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OMB APPROVAL
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UNITED STATES OMB Number: 3235-0145
SECURITIES AND EXCHANGE COMMISSION Expires: August 31, 1999
WASHINGTON, DC 20549 Estimated average burden
hours per form......14.90
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___________)*
Worlds Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.001 par value
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(Title Class of Securities)
981918105
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(CUSIP Number)
Steven Chrust
c/o David Alan Miller
Graubard Mollen & Miller
600 Third Avenue, 31st Floor
New York, New York 10016
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 13, 1999
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 8 Pages
<PAGE>
- ------------------------------ -----------------------------
CUSIP No. 981918105 SCHEDULE 13D Page 2 of 8 Pages
- ------------------------------ -----------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)
SGC Advisory Services, Inc
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_|
(See Instructions) (b)|_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS* (See Instructions)
OO - Other
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
CONNECTICUT
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7 SOLE VOTING POWER
NUMBER OF 1,000,000
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,000,000
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
- ------------------------------ -----------------------------
CUSIP No. 981918105 SCHEDULE 13D Page 3 of 8 Pages
- ------------------------------ -----------------------------
- -------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)
Steven Chrust
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_|
(See Instructions) (b)|_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS* (See Instructions)
PF - Personal Funds
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) |_|
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER OF 136,000
SHARES ----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,000,000
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 136,000
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,000,000
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,136,000
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
|_|
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.5%
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Securities and Issuer
---------------------
The class of equity securities to which this statement relates is the
Common Stock, $.001 par value, of Worlds Inc. ("Company"), a New Jersey
corporation, whose principal executive offices are located at 15 Union Wharf,
Boston, Massachusetts 02109.
Item 2. Identity and Background
-----------------------
This statement is filed on behalf of SGC Advisory Services, Inc., a
corporation organized and existing under the laws of the State of Connecticut
("SGC") and Steven Chrust. SGC is in the business of consulting and financial
advice. SGC's business address is 1786 Bedford Street, Stamford, Connecticut
06905.
Steven Chrust is the president and sole shareholder of SGC. Mr.Chrust's
business address is 1786 Bedford Street, Stamford, Connecticut 06905. Mr. Chrust
is the President of SGC. Mr. Chrust is a United States citizen.
Neither SGC nor Mr. Chrust has been convicted in any criminal
proceeding (excluding traffic violations or similar misdemeanors) during the
last five years.
Neither SGC nor Mr. Chrust has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction resulting in a
judgment, decree or final order enjoining it from engaging in future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws during the
last five years.
Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
SGC acquired warrants to purchase 1,000,000 shares of Common Stock of
the Company on April 13, 1999, as consideration for consulting services which
SGC is rendering to the Company described in Item 6.
Mr. Chrust beneficially owns 1,136,000 shares of Common Stock, which
includes: (i) 1,000,000 shares of Common Stock, issuable upon the exercise of
presently exercisable warrants granted to SGC; (ii) 60,000 shares of Common
Stock held of record jointly by Steven and Sharon Chrust; (iii) 60,000 shares of
Common Stock held of record by Bear Stearns Securities Corp., as custodian for
Mr. Chrust's self-directed Individual Retirement Account; and (iv) 16,000 shares
of Common Stock held of record by Steven Chrust BSSC Master Def Contribution
Profit Sharing Account.
Page 4 of 8 Pages
<PAGE>
Item 4. Purpose of Transactions
-----------------------
SGC was issued warrants to purchase 1,000,000 shares of Common Stock as
consideration for consulting services. Steven Chrust has beneficial ownership of
1,136,000 shares of Common Stock which includes (i) the 1,000,000 shares of
Common Stock issuable upon exercise of these presently exercisable warrants;
(ii) 60,000 shares of Common Stock held of record jointly by Steven and Sharon
Chrust; (iii) 60,000 shares of Common Stock held of record by Bear Stearns
Securities Corp., as custodian for Mr. Chrust's self-directed Individual
Retirement Account; and (iv) 16,000 shares of Common Stock held of record by
Steven Chrust BSSC Master Def Contribution Profit Sharing Account. Mr. Chrust
holds his other shares and any shares he may acquire upon exercise of the
warrants for investment.
Steven Chrust, President of SGC, is also a member and Chairman of the
Board of Directors of the Company. Although Mr. Chrust, in his capacity as a
member and Chairman of the Board of Directors of the Company, may be involved in
the consideration of various proposals considered by the Board of Directors of
the Company, neither Mr. Chrust nor SGC has current plans which relate to or
would result in: an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
a sale or transfer of a material amount of assets of the Company or any of its
subsidiaries; any change in the current board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board of directors of the
Company; any material change in the present capitalization or dividend policy of
the Company; any other material change in the Company's business or corporate
structure; changes in the Company's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person; causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; causing a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities and Exchange Act of 1934; or any action similar to
the above.
Item 5. Interest in Securities of the Issuer
------------------------------------
SGC acquired warrants to purchase 1,000,000 shares of Common Stock on
April 13, 1999, directly from the Company. The warrants are immediately
exercisable and expire on April 13, 2006. The exercise price per share is $.50.
Accordingly, SGC is the beneficial owner of 1,000,000 shares of Common Stock.
This represents a beneficial ownership equal to 5.7% of the outstanding Common
Stock of the Company. Mr. Chrust, as President of SGC, has sole power to
exercise the warrants and, upon issuance of the Common Stock, to vote and
dispose of the shares of Common Stock.
Mr. Chrust is the beneficial owner of 1,136,000 shares of Common Stock.
This represents a beneficial ownership equal to 6.5% of the outstanding Common
Stock of the Company. Mr. Chrust has the direct and indirect power to vote and
dispose of the above shares of Common Stock. Mr. Chrust's beneficial ownership
of 1,136,000 shares of Common Stock includes: (i) 1,000,000 shares of Common
Stock issuable upon exercise the warrants held by SGC; (ii) 60,000 shares of
Page 5 of 8 Pages
<PAGE>
Common Stock held of record by Steven and Sharon Chrust jointly, acquired at a
price per share of $1.00 on October 21, 1997, purchased directly from the
Company; (iii) 60,000 shares of Common Stock held of record by Bear Stearns
Securities Corp., as custodian for Mr. Chrust's Individual Retirement Account,
acquired at a price per share of $1.00 on October 21, 1997, purchased directly
from the Company; (iv) 15,000 shares of Common Stock held of record by Steven
Chrust BSSC Master Def Contribution Profit Sharing Account, acquired at a price
per share of $1.6125 on December 7, 1998, purchased in an open market
transaction through the OTC Bulletin Board; and (v) 1,000 shares of Common Stock
held of record by Steven Chrust BSSC Master Def Contribution Profit Sharing
Account, acquired at a price per share of $1.545 on December 7, 1998, purchased
in an open market transaction through the OTC Bulletin Board.
Item 6. Contracts, Agreements, Understandings or Relationship with
Respect to Securities of Issuer
-------------------------------
On March 23, 1999, SGC entered into a Financial Advisory and Consulting
Agreement with the Company ("Consulting Agreement") pursuant to which the
Company engaged SGC to render consulting advice for a period of 36 months from
April 13, 1999, and SGC was granted warrants to purchase 1,000,000 shares of the
Company's Common Stock. In addition, Mr. Chrust was appointed as a member and
Chairman of the Board of Directors of the Company.
On April 13, 1999, Michael Scharf and Thomas Kidrin, directors and
shareholders of the Company, and Steven Greenberg, a shareholder of the Company,
agreed to contribute to the capital of the Company for cancellation 318,750,
300,000 and 881,250 shares respectively. Each of them also agreed that during
the term of the Consulting Agreement, they will vote any shares of stock of the
Company which they own or subsequently acquire, or over which they have voting
control, for the election of Mr. Chrust as a director of the Company at any
meeting of the Company held for the purpose of electing directors and will sign
any written consent to elect Mr. Chrust as a director if such written consent is
provided in lieu of a meeting.
On April 13, 1999, the Company issued to SGC warrants to purchase
1,000,000 shares of the Company's Common Stock as consideration for consulting
services SGC is rendering to the Company. The warrants are immediately
exercisable at an exercise price of $.50 per share and expire on April 13, 2006.
The warrants are fully earned by SGC and may not be terminated by the Company
for any reason. The warrant and the securities underlying the warrant cannot be
transferred unless applicable securities laws are complied with. The warrant
also provides for demand and "piggy-back" registration rights, indemnification
of SGC under the Securities Exchange Act of 1934, as amended, anti-dilution
provisions, a requirement by the Company to reserve the number of shares of
Common Stock issuable upon the exercise of the warrant and preemptive rights.
Item 7. Materials to be Filed as Exhibits
---------------------------------
(10.1) Joint Filing Agreement dated as of April 14, 1999 (Filed
herewith).
(10.2) Financial Advisory and Consulting Agreement, dated
March 23, 1999, between the Company and SGC
Advisory Services, Inc. (Filed herewith).
Page 6 of 8 Pages
<PAGE>
(10.3) Warrant to purchase 1,000,000 shares of the
Company's Common Stock issued to SGC Advisory
Services, Inc., dated April 13, 1999 (Filed herewith).
(10.4) Contribution/Voting Agreement, dated April 13, 1999
among Messrs. Scharf, Kidrin and Greenberg (Filed
herewith).
Page 7 of 8 Pages
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: April 15, 1999
SGC Advisory Services, Inc.
By: /s/ Steven Chrust
---------------------------
Steven Chrust, President
Page 8 of 8 Pages
<PAGE>
Exhibit 10.1
JOINT FILING AGREEMENT
Agreement dated as of April 15, 1999, among SGC Advisory Services, Inc.
and Steven Chrust (collectively, the "Parties").
Each of the Parties hereto represents to the other Party that it is
eligible to use Schedule 13D to report its beneficial interest in shares of
common stock, $.001 par value per share, of WORLDS INC. ("Schedule 13D") and it
will file the Schedule 13D on behalf of itself.
Each of the Parties agrees to be responsible for the timely filing of
the Schedule 13D and any and all amendments thereto and for the completeness and
accuracy of the information concerning itself contained in the Schedule 13D, and
the other Party to the extent it knows or has reason to believe that any
information about the other Parties is inaccurate.
SGC ADVISORY SERVICES, INC.
/s/ Steven Chrust
---------------------------
By: Steven Chrust, President
/s/ Steven Chrust
----------------------------
Steven Chrust
<PAGE>
EXHIBIT 10.2
FINANCIAL ADVISORY AND CONSULTING AGREEMENT
-------------------------------------------
This Agreement is made and entered into as of the 23rd day of March,
1999 between SGC Advisory Services, Inc. ("SGC" or the "Consultant") and Worlds
Inc. (the "Company").
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Company hereby engages the Consultant to render financial advisory
and consulting service to the Company upon the terms and conditions set
forth herein. The term of this Agreement shall be for 36 months commencing
as of the "Start Date," as defined below. On or prior to April 13, 1999,
the Company shall appoint Steven Chrust as a member and Chairman of its
Board of Directors (the date of such appointment referred to herein as the
"Start Date"). The Company agrees that it will nominate Mr. Chrust for
election as a director at any shareholder's meeting held for the purpose of
electing directors during the term of this Agreement. As long as Mr. Chrust
is a director of the Company, he shall retain his title of Chairman of the
Board.
2. During the term of this Agreement, Consultant shall provide the Company
with such regular and customary financial consulting advice as is
reasonably requested by the Company. It is understood and acknowledged by
the parties that the value of Consultant's advice is not readily
quantifiable, and that although Consultant shall be obligated to render the
advice contemplated by this Agreement upon the reasonable request of the
Company, Consultant shall not be obligated to spend any specific amount of
time in so doing. Consultant's duties may include, but will not necessarily
be limited to:
(a) Rendering advice with regard to internal operations, including:
(i) the formation of corporate goals and their implementation;
(ii) the Company's financial structure and its divisions or
subsidiaries; and
(iii) corporate organization and personnel.
(b) Rendering advice with regard to any of the following corporate
finance matters:
(i) changes in the capitalization of the Company;
(ii) changes in the Company's corporate structure;
(iii) redistribution of shareholdings of the Company's stock;
(iv) offerings of securities in public and private transactions;
1
<PAGE>
(v) alternative uses of corporate assets;
(vi) structure and use of debt; and
(vii) sales of stock by insiders pursuant to Rule 144 or
otherwise.
(c) Assistance in connection with the preparation and dissemination of
information about the Company to the investment community at large and
otherwise assisting in the Company's financial public relations.
In addition to the foregoing, Consultant agrees to (A) furnish advice
to the Company in connection with the acquisition of and/or merger with
other companies, the sale of the Company itself, or any of its assets,
subsidiaries or affiliates, or similar type of transaction hereinafter
referred to as a "Transaction"), (B) assist the Company in identifying
potential partners in connection with a Transaction, (C) furnish advice to
the Company in connection with financings from financial institutions,
including but not limited to lines of credit, performance bonds, letters of
credit, loans or other financings (hereinafter referred to as a "Bank
Financing"), and (D) assist the Company in the negotiation and review of
all documents submitted to the Company by third parties in connection with
a potential Transaction or Bank Financing.
Consultant shall also render such other financial consulting and/or
investment banking services as may from time to time be agreed upon by
Consultant and the Company.
3. The Company shall pay Consultant the following compensation:
(a) an annual fee of $120,000 in monthly installments of $10,000,
commencing on the Start Date; provided, however, that such monthly
payments shall accrue and not be paid in cash until the date by which
the Company has raised at least $1,500,000 in debt or equity
financings consummated at any time during the term of this Agreement
("Financing Trigger Date"). If the Company does not raise such
financing, no fees shall be paid. If the Company raises such
financing, then all accrued and unpaid fees shall be paid on the
Financing Trigger Date and all payments will be made monthly, in cash,
thereafter for as long as this Agreement remains in effect.
Notwithstanding the foregoing, the annual fee shall increase to
$300,000 ($25,000 per month) at such time when (i) the Company's
market value (i.e. the number of outstanding shares multiplied by the
market price) exceeds $100,000,000, and (ii) the Company has raised at
least $5,000,000 in debt or equity financings consummated at any time
during the term of this Agreement.
(b) warrants ("Warrants") to purchase 1,000,000 shares of the
Company's Common Stock, exercisable for a period of seven years
commencing on the Start Date at an exercise price $.50 per share. The
Warrants are fully earned by SGC (and/or its designees) as of the
execution of this Agreement and may not be terminated by the Company
for any reason.
2
<PAGE>
4. In addition to the fees payable hereunder, the Company shall reimburse
Consultant for all reasonable travel and out-of-pocket expenses incurred in
connection with the services performed by Consultant pursuant to this
Agreement, promptly after submission to the Company of appropriate evidence
of such expenditures. Notwithstanding the foregoing, Consultant shall incur
no more than $3,000.00 of expenses in any calendar month without Company's
consent.
5. The Company acknowledges that all opinions and advice (written or oral)
given by Consultant to the Company in connection with Consultant's
engagement are intended solely for the benefit and use of the Company in
considering the transaction to which they relate, and the Company agrees
that no person or entity other than the Company shall be entitled to make
use of or rely upon the advice of Consultant to be given hereunder, and no
such opinion or advice shall be used for any manner or for any purpose, nor
may the Company make any public references to Consultant, or use the
Consultant's name in any annual reports or any other reports or releases of
the Company, without Consultant's prior written consent.
6. Consultant will hold in confidence any information which the Company
provides to Consultant pursuant to this Agreement which is confidential and
not part of the public domain. Notwithstanding the foregoing, Consultant
shall not be required to maintain confidentiality with respect to
information (i) which is or becomes part of the public domain not due to
the breach of this Agreement by Consultant; (ii) of which it had
independent knowledge prior to disclosure; (iii) which comes into the
possession of Consultant in the normal and routine course of its own
business from and through independent non-confidential sources; or (iv)
which is required to be disclosed by Consultant by laws, rules or
regulations. If Consultant is requested or required to disclose any
confidential information supplied to it by the Company, Consultant shall,
unless prohibited by law, promptly notify the Company of such request(s) so
that the Company may seek an appropriate protective order. Upon termination
of this Agreement or at the earlier request of the Company, Consultant
shall return to the Company all confidential documents, files, reports and
data regarding the Company, its business or its finances then in
Consultant's possession.
7. The Company acknowledges that Consultant or its affiliates are in the
business of providing financial services and consulting advice to others.
Nothing herein contained shall be construed to limit or restrict Consultant
in conducting such business with others, or in rendering such advice to
others.
8. The Company recognizes and confirms that, in advising the Company
hereunder, Consultant will use and rely on data, material and other
information furnished to Consultant by the Company, without independently
verifying the accuracy, completeness or veracity of same.
9. The Company agrees to indemnify and hold harmless SGC, its employees,
agents, representatives and controlling persons from and against any and
all losses, claims, damages, liabilities, suits, actions, proceedings,
3
<PAGE>
costs and expenses (collectively, "Damages"), including, without
limitation, reasonable attorney fees and expenses, as and when incurred, if
such Damages were directly or indirectly caused by, relating to, based upon
or arising out of the rendering by SGC of services pursuant to this
Agreement, so long as SGC shall not have engaged in intentional or willful
misconduct, or shall have acted grossly negligently, in connection with the
services provided which form the basis of the claim for indemnification.
The Company agrees to indemnify and hold harmless Steven Chrust, to the
fullest extent possible under law, for Damages, as and when incurred, if
such Damages were directly or indirectly caused by, relating to, based upon
or arising out of Mr. Chrust acting as a director and/or Chairman of the
Board of Directors of the Company. This paragraph shall survive the
termination of this Agreement. Notwithstanding the foregoing, if the
Company has entered into indemnification agreements or agreements with an
executive officer or director which is more favorable to such person then
as set forth above, the Company shall promptly after the execution of this
agreement, enter into a similar agreement with Mr. Chrust.
10. Consultant shall perform its services hereunder as an independent
contractor and not as an employee or agent of the Company or any affiliate
thereof. Consultant shall have no authority to act for, represent or bind
the Company or any affiliate thereof in any manner, except as may be
expressly agreed to by the Company in writing from time to time.
11. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof. No provision of this Agreement
may be amended, modified or waived, except in a writing signed by both
parties. This Agreement shall be binding upon and inure to the benefit of
each of the parties and their respective successors, legal representatives
and assigns. This Agreement may be executed in counterparts. In the event
of any dispute under this Agreement, then and in such event, each party
agrees that the same shall be submitted to the American Arbitration
Association ("AAA") in the City of New York, for its decision and
determination in accordance with its rules and regulations then in effect.
Each of the parties agrees that the decision and/or award made by the AAA
may be entered as judgment of the Courts or the State of New York, and
shall be enforceable as such. This Agreement shall be construed and
enforced in accordance with the laws of the State of New York, without
giving effect to conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the day and year first above written.
SGC ADVISORY SERVICES, INC. WORLDS INC.
By: /s/ Steven Chrust By: /s/ Thomas Kidrin
------------------------ ------------------------
Name: Steven Chrust Name: Thomas Kidrin
Title: President Title: President and Chief
Executive Officer
4
<PAGE>
EXHIBIT 10.3
THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF,
AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN
THIS WARRANT EXCEPT AS HEREIN PROVIDED.
VOID AFTER 5:00 P.M. EASTERN TIME, APRIL 13, 2006
WARRANT
For the Purchase of
1,000,000 Shares of Common Stock
of
WORLDS INC.
1. Warrant.
THIS CERTIFIES THAT, in consideration of $10.00 and other good and valuable
consideration,duly paid by or on behalf of SGC Advisory Services, Inc.
("Holder"), as registered owner of this Warrant, to SGC Advisory Services, Inc.
("Company"), Holder is entitled, at any time or from time to time at or after
April 13, 1999 ("Commencement Date"), and at or before 5:00 p.m., Eastern Time
April 13, 2006 ("Expiration Date"), but not thereafter, to subscribe for,
purchase and receive, in whole or in part, up to one million (1,000,000) shares
of Common Stock of the Company, $.001 par value ("Common Stock"). If the
Expiration Date is a day on which banking institutions are authorized by law to
close, then this Warrant may be exercised on the next succeeding day which is
not such a day in accordance with the terms herein. During the period ending on
the Expiration Date, the Company agrees not to take any action that would
terminate the Warrant. This Warrant is initially exercisable at $.50 per share
of Common Stock purchased; provided, however, that upon the occurrence of any of
the events specified in Section 6 hereof, the rights granted by this Warrant,
including the exercise price and the number of shares of Common Stock to be
received upon such exercise, shall be adjusted as therein specified. The term
"Exercise Price" shall mean the initial exercise price or the adjusted exercise
price, depending on the context, of a share of Common Stock. The term
"Securities" shall mean the shares of Common Stock issuable upon exercise of
this Warrant.
2. Exercise.
2.1 Exercise Form. In order to exercise this Warrant, the exercise form
attached hereto must be duly executed and completed and delivered to the
Company, together with this Warrant and payment of the Exercise Price for the
Securities being purchased. All or any part of the Exercise Price may be paid by
the Holder by applying amounts, if any, otherwise due and payable by the Company
to Holder under the Financial Advisory and Consulting Agreement dated as of
March 23, 1999, between the Company and Holder. If the subscription rights
represented hereby shall not be exercised at or before 5:00 p.m., Eastern time,
on the Expiration Date, this Warrant shall become and be void without further
force or effect, and all rights represented hereby shall cease and expire.
<PAGE>
2.2 Legend. Each certificate for Securities purchased under this Warrant
shall bear a legend as follows, unless such Securities have been registered
under the Securities Act of 1933, as amended ("Act"):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act") or
applicable state law. The securities may not be offered for sale, sold
or otherwise transferred except pursuant to an effective registration
statement under the Act, or pursuant to an exemption from registration
under the Act and applicable state law."
2.3 Conversion Right.
2.3.1 Determination of Amount. In lieu of the payment of the Exercise
Price in cash, the Holder shall have the right (but not the obligation) to
convert this Warrant, in whole or in part, into Common Stock ("Conversion
Right"), as follows: upon exercise of the Conversion Right, the Company
shall deliver to the Holder (without payment by the Holder of any of the
Exercise Price) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the "Value" (as defined below) of the portion of
the Warrant being converted at the time the Conversion Right is exercised
by (y) the Market Price. The "Value" of the portion of the Warrant being
converted shall equal the remainder derived from subtracting (a) the
Exercise Price multiplied by the number of shares of Common Stock
underlying the portion of the Warrant being converted from (b) the Market
Price of the Common Stock multiplied by the number of shares of Common
Stock underlying the portion of the Warrant being converted. As used
herein, the term "Market Price" at any date shall be deemed to be the last
reported sale price of the Common Stock on such date, or, in case no such
reported sale takes place on such day, the average of the last reported
sale prices for the immediately preceding three 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 or
if any such exchange on which the Common Stock is listed is not its
principal trading market, the last reported sale price as furnished by the
National Association of Securities Dealers, Inc. ("NASD") through the
Nasdaq National Market or SmallCap Market, or, if applicable, the OTC
Bulletin Board, or if the Common Stock is not listed or admitted to trading
on any of the foregoing markets, or similar organization, as determined in
good faith by resolution of the Board of Directors of the Company, based on
the best information available to it.
2.3.2 Exercise of Conversion Right. The Conversion Right may be
exercised by the Holder on any business day on or after the Commencement
Date and not later than the Expiration Date by delivering the Warrant with
a duly executed exercise form attached hereto with the conversion section
completed to the Company, exercising the Conversion Right and specifying
the total number of shares of Common Stock the Holder will purchase
pursuant to such conversion.
2.4 Taxes. The Company may, in its sole and absolute discretion, reimburse
Holder for any income taxes payable by Holder as a result of the exercise or
conversion of this Warrant.
3. Transfer.
3.1 General Restrictions. The registered Holder of this Warrant, by its
acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone except upon compliance with, or pursuant to
exemptions from, applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the assignment form attached
hereto duly executed and completed, together with this Warrant and payment of
all transfer taxes, if any, payable in connection therewith. The Company shall
immediately transfer this Warrant on the books of the Company and
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shall execute and deliver a new Warrant or Warrants of like tenor to the
appropriate assignees expressly evidencing the right to purchase the aggregate
number of shares of Common Stock purchasable hereunder or such portion of such
number as shall be contemplated by any such assignment.
3.2 Restrictions Imposed by the Securities Act. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until (i)
the Company has received the opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the Act,
and applicablestate law, the availability of which is established to the
reasonable satisfaction of the Company, or (ii) a registration statement
relating to such Securities has been filed by the Company and declared effective
by the Securities and Exchange Commission and compliance with applicable state
law.
4. New Warrants to be Issued.
4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3
hereof, this Warrant may be exercised or assigned in whole or in part. In the
event of the exercise or assignment hereof in part only, upon surrender of this
Warrant for cancellation, together with the duly executed exercise or assignment
form and funds (or conversion equivalent) sufficient to pay any Exercise Price
and/or transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Warrant of like tenor to this Warrant in the name of the
Holder evidencing the right of the Holder to purchase the aggregate number of
shares of Common Stock and Warrants purchasable hereunder as to which this
Warrant has not been exercised or assigned.
4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant and of
reasonably satisfactory indemnification, the Company shall execute and deliver a
new Warrant of like tenor and date. Any such new Warrant executed and delivered
as a result of such loss, theft, mutilation or destruction shall constitute a
substitute contractual obligation on the part of the Company.
5. Registration Rights.
5.1 Demand Registration. The Company, upon written demand ("Initial Demand
Notice") of a Holder made at any time, agrees to register, on one occasion, all
or any portion of the Common Stock underlying this Warrant(collectively, the
"Registrable Securities"). On such occasion, the Company will file a
registration statement covering the Registrable Securities within sixty days
after receipt of the Initial Demand Notice and use its best efforts to have
such registration statement declared effective promptly thereafter; provided,
however, the Company may delay such filing of a registration statement for one
period of up to 45 consecutive days after receipt of the Initial Demand Notice
if the Company believes, in good faith, that filing the registration statement
would materially adversely impact the Company's then ongoing discussions or
negotiations regarding a merger, acquisition, financing transaction or other
similar transaction. If the Company fails to comply with the provisions of this
Section 5.1, the Company shall, in addition to any other equitable or other
relief available to the Holders, be liable for any and all incidental, special
and consequential damages sustained by the Holders.
5.2 "Piggy-Back" Registration. The Holders of this Warrant upon written
demand shall have the right made at any time to include the Registrable
Securities as part of any registration of securities filed by the Company (other
than in connection with a transaction contemplated by Rule 145(a) promulgated
under the Act or pursuant to Form S-8 or any equivalent form); provided,
however, that if, in the written opinion of the Company's managing underwriter
or underwriters, if any, for such offering (the "Underwriter"), the inclusion of
the Registrable Securities, when added to the securities being registered by the
Company or the selling stockholder(s), will exceed the maximum amount of the
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Company's securities which can be marketed (i) at a price reasonably related to
their then current market value, or (ii) without materially and adversely
affecting the entire offering, the Company shall nevertheless register all or
any portion of the Registrable Securities required to be so registered but such
Registrable Securities shall not be sold by the Holders until 90 days after the
registration statement for such offering has become effective; and provided
further that, if any securities are registered for sale on behalf of other
stockholders in such offering and such stockholders have not agreed to defer
such sale until the expiration of such 90 day period, the number of securities
to be sold by all stockholders in such public offering during such 90 day period
shall be apportioned pro rata among all such selling stockholders, including all
holders of the Registrable Securities, according to the total amount of
securities of the Company proposed to be sold by said selling stockholders,
including all holders of the Registrable Securities.
5.3 Terms. The Company shall bear all fees and expenses attendant to
registering the Registrable Securities, including any filing fees payable to the
National Association of Securities Dealers, Inc. but the Holders shall pay any
and all underwriting commissions and the expenses of any legal counsel selected
by the Holders to represent them in connection with the sale of the Registrable
Securities. The Company agrees to use is best efforts to cause the filing
required herein to become effective promptly and to qualify or register the
Registrable Securities in such States as are reasonably requested by the
Holder(s); provided, however, that in no event shall the Company be required to
register the Registrable Securities in a State in which such registration would
cause (i) the Company to be obligated to register or license to do business in
such State or consent to general service of process in such jurisdiction, or
(ii) the principal shareholders of the Company to be obligated to escrow their
shares of capital stock of the Company. In the event of a proposed registration
under Section 5.2, the Company shall furnish the then Holders of outstanding
Registrable Securities with not less than twenty days written notice prior to
the proposed date of filing of such registration statement. Such notice to the
Holders shall continue to be given for each registration statement filed by the
Company until such time as all of the Registrable Securities have been sold by
the Holder. The holders of the Registrable Securities shall exercise the
"piggy-back" rights provided for herein by giving written notice, within ten
days of the receipt of the Company's notice of its intention to file a
registration statement. The Company shall cause any registration statement filed
pursuant to the demand rights granted under Section 5.1 or pursuant to the
"piggyback" rights granted under Section 5.2 to remain effective until all of
the Registrable Securities covered by such registration statement have been sold
or are freely saleable, without restriction, under an exemption from the
registration requirements. Nothing contained in this Warrant shall be construed
as requiring any Holder to exercise this Warrant or any part thereof prior to
the initial filing of any registration statement or the effectiveness thereof.
5.4 General Terms
5.4.1 Indemnification.
5.4.1.1 The Company shall indemnify the Holder(s) of the
Registrable Securities to be sold pursuant to any registration statement
hereunder and any underwriter or person deemed to be an underwriter under the
Act and each person, if any, who controls such Holders or underwriters or
persons deemed to be underwriters 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
reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from such registration statement. The Holder(s) of the Registrable Securities to
be sold pursuant to such registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, against all
loss, claim, damage, expense or liability (including all reasonable attorneys'
fees and other expenses reasonably
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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, in writing,
for specific inclusion in such registration statement.
5.4.1.2 If any action is brought against a party
hereto, ("Indemnified Party") in respect of which indemnity may be sought
against the other party ("Indemnifying Party"), such Indemnified Party shall
promptly notify Indemnifying Party in writing of the institution of such action
and Indemnifying Party shall assume the defense of such action, including the
employment and fees of counsel reasonably satisfactory to the Indemnified Party.
Such Indemnified Party shall have the right to employ its or their own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the employment of such counsel
shall have been authorized in writing by Indemnifying Party in connection with
the defense of such action, or (ii) Indemnifying Party shall not have employed
counsel to defend such action, or (iii) such Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to it
which may result in a conflict between the Indemnified Party and Indemnifying
Party (in which case Indemnifying Party shall not have the right to direct the
defense of such action on behalf of the Indemnified Party), in any of which
events, the reasonable fees and expenses of not more than one additional firm of
attorneys designated in writing by the Indemnified Party shall be borne by
Indemnifying Party. Notwithstanding anything to the contrary contained herein,
if Indemnified Party shall assume the defense of such action as provided above,
Indemnifying Party shall not be liable for any settlement of any such action
effected without its written consent.
5.4.1.3 If the indemnification or reimbursement
provided for hereunder is finally judicially determined by a court of competent
jurisdiction to be unavailable to an Indemnified Party (other than as a
consequence of a final judicial determination of willful misconduct, bad faith
or gross negligence of such Indemnified Party), then Indemnifying Party agrees,
in lieu of indemnifying such Indemnified Party, to contribute to the amount paid
or payable by such Indemnified Party (i) in such proportion as is appropriate to
reflect the relative benefits received, or sought to be received, by
Indemnifying Party on the one hand and by such Indemnified Party on the other or
(ii) if (but only if) the allocation provided in clause (i) of this sentence is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in such clause (i) but also the
relative fault of Indemnifying Party and of such Indemnified Party; provided,
however, that in no event shall the aggregate amount contributed by a Holder
exceed the profit, if any, earned by such Holder as a result of the exercise by
him of the Warrants and the sale by him of the underlying shares of Common
Stock.
5.4.1.4 The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
5.4.2 Exercise of Warrants. Nothing contained in this Warrant
shall be construed as requiring the Holder(s) to exercise their Warrants prior
to or after the initial filing of any registration statement or the
effectiveness thereof.
5.4.3 Documents Delivered to Holders. The Company shall
furnish to each Holder participating in any of the foregoing offerings and to
each Underwriter of any such offering, 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 any underwriting agreement related thereto), 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 accountants who have issued a report on the
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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' letters delivered to underwriters in underwritten public
offerings of securities. The Company shall also deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriter copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff 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 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.
6. Adjustments
6.1 Adjustments to Exercise Price and Number of Securities. The Exercise
Price and the number of shares of Common Stock underlying this Warrant
shall be subject to adjustment from time to time as hereinafter set forth:
6.1.1 Stock Dividends - Recapitalization, Reclassification, Split-Ups.
If, after the date hereof, and subject to the provisions of Section 6.2 below,
the number of outstanding shares of Common Stock is increased by a stock
dividend on the Common Stock payable in shares of Common Stock or by a
split-up, recapitalization or reclassification of shares of Common Stock or
other similar event, then, on the effective date thereof, the number of shares
of Common Stock issuable on exercise of this Warrant shall be increased in
proportion to such increase in outstanding shares.
6.1.2 Adjustment Due to Issuances at Less Than the Exercise
Price. If, at any time when Warrants are issued and outstanding, the Company
shall issue or sell any shares of Common Stock, including shares held in the
Company's treasury, or securities exercisable or convertible into or
exchangeable for shares of Common Stock, at a consideration per share or with an
exchange, conversion or exercise price (in any case the "Lower Price") that is
less than the Exercise Price in effect immediately prior to the issuance or sale
of such securities (and no adjustment is required to be made pursuant to Section
6.1.1 above), then immediately upon such issuance or sale, the Exercise Price
shall be reduced to the Lower Price.
6.1.3 Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 6.3, the number of outstanding shares of
Common Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then, upon the effective date
thereof, the number of shares of Common Stock issuable on exercise of this
Warrant shall be decreased in proportion to such decrease in outstanding shares.
6.1.4 Adjustments in Exercise Price. Whenever the number of
shares of Common Stock purchasable upon the exercise of this Warrant is
adjusted, as provided in this Section 6.1, the Exercise Price shall be adjusted
(to the nearest cent) by multiplying such Exercise Price immediately prior to
such adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.
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6.1.5 Replacement of Securities upon Reorganization, etc. In
case of any reclassification or reorganization of the outstanding shares of
Common Stock other than a change covered by Section 6.1.1 hereof or which solely
affects the par value of such shares of Common Stock, or in the case of any
merger or consolidation of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), or in the case of any sale or
conveyance to another corporation or entity of the property of the Company as an
entirety or substantially as an entirety in connection with which the Company is
dissolved, the Holder of this Warrant shall have the right thereafter (until the
expiration of the right of exercise of this Warrant) to receive upon the
exercise hereof, for the same aggregate Exercise Price payable hereunder
immediately prior to such event, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or other transfer, by a Holder of the number of shares of Common Stock
of the Company obtainable upon exercise of this Warrant immediately prior to
such event; and if any reclassification also results in a change in shares of
Common Stock covered by Sections 6.1.1 or 6.1.3, then such adjustment shall be
made pursuant to Sections 6.1.1, 6.1.3, 6.1.4 and this Section 6.1.5. The
provisions of this Section 6.1.5 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
6.1.6 Changes in Form of Warrant. This form of Warrant need
not be changed because of any change pursuant to this Section, and Warrants
issued after such change may state the same Exercise Price and the same number
of shares of Common Stock and Warrants as are stated in the Warrants initially
issued pursuant to this Agreement. The acceptance by any Holder of the issuance
of new Warrants reflecting a required or permissive change shall not be deemed
to waive any rights to a prior adjustment or the computation thereof.
6.2 Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of this Warrant, nor shall it be required to issue scrip or
pay cash in lieu of any fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.
7. Reservation and Listing. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
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 and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any stockholder.
As long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon exercise of the
Warrants to be listed (subject to official notice of issuance) on all securities
exchanges (or, if applicable on Nasdaq) on which the Common Stock is then listed
and/or quoted.
8. Certain Notice Requirements.
8.1 Holder's Right to Receive Notice. Nothing herein shall be construed
as conferring upon the Holders the right to vote or consent or to receive notice
as a stockholder 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 events
described in
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Section 8.2 shall occur, then, in one or more of said events, the Company shall
give written notice of such event at least fifteen 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, conversion or
exchange of 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 the closing of the transfer books, as the case
may be.
8.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i)
if the Company shall take a record of the holders of its shares of Common Stock
for the purpose of entitling them to receive a dividend or distribution, or (ii)
the Company shall offer to all the holders of its Common Stock any additional
shares of capital stock of the Company or securities convertible into or
exchangeable for shares of capital stock of the Company, or any option, right or
warrant to subscribe therefor, or (iii) a merger or reorganization in which the
Company is not the surviving party, or (iv) 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 shall be proposed.
8.3 Notice of Change in Exercise Price. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to Section 6
hereof, send notice to the Holders of such event and change ("Price Notice").
The Price Notice shall describe the event causing the change and the method of
calculating same and shall be certified as being true and accurate by the
Company's President and Chief Financial Officer.
8.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt by the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of this Warrant, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, to its principal executive
office.
9. Preemptive Rights. If at any time prior to April 13, 2002, the Company
proposes to offer or sell shares, or securities convertible into or exercisable
for shares (excluding options granted at fair market value on the date of grant
under the Company's Stock Option Plans), of any class of the Company's capital
stock ("New Issuances"), the Company shall notify the Holder in writing
detailing all terms and conditions of the New Issuances at least ten business
days prior to the consummation of the New Issuances and Holder shall have the
preemptive right, on the same terms and conditions as the New Issuances, to
purchase that number of shares (or other securities) sufficient to permit the
Holder to maintain his proportionate economic interest in the Company
(determined by dividing (i) the number of shares owned by the Holder plus the
number of shares the Holder has the right to acquire, by (ii) the total number
of shares outstanding). The closing for the sale to the Holder shall take place
concurrently with and is subject to the consummation of the New Issuances to
persons other than the Holder, which date shall be disclosed in the
aforementioned notice.
10. Miscellaneous.
10.1 Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Warrant.
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10.2 Entire Agreement. This Warrant (together with the other agreements
and documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
10.3 Binding Effect. This Warrant shall inure solely to the benefit of
and shall be binding upon, the Holder and the Company 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 Warrant or any provisions herein contained.
10.4 Governing Law; Submission to Jurisdiction. This Warrant shall be
governed by and construed and enforced in accordance with the law of the State
of New York, without giving effect to conflict of laws. The Company hereby
agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Warrant 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 hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum. Any
process or summons to be served upon the Company 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 8 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys' fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
10.5 Waiver, Etc. The failure of the Company or the Holder to at any
time enforce any of the provisions of this Warrant shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Warrant or any provision hereof or the right of the Company or
any Holder to thereafter enforce each and every provision of this Warrant. No
waiver of any breach, non-compliance or non-fulfillment of any of the provisions
of this Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer as of the 13th day of April, 1999.
WORLDS INC.
By: /s/ Thomas Kidrin
-------------------
Name: Thomas Kidrin
Title: President and Chief
Executive Officer
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Form to be used to exercise Warrant:
- -----------------------------------
- -----------------------------------
- -----------------------------------
Date: _____________________, 19___
The undersigned hereby elects irrevocably to exercise the
within Warrant and to purchase ________ shares of Common Stock of
_________________________ and hereby makes payment of $____________ (at the rate
of $_________ per share of Common Stock) in payment of the Exercise Price
pursuant thereto. Please issue the Common Stock as to which this Warrant is
exercised in accordance with the instructions given below.
or
--
The undersigned hereby elects irrevocably to convert its right
to purchase ____________ shares of Common Stock purchasable under the within
Warrant into __________ shares of Common Stock of ______________________________
(based on a "Market Price" of $________ per share of Common Stock). Please issue
the Common Stock in accordance with the instructions given below.
--------------------------------------
Signature
- ---------------------------
Signature Guaranteed
NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name ________________________________________________________
(Print in Block Letters)
Address ________________________________________________________
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Form to be used to assign Warrant:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer
of the within Warrant):
FOR VALUE RECEIVED, ________________________________ does
hereby sell, assign and transfer unto _________________________________ the
right to purchase _____________________ shares of Common Stock of
_________________________________ ("Company") evidenced by the within Warrant
and does hereby authorize the Company to transfer such right on the books of the
Company.
Dated:____________________, 19___
--------------------------------------
Signature
NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
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EXHIBIT 10.4
AGREEMENT
April 13, 1999
Mr. Steven Chrust
SGC Advisory Services, Inc.
1786 Bedford Street
Stamford, CT 06905
Worlds Inc.
693 Fifth Avenue
New York, New York 10022
Re: Contribution and Voting
-----------------------
Dear Sirs:
The undersigned hereby agree, in connection with the Financial Advisory
and Consulting Agreement ("Consulting Agreement") between SGC Advisory Services,
Inc. and Worlds Inc. (the "Corporation"), dated as of March 23, 1999, that:
1. On the date hereof, they are each contributing to the capital of the
Corporation for cancellation that number of shares set forth opposite his name
below:
Steven Greenberg 881,250
Michael Scharf 318,750
Thomas Kidrin 300,000
TOTAL: 1,500,000
2. During the term of the Consulting Agreement, they will each vote any
shares of stock of the Corporation which they own or hereafter acquire, or over
which they have voting control, for the election of Steven Chrust as a director
of the Corporation at any meeting of the Corporation held for the purpose of
electing directors (and agree to sign any written consent to elect Steven Chrust
as a director if such written consent is provided in lieu of a meeting).
/s/ Steven Greenberg
------------------------------
Steven Greenberg
/s/ Michael Scharf
------------------------------
Michael Scharf
/s/ Thomas Kidrin
------------------------------
Thomas Kidrin
