paid a bonus of not less than $20,000.
ii. The Company shall adopt a stock incentive plan
and shall grant to Employee not less than 30% of the stock options to be issued
by the stock incentive plan at an exercise price which shall be 110% of the fair
value (as determined by the Board in good faith) of the common stock on the date
of grant.
c. Other Benefits: The Employee shall, to the extent deemed
appropriate by the Board (or any applicable committee of the Board), participate
at a level consistent with his rank in profit sharing, stock appreciation
rights, stock bonus, stock option, deferred compensation, and other similar
plans or benefits which are made available to executives employed by the Company
during the Term. Also, during the Term, Employee shall continue to participate
in all fringe benefits and perquisites currently being provided to Employee. In
the event that the Company establishes an individual or group retirement plan,
the Employee shall be entitled to participate, to the extent deemed appropriate
by the Board (or
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any applicable committee of the Board), in such retirement plan consistent with
his rank in the Company. In addition, Employee shall participate, to the extent
deemed appropriate by the Board (or any applicable committee of the Board),
consistent with his rank in any other fringe benefits or perquisites hereafter
adopted by the Company and made applicable to its officers. Further, during the
Term, the Company will provide, at its expense, life, business travel,
disability (in an amount sufficient to fund 60% of Employee's annual salary, and
provided that the premium for such insurance is available on commercially
reasonable terms), medical and hospitalization insurance for the Employee and
his dependents in amounts and on terms as favorable as those provided for any
other officer of the Company.
d. Withholding: All compensation shall be subject to normal
required tax withholdings.
7. VACATION: Employee shall be entitled to twenty (20) days vacation
time for each year during the Term. At Employee's option, vacation may be taken,
either in whole or in part, consecutively or not, in the year that Employee's
entitlement to that vacation accrues or, if unused during such year, such
vacation time shall be carried over (subject to a thirty (30) day maximum
accrual), and may be used in any subsequent year during the Term, provided that
no more than thirty (30) days of vacation may be taken in any one
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calendar year. At the option of Employee, Employee may require that Company pay
Employee for any unused vacation in lieu of carrying such days over to the next
year. Upon termination of Employee's employment with the Company for any reason
whatsoever, Employee shall be paid his Salary for all unused and accrued
vacation, at the Salary rate then existing, up to the maximum accrual of thirty
(30) days.
8. EXPENSES: The Company will reimburse Employee for all expenses
reasonably incurred by Employee in the performance of his duties under this
Agreement. Reimbursement shall be made in accordance with the practices and
requirements generally applied by the Company in connection with reimbursement
of expenses incurred by its employees. In the event that the Company is ever the
subject of an audit, and expenses of the Employee which the Company has
reimbursed to the Employee pursuant to this Agreement are ever found to have
been expended for a personal use by the Employee, such reimbursement of the
Employee's business expenses shall be considered to be additional Salary, and
the Employee shall not be liable for such reimbursed business expenses.
In addition, the Company shall furnish the Employee with a luxury
automobile of his choosing and shall make all lease, insurance and other
payments with respect to same, and with the use of a corporate credit card. In
addition, the Employee shall be
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entitled to prompt reimbursement by the Company for all reasonable legal and
other expenses incurred by him in connection with the preparation and approval
of this Agreement.
9. TERMINATION OF TERM AND/OR AGREEMENT:
a. Termination by the Company for Cause:
i. The Company may, at any time, at its election,
terminate the Term for cause prior to the Term's expiration as a result of any
of the following events: (1) Employee acting fraudulently in his relations with
the Company or on behalf of the Company, (2) Employee misappropriating or doing
material, intentional damage to property of the Company constituting more than
10% of the value of the Company's assets (3) Employee being convicted of a
felony, or (4) Employee's acts or omissions amounting to willful misconduct or
recklessness by the Employee in the performance of his duties under this
Agreement or the habitual neglect of such duties.
ii. Any such termination shall be effective upon
the Company's giving of written notice to the Employee setting forth in
reasonable detail the grounds for the termination, provided, however, that in
the event of a notice of termination under Paragraph 9(a)(i)(4) hereof, Employee
first failed to cure such condition within thirty (30) days after notice thereof
or, if a cure was not possible within thirty (30) days, failed to take all
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diligent action within such period leading to a cure within 120 days after such
notice, and if such cure is not completed within 120 days after such notice, the
Company may elect to terminate the Term notwithstanding the Employee's diligent
action to cure.
iii. In the event of a termination for cause under
this Paragraph 9(a), the Company's obligations to pay Salary and other
compensation and benefits to the Employee shall terminate simultaneously with
the effectiveness of the termination of the Term.
b. Disability: In the event that Employee shall become subject to
a Disability (as defined below) during the Term, the Term shall immediately
terminate, but the current Salary payable to Employee shall be continued for a
period of one year, and shall thereafter be reduced to sixty percent (60%) of
the Salary in effect at the date of the Disability, subject to maximum annual
compensation of $160,000. Such reduced compensation shall continue until the
termination of Employee's Disability, the expiration of the Term, the Employee's
attaining age 65, or the expiration of thirty-six (36) months from the inception
of the Disability, whichever occurs first (the "Disability Period"). During any
such Disability Period, the Company shall also keep in force for the benefit of
Employee and Employee's dependents all life, health and medical insurance
policies maintained for Employee's benefit under
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the terms of this Agreement, and Employee shall be considered to be employed for
purposes of the vesting and accrual of benefits of all other plans and programs
of the Company in which Employee is a participant, and which vest or accrue
benefits over a period of time. All stock options which vest during the
Disability Period shall be exercisable until the fifth (5th) anniversary date
from the date they became first exercisable by Employee. Notwithstanding the
foregoing, the Company shall not be required to add Employee to any bonus,
profit sharing, stock bonus, stock option, deferred compensation, and other
similar plans, or make any new awards to Employee under this Agreement with
respect to such new or presently existing plans during the period of such
Disability. All Salary payments pursuant to this Paragraph 9(b) due to Employee
under its terms shall be reduced by any disability payments made in accordance
with any existing disability program or disability insurance of the Company.
Employee expressly acknowledges that the Company may obtain disability insurance
with respect to the Employee in order to fund Salary payments to Employee during
any period of Disability. Employee also expressly acknowledges that he will
fully cooperate with the Company in submitting to all necessary physical or
mental examinations requested by the Company in determining Employee's
Disability. For purposes of this Agreement, Employee shall be deemed to have
become
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subject to a disability (herein "Disability") if, because of any physical or
mental condition, Employee shall be unable to perform his duties and
responsibilities to the extent reasonably necessary for Employee to give the
Company substantially the value of his services for a consecutive one hundred
eighty (180) day period, or for an aggregate of one hundred eighty (180) days
within any period of twelve (12) consecutive months, and either the Company or
the Employee shall thereafter give written notice to the other of such party's
election that Employee be treated as subject to a Disability. The date of such
Disability shall be the third calendar day immediately following transmittal of
such written notice of Disability.
c. Death: The Term will automatically terminate upon the
death of the Employee; however, the Company will pay death benefits equal to
sixty percent (60%) of Employee's Salary (up to a maximum of $200,000 annually)
at his death to any designated beneficiary of Employee for thirty six (36)
months after Employee's death, or so long as the designated beneficiary survives
Employee, whichever ends first, and there shall be full acceleration of vesting
or exercisability upon death of all outstanding unvested stock options and stock
awards, including, without limitation, awards under any stock plans or
agreements of the Company (whether such awards are made before or after the date
of this Agreement),
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and delivery to the appropriate person of all stock pursuant to the terms of any
such plans or agreements. All stock options which have their vesting accelerated
pursuant to this Paragraph 9(c) shall, notwithstanding the provisions of the
relevant stock option agreement to which they pertain, terminate unless
previously exercised by Employee's heirs or assigns prior to the fifth
anniversary date from the date of Employee's death.
In addition, the Company agrees to maintain a life insurance policy on
the life of Employee in the amount of $1 million, the proceeds of which shall be
payable to a beneficiary designated by Employee.
d. Termination by the Company Without Cause:
i. Termination Without Cause Described: If, during
the Term, Employee is not re-elected to, or is removed from, the position of
President and Chief Executive Officer other than pursuant to Paragraph
9(a),(b),(c) or (f), or if the Company otherwise materially breaches this
Agreement and fails to complete the cure of such breach within thirty (30) days
after written notice from Employee, or if this Agreement is terminated by the
Company as of the end of the initial five-year term or any subsequent one-year
term, then at any time within three (3) months after the date upon which
Employee is removed from either such position or the breach date, as the case
may be, Employee may elect
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by notice in writing to the Secretary of the Company to treat the situation as a
"Termination Without Cause" of Employee's employment by the Company effective
one (1) week after the notice, and to discontinue his obligations to perform
services hereunder. The Term shall end at such effective date.
ii. Employee's Obligations After Termination Without
Cause: In the event of a Termination Without Cause, Employee's obligations under
Paragraph 2 shall cease as of the date notice of such termination is given;
provided, however, that all payments and benefits provided to Employee hereunder
because of a Termination Without Cause shall be upon the condition of, and
partly in consideration for, Employee's continued compliance with any covenants
in this Agreement (including the covenants contained in Paragraphs 10 and 11)
which, by their terms, apply during the Term or thereafter.
iii. Payments and Benefits to Employee after a
Termination Without Cause: In the event of any Termination Without Cause, the
Company shall pay the Employee (a) within five (5) days of the date notice of
such termination is given, any amounts which have become payable under other
provisions of this Agreement, or other obligations of the Company to Employee
which have accrued but have not yet been paid, including, without limitation,
Salary earned prior to the date the notice is given and compensation for
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unused vacation, and (b) in accordance with the other provisions of this
Agreement, all entitlements of Employee. The Company shall also be obligated as
follows:
(1) Within five (5) days following the date
notice of such termination is given, the Company shall pay the Employee an
amount equal to sixty (60%) percent of the present value of the sum of (x) all
Salary which would have been earned but for such Termination Without Cause for a
period of 2.99 years commencing on the date of such Termination Without Cause
based on Employee's then current Salary, plus (y) the present value of an amount
determined by multiplying the amount of Incentive Compensation earned by
Employee for the last full fiscal year of the Company preceding the date of
termination by 2.99 ("Severance Compensation"). In making this present value
calculation, the projected Incentive Compensation shall be assumed to be earned
pro rata over 2.99 years. For this purpose, the rate used for the determination
of the present value shall be the average of the five (5) year treasury note
rates effective at the end of each of the six (6) calendar months immediately
preceding the month in which the termination of employment occurs. The remaining
forty (40%) percent of the Severance Compensation shall be paid to Employee in
twelve (12) equal monthly installments commencing on the first month after the
month in which Employee was terminated.
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(2) During the remaining Term, the Company shall keep
in force for the benefit of Employee and Employee's dependents all life
insurance policies maintained for Employee's benefit under the terms of this
Agreement. During such period, the Company shall not be required to add Employee
to any new profit sharing, stock bonus, stock option, bonus, deferred
compensation, and other similar plans, or make any awards to Employee under this
Agreement with respect to new or old plans of such nature. In the event of a
Termination Without Cause, all existing stock options previously granted to
Employee (whether made before or after this Agreement) shall be accelerated with
respect to vesting or exercisability so as to become fully vested or exercisable
immediately upon the effective date of Employee's Termination Without Cause
pursuant to Paragraph 9(d)(i) above. All stock options which have their vesting
accelerated pursuant to this Paragraph 9(d)(iii)(2) shall, notwithstanding the
provisions of the relevant stock option agreement to which they pertain,
terminate on the fifth anniversary date of the effective date of Employee's
Termination Without Cause.
(3) Notwithstanding Paragraph 9(d)(iii)(2) above,
any life insurance afforded Employee under this Agreement shall be only
supplementary or secondary to any such protection provided by other employment
or through Medicare.
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e. Employee's Additional Election and Rights after a Change
in Control:
i. Employee's Right to Elect Termination after a Change
in Control:
(1) Permitted Period for Elective Termination:
In the event of a Change in Control (as defined in Paragraph 15 hereof),
Employee shall have the right to elect to terminate the Term (and his obligation
to render services under this Agreement) by notice in writing to the Secretary
of the Company within twenty-four (24) months after the Change in Control.
(2) Payments and Benefits to Employee after
Elective Termination: If the Employee elects termination under Paragraph
9(e)(i)(1), the Employee shall be entitled to and the Company shall be obligated
to provide the Employee with all rights and benefits he would be entitled to
upon a Termination Without Cause pursuant to Paragraph 9(d)(iii).
(3) Limitation on Amounts:
(a) Notwithstanding the foregoing, in the
event that any payment or benefit received, or to be received, by Employee
(whether pursuant to the terms of this Agreement or any other plan, arrangement,
or agreement with the Company, or any other plan, arrangement or agreement with
any person whose actions result in a Change in Control, or any person affiliated
with the
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Company or such person) (all such payments and benefits being hereinafter called
"Total Payments") would not be deductible (in whole or in part) as a result of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), by
the Company, an affiliate or other person making such payment or providing such
benefit, then, to the extent necessary to make such portion of the Total
Payments deductible, the Total Payments shall be reduced in one of the two
alternative orders set forth in Paragraph 9(e)(i)(3)(b) hereof.
(b) If the Total Payments all become
payable at approximately the same time, (i) the benefits under the first
sentence of Paragraph 9(d)(iii)(2) shall first be reduced (if necessary, to
zero), (ii) the payment pursuant to Paragraph 9(e)(iii), if applicable, shall
then be reduced (if necessary, to zero), (iii) acceleration of vesting of awards
under stock options, or any similar stock plans or agreements of the Company
under Paragraph 9(d)(iii)(2) shall next be reduced (if necessary, to zero), and
(iv) other portions of the Total Payments shall be reduced as necessary. If the
Total Payments do not become due and payable at the same time, the respective
Total Payments shall be paid in full in the order in which they become payable
until any portion thereof would not be deductible, and such portion (and any
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subsequent portions) of the Total Payments shall be reduced to zero.
(c) For purposes of this limitation, (i)
no portion of the Total Payments, the receipt or enjoyment of which the Employee
shall have effectively waived in writing prior to the date of termination shall
be taken into account; (ii) no portion of the Total Payments shall be taken into
account which, in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to the Employee, does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code,
including by reason of Section 280G(b)(4)(A) of the Code; (iii) the payments in
Paragraph 9(d)(iii) (1) through (3), and Paragraph 9(e)(iii), if applicable,
shall be reduced only to the extent necessary so that the Total Payments (other
than those referred to in Paragraphs 9(e)(i)(3)(c)(i) or (ii)) in their entirety
constitute reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code, or are otherwise not subject to
disallowance as deductions, in the opinion of the tax counsel referred to in
Paragraph 9(e)(i)(3)(c)(ii); and (iv) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Company's independent auditors in accordance with the principles of
Section 280G(d)(3) and (4) of the
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Code. Notwithstanding any dispute as to the total amount to be paid to Employee,
payments will be made with respect to the amounts clearly deductible under
Section 280G of the Code within the time period specified above in Paragraph
9(d)(iii) and 9(e)(iii), as applicable.
(d) If it is established, pursuant to a
final determination of a court or an Internal Revenue Service proceeding that,
notwithstanding the good faith of Employee and the Company in applying the terms
of this Paragraph 9(e)(i)(3), the aggregate Total Payments paid to or for
Employee's benefit are in an amount that would result in any portion of such
Total Payments not being deductible by reason of Section 280G of the Code, then
Employee shall have an obligation to pay the Company, on the fifth (5th)
business day after demand by the Company, an amount equal to the sum of (i) the
excess of the aggregate Total Payments paid to or for Employee's benefit over
the aggregate Total Payments that could have been paid to or for Employee's
benefit without any portion of such Total Payments not being deductible by
reason of Section 280G of the Code (such excess constituting a loan by the
Company to Employee); and (ii) notwithstanding Paragraph 16(c) hereof, interest
on the loan amount set forth in clause (i) of this sentence at the rate provided
in Section 1274(b)(2)(B) of the Code
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from the date of Employee's receipt of such excess until the date of such
payment.
(4) Employee's Obligations After Elective
Termination: If Employee elects to terminate his obligations to render services
under this Agreement pursuant to Paragraph 9(e)(i)(1), his obligations under
Paragraph 2 shall cease as of the date notice of such termination is given.
Employee agrees that all payments made because of such elective termination
shall be upon the condition of, and partly in consideration for, his continued
compliance with any covenants under Paragraph 10 and Paragraph 11 of this
Agreement, which by their terms apply during the Term, or thereafter.
ii. Agreement in Full Effect after a Change in Control:
Upon and after a Change in Control, until and unless Employee makes a written
election pursuant to Paragraph 9(e)(i)(1), this Agreement shall continue in full
force and effect, in accordance with all the provisions hereof.
iii. Additional Payments and Provisions after Termination
Without Cause upon or after a Change in Control: In the event of a Termination
Without Cause of Employee by the Company upon or after a Change in Control (or
upon or after the occurrence of any other event which constitutes a change in
ownership or effective control of the Company, or in the ownership of its
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assets, or which would be deemed to be such a change under Section 280G of the
Code, or the regulations or other legal authority developed thereunder), the
Company shall provide Employee with the payments and benefits required by
Paragraph 9(d)(iii), and shall also pay Employee to the extent permitted by law
and without regard to any forfeiture provisions, a lump sum payment equal to the
benefits payable to Employee pursuant to any retirement plan which may be
established for the benefit of Employee.
f. Voluntary Resignation: A "Voluntary Resignation" shall mean a
termination of employment by the Employee on his own initiative other than a
termination due to Disability or pursuant to Paragraph 9(e) hereof. Provided
such a resignation shall occur on or after the date which is two (2) years from
the date of this Agreement, such a termination shall not be deemed a breach of
this Agreement and shall entitle the Employee to all the rights and benefits to
which he would be entitled in the event of a termination for cause pursuant to
Paragraph 9(e) hereof.
10. RESTRICTION ON COMPETITION: During the Term and for a period of
one (1) year thereafter, the Employee will not in the Continental United States
compete, directly or indirectly, with the business of the Company or any of its
subsidiaries or affiliates or, as an officer, director, shareholder, employee,
partner, agent
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or consultant or otherwise, associate himself directly or indirectly, whether or
not for compensation, with any person or entity engaged in a business competing
with any business of the Company or its subsidiaries or its affiliates. The term
"associate directly or indirectly" shall mean that for the applicable period,
Employee shall not cause, assist or in any way influence any other individual,
company or entity to engage in any of the activities prohibited by this
Paragraph 10.
11. CONFIDENTIAL INFORMATION: "Confidential Information" is defined as
information obtained by Employee as a result of his current or prior positions
with the Company, concerning the businesses, finances, clients, affairs,
business plans, strategies, methods, results from operations, regulatory matters
or investigations by others, and present and future plans relating to the
Company, any subsidiaries, parent or affiliates thereof or any company formed or
funded by the Company at any time for any reason or purpose whatsoever. It is
not intended to include business information that is available in the public
domain or information that was possessed by Employee prior to his employment
with the Company. Employee agrees that he will not, at any time during or after
the Term of employment, disclose, reproduce, assign or transfer to any person,
firm, corporation or other business entity, except as required by law, any
Confidential Information without the
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Company's express written consent; nor shall Employee make use of any such
Confidential Information for his own purpose or for the benefit of any person,
firm, corporation or other business entity, except the Company or any subsidiary
or affiliate thereof. Upon termination of employment for any reason, Employee
will immediately return all books, files, papers, records and documents
(including those contained in computer disks) relating to the business of the
Company.
12. RIGHT TO INJUNCTIVE RELIEF: The Employee acknowledges that the
Company will suffer irreparable injury, not readily susceptible of valuation in
monetary damages, if the Employee breaches any of his obligations under
Paragraph 10 or 11 above. Accordingly, the Employee agrees that the Company
shall be entitled, in addition to, and not in lieu of, any other available
remedies, to seek and obtain injunctive relief against any breach or prospective
breach by the Employee of the Employee's obligations under Paragraphs 10 and 11
of this Agreement, in any Federal or State court sitting in the State of New
Jersey. The Employee hereby submits to the jurisdiction of those courts for the
purposes of any actions or proceedings instituted by the Company to obtain such
injunctive relief, and agrees that process may be served by registered mail,
addressed to the last address of the Employee known to the Company, or in any
other manner authorized by law.
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13. [INTENTIONALLY OMITTED]
14. INDEMNITY:
a. Subject only to the exclusions set forth in Paragraph 14(b)
below and the restrictions set forth in the Delaware General Corporation Law,
and in addition to any rights of Employee under the By-Laws of the Company, any
applicable state law, Paragraph 13 of this Agreement, or any other agreement,
the Company hereby further agrees (which agreement shall survive the expiration
or termination of this Agreement) to hold harmless and indemnify Employee:
i. Against any and all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by Employee in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (including an action by or in the right of the Company) to which
Employee is, was, or at any time becomes, a party, or is threatened to be made a
party, by reason of the fact that Employee is, was, or at any time becomes, a
director, officer, employee, consultant, or agent of the Company, or is, or was,
serving, or at any time serves, at the request of the Company, as a director,
officer, employee, consultant, partner, trustee or agent (regardless of his
title) of
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another corporation, partnership, joint venture, trust or other enterprise; and
ii. Otherwise to the fullest extent as may be provided
to Employee by the Company under the provisions of the By- Laws of the Company
and the Delaware General Corporation Law; and
iii. From any and all income and excise taxes (and
interest and penalties relating thereto) imposed on Employee with reference to
any payment under this Paragraph 14 (including, without limitation, payments in
indemnity for such taxes).
b. Notwithstanding the foregoing, no indemnity pursuant to
this Paragraph 14 shall be paid by the Company:
i. except to the extent the aggregate of losses to be
indemnified thereunder exceed the sum of Five Hundred Dollars ($500), plus the
amount of such losses for which the Employee has already been indemnified,
either pursuant to the By-Laws of the Company or any subsidiary, or pursuant to
any Insurance Policies purchased and maintained by the Company pursuant to
Paragraph 13 above;
ii. in respect to remuneration paid to Employee if it
shall be determined by a final judgment or other final adjudication that such
remuneration was in violation of law;
iii. on account of any suit in which judgment is
rendered against Employee for an accounting of profits made from
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the purchase or sale by Employee of securities of the Company pursuant to the
provisions of Section 16(b) of the Securities Exchange Act of 1934, and
amendments thereto, or similar provisions of any Federal, state or local
statutory law;
iv. on account of actions or omissions by the Employee
which are finally adjudicated to have been material to the cause of action
adjudicated and (x) were in breach of his duty of loyalty to the Company or its
shareholders, (y) were not in good faith or involved a knowing violation of law
or (z) resulted in receipt by Employee of an improper personal benefit; or
v. if a final decision by a court having jurisdiction
in the matter shall determine that such indemnification to Employee is not
lawful.
c. All agreements and obligations of the Company contained herein
shall continue during the period Employee is a director, officer, employee,
consultant or agent of the Company (or is, or was, serving at the request of the
Company as a director, officer, employee, partner, consultant, or agent of
another corporation, partnership, joint venture, trust or other enterprise), and
shall continue thereafter so long as Employee shall be subject to any possible
claim or threatened, pending or completed action, suit or proceeding, whether
civil, criminal or investigative, by reason of the fact that Employee was an
officer
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or director of the Company, or serving in any other capacity referred to herein.
d. The Company shall not be liable to indemnify Employee under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner which would impose any penalty or limitation on Employee
without Employee's written consent. Neither the Company nor Employee will
unreasonably withhold consent to any proposed settlement.
e. The Company will pay all expenses immediately upon the
presentment of bills for such expenses. Employee agrees that Employee will
reimburse the Company for all reasonable expenses paid by the Company in
defending any civil or criminal action, suit or proceeding against Employee in
the event, and only to the extent, that it shall be ultimately determined that
Employee is not entitled to be indemnified by the Company for such expenses
under the provisions of the applicable state statute, the By-Laws, this
Agreement, or otherwise. This Agreement shall not affect any rights of Employee
against the Company, any insurer, or any other person to seek indemnification or
contribution.
f. If the Company fails to pay any expenses (including,
without limiting the generality of the foregoing, legal fees and expenses
incurred in defending any action, suit or proceeding),
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Employee shall be entitled to institute suit against the Company to compel such
payment, and the Company shall pay Employee all costs and legal fees incurred in
enforcing such right to prompt payment.
g. To the extent allowable under Delaware law, the burden of
proof with respect to any proceeding or determination with respect to employee's
entitlement to indemnification under this Agreement shall be on the Company.
h. Neither the failure of the Company, its Board of Directors,
independent legal counsel, nor its stockholders, to have made a determination
that indemnification of the Employee is proper in the circumstances because he
has met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Company, its Board of
Directors, independent legal counsel, or its shareholders, that the Employee has
not met such applicable standard of conduct shall be a defense to any action on
the part of Employee to recover indemnification under this Agreement, or create
a presumption that Employee has not met the applicable standard of conduct.
15. CHANGE IN CONTROL:
a. For purposes of this Agreement, a "Change in Control" shall
have occurred if at any time during the Term, any of the following events shall
occur without the consent of Employee:
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(i) The Company is merged, or consolidated, or
reorganized into or with another corporation
or other legal person, and as a result of
such merger, consolidation or reorganization
less than 51% of the combined voting power
of the then outstanding securities of such
corporation or person immediately after such
transaction are held in the aggregate by the
holders of voting securities of the Company
immediately prior to such transaction;
(ii) The Company sells all or substantially all
of its assets to any other corporation or
other legal person;
(iii) There is a report filed after the date of
this Agreement on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or
report), each as promulgated pursuant to the
Securities Exchange Act of 1934 (the
"Exchange Act") disclosing that any person
(as the term "person" is used in Section
13(d)(3) or
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Section 14(d)(2) of the Exchange Act) has
become the beneficial owner (as the term
"beneficial owner" is defined under Rule
13(d)(3) or any successor rule or regulation
promulgated under the Exchange Act) of
securities representing 15% or more of the
combined voting power of the then
outstanding voting securities of the
Company;
(iv) The Company shall file a report or proxy
statement with the Securities and Exchange
Commission pursuant to the Exchange Act
disclosing in response to Item 1 of Form 8-K
thereunder or Item 5(f) of Schedule 14A
thereunder (or any successor schedule, form
or report or item therein) that the change
in control of the Company has or may have
occurred or will or may occur in the future
pursuant to any then existing contract or
transaction; or
(v) During any period of two consecutive
years, individuals who at the beginning
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of any such period constitute the directors
of the Company cease for any reason to
constitute at least a majority thereof,
unless the election or the nomination for
election by the Company's shareholders of
each director of the Company first elected
during such period was approved by a vote of
at least two-thirds of the directors of the
Company then still in office who were
directors of the Company at the beginning of
such period.
16. MISCELLANEOUS:
a. Employee Representations: The Employee represents and
warrants to the Company that there is no restriction or limitation, by reason of
any agreement or otherwise, upon the Employee's right or ability to enter into
this Agreement and fulfill his obligations under this Agreement.
b. Termination of Employment Agreements: All other
agreements between the Company and Employee with respect to employment shall be
terminated upon execution of this Agreement.
c. Interest on Amounts Due: In the event any amount due
either to Employee or the Company under this Agreement is not
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paid when due, it shall thereafter bear interest at the rate equivalent to the
Citibank, N.A., New York, New York (or its successor), prime rate as it shall
vary from time to time over the period until paid. Such interest shall be
compounded on a monthly basis.
d. Key Man Insurance: Employee expressly acknowledges that
the Company may obtain Key Man insurance coverage with respect to Employee and
Employee shall cooperate fully in order for the Company to obtain such
insurance.
e. Amendment: This Agreement shall not be changed or
terminated except in writing signed by both parties.
f. Successors and Assigns: The terms and provisions of this
Agreement shall inure to the benefit of the personal representatives, heirs and
legatees of the Employee, and shall be binding upon and inure to the benefit of
any successors or assigns of the Company. This Agreement shall survive any
merger or voluntary or involuntary dissolution, and shall bind any person
acquiring the Company's assets in such event.
g. Notices: Any notices or other communications required or
permitted to be given under this Agreement shall be deemed given on the day when
delivered in person, on the next day after being sent via overnight mail (such
as Federal Express), or on the third business day after the day on which mailed
by first
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class mail from within the United States of America addressed to the party
receiving the communication at the principal office of the Company, or such
other address as the party receiving the communication shall have designated to
the other in writing.
h. Consents and Approvals: As to any paragraph of this Agreement
providing for the consent or approval of any party to this Agreement, such
provision shall be deemed to include the restriction that any such exercise of
approval or consent shall be reasonable and not unreasonably denied regardless
of whether such provision actually sets forth a specification that such an
approval or consent shall not be unreasonably denied.
i. Severability: If any provision of this Agreement is found to
be invalid or unenforceable, the remainder of this Agreement shall,
nevertheless, remain in full force and effect. If any provision is held invalid
or unenforceable with respect to particular circumstances, it shall nevertheless
remain in full force and effect in all other circumstances. If the provision
held invalid or substantially limited involves the compensation or benefits of
Employee, Employee shall have the option for thirty (30) days following the
final decision holding such provision to be invalid to terminate this Agreement
by written notice to the Company.
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j. Captions: Captions in this Agreement are merely to
facilitate references, and shall not affect the interpretation of any of
the provisions.
k. Choice of Forum: The parties agree that any proceeding arising
out of or relating to this Agreement shall be commenced in the Superior Court of
New Jersey, Essex County, and the parties hereby irrevocably consent to the
jurisdiction of such Court for such purposes. This Agreement shall be governed
by, and construed and interpreted, in accordance with the internal laws of the
State of New Jersey.
IN WITNESS WHEREOF, this Agreement has been duly executed at West
Orange, New Jersey, on the day and year first above written.
WORLDWIDE ENTERTAINMENT
& SPORTS CORP.
Dated:_______________________ By:_______________________________
Name:
Title:
EMPLOYEE
Dated:_______________________
__________________________________
Marc Roberts
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Exhibit 10.4
MANAGEMENT AGREEMENT
THIS AGREEMENT, entered into this 7th day of November 1995 by and between
Shannon Briggs, whose mailing address is 30 Stone Drive, West Orange , New
Jersey 07052 (hereinafter referred to as "Boxer"), and Worldwide Entertainment &
Sports Corp., a Delaware corporation, with offices at 33 Freeman Street, West
Orange, New Jersey 07052 (hereinafter referred to as "Manager"), for the
engagement of the Manager to provide boxer management services.
IN CONSIDERATION of this Agreement, the parties agree as follows:
1. SCOPE OF AGREEMENT
(a) Manager, during the Term of this Agreement (as hereinafter defined),
shall be the sole and exclusive worldwide personal manager to Boxer and shall
provide management services regarding all matters pertaining to Boxer's career
in all professional activities, including but not limited to the following:
professional boxing matches; personal appearances; stage, film, broadcast,
cablecast and other media appearances; and any use or exploitation of Boxer's
name, likeness or voice for commercial, advertising, endorsement, testimonial,
entertainment or other purposes (all of the foregoing are referred to
collectively as the "Fields").
(b) Manager shall counsel, confer with, represent, and advise Boxer in all
business negotiations and matters related to Boxer's career and pursuit of
opportunities in the Fields; shall supervise Boxer's engagements; shall consult
with and supervise relations with persons hiring Boxer to assure the proper use
of Boxer's services; shall present Boxer's talents so as to advance Boxer's
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career in Manager's best judgment; and shall be available for reasonable
consultation with Boxer to discuss Boxer's career. Manager shall be permitted to
appoint or engage any and all other persons, firms, or corporations which, in
Manager's discretion, are reasonably necessary or helpful to perform Manager's
management services hereunder.
(c) This Agreement shall not be construed to create a partnership between
Boxer and Manager. It is specifically understood that Manager is acting
hereunder as an independent contractor. Manager's services hereunder are not
exclusive and Manager shall at all times be free to perform the same or similar
services for others as well as to engage in any and all other business
activities whether or not the same shall be in direct competition with Boxer's
activities. Boxer acknowledges that he has been informed that Manager is engaged
in other businesses, and it is agreed that Manager may act in the same or
similar capacity to that set forth in this Agreement for other people.
(d) Boxer shall fight in professional boxing matches anywhere in the world
selected by Manager. Boxer shall fulfill any contract for a boxing match entered
into on his behalf by Manager.
(e) Boxer shall apply for and use his best efforts to obtain a license as a
boxer in all jurisdictions designated by the Manager.
(f) Boxer will not enter into any contract relating to any of the Fields
without the prior written consent of Manager. Boxer shall refer to Manager all
communications and requests, oral or written, for his services and appearances
in the Fields.
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(g) Boxer shall perform all contracts entered into by Manager on his behalf
in the Fields.
2. MANAGER'S SHARE OF INCOME
(a) Boxer acknowledges that, prior to the date hereof, Manager (including
Manager's affiliates) has expended in excess of $825,000 in furtherance of
Boxer's career; has provided for all of Boxer's living and training expenses and
accommodations; and has provided extraordinary financial assistance to the
furtherance of Boxer's career. Boxer acknowledges that the terms and conditions
of this Agreement are fair and reasonable in view of Manager's expertise, the
valuable assistance Manager has provided to Boxer prior to the date hereof, and
Manager's substantial financial assistance and investment in Boxer's career.
(b) As its compensation pursuant to this Agreement, Manager shall be
entitled to receive the following:
(i) twenty seven and one half (27 1/2%) percent of Boxer's Gross Income
from Boxer participating in boxing matches; and
(ii) twenty (20%) percent of Boxer's Gross Income from all of Boxer's other
(non-boxing) activities, including but not limited to personal
appearances; stage, film, broadcast, cablecast and other media
appearances; and any use or exploitation of Boxer's name, likeness or
voice for commercial, advertising, endorsement, testimonial,
entertainment or other purposes.
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(c) As used in this Agreement, "Gross Income" shall mean all income
received by Boxer or to any partnership, joint venture, corporate or other
entity which he owns or controls, directly, or indirectly, from any agreement
entered into by Boxer during and after the Term arising out of Boxer's
activities in the Fields as a result of or pursuant to contracts, transactions,
or employments initiated, entered into or negotiated during the Term and all
extensions and renewals of such contacts, transactions, or employments made at
any time. Without limitation to the foregoing, Gross Income shall presumptively
include income to the Boxer pursuant to any contacts, transactions or
employments pertaining or relating to the Fields.
(d) Any Gross Income that is deferred by Boxer so that it is received after
the Term of this Agreement, shall be treated, for purposes of Boxer's obligation
to Manager, as Gross Income.
(e) Manager may in its sole discretion elect from time-to-time to advance
monies to Boxer or on Boxer's behalf. The parties further agree that in the
event Manager, in its sole discretion, elects from time-to-time to defer taking
or receiving its full compensation from any Gross Income received by Boxer, the
amount of any compensation so deferred shall be treated as advances or loans
from Manager to Boxer. The parties further agree that Manager is entitled to
deduct and recoup the aggregate amount of said loans from Boxer's Gross Income.
3. TERM
(a) The term of this Agreement ("Term") shall consist of an initial period
commencing, upon the date of this Agreement and continuing for a period of five
(5) years ("Initial
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Period"), and such extensions as shall be effected pursuant to paragraph (b)
through (d) of this Section 3.
(b) The parties hereby agree that, commencing on the date of this Agreement
and each day thereafter unless and until either party gives written notice to
the other party that he does not wish to extend the Term of the Agreement, the
Term of this Agreement shall be automatically extended one additional day so as
to at all times unless and until such notice is given, maintain the
effectiveness of this Agreement for the maximum term of five years.
(c) The parties hereby agree that at such time as Boxer shall be ranked in
the top ten by any sanctioning body, governing body, agency or other
organization that ranks boxers (including but not limited to the WBA, WBC,
IBF,WBU or WBO), this Agreement shall automatically be renewed and extended for
an additional five (5) year term under all of the same terms and conditions as
set forth herein, without the necessity for any party to take any action or
conduct to effectuate such automatic renewal.
(d) The parties hereby agree that each time Boxer shall participate in a
world championship bout (whether as champion or challenger) where such bout is
sponsored or sanctioned by any organization which sponsors, governs, sanctions
or ranks professional boxers (including but not limited to the WBA, WBC, IBF,
WBU or WBO), this Agreement shall automatically be renewed and extended for an
additional five (5) year term under all of the same terms and conditions as set
forth herein, without the necessity for any party to take any action or conduct
to effectuate such automatic renewal.
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4. MANAGER'S POWER OF ATTORNEY
During the Term of this Agreement, Manager is hereby authorized and
empowered to act on Boxer's behalf to do the following:
(a) approve and permit any and all boxing matches, personal
appearances, performances, publicity and advertising;
(b) approve and permit the use of Boxer's name, photograph, voice
and/or likeness for purposes of advertising, and publicity and in the
promotion and advertising, of any and all reasonable products and
reasonable services;
(c) execute for Boxer in Boxer's name and/or on Boxer's behalf, any
and all agreements, documents and contracts for boxing matches and personal
performances.
For the purposes of this Agreement, Manager is hereby deemed approved as
Boxer's representative to render approval or consent for any action of the type
referred to in this Agreement where Boxer's approval or consent is necessary.
5. BOXER'S WARRANTIES AND REPRESENTATIONS Boxer warrants, represents and
agrees as follows:
(a) Boxer is not under any disability, restriction or prohibition,
either contractual or otherwise, with respect to Boxer's right to execute
this Agreement or to fully perform its terms and conditions;
(b) Boxer has the full right, power and authority to do business
hereunder, and Manager's activities on Boxer's behalf under this Agreement
will not infringe upon, violate or interfere with the rights, whether
statutory, or otherwise, of any one or more third parties;
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(c) Boxer shall devote himself to Boxer's career and do all things
necessary and desirable to promote its career and earnings therefrom. Boxer
agrees to participate in all necessary training and exercising necessary to
compete as a world class professional boxer.
6. MANAGER'S WARRANTIES AND REPRESENTATIONS Manager warrants, represents
and agrees that Manager is not under any disability, restriction or prohibition,
either contractual or otherwise, with respect to Manager's right to execute this
Agreement or to fully perform its terms and conditions.
7. ASSIGNMENT
Manager shall have the right to assign this Agreement to any person,
corporation or entity with which Manager is merged or which Manager now or
hereinafter owns, acquires or controls, in whole or in part, or in which Manager
acquires a controlling interest or which acquires a controlling, interest in the
assets of Manager, provided Marc Roberts is an officer, major shareholder and/or
other principal thereof at the time of assignment. Boxer shall not have the
right to assign this Agreement, or any of his rights hereunder, without
Manager's express prior written consent, except to any corporation formed and
wholly owned by owned by Boxer.
8. INDEMNIFICATION
Each party hereto hereby agrees to and does indemnify, save and hold the
other harmless from all loss, damage and expenses (including, reasonable
attorney's fees) arising out of or connected with any claim by any third party
which shall be inconsistent with any agreement, warranty or representation made
by Boxer or Manager in this Agreement; provided same has been reduced to a final
adverse judgment or settled with the prior written consent of the indemnifying
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party, such consent not to be unreasonably withheld. Each party agrees to
reimburse the other, on demand, for any payment made at any time after the date
hereof with respect to any liability to which the foregoing indemnity applies.
Boxer acknowledges and agrees that Manager's right to represent Boxer as Boxer's
exclusive personal manager and Boxer's obligation to solely and exclusively use
Manager in such capacity are unique, irreplaceable and extraordinary rights and
obligations and that any breach or threatened breach by Boxer thereof shall
cause Manager immediate and unavoidable damages which cannot be adequately
compensated for by money judgment. Accordingly, Boxer agrees that, in addition
to all other forms of relief and all other remedies which may be available to
Manager in the event of such a breach or threatened breach by Boxer, Manager
shall be entitled to seek temporary, preliminary and permanent injunctive relief
to prevent Boxer from performing in violation of this Agreement, and Boxer
agrees that Manager shall not be obligated to secure any bond or other security
in connection with Manager's application for such relief.
9. CURE
In order to make specific and definite and/or to eliminate, if possible,
any controversy which may arise between the parties hereunder, Boxer agrees that
if at any time Boxer believes that the terms of this Agreement are not being,
fully and faithfully performed hereunder by Manager or that Manager has breached
any provision of this Agreement, Boxer will so advise Manager in writing by
registered or certified mail, return receipt requested, of the specific nature
of each and every claim, nonperformance or misfeasance, (a "Default Notice").
The Manager shall then have a period of thirty (30) days after receipt of the
Default Notice within which to cure such claimed
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breach (the "Cure Period"). During such Cure Period, no breach of any obligation
shall be deemed to be incurable. No breach of this Agreement by Manager shall be
asserted by Boxer or deemed to have occurred unless and until Manager has
received a Default Notice and failed by the end of the Cure Period to commence
curing the alleged breach or default. The parties hereby waive trial by jury in
any litigation arising between them, whether arising under this Agreement or
otherwise.
10.NOTICES
All notices pursuant to this Agreement shall be in writing and shall be
given by hand delivery, by registered or certified mail (prepaid), return
receipt requested, or facsimile at the respective addresses set forth below or
such other address or addresses as may be designated by party to the other. Such
notices shall be deemed given when delivered by hand or mailed except that a
notice of change of address shall be effective only from the date of its
receipt.
(a) All notices to Boxer shall be sent to Boxer at the following address
(b) All notices to Manager shall be sent to Manager at the following
address:
Worldwide Entertainment & Sports Corp.
33 Freeman Street
West Orange, New Jersey 07052
Facsimile No. 201-673-1330
With copies to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
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Facsimile No. 201-972-9487
Attention: Herbert F. Kozlov
11.ADDITIONAL PROVISIONS
(a) Agreement shall be governed by, and the validity, interpretation and
legal effect of this Agreement shall be construed in accordance with the laws of
the State of New Jersey without regard to principles of conflict of laws. In the
event that provision hereof shall be deemed invalid, such invalidity shall not
affect to validity of the remainder of this Agreement. The sole and exclusive
forum for any dispute arising hereunder shall be the State or Federal Courts
situated in New Jersey. The parties hereby irrevocably consent to the exclusive
jurisdiction and venue of such courts for such purposes. The parties irrevocably
waive trial by jury in any dispute between them arising pursuant to this
Agreement or otherwise.
(b) Manager is not required to make any loans or advances to Boxer or for
Boxer's account, except as expressly provided herein. Boxer shall repay Manager
promptly with respect to all loans made by Manager to Boxer, and Boxer hereby
authorizes Manager to deduct the amount of any such loans or advances from any
sums Manager may receive for Boxer's account. Upon Manager's request, Boxer
shall execute one or more promissory notes to evidence such loans and advances.
The authority hereby granted to Manager in this Agreement is coupled with an
interest and shall be irrevocable.
(c) Boxer hereby irrevocably appoints Manager as Boxer's true and lawful
attorney-in-fact to endorse, deposit, sign, make, execute and/or deliver all
such checks, drafts,
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notes and bills of exchange and grants to Manager full power and authority to
perform every act requisite to the endorsement, deposit, signing, making,
execution and/or delivery of said instruments. The foregoing language is
intended to create an agency couples with an interest, and the foregoing agency
shall be irrevocable during the Term of this Agreement and any replacements,
renewals, or substitutions thereof. The authority hereby granted to Manager is
coupled with an interest and shall be irrevocable.
(d) Each of the parties hereto warrants and represents that he is executing
this Agreement of his own free will and that in executing this Agreement, he has
relied solely upon his own judgment, belief and knowledge and such advice and
recommendations of any independently selected and retained advisors concerning
the nature, extent and duration of their rights and claims, and that, in
executing this Agreement, he has not been influenced by any representations or
statements made by the other party not specifically set forth herein.
(e) Although Manager may discuss with Boxer contacts between Boxer and
third parties, and/or possible tax, accounting and investment concerns of Boxer,
it is understood that Manager is not rendering, legal, tax, accounting, or
investment advice hereunder, and that any such advice desired by Boxer will be
obtained by Boxer at Boxer's expense solely from professionals offering such
advice.
(f) A waiver of either party of a breach of any provision herein shall not
be deemed a waiver of any subsequent breach nor a permanent modification of such
provision. Nothing contained this Agreement shall be so construed as to require
the commission of any act contrary to law. Wherever there may be valid and
enforceable regulations contrary to the
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provisions of this Agreement, such regulations shall prevail, but in such an
event the provisions of the Agreement affected shall be curtailed and limited
only to the extent necessary to bring same within legal requirements, and the
non-compliance with such regulations shall not void or otherwise affect the
general enforceability of this Agreement.
(g) Boxer has acknowledged that Manager has advised him that he is not a
"talent agent" and that he is not licensed as a "talent agent" under the Labor
Code of the State of California, or as a theatrical employment agency under the
General Business Law of the State of New York, or under the laws of the State of
New Jersey or elsewhere and that Manager is not acting under this contract as a
"talent agent" or a "theatrical employment agency" or in any similar capacity.
The parties acknowledge that the main purpose of this Agreement is for Manager
to manager Boxer's ring (boxing) career, and the other fields Manager is to
oversee are incidental thereto.
(h) No modification, alteration or extension of the term of this Agreement
shall be valid unless the same is made in writing and signed by the parties
hereto. Each party agrees to execute such modifications to this Agreement and to
execute such additional agreements and to take such further action as necessary
to cause this Agreement to comply with the rules and regulations governing
boxing in the State of New Jersey. At Manager's request, Boxer agrees to execute
boxer-manager agreements on terms no less favorable to Manager than the terms of
this Agreement in and accordance with the laws, rules and regulations of the
State of New York, Nevada, New Jersey or any other state Manager designates.
IN WITNESS WHEREOF, of parties thereto have affixed their signatures the
day and year first above written.
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_____________________________
BOXER
WORLDWIDE ENTERTAINMENT &
SPORTS CORP.
_____________________________
MANAGER
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STATE OF NEW JERSEY )
SS.
COUNTY OF )
On this day of , 1995, before me, the undersigned, personally
appeared SHANNON BRIGGS, personally known to me to be the person named in the
foregoing instrument, who being by me duly sworn did depose and say that he
signed, sealed and delivered the within instrument as his voluntary act
and deed.
____________________________
NOTARY PUBLIC
STATE OF NEW JERSEY )
SS.
COUNTY OF )
On this day of , 1995, before me, the undersigned, personally
appeared MARC ROBERTS, personally known to me, who by me duly sworn, did depose
and say that deponent resides at 33 Freeman Street, West Orange, New Jersey
07062, that deponent is the President of WORLDWIDE ENTERTAINMENT AND BOXING
CORP., the corporation described in, and which executed the foregoing
instrument, that deponent knows the seal of the corporation, that the seal
affixed to the instrument is the corporate seal, that it was affixed by order of
the Board of Directors of the corporation, and that deponent signed deponent's
name by like order.
____________________________
NOTARY PUBLIC
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Exhibit 10.5
MANAGEMENT AGREEMENT
THIS AGREEMENT, entered into this 20th day of February, 1996 by and between
Tracy Harris Patterson, whose mailing address is P.O. Box 1282 Highland, New
York 12509 (hereinafter referred to as "Boxer"), and Worldwide Entertainment &
Sports Corp., a Delaware corporation, which has an office at 33 Freeman Street,
West Orange, New Jersey 07052 hereinafter referred to as "Manager"), for the
engagement of the Manager to provide boxer management services.
IN CONSIDERATION of this Agreement, the parties agree as follows:
1. SCOPE OF AGREEMENT
(a) Manager, during the Term of this Agreement (as hereinafter defined),
shall be the sole and exclusive worldwide personal manager to Boxer and shall
provide management services regarding all matters pertaining to Boxer's career
in all professional activities, including but not limited to the following:
professional boxing matches; personal appearances; stage, film, broadcast or
other media appearances; and any use or exploitation of Boxer's name, likeness
or voice for commercial, endorsement, testimonial, entertainment or other
purposes (all of the foregoing are referred to collectively as the "Fields").
(b) Manager shall counsel, confer with, represent, and advise Boxer in all
business negotiations and matters related to Boxer's career and pursuit of
opportunities in the Fields; shall supervise Boxer's engagements; shall consult
with and supervise relations with persons hiring Boxer to assure the proper use
of Boxer's services; shall present Boxer's talents so as to
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advance Boxer's career in Manager's best judgment; and shall be available for
reasonable consultation with Boxer to discuss Boxer's career. Manager shall be
permitted to appoint or engage any and all other persons, firms, or corporations
which, in Manager's discretion, are reasonably necessary or helpful to perform
Manager's management services hereunder.
(c) This Agreement shall not be construed to create a partnership between
Boxer and Manager. It is specifically understood that Manager is acting
hereunder as an independent contractor. Manager's services hereunder are not
exclusive and Manager shall at all times be free to perform the same or similar
services for others as well as to engage in any and all other business
activities whether or not the same shall be in direct competition with Boxer's
activities. Boxer acknowledges that he has been informed that Manager is engaged
in other businesses, and it is agreed that Manager may act in the same or
similar capacity to that set forth in this Agreement for other people.
(d) Boxer shall fight in professional boxing matches anywhere in the world
selected by Manager. Boxer shall fulfill any contract for a boxing match entered
into on his behalf by Manager.
(e) Boxer shall apply for and use his best efforts to obtain a license as a
boxer in all jurisdictions designated by the Manager.
(f) Boxer will not enter into any contract relating to any of the Fields
without the prior written consent of Manager. Boxer shall refer to Manager all
communications and requests, oral or written, for his services and appearances
in the Fields.
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(g) Boxer shall perform all contracts entered into by Manager on his behalf
in the Fields.
2. MANAGER'S SHARE OF INCOME
(a) Manager shall be entitled to receive fifteen (15%) Percent of Boxer's
Gross Income during the Term of this Agreement.
(b) As used in this Agreement, "Gross Income" shall mean all income
received by Boxer or to any partnership, joint venture, corporate or other
entity which he owns or controls, directly, or indirectly, or is earned by
Boxer, to or which Boxer becomes entitled, from any agreement entered into by
Boxer during and after the Term arising out of Boxer's activities in the Fields
as a result of or pursuant to contracts, transactions, or employments initiated,
entered into or negotiated during the Term and all extensions and renewals of
such contacts, transactions, or employments made at any time. Without limitation
to the foregoing, Gross Income shall presumptively include income to the Boxer
pursuant to any contacts, transactions or employments.
(c) Any Gross Income that is deferred by Boxer so that it is received after
the Term of this Agreement, or is otherwise earned during the Term of this
Agreement and received thereafter shall be treated, for purposes of Boxer's
obligation to Manger, as Gross Income.
3. TERM
(a) The term of this Agreement ("Term") shall consist of an initial period
commencing, upon the date of this Agreement and continuing for a period of five
(5) years ("Initial
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Period"), and such extensions as shall be effected pursuant to paragraph (b)
through (d) of this Section 3.
(b) The parties hereby agree that, commencing on the date of this Agreement
and each day thereafter unless and until either party gives written notice to
the other party that he does not wish to extend the Term of the Agreement, the
Term of this Agreement shall be automatically extended one additional day so as
to at all times unless and until such notice is given, maintain the
effectiveness of this Agreement for the maximum term of five years.
(c) The parties hereby agree that at such time as Boxer shall be ranked in
the top ten by any sanctioning body, governing body, agency or other
organization that ranks boxers (including but not limited to the WBA, WBC, IBF
or WBO), this Agreement shall automatically be renewed and extended for an
additional five (5) year term under all of the same terms and conditions as set
forth herein, without the necessity for any party to take any action or conduct
to effectuate such automatic renewal.
(d) The parties hereby agree that each time Boxer shall participate in a
world championship bout (whether as defender or challenger) where such bout is
sponsored or sanctioned by any organization which sponsors, governs, sanctions
or ranks professional boxers (including but not limited to the WBA, WBC, IBF or
WBO), this Agreement shall automatically be renewed and extended for an
additional five (5) year term under all of the same terms and conditions as set
forth herein, without the necessity for any party to take any action or conduct
to effectuate such automatic renewal.
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4. MANAGER'S POWER OF ATTORNEY
During the Term of this Agreement, Manager is hereby authorized and
empowered to act on Boxer's behalf to do the following:
(a) approve and permit any and all boxing matches, personal
appearances, performances, publicity and advertising;
(b) approve and permit the use of Boxer's name, photograph, voice
and/or likeness for purposes of advertising, and publicity and in the
promotion and advertising, of any and all reasonable products and
reasonable services;
(c) execute for Boxer in Boxer's name and/or on Boxer's behalf, any
and all agreements, documents and contracts for boxing matches and personal
performances.
For the purposes of this Agreement, Manager is hereby deemed approved as
Boxer's representative to render approval or consent for any action of the type
referred to in this Agreement where Boxer's approval or consent is necessary.
5. BOXER'S WARRANTIES AND REPRESENTATIONS Boxer warrants, represents and
agrees as follows:
(a) Boxer is not under any disability, restriction or prohibition,
either contractual or otherwise, with respect to Boxer's right to execute
this Agreement or to fully perform its terms and conditions;
(b) Boxer has the full right, power and authority to do business
hereunder, and Manager's activities on Boxer's behalf under this Agreement
will not infringe upon, violate or interfere with the rights, whether
statutory, or otherwise, of any one or more third parties;
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(c) Boxer shall devote himself to Boxer's career and do all things
necessary and desirable to promote its career and earnings therefrom. Boxer
agrees to participate in all necessary training and exercising necessary to
compete as a world class professional boxer.
6. MANAGER'S WARRANTIES AND REPRESENTATIONS
(a) Manager warrants, represents and agrees that Manager is not under any
disability, restriction or prohibition, either contractual or otherwise, with
respect to Manager's right to execute this Agreement or to fully perform its
terms and conditions.
(b) Manager agrees to pay up to $3,000 of the expenses incurred by Boxer
for lodging and meals at the Turtle Brook Inn, which were incurred by Boxer
while he was training for a bout scheduled to be conducted on December 15, 1995.
(c) Manager further agrees to pay on behalf of Boxer up to $593 per month
for the balance of the remaining 36-month automobile lease currently in effect.
Manager further agrees to pay up to $1,500 per annum of the automobile insurance
expenses associated with such lease. Upon the expiration of the current and
existing automobile lease, Manager's obligations pursuant to this Section 6(c)
shall terminate and expire.
7. ASSIGNMENT
Manager shall have the right to assign this Agreement to any person,
corporation or entity with which Manager is merged or which Manager now or
hereinafter owns, acquires or controls, in whole or in part, or in which Manager
acquires a controlling interest or which acquires a controlling, interest in the
assets of Manager, provided Marc Roberts is an officer, major
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shareholder and/or other principal thereof at the time of assignment. Boxer
shall not have the right to assign this Agreement, or any of his rights
hereunder, without Manager's express prior written consent, except to any
corporation formed and wholly owned by owned by Boxer.
8. INDEMNIFICATION
Each party hereto hereby agrees to and does indemnify, save and hold the
other harmless from all loss, damage and expenses (including, reasonable
attorney's fees) arising out of or connected with any claim by any third party
which shall be inconsistent with any agreement, warranty or representation made
by Boxer or Manager in this Agreement; provided same has been reduced to a final
adverse judgment or settled with the prior written consent of the indemnifying
party, such consent not to be unreasonably withheld. Each party agrees to
reimburse the other, on demand, for any payment made at any time after the date
hereof with respect to any liability to which the foregoing indemnity applies.
Boxer acknowledges and agrees that Manager's right to represent Boxer as Boxer's
exclusive personal manager and Boxer's obligation to solely and exclusively use
Manager in such capacity are unique, irreplaceable and extraordinary rights and
obligations and that any breach or threatened breach by Boxer thereof shall
cause Manager immediate and unavoidable damages which cannot be adequately
compensated for by money judgment. Accordingly, Boxer agrees that, in addition
to all other forms of relief and all other remedies which may be available to
Manager in the event of such a breach or threatened breach by Boxer, Manager
shall be entitled to seek temporary, preliminary and permanent injunctive relief
to prevent Boxer from performing in violation of this Agreement,
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and Boxer agrees that Manager shall not be obligated to secure any bond or other
security in connection with Manager's application for such relief.
9. CURE
In order to make specific and definite and/or to eliminate, if possible,
any controversy which may arise between the parties hereunder, Boxer agrees that
if at any time Boxer believes that the terms of this Agreement are not being,
fully and faithfully performed hereunder by Manager or that Manager has breached
any provision of this Agreement, Boxer will so advise Manager in writing by
registered or certified mail, return receipt requested, of the specific nature
of each and every claim, nonperformance or misfeasance, (a "Default Notice").
The Manager shall then have a period of thirty (30) days after receipt of the
Default Notice within which to cure such claimed breach (the "Cure Period").
During such Cure Period, no breach of any obligation shall be deemed to be
incurable. No breach of this Agreement by Manager shall be asserted by Boxer or
deemed to have occurred unless and until Manager has received a Default Notice
and failed by the end of the Cure Period to commence curing the alleged breach
or default. The parties hereby waive trial by jury in any litigation arising
under this Agreement.
10.NOTICES
All notices pursuant to this Agreement shall be in writing and shall be
given by hand delivery, by registered or certified mail, return receipt
requested, or by telex or facsimile (prepaid) at the respective addresses set
forth below or such other address or addresses as may be
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designated by party to the other. Such notices shall be deemed given when
delivered by hand or mailed except that a notice of change of address shall be
effective only from the date of its receipt.
(a) All notices to Boxer shall be sent to Boxer at the following address:
(b) All notices to Manager shall be sent to Manager at the following
address:
Worldwide Entertainment & Sports Corp.
Attention: Marc Roberts
33 Freeman Street
West Orange, New Jersey 07052
With copies to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attention: Herbert F. Kozlov
11.ADDITIONAL PROVISIONS
(a) Agreement shall be governed by, and the validity, interpretation and
legal effect of this Agreement shall be construed in accordance with the laws of
the State of New Jersey without regard to principles of conflict of laws. In the
event that provision hereof shall be deemed invalid, such invalidity shall not
affect to validity of the remainder of this Agreement. The sole and exclusive
forum for any dispute arising hereunder shall be the State or Federal Courts
situated in New Jersey. The parties hereby irrevocably consent to the exclusive
jurisdiction and venue of such courts for such purposes.
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(b) Manager is not required to make any loans or advances to Boxer or for
Boxer's account, except as expressly provided herein. Boxer shall repay Manager
promptly with respect to all loans made by Manager to Boxer, and Boxer hereby
authorizes Manager to deduct the amount of any such loans or advances from any
sums Manager may receive for Boxer's account. Upon Manager's request, Boxer
shall execute one or more promissory notes to evidence such loans and advances.
The authority hereby granted to Manager in this Agreement is coupled with an
interest and shall be irrevocable.
(c) Boxer hereby irrevocably appoints Manager as Boxer's true and lawful
attorney-in-fact to endorse, deposit, sign, make, execute and/or deliver all
such checks, drafts, notes and bills of exchange and grants to Manager full
power and authority to perform every act requisite to the endorsement, deposit,
signing, making, execution and/or delivery of said instruments. The foregoing
language is intended to create an agency couples with an interest, and the
foregoing agency shall be irrevocable during the Term of this Agreement and any
replacements, renewals, or substitutions thereof. The authority hereby granted
to Manager is coupled with an interest and shall be irrevocable.
(d) Each of the parties hereto warrants and represents that he is executing
this Agreement of his own free will and that in executing this Agreement, he has
relied solely upon his own judgment, belief and knowledge and such advice and
recommendations of any independently selected and retained advisors concerning
the nature, extent and duration of their
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rights and claims, and that, in executing this Agreement, he has not been
influenced by any representations or statements made by the other party not
specifically set forth herein.
(e) Although Manager may discuss with Boxer contacts between Boxer and
third parties, and/or possible tax, accounting and investment concerns of Boxer,
it is understood that Manager is not rendering, legal, tax, accounting, or
investment advice hereunder, and that any such advice desired by Boxer will be
obtained by Boxer at Boxer's expense solely from professionals offering such
advice.
(f) A waiver of either party of a breach of any provision herein shall not
be deemed a waiver of any subsequent breach nor a permanent modification of such
provision. Nothing contained this Agreement shall be so construed as to require
the commission of any act contrary to law. Wherever there may be valid and
enforceable regulations contrary to the provisions of this Agreement, such
regulations shall prevail, but in such an event the provisions of the Agreement
affected shall be curtailed and limited only to the extent necessary to bring
same within legal requirements, and the non-compliance with such regulations
shall not void or otherwise affect the general enforceability of this Agreement.
(g) Boxer has acknowledged that Manager has advised him that he is not a
"talent agent" and that he is not licensed as a "talent agent" under the Labor
Code of the State of California, or as a theatrical employment agency under the
General Business Law of the State of New York, or under the laws of the State of
New Jersey or elsewhere and that Manager is not acting under this contract as a
"talent agent" or a "theatrical employment agency" or in any similar
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capacity. The parties acknowledge that the main purpose of this Agreement is for
Manager to manager Boxer's ring (boxing) career, and the other fields Manager is
to oversee are incidental thereto.
(h) No modification, alteration or extension of the term of this Agreement
shall be valid unless the same is made in writing and signed by the parties
hereto. Each party agrees to execute such modifications to this Agreement and to
execute such additional agreements and to take such further action as necessary
to cause this Agreement to comply with the rules and regulations governing
boxing in the State of New York. At Manager's request, Boxer agrees to execute
boxer-manager agreements on terms no less favorable to Manager than the terms of
this Agreement in and accordance with the laws, rules and regulations of the
State of New York, Nevada, New Jersey or any other state Manager designates.
IN WITNESS WHEREOF, of parties thereto have affixed their signatures the
day and year first above written.
------------------------------------
BOXER
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By:__________________________________
MANAGER
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STATE OF NEW JERSEY )
SS.:
COUNTY OF )
On this day of , 1995, before me, the undersigned, personally
appeared Marc Roberts, personally known to me, who by me duly sworn, did depose
and say that deponent has an office at 33 Freeman Street, West Orange, New
Jersey 07052, that deponent is the Presdient of WORLDWIDE ENTERTAINMENT & SPORTS
CORP., the corporation described in, and which executed the foregoing
instrument, that deponent knows the seal of the corporation, that the seal
affixed to the instrument is the corporate seal, that it was affixed by order of
the Board of Directors of the corporation, and that deponent signed deponent's
name by like order.
____________________________
NOTARY PUBLIC
STATE OF NEW JERSEY )
SS.:
COUNTY OF )
On this day of December, 1995, before me, the undersigned, personally
appeared TRACY HARRIS PATTERSON, personally known to me to be the person named
in the foregoing instrument, who being by me duly sworn did depose and say that
he signed, sealed and delivered the within instrument as his voluntary act and
deed.
_____________________________
NOTARY PUBLIC
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Exhibit 10.6
MANAGEMENT AGREEMENT
THIS AGREEMENT, entered into this 8th day of January, 1996 by and between
Charles Murray, whose mailing address is 63 Eddy Street, Rochester, NY 14611
(hereinafter referred to as "Boxer"), and Worldwide Entertainment & Sports
Corp.,a Delaware corporation with a principal office at 29 Northfield Avenue,
West Orange, New Jersey 07052 hereinafter referred to as "Manager"), for the
engagement of the Manager to provide boxer management services.
IN CONSIDERATION of this Agreement, the parties agree as follows:
1. SCOPE OF AGREEMENT
(a) Manager, during the Term of this Agreement (as hereinafter defined),
shall be the sole and exclusive worldwide personal manager to Boxer and shall
provide management services regarding all matters pertaining to Boxer's career
in all professional activities, including but not limited to the following:
professional boxing matches; personal appearances; stage, film, broadcast or
other media appearances; and any use or exploitation of Boxer's name, likeness
or voice for commercial, endorsement, testimonial, entertainment or other
purposes (all of the foregoing are referred to collectively as the "Fields").
(b) Manager shall counsel, confer with, represent, and advise Boxer in all
business negotiations and matters related to Boxer's career and pursuit of
opportunities in the Fields; shall supervise Boxer's engagements; shall consult
with and supervise relations with persons hiring Boxer to assure the proper use
of Boxer's services; shall present Boxer's talents so as to advance Boxer's
career in Manager's best judgment; and shall be available for reasonable
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<PAGE>
consultation with Boxer to discuss Boxer's career. Manager shall be permitted to
appoint or engage any and all other persons, firms, or corporations which, in
Manager's discretion, are reasonably necessary or helpful to perform Manager's
management services hereunder.
(c) This Agreement shall not be construed to create a partnership between
Boxer and Manager. It is specifically understood that Manager is acting
hereunder as an independent contractor. Manager's services hereunder are not
exclusive and Manager shall at all times be free to perform the same or similar
services for others as well as to engage in any and all other business
activities whether or not the same shall be in direct competition with Boxer's
activities. Boxer acknowledges that he has been informed that Manager is engaged
in other businesses, and it is agreed that Manager may act in the same or
similar capacity to that set forth in this Agreement for other people.
(d) Boxer shall fight in professional boxing matches anywhere in the world
selected by Manager. Boxer shall fulfill any contract for a boxing match entered
into on his behalf by Manager.
(e) Boxer shall apply for and use his best efforts to obtain a license as a
boxer in all jurisdictions designated by the Manager.
(f) Boxer will not enter into any contract relating to any of the Fields
without the prior written consent of Manager. Boxer shall refer to Manager all
communications and requests, oral or written, for his services and appearances
in the Fields.
(g) Boxer shall perform all contracts entered into by Manager on his behalf
in the Fields.
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(h) In partial consideration for the Boxer's performance in full of his
obligations under this agreement, the Manager has agreed to issue to the Boxer
shares of common stock of the Manager. Concurrently herewith, the Boxer is
executing and delivering to the Manager an acknowledgment and representation
letter relating to such shares of stock, and the Manager is instructing the
transfer agent and registrar for the Manager to deliver to the Boxer a
certificate representing the shares.
2. MANAGER'S SHARE OF INCOME
(a) Manager shall be entitled to receive seventeen and one-half (17.5%)
Percent of Boxer's Gross Income during the Term of this Agreement.
(b) As used in this Agreement, "Gross Income" shall mean all income
received by Boxer or to any partnership, joint venture, corporate or other
entity which he owns or controls, directly, or indirectly, or is earned by
Boxer, to or which Boxer becomes entitled, from any agreement entered into by
Boxer during and after the Term arising out of Boxer's activities in the Fields
as a result of or pursuant to contracts, transactions, or employment initiated,
entered into or negotiated during the Term and all extensions and renewals of
such contacts, transactions, or employment made at any time. Without limitation
to the foregoing, Gross Income shall presumptively include income to the Boxer
pursuant to any contacts, transactions or employments.
(c) Any Gross Income that is deferred by Boxer so that it is
received after the Term of this Agreement, or is otherwise earned during the
Term of this Agreement and received thereafter shall be treated, for purposes of
Boxer's obligation to Manger, as Gross Income.
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3. TERM
(a) The term of this Agreement ("Term") shall consist of an initial period
commencing, upon the date of this Agreement and continuing for a period of five
(5) years ("Initial Period"), and such extensions as shall be effected pursuant
to paragraph (b) through (d) of this Section 3.
(b) The parties hereby agree that, commencing on the date of this Agreement
and each day thereafter unless and until either party gives written notice to
the other party that he does not wish to extend the Term of the Agreement, the
Term of this Agreement shall be automatically extended one additional day so as
to at all times unless and until such notice is given, maintain the
effectiveness of this Agreement for the maximum term of five years.
(c) The parties hereby agree that at such time as Boxer shall be ranked in
the top ten by any sanctioning body, governing body, agency or other
organization that ranks boxers (including but not limited to the WBA, WBC, IBF
or WBO), this Agreement shall automatically be renewed and extended for an
additional five (5) year term under all of the same terms and conditions as set
forth herein, without the necessity for any party to take any action or conduct
to effectuate such automatic renewal.
(d) The parties hereby agree that each time Boxer shall participate in a
world championship bout (whether as defender or challenger) where such bout is
sponsored or sanctioned by any organization which sponsors, governs, sanctions
or ranks professional boxers (including but not limited to the WBA, WBC, IBF or
WBO), this Agreement shall automaticallybe renewed and extended for an
additional five (5) year term under all of the same terms and
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conditions as set forth herein, without the necessity for any party to take any
action or conduct to effectuate such automatic renewal.
4. MANAGER'S POWER OF ATTORNEY
During the Term of this Agreement, Manager is hereby authorized and
empowered to act on Boxer's behalf to do the following:
(a) approve and permit any and all boxing matches, personal
appearances, performances, publicity and advertising;
(b) approve and permit the use of Boxer's name, photograph, voice
and/or likeness for purposes of advertising, and publicity and in the
promotion and advertising, of any and all reasonable products and
reasonable services;
(c) execute for Boxer in Boxer's name and/or on Boxer's behalf, any
and all agreements, documents and contracts for boxing matches and personal
performances.
For the purposes of this Agreement, Manager is hereby deemed approved as
Boxer's representative to render approval or consent for any action of the type
referred to in this Agreement where Boxer's approval or consent is necessary.
5. BOXER'S WARRANTIES AND REPRESENTATIONS
Boxer warrants, represents and agrees as follows:
(a) Boxer is not under any disability, restriction or prohibition,
either contractual or otherwise, with respect to Boxer's right to execute
this Agreement or to fully perform its terms and conditions;
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(b) Boxer has the full right, power and authority to do business
hereunder, and Manager's activities on Boxer's behalf under this Agreement
will not infringe upon, violate or interfere with the rights, whether
statutory, or otherwise, of any one or more third parties;
(c) Boxer shall devote himself to Boxer's career and do all things
necessary and desirable to promote its career and earnings therefrom. Boxer
agrees to participate in all necessary training and exercising necessary to
compete as a world class professional boxer.
6. MANAGER'S WARRANTIES AND REPRESENTATIONS
(a) Manager warrants, represents and agrees that Manager is not under any
disability, restriction or prohibition, either contractual or otherwise, with
respect to Manager's right to execute this Agreement or to fully perform its
terms and conditions.
7. ASSIGNMENT
Manager shall have the right to assign this Agreement to any person,
corporation or entity with which Manager is merged or which Manager now or
hereinafter owns, acquires or controls, in whole or in part, or in which Manager
acquires a controlling interest or which acquires a controlling, interest in the
assets of Manager, provided Manager is an officer, major shareholder and/or
other principal thereof at the time of assignment. Boxer shall not have the
right to assign this Agreement, or any of his rights hereunder, without
Manager's express prior written consent, except to any corporation formed and
wholly owned by owned by Boxer.
8. INDEMNIFICATION
Each party hereto hereby agrees to and does indemnify, save and hold the
other
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harmless from all loss, damage and expenses (including, reasonable attorney's
fees) arising out of or connected with any claim by any third party which shall
be inconsistent with any agreement, warranty or representation made by Boxer or
Manager in this Agreement; provided same has been reduced to a final adverse
judgment or settled with the prior written consent of the indemnifying party,
such consent not to be unreasonably withheld. Each party agrees to reimburse the
other, on demand, for any payment made at any time after the date hereof with
respect to any liability to which the foregoing indemnity applies. Boxer
acknowledges and agrees that Manager's right to represent Boxer as Boxer's
exclusive personal manager and Boxer's obligation to solely and exclusively use
Manager in such capacity are unique, irreplaceable and extraordinary rights and
obligations and that any breach or threatened breach by Boxer thereof shall
cause Manager immediate and unavoidable damages which cannot be adequately
compensated for by money judgment. Accordingly, Boxer agrees that, in addition
to all other forms of relief and all other remedies which may be available to
Manager in the event of such a breach or threatened breach by Boxer, Manager
shall be entitled to seek temporary, preliminary and permanent injunctive relief
to prevent Boxer from performing in violation of this Agreement, and Boxer
agrees that Manager shall not be obligated to secure any bond or other security
in connection with Manager's application for such relief.
9. CURE
In order to make specific and definite and/or to eliminate, if possible,
any controversy which may arise between the parties hereunder, Boxer agrees that
if at any time Boxer believes
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that the terms of this Agreement are not being, fully and faithfully performed
hereunder by Manager or that Manager has breached any provision of this
Agreement, Boxer will so advise Manager in writing by registered or certified
mail, return receipt requested, of the specific nature of each and every claim,
nonperformance or misfeasance, (a "Default Notice"). The Manager shall then have
a period of thirty (30) days after receipt of the Default Notice within which to
cure such claimed breach (the "Cure Period"). During such Cure Period, no breach
of any obligation shall be deemed to be incurable. No breach of this Agreement
by Manager shall be asserted by Boxer or deemed to have occurred unless and
until Manager has received a Default Notice and failed by the end of the Cure
Period to commence curing the alleged breach or default. The parties hereby
waive trial by jury in any litigation arising under this Agreement.
10.NOTICES
All notices pursuant to this Agreement shall be in writing and shall be
given by hand delivery, by registered or certified mail, return receipt
requested, or by telex or facsimile (prepaid) at the respective addresses set
forth below or such other address or addresses as may be designated by one party
to the other. Such notices shall be deemed given when delivered by hand or
mailed except that a notice of change of address shall be effective only from
the date of its receipt.
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(a) All notices to Boxer shall be sent to Boxer at the following address:
(b) All notices to Manager shall be sent to Manager at the following
address:
Worldwide Entertainment & Sports Corp.
attn: Marc Roberts
33 Freeman Street
West Orange, New Jersey 07052
With copies to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attention: Herbert F. Kozlov
11. ADDITIONAL PROVISIONS
(a) Agreement shall be governed by, and the validity, interpretation and
legal effect of this Agreement shall be construed in accordance with the laws of
the State of New Jersey without regard to principles of conflict of laws. In the
event that provision hereof shall be deemed invalid, such invalidity shall not
affect to validity of the remainder of this Agreement. The sole and exclusive
forum for any dispute arising hereunder shall be the State or Federal Courts
situated in New Jersey. The parties hereby irrevocably consent to the exclusive
jurisdiction and venue of such courts for such purposes.
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(b) Manager is not required to make any loans or advances to Boxer or for
Boxer's account, except as expressly provided herein. Boxer shall repay Manager
promptly with respect to all loans made by Manager to Boxer, and Boxer hereby
authorizes Manager to deduct the amount of any such loans or advances from any
sums Manager may receive for Boxer's account. Upon Manager's request, Boxer
shall execute one or more promissory notes to evidence such loans and advances.
The authority hereby granted to Manager in this Agreement is coupled with an
interest and shall be irrevocable.
(c) Boxer hereby irrevocably appoints Manager as Boxer's true and lawful
attorney-in-fact to endorse, deposit, sign, make, execute and/or deliver all
such checks, drafts, notes and bills of exchange and grants to Manager full
power and authority to perform every act requisite to the endorsement, deposit,
signing, making, execution and/or delivery of said instruments. The foregoing
language is intended to create an agency coupled with an interest, and the
foregoing agency shall be irrevocable during the Term of this Agreement and any
replacements, renewals, or substitutions thereof. The authority hereby granted
to Manager is coupled with an interest and shall be irrevocable.
(d) Each of the parties hereto warrants and represents that he is executing
this Agreement of his own free will and that in executing this Agreement, he has
relied solely uponhis own judgment, belief and knowledge and such advice and
recommendations of any independently selected and retained advisors concerning
the nature, extent and duration of their
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rights and claims, and that, in executing this Agreement, he has not been
influenced by any representations or statements made by the other party not
specifically set forth herein.
(e) Although Manager may discuss with Boxer contacts between Boxer and
third parties, and/or possible tax, accounting and investment concerns of Boxer,
it is understood that Manager is not rendering, legal, tax, accounting, or
investment advice hereunder, and that any such advice desired by Boxer will be
obtained by Boxer at Boxer's expense solely from professionals offering such
advice.
(f) A waiver of either party of a breach of any provision herein shall not
be deemed a waiver of any subsequent breach nor a permanent modification of such
provision. Nothing contained in this Agreement shall be so construed as to
require the commission of any act contrary to law. Wherever there may be valid
and enforceable regulations contrary to the provisions of this Agreement, such
regulations shall prevail, but in such an event the provisions of the Agreement
affected shall be curtailed and limited only to the extent necessary to bring
same within legal requirements, and the non-compliance with such regulations
shall not void or otherwise affect the general enforceability of this Agreement.
(g) Boxer has acknowledged that Manager has advised him that he is not a
"talent agent" and that he is not licensed as a "talent agent" under the Labor
Code of the State of California, or as a theatrical employment agency under the
General Business Law of the State ofNew York, or under the laws of the State of
New Jersey or elsewhere and that Manager is not acting under this contract as a
"talent agent" or a "theatrical employment agency" or in any similar
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capacity. The parties acknowledge that the main purpose of this Agreement is for
Manager to manager Boxer's ring (boxing) career, and the other fields Manager is
to oversee are incidental thereto.
(h) No modification, alteration or extension of the term of this Agreement
shall be valid unless the same is made in writing and signed by the parties
hereto. Each party agrees to execute such modifications to this Agreement and to
execute such additional agreements and to take such further action as necessary
to cause this Agreement to comply with the rules and regulations governing
boxing in the State of New York. At Manager's request, Boxer agrees to execute
boxer-manager agreements on terms no less favorable to Manager than the terms of
this Agreement in and accordance with the laws, rules and regulations of the
State of New York, Nevada, New Jersey or any other state Manager designates.
IN WITNESS WHEREOF, of parties hereto have affixed their signatures the day
and year first above written.
____________________________
Charles Murray
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By:____________________________
Marc Roberts
President
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<PAGE>
STATE OF NEW JERSEY )
SS.:
COUNTY OF )
On this day of , , before me, the undersigned, personally
appeared , personally known to me to be the person named in the foregoing
being by me duly sworn did depose and say that he signed, sealed and delivered
instrument, who being by me duly sworn did depose and say that he signed, sealed
and delivered the within instrument as his voluntary act and deed.
_____________________________
NOTARY PUBLIC
STATE OF NEW JERSEY )
SS.:
COUNTY OF )
On this day of , , before me, the undersigned, personally
appeared , personally known to me to be the person named in the foregoing
being by me duly sworn did depose and say that he signed, sealed and delivered
instrument, who being by me duly sworn did depose and say that he signed, sealed
and delivered the within instrument as his voluntary act and deed.
____________________________
NOTARY PUBLIC
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<PAGE>
Exhibit 10.7
MANAGEMENT AGREEMENT
THIS AGREEMENT, entered into this 9th day of April, 1996 by and between Ray
Mercer, whose mailing address is 607 Iverleigh Drive (hereinafter referred to as
"Boxer"), and Worldwide Entertainment & Sports Corp., a Delaware corporation
whose principal office is located at 29 Northfield Avenue, West Orange, New
Jersey 07052 hereinafter referred to as "Manager"), for the engagement of the
Manager to provide boxer management services.
IN CONSIDERATION of this Agreement, the parties agree as follows:
1. SCOPE OF AGREEMENT
(a) Manager, during the Term of this Agreement (as hereinafter defined),
shall be the sole and exclusive worldwide personal manager to Boxer and shall
provide management services regarding all matters pertaining to Boxer's career
in all professional activities, including but not limited to the following:
professional boxing matches; personal appearances; stage, film, broadcast or
other media appearances; and any use or exploitation of Boxer's name, likeness
or voice for commercial, endorsement, testimonial, entertainment or other
purposes (all of the foregoing are referred to collectively as the "Fields").
(b) Manager shall counsel, confer with, represent, and advise Boxer in all
business negotiations and matters related to Boxer's career and pursuit of
opportunities in the Fields; shall supervise Boxer's engagements; shall consult
with and supervise relations with persons hiring Boxer to assure the proper use
of Boxer's services; shall present Boxer's talents so as to advance Boxer's
career in Manager's best judgment; and shall be available for reasonable
consultation with Boxer to discuss Boxer's career. Manager shall be permitted to
appoint or
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engage any and all other persons, firms, or corporations which, in Manager's
discretion, are reasonably necessary or helpful to perform Manager's management
services hereunder.
(c) This Agreement shall not be construed to create a partnership between
Boxer and Manager. It is specifically understood that Manager is acting
hereunder as an independent contractor. Manager's services hereunder are not
exclusive and Manager shall at all times be free to perform the same or similar
services for others as well as to engage in any and all other business
activities whether or not the same shall be in direct competition with Boxer's
activities. Boxer acknowledges that he has been informed that Manager is engaged
in other businesses, and it is agreed that Manager may act in the same or
similar capacity to that set forth in this Agreement for other people.
(d) Boxer shall fight in professional boxing matches anywhere in the world
selected by Manager. Boxer shall fulfill any contract for a boxing match entered
into on his behalf by Manager.
(e) Boxer shall apply for and use his best efforts to obtain a license as a
boxer in all jurisdictions designated by the Manager.
(f) Boxer will not enter into any contract relating to any of the Fields
without the prior written consent of Manager. Boxer shall refer to Manager all
communications and requests, oral or written, for his services and appearances
in the Fields.
(g) Boxer shall perform all contracts entered into by Manager on his behalf
in the Fields.
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(h) In partial consideration for the Boxer's performance in full of his
obligations under this agreement, the Manager has agreed to issue to the Boxer
shares of common stock of the Manager. Concurrently herewith, the Boxer is
executing and delivering to the Manager an acknowledgment and representation
letter relating to such shares of stock, and the Manager is instructing the
transfer agent and registrar for the Manager to deliver to the Boxer a
certificate representing the shares.
2. MANAGER'S SHARE OF INCOME
(a) Manager shall be entitled to receive twenty (20%) Percent of Boxer's
Gross Income during the Term of this Agreement.
(b) As used in this Agreement, "Gross Income" shall mean all income
received by Boxer or to any partnership, joint venture, corporate or other
entity which he owns or controls, directly, or indirectly, or is earned by
Boxer, to or which Boxer becomes entitled, from any agreement entered into by
Boxer during and after the Term arising out of Boxer's activities in the Fields
as a result of or pursuant to contracts, transactions, or employment initiated,
entered into or negotiated during the Term and all extensions and renewals of
such contacts, transactions, or employment made at any time. Without limitation
to the foregoing, Gross Income shall presumptively include income to the Boxer
pursuant to any contacts, transactions or employments.
(c) Any Gross Income that is deferred by Boxer so that it is received after
the Term of this Agreement, or is otherwise earned during the Term of this
Agreement and received thereafter shall be treated, for purposes of Boxer's
obligation to Manger, as Gross Income.
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3. TERM
(a) The term of this Agreement ("Term") shall consist of an initial period
commencing, upon the date of this Agreement and continuing for a period of five
(5) years ("Initial Period"), and such extensions as shall be effected pursuant
to paragraph (b) through (d) of this Section 3.
(b) The parties hereby agree that, commencing on the date of this Agreement
and each day thereafter unless and until either party gives written notice to
the other party that he does not wish to extend the Term of the Agreement, the
Term of this Agreement shall be automatically extended one additional day so as
to at all times unless and until such notice is given, maintain the
effectiveness of this Agreement for the maximum term of five years.
(c) The parties hereby agree that at such time as Boxer shall be ranked in
the top ten by any sanctioning body, governing body, agency or other
organization that ranks boxers (including but not limited to the WBA, WBC, IBF
or WBO), this Agreement shall automatically be renewed and extended for an
additional five (5) year term under all of the same terms and conditions as set
forth herein, without the necessity for any party to take any action or conduct
to effectuate such automatic renewal.
(d) The parties hereby agree that each time Boxer shall participate in a
world championship bout (whether as defender or challenger) where such bout is
sponsored or sanctioned by any organization which sponsors, governs, sanctions
or ranks professional boxers (including but not limited to the WBA, WBC, IBF or
WBO), this Agreement shall automatically be renewed and extended for an
additional five (5) year term under all of the same terms and
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conditions as set forth herein, without the necessity for any party to take any
action or conduct to effectuate such automatic renewal.
4. MANAGER'S POWER OF ATTORNEY
During the Term of this Agreement, Manager is hereby authorized and
empowered to act on Boxer's behalf to do the following:
(a) approve and permit any and all boxing matches, personal appearances,
performances, publicity and advertising;
(b) approve and permit the use of Boxer's name, photograph, voice and/or
likeness for purposes of advertising, and publicity and in the promotion and
advertising, of any and all reasonable products and reasonable services;
(c) execute for Boxer in Boxer's name and/or on Boxer's behalf, any and all
agreements, documents and contracts for boxing matches and personal
performances.
For the purposes of this Agreement, Manager is hereby deemed approved as
Boxer's representative to render approval or consent for any action of the type
referred to in this Agreement where Boxer's approval or consent is necessary.
5. BOXER'S WARRANTIES AND REPRESENTATIONS
Boxer warrants, represents and agrees as follows:
(a) Boxer is not under any disability, restriction or prohibition, either
contractual or otherwise, with respect to Boxer's right to execute this
Agreement or to fully perform its terms and conditions;
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(b) Boxer has the full right, power and authority to do business hereunder,
and Manager's activities on Boxer's behalf under this Agreement will not
infringe upon, violate or interfere with the rights, whether statutory, or
otherwise, of any one or more third parties;
(c) Boxer shall devote himself to Boxer's career and do all things
necessary and desirable to promote its career and earnings therefrom. Boxer
agrees to participate in all necessary training and exercising necessary to
compete as a world class professional boxer.
6. MANAGER'S WARRANTIES AND REPRESENTATIONS
(a) Manager warrants, represents and agrees that Manager is not under any
disability, restriction or prohibition, either contractual or otherwise, with
respect to Manager's right to execute this Agreement or to fully perform its
terms and conditions.
7. ASSIGNMENT
Manager shall have the right to assign this Agreement to any person,
corporation or entity with which Manager is merged or which Manager now or
hereinafter owns, acquires or controls, in whole or in part, or in which Manager
acquires a controlling interest or which acquires a controlling, interest in the
assets of Manager, provided Manager is an officer, major shareholder and/or
other principal thereof at the time of assignment. Boxer shall not have the
right to assign this Agreement, or any of his rights hereunder, without
Manager's express prior written consent, except to any corporation formed and
wholly owned by owned by Boxer.
8. INDEMNIFICATION
Each party hereto hereby agrees to and does indemnify, save and hold the
other
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harmless from all loss, damage and expenses (including, reasonable attorney's
fees) arising out of or connected with any claim by any third party which shall
be inconsistent with any agreement, warranty or representation made by Boxer or
Manager in this Agreement; provided same has been reduced to a final adverse
judgment or settled with the prior written consent of the indemnifying party,
such consent not to be unreasonably withheld. Each party agrees to reimburse the
other, on demand, for any payment made at any time after the date hereof with
respect to any liability to which the foregoing indemnity applies. Boxer
acknowledges and agrees that Manager's right to represent Boxer as Boxer's
exclusive personal manager and Boxer's obligation to solely and exclusively use
Manager in such capacity are unique, irreplaceable and extraordinary rights and
obligations and that any breach or threatened breach by Boxer thereof shall
cause Manager immediate and unavoidable damages which cannot be adequately
compensated for by money judgment. Accordingly, Boxer agrees that, in addition
to all other forms of relief and all other remedies which may be available to
Manager in the event of such a breach or threatened breach by Boxer, Manager
shall be entitled to seek temporary, preliminary and permanent injunctive relief
to prevent Boxer from performing in violation of this Agreement, and Boxer
agrees that Manager shall not be obligated to secure any bond or other security
in connection with Manager's application for such relief.
9. CURE
In order to make specific and definite and/or to eliminate, if possible,
any controversy which may arise between the parties hereunder, Boxer agrees that
if at any time Boxer believes
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that the terms of this Agreement are not being, fully and faithfully performed
hereunder by Manager or that Manager has breached any provision of this
Agreement, Boxer will so advise Manager in writing by registered or certified
mail, return receipt requested, of the specific nature of each and every claim,
nonperformance or misfeasance, (a "Default Notice"). The Manager shall then have
a period of thirty (30) days after receipt of the Default Notice within which to
cure such claimed breach (the "Cure Period"). During such Cure Period, no breach
of any obligation shall be deemed to be incurable. No breach of this Agreement
by Manager shall be asserted by Boxer or deemed to have occurred unless and
until Manager has received a Default Notice and failed by the end of the Cure
Period to commence curing the alleged breach or default. The parties hereby
waive trial by jury in any litigation arising under this Agreement.
10. NOTICES
All notices pursuant to this Agreement shall be in writing and shall be
given by hand delivery, by registered or certified mail, return receipt
requested, or by telex or facsimile (prepaid) at the respective addresses set
forth below or such other address or addresses as may be designated by one party
to the other. Such notices shall be deemed given when delivered by hand or
mailed except that a notice of change of address shall be effective only from
the date of its receipt.
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(a) All notices to Boxer shall be sent to Boxer at the following address:
(b) All notices to Manager shall be sent to Manager at the following
address:
Worldwide Entertainment & Sports Corp.
attn:Marc Roberts
33 Freeman Street
West Orange, New Jersey 07052
With copies to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attention: Herbert F. Kozlov
11. ADDITIONAL PROVISIONS
(a) Agreement shall be governed by, and the validity, interpretation and
legal effect of this Agreement shall be construed in accordance with the laws of
the State of New Jersey without regard to principles of conflict of laws. In the
event that provision hereof shall be deemed invalid, such invalidity shall not
affect to validity of the remainder of this Agreement. The sole and exclusive
forum for any dispute arising hereunder shall be the State or Federal Courts
situated in New Jersey. The parties hereby irrevocably consent to the exclusive
jurisdiction and venue of such courts for such purposes.
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(b) Manager is not required to make any loans or advances to Boxer or for
Boxer's account, except as expressly provided herein. Boxer shall repay Manager
promptly with respect to all loans made by Manager to Boxer, and Boxer hereby
authorizes Manager to deduct the amount of any such loans or advances from any
sums Manager may receive for Boxer's account. Upon Manager's request, Boxer
shall execute one or more promissory notes to evidence such loans and advances.
The authority hereby granted to Manager in this Agreement is coupled with an
interest and shall be irrevocable.
(c) Boxer hereby irrevocably appoints Manager as Boxer's true and lawful
attorney-in-fact to endorse, deposit, sign, make, execute and/or deliver all
such checks, drafts, notes and bills of exchange and grants to Manager full
power and authority to perform every act requisite to the endorsement, deposit,
signing, making, execution and/or delivery of said instruments. The foregoing
language is intended to create an agency coupled with an interest, and the
foregoing agency shall be irrevocable during the Term of this Agreement and any
replacements, renewals, or substitutions thereof. The authority hereby granted
to Manager is coupled with an interest and shall be irrevocable.
(d) Each of the parties hereto warrants and represents that he is executing
this Agreement of his own free will and that in executing this Agreement, he has
relied solely upon his own judgment, belief and knowledge and such advice and
recommendations of any independently selected and retained advisors concerning
the nature, extent and duration of their
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rights and claims, and that, in executing this Agreement, he has not been
influenced by any representations or statements made by the other party not
specifically set forth herein.
(e) Although Manager may discuss with Boxer contacts between Boxer and
third parties, and/or possible tax, accounting and investment concerns of Boxer,
it is understood that Manager is not rendering, legal, tax, accounting, or
investment advice hereunder, and that any such advice desired by Boxer will be
obtained by Boxer at Boxer's expense solely from professionals offering such
advice.
(f) A waiver of either party of a breach of any provision herein shall not
be deemed a waiver of any subsequent breach nor a permanent modification of such
provision. Nothing contained in this Agreement shall be so construed as to
require the commission of any act contrary to law. Wherever there may be valid
and enforceable regulations contrary to the provisions of this Agreement, such
regulations shall prevail, but in such an event the provisions of the Agreement
affected shall be curtailed and limited only to the extent necessary to bring
same within legal requirements, and the non-compliance with such regulations
shall not void or otherwise affect the general enforceability of this Agreement.
(g) Boxer has acknowledged that Manager has advised him that he is not a
"talent agent" and that he is not licensed as a "talent agent" under the Labor
Code of the State of California, or as a theatrical employment agency under the
General Business Law of the State of New York, or under the laws of the State of
New Jersey or elsewhere and that Manager is not acting under this contract as a
"talent agent" or a "theatrical employment agency" or in any similar
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capacity. The parties acknowledge that the main purpose of this Agreement is for
Manager to manager Boxer's ring (boxing) career, and the other fields Manager is
to oversee are incidental thereto.
(h) No modification, alteration or extension of the term of this Agreement
shall be valid unless the same is made in writing and signed by the parties
hereto. Each party agrees to execute such modifications to this Agreement and to
execute such additional agreements and to take such further action as necessary
to cause this Agreement to comply with the rules and regulations governing
boxing in the State of New York. At Manager's request, Boxer agrees to execute
boxer-manager agreements on terms no less favorable to Manager than the terms of
this Agreement in and accordance with the laws, rules and regulations of the
State of New York, Nevada, New Jersey or any other state Manager designates.
IN WITNESS WHEREOF, of parties hereto have affixed their signatures the day
and year first above written.
____________________________
Ray Mercer
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By: ____________________________
Marc Roberts
President
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STATE OF NEW JERSEY )
SS.:
COUNTY OF )
On this ____ day of ______ , ______, before me, the undersigned, personally
appeared __________, personally known to me to be the person named in the
foregoing instrument, who being by me duly sworn did depose and say that he
signed, sealed and delivered the within instrument as his voluntary act and
deed.
____________________________
NOTARY PUBLIC
STATE OF NEW JERSEY )
SS.:
COUNTY OF )
On this ____ day of ______ , ______, before me, the undersigned, personally
appeared __________, personally known to me to be the person named in the
foregoing instrument, who being by me duly sworn did depose and say that he
signed, sealed and delivered the within instrument as his voluntary act and
deed.
____________________________
NOTARY PUBLIC
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Exhibit 10.8
THE UNITS OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND ARE BEING OFFERED AND SOLD
IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE
UNITS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SUCH LAWS PURSUANT TO
REGISTRATION OR AN EXEMPTION THEREFROM. THE UNITS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE OFFERING MATERIALS.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
SUBSCRIPTION AGREEMENT
March ___, 1996
Worldwide Entertainment & Sports Corp.
29 Northfield Avenue
West Orange, New Jersey 07052
Re: Purchase of ___________ Unit(s)
Gentlemen:
Worldwide Entertainment & Sports Corp., a Delaware corporation with its
principal offices at 29 Northfield Avenue, West Orange, NJ 07052 (the
"Company"), is hereby offering to the undersigned investor, an investment in the
Company's Units, each Unit being comprised of (a) a promissory note, in the form
of Exhibit A annexed hereto, in the principal amount of $50,000 with interest
payable at a rate of 10% per year compounded annually (the "Note") and payable
in full upon the earlier of (i) 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, $.01 par value (the "Initial Public Offering") or (ii)
18 months after the date of the closing of the investment hereunder (the
"Closing Date") and (b) warrants in the form of Exhibit B annexed hereto, to
purchase 25,000 shares of the Company's Common Stock, $.01 par value,
exercisable for a period of five years from the 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 "Warrants").
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Worldwide Entertainment & Sports Corp.
Page 2
The Company was formed for the purpose of acquiring the manager's interest
in the following boxer-manager agreements with the boxers Ray Mercer, Tracy
Harris Patterson and Charles Edward Murray:
(i) Exclusive Management Contract dated December 8, 1994 between
Merciless Management Corp. and Ray Mercer;
(ii) Exclusive Management Contract dated December 16, 1994 between the
Natural Management Corp. and Charles Edward Murray;
(iii) Management Agreement dated July 14, 1995 between Tracy Harris
Patterson and Marc Roberts.
Marc Roberts, a principal of the Company, is a principal of the Natural
Management Corp. and Merciless Management.
The Company will also seek to acquire from the Limited Partnership of
Shannon Briggs Boxing I, L.P. dated as of April 1, 1993 (the "Briggs
Partnership"), except for the 7-2/3 interest owned by Michael Marley, all of
such partnership's rights including its co-manager's interest in the Management
Agreement dated July 25, 1992 among Shannon Briggs, Shannon Briggs Champion
Management, Inc. acting as general partner for the Briggs Partnership, and
Michael L. Marley.
The Company's continuing right to receive the benefits of the
boxer-manager's agreements may be contingent upon Marc Roberts' continued
affiliation with the Company. The Company could be adversely affected by any
circumstances which result in Mr. Roberts no longer being affiliated with the
Company.
The Company is also contemplating a transaction whereby it will acquire or
merge with a Florida-based company that is in the business of providing
management services to entertainers and professional athletes.
However, there can be no assurance that the interests in the boxer-manager
agreements referred to above will be acquired by the Company, that a transaction
can and will be consummated with the Florida-based company, or as to any other
matter.
The undersigned, who resides at the address set forth below the investor's
signature (the "Investor") and is an "accredited investor" as hereinafter
defined, wishes to subscribe for the
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Worldwide Entertainment & Sports Corp.
Page 3
number of units set forth below his/her signature, for a subscription price of
$50,000 per Unit (the "Investment").
1. Subscription.
(a) Subject to the terms and conditions hereof, the Investor hereby
irrevocably subscribes for and commits to purchase the Units set forth below
his/her signature from the Company. In connection therewith, the undersigned is
tendering to the Company a check payable to the Company, or wire funds directed
to the Company's account, in the amount of $___________, representing full
payment for the Units subscribed for (the "Subscription Funds").
(b) The Company shall give written notice to the undersigned of the
acceptance or rejection of this subscription within two (2) days of the Closing
Date or such other date as the Company terminates or withdraws the offering of
Units. The undersigned understands and agrees that notwithstanding prior receipt
of notice of acceptance of the undersigned's subscription, the Company reserves
the right to reject this subscription, in whole or in part, at any time prior to
the Closing Date, if in its judgment it deems such action to be in the Company's
best interest. If the offering of Units is oversubscribed, the Company, in its
sole discretion, will determine which subscriptions or portions thereof shall be
accepted:
(i) If the undersigned's subscription is accepted, the Company shall
accept the Subscription Funds on the Closing Date.
(ii) If the undersigned's subscription is not accepted in whole, the
Company shall promptly return to the undersigned after the Closing Date the
amount by which the Subscription Funds exceed the aggregate purchase price
for the Shares purchased by the undersigned.
(iii) If (x) the undersigned's subscription is rejected or (y) the
Company withdraws the offering of Units for any reason, (in which event
this subscription shall be deemed to be rejected), then the Company shall
promptly return to the undersigned the Subscription Funds and this
Agreement shall have no further force and effect.
(iv) Provided that the undersigned's subscription is accepted, on the
Closing Date or promptly thereafter, the Company shall deliver to the
undersigned the Note and the Warrants purchased by the undersigned pursuant
to the offering of the Units.
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Worldwide Entertainment & Sports Corp.
Page 4
2. Acknowledgments. The undersigned acknowledges that:
(a) The undersigned has had the opportunity to ask questions of the
officers, directors and promoters of the Company, and in making his/her decision
to purchase the Units herein subscribed for, the undersigned has relied solely
upon independent investigations made by him/her.
(b) The undersigned understands and acknowledges that this investment is of
a speculative nature involving a high degree of risk of losing the entire
investment, and that:
i) The Units are being sold in reliance on the exemption from the
registration provisions of the Securities Act of 1933, as amended (the
"Act") as contained in Regulation D promulgated by the Securities &
Exchange Commission thereunder and the Units will be "Restricted
Securities" as defined in Rule 144 under the Act and will be saleable only
pursuant to a Registration Statement or exemption from registration
requirements under the Act. The Company has no obligation to register the
Units, or the Notes or Warrants underlying the Units.
ii) The Units are only being offered to the Investor because he/she
has represented that he/she is an "accredited investor" (as defined in
Regulation D), and the information being supplied to the Investor would not
be adequate to comply with the disclosure provided in connection with a
registration statement or with information required to be provided under
the Act to an unaccredited investor under Regulation D.
iii) The undersigned has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
an investment in the Units, has obtained, in his/her judgment, sufficient
information from the Company or otherwise to evaluate the merits and risks
of an investment in the Units and has determined that the Units are a
suitable investment for him/her and that at this time he/she could bear a
complete loss of his/her investment.
iv) Each certificate for the Note and the Warrants shall be imprinted
with a legend substantially in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
THERETO UNDER SAID ACT, OR AN OPINION OF COUNSEL
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Worldwide Entertainment & Sports Corp.
Page 5
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
3. Investment Representations.
(a) Investment Intent. The Investor represents that the undersigned will be
acquiring the Units to be purchased hereby for investment only, for his/her own
account, solely with the undersigned's own funds, and not with a view to, or for
sale in connection with, any distribution thereof nor with any present intention
to sell such Units, except in compliance with the Act. No other person has a
direct or indirect beneficial interest in such Units. The Company has no
obligation to register the Units under the Act, or to assist the undersigned in
complying with an exemption from registration under the Act.
(b) Transfer Limited. The Investor further acknowledges that the Units to
be purchased hereby will have been issued pursuant to an exemption from
registration under the Act and the rules and regulations promulgated thereunder
and agrees not to sell or otherwise transfer or dispose of the Units in any
transaction which, in the reasonable opinion of the Company's counsel, would be
in violation of the Act.
(c) Experience. The Investor represents and warrants that the undersigned
has such knowledge and experience in financial and business matters that he/she
is and will be capable of evaluating the risks and merits of an investment in
the Units to be purchased hereby and that it is able to bear the economic risks,
including total loss, of investing in the Units.
(d) No Review. The Investor understands that no federal or state agency has
passed upon the Units or made any findings or determination as to the fairness
of this investment.
(e) Residency. The Investor is a resident of the State of __________.
(f) Reliance on Representations. Any information which the undersigned has
heretofore furnished and herewith furnishes to the Company with respect to the
undersigned's financial position and business experience, is correct and
complete as of the date of this Agreement, and the undersigned hereby reconfirms
all such representations and warranties as though fully set forth herein. The
representations, warranties, agreements, undertakings and acknowledgments made
by the undersigned in this Agreement are made with the intent that they be
relied upon by the Company in determining the suitability of the undersigned as
a purchaser of the Units and all such representations, warranties, agreements,
undertakings and acknowledg ments shall survive the Closing Date. The
undersigned agrees that if there should be any material change in such
information prior to the Closing Date, the undersigned shall immediately furnish
such revised or corrected information to the Company.
<PAGE>
<PAGE>
Worldwide Entertainment & Sports Corp.
Page 6
4. Representations by the Company.
(a) Organization and Standing; Articles of Incorporation and By-Laws. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has all requisite corporate
power and all licenses, permits and registrations to own and operate their
properties and assets and to carry on its business as presently conducted and
contemplated.
(b) Corporate Power. The Company has all requisite corporate power to enter
into this Agreement, and has all requisite corporate power to sell the Units,
and to carry out and perform its obligations hereunder and thereunder.
(c) Closing of the Investment. The Company shall hold all subscriptions in
escrow until it has accepted the subscription as set forth in paragraph 1(b)
above. The Company may, in its discretion, secure financing for the Company as
it deems necessary or desirable in addition to the closings contemplated
hereunder.
5. Information with Respect to the Undersigned. The undersigned represents
the following information is true and correct:
Name of Purchaser: (1)______________________________________
(Print Name)
(2)______________________________________
(Print Name)
Mailing Address: ______________________________________
(Name of Addressee)
______________________________________
(Number of Street)
______________________________________
(City/State/Zip Code)
______________________________________
(Facsimile No.)
Social Security and/or
taxpayer identification
number(s): (1)____________________
(2)____________________
<PAGE>
<PAGE>
Worldwide Entertainment & Sports Corp.
Page 7
Ownership Form (check one):
__ Individual __ Community Property
__ Joint Tenancy __ Tenancy-in-Common
6. Accredited Investor. The undersigned represent and warrant that I am (we
are) "accredited investor(s)" as that term is defined in Rule 501 of Regulation
D promulgated by the Securities and Exchange Commission pursuant to the Act as
set forth below. (Initial the appropriate category of accredited investor that
each person satisfies and indicate which person the initialed category is
applicable to.):
____ (1) Such investor is a natural person who had
individual income (excluding income of such
investor's spouse) in excess of $200,000 in each of
1993 and 1994 or joint income with such investor's
spouse in excess of $300,000 in each of those years
and reasonably expects to reach the same income
level in 1995 (for purposes hereof, individual
income being defined as adjusted gross income,
without taking into account: (a) any deductions for
long-term capital gains under ss. 1202 of the
Internal Revenue Code of 1986, as presently amended
(the "Code"); (b) any depletion deductions under
Code ss. 611 et seq.; (c) any exclusion for
interest under Code ss. 103; or (d) any partnership
losses allocated to such Investor as reported on
Schedule E of his Form 1040 or any successor form);
____ (2) Such investor is a natural person whose net
worth at the time of purchase, either individually
or jointly with such Investor's spouse, exceeds
$1,000,000 (including such investor's home, home
furnishings and automobiles);
____ (3) Such investor is a trust, not formed for the
specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000
whose purchase is directed by a sophisticated
person as described in Rule 506(b)(2)(ii) under the
Act;
____ (4) Such investor is a corporation, partnership,
trust or other entity in which all of the equity
owners are Accredited Investors; or
____ (5) other (details below).
_________________________________________
<PAGE>
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Worldwide Entertainment & Sports Corp.
Page 8
7. Tax Consequences. No effort has been made to provide any advice as to
the federal, state or local income tax consequences of the investment by the
undersigned in the Units. The undersigned has been advised to seek independent
advice as to the tax consequences of an investment in the Units.
8. Registration of Securities.
(a) As used in this paragraph, the following terms shall have the following
respective meanings:
(i) "Commission" shall mean the Securities and Exchange Commission, or
any other Federal agency at the time administering the Act.
(ii) "Person" shall mean and include an individual, a corporation, a
partnership, a trust, an unincorporated organization and a government or
any department, agency or political subdivision thereof.
(iii) "Holder" or "seller" shall mean Investor.
(iv) "Restricted Securities" shall mean the Warrants and the shares of
Common Stock of the Company underlying the Warrants issued pursuant to the
this Agreement.
(b) The sale from time to time of the Restricted Securities shall be
included by the Company in the Registration Statement filed with the Commission
under the Act for the Company's underwritten initial public offering, subject to
the approval of the managing underwriters.
(c) In connection with any Registration Statement filed herein, the Company
shall:
(i) furnish to each selling stockholder such number of copies of such
registration statement and of each such amendment or supplement thereto (in
each case including all exhibits), including a preliminary prospectus, in
conformity with the requirements of the Act;
(ii) use its best efforts to register or qualify the Restricted
Securities covered by such registration statement under the securities or
blue sky laws of such jurisdictions as the number of shares initially
proposed to be registered is qualified.
(iii) notify each seller of Restricted Securities covered by such
registration statement, at any time when a prospectus relating thereto
covered by such
<PAGE>
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Worldwide Entertainment & Sports Corp.
Page 9
registration statement is required to be delivered under the Act of
the happening of any event as a result of which the Registration Statement,
the prospectus or any document incorporated therein by reference, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and at the request of such seller, prepare and furnish to
such seller a post-effective amendment or supplement to the registration
statement or the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(d) All expenses incurred by Company in complying with its obligations
hereunder, including, without limitation, all registration and filing fees, fees
and expenses of complying with securities and blue sky laws, printing expenses
and fees and disburse ments of counsel and of independent certified public
accountants of Company shall be paid by Company; provided, however, that all
underwriting discounts and selling commissions and stock transfer taxes
applicable to the Restricted Securities covered by the registration effected
hereof, and Holder's counsel fees, shall be borne by the seller or sellers
thereof.
9. Survival and Indemnification.
(a) The undersigned agrees that the representations contained herein shall
survive the purchase of the Units and that he/she will indemnify and hold
harmless the Company from and against loss, damage or liability arising from a
claim of or action instituted by a third party including any governmental or
regulatory body investigation, or proceeding arising from a breach of any
representation or material misrepresentation of the undersigned contained
herein.
(b) The Company agrees that the representations contained herein shall
survive the purchase of the Units hereby and that it will indemnify and hold
harmless the undersigned from and against loss, damage or liability arising from
a claim of or action instituted by a third party including any governmental or
regulatory body investigation, or proceeding arising from a breach of any
representation or material misrepresentation of the undersigned contained
herein.
(c) The indemnities provided herein shall not be deemed exclusive remedies
but are in addition to all other rights and remedies available to either or both
of the parties pursuant to this Agreement.
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Worldwide Entertainment & Sports Corp.
Page 10
10. Miscellaneous.
(a) In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges shall be enforceable to the
fullest extent permitted by law.
(b) This Agreement is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties thereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter. This Agreement may only be modified in
writing signed by the undersigned and the Company.
(c) This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the laws of the State of New
Jersey applicable to agreements made and to be performed entirely within such
State.
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Worldwide Entertainment & Sports Corp.
Page 11
(d) Copies of all notices or other communications to be given or made
hereunder will be transmitted to the Investor at the mailing address set forth
below the Investor's signature below.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement as of the day and year first above written.
_______________________________________
Signature
_______________________________________
Print Name
_______________________________________
No. of Units
_______________________________________
Address
_______________________________________
Home Phone Number
_______________________________________
Office Phone Number
_______________________________________
Fax No.
{acceptance on separate page}
<PAGE>
<PAGE>
Worldwide Entertainment & Sports Corp.
Page 12
The foregoing subscription is hereby accepted by Worldwide Entertainment &
Sports Corp. as of the _____ day of _________________________, 1996.
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
(a Delaware Corporation)
By:
___________________________________
Marc Roberts, President
<PAGE>
<PAGE>
SUBSCRIPTION AGREEMENT
FOR
WORLDWIDE ENTERTAINMENT
& SPORTS CORP.
<PAGE>
<PAGE>
Exhibit 10.9
AGREEMENT OF ACQUISITION OF ASSETS
AGREEMENT made as of the 1st day of November, 1996, by and between SHANNON
BRIGGS BOXING I, L.P., a New Jersey limited partnership ("Seller"), and
WORLDWIDE ENTERTAINMENT & SPORTS CORP., a Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the management, training, promotion support,
direction and marketing of Shannon Briggs, a professional boxer (the
"Business"); and
WHEREAS, the Business has been carried on by Seller from a training
facility located in a building at 61 Freeman Street, Newark, New Jersey (the
"Facility") and from executive offices located at 33 Freeman Street, West
Orange, New Jersey (the "Office"), the Facility and the Office being
collectively referred to herein at the "Facilities"; and
WHEREAS, Seller owns the Assets (as hereinafter defined) of the Business,
all of which are necessary to carry on the Business of Seller as it has been
conducted; and
WHEREAS, Seller desires to sell the Assets, and Purchaser desires to
purchase the Assets and all other specified rights or assets owned and used by
Seller in its Business which are necessary to carry on such Business as it has
been conducted, except as hereinafter specifically excluded, on the terms and
conditions hereinafter specified; and
WHEREAS, Seller is a party to a management agreement between Shannon Briggs
Champion Management Inc., acting as General Partner for the Seller, Shannon
Briggs and Michael L. Marley (the "Management Contract"), a training agreement
between and among Theodore Atlas, Michael Marley and Marc Roberts (the "Trainer
Agreement") and a co-management agreement with Michael Marley (the "Marley
Agreement")(all of the above referenced agreements are hereinafter referred to
as the "Agreements");
NOW, THEREFORE, in consideration of the promises and the mutual covenants
and agreements set forth herein, the parties hereby agree as follows:
1. Purchase and Sale of Certain Assets Agreed to be Sold.
Subject to the terms and conditions of this Agreement, Seller does hereby
agree to sell, transfer, assign, convey and deliver to Purchaser, and Purchaser
does hereby agree to purchase from Seller, on the Closing Date as hereinafter
defined, all of Seller's Assets (as hereinafter defined) and the Business as a
going concern, subject to the Assumed Liabilities (as hereinafter defined). The
assets of the Seller other than the Retained Assets (as hereinafter defined) and
the Business as a going concern are hereinafter referred to as the "Assets". The
term "Assets", as used in this Agreement and
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<PAGE>
in the Exhibits hereto, means all assets (except for Retained Assets) owned by
Seller on the Closing Date (as hereinafter defined), including, without
limitation, all rights of Seller under any contracts and agreements; trademarks,
service marks, trade names, copyrights and know-how; interests in real estate
(including leaseholds and improvements therein and all other interests) and
furniture, fixtures and equipment (including all rights of Seller under leases
thereto); all cash on hand and in banks and cash equivalents; the Corporate
minute books, stock record books and seal of Shannon Briggs Champion Management,
Inc., the Seller's general partner (the "General Partner"); and all other
property and rights of every kind and nature, tangible or intangible, owned by
Seller on the Closing Date, whether or not specifically referred to in this
Agreement, and whether or not carried on the books of Seller as an asset.
1.1 Assets Excluded from the Sale.
Anything herein to the contrary notwithstanding, Seller is retaining and is
not selling, conveying, assigning, transferring or delivering to Purchaser any
of its interest of any kind or nature whatsoever in Seller's general ledgers and
books of original entry, tax returns and tax records (collectively, the
"Retained Assets").
2. Liabilities of Seller
2.1 Seller's Liabilities Assumed.
In connection with the purchase by Purchaser of the Assets, Purchaser shall
assume and agree to perform and, as set forth below, pay and discharge, all of
the following debts, liabilities, obligations and commitments of Seller relating
to the Business (collectively, the "Assumed Liabilities"):
(A) The liabilities set forth on Schedule 2.1 (A); and
(B) All obligations pursuant to the Agreements with respect to Michael
Marley and the settlement of such obligations; and
(C) All obligations of Seller under the contracts, licenses,
agreements, leases, commitments and instruments assumed pursuant to Section
6.2 to be timely paid and discharged.
2.2 Seller's Liabilities Not Assumed.
Except as may otherwise be expressly provided in Section 2.1, all
commitments, liabilities and obligations of Seller of any kind or nature
whatsoever, liquidated or contingent, whether existing at the Closing Date or
arising thereafter, shall remain the commitments, liabilities and obligations of
Seller, and Seller agrees to pay same when due, and Purchaser shall have no
commitment or obligation nor assume any responsibility with
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<PAGE>
respect thereto, and Seller shall at all times indemnify Purchaser and hold it
harmless against same, all subject to the provisions of Article 9 hereof. Any
liability for transfer taxes arising from the issuance of stock certificates in
names other than the names of the limited partners (the "Limited Partners")
shall be borne by the respective Limited Partners.
3. Acquisition Price and Payment of Acquisition Price.
3.1 Acquisition Price.
The purchase price for the Assets shall be:
(i) 25% of the issued and outstanding capital stock of the Company plus
15,000 shares of the Common Stock, $.01 par value, of the Purchaser
(the "Shares").
Certificates representing the Shares (in such names and denominations as
Seller shall advise Purchaser in writing two business days prior to the Closing
Date) shall be delivered to Seller on the Closing Date.
4. Warranties and Representations of Seller.
4.1 Seller's Warranties and Representations.
In order to induce Purchaser to effect the transactions provided for
herein, Seller warrants and represents to Purchaser as follows, said warranties
and representations to be true on and as of the Closing Date and to survive the
Closing for the respective periods set forth in Article 11 below.
(A) Good Standing and Authority of Seller and the General Partner.
Seller is a limited partnership and the General Partner is a corporation,
both duly organized and validly existing in good standing under the laws of the
State of New Jersey, with full power and authority to own all of the Assets and
to engage in the Business through the use thereof, and the General Partner is
duly qualified to do business and is in good standing in all jurisdictions where
the conduct of its business or the ownership of its assets so requires.
(B) Authorization, Execution, Delivery and Performance of Agreement.
Seller has the full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. All proceedings required to be
taken by Seller and the General Partner to authorize the execution, delivery and
performance of this Agreement, and the agreements and instruments relating
hereto, have been properly
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<PAGE>
taken, and this Agreement constitutes the valid and binding obligation of
Seller, enforceable in accordance with its terms.
(C) Personal Property.
Exhibit 4.1(C) is a complete and accurate list as of September 30, 1995
describing and specifying the location of all furniture, fixtures and equipment,
and all other tangible personal property, owned by, in the possession of, or
used by, Seller in connection with its Business. The tangible personal property
listed and described in Exhibit 4.1(C) constitute all of the tangible personal
property used in the conduct by Seller of its Business as now conducted, whether
or not located at the Facilities, except for the personal property specifically
excluded from the sale pursuant to Section 1.2, and consistent with normal
procedures of the Business, all of such personal property is in good operating
condition and repair.
No tangible personal property used by Seller in connection with its
Business is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, or is located other
than in the possession of Seller. Seller has title to each item of personal
property described in Exhibit 4.1(c), free and clear of any lien, pledge,
encumbrance, charge or title retention or other security arrangement, except for
non-delinquent liens for taxes, assessments or other governmental charges or
levies. The instruments of conveyance and transfer to be executed and delivered
by Seller to Purchaser on the Closing Date will be valid in accordance with
their terms and will effectively convey to Purchaser good and marketable title
to said items of tangible personal property which such instruments purport to
convey.
(D) Contracts Disclosed.
Seller is a party to the written or oral contracts with boxers, promoters,
trainers, consultants and employees and service contracts listed in Exhibit
4.1(D), entered into in connection with Seller's Business, and Seller has
entered into no material written or oral contract, agreement or purchase order
except as listed in Exhibit 4.1(D). True copies of said written contracts and a
summary description of said oral contracts are being delivered to Purchaser
simultaneously with the execution of this Agreement. Seller is not in default
with respect to any contract, has performed all of the terms and conditions
required to be performed by it through the date hereof, and has not received any
notice of cancellation of any of said contracts, other than cancellation of the
Management Contract, Trainer Agreement and Co-management Agreement, all of which
are being canceled pursuant to Article 6 hereof. To the best of Seller's
knowledge the other parties to said contracts are not in material default
thereunder. All of said contracts are assignable without consent of the other
party thereto, except as set forth in Exhibit 4.1(D) and if required by the
terms of any contract, Seller shall provide notice to the other parties thereto
with a copy to Purchaser.
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(E) Litigation and Claims.
Except as set forth in Exhibit 4.1(E), there are no claims, actions, suits,
administrative or other proceedings or investigations pending or threatened to
Seller's knowledge, involving Seller's Business or assets thereof, and Seller
does not know of any basis for any claims, actions, suits, administrative or
other proceedings or investigations of such nature, at law or, in equity, or
before or by any Federal, state, or local governmental department, commission,
board, bureau or agency, including any state athletic commission.
(F) Compliance with Law, Permits and Licenses.
Except as disclosed to Purchaser in writing (initialed by Purchaser)
simultaneously herewith or prior hereto, Seller, to its knowledge, is in
compliance in all material respects with all applicable laws, ordinances, rules
and regulations of all governments and public authorities having jurisdiction,
including the Nevada, the New Jersey and any other state athletic commissions
having jurisdiction and has obtained all management licenses, equipment permits,
use and occupancy permits, and other permits and licenses, and has duly filed
all necessary contracts, reports and/or instruments required in the operation of
Seller's Business by all Federal, state and local agencies having jurisdiction,
including the Nevada, the New Jersey and any other state athletic commissions
having jurisdiction.
(G) Non-Violation of Law, etc.
The consummation of the transactions contemplated herein will not result in
a violation by Seller of any provision of the Certificate or Agreement of
Limited Partnership of Seller, or any law or order, rule, regulation, writ,
injunction or decree of any governmental instrumentality, court or state
athletic commission having jurisdiction over Seller, or result in any breach or
violation of any agreement or instrument by which Seller or any of the Assets
may be bound or affected.
(H) Operating Statements.
Seller has heretofore delivered to Purchaser a balance sheet as at
September 30, 1995, and related statements of profit and loss for the six months
then ended of Seller, copies of which have been initialed by Seller, and
Purchaser hereby acknowledges the receipt of such balance sheet and statements
of profit and loss. Such balance sheet and statements of profit and loss present
the financial position of Seller as at said date and the results of its
operations for the periods indicated and have been prepared on a materially
consistent basis with earlier periods.
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(I) Trademarks, etc.
(i) To the best of its knowledge, Seller in its Business is not infringing
and has not infringed any third party trademarks, or trade secret
rights, nor are there any outstanding controversies regarding asserted
rights of others.
(ii) Seller owns all trademarks, trademark registrations, trademark rights,
trade names, trade name rights, trade secrets, copyrights and
copyright registrations and applications and licenses therefor, or
rights to use the same, necessary to carry on Seller's Business
operations as they have been conducted, or used in the ordinary course
of said business. Purchaser acknowledges that Seller's rights to any
such marks and names are based on use and that Seller has not made any
filings in the United States Patent and Trademark offices.
(J) Indebtedness.
Seller has no liabilities or obligations of a nature customarily
reflected in a balance sheet or the notes thereto prepared in accordance with
generally accepted accounting principles, whether accrued, absolute, contingent
or otherwise and whether due or to become due, except to the extent reflected
in Seller's September 30, 1995 balance sheet or set forth in Exhibit 4.1(j).
(K) Taxes.
Seller has received no notice of audit or proposed deficiencies in taxes.
5. Warranties and Representations of Purchaser.
5.1 Purchaser's Warranties and Representations.
In order to induce Seller to effect the transactions provided for herein,
Purchaser, hereby warrants and represents to Seller as follows;
(A) Good Standing and Authority of Purchaser.
Purchaser is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware, with full power and authority
to carry on its business as now being conducted.
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<PAGE>
(B) Authorization, Execution, Delivery and Performance of Agreement.
Purchaser has the full power and authority to enter into this Agreement and
to carry out the transactions contemplated hereby. All proceedings required to
be taken by Purchaser to authorize the execution, delivery and performance of
this Agreement, and the agreements and instruments relating hereto, have been
properly taken, and this Agreement constitutes the valid and binding obligation
of Purchaser, enforceable in accordance with its terms.
(C) Non-Violation of Law etc.
The consummation of the transactions contemplated herein will not violate
any provision of the Certificate of Incorporation or By-Laws of Purchaser, or
any law or order, rule or regulation, writ, injunction, or decree of any
governmental instrumentality or court having jurisdiction over Purchaser, or
result in any breach or violation of any agreement or instrument to which
Purchaser may be bound.
6. Miscellaneous Agreements of the Parties.
6.1 Cancellation of Contracts.
Prior to the Closing Date, Seller will take all actions necessary to cancel
the Management Contract, the Trainer Agreement and the Marley Agreement. Seller
knows of no regulatory or legal impediment to the cancellation of any of such
agreements or the execution by Purchaser of new agreements with the other
parties thereto.
6.2 Payment of Applicable Taxes.
All transfer and documentary taxes and fees imposed by the State of New
Jersey or applicable localities affecting the instruments of conveyance in the
transaction contemplated hereby, if any, shall be paid by Seller. All sales, use
and excise taxes, if any, on the transfer of personalty hereunder imposed by the
State of New Jersey or applicable localities shall be paid by Purchaser.
7. Conditions to Closing.
7.1 Conditions to Purchaser's Obligations.
All obligations of Purchaser under this Agreement are subject to the
fulfillment on or prior to the Closing Date of each of the following conditions:
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(A) Seller shall have substantially complied with all material
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or as of the Closing Date;
(B) All representations and warranties of Seller contained in this
Agreement or in any certificate or document delivered pursuant to the
provisions hereof, or in connection with the transactions contemplated
hereby, shall be true in all material respects at and as of the Closing
Date, as though all such representations and warranties were made at and as
of such time;
(C) No litigation, proceeding or investigation shall be pending, or
threatened as far as is known to Seller, which would prevent the
consummation of this Agreement or which would materially affect Purchaser's
operation and enjoyment of the Assets to be purchased hereunder;
(D) The Board of Directors and Shareholders of the General Partner of
Seller and the Limited Partners shall have duly authorized the execution
and delivery of this Agreement;
(E) There shall have been delivered to Purchaser a certificate signed
by the President of the General Partner of Seller, certifying to the
fulfillment of the conditions specified in Subsections (A) through (D) of
this Section 7.1, except to the extent that any such conditions shall have
been waived in writing by Purchaser prior to or at the Closing;
(F) Purchaser shall have obtained (i) a management agreement with
Shannon Briggs (the "Boxer") and (ii) a trainer agreement with Theodore
Atlas and Marc Roberts, all in form and substance satisfactory to it. To
the extent required, Purchaser shall have obtained consents from state
athletic commissions having jurisdiction over the matters contained in such
contracts;
(G) Purchaser shall have obtained the requisite licenses and permits
to conduct the Business from all Federal, state and local agencies having
jurisdiction, including the Nevada, the New Jersey and any other state
athletic commission having jurisdiction;
(H) Seller shall have delivered to Purchaser evidences of the
cancellation of the Management Contract, Trainer Agreement and Co-managers
Agreement;
(I) Seller shall have obtained consents to assignments of contracts
which require such consent; and
(J) There shall have occurred no material adverse change to the
Business or properties or assets of Seller between the date hereof and the
Closing Date.
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7.2 Conditions to Seller's Obligations.
All obligations of Seller under this Agreement are subject to the
fulfillment as of the Closing Date of each of the following conditions:
(A) Purchaser shall have substantially complied with all material
agreements and conditions required by this Agreement to be performed or
complied with by it, prior to or as of the Closing Date;
(B) All representations and warranties of Purchaser contained in this
Agreement or in any certificate or document delivered pursuant to the
provisions hereof or in connection with the transactions contemplated
hereby shall be true in all material respects at and as of the Closing Date
as though all such representations and warranties were made at and as of
such time;
(C) The Board of Directors of Purchaser shall have duly authorized the
execution and delivery hereof; and
(D) There shall have been delivered to Seller a certificate signed by
the President of Purchaser, certifying to the fulfillment of the conditions
specified in Subsections (A) through (C) of this Section 7.2, except to the
extent that any such conditions shall have been waived in writing by Seller
prior to or at the Closing.
8. Documents and Instruments to be Delivered at Closing.
8.1 Documents and Instruments to be Delivered by Seller.
Seller shall deliver the following to Purchaser at the Closing:
(A) A copy of the resolutions adopted at the meetings of the Board of
Directors and Shareholders of the General Partner authorizing and approving
this transaction, certified to be correct by the Secretary or an Assistant
Secretary of the General Partner;
(B) The opinion of Howard Trinker, Esq., dated the Closing Date, to
the effect that:
(i) Seller is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of New Jersey
and to the best of counsel's knowledge is duly qualified and in
good standing in each state where the ownership of its properties
or the conduct of business of Seller so requires;
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(ii) Seller and the General Partner each has the power and authority
to enter into and perform this Agreement. The execution, delivery
and performance of this Agreement have been duly authorized by
all requisite action on the part of Seller, and this Agreement
has been duly executed and delivered by Seller;
(iii) This Agreement is a valid and binding obligation of Seller and
is enforceable against Seller in accordance with its terms,
except as may be limited by any bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights in
general or general principles of equity; and
(iv) The execution and delivery of this Agreement and the performance
by Seller of the terms herein do not conflict with or result in a
violation of the Certificate of Agreement of Limited Partnership
of Seller or, to the knowledge of such counsel, result in a
breach of any material terms, conditions or provisions of, or
constitute a material default under, any material indenture,
agreement or other instrument to which Seller is a party or by
which Seller is bound or affected nor shall it result in the
violation of any law or of any regulation, order or directive of
any court, agency or other authority, including any state
athletic commission having jurisdiction.
(C) Bills of Sale with respect to the personal property being sold
hereunder, in usual form, conveying to Purchaser free and unencumbered
title thereto, subject to exceptions only as set forth in Exhibit 4.1(C);
(D) Effective, good, and where appropriate, recordable assignments of
the other Assets being sold hereunder;
(E) Instruments of assignment of the trademarks, etc. listed in
Exhibit 4.1(I);
(F) All other documents and instruments which Purchaser may reasonably
request.
8.2 Documents and Instruments to be Delivered by Purchaser.
Purchaser shall deliver the following to Seller at the Closing:
(A) A copy of the resolutions adopted at the meeting of Purchaser's
Board of Directors authorizing and approving this transaction, certified to
be correct by the Secretary or an Assistant Secretary of Purchaser;
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(B) The opinion of Parker Duryee Rosoff & Haft, counsel for Purchaser,
dated the Closing Date, stating that:
(i) Purchaser is a corporation duly organized and is validly existing
and in good standing under the laws of the State of Delaware;
(ii) Purchaser has the corporate power and authority to enter into and
perform this Agreement and the transactions contemplated
hereunder. The execution, delivery and performance of this
Agreement and the transactions contemplated hereunder have been
duly authorized by all requisite corporate action on the part of,
and this Agreement has been duly executed and delivered by,
Purchaser;
(iii) This Agreement is a valid and binding obligation of Purchaser
and is enforceable against Purchaser in accordance with its
terms, except as may be limited by any bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
in general or general principles of equity; and
(iv) The execution and delivery of this Agreement and the performance
by Purchaser of the terms herein do not conflict with or result
in a violation of the Certificate of Incorporation or By-Laws of
Purchaser or, to the knowledge of such counsel, result in a
breach of any material terms, conditions or provisions of, or
constitute a material default under, any material indenture,
agreement or other instrument known to such counsel to which
Purchaser is a party or by which Purchaser is bound or affected,
nor to the knowledge of such counsel shall it result in the
violation of any law or of any regulation, order or directive of
any court, agency or other authority (except no opinion need be
expressed regarding rules of any state athletic commission);
(C) The delivery of Shares required to be made pursuant to Section
3.1;
(D) Such documents reasonably satisfactory to Seller and Seller's
counsel evidencing the assumption by Purchaser of the Assumed Liabilities;
and
(E) All other documents and instruments which Seller may reasonably
request.
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9. Indemnification.
9.1 Indemnification by Seller.
Seller shall indemnify and hold harmless Purchaser against and in respect
of:
(A) All commitments, liabilities and obligations of, or claims
against, Seller (including those arising after the Closing relating to
Seller's acts occurring before the Closing), not expressly assumed by
Purchaser;
(B) Any damage or deficiency resulting from any misrepresentation,
breach of warranty, or nonfulfillment of any obligation on the part of
Seller under this Agreement, or from any misrepresentations or omissions
from any certificate or other instrument furnished or to be furnished to
Purchaser under this Agreement; and
(C) All actions, suits, proceedings, demands, assessments, judgments,
costs, settlements and expenses (including reasonable attorneys fees)
incident to any of the foregoing.
9.2 Indemnification by Purchaser.
Purchaser shall indemnify and hold harmless Seller against and in respect
of:
(A) All liabilities of or claims against Seller arising out of the
contracts assumed by Purchaser hereunder, by reason of breach or
non-performance by Purchaser from and after the Closing Date;
(B) Any damage or deficiency resulting from any misrepresentation,
breach or warranty or non-fulfillment or any agreement on the part of
Purchaser under this Agreement or from any misrepresentations or omissions
from any certificate or other instrument furnished or to be furnished to
Seller under this Agreement;
(C) All actions, suits, proceedings, demands, assessments, judgments,
costs, settlements and expenses (including reasonable attorneys fees)
incident to the foregoing.
(D) Indemnification Procedure
Any party claiming indemnification under this Article 9 shall give
prompt notice to the other party of any matter which gives rise or may give
rise to any such right of the indemnitee to assert any claim for indemnity
under this Article 9, including claims being accumulated pursuant to
Section 9.5, and the indemnitor shall have the right to defend against, or,
participate with the indemnitee in the defense of, any matter which gives
rise, or may give rise, to any such right, through counsel of the
indemnitor's choice, at the indemnitor's expense. If the indemnitor assumes
the defense of any claim, it shall not thereafter be responsible for any of
the indemnitee's legal fees thereafter accruing.
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9.3 Time Limitations.
All claims to be made by Purchaser with respect to the indemnifications
contained in this Article 9 shall be made within two (2) years from the Closing
Date by notice in writing given in accordance with provisions of Section 11.1,
except with respect to claims arising out of Federal, state and local tax
matters, in which instances the applicable statutes of limitations as the same
may be extended from time to time shall apply.
9.4 Conduct of Business Pending Closing.
Seller and Purchaser agree that pending the Closing Date:
(A) Seller's business will be conducted in the ordinary course;
(B) Seller's furniture, fixtures and equipment will be maintained so
that on the Closing Date they will be in substantially the same condition
and repair as they were on September 30, 1995, subject to ordinary wear and
tear in the interim;
(C) Except as agreed to by Seller and Purchaser, no contract or
commitment shall be entered into by or on behalf of Seller except in the
ordinary course and not extending beyond the Closing Date;
(D) Seller shall use its best efforts to conduct its Business with the
intent to: (i) preserve the Assets and the Business; and (ii) keep
available to Purchaser the services of the present employees of the
Business except that it reserves the right to discharge any employee if it
deems the continued employment of such employee is not in the best
interests of the Business;
(E) Seller shall duly comply with all Federal, state and local laws,
rules and regulations (including those of state athletic commissions) which
may be applicable to the conduct of the Business and/or necessary in order
to effectuate the consummation of the sale provided for herein; and
(F) Seller shall not encumber or permit to be encumbered any of the
Assets, or dispose or contract to dispose of any of the Assets, except in
the regular course of business.
10. Closing
10.1 Closing.
The closing hereunder (herein referred to as the "Closing") shall refer to
the actual conveyance, transfer, assignment and delivery of the Assets to
Purchaser in exchange for the consideration to Seller set forth in Section 3 and
shall take place at the office of Parker Duryee Rosoff & Haft, A Professional
Corporation, 529 Fifth Avenue, New
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York, New York 10017 on or about December 20, 1995 or on such other date as the
parties mutually agree.
10.2 Closing Date.
The date of Closing is herein referred to as the "Closing Date".
11. Miscellaneous Provisions.
11.1 Notices.
Any notice, request, instruction or other document to be given hereunder by
either party to the others, shall be in writing and delivered personally or sent
by registered or certified mail, postage prepaid, return receipt requested:
If to Purchaser, addressed to:
Worldwide Entertainment & Sports Corp.
33 Freeman Street
West Orange, New Jersey 07052
Attention: Marc Roberts
with a copy by ordinary mail to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attention: Herbert F. Kozlov
If to Seller, addressed to:
Shannon Briggs Boxing I, L.P.
33 Freeman Street
West Orange, New Jersey 07052
Attention: Marc Roberts
with a copy by ordinary mail to:
Howard Trinker, Esq.
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70 South Orange Avenue, Suite 109
Livingston, NJ 07039
Either party may change its address by notice to the other party hereunder of
such change.
11.2 Survival of Warranties and Representations.
The warranties and representations herein contained of either party shall
survive the Closing for the respective periods set forth in Section 9.4 above
and shall not be affected by any investigation made by the other party.
11.3 Entire Agreement.
This Agreement, and the agreements and documents herein referred to,
executed by the parties, supersede any earlier agreements between the parties,
and constitute the entire agreement between the parties referable to the subject
matter hereof, and representations, inducements, agreements, promises or
understandings altering, modifying, taking from or adding to its terms or
conditions shall not have any force and effect unless the same are in writing
and validly executed by the parties hereto.
11.4 Binding Effect.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
11.5 Governing Law.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New Jersey.
11.6 Captions.
The respective captions of the Articles and Sections of this Agreement are
inserted for convenience of reference only and shall not be deemed to modify in
any respect any of the provisions of this Agreement.
11.7 Dissolution of the Partnership.
The Partners shall take all necessary steps to dissolve and liquidate the
Partnership within 60 days after the Closing Date.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed the day and year first above written.
SHANNON BRIGGS BOXING I, L.P., Seller
By: S.B. CHAMPION MANAGEMENT INC.,
General Partner
By:_______________________________
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By:_______________________________
Marc Roberts, President
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SCHEDULE 2.1 (A)
(1) Loan Payable to Marc Roberts in the amount of $219,998.00
(2) Accrued expenses in the aggregate amount of $6,788.
(3) Taxes payable to CBT in the amount of $50.
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Exhibit 4.1(C)
Personal Property
None
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Exhibit 4.1(D)
Two life insurance policies with an aggregate value of $400,000
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Exhibit 4.1(E)
Litigation and Claims
A Settlement Agreement and Release has been entered into between and among
Michael L. Marley, Shannon Briggs, Marc Roberts, S.B. Champion Management, Inc.
and Shannon Briggs Boxing Limited Partnership I. The agreement provides for the
release, discharge and satisfaction of all claims, counterclaims and
cross-claims raised in the actions Michael Marley v. Marc Roberts, Shannon
Briggs, S.B. Champion Management Inc. and Shannon Briggs Boxing Limited
Partnership I (United States District Court, Southern District of New York 93
Civ. 8446) and S.B. Champion Inc., et al.. v. Marley (United States District
Court, District of New Jersey. Counsel of record for the parties have been
instructed to execute such stipulations of discontinuance as may be necessary to
terminate the foregoing actions.
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Exhibit 4.1(I)
Trademarks, Etc,
None
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Exhibit 4.1(J)
Indebtedness
See Schedule 2.1 (A)
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Amendment to Agreement of Acquisition of Assets
Agreement made as of the 31st day of March, 1996 by and between Shannon
Briggs Boxing I, L.P., a New Jersey limited partnership ("Seller") and Worldwide
Entertainment & Sports Corp., a Delaware corporation ("Purchaser"). All
capitalized terms used herein and not otherwise defined shall have the meaning
ascribed to such terms in the Agreement as defined below.
WHEREAS, Seller and Purchaser have entered into an Agreement of Acquisition
of Assets dated as of November 1, 1996 (the "Agreement"), pursuant to which
Seller has agreed to transfer its Assets and the Business as a going concern;
and
WHEREAS, the business of Purchaser has expanded and diversified since
November 1, 1995; and
WHEREAS, the parties have agreed to amend certain provisions of the
Agreement.
NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements set forth herein, the parties hereby agree as follows:
1. Paragraph 3. Acquisition Price and Payment of Acquisition Price is hereby
superseded and replaced in its entirety by the following:
3.1 Acquisition Price
The purchase price of the Assets shall be:
(i) 15% of the issued and outstanding capital stock of the Purchaser, $.01
par value (the "Shares").
Certificates representing the Shares shall be delivered to Seller's
counsel, Howard J. Trinker, Esq., 70 South Orange Ave., Livingston, New jersey
07039, within 120 days of the Closing Date (the "Certificate Delivery Date"),
such certificates to be in such names and denominations as Seller shall advise
Purchaser in writing two business days prior to the Certificate Delivery Date.
Purchaser shall give Seller and Seller's attorney at least five business days
prior notice of the Certificate Delivery Date.
2. Paragraph 10.2 Closing Date is hereby superseded and replaced in its entirety
by the following:
10.2 Closing Date
The date of Closing is herein referred to as the "Closing Date". The
Closing Date shall be April 20, 1996, and all the transactions contemplated
hereby shall be deemed to have been effected as of such date.
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3. Paragraph 11.7 Dissolution of the Partnership is hereby superseded and
replaced in its entirety as follows:
11.7 Dissolution of the Partnership
The Partners shall take all necessary steps to dissolve and liquidate the
Partnership not later than 30 days after the Certificate Delivery Date.
4. All other terms and provisions of the Agreement shall remain in full force
and effect. Any conflict between this Amendment and the Agreement shall be
governed by the terms of this Amendment.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the day and year first written above.
SHANNON BRIGGS BOXING I, L.P.
By: S.B. Champion Management, Inc.
General Partner
By:________________________________
Marc Roberts, President
WORLDWIDE ENTERTAINMENT & SPORTS CORP.
By:________________________________
Marc Roberts, President
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Exhibit 21.01
Subsidiaries of the Registrant
1) Worldwide Team Sports, Inc., a Delaware corporation.
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the board of directors of Worldwide Entertainment & Sports Corp.
We consent to the use of our reports on the Financial Statements of Worldwide
Entertainment & Sports Corp. in the Registration Statement of Form SB-2 filed
with the Securities and Exchange Commission and to the reference to our firm
under the headings "Selected Consolidated Financial Data" and "Experts" therein.
/s/ Rosenberg Rich Baker Berman & Company
July 23, 1996
