-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MOiUuKn2Z7qLaIqoUkX4v3YcrqHg7CrGTHB92M2ejUavyN1qAouwdTcYAJg79Lp5 y6YURD9oP0iAdsloWlxGFQ== 0000938492-99-000253.txt : 19990419 0000938492-99-000253.hdr.sgml : 19990419 ACCESSION NUMBER: 0000938492-99-000253 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990416 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: WORLDS INC CENTRAL INDEX KEY: 0000001961 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 221848316 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-56133 FILM NUMBER: 99595518 BUSINESS ADDRESS: STREET 1: 15 UNION WHARF CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6177258900 MAIL ADDRESS: STREET 1: 15 UNION WHARF CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: ACADEMIC COMPUTER SYSTEMS INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER INDUSTRIES LTD DATE OF NAME CHANGE: 19690318 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CHRUST STEVEN CENTRAL INDEX KEY: 0001084366 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O SGC ADVISORY SERVICES INC STREET 2: 1786 BEDFORD STREET CITY: STANFORD STATE: CT ZIP: 06905 MAIL ADDRESS: STREET 1: C/O SGC ADVISORY SERVICES INC STREET 2: 1786 BEDFORD STREET CITY: STANFORD STATE: CT ZIP: 06905 SC 13D 1 SCHEDULE 13D ------------------------- OMB APPROVAL ------------------------- UNITED STATES OMB Number: 3235-0145 SECURITIES AND EXCHANGE COMMISSION Expires: August 31, 1999 WASHINGTON, DC 20549 Estimated average burden hours per form......14.90 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. ___________)* Worlds Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $.001 par value - -------------------------------------------------------------------------------- (Title Class of Securities) 981918105 - -------------------------------------------------------------------------------- (CUSIP Number) Steven Chrust c/o David Alan Miller Graubard Mollen & Miller 600 Third Avenue, 31st Floor New York, New York 10016 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 13, 1999 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|. Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 8 Pages - ------------------------------ ----------------------------- CUSIP No. 981918105 SCHEDULE 13D Page 2 of 8 Pages - ------------------------------ ----------------------------- - ------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only) SGC Advisory Services, Inc - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_| (See Instructions) (b)|_| - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* (See Instructions) OO - Other - ------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 1,000,000 SHARES ---------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH ---------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 1,000,000 WITH ---------------------------------------------------- 10 SHARED DISPOSITIVE POWER - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,000,000 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.7% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- *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. - ------------------------------ ----------------------------- CUSIP No. 981918105 SCHEDULE 13D Page 3 of 8 Pages - ------------------------------ ----------------------------- - ------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (entities only) Steven Chrust - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)|_| (See Instructions) (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 - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 136,000 SHARES ---------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY 1,000,000 EACH ---------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER PERSON 136,000 WITH ---------------------------------------------------- 10 SHARED DISPOSITIVE POWER 1,000,000 - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,136,000 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.5% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. Item 1. Securities and Issuer --------------------- The class of equity securities to which this statement relates is the Common Stock, $.001 par value, of Worlds Inc. ("Company"), a New Jersey corporation, whose principal executive offices are located at 15 Union Wharf, Boston, Massachusetts 02109. Item 2. Identity and Background ----------------------- This statement is filed on behalf of SGC Advisory Services, Inc., a corporation organized and existing under the laws of the State of Connecticut ("SGC") and Steven Chrust. SGC is in the business of consulting and financial advice. SGC's business address is 1786 Bedford Street, Stamford, Connecticut 06905. Steven Chrust is the president and sole shareholder of SGC. Mr.Chrust's business address is 1786 Bedford Street, Stamford, Connecticut 06905. Mr. Chrust is the President of SGC. Mr. Chrust is a United States citizen. Neither SGC nor Mr. Chrust has been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors) during the last five years. Neither SGC nor Mr. Chrust has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction resulting in a judgment, decree or final order enjoining it from engaging in future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws during the last five years. Item 3. Source and Amount of Funds or Other Consideration ------------------------------------------------- SGC acquired warrants to purchase 1,000,000 shares of Common Stock of the Company on April 13, 1999, as consideration for consulting services which SGC is rendering to the Company described in Item 6. Mr. Chrust beneficially owns 1,136,000 shares of Common Stock, which includes: (i) 1,000,000 shares of Common Stock, issuable upon the exercise of presently exercisable warrants granted to SGC; (ii) 60,000 shares of Common Stock held of record jointly by Steven and Sharon Chrust; (iii) 60,000 shares of Common Stock held of record by Bear Stearns Securities Corp., as custodian for Mr. Chrust's self-directed Individual Retirement Account; and (iv) 16,000 shares of Common Stock held of record by Steven Chrust BSSC Master Def Contribution Profit Sharing Account. Page 4 of 8 Pages Item 4. Purpose of Transactions ----------------------- SGC was issued warrants to purchase 1,000,000 shares of Common Stock as consideration for consulting services. Steven Chrust has beneficial ownership of 1,136,000 shares of Common Stock which includes (i) the 1,000,000 shares of Common Stock issuable upon exercise of these presently exercisable warrants; (ii) 60,000 shares of Common Stock held of record jointly by Steven and Sharon Chrust; (iii) 60,000 shares of Common Stock held of record by Bear Stearns Securities Corp., as custodian for Mr. Chrust's self-directed Individual Retirement Account; and (iv) 16,000 shares of Common Stock held of record by Steven Chrust BSSC Master Def Contribution Profit Sharing Account. Mr. Chrust holds his other shares and any shares he may acquire upon exercise of the warrants for investment. Steven Chrust, President of SGC, is also a member and Chairman of the Board of Directors of the Company. Although Mr. Chrust, in his capacity as a member and Chairman of the Board of Directors of the Company, may be involved in the consideration of various proposals considered by the Board of Directors of the Company, neither Mr. Chrust nor SGC has current plans which relate to or would result in: an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; any change in the current board of directors or management of the Company, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board of directors of the Company; any material change in the present capitalization or dividend policy of the Company; any other material change in the Company's business or corporate structure; changes in the Company's charter, by-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; causing a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities and Exchange Act of 1934; or any action similar to the above. Item 5. Interest in Securities of the Issuer ------------------------------------ SGC acquired warrants to purchase 1,000,000 shares of Common Stock on April 13, 1999, directly from the Company. The warrants are immediately exercisable and expire on April 13, 2006. The exercise price per share is $.50. Accordingly, SGC is the beneficial owner of 1,000,000 shares of Common Stock. This represents a beneficial ownership equal to 5.7% of the outstanding Common Stock of the Company. Mr. Chrust, as President of SGC, has sole power to exercise the warrants and, upon issuance of the Common Stock, to vote and dispose of the shares of Common Stock. Mr. Chrust is the beneficial owner of 1,136,000 shares of Common Stock. This represents a beneficial ownership equal to 6.5% of the outstanding Common Stock of the Company. Mr. Chrust has the direct and indirect power to vote and dispose of the above shares of Common Stock. Mr. Chrust's beneficial ownership of 1,136,000 shares of Common Stock includes: (i) 1,000,000 shares of Common Stock issuable upon exercise the warrants held by SGC; (ii) 60,000 shares of Page 5 of 8 Pages Common Stock held of record by Steven and Sharon Chrust jointly, acquired at a price per share of $1.00 on October 21, 1997, purchased directly from the Company; (iii) 60,000 shares of Common Stock held of record by Bear Stearns Securities Corp., as custodian for Mr. Chrust's Individual Retirement Account, acquired at a price per share of $1.00 on October 21, 1997, purchased directly from the Company; (iv) 15,000 shares of Common Stock held of record by Steven Chrust BSSC Master Def Contribution Profit Sharing Account, acquired at a price per share of $1.6125 on December 7, 1998, purchased in an open market transaction through the OTC Bulletin Board; and (v) 1,000 shares of Common Stock held of record by Steven Chrust BSSC Master Def Contribution Profit Sharing Account, acquired at a price per share of $1.545 on December 7, 1998, purchased in an open market transaction through the OTC Bulletin Board. Item 6. Contracts, Agreements, Understandings or Relationship with Respect to Securities of Issuer ------------------------------- On March 23, 1999, SGC entered into a Financial Advisory and Consulting Agreement with the Company ("Consulting Agreement") pursuant to which the Company engaged SGC to render consulting advice for a period of 36 months from April 13, 1999, and SGC was granted warrants to purchase 1,000,000 shares of the Company's Common Stock. In addition, Mr. Chrust was appointed as a member and Chairman of the Board of Directors of the Company. On April 13, 1999, Michael Scharf and Thomas Kidrin, directors and shareholders of the Company, and Steven Greenberg, a shareholder of the Company, agreed to contribute to the capital of the Company for cancellation 318,750, 300,000 and 881,250 shares respectively. Each of them also agreed that during the term of the Consulting Agreement, they will vote any shares of stock of the Company which they own or subsequently acquire, or over which they have voting control, for the election of Mr. Chrust as a director of the Company at any meeting of the Company held for the purpose of electing directors and will sign any written consent to elect Mr. Chrust as a director if such written consent is provided in lieu of a meeting. On April 13, 1999, the Company issued to SGC warrants to purchase 1,000,000 shares of the Company's Common Stock as consideration for consulting services SGC is rendering to the Company. The warrants are immediately exercisable at an exercise price of $.50 per share and expire on April 13, 2006. The warrants are fully earned by SGC and may not be terminated by the Company for any reason. The warrant and the securities underlying the warrant cannot be transferred unless applicable securities laws are complied with. The warrant also provides for demand and "piggy-back" registration rights, indemnification of SGC under the Securities Exchange Act of 1934, as amended, anti-dilution provisions, a requirement by the Company to reserve the number of shares of Common Stock issuable upon the exercise of the warrant and preemptive rights. Item 7. Materials to be Filed as Exhibits --------------------------------- (10.1) Joint Filing Agreement dated as of April 14, 1999 (Filed herewith). (10.2) Financial Advisory and Consulting Agreement, dated March 23, 1999, between the Company and SGC Advisory Services, Inc. (Filed herewith). Page 6 of 8 Pages (10.3) Warrant to purchase 1,000,000 shares of the Company's Common Stock issued to SGC Advisory Services, Inc., dated April 13, 1999 (Filed herewith). (10.4) Contribution/Voting Agreement, dated April 13, 1999 among Messrs. Scharf, Kidrin and Greenberg (Filed herewith). Page 7 of 8 Pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: April 15, 1999 SGC Advisory Services, Inc. By: /s/ Steven Chrust --------------------------- Steven Chrust, President Page 8 of 8 Pages EX-10.1 2 JOINT FILING AGREEMENT Exhibit 10.1 JOINT FILING AGREEMENT Agreement dated as of April 15, 1999, among SGC Advisory Services, Inc. and Steven Chrust (collectively, the "Parties"). Each of the Parties hereto represents to the other Party that it is eligible to use Schedule 13D to report its beneficial interest in shares of common stock, $.001 par value per share, of WORLDS INC. ("Schedule 13D") and it will file the Schedule 13D on behalf of itself. Each of the Parties agrees to be responsible for the timely filing of the Schedule 13D and any and all amendments thereto and for the completeness and accuracy of the information concerning itself contained in the Schedule 13D, and the other Party to the extent it knows or has reason to believe that any information about the other Parties is inaccurate. SGC ADVISORY SERVICES, INC. /s/ Steven Chrust --------------------------- By: Steven Chrust, President /s/ Steven Chrust ---------------------------- Steven Chrust EX-10.2 3 FINANCIAL ADVISORY AND CONSULTING AGREEMENT EXHIBIT 10.2 FINANCIAL ADVISORY AND CONSULTING AGREEMENT ------------------------------------------- This Agreement is made and entered into as of the 23rd day of March, 1999 between SGC Advisory Services, Inc. ("SGC" or the "Consultant") and Worlds Inc. (the "Company"). In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The Company hereby engages the Consultant to render financial advisory and consulting service to the Company upon the terms and conditions set forth herein. The term of this Agreement shall be for 36 months commencing as of the "Start Date," as defined below. On or prior to April 13, 1999, the Company shall appoint Steven Chrust as a member and Chairman of its Board of Directors (the date of such appointment referred to herein as the "Start Date"). The Company agrees that it will nominate Mr. Chrust for election as a director at any shareholder's meeting held for the purpose of electing directors during the term of this Agreement. As long as Mr. Chrust is a director of the Company, he shall retain his title of Chairman of the Board. 2. During the term of this Agreement, Consultant shall provide the Company with such regular and customary financial consulting advice as is reasonably requested by the Company. It is understood and acknowledged by the parties that the value of Consultant's advice is not readily quantifiable, and that although Consultant shall be obligated to render the advice contemplated by this Agreement upon the reasonable request of the Company, Consultant shall not be obligated to spend any specific amount of time in so doing. Consultant's duties may include, but will not necessarily be limited to: (a) Rendering advice with regard to internal operations, including: (i) the formation of corporate goals and their implementation; (ii) the Company's financial structure and its divisions or subsidiaries; and (iii) corporate organization and personnel. (b) Rendering advice with regard to any of the following corporate finance matters: (i) changes in the capitalization of the Company; (ii) changes in the Company's corporate structure; (iii) redistribution of shareholdings of the Company's stock; (iv) offerings of securities in public and private transactions; 1 (v) alternative uses of corporate assets; (vi) structure and use of debt; and (vii) sales of stock by insiders pursuant to Rule 144 or otherwise. (c) Assistance in connection with the preparation and dissemination of information about the Company to the investment community at large and otherwise assisting in the Company's financial public relations. In addition to the foregoing, Consultant agrees to (A) furnish advice to the Company in connection with the acquisition of and/or merger with other companies, the sale of the Company itself, or any of its assets, subsidiaries or affiliates, or similar type of transaction hereinafter referred to as a "Transaction"), (B) assist the Company in identifying potential partners in connection with a Transaction, (C) furnish advice to the Company in connection with financings from financial institutions, including but not limited to lines of credit, performance bonds, letters of credit, loans or other financings (hereinafter referred to as a "Bank Financing"), and (D) assist the Company in the negotiation and review of all documents submitted to the Company by third parties in connection with a potential Transaction or Bank Financing. Consultant shall also render such other financial consulting and/or investment banking services as may from time to time be agreed upon by Consultant and the Company. 3. The Company shall pay Consultant the following compensation: (a) an annual fee of $120,000 in monthly installments of $10,000, commencing on the Start Date; provided, however, that such monthly payments shall accrue and not be paid in cash until the date by which the Company has raised at least $1,500,000 in debt or equity financings consummated at any time during the term of this Agreement ("Financing Trigger Date"). If the Company does not raise such financing, no fees shall be paid. If the Company raises such financing, then all accrued and unpaid fees shall be paid on the Financing Trigger Date and all payments will be made monthly, in cash, thereafter for as long as this Agreement remains in effect. Notwithstanding the foregoing, the annual fee shall increase to $300,000 ($25,000 per month) at such time when (i) the Company's market value (i.e. the number of outstanding shares multiplied by the market price) exceeds $100,000,000, and (ii) the Company has raised at least $5,000,000 in debt or equity financings consummated at any time during the term of this Agreement. (b) warrants ("Warrants") to purchase 1,000,000 shares of the Company's Common Stock, exercisable for a period of seven years commencing on the Start Date at an exercise price $.50 per share. The Warrants are fully earned by SGC (and/or its designees) as of the execution of this Agreement and may not be terminated by the Company for any reason. 2 4. In addition to the fees payable hereunder, the Company shall reimburse Consultant for all reasonable travel and out-of-pocket expenses incurred in connection with the services performed by Consultant pursuant to this Agreement, promptly after submission to the Company of appropriate evidence of such expenditures. Notwithstanding the foregoing, Consultant shall incur no more than $3,000.00 of expenses in any calendar month without Company's consent. 5. The Company acknowledges that all opinions and advice (written or oral) given by Consultant to the Company in connection with Consultant's engagement are intended solely for the benefit and use of the Company in considering the transaction to which they relate, and the Company agrees that no person or entity other than the Company shall be entitled to make use of or rely upon the advice of Consultant to be given hereunder, and no such opinion or advice shall be used for any manner or for any purpose, nor may the Company make any public references to Consultant, or use the Consultant's name in any annual reports or any other reports or releases of the Company, without Consultant's prior written consent. 6. Consultant will hold in confidence any information which the Company provides to Consultant pursuant to this Agreement which is confidential and not part of the public domain. Notwithstanding the foregoing, Consultant shall not be required to maintain confidentiality with respect to information (i) which is or becomes part of the public domain not due to the breach of this Agreement by Consultant; (ii) of which it had independent knowledge prior to disclosure; (iii) which comes into the possession of Consultant in the normal and routine course of its own business from and through independent non-confidential sources; or (iv) which is required to be disclosed by Consultant by laws, rules or regulations. If Consultant is requested or required to disclose any confidential information supplied to it by the Company, Consultant shall, unless prohibited by law, promptly notify the Company of such request(s) so that the Company may seek an appropriate protective order. Upon termination of this Agreement or at the earlier request of the Company, Consultant shall return to the Company all confidential documents, files, reports and data regarding the Company, its business or its finances then in Consultant's possession. 7. The Company acknowledges that Consultant or its affiliates are in the business of providing financial services and consulting advice to others. Nothing herein contained shall be construed to limit or restrict Consultant in conducting such business with others, or in rendering such advice to others. 8. The Company recognizes and confirms that, in advising the Company hereunder, Consultant will use and rely on data, material and other information furnished to Consultant by the Company, without independently verifying the accuracy, completeness or veracity of same. 9. The Company agrees to indemnify and hold harmless SGC, its employees, agents, representatives and controlling persons from and against any and all losses, claims, damages, liabilities, suits, actions, proceedings, 3 costs and expenses (collectively, "Damages"), including, without limitation, reasonable attorney fees and expenses, as and when incurred, if such Damages were directly or indirectly caused by, relating to, based upon or arising out of the rendering by SGC of services pursuant to this Agreement, so long as SGC shall not have engaged in intentional or willful misconduct, or shall have acted grossly negligently, in connection with the services provided which form the basis of the claim for indemnification. The Company agrees to indemnify and hold harmless Steven Chrust, to the fullest extent possible under law, for Damages, as and when incurred, if such Damages were directly or indirectly caused by, relating to, based upon or arising out of Mr. Chrust acting as a director and/or Chairman of the Board of Directors of the Company. This paragraph shall survive the termination of this Agreement. Notwithstanding the foregoing, if the Company has entered into indemnification agreements or agreements with an executive officer or director which is more favorable to such person then as set forth above, the Company shall promptly after the execution of this agreement, enter into a similar agreement with Mr. Chrust. 10. Consultant shall perform its services hereunder as an independent contractor and not as an employee or agent of the Company or any affiliate thereof. Consultant shall have no authority to act for, represent or bind the Company or any affiliate thereof in any manner, except as may be expressly agreed to by the Company in writing from time to time. 11. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. No provision of this Agreement may be amended, modified or waived, except in a writing signed by both parties. This Agreement shall be binding upon and inure to the benefit of each of the parties and their respective successors, legal representatives and assigns. This Agreement may be executed in counterparts. In the event of any dispute under this Agreement, then and in such event, each party agrees that the same shall be submitted to the American Arbitration Association ("AAA") in the City of New York, for its decision and determination in accordance with its rules and regulations then in effect. Each of the parties agrees that the decision and/or award made by the AAA may be entered as judgment of the Courts or the State of New York, and shall be enforceable as such. This Agreement shall be construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on the day and year first above written. SGC ADVISORY SERVICES, INC. WORLDS INC. By: /s/ Steven Chrust By: /s/ Thomas Kidrin ------------------------ ------------------------ Name: Steven Chrust Name: Thomas Kidrin Title: President Title: President and Chief Executive Officer 4 EX-10.3 4 WARRANT AGREEMENT EXHIBIT 10.3 THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT EXCEPT AS HEREIN PROVIDED. VOID AFTER 5:00 P.M. EASTERN TIME, APRIL 13, 2006 WARRANT For the Purchase of 1,000,000 Shares of Common Stock of WORLDS INC. 1. Warrant. THIS CERTIFIES THAT, in consideration of $10.00 and other good and valuable consideration,duly paid by or on behalf of SGC Advisory Services, Inc. ("Holder"), as registered owner of this Warrant, to SGC Advisory Services, Inc. ("Company"), Holder is entitled, at any time or from time to time at or after April 13, 1999 ("Commencement Date"), and at or before 5:00 p.m., Eastern Time April 13, 2006 ("Expiration Date"), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to one million (1,000,000) shares of Common Stock of the Company, $.001 par value ("Common Stock"). If the Expiration Date is a day on which banking institutions are authorized by law to close, then this Warrant may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate the Warrant. This Warrant is initially exercisable at $.50 per share of Common Stock purchased; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Warrant, including the exercise price and the number of shares of Common Stock to be received upon such exercise, shall be adjusted as therein specified. The term "Exercise Price" shall mean the initial exercise price or the adjusted exercise price, depending on the context, of a share of Common Stock. The term "Securities" shall mean the shares of Common Stock issuable upon exercise of this Warrant. 2. Exercise. 2.1 Exercise Form. In order to exercise this Warrant, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Warrant and payment of the Exercise Price for the Securities being purchased. All or any part of the Exercise Price may be paid by the Holder by applying amounts, if any, otherwise due and payable by the Company to Holder under the Financial Advisory and Consulting Agreement dated as of March 23, 1999, between the Company and Holder. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Warrant shall become and be void without further force or effect, and all rights represented hereby shall cease and expire. 2.2 Legend. Each certificate for Securities purchased under this Warrant shall bear a legend as follows, unless such Securities have been registered under the Securities Act of 1933, as amended ("Act"): "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended ("Act") or applicable state law. The securities may not be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act and applicable state law." 2.3 Conversion Right. 2.3.1 Determination of Amount. In lieu of the payment of the Exercise Price in cash, the Holder shall have the right (but not the obligation) to convert this Warrant, in whole or in part, into Common Stock ("Conversion Right"), as follows: upon exercise of the Conversion Right, the Company shall deliver to the Holder (without payment by the Holder of any of the Exercise Price) that number of shares of Common Stock equal to the quotient obtained by dividing (x) the "Value" (as defined below) of the portion of the Warrant being converted at the time the Conversion Right is exercised by (y) the Market Price. The "Value" of the portion of the Warrant being converted shall equal the remainder derived from subtracting (a) the Exercise Price multiplied by the number of shares of Common Stock underlying the portion of the Warrant being converted from (b) the Market Price of the Common Stock multiplied by the number of shares of Common Stock underlying the portion of the Warrant being converted. As used herein, the term "Market Price" at any date shall be deemed to be the last reported sale price of the Common Stock on such date, or, in case no such reported sale takes place on such day, the average of the last reported sale prices for the immediately preceding three trading days, in either case as officially reported by the principal securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common Stock is not listed or admitted to trading on any national securities exchange or if any such exchange on which the Common Stock is listed is not its principal trading market, the last reported sale price as furnished by the National Association of Securities Dealers, Inc. ("NASD") through the Nasdaq National Market or SmallCap Market, or, if applicable, the OTC Bulletin Board, or if the Common Stock is not listed or admitted to trading on any of the foregoing markets, or similar organization, as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it. 2.3.2 Exercise of Conversion Right. The Conversion Right may be exercised by the Holder on any business day on or after the Commencement Date and not later than the Expiration Date by delivering the Warrant with a duly executed exercise form attached hereto with the conversion section completed to the Company, exercising the Conversion Right and specifying the total number of shares of Common Stock the Holder will purchase pursuant to such conversion. 2.4 Taxes. The Company may, in its sole and absolute discretion, reimburse Holder for any income taxes payable by Holder as a result of the exercise or conversion of this Warrant. 3. Transfer. 3.1 General Restrictions. The registered Holder of this Warrant, by its acceptance hereof, agrees that it will not sell, transfer or assign or hypothecate this Warrant to anyone except upon compliance with, or pursuant to exemptions from, applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with this Warrant and payment of all transfer taxes, if any, payable in connection therewith. The Company shall immediately transfer this Warrant on the books of the Company and 2 shall execute and deliver a new Warrant or Warrants of like tenor to the appropriate assignees expressly evidencing the right to purchase the aggregate number of shares of Common Stock purchasable hereunder or such portion of such number as shall be contemplated by any such assignment. 3.2 Restrictions Imposed by the Securities Act. This Warrant and the Securities underlying this Warrant shall not be transferred unless and until (i) the Company has received the opinion of counsel for the Holder that such securities may be sold pursuant to an exemption from registration under the Act, and applicablestate law, the availability of which is established to the reasonable satisfaction of the Company, or (ii) a registration statement relating to such Securities has been filed by the Company and declared effective by the Securities and Exchange Commission and compliance with applicable state law. 4. New Warrants to be Issued. 4.1 Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Warrant may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Warrant for cancellation, together with the duly executed exercise or assignment form and funds (or conversion equivalent) sufficient to pay any Exercise Price and/or transfer tax, the Company shall cause to be delivered to the Holder without charge a new Warrant of like tenor to this Warrant in the name of the Holder evidencing the right of the Holder to purchase the aggregate number of shares of Common Stock and Warrants purchasable hereunder as to which this Warrant has not been exercised or assigned. 4.2 Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and of reasonably satisfactory indemnification, the Company shall execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company. 5. Registration Rights. 5.1 Demand Registration. The Company, upon written demand ("Initial Demand Notice") of a Holder made at any time, agrees to register, on one occasion, all or any portion of the Common Stock underlying this Warrant(collectively, the "Registrable Securities"). On such occasion, the Company will file a registration statement covering the Registrable Securities within sixty days after receipt of the Initial Demand Notice and use its best efforts to have such registration statement declared effective promptly thereafter; provided, however, the Company may delay such filing of a registration statement for one period of up to 45 consecutive days after receipt of the Initial Demand Notice if the Company believes, in good faith, that filing the registration statement would materially adversely impact the Company's then ongoing discussions or negotiations regarding a merger, acquisition, financing transaction or other similar transaction. If the Company fails to comply with the provisions of this Section 5.1, the Company shall, in addition to any other equitable or other relief available to the Holders, be liable for any and all incidental, special and consequential damages sustained by the Holders. 5.2 "Piggy-Back" Registration. The Holders of this Warrant upon written demand shall have the right made at any time to include the Registrable Securities as part of any registration of securities filed by the Company (other than in connection with a transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-8 or any equivalent form); provided, however, that if, in the written opinion of the Company's managing underwriter or underwriters, if any, for such offering (the "Underwriter"), the inclusion of the Registrable Securities, when added to the securities being registered by the Company or the selling stockholder(s), will exceed the maximum amount of the 3 Company's securities which can be marketed (i) at a price reasonably related to their then current market value, or (ii) without materially and adversely affecting the entire offering, the Company shall nevertheless register all or any portion of the Registrable Securities required to be so registered but such Registrable Securities shall not be sold by the Holders until 90 days after the registration statement for such offering has become effective; and provided further that, if any securities are registered for sale on behalf of other stockholders in such offering and such stockholders have not agreed to defer such sale until the expiration of such 90 day period, the number of securities to be sold by all stockholders in such public offering during such 90 day period shall be apportioned pro rata among all such selling stockholders, including all holders of the Registrable Securities, according to the total amount of securities of the Company proposed to be sold by said selling stockholders, including all holders of the Registrable Securities. 5.3 Terms. The Company shall bear all fees and expenses attendant to registering the Registrable Securities, including any filing fees payable to the National Association of Securities Dealers, Inc. but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities. The Company agrees to use is best efforts to cause the filing required herein to become effective promptly and to qualify or register the Registrable Securities in such States as are reasonably requested by the Holder(s); provided, however, that in no event shall the Company be required to register the Registrable Securities in a State in which such registration would cause (i) the Company to be obligated to register or license to do business in such State or consent to general service of process in such jurisdiction, or (ii) the principal shareholders of the Company to be obligated to escrow their shares of capital stock of the Company. In the event of a proposed registration under Section 5.2, the Company shall furnish the then Holders of outstanding Registrable Securities with not less than twenty days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holders shall continue to be given for each registration statement filed by the Company until such time as all of the Registrable Securities have been sold by the Holder. The holders of the Registrable Securities shall exercise the "piggy-back" rights provided for herein by giving written notice, within ten days of the receipt of the Company's notice of its intention to file a registration statement. The Company shall cause any registration statement filed pursuant to the demand rights granted under Section 5.1 or pursuant to the "piggyback" rights granted under Section 5.2 to remain effective until all of the Registrable Securities covered by such registration statement have been sold or are freely saleable, without restriction, under an exemption from the registration requirements. Nothing contained in this Warrant shall be construed as requiring any Holder to exercise this Warrant or any part thereof prior to the initial filing of any registration statement or the effectiveness thereof. 5.4 General Terms 5.4.1 Indemnification. 5.4.1.1 The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and any underwriter or person deemed to be an underwriter under the Act and each person, if any, who controls such Holders or underwriters or persons deemed to be underwriters within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense or liability (including all reasonable attorneys' fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement. The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, against all loss, claim, damage, expense or liability (including all reasonable attorneys' fees and other expenses reasonably 4 incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, in writing, for specific inclusion in such registration statement. 5.4.1.2 If any action is brought against a party hereto, ("Indemnified Party") in respect of which indemnity may be sought against the other party ("Indemnifying Party"), such Indemnified Party shall promptly notify Indemnifying Party in writing of the institution of such action and Indemnifying Party shall assume the defense of such action, including the employment and fees of counsel reasonably satisfactory to the Indemnified Party. Such Indemnified Party shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the employment of such counsel shall have been authorized in writing by Indemnifying Party in connection with the defense of such action, or (ii) Indemnifying Party shall not have employed counsel to defend such action, or (iii) such Indemnified Party shall have been advised by counsel that there may be one or more legal defenses available to it which may result in a conflict between the Indemnified Party and Indemnifying Party (in which case Indemnifying Party shall not have the right to direct the defense of such action on behalf of the Indemnified Party), in any of which events, the reasonable fees and expenses of not more than one additional firm of attorneys designated in writing by the Indemnified Party shall be borne by Indemnifying Party. Notwithstanding anything to the contrary contained herein, if Indemnified Party shall assume the defense of such action as provided above, Indemnifying Party shall not be liable for any settlement of any such action effected without its written consent. 5.4.1.3 If the indemnification or reimbursement provided for hereunder is finally judicially determined by a court of competent jurisdiction to be unavailable to an Indemnified Party (other than as a consequence of a final judicial determination of willful misconduct, bad faith or gross negligence of such Indemnified Party), then Indemnifying Party agrees, in lieu of indemnifying such Indemnified Party, to contribute to the amount paid or payable by such Indemnified Party (i) in such proportion as is appropriate to reflect the relative benefits received, or sought to be received, by Indemnifying Party on the one hand and by such Indemnified Party on the other or (ii) if (but only if) the allocation provided in clause (i) of this sentence is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in such clause (i) but also the relative fault of Indemnifying Party and of such Indemnified Party; provided, however, that in no event shall the aggregate amount contributed by a Holder exceed the profit, if any, earned by such Holder as a result of the exercise by him of the Warrants and the sale by him of the underlying shares of Common Stock. 5.4.1.4 The rights accorded to Indemnified Parties hereunder shall be in addition to any rights that any Indemnified Party may have at common law, by separate agreement or otherwise. 5.4.2 Exercise of Warrants. Nothing contained in this Warrant shall be construed as requiring the Holder(s) to exercise their Warrants prior to or after the initial filing of any registration statement or the effectiveness thereof. 5.4.3 Documents Delivered to Holders. The Company shall furnish to each Holder participating in any of the foregoing offerings and to each Underwriter of any such offering, if any, a signed counterpart, addressed to such Holder or Underwriter, of (i) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under any underwriting agreement related thereto), and (ii) a "cold comfort" letter dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the 5 Company's financial statements included in such registration statement, in each case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities. The Company shall also deliver promptly to each Holder participating in the offering requesting the correspondence and memoranda described below and to the managing underwriter copies of all correspondence between the Commission and the Company, its counsel or auditors and all memoranda relating to discussions with the Commission or its staff with respect to the registration statement and permit each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of the NASD. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times and as often as any such Holder shall reasonably request. 6. Adjustments 6.1 Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of shares of Common Stock underlying this Warrant shall be subject to adjustment from time to time as hereinafter set forth: 6.1.1 Stock Dividends - Recapitalization, Reclassification, Split-Ups. If, after the date hereof, and subject to the provisions of Section 6.2 below, the number of outstanding shares of Common Stock is increased by a stock dividend on the Common Stock payable in shares of Common Stock or by a split-up, recapitalization or reclassification of shares of Common Stock or other similar event, then, on the effective date thereof, the number of shares of Common Stock issuable on exercise of this Warrant shall be increased in proportion to such increase in outstanding shares. 6.1.2 Adjustment Due to Issuances at Less Than the Exercise Price. If, at any time when Warrants are issued and outstanding, the Company shall issue or sell any shares of Common Stock, including shares held in the Company's treasury, or securities exercisable or convertible into or exchangeable for shares of Common Stock, at a consideration per share or with an exchange, conversion or exercise price (in any case the "Lower Price") that is less than the Exercise Price in effect immediately prior to the issuance or sale of such securities (and no adjustment is required to be made pursuant to Section 6.1.1 above), then immediately upon such issuance or sale, the Exercise Price shall be reduced to the Lower Price. 6.1.3 Aggregation of Shares. If after the date hereof, and subject to the provisions of Section 6.3, the number of outstanding shares of Common Stock is decreased by a consolidation, combination or reclassification of shares of Common Stock or other similar event, then, upon the effective date thereof, the number of shares of Common Stock issuable on exercise of this Warrant shall be decreased in proportion to such decrease in outstanding shares. 6.1.4 Adjustments in Exercise Price. Whenever the number of shares of Common Stock purchasable upon the exercise of this Warrant is adjusted, as provided in this Section 6.1, the Exercise Price shall be adjusted (to the nearest cent) by multiplying such Exercise Price immediately prior to such adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of this Warrant immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter. 6 6.1.5 Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Common Stock other than a change covered by Section 6.1.1 hereof or which solely affects the par value of such shares of Common Stock, or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and which does not result in any reclassification or reorganization of the outstanding shares of Common Stock), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Warrant shall have the right thereafter (until the expiration of the right of exercise of this Warrant) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or other transfer, by a Holder of the number of shares of Common Stock of the Company obtainable upon exercise of this Warrant immediately prior to such event; and if any reclassification also results in a change in shares of Common Stock covered by Sections 6.1.1 or 6.1.3, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.3, 6.1.4 and this Section 6.1.5. The provisions of this Section 6.1.5 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers. 6.1.6 Changes in Form of Warrant. This form of Warrant need not be changed because of any change pursuant to this Section, and Warrants issued after such change may state the same Exercise Price and the same number of shares of Common Stock and Warrants as are stated in the Warrants initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Warrants reflecting a required or permissive change shall not be deemed to waive any rights to a prior adjustment or the computation thereof. 6.2 Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of shares of Common Stock upon the exercise of this Warrant, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of shares of Common Stock or other securities, properties or rights. 7. Reservation and Listing. The Company shall at all times reserve and keep available out of its authorized shares of Common Stock, solely for the purpose of issuance upon exercise of this Warrant, such number of shares of Common Stock or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Warrants and payment of the Exercise Price therefor, all shares of Common Stock and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any stockholder. As long as the Warrants shall be outstanding, the Company shall use its best efforts to cause all shares of Common Stock issuable upon exercise of the Warrants to be listed (subject to official notice of issuance) on all securities exchanges (or, if applicable on Nasdaq) on which the Common Stock is then listed and/or quoted. 8. Certain Notice Requirements. 8.1 Holder's Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive notice as a stockholder for the election of directors or any other matter, or as having any rights whatsoever as a stockholder of the Company. If, however, at any time prior to the expiration of the Warrants and their exercise, any of the events described in 7 Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least fifteen days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the stockholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be. 8.2 Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution, or (ii) the Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefor, or (iii) a merger or reorganization in which the Company is not the surviving party, or (iv) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed. 8.3 Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of such event and change ("Price Notice"). The Price Notice shall describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by the Company's President and Chief Financial Officer. 8.4 Transmittal of Notices. All notices, requests, consents and other communications under this Warrant shall be in writing and shall be deemed to have been duly made on the date of delivery if delivered personally or sent by overnight courier, with acknowledgment of receipt by the party to which notice is given, or on the fifth day after mailing if mailed to the party to whom notice is to be given, by registered or certified mail, return receipt requested, postage prepaid and properly addressed as follows: (i) if to the registered Holder of this Warrant, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to its principal executive office. 9. Preemptive Rights. If at any time prior to April 13, 2002, the Company proposes to offer or sell shares, or securities convertible into or exercisable for shares (excluding options granted at fair market value on the date of grant under the Company's Stock Option Plans), of any class of the Company's capital stock ("New Issuances"), the Company shall notify the Holder in writing detailing all terms and conditions of the New Issuances at least ten business days prior to the consummation of the New Issuances and Holder shall have the preemptive right, on the same terms and conditions as the New Issuances, to purchase that number of shares (or other securities) sufficient to permit the Holder to maintain his proportionate economic interest in the Company (determined by dividing (i) the number of shares owned by the Holder plus the number of shares the Holder has the right to acquire, by (ii) the total number of shares outstanding). The closing for the sale to the Holder shall take place concurrently with and is subject to the consummation of the New Issuances to persons other than the Holder, which date shall be disclosed in the aforementioned notice. 10. Miscellaneous. 10.1 Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Warrant. 8 10.2 Entire Agreement. This Warrant (together with the other agreements and documents being delivered pursuant to or in connection with this Warrant) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof. 10.3 Binding Effect. This Warrant shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their respective successors, legal representatives and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Warrant or any provisions herein contained. 10.4 Governing Law; Submission to Jurisdiction. This Warrant shall be governed by and construed and enforced in accordance with the law of the State of New York, without giving effect to conflict of laws. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Warrant shall be brought and enforced in the courts of the State of New York or of the United States of America for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company agrees that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys' fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefor. 10.5 Waiver, Etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Warrant shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Warrant or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Warrant. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Warrant shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment. IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer as of the 13th day of April, 1999. WORLDS INC. By: /s/ Thomas Kidrin ------------------- Name: Thomas Kidrin Title: President and Chief Executive Officer 9 Form to be used to exercise Warrant: - ----------------------------------- - ----------------------------------- - ----------------------------------- Date: _____________________, 19___ The undersigned hereby elects irrevocably to exercise the within Warrant and to purchase ________ shares of Common Stock of _________________________ and hereby makes payment of $____________ (at the rate of $_________ per share of Common Stock) in payment of the Exercise Price pursuant thereto. Please issue the Common Stock as to which this Warrant is exercised in accordance with the instructions given below. or -- The undersigned hereby elects irrevocably to convert its right to purchase ____________ shares of Common Stock purchasable under the within Warrant into __________ shares of Common Stock of ______________________________ (based on a "Market Price" of $________ per share of Common Stock). Please issue the Common Stock in accordance with the instructions given below. -------------------------------------- Signature - --------------------------- Signature Guaranteed NOTICE: The signature to this form must correspond with the name as written upon the face of the within Warrant in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange. INSTRUCTIONS FOR REGISTRATION OF SECURITIES Name ________________________________________________________ (Print in Block Letters) Address ________________________________________________________ 10 Form to be used to assign Warrant: ASSIGNMENT (To be executed by the registered Holder to effect a transfer of the within Warrant): FOR VALUE RECEIVED, ________________________________ does hereby sell, assign and transfer unto _________________________________ the right to purchase _____________________ shares of Common Stock of _________________________________ ("Company") evidenced by the within Warrant and does hereby authorize the Company to transfer such right on the books of the Company. Dated:____________________, 19___ -------------------------------------- Signature NOTICE: The signature to this form must correspond with the name as written upon the face of the within Warrant in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange. 11 EX-10.4 5 CONTRIBUTION AND VOTING AGREEMENT EXHIBIT 10.4 AGREEMENT April 13, 1999 Mr. Steven Chrust SGC Advisory Services, Inc. 1786 Bedford Street Stamford, CT 06905 Worlds Inc. 693 Fifth Avenue New York, New York 10022 Re: Contribution and Voting ----------------------- Dear Sirs: The undersigned hereby agree, in connection with the Financial Advisory and Consulting Agreement ("Consulting Agreement") between SGC Advisory Services, Inc. and Worlds Inc. (the "Corporation"), dated as of March 23, 1999, that: 1. On the date hereof, they are each contributing to the capital of the Corporation for cancellation that number of shares set forth opposite his name below: Steven Greenberg 881,250 Michael Scharf 318,750 Thomas Kidrin 300,000 TOTAL: 1,500,000 2. During the term of the Consulting Agreement, they will each vote any shares of stock of the Corporation which they own or hereafter acquire, or over which they have voting control, for the election of Steven Chrust as a director of the Corporation at any meeting of the Corporation held for the purpose of electing directors (and agree to sign any written consent to elect Steven Chrust as a director if such written consent is provided in lieu of a meeting). /s/ Steven Greenberg ------------------------------ Steven Greenberg /s/ Michael Scharf ------------------------------ Michael Scharf /s/ Thomas Kidrin ------------------------------ Thomas Kidrin -----END PRIVACY-ENHANCED MESSAGE-----