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SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Worlds.com Inc. (formerly Worlds Inc.)
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(Name of Issuer)
Common Stock, $.001 par value
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(Title Class of Securities)
981918105
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(CUSIP Number)
Steven G. Chrust
c/o David Alan Miller
Graubard Mollen & Miller
600 Third Avenue, 31st Floor
New York, New York 10016
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
March 10, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 9
<PAGE>
SCHEDULE 13D
CUSIP No. 981918105 Page 2 of 9 Pages
- -------------------------- -------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)
SGC Advisory Services, Inc.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)* (a)|_|
(b)|_|
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3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*(See Instructions)
OO - Other
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
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7 SOLE VOTING POWER
1,000,000
----------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY ----------------------------------------------------
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH
REPORTING 1,000,000
PERSON ----------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,000,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.4%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
CUSIP No. 981918105 Page 3 of 9 Pages
- ----------------------------- ---------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only)
Steven G. Chrust
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)* (a)|_|
(b)|_|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*(See Instructions)
PF - Personal Funds
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
1,927,113
----------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 1,000,000
OWNED BY ----------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 1,927,113
WITH ----------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,000,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,927,113
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Securities and Issuer
The class of equity securities to which this statement relates is the
Common Stock, $.001 par value, of Worlds.com Inc. (formerly Worlds Inc.)
("Company"), a New Jersey corporation, whose principal executive offices are
located at 15 Union Wharf, Boston, Massachusetts 02109. This is Amendment No. 1
to a Schedule 13D filed on April 16, 1999.
Item 2. Identity and Background
This statement is filed on behalf of SGC Advisory Services, Inc., a
corporation organized and existing under the laws of the State of Connecticut
("SGC") and Steven Chrust. SGC is in the business of consulting and financial
advice. SGC's business address is 1786 Bedford Street, Stamford, Connecticut
06905.
Steven G. Chrust is the president and sole shareholder of SGC. Mr. Chrust's
business address is 1786 Bedford Street, Stamford, Connecticut 06905. Mr. Chrust
is the President of SGC. Mr. Chrust is a United States citizen.
Neither SGC nor Mr. Chrust has been convicted in any criminal proceeding
(excluding traffic violations or similar misdemeanors) during the last five
years.
Neither SGC nor Mr. Chrust has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction resulting in a
judgment, decree or final order enjoining it from engaging in future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws during the
last five years.
Item 3. Source and Amount of Funds or Other Consideration
SGC acquired warrants to purchase 1,000,000 shares of Common Stock of the
Company on April 13, 1999, as consideration for consulting services which SGC is
rendering to the Company described in Item 6.
Mr. Chrust beneficially owns 2,927,113 shares of Common Stock, which
includes: (i) 1,000,000 shares of Common Stock, issuable upon the exercise of
presently exercisable warrants granted to SGC as consideration for consulting
services; (ii) 11,000 shares of Common Stock held of record jointly by Steven
and Sharon Chrust, acquired at a price per share of $1.00 on October 21, 1997,
purchased directly from the Company; (iii) 60,000 shares of Common Stock held of
record by Bear Stearns Securities Corp., as custodian for Mr. Chrust's
self-directed Individual Retirement Account, acquired at a price per share of
$1.00 on October 21, 1997, purchased directly from the Company; (iv) 15,000
shares of Common Stock held of record by Steven Chrust BSSC Master Def
Contribution Profit Sharing Account, acquired at a price per share of $1.6125 on
December 7, 1998, purchased in an open market transaction through the OTC
Page 4 of 9 Pages
<PAGE>
Bulletin Board; (v) 1,000 shares of Common Stock held of record by Steven Chrust
BSSC Master Def Contribution Profit Sharing Account, acquired at a price per
share of $1.545 on December 7, 1998, purchased in an open market transaction
through the OTC Bulletin Board; (vi) 15,000 shares of Common Stock held of
record by Eve Chrust, Mr. Chrust's daughter which she acquired by gift from Mr.
Chrust; (vii) 15,000 shares of Common Stock held of record by Liza Chrust, Mr.
Chrust's other daughter which she acquired by gift from Mr. Chrust; (viii)
30,000 shares of Common Stock, held of record jointly by Steven and Sharon
Chrust, acquired at a per share price of $1.00 on June 28, 1999, directly from
the Company, (ix) 15,000 shares of Common Stock, issuable upon the exercise of
presently exercisable warrants held by Steven and Sharon Chrust, jointly,
purchased on June 28, 1999, directly from the Company; (x) 302,939 shares of
Common Stock held of record by Mr. Chrust, purchased on March 10, 2000 in a
private transaction from Steven A. Greenberg at a purchase price of $3.301 per
share; (xi) 1,363,342 shares of Common Stock, issuable upon the exercise of
presently exercisable options, purchased on March 10, 2000 in a private
transaction from Steven A. Greenberg at a purchase price of $.007335 per share;
and (xii) an aggregate of 287,500 shares of Common Stock, issuable upon the
exercise of options granted to Mr. Chrust in his capacity as a director of the
Company, of which 98,832 shares are currently purchasable. Each of the above
cash purchases of securities was made using personal funds of Mr. Chrust.
Item 4. Purpose of Transactions
Mr. Chrust holds his shares of Common Stock and any shares of Common Stock
he may acquire upon exercise of the warrants for investment.
Steven G. Chrust is a member and Chairman of the Board of Directors of the
Company. Although Mr. Chrust, in his capacity as a member and Chairman of the
Board of Directors of the Company, may be involved in the consideration of
various proposals considered by the Board of Directors of the Company, neither
Mr. Chrust nor SGC has current plans which relate to or would result in: an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries; a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries; any change in the current board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board of directors of the
Company; any material change in the present capitalization or dividend policy of
the Company; any other material change in the Company's business or corporate
structure; changes in the Company's charter, by-laws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person; causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; causing a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities and Exchange Act of 1934; or any action similar to
the above.
Page 5 of 9 Pages
<PAGE>
Item 5. Interest in Securities of the Issuer
SGC holds warrants to purchase 1,000,000 shares of Common Stock.
Accordingly, SGC is the beneficial owner of 1,000,000 shares of Common Stock.
This represents a beneficial ownership equal to 5.4% of the outstanding Common
Stock of the Company. Mr. Chrust, as President of SGC, has sole power to
exercise the warrants and, upon issuance of the Common Stock, to vote and
dispose of the shares of Common Stock.
On March 10, 2000, Mr. Chrust purchased 302,939 shares of Common Stock at a
purchase price of $3.301 per share in a private transaction from Steven A.
Greenberg and purchased an option for $.007335 per share to purchase an
aggregate of 1,363,342 additional shares of Common Stock owned by Mr. Greenberg
at $3.301 per share. On March 17, 2000, Mr. Chrust, in connection with his being
a director of the Company, was granted options to purchase an aggregate of
287,500 shares of Common Stock of the Company. The options are immediately
vested as to one-third of the shares and the balance vest in equal amounts on
March 17, 2001 and March 17, 2002. The options expire on March 17, 2005. The
first option is exercisable at $5.68 per share for 187,500 shares; the second
option is exercisable at $6.00 per share for 50,000 shares; and the third option
is exercisable at $9.00 per share for 50,000 shares. In addition, Mr. Chrust
beneficially owns 1,162,000 shares of Common Stock which includes: (i) 1,000,000
shares of Common Stock issuable upon exercise the warrants held by SGC; (ii)
41,000 shares of Common Stock held of record by Steven and Sharon Chrust
jointly; (iii) 60,000 shares of Common Stock held of record by Bear Stearns
Securities Corp., as custodian for Mr. Chrust's Individual Retirement Account;
(iv) 16,000 shares of Common Stock held of record by Steven Chrust BSSC Master
Def Contribution Profit Sharing Account; (v) 15,000 shares of Common Stock held
of record by Eve Chrust, Mr. Chrust's daughter; and (vi) 15,000 shares of Common
Stock held of record by Liza Chrust, Mr. Chrust's other daughter; (vii) 15,000
shares of Common Stock, issuable upon the exercise of presently exercisable
warrants granted to Steven and Sharon Chrust, jointly.
Accordingly, Mr. Chrust is the beneficial owner of 2,927,113 shares of
Common Stock. This represents a beneficial ownership equal to 14.6% of the
outstanding Common Stock of the Company. Mr. Chrust has the direct and indirect
power to vote and dispose of the above shares of Common Stock, subject to the
voting agreement as to 302,939 shares of Common Stock described in Item 6.
Item 6. Contracts, Agreements, Understandings or Relationship with
Respect to Securities of Issuer
On March 23, 1999, SGC entered into a Financial Advisory and Consulting
Agreement with the Company ("Consulting Agreement") pursuant to which the
Company engaged SGC to render consulting advice for a period of 36 months from
April 13, 1999, and SGC was granted warrants to purchase 1,000,000 shares of the
Company's Common Stock. In addition, Mr. Chrust was appointed as a member and
Chairman of the Board of Directors of the Company.
On April 13, 1999, Michael Scharf and Thomas Kidrin, directors and
shareholders of the Company, and Steven Greenberg, a shareholder of the Company,
Page 6 of 9 Pages
<PAGE>
agreed to contribute to the capital of the Company for cancellation 318,750,
300,000 and 881,250 shares respectively. Each of them also agreed that during
the term of the Consulting Agreement, they will vote any shares of stock of the
Company which they own or subsequently acquire, or over which they have voting
control, for the election of Mr. Chrust as a director of the Company at any
meeting of the Company held for the purpose of electing directors and will sign
any written consent to elect Mr. Chrust as a director if such written consent is
provided in lieu of a meeting.
On April 13, 1999, the Company issued to SGC warrants to purchase 1,000,000
shares of the Company's Common Stock as consideration for consulting services
SGC is rendering to the Company. The warrants are immediately exercisable at an
exercise price of $.50 per share and expire on April 13, 2006. The warrants are
fully earned by SGC and may not be terminated by the Company for any reason. The
warrant and the securities underlying the warrant cannot be transferred unless
applicable securities laws are complied with. The warrant also provides for
demand and "piggy-back" registration rights, indemnification of SGC under the
Securities Exchange Act of 1934, as amended, anti-dilution provisions, a
requirement by the Company to reserve the number of shares of Common Stock
issuable upon the exercise of the warrant and preemptive rights.
Pursuant to a Purchase and Option Agreement, dated March 10, 2000 (the
"Purchase Agreement"), Steven G. Chrust purchased from Steven A. Greenberg
302,939 shares of Common Stock for $1,000,001.64. Mr. 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 Purchase and Option
Agreement, Mr. Greenberg sold to Mr. Chrust an option (the "Option") at $.007335
per share to purchase 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 preceding sentence in
connection with the extension of the Option.
In connection with the options granted by the Company to Mr. Chrust, the
Company will enter into option agreements for each grant reflecting the terms
stated in this Schedule 13D and such other terms as are ordinarily set forth in
similar options of the Company.
Item 7. Materials to be Filed as Exhibits
(10.1) Joint Filing Agreement dated as of April 14, 1999 (Previously
Filed).*
(10.2) Financial Advisory and Consulting Agreement, dated March 23, 1999,
between the Company and SGC Advisory Services, Inc. (Previously
Filed).*
(10.3) Warrant to purchase 1,000,000 shares of the Company's Common Stock
issued to SGC Advisory Services, Inc., dated April 13, 1999
(Previously Filed).*
Page 7 of 9 Pages
<PAGE>
(10.4) Contribution/Voting Agreement, dated April 13, 1999 among Messrs.
Scharf, Kidrin and Greenberg (Previously Filed).*
(10.5) Purchase and Option Agreement, dated March 10, 2000, between Steven
A. Greenberg and Steven G. Chrust (Filed Herewith).
(10.6) Consent letter from Steven A. Greenberg to Worlds.com Inc., dated
March 10, 2000 (Filed Herewith).
* Previously filed with Schedule 13D filed on April 16, 2000.
Page 8 of 9 Pages
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 17, 2000
SGC Advisory Services, Inc.
/s/ Steven G. Chrust
By:____________________________
Steven G. Chrust, President
/s/ Steven G. Chrust
_____________________________
Steven G. Chrust
Page 8 of 8 Pages
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
commencing on the date of this Agreement and ending on June 4, 2000, unless
<PAGE>
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.
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<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
3
<PAGE>
note, bond, mortgage, indenture, contract, agreement or other instrument or
obligation to which he is a party or by which he is bound.
(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
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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.
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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
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
