EXHIBIT 10.2
FINANCIAL ADVISORY AND CONSULTING AGREEMENT
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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 Xxxxxx Xxxxxx 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 Xx. Xxxxxx 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 Xx. Xxxxxx
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;
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(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.
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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,
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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 Xxxxxx Xxxxxx, 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 Xx. Xxxxxx 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 Xx. Xxxxxx.
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/ Xxxxxx Xxxxxx By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx Name: Xxxxxx Xxxxxx
Title: President Title: President and Chief
Executive Officer
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