SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
WORLDS.COM INC. (formerly Worlds Inc.)
(Name of Issuer)
Common Stock, $0.001 par value
(Title of Class of Securities)
981918105
(CUSIP Number)
Steven A. Greenberg
693 Fifth Avenue
New York, NY 10022
(212) 246-1000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 10, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ]
NOTE: Schedules filed in paper format shall include a signed original
and five copies of this schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 7 Pages)
- ---------------------------------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
Schedule 13D
CUSIP NO. 981918105 13D Page 2 of 7 Pages
---------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Thomas Kidrin
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF SHARES BENEFICIALLY OWNED
BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
1,290,000
8. SHARED VOTING POWER
-0-
9. SOLE DISPOSITIVE POWER
1,290,000
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,290,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.4%
14. TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE>
Schedule 13D
CUSIP NO. 981918105 13D Page 3 of 7 Pages
---------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Michael Scharf
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF SHARES BENEFICIALLY OWNED
BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
1,381,250
8. SHARED VOTING POWER
-0-
9. SOLE DISPOSITIVE POWER
1,381,250
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,381,250
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.8%
14. TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE>
Schedule 13D
CUSIP NO. 981918105 13D Page 4 of 7 Pages
---------
1. NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Steven A. Greenberg
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
3. SEC USE ONLY
4. SOURCE OF FUNDS*
PF
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER OF SHARES BENEFICIALLY OWNED
BY EACH REPORTING PERSON WITH:
7. SOLE VOTING POWER
3,667,281
8. SHARED VOTING POWER
-0-
9. SOLE DISPOSITIVE POWER
3,364,342
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,667,281
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
20.8%
14. TYPE OF REPORTING PERSON*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT
<PAGE>
Page 5 of 7 Pages
This statement relates to Common Stock, $0.05 par value (the "Common
Stock"), of Worlds.com Inc. (formerly Worlds Inc.), a New Jersey corporation
(the "Issuer"). This is amendment No. 2 to a Schedule 13D filed on April 23,
1999 (the "Schedule 13D"). Terms not defined herein shall have the meaning
ascribed to them in the Schedule 13D.
Item 5. Interest in Securities of the Issuer.
Item 5 is amended and restated in its entirety as follows:
(a) Mr. Greenberg beneficially owns 3,667,281 shares of Common Stock
(representing approximately 20.8% of the Issuer's outstanding shares)
of which 3,467,281 were acquired by Mr. Greenberg at par value as a
founder. The balance was acquired as disclosed in Item 5(c) below. Mr.
Scharf owns 1,381,250 shares of Common Stock (representing
approximately 7.8% of the Issuer's outstanding shares), all of which
were purchased at par value as a founder except for 400,000 shares
purchased in June 1997 at a price of $0.50 per share. Mr. Kidrin owns
1,290,000 shares of Common Stock (representing approximately 7.4% of
the Issuer's outstanding shares), all of which were purchased at par
value as a founder. Each Reporting Person disclaims beneficial
ownership in the shares held by the other Reporting Persons.
(b) Except as disclosed in Item 6, each Reporting Person has the sole
power to vote and dispose of the Common Stock.
(c) By agreement dated April 13, 1999, Messrs. Greenberg, Scharf and
Kidrin agreed to contribute to the capital of the Company for
cancellation 881,250, 318,750 and 300,000 shares of Common Stock,
respectively. On April 13, 1999, Mr. Greenberg purchased from Mr.
Scharf 200,000 shares of Common Stock at $0.50 per share in a private
transaction.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Pursuant to a Purchase and Option Agreement dated March 10, 2000 (the
"Agreement"), Steven A. Greenberg ("Greenberg") sold 302,939 shares
of Common Stock to Steven G. Chrust, Chairman of the Issuer ("Chrust")
for $1,000,001.64.
Greenberg retains the right to vote such shares until the earlier of
(i) September 10, 2001 or (ii) the date on which the Option (as
defined below) is exercised with respect to at least 605,877 shares of
Common Stock. Pursuant to the Agreement, Greenberg sold an option (the
"Option") to Chrust to purchase up to an aggregate of 1,363,342 shares
of Common Stock at an exercise price of $3.301 per share. The Option
will expire on June 4, 2000, unless exercised with respect to 75,735
shares by such date, in which case the Option will expire on July 4,
2000. The Option is not exercisable for less than an aggregate of
605,877 shares of Common Stock, except as set forth in the previous
sentence in connection with the extension of the Option. Pursuant to a
Purchase Agreement dated March 10, 2000 (the "Purchase Agreement"),
Greenberg also sold 151,469 shares of Common Stock to The Advent Fund
LLC for $499,999.17. This paragraph is qualified in its entirety by
reference to the Agreement and Purchase Agreement, which are filed as
exhibits hereto.
Pursuant to the Agreement, Greenberg executed a consent an an
irrevocable proxy with respect to all of his shares of Common Stock,
relating to the possible authorization and creation of a series or
class of preferred stock, on the condition that such shares are issued
not later than July 4, 2000. This paragraph is qualified in its
entirety by reference to the consent, which is filed as an exhibit
hereto.
<PAGE>
Page 6 of 7 Pages
Item 7. Material to be Filed as Exhibits.
*1. Agreement to jointly file Schedule 13D.
*2. Contribution and Voting Agreement.
3. Purchase and Option Agreement, dated March 10, 2000, by and
between Steven A. Greenberg and Steven G. Chrust.
4. Purchase Agreement, dated March 10, 2000, by and between Steven
A. Greenberg and The Advent Fund LLC.
5. Consent letter from Steven A. Greenberg to the Issuer dated March
10, 2000.
- ---------------
* Filed previously.
<PAGE>
Page 7 of 7 Pages
SIGNATURES
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
Dated: March 17, 2000
/s/ Steven Greenberg
- -------------------------
Steven Greenberg
/s/ Michael Scharf
- -------------------------
Michael Scharf
/s/ Thomas Kidrin
- -------------------------
Thomas Kidrin
PURCHASE AND OPTION AGREEMENT
PURCHASE AND OPTION AGREEMENT, dated March 10, 2000, by and between
STEVEN A. GREENBERG ("Greenberg") and STEVEN G. CHRUST ("Chrust").
WHEREAS, Chrust desires to purchase concurrently with the execution of
this Agreement certain shares of the common stock ("Common Stock") of Worlds.com
Inc. ("Company") owned by Greenberg and Greenberg desires to sell to Chrust such
shares; and
WHEREAS, Greenberg also desires to grant Chrust an option to purchase
certain additional shares of the Common Stock owned by Greenberg and Chrust
desires to acquire the option on the terms and conditions set forth in this
Agreement.
IT IS AGREED:
1. Stock Purchase. Chrust hereby purchases from Greenberg and
Greenberg hereby sells to Chrust 302,939 shares of the Common Stock owned by
Greenberg ("Purchased Shares") at a price of $3.301 per share. Accordingly,
concurrently with the execution of this Agreement, Chrust is wiring to an
account designated by Greenberg the sum of $1,000,001.64 in immediately
available funds in consideration for the Purchased Shares, and Greenberg is
causing certificates representing the Purchased Shares, together with stock
powers, with signatures guaranteed, to be delivered to Graubard Mollen & Miller
("GMM"). Promptly thereafter, GMM shall arrange to have the Purchased Shares
transferred into Chrust's name and certificates representing such shares to be
delivered to Chrust.
2. Grant of Stock Option. Greenberg hereby grants to Chrust the
right and option ("Option ") to purchase up to an aggregate of 1,363,342
additional shares of the Common Stock owned by Greenberg ("Option Shares"), all
on the terms and conditions set forth herein.
3. Exercise Price. The exercise price ("Exercise Price") of the
Option shall be $3.301 per share, subject to adjustment as hereinafter provided.
4. Exercisability. The Option shall be exercisable from time to
time, in whole or in part, during the "Option Period," which shall be the period
<PAGE>
commencing on the date of this Agreement and ending on June 4, 2000, unless
extended until July 4, 2000 in accordance with Section 5(ii) hereof. The last
day of the Option Period, as it may be extended, is referred to as the
"Termination Date." Notwithstanding the foregoing, except as set forth in
Section 5(ii) hereof, the Option may not be exercised for less than an aggregate
of 605,877 Option Shares (inclusive of the 75,735 Option Shares which may be
purchased under Section 5(ii), below) (the "Minimum Option Exercise").
5. Consideration for the Option.
(i) Simultaneously with the execution of this Agreement, Chrust
is wiring to the account designated by Greenberg pursuant to Section 1
above the sum of $10,000 ("Option Purchase Price") as payment for the grant
of the Option by Greenberg to Chrust.
(ii) If Chrust desires to extend the Option Period beyond June 4,
2000, then on or prior to the close of business on June 4, 2000, Chrust
must wire, or have wired, an additional $250,001.24 ("Extension Payment")
to the account designated pursuant to Section 5(i) in order to exercise the
Option with respect to 75,735 Option Shares ("Extension Exercise"). If the
Extension Exercise is made on or prior to June 4, 2000, the Termination
Date shall be extended to July 4, 2000, and (ii) the Escrow Agent shall
deliver a certificate for such 75,735 Option Shares as directed by Chrust.
(iii) If the Option is exercised in accordance with the terms
hereof and of the Escrow Agreement (as defined in Section 7 below), then
the Option Purchase Price (less $1) will be applied as a credit against the
aggregate amount payable to Greenberg upon satisfaction of the Minimum
Option Exercise. If the Option is not so exercised, Greenberg will be
entitled to retain the full amount of the Option Purchase Price.
6. Adjustments. In the event of any change in the number of
outstanding shares of the Common Stock occurring as the result of a stock split,
reverse stock split or stock dividend, combination or reclassification of the
outstanding Common Stock, or similar event after the date hereof, the number of
Option Shares and the Exercise Price of the Option shall each be proportionately
adjusted. Any right to acquire a fractional Option Share resulting from
adjustments will be rounded to the nearest whole Option Share.
2
<PAGE>
7. Method of Exercise. The Option may be exercised in whole or in
part (subject to the Minimum Option Exercise described in Section 4, above,
and/or the Extension Exercise described in Section 5(ii), above) by written
notice directed to Greenberg and the Escrow Agent in accordance with the terms
of the Escrow Agreement among Greenberg, Chrust and Continental Stock Transfer &
Trust Company ("Escrow Agent"), executed simultaneously herewith ("Escrow
Agreement").
8. Voting Rights. Chrust hereby acknowledges and agrees that during
the Voting Proxy Period (as defined in this paragraph 8), Greenberg shall have
the right to vote all of the Purchased Shares with respect to any matter put to
a vote of the stockholders of the Company. The "Voting Proxy Period" shall be
the period commencing on the date hereof and ending on the earlier of (i)
September 10, 2001 or (ii) the date the Minimum Option Exercise is made.
Notwithstanding anything contained herein to the contrary, the foregoing shall
not in any way limit or otherwise modify Greenberg's obligations to vote his
shares, including the Purchased Shares, in accordance with the terms of the
Consent (defined in Section 11, below) and the letter, dated April 13, 1999,
from Greenberg, Michael Scharf and Thomas Kidrin to Chrust and the Company.
9. Greenberg's Representations. Greenberg represents and warrants
to Chrust that:
(i) he owns the Purchased Shares and the Option Shares
(together, the "Shares") free of any lien, restriction or encumbrance of
any kind, and he has owned all of the Shares since December 31, 1997;
(ii) the sale by him of the Purchased Shares is, and the sale by
him of the Option Shares upon exercise of the Option will be, exempt from
the registration requirements of the Securities Act of 1933, as amended
("1933 Act");
(iii) he has not granted anyone an option, warrant, subscription
or other right with respect to the Shares or any right to vote the Shares;
(iv) his execution, delivery and performance of this Agreement
and the Escrow Agreement does not and will not conflict with or violate any
law, statute, ordinance, rule, regulation, order, judgment or decree
applicable to him, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, any note, bond, mortgage, indenture, contract, agreement or other
instrument or obligation to which he is a party or by which he is bound.
3
<PAGE>
(v) he has received a copy of all reports and documents 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; and
(vi) he has had both the opportunity to ask questions and receive
answers from the officers and directors of the Company and persons acting
on its behalf concerning the Company's operations and to obtain any
additional information he requested.
10. Chrust's Representations. Chrust represents and warrants to
Greenberg that:
(i) he understands that he must bear the economic risk of the
investment in the Shares, which cannot be sold by him unless they are
registered under the 1933 Act or an exemption therefrom is available
thereunder; and
(ii) he is aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Shares in the
absence of registration under the 1933 Act or an exemption therefrom as
provided herein;
(iii) he understands that the certificates evidencing the
Shares shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
the securities laws of any State. The shares may not be sold,
transferred or otherwise disposed of in the absence of such
registration or an exemption therefrom under said Act."
(iv) he understands that, during the Voting Proxy Period the
Purchased Shares shall bear the following additional legend:
4
<PAGE>
"The shares represented by this certificate are subject to
certain voting rights granted to a person other than the
registered holder hereof, in accordance with a certain Purchase
and Option Agreement, dated March 10, 2000, a copy of which is on
file at the principal offices of the Company."
(v) as Chairman of the Company's board of directors, he is aware
of all information regarding the Company's operations, including the
Company's proposed plans and business risks.
(vi) his execution, delivery and performance of this Agreement
and the Escrow Agreement does not and will not conflict with or violate any
law, statute, ordinance, rule, regulation, order, judgment or decree
applicable to him, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, any note, bond, mortgage, indenture, contract, agreement or other
instrument or obligation to which he is a party or by which he is bound.
11. Releases; Consent. Simultaneously herewith, (i) each of Greenberg
and the Company are executing mutual general releases in the other's favor
("Releases"), and (ii) Greenberg is executing a shareholder consent with respect
to certain matters ("Consent").
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 deemed given if given in writing, by hand, or
delivered by nationally recognized overnight courier, or by telecopier and
confirmed by mail (registered or certified mail, postage prepaid, return receipt
requested) at their respective addresses set forth herein, or to such other
address as either shall have specified by notice in writing to the other.
12.2 Survival of Representations. The representations and
warranties made by the parties shall survive the delivery of the Purchased
Shares and the partial, full or non-exercise of the Option (and the delivery of
the Option Shares).
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.
5
<PAGE>
12.4 Entire Agreement. This Agreement, the Escrow Agreement, the
Releases and the Consent constitute the entire agreement between the parties
with respect to the subject matter hereof. This Agreement may not be amended
except by writing executed by Greenberg and Chrust.
12.5 Binding Effect; Successors. Chrust shall be entitled to
designate persons to purchase Option Shares along with him and such persons
shall be deemed to be assignees of his rights hereunder. If a portion of the
Option is exercised by such a designee, such designee must deliver to Greenberg
simultaneously with such exercise a certificate containing representations and
warranties substantially similar to the representations and warranties made by
Chrust in Section 10 above. 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 any rights, remedies,
obligations or liabilities on any person other than the parties hereto and as
provided above, their respective heirs, successors, assigns and representatives.
12.6 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(without regard to choice of law provisions). Each party (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. Each party 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 registered mail to his address shall be deemed in every respect effective
service of process upon him in any such suit, action or proceeding.
12.7 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
6
<PAGE>
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
12.8 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.
12.9 SEC Filings. Each party agrees to provide the other with
copies of any filings they make with the Securities and Exchange Commission to
reflect the sale of the Purchased Shares and the grant and exercise of the
Option prior to the time the filing is required to be made and to give the other
party reasonable opportunity to comment on same.
12.10 Severability. The invalidity or unenforceability of any
term or provision of this Agreement in any situation or jurisdiction shall not
affect the validity or enforceability of the other terms or provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction and the remaining terms and provisions
shall remain in full force and effect, unless doing so would result in an
interpretation of this Agreement which is manifestly unjust.
12.11 Fees and Expenses. Except as otherwise expressly set forth
herein or in the Escrow Agreement, all costs and expenses (including, without
limitation, legal and financial advisory fees and expenses) incurred in
connection with, or in anticipation of, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
12.12 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original instrument and
all of which together shall constitute a single agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have signed this Agreement on
the day and year first above:
Address: 693 Fifth Avenue -- 19th Floor
New York, New York 10022
Telecopier No.: 212-246-1007
/s/ Steven A. Greenberg
- ----------------------------------
STEVEN A. GREENBERG
Address: SGC Advisory Services, Inc.
1786 Bedford Street
Stamford, CT 06905
Telecopier No.: 203-316-3929
/s/ Steven G. Chrust
- ---------------------------------
STEVEN G. CHRUST
8
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated March 10, 2000, by and between STEVEN A.
GREENBERG ("Greenberg") and THE ADVENT FUND LLC ("Purchaser").
WHEREAS, Purchaser desires to purchase concurrently with the execution
of this Agreement certain shares of the common stock ("Common Stock") of
Worlds.com Inc. ("Company") owned by Greenberg and Greenberg desires to sell to
Purchaser such shares.
IT IS AGREED:
1. Stock Purchase. Purchaser hereby purchases from Greenberg and
Greenberg hereby sells to Purchaser 151,469 shares of the Common Stock owned by
Greenberg ("Purchased Shares") at a price of $3.301 per share. Accordingly,
concurrently with the execution of this Agreement, Purchaser is wiring to an
account designated by Greenberg the sum of $499,999.17 in immediately available
funds in consideration for the Purchased Shares, and Greenberg is causing the
Purchased Shares to be transferred into the names directed by Purchaser and
certificates representing such shares to be delivered to Purchaser.
2. Greenberg's Representations. Greenberg represents and warrants
to Purchaser that:
(i) he owns the Purchased Shares free of any lien,
restriction or encumbrance of any kind, and he has owned all of the
Purchased Shares since December 31, 1997;
(ii) the sale by him of the Purchased Shares is exempt from
the registration requirements of the Securities Act of 1933, as
amended ("1933 Act");
(iii) he has not granted anyone an option, warrant,
subscription or other right with respect to the Purchased Shares or
any right to vote the Purchased Shares;
(iv) his execution, delivery and performance of this
Agreement does not and will not conflict with or violate any law,
statute, ordinance, rule, regulation, order, judgment or decree
applicable to him, result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a
default) under, any note, bond, mortgage, indenture, contract,
agreement or other instrument or obligation to which he is a party or
by which he is bound.
<PAGE>
(v) he has received a copy of all reports and documents
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; and
(vi) he has had both the opportunity to ask questions and
receive answers from the officers and directors of the Company and
persons acting on its behalf concerning the Company's operations and
to obtain any additional information he requested.
3. Purchaser's Representations. Purchaser represents and warrants to
Greenberg that:
(i) he understands that he must bear the economic risk of
the investment in the Purchased Shares, which cannot be sold by him
unless they are registered under the 1933 Act or an exemption
therefrom is available thereunder; and
(ii) he is aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Purchased
Shares in the absence of registration under the 1933 Act or an
exemption therefrom as provided herein;
(iii) he understands that the certificates evidencing the
Purchased Shares shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any State. The shares may not
be sold, transferred or otherwise disposed of in the absence
of such registration or an exemption therefrom under said
Act."
(iv) he has received a copy of all reports and documents
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, and is aware of the risks involved with his investment;
2
<PAGE>
(v) he has had both the opportunity to ask questions and
receive answers from the officers and directors of the Company and
persons acting on its behalf concerning the Company's operations and
to obtain any additional information he requested; and
(vi) his execution, delivery and performance of this
Agreement does not and will not conflict with or violate any law,
statute, ordinance, rule, regulation, order, judgment or decree
applicable to him, result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a
default) under, any note, bond, mortgage, indenture, contract,
agreement or other instrument or obligation to which he is a party or
by which he is bound.
4. Miscellaneous.
4.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be deemed given if given in writing, by hand, or
delivered by nationally recognized overnight courier, or by telecopier and
confirmed by mail (registered or certified mail, postage prepaid, return receipt
requested) at their respective addresses set forth herein, or to such other
address as either shall have specified by notice in writing to the other.
4.2 Survival of Representations. The representations and
warranties made by the parties shall survive the delivery of the Purchased
Shares.
4.3 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.
4.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This
Agreement may not be amended except by writing executed by Greenberg and
Purchaser.
4.5 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 any rights, remedies, obligations or liabilities on any person other than
3
<PAGE>
the parties hereto and as provided above, their respective heirs, successors,
assigns and representatives.
4.6 Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(without regard to choice of law provisions). Each party (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. Each party 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 registered mail to his address shall be deemed in every respect effective
service of process upon him in any such suit, action or proceeding.
4.7 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto waives any right to trial by jury with respect to any claim or
proceeding related to or arising out of this Agreement or any of the
transactions contemplated hereby.
4.8 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.
4.9 Severability. The invalidity or unenforceability of any term
or provision of this Agreement in any situation or jurisdiction shall not affect
the validity or enforceability of the other terms or provisions hereof or the
validity or enforceability of the offending term or provision in any other
4
<PAGE>
situation or in any other jurisdiction and the remaining terms and provisions
shall remain in full force and effect, unless doing so would result in an
interpretation of this Agreement which is manifestly unjust.
4.10 Fees and Expenses. All costs and expenses (including,
without limitation, legal and financial advisory fees and expenses) incurred in
connection with, or in anticipation of, this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
4.11 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original instrument and
all of which together shall constitute a single agreement.
4.12 Chrust Agreement. This Agreement is being executed and
delivered simultaneously with the Purchase and Option Agreement, dated March 10,
2000, between Greenberg and Steven Chrust, pursuant to which Chrust is
purchasing 302,939 shares of Common Stock of the Company from Greenberg for
$1,000,001.64.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement on
the day and year first above:
Address: 693 Fifth Avenue--19th Floor
New York, New York 10022
Telecopier No.: 212-246-1007
/s/ Steven A. Greenberg
- ---------------------------------
STEVEN A. GREENBERG
PURCHASER: Address: 440 South LaSalle--Suite 2500
THE ADVENT FUND LLC Chicago, Illinois 60605
Telecopier No.: 312-663-8464
/s/ Ben King
- ---------------------------------
By: Ben King, Manager
STEVEN A. GREENBERG
693 FIFTH AVENUE-- 19TH FLOOR
NEW YORK, NEW YORK 10022
March 10, 2000
Worlds.com Inc.
15 Union Wharf
Boston, Massachusetts 02109
Gentlemen:
This letter is being delivered to you simultaneously with the
execution of and delivery of the purchase and option agreement ("Agreement"),
dated March 10, 2000, between the undersigned ("Greenberg") and Steven G. Chrust
("Chrust").
I hereby consent, with respect to all of the shares of common stock of
Worlds.com Inc. ("Company") which I own or have the right to vote (including the
"Purchased Shares," as defined in the Agreement), to the authorization and
creation of a series or class of preferred stock ("Preferred Stock") with the
following terms and any amendment to the certificate of incorporation of the
Company required in connection therewith:
o stated value of up to a maximum of $5,000,000;
o convertible into the Company's common stock (or an equivalent
thereof) at a conversion price of 80% or more of the "Fair Market
Value" (determined in customary fashion, based on a number of
days prior to closing on the sale of the Preferred Stock);
o either dividend bearing or non-dividend bearing; provided,
however, that if dividends are to accrue or be paid, the annual
dividend rate shall be 10% or less and the Company must have the
option to pay dividends either in kind or in common stock of the
Company;
o senior liquidation preference in the amount of the stated value;
o voting rights as required by law and on an as-converted basis
with the common stock, together with the right, as a class, to
elect no more than two directors to the Company's board of
directors; and
<PAGE>
o such other rights and preferences as are either customary or not
materially adverse to the Company.
This letter shall constitute Greenberg's consent as a shareholder of
the Company, as well as his irrevocable proxy to the Company to vote his shares
of common stock, as well as any other shares over which he has voting power, in
favor of the authorization and creation of the Preferred Stock if such matter is
put to a vote of stockholders prior to July 4, 2000. Upon the reasonable request
of the Company, I will execute a "written consent of Majority Shareholders" or
other similar document to implement the consent granted hereby.
Notwithstanding the foregoing, this letter and the consent and proxy
hereby granted (i) shall become null and void and be of no force or effect if
the Preferred Stock is not issued by July 4, 2000 and (ii) shall not permit the
Company to authorize the Preferred Stock if shares of the Preferred Stock are
not issued by July 4, 2000.
As of the date of this letter, I own 3,818,750 shares of the Company's
common stock, inclusive of the Purchased Shares.
Very truly yours,
/s/ Steven Greenberg
----------------------------------------
Steven Greenberg
