As filed with the Securities and Exchange Commission on October 29, 1999
Registration No. 333-
- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
WORLDS INC.
(Exact name of registrant as specified in its charter)
New Jersey 221848316
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
15 UNION WHARF
BOSTON, MA 02190
(Address of principal executive offices)
1997 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
AND
OTHER EMPLOYEE BENEFIT PLANS
(Full title of the Plans)
THOMAS KIDRIN
President and Chief Executive Officer
Worlds Inc.
15 Union Wharf
Boston, MA 02190
(617) 725-8900
(Name, address and telephone number, including area code, of agent for service)
with a copy to:
DAVID ALAN MILLER, Esq.
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016-2097
(212) 818-8800
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of Securities Amount to be offering price aggregate Amount of
to be registered registered per share offering price registration fee
========================= ============= =============== ================ ================
<S> <C> <C> <C> <C>
Common stock issuable
upon exercise of options
granted and outstanding
under the 1997 Incentive
and Non-Qualified Stock
Option Plan ("1997
Plan") 889,500 $ 1.61(1) $ 1,432,095.00 $ 398.12
Common stock issuable
upon exercise of options
that may be granted
under the 1997 Plan 2,035,500 $ 3.4375(2) $ 6,997,031.25 $ 1,945.18
Common stock issuable
upon exercise of options
granted and outstanding
under other employee
benefit plans ("Benefit
Plans") 590,000 (3) $ 2,253,000.00(4) $ 626.33
----------
TOTAL $ 2,969.63
========================= ============= =============== ================ ================
</TABLE>
(1) Represents the weighted average exercise price payable for the shares
issuable upon exercise of outstanding options granted under the 1997
Plan, in accordance with Rule 457(h) promulgated under the Securities
Act of 1933, as amended ("Securities Act").
(2) Represents the average of the bid and asked prices of our common stock
on October 25, 1999, as reported by the OTC Bulletin Board, pursuant to
Rule 457(c) promulgated under the Securities Act.
(3) The exercise prices payable for the shares of common stock issuable
upon exercise of outstanding options granted pursuant to Benefit Plans
are as follows: $1.00 (40,000 shares); $2.46 (300,000 shares); $4.00
(150,000 shares); $7.50 (50,000 shares); $10.00 (50,000 shares).
(4) The proposed maximum aggregate offering price is the sum of the
exercise prices of the options granted and outstanding under the
Benefit Plans as of October 29, 1999, in accordance with Rule 457(h)
promulgated under the Securities Act.
---------------------
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<PAGE>
In accordance with the provisions of Rule 462 promulgated under the
Securities Act, the registration statement will become effective upon filing
with the Securities and Exchange Commission.
In addition, pursuant to Rule 416 under the Securities Act, this
registration statement also covers additional securities to be offered or issued
in connection with terms which provide for a change in the amount of securities
being offered or issued to prevent dilution resulting from stock splits,
dividends or similar transactions.
iii
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information *
Item 2. Registrant Information and Plan Annual Information*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this registration statement in accordance
with Rule 428 under the Securities Act and the Note to Part I of the
Instructions to Form S-8.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents previously filed by us with the Securities and
Exchange Commission ("Commission") pursuant to the Securities Exchange Act of
1934, as amended ("Exchange Act"), are incorporated by reference in this
registration statement:
(1) Annual Report on Form 10-KSB for the fiscal year ended December
31, 1998;
(2) Quarterly Report on Form 10-QSB for the quarter ended March 31,
1999;
(3) Quarterly Report on Form 10-QSB (as amended) for the quarter
ended June 30, 1999; and
(4) The description of the common stock contained in Registrant's
Form SB-2 Registration Statement filed with the Commission on
April 6, 1998 (Commission File No. 333-49453).
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment that indicates that all securities offered have been
sold or that deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the respective date of filing of such documents. Any statement
contained in a document incorporated by reference herein is modified or
superseded for all purposes to the extent that a statement contained in this
Registration Statement or in any other subsequently filed document that is
incorporated by reference modified or replaces such statement.
Item 4. Description of Securities.
The common stock is registered under Section 12 of the Exchange Act.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 14A:3-5 of the New Jersey Business Corporation Act, as amended,
authorizes the registrant to indemnify any director or officer under certain
prescribed circumstances and subject to certain limitations against certain
costs and expenses, including attorneys' fees actually and reasonably incurred
in connection with any action, suit or proceeding, whether civil, criminal,
administrative or investigative, to which such person is a party by reason of
being a director or officer of the registrant if it is determined that such
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<PAGE>
person acted in accordance with the applicable standard of conduct set forth in
such statutory provisions. Article VI of the registrant's by-laws extends such
indemnities to the full extent permitted by New Jersey law.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
Exhibit
No. Description
----- -----------
4.1 1997 Incentive and Non-Qualified Stock Option Plan.
4.2 Form of Employee Incentive/Non-Incentive Stock Option
Agreement under the 1997 Incentive and Non-Qualified Stock
Option Plan.
4.3 Form of Consultant Non-Incentive Stock Option Agreement
under the 1997 Incentive and Non-Qualified Stock Option
Plan.
4.4 Form of Director Non-Incentive Autogrant Stock Option
Agreement under the 1997 Incentive and Non-Qualified Stock
Option Plan.
4.5 Form of Community Leader Stock Option Agreement under the
1997 Incentive and Non-Qualified Stock Option Plan.
4.6 Benefit Plan form for employees.
4.7 Benefit Plan form for consultants.
4.8 Benefit Plan form for non-employee directors.
4.9 Schedule of option grants under Benefit Plans.
5.1 Opinion of Graubard Mollen & Miller.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Graubard Mollen & Miller (included in Exhibit
5.1).
24.1 Powers of Attorney (included on the signature page to this
registration statement).
II-2
<PAGE>
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act 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 and 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 percent change
in the maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in
the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
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<PAGE>
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, State of Massachusetts, on this 29th day of
October, 1999.
WORLDS INC.
By: /s/ Thomas Kidrin
------------------
Thomas Kidrin
President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas Kidrin 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
or all amendments to this registration statement, including post-effective
amendments, and to file the same, with all exhibits thereto, and all documents
in connection therewith, with the 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, and hereby ratifies and confirms 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 date indicated.
/s/ Steven Chrust Chairman of the Board October 29, 1999
- -----------------
Steven Chrust
/s/ Thomas Kidrin President, Chief Executive Officer, October 29, 1999
- ----------------- Secretary, Treasurer (Principal
Thomas Kidrin Accounting Officer) and Director
/s/ Kenneth A. Locker Director October 29, 1999
- ---------------------
Kenneth A. Locker
/s/ Michael J. Scharf Director October 29, 1999
- ---------------------
Michael J. Scharf
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<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
----- -----------
4.1 1997 Incentive and Non-Qualified Stock Option Plan.
4.2 Form of Employee Incentive/Non-Incentive Stock Option
Agreement under the 1997 Incentive and Non-Qualified Stock
Option Plan.
4.3 Form of Consultant Non-Incentive Stock Option Agreement
under the 1997 Incentive and Non-Qualified Stock Option
Plan.
4.4 Form of Director Non-Incentive Autogrant Stock Option
Agreement under the 1997 Incentive and Non-Qualified Stock
Option Plan.
4.5 Form of Community Leader Stock Option Agreement under the
1997 Incentive and Non-Qualified Stock Option Plan.
4.6 Benefit Plan form for employees.
4.7 Benefit Plan form for consultants.
4.8 Benefit Plan form for non-employee directors.
4.9 Schedule of option grants under Benefit Plans.
5.1 Opinion of Graubard Mollen & Miller.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Graubard Mollen & Miller (included in Exhibit
5.1).
24.1 Powers of Attorney (included on the signature page to this
registration statement).
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EXHIBIT 4.1
WORLDS INC.
a New Jersey Corporation
1997 Incentive and Non-Qualified Stock Option Plan
1. Purpose. The purposes of this 1997 Incentive and Non-Qualified Stock
Option Plan are to attract and retain the best available personnel, to provide
additional incentive to the Employees, Consultants and Outside Directors of
Worlds Inc., a New Jersey corporation (the "Company"), and to promote the
success of the Company's business.
Options granted hereunder may, consistent with the terms of
this Plan, be either Incentive Stock Options or Nonstatutory Stock Options, at
the discretion of the Committee (or the Board) and as reflected in the terms of
the written option agreement.
2. Definitions. As used in this Plan, the following definitions
shall apply:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the rules and reguations promulgated thereunder.
(c) "Commission" means the United States Securities and Exchange
Commission.
(d) "Committee" means the Committee appointed by the Board or
otherwise determined in accordance with Section 4(a) of this Plan.
(e) "Common Stock" means the common stock of the Company, par
value $0.001 per share.
(f) "Consultant" means any person who is engaged by the
Company or any Parent or Subsidiary to render consulting services and is
compensated for such consulting services; provided that the term Consultant
shall not include directors who are not compensated for their services or are
paid only a director's fee by the Company.
(g) "Continuous Status as an Employee, Consultant or Outside
Director" means the absence of any interruption or termination of service as an
Employee, Consultant or Outside Director, as applicable. Continuous Status as an
Employee, Consultant or Outside Director shall not be considered interrupted in
the case of sick leave or military leave, any other leave provided pursuant to a
written policy of the Company in effect at the time of determination, or any
other leave of absence approved by the Board or the Committee; provided that
such leave is for a period of not more than the greatest of (i) 90 days, (ii)
the date of the resumption of such service upon the expiration of such leave
which is guaranteed by contract or statute or is provided in a written policy of
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the Company which was in effect upon the commencement of such leave, or (iii)
such period of leave as may be determined by the Board or the Committee in its
sole discretion.
(h) "Disinterested Person" shall have the meaning set forth in
Rule 16b- 3(d)(3), or any successor definition adopted by the Commission,
provided the person is also an "outside director" under Section 162(m) of the
Code.
(i) "Employee" means any person employed by the Company or any
Parent or Subsidiary of the Company within the meaning of code Section 3401(c),
including employees who are also officers or directors or both of the Company or
any Parent or Subsidiary of the Company. The payment of a director's fee by the
Company shall not be sufficient to constitute "employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and the rules and regulations promulgated
thereunder.
(k) "Holder" means the recipient of a Stock Appreciation
Right.
(l) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code, and the rules and regulations promulgated thereunder.
(m) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(n) "Option" means a stock option granted pursuant to this
Plan.
(o) "Optioned Stock" means the Common Stock subject to an
Option.
(p) "Optionee" means an Employee, Consultant or Outside
Director who receives an Option.
(q) "Outside Director" means any member of the Board of
Directors of the Company who is not an Employee or Consultant.
(r) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(s) "Plan" means this 1997 Incentive and Non-Qualified Stock
Option Plan of Worlds Inc., as amended from time to time.
(t) "Rule 16b-3" means Rule 16b-3, as promulgated by the
Commission under Section 16(b) of the Exchange Act, as such rule is amended from
time to time and as interpreted by the Commission.
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(u) "Securities Act" means the Securities Act of 1933, as
amended from time to time, and the rules and regulations promulgated thereunder.
(v) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 10 of this Plan.
(w) "Stock Appreciation Right" means a right, the value of
which is determined relative to appreciation in value of Shares pursuant to an
award granted under Section 12 hereof.
(x) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Scope of Plan. Subject to the provisions of Section 10 of this Plan,
and unless otherwise amended by the Board and approved by the stockholders of
the Company as required by law, the maximum aggregate number of Shares issuable
under this Plan is 1,000,000, and such Shares are hereby made available and
shall be reserved for issuance under this Plan. The Shares may be authorized but
unissued, or reacquired, Common Stock.
If an Option shall expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares subject
thereto shall (unless this Plan shall have terminated) become available for
grants of other Options under this Plan.
4. Administration of Plan.
(a) Procedure. This Plan shall be administered either by the
Board or by a Committee appointed pursuant to this Section 4(a). The Committee
shall consist of two or more Outside Directors appointed by the Board, but all
Committee members must be Disinterested Persons. If the Board fails to appoint
such persons, the Committee shall consist of all Outside Directors who are
Disinterested Persons. It is the intent of this provision that the Plan shall at
all times be administered so as to comply with the requirements of Rule 16b-3
and the Code for issuing Incentive Stock Options. In the event it is not
required to appoint a Committee, then all references herein to a Committee shall
mean the Board.
(b) Powers of Committee. Subject to the provisions of this
Plan, the Committee (or the Board) shall have full and final authority in its
discretion to: (i) grant Incentive Stock Options and Nonstatutory Stock Options,
(ii) determine, upon review of relevant information and in accordance with
Section 7 below, the Fair Market Value of the Common Stock; (iii) determine the
exercise price per share of Options to be granted, in accordance with this Plan,
(iv) determine the Employees and Consultants to whom, and the time or times at
which, Options shall be granted, and the number of shares to be represented by
each Option; (v) cancel, with the consent of the Optionee, outstanding Options
and grant new Options in substitution therefor; (vi) interpret this Plan; (vii)
accelerate or defer (with the consent of Optionee) the exercise date of any
Option; (viii) prescribe, amend and rescind rules and regulations relating to
this Plan; (ix) determine the terms and provisions of each Option granted
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(which need not be identical) by which Options shall be evidenced and, with the
consent of the holder thereof, modify or amend any provisions (including without
limitation provisions relating to the exercise price and the obligation of any
Optionee to sell purchased Shares to the Company upon specified terms and
conditions) of any Option; (x) require withholding from or payment by an
Optionee of any federal, state or local taxes; (xi) appoint and compensate
agents, counsel, auditors or other specialists as the Committee deems necessary
or advisable; (xii) correct any defect or supply any omission or reconcile any
inconsistency in this Plan and any agreement relating to any Option, in such
manner and to such extent the Committee determines to carry out the purposes of
this Plan, and; (xiii) construe and interpret this Plan, any agreement relating
to any Option, and make all other determinations deemed by the Committee to be
necessary or advisable for the administration of this Plan, even in conflict
with an express provision of the Plan.
A majority of the Committee shall constitute a quorum at any
meeting, and the acts of a majority of the members present, or acts unanimously
approved in writing by the entire Committee without a meeting, shall be the acts
of the Committee. A member of the Committee shall not participate in any
decisions with respect to himself under this Plan.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Committee, if appointed, shall be
final and binding on all Optionees and any other holders of any Options granted
under this Plan.
5. Eligibility.
(a) Options may be granted to any Employee or Consultant as
the Committee may from time to time designate, provided that Incentive Stock
Options may be granted only to Employees (unless permitted by the Code). In
selecting the individuals to whom Options shall be granted, as well as in
determining the number of Options granted, the Committee (or the Board) shall
take into consideration such factors as it deems relevant in connection with
accomplishing the purpose of this Plan. Subject to the provisions of Section 3
above, an Optionee may, if he or she is otherwise eligible, be granted an
additional Option or Options if the Committee shall so determine.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
Notwithstanding such designations, if and to the extent that the aggregate Fair
Market Value of the Shares with respect to which Options designated as Incentive
Stock Options are exercisable for the first time by any Optionee during any
calendar year (under all plans of the Company) exceeds $100,000, such options
shall be treated as Nonstatutory Stock Options. For purposes of this Section
5(b), Options shall be taken into account in the order in which they are
granted, and the Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.
(c) This Plan shall not confer upon any Optionee any right
with respect to continuation of employment by or the rendition of services to
the Company or any Parent or Subsidiary, nor shall it interfere in any way with
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his or her right or the right of the Company or any Parent or Subsidiary to
terminate his or her employment or services at any time, with or without cause.
The terms of this Plan or any Options granted hereunder shall not be construed
to give any Optionee the right to any benefits not specifically provided by this
Plan or in any manner modify the Company's right to modify, amend or terminate
any of its pension or retirement plans.
(d) All grants of Options to Outside Directors under this Plan
shall be automatic and non-discretionary and shall be made strictly in
accordance with the following provisions:
(i) No person shall have any discretion to
select which Outside Directors shall be granted options or to determine the
number of Shares to be covered by options granted to Outside Directors;
provided, that nothing in this Plan shall be construed to prevent an Outside
Director from declining to receive an Option under this Plan.
(ii) Each Outside Director shall be
automatically granted an option to purchase 60,000 Shares (subject to adjustment
as provided in Section 10 below) on the date this Plan is adopted. Commencing in
1999, each Outside Director shall be automatically granted on the first business
day following their election (or re-election, as the case may be), an option to
purchase 5,000 Shares (subject to adjustment as provided in Section 10 below).
(iii) The terms of each Option granted under this
Section 5(d) shall be as follows:
(A) the term of the Option shall be ten
(10) years;
(B) the Option shall become exercisable
cumulatively with respect to one-third of the Shares on each of the first,
second and third anniversaries of the date of grant; and
(C) the exercise price per share of
Common Stock shall be 100% of the "Fair Market Value" (as defined in Section
7(b) below) on the date of grant of the Option.
6. Term of Plan. This Plan shall become effective upon its adoption by
the Board of Directors of the Company) subject to the approval thereof by vote
of the holders of a majority of the outstanding shares of the Company present,
or represented, and entitled to vote at a meeting to be duly held (or through
written consents in lieu of a meeting) in accordance with the applicable laws of
the State of Delaware. Such meeting shall be held within twelve months of the
adoption of the Plan by the Board of Directors. The Plan shall terminate no
later than ten years after the date of stockholder approval. No grants shall be
made under this Plan after the date of termination of this Plan. Any
termination, either partially or wholly, shall not affect any Options then
outstanding under this Plan.
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7. Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Committee as follows:
(i) In the case of an Incentive Stock Option
granted to any Employee, the per Share exercise price shall be no less than 100%
of the Fair Market Value per Share on the date of grant, but if granted to an
Employee who, at the time of the grant of such Incentive Stock Option, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.
(ii) With respect to (i) above, the per Share
exercise price is subject to adjustment as provided in Section 10 below. For
purposes of this Section 7(a), if an Option is amended to reduce the exercise
price, the date of grant of such option shall thereafter be considered to be the
date of such amendment.
(b) Fair Market Value. The "Fair Market Value" of the Common
Stock shall be determined by the Committee in its discretion; provided, that if
the Common Stock is listed on a stock exchange, the Fair Market Value per Share
shall be the closing price on such exchange on the date of grant of the Option
as reported in the Wall Street Journal (or, (i) if not so reported, as otherwise
reported by the exchange, and (ii) if not reported on the date of grant, then on
the last prior date on which a sale of the Common Stock was reported); or if not
listed on an exchange but traded on the National Association of Securities
Dealers Automated Quotation National Market System ("NASDAQ"), the Fair Market
Value per Share shall be the closing price per share of the Common Stock for the
date of grant, as reported in the Wall Street Journal (or, (i) if not so
reported, as otherwise reported by NASDAQ, and (ii) if not reported on the date
of grant, then on the last prior date on which a sale of the Common Stock was
reported); or, if the Common Stock is otherwise publicly traded, the mean of the
closing bid price and asked price or the last known sale or as otherwise
reasonably determined by the Board.
(c) Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
be determined by the Committee (and in the case of an Incentive Stock Option,
shall be determined at the time of grant) and may consist entirely of (i) cash;
(ii) check; (iii) the Optionee's personal interest bearing full recourse
promissory note with such terms and provisions as the Committee may authorize
(provided that no person who is not an Employee of the Company may purchase
Shares with a promissory note); (iv) other Shares of Common Stock which have a
Fair Market Value on the date of surrender (determined without regard to any
limitations on transferability imposed by securities laws) equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised; (v) any combination of such methods of payment; or (iv) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable laws.
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(d) Withholding. No later than the date as of which an amount
first becomes includable in the gross income of the Optionee for Federal income
tax purposes with respect to an option, the Optionee shall pay to the Company
(or other entity identified by the Committee), or make arrangements satisfactory
to the Company or other entity identified by the Committee regarding the payment
of, any Federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount required in order for the Company to obtain
a current deduction. Unless otherwise determined by the Committee, withholding
obligations may be settled with Common Stock, including Common Stock underlying
the subject option, provided that any applicable requirements under Section 16
of the Exchange Act are satisfied so as to avoid liability thereunder. The
obligations of the Company under this Plan shall be conditional upon such
payment or arrangements, and the Company shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment otherwise due to the
Optionee.
8. Options.
(a) Term of Option. The term of each Option granted shall be
for a period of no more than ten (10) years from the date of grant thereof or
such shorter term as may be provided in the Option agreement. However, in the
case of an Option granted to an Optionee who, at the time the Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
time as may be provided in the Option Agreement.
(b) Exercise of Options.
(i) Procedure for Exercise; Rights as a
Stockholder. Any Option granted under this Plan shall be exercisable at such
times and under such conditions as determined by the Committee, including
performance criteria with respect to the Company and/or the Optionee, and as
shall otherwise be permissible under the terms of this Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Option by the person entitled to exercise the Option and full payment for
the Shares with respect to which the Option is exercised has been received by
the Company. Full payment may, as authorized by the Committee, consist of any
consideration and method of payment allowable under Section 7 of this Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. If the
exercise of an Option is treated in part as the exercise of an Incentive Stock
Option and in part as the exercise of a Nonstatutory Stock Option, the Company
shall issue a separate stock certificate evidencing the Shares treated as
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acquired upon exercise of an Incentive Stock Option and a separate stock
certificate evidencing the Shares treated as acquired upon exercise of a
Nonstatutory Stock Option and shall identify each such certificate accordingly
in its stock transfer records. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 10 of this Plan.
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which thereafter may be available, both for purposes of
this Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(ii) Method of Exercise. An Optionee may
exercise an Option, in whole or in part, at any time during the option period by
the Optionee's giving written notice of exercise on a form provided by the
Committee (if available) to the Company specifying the number of shares of
Common Stock subject to the Option to be purchased. Such notice shall be
accompanied by payment in full of the purchase price by cash or check or such
other form of payment as the Company may accept. If approved by the Committee,
payment in full or in part may also be made (A) by delivering Common Stock
already owned by the Optionee having a total Fair Market Value on the date of
such delivery equal to the exercise price of the subject Option; (B) by the
execution and delivery of a note or other evidence of indebtedness (and any
security agreement thereunder) satisfactory to the Committee; (C) by authorizing
the Company to retain shares of Common Stock which would otherwise be issuable
upon exercise of the Option having a total Fair Market Value on the date of
delivery equal to the exercise price of the subject Option; (D) by the delivery
of cash by a broker-dealer to whom the Optionee has submitted an irrevocable
notice of exercise (in accordance with Part 220, Chapter II, Title 12 of the
Code of Federal Regulations, so-called "cashless" exercise); or (E) by any
combination of the foregoing. In the case of an Incentive Stock Option, the
right to make a payment in the form of already owned shares of Common Stock of
the same class as the Common Stock subject to the Option may be authorized only
at the time the Option is granted. No shares of Common Stock shall be issued
until full payment therefor has been made. An Optionee shall have all of the
rights of a stockholder of the Company holding the class of Common Stock that is
subject to such Option (including, if applicable, the right to vote the shares
and the right to receive dividends), when the Optionee has given written notice
of exercise, has paid in full for such shares and such shares have been recorded
on the Company's official stockholder records as having been issued or
transferred.
(iii) Termination of Status as an Employee,
Consultant or Outside Director. If an Optionee's Continuous Status as an
Employee, Consultant or Outside Director (as the case may be) is terminated for
any reason whatever, such Optionee may, but only within such period of time as
provided in the Option agreement, after the date of such termination (but in no
event later than the date of expiration of the term of such Option as set forth
in the Option agreement and determined by the Committee), exercise the Option to
the extent that such Employee, Consultant or Outside Director was entitled to
exercise it at the date of such termination pursuant to the terms of the Option
agreement. To the extent that such Employee, Consultant or Outside Director was
not entitled to exercise the Option at the date of such termination, or if such
Employee, Consultant or Outside Director does not exercise such Option
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<PAGE>
(which such Employee, Consultant or Outside Director was entitled to exercise)
within the time specified in the Option agreement, the Option shall terminate.
(iv) Company Loan or Guarantee. Upon the
exercise of any Option and subject to the pertinent Option agreement and the
discretion of the Committee, the Company may at the request of the Optionee; (A)
lend to the Optionee, with recourse, an amount equal to such portion of the
option exercise price as the Committee may determine; or (B) guarantee a loan
obtained by the Optionee from a third-party for the purpose of tendering the
option exercise price.
9. Non-transferability of Options. An Option granted hereunder shall by
its terms not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or the laws of descent and distribution. An
Option shall also be transferable to the extent such transfer will not cause
either the Option or the Plan to no longer qualify as an Incentive Stock Option
under the Code or as meeting the requirements of Rule 16b-3. An Option may be
exercised during the Optionee's lifetime only by the Optionee.
10. Adjustments Upon Changes in Capitalization or Merger.
(a) Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock which have
been authorized for issuance under this Plan but as to which no Options have yet
been granted or which have been returned to this Plan upon cancellation or
expiration of an Option, and the number of shares of Common Stock subject to
each outstanding Option, as well as the price per share of Common Stock covered
by each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock of the Company. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Committee. The Committee may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Committee and give each Optionee the right to exercise his or
her Option as to all or any part of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable.
(c) Sale or Merger. "Sale" means: (i) sale (other than a sale
by the Company) of securities entitled to more than 75% of the voting power of
the Company in a single transaction or a related series of transactions; or (ii)
sale of substantially all of the assets of the Company; or (iii) approval by the
stockholders of the Company of a reorganization, merger or consolidation of the
Company, as a result of which the persons who were the stockholders of the
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Company immediately prior to such reorganization, merger or consolidation do not
own securities immediately after the reorganization, merger or consolidation
entitled to more than 50% of the voting power of the reorganized, merged or
consolidated company. Immediately prior to a Sale, each Optionee may exercise
his or her Option as to all Shares then subject to the Option, regardless of any
vesting conditions otherwise expressed in the Option. Voting power, as used in
this Section 10(c), shall refer to those securities entitled to vote generally
in the election of directors, and securities of the Company not entitled to vote
but which are convertible into, or exercisable for, securities of the Company
entitled to vote generally in the election of directors shall be counted as if
converted or exercised, and each unit of voting securities shall be counted in
proportion to the number of votes such unit is entitled to cast.
(d) Purchased Shares. No adjustment under this Section 10
shall apply to any purchased Shares already deemed issued at the time any
adjustment would occur.
(e) Notice of Adjustments. Whenever the purchase price or the
number or kind of securities issuable upon the exercise of the Option shall be
adjusted pursuant to Section 10, the Company shall give each Optionee written
notice setting forth, in reasonable detail, the event requiring the adjustment,
the amount of the adjustment, and the method by which such adjustment was
calculated.
(f) Mitigation of Excise Tax. If any payment or right accruing
to an Optionee under this Plan (without the application of this Section), either
alone or together with other payments or rights accruing to the Optionee from
the Company or an affiliate ("Total Payments") would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations thereunder),
the Committee may in each particular instance determine to (i) reduce such
payment or right to the largest amount or greatest right that will result in no
portion of the amount payable or right accruing under the Plan being subject to
an excise tax under Section 4999 of the Code or being disallowed as a deduction
under Section 280G of the Code, or (ii) take such other actions, or make such
other arrangements or payments with respect to any such payment or right as the
Committee may determine in the circumstances. Any such determination shall be
made by the Committee in the exercise of its sole discretion, and such
determination shall be conclusive and binding on the Optionee. The Optionee
shall cooperate as may be requested by the Committee in connection with the
Committee's determination, including providing the Committee with such
information concerning such Optionee as the Committee may deem relevant to its
determination.
11. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Committee makes the determination
granting such Option. Notice of the determination shall be given to each
Employee, Consultant or Outside Director to whom an Option is so granted within
a reasonable time after the date of such grant. If the Committee cancels, with
the consent of Optionee, any Option granted under this Plan, and a new Option is
substituted therefor, the date that the canceled Option was originally granted
shall be the date used to determine the earliest date for exercising the new
substituted Option under Section 7 so that the Optionee may exercise the
substituted Option at the same time as if the Optionee had held the substituted
Option since the date the canceled Option was granted, unless the canceled
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Option shall have a new exercise price, in which case, the date of grant shall
be the date the Committee makes the determination to grant the substituted
Option.
12. Stock Appreciation Rights. An award of a Stock Appreciation Right
shall entitle the Holder, subject to terms and conditions determined by the
Committee, to receive upon exercise of the Stock Appreciation Right all or a
portion of the excess of (i) the Fair Market Value of a specified number of
Shares as of the date of exercise of the Stock Appreciation Right over (ii) a
specified price which shall not be less than 100% of the Fair Market Value of
such Shares as of the date of grant of the Stock Appreciation Right. A Stock
Appreciation Right may be granted in connection with a previously or
contemporaneously granted Option, or independent of any Option. If issued in
connection with an Option, the Committee may impose a condition that exercise of
a Stock Appreciation Right cancels the Option with which it is connection and
exercise of the connected Option cancels the Stock Appreciation Right. Each
Stock Appreciation Right may be exercisable in whole or in part on the terms
provided in the Option agreement. Notwithstanding anything to the contrary
stated in this Plan, no Stock Appreciation Right shall be exercisable prior to
six months from the date of grant except in the event of the death or Disability
of the Holder. No Stock Appreciation Right shall be exercisable at any time
after its term. When a Stock Appreciation Right is no longer exercisable, it
shall be deemed to have lapsed or terminated. Except as otherwise provided in
the applicable Option agreement, upon exercise of a Stock Appreciation Right,
payment to the Holder (or to his or her Successor) shall be made in the form of
cash, Stock or a combination of cash and Stock as promptly as practicable after
such exercise. The Option agreement may provide for a limitation upon the amount
or percentage of the total appreciation on which payment (whether in cash and/or
Stock) may be made in the event of the exercise of a Stock Appreciation Right.
Any election by a Holder to receive cash in full or partial
settlement of a Stock Appreciation Right, and any exercise of a Stock
Appreciation Right for cash, may be made only by a request filed with the
Corporate Secretary of the Company during the period beginning on the third
business day following the date of release for publication by the Company of
quarterly or annual summary statements of earnings and ending on the twelfth
business day following such date. Within thirty (30) days after the receipt by
the Company of a request to receive cash in full or partial settlement of a
Stock Appreciation Right or to exercise such Stock Appreciation Right for cash,
the Committee shall, in its sole discretion, either consent to or disapprove, in
whole or in part, such request.
If the Committee disapproves in whole or in part any election
by a Holder to receive cash in full or partial settlement of a Stock
Appreciation Right or to exercise such Stock Appreciation Right for cash, such
disapproval shall not affect such Holder's right to exercise such Stock
Appreciation Right at a later date, to the extent that such Stock Appreciation
Right shall be otherwise exercisable, or to elect the form of payment at a later
date, provided that an election to receive cash upon such later exercise shall
be subject to the approval of the Committee. Additionally, such disapproval
shall not affect such Holder's right to exercise any related Option or Options
granted to such Holder Under the Plan.
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In no event will a Holder of a Stock Appreciation Right who is
subject to the reporting requirements of Section 16(a) of the Exchange Act be
entitled to make such a request or receive cash in full or partial payment of
such Stock Appreciation Right until the Company shall have satisfied the
applicable requirements of Rule 16(b)-3 promulgated under the Exchange Act for
the specified periods.
13. Amendment and Termination of Plan.
(a) Amendment and Termination. The Board or the Committee may
amend, waive or terminate this Plan, including any express provision contained
herein, from time to time in such respects as it shall deem advisable; provided
that, to the extent necessary to comply with Rule 16b-3 or with Section 422 of
the Code (or any other successor or applicable law or regulation), the Company
shall obtain stockholder approval of any Plan amendment in such a manner and to
such a degree as is required by the applicable law, rule or regulation.
(b) Effect of Amendment or Termination. Any such amendment or
termination of this Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Committee, which agreement must be in writing and signed by the Optionee and
the Company.
14. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, and the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
15. Restrictions on Shares. Shares of Common Stock issued upon exercise
of an Option shall be subject to the terms and conditions specified herein and
to such other terms, conditions and restrictions as the Committee in its
discretion may determine or provide in the grant. The Company shall not be
required to issue or deliver any certificates for shares of Common Stock, cash
or other property prior to (a) the listing of such shares on any stock exchange
(or other public market) on which the Common Stock may then be listed (or
regularly traded), (b) the completion of any registration or qualification of
such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(c) the satisfaction of any applicable withholding obligation in order for the
Company or an affiliate to obtain a deduction with respect to the exercise of an
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Option. The Company may cause any certificate for any share of Common Stock to
be delivered to be properly marked with a legend or other notation reflecting
the limitations on transfer of such Common Stock as provided in this Plan or as
the Committee may otherwise require. The Committee may require any person
exercising an Option to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
the shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares.
16. Stockholder Rights. No person shall have any rights of a
stockholder as to shares of Common Stock subject to an Option until, after
proper exercise of the Option or other action required, such shares shall have
been recorded on the Company's official stockholder records as having been
issued or transferred. Subject to the preceding Section and upon exercise of the
Option or any portion thereof, the Company will have thirty (30) days in which
to issue the shares, and the Optionee will not be treated as a stockholder for
any purpose whatsoever prior to such issuance. No adjustment shall be made for
cash dividends or other rights for which the record date is prior to the date
such shares are recorded as issued or transferred in the Company's official
stockholder records, except as provided herein or in an agreement.
17. Best Efforts To Register. If there has been a public offering, the
Company may register under the Securities Act the Common Stock delivered or
deliverable pursuant to Options on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, as soon as such forms are available for registration to the Company for
this purpose. The Company will, if it so determines, use its good faith efforts
to cause the registration statement to become effective as soon as possible and
will file such supplements and amendments to the registration statement as may
be necessary to keep the registration statement in effect until the earliest of
(a) one year following the expiration of the option period of the last Option
outstanding, (b) the date the Company is no longer a reporting company under the
Exchange Act and (c) the date all Optionees have disposed of all shares
delivered pursuant to any Option. The Company may delay the foregoing actions at
any time and from time to time if the Committee determines in its discretion
that any such registration would materially and adversely affect the Company's
interests or if there is no material benefit to Optionees.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to permit the exercise of all Options outstanding under this Plan.
The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained for any
reason.
19. Option Agreements. Options shall be evidenced by written
Option agreements in such form as the Committee (or the Board) shall approve.
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20. Information to Optionees. To the extent required by applicable law,
the Company shall provide to each Optionee, during the period for which such
Optionee has one or more Options outstanding, copies of all annual reports and
other information which are provided to all stockholders of the Company. Except
as otherwise noted in the foregoing sentence, the Company shall have no
obligation or duty to affirmatively disclose to any Optionee, and no Optionee
shall have any right to be advised of, any material information regarding the
Company or any Parent or Subsidiary at any time prior to, upon or otherwise in
connection with, the exercise of an Option.
21. Funding. Benefits payable under this Plan to any person shall be
paid directly by the Company. The Company shall not be required to fund or
otherwise segregate assets to be used for payment of benefits under this Plan.
22. Indemnification. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with this
Plan or any option granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding; provided that within 60 days after
institution of any such action, suit or proceeding a Committee member shall in
writing offer the Company the opportunity, at its own expense, to handle and
defend the same. The foregoing right of indemnification shall not be exclusive
and shall be independent of any other rights of indemnification to which such
persons may be entitled under the Company's Certificate of Incorporation or
by-laws, by contract, as a matter of law, or otherwise.
23. Controlling Law. This Plan shall be governed by the laws of the
State of New York applicable to contracts made and performed wholly in New York
between New York residents.
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EXHIBIT 4.2
STOCK OPTION AGREEMENT
[Employee Incentive/Non-Incentive Stock Option Agreement Under Plan]
AGREEMENT, made as of _________ __, _____ by and between WORLDS INC., a
New Jersey corporation (the "Company"), and ____________________ (the
"Employee").
WHEREAS, on _________ __, ______ ("Grant Date"), pursuant to the terms
and conditions of the Company's 1997 Incentive and Non-Qualified Stock Option
Plan (the "Plan"), the Board of Directors of the Company or the Committee (as
such term is defined in the Plan) authorized the grant to the Employee of an
option to purchase an aggregate of ___ shares of the authorized but unissued
common stock of the Company, $.001 par value ("Common Stock"), conditioned upon
the Employee's acceptance thereof upon the terms and conditions set forth in
this Agreement and subject to the terms of the Plan (capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the Plan);
and
WHEREAS, the Employee desires to acquire the option on the terms and
conditions set forth in this Agreement.
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Employee the
right and option ("Option") to purchase all or any part of an aggregate of ___
shares of Common Stock ("Option Shares") on the terms and conditions set forth
herein and subject to the provisions of the Plan.
2. [Non-]Incentive Stock Option. The Option represented hereby is [not]
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended ("Code").
3. Exercise Price. The exercise price ("Exercise Price") of the Option
shall be $____ per share, [cannot be less than 100% of Fair Market Value, 110%
of Fair Market Value for incentive options to greater than 10% shareholder]
subject to adjustment as provided in the Plan.
4. Exercisability. This Option shall become exercisable on _____ __,
_____, subject to the terms and conditions of the Plan and this Agreement, and
shall remain exercisable until _________ __, ____ [cannot exceed 10 years; 5
years for incentive options to greater than 10% shareholders] (the "Exercise
Period").
<PAGE>
OR
4. Exercisability. This Option shall become exercisable, subject to the
terms and conditions of the Plan and this Agreement, as follows: (i) the right
to purchase 331/3% of the Option Shares shall be exercisable on and after
_______ __, ____ [First Anniversary of Date of Grant], (ii) the right to
purchase an additional 331/3% of the Option Shares shall be exercisable on and
after _______ __, ____ [Second Anniversary of Date of Grant], and (iii) the
right to purchase the remaining 331/3% of the Option Shares shall be exercisable
on and after _______ __, ____ [Third Anniversary of Date of Grant]. After a
portion of the Option becomes exercisable, it shall remain exercisable except as
otherwise provided herein, until the close of business on __________ __, ____
[up to Tenth Anniversary from Date of Grant; or five years for incentive options
to 10% holders] (the "Exercise Period").
5. Effect of Termination of Employment.
5.1 Termination Due to Death. If Employee's employment by the
Company terminates by reason of death, the portion of the Option, if any, that
was exercisable as of the date of death may thereafter be exercised by the legal
representative of the estate or by the legatee of the Employee under the will of
the Employee, for a period of one year from the date of such death or until the
expiration of the Exercise Period, whichever period is shorter. The portion of
the Option, if any, that was not exercisable as of the date of death shall
immediately expire.
5.2 Termination Due to Disability. If Employee's employment by
the Company terminates by reason of disability, the portion of the Option, if
any, that was exercisable as of the date of disability may thereafter be
exercised by the Employee for a period of one year from the date of such
termination or until the expiration of the Exercise Period, whichever period is
shorter. The portion of the Option, if any, that was not exercisable as of the
date of termination shall immediately expire.
5.3 Termination by the Company Without Cause and/or Due to
Retirement. If Employee's employment is terminated by the Company without cause
or due to the normal retirement of Employee after his 65th birthday, then the
portion of the Option which has vested by the date of termination of employment
may be exercised for a period of three months from termination of employment or
until the expiration of the Exercise Period, whichever is shorter. The portion
of the Option, if any, not yet exercisable on the date of termination of
employment shall immediately expire.
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5.4 Other Termination.
5.4.1 If Employee's employment is terminated for
any reason other than (i) death, (ii) disability, (iii) normal retirement, or
(iv) without cause by the Company, the Option shall expire on the date of
termination of employment.
5.4.2 The Committee, in the event the Employee's
employment is terminated for cause, may require the Employee to return to the
Company the economic benefit of any Option Shares purchased hereunder by the
Employee within the six month period prior to the date of termination. In such
event, the Employee hereby agrees to remit to the Company, in cash, an amount
equal to the difference between the Fair Market Value (on the date of
termination) of the Option Shares so purchased by Employee (or the sales price
of such Option Shares if the Option Shares were sold during such six month
period) and the Exercise Price.
5.5 Competing With the Company. In the event that, within six
(6) months after the date of termination of Employee's employment with the
Company, Employee accepts employment with, or becomes engaged as a consultant
by, any competitor of, or otherwise competes with, the Company, the Committee,
in its sole discretion, may require such Employee to return to the Company the
economic value of any Option Shares purchased hereunder by the Employee within
the six-month period prior to the date of termination. In such event, Employee
agrees to remit the economic value to the Company in accordance with Section
5.4.2.
6. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of the Employee for Federal income tax
purposes with respect to the Option, the Employee shall pay to the Company (or
other entity identified by the Committee), or make arrangements satisfactory to
the Company (or other entity identified by the Committee) regarding the payment
of, any Federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount ("Withholding Tax"). Unless otherwise
determined by the Committee, withholding obligations may be settled with Common
Stock, including Common Stock underlying the subject option, provided that any
applicable requirements under Section 16 of the Exchange Act are satisfied so as
to avoid liability thereunder. The obligations of the Company under the Plan and
pursuant to this Agreement shall be conditioned upon such payment or
arrangements with the Company and the Company shall, to the extent permitted by
law, have the right to deduct any Withholding Taxes from any payment of any kind
otherwise due to the Employee from the Company.
7. Method of Exercise.
7.1 Notice to the Company. The Option may be exercised in
whole or in part by written notice in the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice and of the Withholding Taxes, if any.
7.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Employee as soon as practicable after
payment therefor.
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7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Employee shall make cash
payments by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company. The Company shall not be required to
deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
7.3.2 Promissory Note. The Committee, in its sole
discretion, may allow Employee to issue a personal interest bearing full
recourse promissory note with such terms and provisions as the Committee may
authorize.
7.3.3 Stock Payment. The Committee, in its sole
discretion, may allow Employee to use Common Stock of the Company owned by him
to make any required payments by delivery of stock certificates in negotiable
form which are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Shares of Common Stock used for this
purpose shall be valued at the Fair Market Value.
7.3.4 Payment of Withholding Tax. Any required
Withholding Tax may be paid in cash or with Common Stock in accordance with
Sections 7.3.1 and 7.3.2, respectively, and Section 6.
7.3.5 Exchange Act Compliance. Notwithstanding
the foregoing, the Company shall have the right to reject payment in the form of
Common Stock if in the opinion of counsel for the Company, (i) it could result
in an event of "recapture" under Section 16(b) of the Securities Exchange Act of
1934; (ii) such shares of Common Stock may not be sold or transferred to the
Company; or (iii) such transfer could create legal difficulties for the Company.
8. Nonassignability. The Option shall not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner, except by will or by the
laws of descent and distribution in the event of the death of the Employee. No
transfer of the Option by the Employee by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will and/or
such other evidence as the Company may deem necessary to establish the validity
of the transfer and the acceptance by the transferee or transferees of the terms
and conditions of the Option.
4
<PAGE>
9. Company Representations. The Company hereby represents and warrants
to the Employee that:
(i) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by
the Company to the Employee in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and
non-assessable.
10. Employee Representations. The Employee hereby represents and
warrants to the Company that:
(i) he or she is acquiring the Option and shall
acquire the Option Shares for his own account and not with a view
towards the distribution thereof;
(ii) he or she has received a copy of the Plan as
in effect as of the date of this Agreement;
(iii) he or she has received a copy of all reports
and documents required to be filed by the Company with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, within the last 24 months and all reports issued by
the Company to its stockholders;
(iv) he or she understands that he or she is subject
to the Company's Insider Trading Policy and has received a copy of such
policy as of the date of this Agreement;
(v) he or she understands that he or she must bear
the economic risk of the investment in the Option Shares, which cannot
be sold by him unless they are registered under the Securities Act of
1933 (the "1933 Act") or an exemption therefrom is available thereunder
and that the Company is under no obligation to register the Option
Shares for sale under the 1933 Act;
(vi) in his or her position with the Company, he or
she has had both the opportunity to ask questions and receive answers
from the officers and directors of the Company and all persons acting
on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it
without unreasonable effort or expense necessary to verify the accuracy
of the information obtained pursuant to clause (iii) above;
5
<PAGE>
(vii) he or she is aware that the Company shall place
stop transfer orders with its transfer agent against the transfer of
the Option Shares in the absence of registration under the 1933 Act or
an exemption therefrom as provided herein; and
(viii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
11. Restriction on Transfer of Option Shares.
11.1 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him without
registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Employee has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
11.2 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him
6
<PAGE>
(i) prior to six months after the Grant Date and (ii) except in accordance with
Company's Insider Trading Policy regarding the sale and disposition of
securities owned by employees and/or directors of the Company.
12. Adjustments. The number of shares subject to the Option, the
Exercise Price, the Exercise Period and the vesting of the Option shall all be
subject to adjustment under Section 10 of the Plan.
13. Miscellaneous.
13.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, or by private courier to the
parties at their respective addresses set forth herein, or to such other address
as either shall have specified by notice in writing to the other. Notice shall
be deemed duly given hereunder when delivered or mailed as provided herein.
13.2 Conflicts with Plan. In the event of a conflict between
the provisions of the Plan and the provisions of this Agreement, the provisions
of the Plan shall in all respects be controlling.
13.3 Employee and Stockholder Rights. The Employee shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Employee any right to
continued employment with the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to terminate Employee in
accordance with the provisions regarding such termination set forth in
Employee's written employment agreement with the Company, or if there exists no
such agreement, to terminate Employee at will.
13.4 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
13.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supercedes any and all prior agreements with respect to the Option. This
Agreement may not be amended except by writing executed by the Employee and the
Company.
13.6 Binding Effect; Successors. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and, to the
extent not prohibited herein, their respective heirs, successors,
7
<PAGE>
assigns and representatives. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto and as provided
above, their respective heirs, successors, assigns and representatives any
rights, remedies, obligations or liabilities.
13.7 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
(without regard to choice of law provisions). Employee (i) agrees that any legal
suit, action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York, (ii)
waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum, and (iii) irrevocably
consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York
in any such suit, action or proceeding. Employee further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York and
agrees that service of process upon him mailed by certified mail to its address
shall be deemed in every respect effective service of process upon him in any
such suit, action or proceeding.
13.8 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
Agreement.
13.9 Employee's Options. Employee acknowledges that the Option
and the stock options referred to below are the only stock options granted to
him by the Company.
Date of Grant Number of Shares Exercise Price
- ------------- ----------------- --------------
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written:
WORLDS INC. Address: 15 Union Wharf
Boston, Massachusetts 02109
By: ______________________________________
Steven G. Chrust, Chairman of the Board
EMPLOYEE: Address:
- ------------------------------------
9
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
- ----------------------------
DATE
WORLDS INC.
15 Union Wharf
Boston, Massachusetts 02109
Attention: Stock Option Committee of
the Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
_________ __ ____ with Worlds Inc. (the "Company"), I hereby irrevocably elect
to exercise the right to purchase _________ shares of the Company's common
stock, par value $.001 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of the Company in the sum of
$_________;
|_| confirmation of wire transfer in the amount of
$_____________;
|_| with the consent of the Company, a certificate for
__________ shares of the Company's Common Stock, free
and clear of any encumbrances, duly endorsed, having
a Fair Market Value (as such term is defined in the
1997 Incentive and NonQualified Stock Option Plan) of
$_________; and/or
|_| with the consent of the Company, a personal interest
bearing full recourse promissory note in the amount
of $__________.
I hereby represent and warrant to, and agree with, the Company
that:
(i) I am acquiring the Option and shall acquire the
Option Shares for my own account, for investment, and not with a view
towards the distribution thereof;
(ii) I have received a copy of the Plan and all
reports and documents required to be filed by the Company with the
Commission pursuant to the Exchange Act within the last 24 months and
all reports issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 (the "1933
Act") or an exemption therefrom is available thereunder and that the
Company is under no obligation to register the Option Shares for sale
under the 1933 Act;
(iv) I understand I am subject to the Company's
Insider Trading Policy and have received a copy of such policy as of
the date of this Agreement;
<PAGE>
(v) I agree that I will not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by me hereby
except in accordance with Company's policy, if any, regarding the sale
and disposition of securities owned by employees and/or directors of
the Company;
(vi) in my position with the Company, I have had both
the opportunity to ask questions and receive answers from the officers
and directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(vii) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(viii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the
Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
- ------------------------------ ----------------------------------------
(Signature) (Address)
- ------------------------------ ----------------------------------------
(Print Name)
----------------------------------------
(Social Security Number)
2
EXHIBIT 4.3
STOCK OPTION AGREEMENT
[Consultant Non-Incentive Stock Option Agreement Under Plan]
AGREEMENT, made as of _________ __, _____ by and between WORLDS INC., a
New Jersey corporation (the "Company"), and ____________________ (the
"Consultant").
WHEREAS, on _________ __, ______ ("Grant Date"), pursuant to the terms
and conditions of the Company's 1997 Incentive and Non-Qualified Stock Option
Plan (the "Plan"), the Board of Directors of the Company or the Committee (as
such term is defined in the Plan) authorized the grant to the Consultant of an
option to purchase an aggregate of ___ shares of the authorized but unissued
common stock of the Company, $.001 par value ("Common Stock"), conditioned upon
the Consultant's acceptance thereof upon the terms and conditions set forth in
this Agreement and subject to the terms of the Plan (capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the Plan);
and
WHEREAS, the Consultant desires to acquire the option on the terms and
conditions set forth in this Agreement.
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Consultant
the right and option ("Option") to purchase all or any part of an aggregate of
___ shares of Common Stock ("Option Shares") on the terms and conditions set
forth herein and subject to the provisions of the Plan.
2. Non-Incentive Stock Option. The Option represented hereby is not
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended ("Code").
3. Exercise Price. The exercise price ("Exercise Price") of the Option
shall be $____ per share, [cannot be less than 100% of Fair Market Value]
subject to adjustment as provided in the Plan.
4. Exercisability. This Option shall become exercisable on
_____________ __, _____, subject to the terms and conditions of the Plan and
this Agreement, and shall remain exercisable until _________ __, ____ [cannot
exceed 10 years] (the "Exercise Period").
OR
<PAGE>
4. Exercisability. This Option shall become exercisable, subject to the
terms and conditions of the Plan and this Agreement, as follows: (i) the right
to purchase 331/3% of the Option Shares shall be exercisable on and after
_______ __, ____ [First Anniversary of Date of Grant], (ii) the right to
purchase an additional 331/3% of the Option Shares shall be exercisable on and
after _______ __, ____ [Second Anniversary of Date of Grant], and (iii) the
right to purchase the remaining 331/3% of the Option Shares shall be exercisable
on and after _______ __, ____ [Third Anniversary of Date of Grant]. After a
portion of the Option becomes exercisable, it shall remain exercisable except as
otherwise provided herein, until the close of business on __________ __, ____
[up to Tenth Anniversary from Date of Grant; or five years for incentive options
to 10% holders] (the "Exercise Period").
5. Effect of Termination of Engagement.
5.1 Termination Due to Death. If Consultant's engagement by
the Company terminates by reason of death, the portion of the Option, if any,
that was exercisable as of the date of death may thereafter be exercised by the
legal representative of the estate or by the legatee of the Consultant under the
will of the Consultant, for a period of one year from the date of such death or
until the expiration of the Exercise Period, whichever period is shorter. The
portion of the Option, if any, that was not exercisable as of the date of death
shall immediately expire.
5.2 Termination Due to Disability. If Consultant's engagement
by the Company terminates by reason of disability, the portion of the Option, if
any, that was exercisable as of the date of disability may thereafter be
exercised by the Consultant for a period of one year from the date of such
termination or until the expiration of the Exercise Period, whichever period is
shorter. The portion of the Option, if any, that was not exercisable as of the
date of termination shall immediately expire.
5.3 Termination by the Company Without Cause and/or Due to
Retirement. If Consultant's engagement is terminated by the Company without
cause or due to the normal retirement of Consultant after his 65th birthday,
then the portion of the Option which has vested by the date of termination of
engagement may be exercised for a period of three months from termination of
engagement or until the expiration of the Exercise Period, whichever is shorter.
The portion of the Option, if any, not yet exercisable on the date of
termination of engagement shall immediately expire.
2
<PAGE>
5.4 Other Termination.
5.4.1 If Consultant's engagement is terminated for
any reason other than (i) death, (ii) disability, (iii) normal retirement, or
(iv) without cause by the Company, the Option shall expire on the date of
termination of engagement.
5.4.2 The Committee, in the event the
Consultant's engagement is terminated for cause, may require the Consultant to
return to the Company the economic benefit of any Option Shares purchased
hereunder by the Consultant within the six month period prior to the date of
termination. In such event, the Consultant hereby agrees to remit to the
Company, in cash, an amount equal to the difference between the Fair Market
Value (on the date of termination) of the Option Shares so purchased by
Consultant (or the sales price of such Option Shares if the Option Shares were
sold during such six month period) and the Exercise Price.
5.5 Competing With the Company. In the event that, within six
(6) months after the date of termination of Consultant's engagement with the
Company, Consultant accepts employment with, or becomes engaged as a consultant
by, any competitor of, or otherwise competes with, the Company, the Committee,
in its sole discretion, may require such Consultant to return to the Company the
economic value of any Option Shares purchased hereunder by the Consultant within
the six-month period prior to the date of termination. In such event, Consultant
agrees to remit the economic value to the Company in accordance with Section
5.4.2.
6. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of the Consultant for Federal income tax
purposes with respect to the Option, the Consultant shall pay to the Company (or
other entity identified by the Committee), or make arrangements satisfactory to
the Company (or other entity identified by the Committee) regarding the payment
of, any Federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount ("Withholding Tax"). Unless otherwise
determined by the Committee, withholding obligations may be settled with Common
Stock, including Common Stock underlying the subject option, provided that any
applicable requirements under Section 16 of the Exchange Act are satisfied so as
to avoid liability thereunder. The obligations of the Company under the Plan and
pursuant to this Agreement shall be conditioned upon such payment or
arrangements with the Company and the Company shall, to the extent permitted by
law, have the right to deduct any Withholding Taxes from any payment of any kind
otherwise due to the Consultant from the Company.
3
<PAGE>
7. Method of Exercise.
7.1 Notice to the Company. The Option may be exercised in
whole or in part by written notice in the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice and of the Withholding Taxes, if any.
7.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Consultant as soon as practicable after
payment therefor.
7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Consultant shall make
cash payments by wire transfer, certified or bank check or personal check, in
each case payable to the order of the Company. The Company shall not be required
to deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
7.3.2 Promissory Note. The Committee, in its sole
discretion, may allow Consultant to issue a personal interest bearing full
recourse promissory note with such terms and provisions as the Committee may
authorize.
7.3.3 Stock Payment. The Committee, in its sole
discretion, may allow Consultant to use Common Stock of the Company owned by him
to make any required payments by delivery of stock certificates in negotiable
form which are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Shares of Common Stock used for this
purpose shall be valued at the Fair Market Value.
7.3.4 Payment of Withholding Tax. Any required
Withholding Tax may be paid in cash or with Common Stock in accordance with
Sections 7.3.1 and 7.3.2, respectively, and Section 6.
7.3.5 Exchange Act Compliance. Notwithstanding
the foregoing, the Company shall have the right to reject payment in the form of
Common Stock if in the opinion of counsel for the Company, (i) it could result
in an event of "recapture" under Section 16(b) of the Securities Exchange Act of
1934; (ii) such shares of Common Stock may not be sold or transferred to the
Company; or (iii) such transfer could create legal difficulties for the Company.
4
<PAGE>
8. Nonassignability. The Option shall not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner, except by will or by the
laws of descent and distribution in the event of the death of the Consultant. No
transfer of the Option by the Consultant by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will and/or
such other evidence as the Company may deem necessary to establish the validity
of the transfer and the acceptance by the transferee or transferees of the terms
and conditions of the Option.
9. Company Representations. The Company hereby represents and warrants
to the Consultant that:
(i) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by
the Company to the Consultant in accordance with the terms and
conditions hereof, will be duly and validly issued and fully paid and
non-assessable.
10. Consultant Representations. The Consultant hereby represents and
warrants to the Company that:
(i) he or she is acquiring the Option and shall
acquire the Option Shares for his own account and not with a view
towards the distribution thereof;
(ii) he or she has received a copy of the Plan as
in effect as of the date of this Agreement;
(iii) he or she has received a copy of all reports
and documents required to be filed by the Company with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, within the last 24 months and all reports issued by
the Company to its stockholders;
(iv) he or she understands that he or she is subject
to the Company's Insider Trading Policy and has received a copy of such
policy as of the date of this Agreement;
5
<PAGE>
(v) he or she understands that he or she must bear
the economic risk of the investment in the Option Shares, which cannot
be sold by him unless they are registered under the Securities Act of
1933 (the "1933 Act") or an exemption therefrom is available thereunder
and that the Company is under no obligation to register the Option
Shares for sale under the 1933 Act;
(vi) in his or her position with the Company, he or
she has had both the opportunity to ask questions and receive answers
from the officers and directors of the Company and all persons acting
on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it
without unreasonable effort or expense necessary to verify the accuracy
of the information obtained pursuant to clause (iii) above;
(vii) he or she is aware that the Company shall place
stop transfer orders with its transfer agent against the transfer of
the Option Shares in the absence of registration under the 1933 Act or
an exemption therefrom as provided herein; and
(viii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
11. Restriction on Transfer of Option Shares.
11.1 Anything in this Agreement to the contrary
notwithstanding, Consultant hereby agrees that he shall not sell, transfer by
any means or otherwise dispose of the Option Shares acquired by him without
registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Consultant has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
11.2 Anything in this Agreement to the contrary
notwithstanding, Consultant hereby agrees that he shall not sell, transfer by
any means or otherwise dispose of the Option Shares acquired by him
6
<PAGE>
(i) prior to six months after the Grant Date and (ii) except in accordance with
Company's Insider Trading Policy regarding the sale and disposition of
securities owned by employees and/or directors of the Company.
12. Adjustments. The number of shares subject to the Option, the
Exercise Price, the Exercise Period and the vesting of the Option shall all be
subject to adjustment under Section 10 of the Plan.
13. Miscellaneous.
13.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, or by private courier to the
parties at their respective addresses set forth herein, or to such other address
as either shall have specified by notice in writing to the other. Notice shall
be deemed duly given hereunder when delivered or mailed as provided herein.
13.2 Conflicts with Plan. In the event of a conflict between
the provisions of the Plan and the provisions of this Agreement, the provisions
of the Plan shall in all respects be controlling.
13.3 Consultant and Stockholder Rights. The Consultant shall
not have any of the rights of a stockholder with respect to the Option Shares
until such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Consultant any right
to continued engagement by the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to terminate Consultant in
accordance with the provisions regarding such termination set forth in
Consultant's written agreement with the Company, or if there exists no such
agreement, to terminate Consultant's engagement at will.
13.4 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
13.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supercedes any and all prior agreements with respect to the Option. This
Agreement may not be amended except by writing executed by the Consultant and
the Company.
13.6 Binding Effect; Successors. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and, to the
extent not prohibited herein, their respective heirs, successors, assigns and
7
<PAGE>
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
13.7 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
(without regard to choice of law provisions). Consultant (i) agrees that any
legal suit, action or proceeding arising out of or relating to this Agreement
shall be instituted exclusively in New York State Supreme Court, County of New
York, or in the United States District Court for the Southern District of New
York, (ii) waives any objection to the venue of any such suit, action or
proceeding and the right to assert that such forum is not a convenient forum,
and (iii) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. Consultant further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon him mailed
by certified mail to its address shall be deemed in every respect effective
service of process upon him in any such suit, action or proceeding.
13.8 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
Agreement.
13.9 Consultant's Options. Consultant acknowledges that the
Option and the stock options referred to below are the only stock options
granted to him by the Company.
Date of Grant Number of Shares Exercise Price
- ------------- ----------------- --------------
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written:
WORLDS INC. Address: 15 Union Wharf
Boston, Massachusetts 02109
By:_____________________________
Steven G. Chrust, Chairman
of the Board
CONSULTANT: Address:
____________________________________
9
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
- ----------------------------
DATE
WORLDS INC.
15 Union Wharf
Boston, Massachusetts 02109
Attention: Stock Option Committee of
the Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
_________ __ ____ with Worlds Inc. (the "Company"), I hereby irrevocably elect
to exercise the right to purchase _________ shares of the Company's common
stock, par value $.001 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of the Company in the sum of
$_________;
|_| confirmation of wire transfer in the amount of
$_____________;
|_| with the consent of the Company, a certificate for
__________ shares of the Company's Common Stock, free
and clear of any encumbrances, duly endorsed, having
a Fair Market Value (as such term is defined in the
1997 Incentive and NonQualified Stock Option Plan) of
$_________; and/or
|_| with the consent of the Company, a personal interest
bearing full recourse promissory note in the amount
of $__________.
I hereby represent and warrant to, and agree with, the Company
that:
(i) I am acquiring the Option and shall acquire the
Option Shares for my own account, for investment, and not with a view
towards the distribution thereof;
(ii) I have received a copy of the Plan and all
reports and documents required to be filed by the Company with the
Commission pursuant to the Exchange Act within the last 24 months and
all reports issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 (the "1933
Act") or an exemption therefrom is available thereunder and that the
Company is under no obligation to register the Option Shares for sale
under the 1933 Act;
(iv) I understand I am subject to the Company's
Insider Trading Policy and have received a copy of such policy as of
the date of this Agreement;
<PAGE>
(v) I agree that I will not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by me hereby
except in accordance with Company's policy, if any, regarding the sale
and disposition of securities owned by employees and/or directors of
the Company;
(vi) in my position with the Company, I have had both
the opportunity to ask questions and receive answers from the officers
and directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(vii) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(viii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the
Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
- ---------------------------------- ----------------------------------------
(Signature) (Address)
- ---------------------------------- ----------------------------------------
(Print Name)
----------------------------------------
(Social Security Number)
2
EXHIBIT 4.4
STOCK OPTION AGREEMENT
[Director Non-Incentive Autogrant Stock Option Agreement Under Plan]
AGREEMENT, made as of _________ __, _____ by and between WORLDS INC., a
New Jersey corporation (the "Company"), and ____________________ (the
"Director").
WHEREAS, on _________ __, ______ ("Grant Date"), pursuant to the terms
and conditions of Section 5(d) of the Company's 1997 Incentive and Non-Qualified
Stock Option Plan (the "Plan"), the Board of Directors of the Company or the
Committee (as such term is defined in the Plan) authorized the grant to the
Director of an option to purchase an aggregate of ___ shares of the authorized
but unissued common stock of the Company, $.001 par value ("Common Stock"),
conditioned upon the Director's acceptance thereof upon the terms and conditions
set forth in this Agreement and subject to the terms of the Plan (capitalized
terms used herein and not otherwise defined shall have the meanings set forth in
the Plan); and
WHEREAS, the Director desires to acquire the option on the terms and
conditions set forth in this Agreement.
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Director the
right and option ("Option") to purchase all or any part of an aggregate of ___
shares of Common Stock ("Option Shares") on the terms and conditions set forth
herein and subject to the provisions of the Plan.
2. Non-Incentive Stock Option. The Option represented hereby is not
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended ("Code").
3. Exercise Price. The exercise price ("Exercise Price") of the Option
shall be $____ per share, [cannot be less than 100% of Fair Market Value]
subject to adjustment as provided in the Plan.
4. Exercisability. This Option shall become exercisable, subject to the
terms and conditions of the Plan and this Agreement, as follows: (i) the right
to purchase 331/3% of the Option Shares shall be exercisable on and after
_______ __, ____ [First Anniversary of Date of Grant], (ii) the right to
purchase an additional 331/3% of the Option Shares shall be exercisable on and
after _______ __, ____ [Second Anniversary of Date of Grant], and (iii) the
right to purchase the remaining 331/3% of the Option Shares shall
<PAGE>
be exercisable on and after _______ __, ____ [Third Anniversary of Date of
Grant]. After a portion of the Option becomes exercisable, it shall remain
exercisable except as otherwise provided herein, until the close of business on
__________ __, ____ [Tenth Anniversary from Date of Grant] (the "Exercise
Period").
5. Effect of Termination of Directorship.
5.1 Termination Due to Death. If Director ceases to be a
director of the Company by reason of death, the portion of the Option, if any,
that was exercisable as of the date of death may thereafter be exercised by the
legal representative of the estate or by the legatee of the Director under the
will of the Director, for a period of one year from the date of such death or
until the expiration of the Exercise Period, whichever period is shorter. The
portion of the Option, if any, that was not exercisable as of the date of death
shall immediately expire.
5.2 Termination Due to Disability. If Director ceases to be a
director of the Company by reason of disability, the portion of the Option, if
any, that was exercisable as of the date of disability may thereafter be
exercised by the Director for a period of one year from the date of such
termination or until the expiration of the Exercise Period, whichever period is
shorter. The portion of the Option, if any, that was not exercisable as of the
date of termination shall immediately expire.
5.3 Termination Due to Failure to be Re-Elected. If Director
ceases to be a director of the Company because he failed to win enough
shareholder votes, then the portion of the Option which has vested by the date
of termination of his directorship may be exercised for a period of three months
from termination of his directorship or until the expiration of the Exercise
Period, whichever is shorter. The portion of the Option, if any, not yet
exercisable on the date of termination of his directorship shall immediately
expire.
5.4 Other Termination. If Director ceases to be a director of
the Company for any other reason (including, but not limited to, Director's
resignation or the Company's failure to nominate Director for re-election), the
Option shall expire on the date of termination of his directorship.
6. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of the Director for Federal income tax
purposes with respect to the Option, the Director shall pay to the Company (or
other entity identified by the Committee), or make arrangements satisfactory to
the Company (or other entity identified by the Committee) regarding the payment
of, any Federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount ("Withholding Tax"). Unless otherwise
determined by the Committee, withholding obligations may be settled with Common
Stock, including Common Stock underlying the subject option, provided that any
2
<PAGE>
applicable requirements under Section 16 of the Exchange Act are satisfied so as
to avoid liability thereunder. The obligations of the Company under the Plan and
pursuant to this Agreement shall be conditioned upon such payment or
arrangements with the Company and the Company shall, to the extent permitted by
law, have the right to deduct any Withholding Taxes from any payment of any kind
otherwise due to the Director from the Company.
7. Method of Exercise.
7.1 Notice to the Company. The Option may be exercised in
whole or in part by written notice in the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice and of the Withholding Taxes, if any.
7.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Director as soon as practicable after
payment therefor.
7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Director shall make cash
payments by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company. The Company shall not be required to
deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
7.3.2 Promissory Note. The Committee, in its sole
discretion, may allow Director to issue a personal interest bearing full
recourse promissory note with such terms and provisions as the Committee may
authorize.
7.3.3 Stock Payment. The Committee, in its sole
discretion, may allow Director to use Common Stock of the Company owned by him
to make any required payments by delivery of stock certificates in negotiable
form which are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Shares of Common Stock used for this
purpose shall be valued at the Fair Market Value.
7.3.4 Payment of Withholding Tax. Any required
Withholding Tax may be paid in cash or with Common Stock in accordance with
Sections 7.3.1 and 7.3.2, respectively, and Section 6.
3
<PAGE>
7.3.5 Exchange Act Compliance. Notwithstanding
the foregoing, the Company shall have the right to reject payment in the form of
Common Stock if in the opinion of counsel for the Company, (i) it could result
in an event of "recapture" under Section 16(b) of the Securities Exchange Act of
1934; (ii) such shares of Common Stock may not be sold or transferred to the
Company; or (iii) such transfer could create legal difficulties for the Company.
8. Nonassignability. The Option shall not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner, except by will or by the
laws of descent and distribution in the event of the death of the Director. No
transfer of the Option by the Director by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will and/or
such other evidence as the Company may deem necessary to establish the validity
of the transfer and the acceptance by the transferee or transferees of the terms
and conditions of the Option.
9. Company Representations. The Company hereby represents and warrants
to the Director that:
(i) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by
the Company to the Director in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and
non-assessable.
10. Director Representations. The Director hereby represents and
warrants to the Company that:
(i) he or she is acquiring the Option and shall
acquire the Option Shares for his own account and not with a view
towards the distribution thereof;
(ii) he or she has received a copy of the Plan as
in effect as of the date of this Agreement;
(iii) he or she has received a copy of all reports
and documents required to be filed by the Company with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended, within the last 24 months and all reports issued by
the Company to its stockholders;
4
<PAGE>
(iv) he or she understands that he or she is subject
to the Company's Insider Trading Policy and has received a copy of such
policy as of the date of this Agreement;
(v) he or she understands that he or she must bear
the economic risk of the investment in the Option Shares, which cannot
be sold by him unless they are registered under the Securities Act of
1933 (the "1933 Act") or an exemption therefrom is available thereunder
and that the Company is under no obligation to register the Option
Shares for sale under the 1933 Act;
(vi) in his or her position with the Company, he or
she has had both the opportunity to ask questions and receive answers
from the officers and directors of the Company and all persons acting
on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it
without unreasonable effort or expense necessary to verify the accuracy
of the information obtained pursuant to clause (iii) above;
(vii) he or she is aware that the Company shall place
stop transfer orders with its transfer agent against the transfer of
the Option Shares in the absence of registration under the 1933 Act or
an exemption therefrom as provided herein; and
(viii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
11. Restriction on Transfer of Option Shares.
11.1 Anything in this Agreement to the contrary
notwithstanding, Director hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him without
registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Director has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
5
<PAGE>
11.2 Anything in this Agreement to the contrary
notwithstanding, Director hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him (i) prior to six
months after the Grant Date and (ii) except in accordance with Company's Insider
Trading Policy regarding the sale and disposition of securities owned by
employees and/or directors of the Company.
12. Adjustments. The number of shares subject to the Option, the
Exercise Price, the Exercise Period and the vesting of the Option shall all be
subject to adjustment under Section 10 of the Plan.
13. Miscellaneous.
13.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, or by private courier to the
parties at their respective addresses set forth herein, or to such other address
as either shall have specified by notice in writing to the other. Notice shall
be deemed duly given hereunder when delivered or mailed as provided herein.
13.2 Conflicts with Plan. In the event of a conflict between
the provisions of the Plan and the provisions of this Agreement, the provisions
of the Plan shall in all respects be controlling.
13.3 Director and Stockholder Rights. The Director shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Director any right to
continue to be a director of the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to either terminate his
directorship (if authorized to do so under the Company's by-laws and New Jersey
corporate law), or not nominate him for re-election.
13.4 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
13.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supercedes any and all prior agreements with respect to the Option. This
Agreement may not be amended except by writing executed by the Director and the
Company.
6
<PAGE>
13.6 Binding Effect; Successors. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
13.7 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
(without regard to choice of law provisions). Director (i) agrees that any legal
suit, action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York, (ii)
waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum, and (iii) irrevocably
consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York
in any such suit, action or proceeding. Director further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York and
agrees that service of process upon him mailed by certified mail to its address
shall be deemed in every respect effective service of process upon him in any
such suit, action or proceeding.
13.8 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
Agreement.
13.9 Director's Options. Director acknowledges that the Option
and the stock options referred to below are the only stock options granted to
him by the Company.
Date of Grant Number of Shares Exercise Price
- ------------- ----------------- --------------
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written:
WORLDS INC. Address: 15 Union Wharf
Boston, Massachusetts 02109
By: ___________________________
Steven G. Chrust, Chairman
of the Board
DIRECTOR: Address:
____________________________________
8
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
- ----------------------------
DATE
WORLDS INC.
15 Union Wharf
Boston, Massachusetts 02109
Attention: Stock Option Committee of
the Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
_________ __ ____ with Worlds Inc. (the "Company"), I hereby irrevocably elect
to exercise the right to purchase _________ shares of the Company's common
stock, par value $.001 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of the Company in the sum of
$_________;
|_| confirmation of wire transfer in the amount of
$_____________;
|_| with the consent of the Company, a certificate for
__________ shares of the Company's Common Stock, free
and clear of any encumbrances, duly endorsed, having
a Fair Market Value (as such term is defined in the
1997 Incentive and NonQualified Stock Option Plan) of
$_________; and/or
|_| with the consent of the Company, a personal interest
bearing full recourse promissory note in the amount
of $__________.
I hereby represent and warrant to, and agree with, the Company
that:
(i) I am acquiring the Option and shall acquire the
Option Shares for my own account, for investment, and not with a view
towards the distribution thereof;
(ii) I have received a copy of the Plan and all
reports and documents required to be filed by the Company with the
Commission pursuant to the Exchange Act within the last 24 months and
all reports issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 (the "1933
Act") or an exemption therefrom is available thereunder and that the
Company is under no obligation to register the Option Shares for sale
under the 1933 Act;
(iv) I understand I am subject to the Company's
Insider Trading Policy and have received a copy of such policy as of
the date of this Agreement;
<PAGE>
(v) I agree that I will not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by me hereby
except in accordance with Company's policy, if any, regarding the sale
and disposition of securities owned by employees and/or directors of
the Company;
(vi) in my position with the Company, I have had both
the opportunity to ask questions and receive answers from the officers
and directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(vii) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(viii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered under
the Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
- ------------------------- ----------------------------------------
(Signature) (Address)
- ------------------------- ----------------------------------------
(Print Name)
----------------------------------------
(Social Security Number)
2
EXHIBIT 4.5
STOCK OPTION AGREEMENT
AGREEMENT, dated as of the date on the signature page hereto,
between the individual whose name is printed on the signature page hereto,
residing at the address indicated below such individual's name (the "Optionee")
and WORLDS INC., a New Jersey corporation having its principal office at 15
Union Wharf, Boston, Massachusetts 02109 ("Company").
WHEREAS, the Company has instituted a program designed to
recruit community leaders ("Community Leaders") to welcome and acquaint new
users to its Internet portal, Worlds Ultimate 3D Chat and to investigate and
report any inappropriate behavior by users to the Community Director for
corrective action; and
WHEREAS, Optionee has executed and delivered to the Company a
letter agreement setting forth the terms of his volunteer position as Community
Leader ("Letter Agreement"); and
WHEREAS, the Company desires to compensate Optionee in full
consideration for his services as a Community Leader with options ("Options") to
be granted under the Company's 1997 Incentive and NonQualified Stock Option Plan
("Plan") from time to time to purchase shares of Common Stock of the Company
("Option Shares"); and
WHEREAS, Optionee desires to acquire Options from the Company
on the terms and conditions set forth in this agreement ("Agreement");
IT IS AGREED:
1. Grant of Options. The Company hereby grants to the Optionee
the right and option to purchase all or any part the number of shares of Common
Stock set forth on Schedule A hereto, as amended from time to time, on the terms
and conditions set forth herein. The Option is a non-qualified stock option not
intended to qualify under any section of the Internal Revenue Code of 1986, as
amended. Schedule A shall be amended by the Company at the close of business on
the last day of each full calendar month after the date hereof ("Grant Date").
Options will be earned by Optionee on the basis of 25 shares for each validated
full month of service ("Option Rate").
2. Exercise Price. The purchase price of each share of Common
Stock subject to the Options shall be equal to the last sale price of the Common
Stock on the Grant Date of such Options as reported by the principal trading
market for the Common Stock, and shall be set forth on Schedule A hereto as
amended from time to time.
<PAGE>
3. Vesting and Exercisability. Each monthly grant of options
shall fully vest on the Grant Date of such Options and shall be exercisable for
a period of three years thereafter ("Exercise Period").
4. Limitations on Rights of Optionee. The Optionee shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option. Nothing
contained herein shall be deemed to give Optionee any right of employment with
the Company and the Company shall have the right to terminate Optionee's
volunteer position as a Community Leader at any time, without prior notice to
Optionee.
5. Dividends, Mergers, Etc.
(a) In the event of a stock split or exchange,
stock dividend, combination of shares, or any other similar
change in the Common Stock of the Company as a whole ("Stock
Event"), the Board of Directors of the Company shall make
equitable, proportionate adjustments in the number and kind
of shares covered by Options granted prior to the Stock
Event and in the option price thereunder, as it deems
necessary. Notwithstanding the foregoing, the Board of
Directors shall not be required to change the Option Rate
after any Stock Event
(b) Upon the dissolution or liquidation of the
Company, or upon the consummation of any merger, consolidation or other form of
reorganization in which the Company is not the survivor, or upon the sale of all
or substantially all of the Company's assets (the date of consummation of any
such event being referred to herein as the "Transaction Date"), then the Options
shall terminate at the close of business on the Transaction Date.
6. Transferability of Options and Option Shares.
(a) The Options shall not be assignable or
transferable except in the event of the death of the Optionee, by will or by the
laws of descent and distribution. No transfer of the Options by the Optionee by
will or by the laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written notice thereof
and a copy of the will and such other evidence as the Company may deem necessary
to establish the validity of the transfer and the acceptance by the transferee
or transferees of the terms and conditions of the Options.
(b) The Optionee hereby represents and warrants
to the Company that such Optionee is acquiring the Options for his own account
and not with a view to the distribution thereof.
(c) The Optionee hereby agrees that he shall not
sell, transfer by any means or otherwise dispose of the Options Shares acquired
2
<PAGE>
by him without registration under the Securities Act of 1933 ("Act"), or in the
event that they are not so registered, unless (i) an exemption from the Act is
available thereunder, and (ii) the Optionee has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such opposed transfer to be so exempt.
7. Optionee's Acknowledgments. The Optionee hereby
acknowledges that:
(a) Optionee has inspected or had opportunity to
inspect all reports and documents required to be filed by the Company with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934 within the last 12 months.
(b) If Optionee exercises the Options, Optionee may
have to bear the economic risk of the investment in the Options Shares for an
indefinite period of time because the Options Shares may not have been
registered under the Act and cannot be sold by him unless they are registered
under the Act or an exemption therefrom is available thereunder.
(c) Optionee has had both the opportunity to ask
questions of and receive answers from the officers and directors of the Company
and all persons acting on its behalf concerning the terms and conditions of the
offer made hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it without
unreasonable effort or expense necessary to verify the accuracy of the
information obtained pursuant to subparagraph (a) above.
(d) The Company shall place stop transfer orders with
its transfer agent against the transfer of the Options Shares in the absence of
registration under the Act or an exemption therefrom.
(e) In the absence of registration under the
Act, the certificates evidencing the Options Shares shall bear the following
legend:
"The Shares represented by this certificate have been
acquired for investment and have not been registered under
the Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
8. Exercise of Options.
(a) Subject to the terms and conditions of the
Agreement, the Options may be exercised by written notice to the Company at its
principal place of business. Such notice shall state the election to exercise
the Options and the number of Options Shares in respect to which it is being
exercised, and, if the Options Shares are not then registered for resale under
the Act, such notice shall contain a representation and agreement by
3
<PAGE>
the person or persons so exercising the Options that the Options Shares are
being purchased for investment and not with a view to the distribution or resale
thereof. Such notice shall be accompanied by payment of the full purchase price
of the Options Shares.
(b) Payment of the purchase price shall be made in
cash or by check, bank draft or money order payable to the order of the Company.
(c) The Company shall issue a certificate or
certificates evidencing the Options Shares as soon as practicable after the
notice and payment is received and has cleared the banking system. The
certificate or certificates evidencing the Options Shares shall be registered in
the name of the person or persons so exercising the Options.
(d) The Company hereby represents and warrants
to the Optionee that the Options Shares, when issued and delivered by the
Company to the Optionee in accordance with the terms and conditions hereof, will
be duly and validly issued and fully paid and non-assessable.
9. Miscellaneous.
(a) All notices provided for in this Agreement
shall be in writing, and shall be deemed to have been duly given when delivered
personally to the party to receive the same or when mailed first class postage
prepaid, by certified mail, return receipt requested, addressed to the party to
receive the same at his or its address set forth below, or such other address as
the party to receive the same shall have specified by written notice given in
the manner provided for in this Section 9. All notices shall be deemed to have
been given as of the date of personal delivery or mailing thereof.
If to Optionee:
At the address indicated below his or her name on the
signature page hereto.
If to the Company:
Worlds Inc.
15 Union Wharf
Boston, MA 02190
Attn: Community Leaders Option Program
(b) This Agreement and the Letter Agreement
executed simultaneously herewith set forth the entire agreement of the parties
relating to Optionee's volunteer position as Community Leader and are intended
to supersede all prior negotiations, understandings and agreements. No
provisions of this Agreement or the Letter Agreement may be waived or changed
4
<PAGE>
except by a writing by the party against whom such waiver or change is sought to
be enforced. The failure of any party to require performance of any provision
hereof or thereof shall in no manner affect the right at a later time to enforce
such provision.
(c) This Agreement shall be governed by and
construed under the law of the State of New York, disregarding any principles of
conflicts of law that would otherwise provide for the application of the
substantive law of another jurisdiction. Each of the parties (i) agrees that any
legal suit, action or proceeding arising out of or relating to this Agreement
shall be instituted exclusively in the courts of New York, (ii) waives any
objection to the venue of any such suit, action or proceeding and the right to
assert that such forum is not a convenient forum, and (iii) irrevocably consents
to the jurisdiction of the courts of New York in any such suit, action or
proceeding. Each of the parties further agrees to accept and acknowledge service
of any and all process which may be served in any such suit, action or
proceeding in the courts of New York and agrees that service of process upon it
mailed by certified mail to its address shall be deemed in every respect
effective service of process upon it in any such suit, action or proceeding.
(d) This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of the Company. This Agreement
shall not be assignable by Optionee, but shall inure to the benefit of and be
binding upon Optionee's heirs and legal representatives.
(e) Should any provision of this Agreement
become legally unenforceable, no other provision of this Agreement shall be
affected, and this Agreement shall continue as if the Agreement had been
executed absent the unenforceable provision.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
in the date first above written.
WORLDS INC.
By:_____________________________
________________________________
Signature
Name:___________________________
Address:_________________________
_________________________
_________________________
Social Security #:_______________
Phone Number ____________________
6
<PAGE>
SCHEDULE A
STOCK OPTIONS GRANT SCHEDULE
Total Options
Ownership as of
Date of Grant
(includes exercised
Date of Grant Options Granted Exercise Price Options)
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
- ------------- ------------- ------------- -------------
7
EXHIBIT 4.6
STOCK OPTION AGREEMENT
[Benefit Plan Form for Employees]
AGREEMENT, made as of _________ __, _____ by and between WORLDS INC., a
New Jersey corporation (the "Company"), and ____________________ (the
"Employee").
WHEREAS, on _________ __, ______ ("Grant Date"), the Board of Directors
of the Company authorized the grant to the Employee of an option to purchase an
aggregate of ___ shares of the authorized but unissued common stock of the
Company, $.001 par value ("Common Stock"), conditioned upon the Employee's
acceptance thereof upon the terms and conditions set forth in this Agreement;
and
WHEREAS, the Employee desires to acquire the option on the terms and
conditions set forth in this Agreement.
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Employee the
right and option ("Option") to purchase all or any part of an aggregate of ___
shares of Common Stock ("Option Shares") on the terms and conditions set forth
herein.
2. Non-Incentive Stock Option. The Option represented hereby is not
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended ("Code").
3. Exercise Price. The exercise price ("Exercise Price") of the Option
shall be $____ per share, [cannot be less than 100% of Fair Market Value]
subject to proportionate adjustment for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock.
4. Exercisability. This Option shall become exercisable on _____ __,
_____, subject to the terms and conditions of this Agreement, and shall remain
exercisable until _________ __, ____ [cannot exceed 10 years] (the "Exercise
Period").
OR
<PAGE>
4. Exercisability. This Option shall become exercisable, subject to the
terms and conditions of this Agreement, as follows: (i) the right to purchase
331/3% of the Option Shares shall be exercisable on and after _______ __, ____
[First Anniversary of Date of Grant], (ii) the right to purchase an additional
331/3% of the Option Shares shall be exercisable on and after _______ __, ____
[Second Anniversary of Date of Grant], and (iii) the right to purchase the
remaining 331/3% of the Option Shares shall be exercisable on and after _______
__, ____ [Third Anniversary of Date of Grant]. After a portion of the Option
becomes exercisable, it shall remain exercisable except as otherwise provided
herein, until the close of business on __________ __, ____ [up to Tenth
Anniversary from Date of Grant] (the "Exercise Period").
5. Effect of Termination of Employment.
5.1 Termination Due to Death. If Employee's employment by the
Company terminates by reason of death, the portion of the Option, if any, that
was exercisable as of the date of death may thereafter be exercised by the legal
representative of the estate or by the legatee of the Employee under the will of
the Employee, for a period of one year from the date of such death or until the
expiration of the Exercise Period, whichever period is shorter. The portion of
the Option, if any, that was not exercisable as of the date of death shall
immediately expire.
5.2 Termination Due to Disability. If Employee's employment by
the Company terminates by reason of disability, the portion of the Option, if
any, that was exercisable as of the date of disability may thereafter be
exercised by the Employee for a period of one year from the date of such
termination or until the expiration of the Exercise Period, whichever period is
shorter. The portion of the Option, if any, that was not exercisable as of the
date of termination shall immediately expire.
5.3 Termination by the Company Without Cause and/or Due to
Retirement. If Employee's employment is terminated by the Company without cause
or due to the normal retirement of Employee after his 65th birthday, then the
portion of the Option which has vested by the date of termination of employment
may be exercised for a period of three months from termination of employment or
until the expiration of the Exercise Period, whichever is shorter. The portion
of the Option, if any, not yet exercisable on the date of termination of
employment shall immediately expire.
5.4 Other Termination.
5.4.1 If Employee's employment is terminated for
any reason other than (i) death, (ii) disability, (iii) normal retirement, or
(iv) without cause by the Company, the Option shall expire on the date of
termination of employment.
2
<PAGE>
5.4.2 The Board, in the event the Employee's
employment is terminated for cause, may require the Employee to return to the
Company the economic benefit of any Option Shares purchased hereunder by the
Employee within the six month period prior to the date of termination. In such
event, the Employee hereby agrees to remit to the Company, in cash, an amount
equal to the difference between the Fair Market Value (on the date of
termination) of the Option Shares so purchased by Employee (or the sales price
of such Option Shares if the Option Shares were sold during such six month
period) and the Exercise Price. The "Fair Market Value" of the Common Stock
shall be determined by the Board in its discretion; provided, that if the Common
Stock is listed on a stock exchange, the Fair Market Value per share shall be
the closing price on such exchange on the date of grant of the Option as
reported in the Wall Street Journal (or, (i) if not so reported, as otherwise
reported by the exchange, and (ii) if not reported on the date of grant, then on
the last prior date on which a sale of the Common Stock was reported); or if not
listed on an exchange but traded on Nasdaq, the Fair Market Value per share
shall be the closing price per share of the Common Stock for the date of grant,
as reported in the Wall Street Journal (or, (i) if not so reported, as otherwise
reported by Nasdaq, and (ii) if not reported on the date of grant, then on the
last prior date on which a sale of the Common Stock was reported); or, if the
Common Stock is otherwise publicly traded, the mean of the closing bid price and
asked price for the last known sale or as otherwise reasonably determined by the
Board.
5.5 Competing With the Company. In the event that, within six
(6) months after the date of termination of Employee's employment with the
Company, Employee accepts employment with, or becomes engaged as a consultant
by, any competitor of, or otherwise competes with, the Company, the Committee,
in its sole discretion, may require such Employee to return to the Company the
economic value of any Option Shares purchased hereunder by the Employee within
the six-month period prior to the date of termination. In such event, Employee
agrees to remit the economic value to the Company in accordance with Section
5.4.2.
6. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of the Employee for Federal income tax
purposes with respect to the Option, the Employee shall pay to the Company (or
other entity identified by the Board), or make arrangements satisfactory to the
Company (or other entity identified by the Board) regarding the payment of, any
Federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount ("Withholding Tax"). Unless otherwise
determined by the Board, withholding obligations may be settled with Common
Stock, including Common Stock underlying the subject option, provided that any
applicable requirements under Section 16 of the Exchange Act are satisfied so as
to avoid liability thereunder. The obligations of the Company pursuant to this
Agreement shall be conditioned upon such payment or arrangements with the
Company and the
3
<PAGE>
Company shall, to the extent permitted by law, have the right to deduct any
Withholding Taxes from any payment of any kind otherwise due to the Employee
from the Company.
7. Method of Exercise.
7.1 Notice to the Company. The Option may be exercised in
whole or in part by written notice in the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice and of the Withholding Tax, if any.
7.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Employee as soon as practicable after
payment therefor.
7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Employee shall make cash
payments by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company. The Company shall not be required to
deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
7.3.2 Promissory Note. The Board, in its sole
discretion, may allow Employee to issue a personal interest bearing full
recourse promissory note with such terms and provisions as the Committee may
authorize.
7.3.3 Stock Payment. The Board, in its sole
discretion, may allow Employee to use Common Stock of the Company owned by him
to make any required payments by delivery of stock certificates in negotiable
form which are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Shares of Common Stock used for this
purpose shall be valued at the Fair Market Value.
7.3.4 Payment of Withholding Tax. Any required
Withholding Tax may be paid in cash or with Common Stock in accordance with
Sections 7.3.1 and 7.3.2, respectively, and Section 6.
7.3.5 Exchange Act Compliance. Notwithstanding
the foregoing, the Company shall have the right to reject payment in the form of
Common Stock if in the opinion of counsel for the Company, (i) it could result
in an event of "recapture" under Section 16(b) of the Securities Exchange Act of
4
<PAGE>
1934; (ii) such shares of Common Stock may not be sold or transferred to the
Company; or (iii) such transfer could create legal difficulties for the Company.
8. Nonassignability. The Option shall not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner, except by will or by the
laws of descent and distribution in the event of the death of the Employee. No
transfer of the Option by the Employee by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will and/or
such other evidence as the Company may deem necessary to establish the validity
of the transfer and the acceptance by the transferee or transferees of the terms
and conditions of the Option.
9. Company Representations. The Company hereby represents and warrants
to the Employee that:
(i) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by
the Company to the Employee in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and
non-assessable.
10. Employee Representations. The Employee hereby represents and
warrants to the Company that:
(i) he or she is acquiring the Option and shall
acquire the Option Shares for his own account and not with a view
towards the distribution thereof;
(ii) he or she has received a copy of all reports and
documents required to be filed by the Company with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, within the last 24 months and all reports issued by the
Company to its stockholders;
(iii) he or she understands that he or she is subject
to the Company's insider trading policy and has received a copy of such
policy as of the date of this Agreement;
5
<PAGE>
(iv) he or she understands that he or she must bear
the economic risk of the investment in the Option Shares, which cannot
be sold by him unless they are registered under the Securities Act of
1933 (the "1933 Act") or an exemption therefrom is available thereunder
and that the Company is under no obligation to register the Option
Shares for sale under the 1933 Act;
(v) in his or her position with the Company, he or
she has had both the opportunity to ask questions and receive answers
from the officers and directors of the Company and all persons acting
on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it
without unreasonable effort or expense necessary to verify the accuracy
of the information obtained pursuant to clause (ii) above;
(vi) he or she is aware that the Company shall place
stop transfer orders with its transfer agent against the transfer of
the Option Shares in the absence of registration under the 1933 Act or
an exemption therefrom as provided herein; and
(vii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered under
the Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
11. Restriction on Transfer of Option Shares.
11.1 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him without
registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Employee has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
11.2 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him
6
<PAGE>
(i) prior to six months after the Grant Date and (ii) except in accordance with
Company's insider trading policy regarding the sale and disposition of
securities owned by employees and/or directors of the Company.
12. Miscellaneous.
12.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, or by private courier to the
parties at their respective addresses set forth herein, or to such other address
as either shall have specified by notice in writing to the other. Notice shall
be deemed duly given hereunder when delivered or mailed as provided herein.
12.2 Employee and Stockholder Rights. The Employee shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Employee any right to
continued employment with the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to terminate Employee in
accordance with the provisions regarding such termination set forth in
Employee's written employment agreement with the Company, or if there exists no
such agreement, to terminate Employee at will.
12.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
12.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supercedes any and all prior agreements with respect to the Option. This
Agreement may not be amended except by writing executed by the Employee and the
Company.
12.5 Binding Effect; Successors. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
12.6 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
(without regard to choice of law provisions).
7
<PAGE>
Employee (i) agrees that any legal suit, action or proceeding arising out of or
relating to this Agreement shall be instituted exclusively in New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (ii) waives any objection to the venue of any
such suit, action or proceeding and the right to assert that such forum is not a
convenient forum, and (iii) irrevocably consents to the jurisdiction of the New
York State Supreme Court, County of New York, and the United States District
Court for the Southern District of New York in any such suit, action or
proceeding. Employee further agrees to accept and acknowledge service of any and
all process which may be served in any such suit, action or proceeding in the
New York State Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York and agrees that service of
process upon him mailed by certified mail to its address shall be deemed in
every respect effective service of process upon him in any such suit, action or
proceeding.
12.7 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
Agreement.
12.8 Employee's Options. Employee acknowledges that the Option
and the stock options referred to below are the only stock options granted to
him by the Company.
Date of Grant Number of Shares Exercise Price
- ------------- ----------------- --------------
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written:
WORLDS INC. Address: 15 Union Wharf
Boston, Massachusetts 02109
By: ____________________________
Steven G. Chrust, Chairman
of the Board
EMPLOYEE: Address:
_______________________________
9
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
- ----------------------------
DATE
WORLDS INC.
15 Union Wharf
Boston, Massachusetts 02109
Attention: Stock Option Committee of
the Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
_________ __ ____ with Worlds Inc. (the "Company"), I hereby irrevocably elect
to exercise the right to purchase _________ shares of the Company's common
stock, par value $.001 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of the Company in the sum of
$_________;
|_| confirmation of wire transfer in the amount of
$_____________;
|_| with the consent of the Company, a certificate for
__________ shares of the Company's Common Stock, free
and clear of any encumbrances, duly endorsed, having
a Fair Market Value (as such term is defined in my
Stock Option Agreement) of $_________; and/or
|_| with the consent of the Company, a personal interest
bearing full recourse promissory note in the amount
of $__________.
I hereby represent and warrant to, and agree with, the Company
that:
(i) I am acquiring the Option and shall acquire the
Option Shares for my own account, for investment, and not with a view
towards the distribution thereof;
(ii) I have received a copy of all reports and
documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports
issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 (the "1933
Act") or an exemption therefrom is available thereunder and that the
Company is under no obligation to register the Option Shares for sale
under the 1933 Act;
(iv) I understand I am subject to the Company's
insider trading policy and have received a copy of such policy as of
the date of this Agreement;
<PAGE>
(v) I agree that I will not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by me hereby
except in accordance with Company's policy, if any, regarding the sale
and disposition of securities owned by employees and/or directors of
the Company;
(vi) in my position with the Company, I have had both
the opportunity to ask questions and receive answers from the officers
and directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(vii) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(viii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered under
the Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
- -------------------------- ----------------------------------------
(Signature) (Address)
- -------------------------- ----------------------------------------
(Print Name)
----------------------------------------
(Social Security Number)
2
EXHIBIT 4.7
STOCK OPTION AGREEMENT
[Benefit Plan Form for Consultants]
AGREEMENT, made as of _________ __, _____ by and between WORLDS INC., a
New Jersey corporation (the "Company"), and ____________________ (the
"Consultant").
WHEREAS, on _________ __, ______ ("Grant Date"), the Board of Directors
of the Company authorized the grant to the Consultant of an option to purchase
an aggregate of ___ shares of the authorized but unissued common stock of the
Company, $.001 par value ("Common Stock"), conditioned upon the Consultant's
acceptance thereof upon the terms and conditions set forth in this Agreement;
and
WHEREAS, the Consultant desires to acquire the option on the terms and
conditions set forth in this Agreement.
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Consultant
the right and option ("Option") to purchase all or any part of an aggregate of
___ shares of Common Stock ("Option Shares") on the terms and conditions set
forth herein.
2. Non-Incentive Stock Option. The Option represented hereby is not
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended ("Code").
3. Exercise Price. The exercise price ("Exercise Price") of the Option
shall be $____ per share, [cannot be less than 100% of Fair Market Value]
subject to proportionate adjustment for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock.
4. Exercisability. This Option shall become exercisable on
_____________ __, _____, subject to the terms and conditions of this Agreement,
and shall remain exercisable until _________ __, ____ [cannot exceed 10 years]
(the "Exercise Period").
OR
<PAGE>
4. Exercisability. This Option shall become exercisable, subject to the
terms and conditions of this Agreement, as follows: (i) the right to purchase
331/3% of the Option Shares shall be exercisable on and after _______ __, ____
[First Anniversary of Date of Grant], (ii) the right to purchase an additional
331/3% of the Option Shares shall be exercisable on and after _______ __, ____
[Second Anniversary of Date of Grant], and (iii) the right to purchase the
remaining 331/3% of the Option Shares shall be exercisable on and after _______
__, ____ [Third Anniversary of Date of Grant]. After a portion of the Option
becomes exercisable, it shall remain exercisable except as otherwise provided
herein, until the close of business on __________ __, ____ [up to Tenth
Anniversary from Date of Grant] (the "Exercise Period").
5. Effect of Termination of Engagement.
5.1 Termination Due to Death. If Consultant's engagement by
the Company terminates by reason of death, the portion of the Option, if any,
that was exercisable as of the date of death may thereafter be exercised by the
legal representative of the estate or by the legatee of the Consultant under the
will of the Consultant, for a period of one year from the date of such death or
until the expiration of the Exercise Period, whichever period is shorter. The
portion of the Option, if any, that was not exercisable as of the date of death
shall immediately expire.
5.2 Termination Due to Disability. If Consultant's engagement
by the Company terminates by reason of disability, the portion of the Option, if
any, that was exercisable as of the date of disability may thereafter be
exercised by the Consultant for a period of one year from the date of such
termination or until the expiration of the Exercise Period, whichever period is
shorter. The portion of the Option, if any, that was not exercisable as of the
date of termination shall immediately expire.
5.3 Termination by the Company Without Cause and/or Due to
Retirement. If Consultant's engagement is terminated by the Company without
cause or due to the normal retirement of Consultant after his 65th birthday,
then the portion of the Option which has vested by the date of termination of
engagement may be exercised for a period of three months from termination of
engagement or until the expiration of the Exercise Period, whichever is shorter.
The portion of the Option, if any, not yet exercisable on the date of
termination of engagement shall immediately expire.
2
<PAGE>
5.4 Other Termination.
5.4.1 If Consultant's engagement is terminated for
any reason other than (i) death, (ii) disability, (iii) normal retirement, or
(iv) without cause by the Company, the Option shall expire on the date of
termination of engagement.
5.4.2 The Board, in the event the Consultant's
engagement is terminated for cause, may require the Consultant to return to the
Company the economic benefit of any Option Shares purchased hereunder by the
Consultant within the six month period prior to the date of termination. In such
event, the Consultant hereby agrees to remit to the Company, in cash, an amount
equal to the difference between the Fair Market Value (on the date of
termination) of the Option Shares so purchased by Consultant (or the sales price
of such Option Shares if the Option Shares were sold during such six month
period) and the Exercise Price. The "Fair Market Value" of the Common Stock
shall be determined by the Board in its discretion; provided, that if the Common
Stock is listed on a stock exchange, the Fair Market Value per share shall be
the closing price on such exchange on the date of grant of the Option as
reported in the Wall Street Journal (or, (i) if not so reported, as otherwise
reported by the exchange, and (ii) if not reported on the date of grant, then on
the last prior date on which a sale of the Common Stock was reported); or if not
listed on an exchange but traded on Nasdaq, the Fair Market Value per share
shall be the closing price per share of the Common Stock for the date of grant,
as reported in the Wall Street Journal (or, (i) if not so reported, as otherwise
reported by Nasdaq, and (ii) if not reported on the date of grant, then on the
last prior date on which a sale of the Common Stock was reported); or, if the
Common Stock is otherwise publicly traded, the mean of the closing bid price and
asked price for the last known sale or as otherwise reasonably determined by the
Board.
5.5 Competing With the Company. In the event that, within six
(6) months after the date of termination of Consultant's engagement with the
Company, Consultant accepts employment with, or becomes engaged as a consultant
by, any competitor of, or otherwise competes with, the Company, the Committee,
in its sole discretion, may require such Consultant to return to the Company the
economic value of any Option Shares purchased hereunder by the Consultant within
the six-month period prior to the date of termination. In such event, Consultant
agrees to remit the economic value to the Company in accordance with Section
5.4.2.
6. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of the Consultant for Federal income tax
purposes with respect to the Option, the Consultant shall pay to the Company (or
other entity identified by the Board), or make arrangements satisfactory to the
Company (or other entity identified by the Board) regarding the payment of, any
Federal, state, local or foreign taxes of any kind required by law to be
3
<PAGE>
withheld with respect to such amount ("Withholding Tax"). Unless otherwise
determined by the Board, withholding obligations may be settled with Common
Stock, including Common Stock underlying the subject option, provided that any
applicable requirements under Section 16 of the Exchange Act are satisfied so as
to avoid liability thereunder. The obligations of the Company pursuant to this
Agreement shall be conditioned upon such payment or arrangements with the
Company and the Company shall, to the extent permitted by law, have the right to
deduct any Withholding Tax from any payment of any kind otherwise due to the
Consultant from the Company.
7. Method of Exercise.
7.1 Notice to the Company. The Option may be exercised in
whole or in part by written notice in the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice and of the Withholding Taxes, if any.
7.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Consultant as soon as practicable after
payment therefor.
7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Consultant shall make
cash payments by wire transfer, certified or bank check or personal check, in
each case payable to the order of the Company. The Company shall not be required
to deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
7.3.2 Promissory Note. The Board, in its sole
discretion, may allow Consultant to issue a personal interest bearing full
recourse promissory note with such terms and provisions as the Committee may
authorize.
7.3.3 Stock Payment. The Board, in its sole
discretion, may allow Consultant to use Common Stock of the Company owned by him
to make any required payments by delivery of stock certificates in negotiable
form which are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Shares of Common Stock used for this
purpose shall be valued at the Fair Market Value.
7.3.4 Payment of Withholding Tax. Any required
Withholding Tax may be paid in cash or with Common Stock in accordance with
Sections 7.3.1 and 7.3.2, respectively, and Section 6.
4
<PAGE>
7.3.5 Exchange Act Compliance. Notwithstanding
the foregoing, the Company shall have the right to reject payment in the form of
Common Stock if in the opinion of counsel for the Company, (i) it could result
in an event of "recapture" under Section 16(b) of the Securities Exchange Act of
1934; (ii) such shares of Common Stock may not be sold or transferred to the
Company; or (iii) such transfer could create legal difficulties for the Company.
8. Nonassignability. The Option shall not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner, except by will or by the
laws of descent and distribution in the event of the death of the Consultant. No
transfer of the Option by the Consultant by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will and/or
such other evidence as the Company may deem necessary to establish the validity
of the transfer and the acceptance by the transferee or transferees of the terms
and conditions of the Option.
9. Company Representations. The Company hereby represents and warrants
to the Consultant that:
(i) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by
the Company to the Consultant in accordance with the terms and
conditions hereof, will be duly and validly issued and fully paid and
non-assessable.
10. Consultant Representations. The Consultant hereby represents and
warrants to the Company that:
(i) he or she is acquiring the Option and shall
acquire the Option Shares for his own account and not with a view towards the
distribution thereof;
(ii) he or she has received a copy of all reports and
documents required to be filed by the Company with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, within the last 24 months and all reports issued by the
Company to its stockholders;
5
<PAGE>
(iii) he or she understands that he or she is subject
to the Company's insider trading policy and has received a copy of such
policy as of the date of this Agreement;
(iv) he or she understands that he or she must bear
the economic risk of the investment in the Option Shares, which cannot
be sold by him unless they are registered under the Securities Act of
1933 (the "1933 Act") or an exemption therefrom is available thereunder
and that the Company is under no obligation to register the Option
Shares for sale under the 1933 Act;
(v) in his or her position with the Company, he or
she has had both the opportunity to ask questions and receive answers
from the officers and directors of the Company and all persons acting
on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it
without unreasonable effort or expense necessary to verify the accuracy
of the information obtained pursuant to clause (iii) above;
(vi) he or she is aware that the Company shall place
stop transfer orders with its transfer agent against the transfer of
the Option Shares in the absence of registration under the 1933 Act or
an exemption therefrom as provided herein; and
(vii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
11. Restriction on Transfer of Option Shares.
11.1 Anything in this Agreement to the contrary
notwithstanding, Consultant hereby agrees that he shall not sell, transfer by
any means or otherwise dispose of the Option Shares acquired by him without
registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Consultant has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
6
<PAGE>
11.2 Anything in this Agreement to the contrary
notwithstanding, Consultant hereby agrees that he shall not sell, transfer by
any means or otherwise dispose of the Option Shares acquired by him (i) prior to
six months after the Grant Date and (ii) except in accordance with Company's
insider trading policy regarding the sale and disposition of securities owned by
employees and/or directors of the Company.
12. Miscellaneous.
12.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, or by private courier to the
parties at their respective addresses set forth herein, or to such other address
as either shall have specified by notice in writing to the other. Notice shall
be deemed duly given hereunder when delivered or mailed as provided herein.
12.2 Consultant and Stockholder Rights. The Consultant shall
not have any of the rights of a stockholder with respect to the Option Shares
until such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Consultant any right
to continued engagement by the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to terminate Consultant in
accordance with the provisions regarding such termination set forth in
Consultant's written agreement with the Company, or if there exists no such
agreement, to terminate Consultant's engagement at will.
12.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
12.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supercedes any and all prior agreements with respect to the Option. This
Agreement may not be amended except by writing executed by the Consultant and
the Company.
12.5 Binding Effect; Successors. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
7
<PAGE>
12.6 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
(without regard to choice of law provisions). Consultant (i) agrees that any
legal suit, action or proceeding arising out of or relating to this Agreement
shall be instituted exclusively in New York State Supreme Court, County of New
York, or in the United States District Court for the Southern District of New
York, (ii) waives any objection to the venue of any such suit, action or
proceeding and the right to assert that such forum is not a convenient forum,
and (iii) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. Consultant further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York State Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon him mailed
by certified mail to its address shall be deemed in every respect effective
service of process upon him in any such suit, action or proceeding.
12.7 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
Agreement.
12.8 Consultant's Options. Consultant acknowledges that the
Option and the stock options referred to below are the only stock options
granted to him by the Company.
Date of Grant Number of Shares Exercise Price
- ------------- ----------------- --------------
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written:
WORLDS INC. Address: 15 Union Wharf
Boston, Massachusetts 02109
By: ___________________________
Steven G. Chrust, Chairman
of the Board
CONSULTANT: Address:
_______________________________
9
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
- ----------------------------
DATE
WORLDS INC.
15 Union Wharf
Boston, Massachusetts 02109
Attention: Stock Option Committee of
the Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
_________ __ ____ with Worlds Inc. (the "Company"), I hereby irrevocably elect
to exercise the right to purchase _________ shares of the Company's common
stock, par value $.001 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of the Company in the sum of
$_________;
|_| confirmation of wire transfer in the amount of
$_____________;
|_| with the consent of the Company, a certificate for
__________ shares of the Company's Common Stock, free
and clear of any encumbrances, duly endorsed, having
a Fair Market Value (as such term is defined in my
Stock Option Agreement) of $_________; and/or
|_| with the consent of the Company, a personal interest
bearing full recourse promissory note in the amount
of $__________.
I hereby represent and warrant to, and agree with, the Company
that:
(i) I am acquiring the Option and shall acquire the
Option Shares for my own account, for investment, and not with a view
towards the distribution thereof;
(ii) I have received a copy of all reports and
documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports
issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 (the "1933
Act") or an exemption therefrom is available thereunder and that the
Company is under no obligation to register the Option Shares for sale
under the 1933 Act;
(iv) I understand I am subject to the Company's
insider trading policy and have received a copy of such policy as of
the date of this Agreement;
<PAGE>
(v) I agree that I will not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by me hereby
except in accordance with Company's policy, if any, regarding the sale
and disposition of securities owned by employees and/or directors of
the Company;
(vi) in my position with the Company, I have had both
the opportunity to ask questions and receive answers from the officers
and directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(vii) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(viii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the
Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
- ------------------------- ----------------------------------------
(Signature) (Address)
- ------------------------- ----------------------------------------
(Print Name)
----------------------------------------
(Social Security Number)
2
EXHIBIT 4.8
STOCK OPTION AGREEMENT
[Benefit Plan for Non-Employee Directors]
AGREEMENT, made as of _________ __, _____ by and between WORLDS INC., a
New Jersey corporation (the "Company"), and ____________________ (the
"Director").
WHEREAS, on _________ __, ______ ("Grant Date"), the Board of Directors
of the Company authorized the grant to the Director of an option to purchase an
aggregate of ___ shares of the authorized but unissued common stock of the
Company, $.001 par value ("Common Stock"), conditioned upon the Director's
acceptance thereof upon the terms and conditions set forth in this Agreement;
and
WHEREAS, the Director desires to acquire the option on the terms and
conditions set forth in this Agreement.
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Director the
right and option ("Option") to purchase all or any part of an aggregate of ___
shares of Common Stock ("Option Shares") on the terms and conditions set forth
herein.
2. Non-Incentive Stock Option. The Option represented hereby is not
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended ("Code").
3. Exercise Price. The exercise price ("Exercise Price") of the Option
shall be $____ per share, [cannot be less than 100% of Fair Market Value]
subject to proportionate adjustment for any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock.
4. Exercisability. This Option shall become exercisable, subject to the
terms and conditions of this Agreement, as follows: (i) the right to purchase
331/3% of the Option Shares shall be exercisable on and after _______ __, ____
[First Anniversary of Date of Grant], (ii) the right to purchase an additional
331/3% of the Option Shares shall be exercisable on and after _______ __, ____
[Second Anniversary of Date of Grant], and (iii) the right to purchase the
remaining 331/3% of the Option Shares shall be exercisable on and after _______
__, ____ [Third Anniversary of Date of Grant]. After a portion of the Option
<PAGE>
exercisable, it shall remain exercisable except as otherwise provided herein,
until the close of business on __________ __, ____ [Tenth Anniversary from Date
of Grant] (the "Exercise Period").
5. Effect of Termination of Directorship.
5.1 Termination Due to Death. If Director ceases to be a
director of the Company by reason of death, the portion of the Option, if any,
that was exercisable as of the date of death may thereafter be exercised by the
legal representative of the estate or by the legatee of the Director under the
will of the Director, for a period of one year from the date of such death or
until the expiration of the Exercise Period, whichever period is shorter. The
portion of the Option, if any, that was not exercisable as of the date of death
shall immediately expire.
5.2 Termination Due to Disability. If Director ceases to be a
director of the Company by reason of disability, the portion of the Option, if
any, that was exercisable as of the date of disability may thereafter be
exercised by the Director for a period of one year from the date of such
termination or until the expiration of the Exercise Period, whichever period is
shorter. The portion of the Option, if any, that was not exercisable as of the
date of termination shall immediately expire.
5.3 Termination Due to Failure to be Re-Elected. If Director
ceases to be a director of the Company because he failed to win enough
shareholder votes, then the portion of the Option which has vested by the date
of termination of his directorship may be exercised for a period of three months
from termination of his directorship or until the expiration of the Exercise
Period, whichever is shorter. The portion of the Option, if any, not yet
exercisable on the date of termination of his directorship shall immediately
expire.
5.4 Other Termination. If Director ceases to be a director of
the Company for any other reason (including, but not limited to, Director's
resignation or the Company's failure to nominate Director for re-election), the
Option shall expire on the date of termination of his directorship.
6. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of the Director for Federal income tax
purposes with respect to the Option, the Director shall pay to the Company (or
other entity identified by the Board), or make arrangements satisfactory to the
Company (or other entity identified by the Board) regarding the payment of, any
Federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount ("Withholding Tax"). Unless otherwise
determined by the Board, withholding obligations may be settled with Common
Stock, including Common Stock underlying the subject option, provided that any
applicable requirements under Section 16 of the Exchange Act are satisfied so as
to avoid liability thereunder. The obligations of the Company pursuant
2
<PAGE>
to this Agreement shall be conditioned upon such payment or arrangements with
the Company and the Company shall, to the extent permitted by law, have the
right to deduct any Withholding Tax from any payment of any kind otherwise due
to the Director from the Company.
7. Method of Exercise.
7.1 Notice to the Company. The Option may be exercised in
whole or in part by written notice in the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice and of the Withholding Taxes, if any.
7.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Director as soon as practicable after
payment therefor.
7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Director shall make cash
payments by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company. The Company shall not be required to
deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
7.3.2 Promissory Note. The Committee, in its sole
discretion, may allow Director to issue a personal interest bearing full
recourse promissory note with such terms and provisions as the Committee may
authorize.
7.3.3 Stock Payment. The Committee, in its sole
discretion, may allow Director to use Common Stock of the Company owned by him
to make any required payments by delivery of stock certificates in negotiable
form which are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Shares of Common Stock used for this
purpose shall be valued at the Fair Market Value. The "Fair Market Value" of the
Common Stock shall be determined by the Board in its discretion; provided, that
if the Common Stock is listed on a stock exchange, the Fair Market Value per
share shall be the closing price on such exchange on the date of grant of the
Option as reported in the Wall Street Journal (or, (i) if not so reported, as
otherwise reported by the exchange, and (ii) if not reported on the date of
grant, then on the last prior date on which a sale of the Common Stock was
reported); or if not listed on an exchange but traded on Nasdaq, the Fair Market
Value per share shall be the closing price per share of the Common Stock for the
date of grant, as reported in the Wall Street Journal (or, (i) if not so
3
<PAGE>
reported, as otherwise reported by Nasdaq, and (ii) if not reported on the date
of grant, then on the last prior date on which a sale of the Common Stock was
reported); or, if the Common Stock is otherwise publicly traded, the mean of the
closing bid price and asked price for the last known sale or as otherwise
reasonably determined by the Board.
7.3.4 Payment of Withholding Tax. Any required
Withholding Tax may be paid in cash or with Common Stock in accordance with
Sections 7.3.1 and 7.3.2, respectively, and Section 6.
7.3.5 Exchange Act Compliance. Notwithstanding
the foregoing, the Company shall have the right to reject payment in the form of
Common Stock if in the opinion of counsel for the Company, (i) it could result
in an event of "recapture" under Section 16(b) of the Securities Exchange Act of
1934; (ii) such shares of Common Stock may not be sold or transferred to the
Company; or (iii) such transfer could create legal difficulties for the Company.
8. Nonassignability. The Option shall not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner, except by will or by the
laws of descent and distribution in the event of the death of the Director. No
transfer of the Option by the Director by will or by the laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and a copy of the will and/or
such other evidence as the Company may deem necessary to establish the validity
of the transfer and the acceptance by the transferee or transferees of the terms
and conditions of the Option.
9. Company Representations. The Company hereby represents and warrants
to the Director that:
(i) the Company, by appropriate and all required
action, is duly authorized to enter into this Agreement and consummate
all of the transactions contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by
the Company to the Director in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and
non-assessable.
10. Director Representations. The Director hereby represents and
warrants to the Company that:
(i) he or she is acquiring the Option and shall
acquire the Option Shares for his own account and not with a view
towards the distribution thereof;
4
<PAGE>
(ii) he or she has received a copy of all reports and
documents required to be filed by the Company with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, within the last 24 months and all reports issued by the
Company to its stockholders;
(iii) he or she understands that he or she is subject
to the Company's insider trading policy and has received a copy of such
policy as of the date of this Agreement;
(iv) he or she understands that he or she must bear
the economic risk of the investment in the Option Shares, which cannot
be sold by him unless they are registered under the Securities Act of
1933 (the "1933 Act") or an exemption therefrom is available thereunder
and that the Company is under no obligation to register the Option
Shares for sale under the 1933 Act;
(v) in his or her position with the Company, he or
she has had both the opportunity to ask questions and receive answers
from the officers and directors of the Company and all persons acting
on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it
without unreasonable effort or expense necessary to verify the accuracy
of the information obtained pursuant to clause (iii) above;
(vi) he or she is aware that the Company shall place
stop transfer orders with its transfer agent against the transfer of
the Option Shares in the absence of registration under the 1933 Act or
an exemption therefrom as provided herein; and
(vii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered under
the Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
5
<PAGE>
11. Restriction on Transfer of Option Shares.
11.1 Anything in this Agreement to the contrary
notwithstanding, Director hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him without
registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Director has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
11.2 Anything in this Agreement to the contrary
notwithstanding, Director hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him (i) prior to six
months after the Grant Date and (ii) except in accordance with Company's Insider
Trading Policy regarding the sale and disposition of securities owned by
employees and/or directors of the Company.
12. Miscellaneous.
12.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, or by private courier to the
parties at their respective addresses set forth herein, or to such other address
as either shall have specified by notice in writing to the other. Notice shall
be deemed duly given hereunder when delivered or mailed as provided herein.
12.2 Director and Stockholder Rights. The Director shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Director any right to
continue to be a director of the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to either terminate his
directorship (if authorized to do so under the Company's by-laws and New Jersey
corporate law), or not nominate him for re-election.
12.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
12.4 Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
6
<PAGE>
and supercedes any and all prior agreements with respect to the Option. This
Agreement may not be amended except by writing executed by the Director and the
Company.
12.5 Binding Effect; Successors. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
12.6 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New Jersey
(without regard to choice of law provisions). Director (i) agrees that any legal
suit, action or proceeding arising out of or relating to this Agreement shall be
instituted exclusively in New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York, (ii)
waives any objection to the venue of any such suit, action or proceeding and the
right to assert that such forum is not a convenient forum, and (iii) irrevocably
consents to the jurisdiction of the New York State Supreme Court, County of New
York, and the United States District Court for the Southern District of New York
in any such suit, action or proceeding. Director further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York State Supreme Court, County of New York, or
in the United States District Court for the Southern District of New York and
agrees that service of process upon him mailed by certified mail to its address
shall be deemed in every respect effective service of process upon him in any
such suit, action or proceeding.
12.7 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
Agreement.
12.8 Director's Options. Director acknowledges that the Option
and the stock options referred to below are the only stock options granted to
him by the Company.
Date of Grant Number of Shares Exercise Price
- ------------- ----------------- --------------
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above written:
WORLDS INC. Address: 15 Union Wharf
Boston, Massachusetts 02109
By: ___________________________
Steven G. Chrust, Chairman
of the Board
DIRECTOR: Address:
________________________________
8
<PAGE>
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
- ----------------------------
DATE
WORLDS INC.
15 Union Wharf
Boston, Massachusetts 02109
Attention: Stock Option Committee of
the Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
_________ __ ____ with Worlds Inc. (the "Company"), I hereby irrevocably elect
to exercise the right to purchase _________ shares of the Company's common
stock, par value $.001 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of the Company in the sum of
$_________;
|_| confirmation of wire transfer in the amount of
$_____________;
|_| with the consent of the Company, a certificate for
__________ shares of the Company's Common Stock, free
and clear of any encumbrances, duly endorsed, having
a Fair Market Value (as such term is defined my Stock
Option Agreement) of $_________; and/or
|_| with the consent of the Company, a personal interest
bearing full recourse promissory note in the amount
of $__________.
I hereby represent and warrant to, and agree with, the Company
that:
(i) I am acquiring the Option and shall acquire the
Option Shares for my own account, for investment, and not with a view
towards the distribution thereof;
(ii) I have received copies of all reports and
documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports
issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 (the "1933
Act") or an exemption therefrom is available thereunder and that the
Company is under no obligation to register the Option Shares for sale
under the 1933 Act;
(iv) I understand I am subject to the Company's
insider trading policy and have received a copy of such policy as of
the date of this Agreement;
<PAGE>
(v) I agree that I will not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by me hereby
except in accordance with Company's policy, if any, regarding the sale
and disposition of securities owned by employees and/or directors of
the Company;
(vi) in my position with the Company, I have had both
the opportunity to ask questions and receive answers from the officers
and directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(vii) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein; and
(viii) if, at the time of issuance of the Option
Shares, the issuance of such shares have not been registered under the
1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered under
the Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
- --------------------------- ----------------------------------------
(Signature) (Address)
- --------------------------- ----------------------------------------
(Print Name)
----------------------------------------
(Social Security Number)
2
EXHIBIT 4.9
WORLDS INC. - Schedule of Option Grants Under Benefit Plans
<TABLE>
<CAPTION>
Vesting
Number Number Dates
Grant of Exercise of of Expiration Option
Name Date Shares Price ($) Shares Vesting Date Form
- ----------- ----------- -------- -------- ------ ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Debra Sito 9/3/99 150,000 4.00 50,000 9/2/00 9/3/04 (1)
12,500 quarterly
beginning
12/2/00
Debra Sito 9/3/99 50,000 7.50 16,000 9/2/00 9/3/04 (1)
4,250 quarterly
beginning
12/2/00
Debra Sito 9/3/99 50,000 10.00 16,000 9/2/00 9/3/04 (1)
4,250 quarterly
beginning
12/2/00
Steve Colwell 8/10/99 300,000 2.46 100,000 annually 8/10/04 (2)
beginning
8/10/00
Ken Locker 5/7/98 40,000 1.00 13,333 annually 5/7/03 (3)
beginning
5/7/99
</TABLE>
- ------------------
(1) Benefit Plan form for employees.
(2) Benefit Plan form for consultants.
(3) Benefit Plan form for non-employee directors.
EXHIBIT 5.1
GRAUBARD MOLLEN & MILLER
600 Third Avenue
New York, NY 10016
October 29, 1999
Worlds Inc.
15 Union Wharf
Boston, MA 02109
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to you in connection with the
registration on Form S-8 under the Securities Act of 1933, as amended
("Securities Act"), by Worlds Inc. ("Company") of up to 3,000,000 shares of the
Company's common stock, $.001 par value per share ("Common Stock"), issuable
upon exercise of options or pursuant to other stock-based awards that have been
or may be granted under the Company's 1997 Incentive and Non-Qualified Stock
Option Plan (the "1997 Plan") and up to 590,000 shares of Common Stock issuable
upon exercise of options that have been granted under certain other employee
benefit plans ("Benefit Plans") of the Company. In August 1999, the Company's
board of directors approved an amendment to the 1997 Plan which will increase
the number of shares of common stock available for issuance upon exercise of
options granted under the 1997 Plan from 1,000,000 to 3,000,000 shares, subject
to the approval of the Company's shareholders.
In such capacity, we have examined, among other documents, the
1997 Plan, the forms of the stock option agreements between the Company and the
grantees of options under the 1997 Plan and the Benefit Plans, copies of the
certificate of incorporation and by-laws of the Company and copies of
resolutions adopted by the Company's Board of Directors relating, among other
things, to the adoption of the 1997 Plan and the amendment of the 1997 Plan and
the authorization and sale of the shares of common stock to be sold pursuant to
the 1997 Plan and the Benefit Plans. We have examined and relied upon, to the
extent we deemed such reliance proper, certificates of officers and directors of
the Company, certificates of certain public officials and such other records and
documents as we have considered necessary or desirable and proper in order that
we may render the opinion hereinafter set forth. We have assumed the
authenticity of such certificate of incorporation and by-laws, resolutions,
<PAGE>
certificates, records and other documents examined by us and the correctness of
all statements of fact contained therein, and nothing has come to our attention
that indicates that such documents and other items are not authentic or correct.
With respect to such examination, we have assumed the genuineness of all
signatures appearing on all documents presented to us as originals and the
conformity to originals of all documents presented to us as conformed or
reproduced documents. We have not examined the certificates for the shares of
common stock other than specimens thereof.
As members of the Bar of the State of New York, we do not
purport to be experts in the law of any jurisdiction other than the State of New
York and with respect to the Federal law of the United States.
Based on the foregoing, we are of the opinion that the shares
of Common Stock being offered pursuant to the 1997 Plan and the Benefit Plans,
and the terms of the 1997 Plan and the respective Benefit Plans, have been duly
authorized and, when issued and delivered against payment therefor, as
contemplated by the 1997 Plan and the Benefit Plans, will be validly issued and
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit
to the registration statement, to the use of our name as your counsel, and to
all references made to us in the registration statement. In giving this consent,
we do not hereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act, or the rules and regulations
promulgated thereunder.
This letter is being delivered to you solely for your benefit
and may not be relied upon in any manner by any other person.
Very truly yours,
/s/ Graubard Mollen & Miller
GRAUBARD MOLLEN & MILLER
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Worlds Inc.
We hereby consent to the incorporation by reference in the registration
statement on Form S-8 of Worlds Inc. of our report dated March 26, 1999 relating
to the financial statements of Worlds Inc. (a development stage enterprise)
appearing in the Company's Annual Report on Form 10- KSB for the year ended
December 31, 1998. Our report contains an explanatory paragraph regarding the
Company's ability to continue as a going concern.
/s/ BDO Seidman, LLP
BDO SEIDMAN, LLP
New York, New York
October 26, 1999
