-----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, WJImeEQkPF5tWSGYgs5F98pe9F+9tBJjYv51R0ZjURYylMa6KW4vB7FH2984Dyru owFkbne2I9leoSRLWIs1JQ== 0000900184-01-500012.txt : 20010615 0000900184-01-500012.hdr.sgml : 20010615 ACCESSION NUMBER: 0000900184-01-500012 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 20010614 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NEWS COMMUNICATIONS INC CENTRAL INDEX KEY: 0000794487 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 133346991 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-41485 FILM NUMBER: 1660637 BUSINESS ADDRESS: STREET 1: 174-15 HORACE HARDING EXPRY CITY: FRESH MEADOWS STATE: NY ZIP: 11365 BUSINESS PHONE: 7183573380 MAIL ADDRESS: STREET 1: 174-15 HORACE HARDING EXPWY CITY: FRESH MEADOWS STATE: NY ZIP: 11365 FORMER COMPANY: FORMER CONFORMED NAME: APPLIED RESOURCES INC DATE OF NAME CHANGE: 19871220 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DAVIS J MORTON CENTRAL INDEX KEY: 0000900184 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 44 WAY STREET STREET 2: 2ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 MAIL ADDRESS: STREET 1: 44 WALL STREET STREET 2: 2ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10005 SC 13D/A 1 news13d.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No.__18__) News Communications, Inc. ----------------------------------------------------- (Name of Issuer) Common Stock, $.01 par value ("the shares") -------------------------------------------------------- (Title of Class of Securities) 652484601 ---------------------------------------------------------- (CUSIP Number) David Selengut, Esq. at Ellenoff Grossman & Schole LLP 370 Lexington Avenue NY NY 10017 212-370-1300 ------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 4, 2001 ----------------------------------------------------------- (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 [ ]. *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 the disclosures provided in a prior cover page. The information required in 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). CUSIP No. 652484601 13D Page 2 of 10 pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON J. Morton Davis - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [x ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 Source of Funds See Item #3 herein. - ------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 4,752,696 BENEFICIALLY -------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH 0 REPORTING -------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 4,752,696 -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,752,696 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] (1) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 43% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT (1) The beneficial ownership of J. Morton Davis excludes shares owned by parties to a Stockholders' Agreement as defined in Item 6 other than the Reporting Parties. CUSIP No. 652484601 13D Page 3 of 10 pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON D.H. Blair Investment Banking Corp. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 Source of Funds See Item #3 herein. - ------------------------------------------------------------------------------- 5 Check Box if Disclosure of Legal Proceedings is required pursuant to Items 2(d) or 2(e) - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 2,835,412 BENEFICIALLY -------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH 0 REPORTING -------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 2,835,412 -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,835,412 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] (1) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 25.7% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* BD - -------------------------------------------------------------------------------- *SEE,INSTRUCTIONS BEFORE FILLING OUT (1) The beneficial ownership of D.H. Blair Investment Banking Corp excludes shares owned by parties to a Stockholders' Agreement as defined in Item 6 other than the Reporting Parties. CUSIP No. 652484601 13D Page 4 of 10 pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Rosalind Davidowitz - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 Source of Funds See Item #3 herein. - ------------------------------------------------------------------------------- 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 - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 1,787,717 BENEFICIALLY -------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH 0 REPORTING -------------------------------------------------------------- PERSON 9 SOLE DISPOSITIVE POWER WITH 1,787,717 -------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,787,717 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] (1) - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 16.8% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT (1) The beneficial ownership of Rosalind Davidowitz excludes shares owned by parties to a Stockholders' Agreement as defined in Item 6 other than the Reporting Parties. Page 5 of 10 pages Form 13D is hereby amended as follows: Item 2. (a) J. Morton Davis, D.H. Blair Investment Banking Corp. ("Blair Investment") and Rosalind Davidowitz, (together, the "Reporting Parties"). Item 3. Source and Amount of Funds or Other Consideration: D.H. Blair Investment Banking Corp. purchased 250,000 shares of Common Stock at a price of $1.00 per share. The source of funds was working capital, a portion of which was from a repayment of a note by Issuer to Blair Investment. These shares were immediately surrendered to the Issuer. Item 4 Purpose of Transaction None of the purposes set forth in (a) through (j) of Item 4, apply to this transaction. Item 5. Interest in the Securities of the Issuer is amended in its entirety: (a) As of June 4, 2001, Mr. Davis may be deemed to beneficially own 4,752,696 shares or 43% of the Issuer's shares issued and outstanding as follows: (i) 129,567 shares owned directly by Mr. Davis, (ii) 2,454,999 shares owned by Blair Investment, (iii) Warrants to purchase 157,867 shares owned by Blair Investment (iv) 22,546 shares issuable upon exercise of 5,900 shares of $10 convertible preferred stock owned by Blair Investment, (v) 200,000 shares issuable upon conversion of 8% Convertible Notes owned by Blair Investment, and (vi) 1,787,717 shares owned by Rosalind Davidowitz (1). As of June 4, 2001, Blair Investment may be deemed to beneficially own 2,835,412 shares or 25.7% of the Issuer's shares as indicated in (ii) - (v) above. As of June 4, 2001, Rosalind Davidowitz may be deemed to beneficially own 1,787,717 shares or 16.8% of the Issuer's shares as indicated in (vi) above. (b) See numbers (7) - (10) on the cover page, of this form for each Reporting Party. The beneficial ownerhsip of the Reporting Parties excludes shares owned by parties to a Stockholders' Agreement as defined in Item 6 of the previously filed 13D and in Item 6 of this amended 13D, other than the Reporting Parties. NEWY1:2002512:3:6/5/01 Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. The Reporting Parties, James A. Finkelstein ("James Finkelstein"), the Issuer, Wilbur L. Ross ("Ross"), Jerry Finkelstein, the Finkelstein Foundation, Inc. and Shirley Finkelstein (collectively, the "Jerry Finkelstein Group"), Melvyn I. Weiss and the M&B Weiss Family Partnership (together, the "Weiss Group") and the holders of the Issuer's $10 Convertible Preferred Stock entered into a Letter Agreement, dated as of May 8, 2001 and consummated on June 4, 2001, pursuant to which, among other things, James Finkelstein was hired to serve as President and Chief Executive Officer of the Issuer. The Letter Agreement is attached as Exhibit 1 to this Schedule 13D and the terms thereof are incorporated herein by reference. Page 6 of 10 pages Under the terms of the Letter Agreement, the Reporting Parties, the Weiss Group, Ross, the Jerry Finkelstein Group and James Finkelstein have agreed, subject to board approval and the receipt of a fairness opinion, to vote in favor of the following plan (the "Going Private Plan") if proposed before May 15, 2002: 1. James Finkelstein or an entity controlled by James Finkelstein would form a new entity ("Newco") and James Finkelstein would contribute all shares of the Issuer's stock owned by him to Newco. 2. James Finkelstein would purchase, for an aggregate of $310,000, additional shares of Newco Common Stock which, after giving effect to the transactions described below, would represent 50.1% of the issued and outstanding Newco Common Stock. 3. Newco would enter into a merger or other agreement with the Issuer pursuant to which Newco would acquire all of the shares of the Issuer not owned by it for an aggregate consideration of $1.30 per share on the following terms: i. Each of the Jerry Finkelstein Group, Ross, the Weiss Group, the Reporting Parties and the holders of the Issuer's $10 Convertible Preferred Stock would receive for each share of the Issuer's Common Stock owned by them approximately 0.175 shares of Newco Common Stock (having a value of approximately $.175) and approximately $1.125 principal amount of Newco's 5% Subordinated Notes (the "Control Shareholder Consideration"). ii. All other stockholders of the Issuer will receive for each of the Issuer's shares owned by them $.35 in cash and $.95 principal amount of Newco's 8% Senior Subordinated Notes due on the fourth anniversary of the consummation of the merger (the "General Shareholder Consideration"). Pursuant to the terms of the Letter Agreement, the following documents were delivered and the following transactions were consummated: 1. James Finkelstein, the Jerry Finkelstein Group, Ross, the Weiss Group and the Reporting Parties (each member of the Jerry Finkelstein Group, Ross, the Reporting Parties and the Weiss Group and James Finkelstein, individually, a "Stockholder" and collectively the "Stockholders") entered into a Stockholders' Agreement dated as of May 8, 2001 and consummated on June 4, 2001 (the "Stockholders' Agreement"). The Stockholders' Agreement is attached as Exhibit 2 to this Schedule 13D and the terms thereof are incorporated herein by reference. Page 7 of 10 pages Pursuant to the terms of the Stockholders' Agreement, subject to limited exceptions, James Finkelstein has been granted an irrevocable proxy to vote all of the shares held by the Reporting Parties (the "Reporting Parties Shares") until such time as James Finkelstein ceases to be employed as the President and Chief Executive Officer of the Issuer. In addition, the Stockholders' Agreement provides that, for so long as James Finkelstein is President and Chief Executive Officer of the Issuer, the Stockholders have agreed to act to maintain the size of the Issuer's Board of Directors at 9 members and to vote their shares so as to elect as directors of the Issuer as follows: (i) four persons designated by James Finkelstein, one of whom shall initially be James Finkelstein and one of whom shall initially be Jerry Finkelstein; (ii) one person designated by Ross who shall initially be Ross; (iii) one person designated by the Weiss Group who shall initially be Gary Weiss; (iv) one person designated by the Reporting Parties who shall initially be Martin A. Bell; and (v) two persons designated by the mutual agreement of the Reporting Parties, the Weiss Group and Ross. 2. Blair Investment and the Issuer entered into a Subscription Agreement dated as of May 8, 2001 which was consummated on June 4, 2001 (the "Blair Subscription Agreement") pursuant to which Blair Investment purchased 250,000 shares of the Issuer's Common Stock at a purchase price of $1.00 per share. The shares purchased were immediately surrendered to the Issuer in order for the Issuer to satisfy its obligations to James Finkelstein under the terms of the Finkelstein Subscription Agreement described below. The Blair Subscription Agreement is attached as Exhibit 3 to this Schedule 13D and the terms thereof are incorporated herein by reference. 3. Blair Investment and the Issuer entered into a second Subscription Agreement dated as of May 8, 2001 which was consummated on June 4, 2001 (the "Blair Debt Conversion Subscription Agreement") pursuant to which Blair Investment converted $150,000 of the Issuer's indebtedness to Blair Investment plus accrued interest of $7,594.82 into shares of the Issuer's Common Stock at a purchase price of $1.00 per share, resulting in the issuance of 7,595 shares of the Issuer's Common Stock to Blair Investment. The Blair Debt Conversion Subscription Agreement is attached as Exhibit 4 to this Schedule 13D and the terms thereof are incorporated herein by reference. 4. Rosalind Davidowitz and the Issuer entered into a Subscription Agreement dated as of May 8, 2001 which was consummated on June 4, 2001 (the "Davidowitz Subscription Agreement") pursuant to which Ms. Davidowitz converted all $1,000,000 of the Issuer's indebtedness to Ms. Davidowitz plus accrued interest of $38,575.51 into shares of the Issuer's Common Stock at a purchase price of $1.00 per share, resulting in the issuance of 1,038,575 shares of the Issuer's Common Stock to Ms. Davidowitz. The Davidowitz Conversion Subscription Agreement is attached as Exhibit 5 to this Schedule 13D and the terms thereof are incorporated herein by reference. 5. James Finkelstein and the Issuer entered into a Subscription Agreement dated as of May 8, 2001 which was consummated on June 4, 2001 (the "Finkelstein Subscription Agreement") pursuant to which James Finkelstein agreed to purchase 750,000 shares of the Issuer's Common Stock. In addition, in consideration for James Finkelstein's purchase of shares, the Issuer issued to James Finkelstein an additional 250,000 shares of the Issuer's Common Stock (the "Adjustment Shares") which Blair Investment had surrendered. The Finkelstein Subscription Agreement provides that if, on the second anniversary of the date of the Finkelstein Subscription Agreement, the fair market value of the equity securities of the Issuer is equal to or greater than $46,000,000 (an "Adjustment Event"), then James Finkelstein would transfer the Adjustment Shares (or any securities received in respect of the Adjustment Shares) to Blair Investment unless the Going Private Plan occurs, in which case James Finkelstein would deliver to Blair Investment the number of shares of Newco Common Stock and the Newco Subordinated Notes that Blair Investment would have received had it owned the Adjustment Shares on the date of the consummation of the transaction between the Issuer and Newco. Blair Investment was specifically designated as a third party beneficiary of the Finkelstein Subscription Agreement. The Finkelstein Subscription Agreement is attached as Exhibit 6 to this Schedule 13D and the terms thereof are incorporated herein by reference. Page 8 of 10 pages In connection with the consummation of the transactions contemplated by the Letter Agreement, the following transactions also took place involving the Reporting Parties: 1. On or about June 4, 2001, the Issuer repaid the principal amount of $300,000 plus accrued interest outstanding on a certain Revolving Note dated March 30, 2001, and the corresponding revolving credit facility was terminated. The Loan Agreement evidencing such revolving credit facility provided that upon repayment in full of the advances under the revolving loans, the Issuer would issue to Blair Investment warrants at an exercise price of $1.00 per share in an amount equal to the aggregate revolving loans outstanding at any one time during the term of the Loan Agreement. Accordingly, upon payment in full of the revolving loans, the Issuer issued to Blair Investment warrants to purchase 300,000 shares of the Issuer's Common Stock at an exercise price of $1.00 per share (the "Credit Facility Warrants"). The Credit Facility Warrants are attached as Exhibit 7 to this Schedule 13D and the terms thereof are incorporate herein by reference. 2. Blair Investment entered into a Warrant Purchase Agreement with James Finkelstein, dated as of April 19, 2001 and effective June 4, 2001, pursuant to which James Finkelstein purchased from Blair Investment one-half of the Credit Facility Warrants, or warrants to purchase up to 150,000 shares of the Issuer's Common Stock at an exercise price of $1.00 per share. The purchase price for such warrants under the Warrant Purchase Agreement was $0.01 per warrant, or an aggregate of $1,500. The form of Warrant Purchase Agreement is attached as Exhibit 8 to this Schedule 13D and the terms thereof are incorporated herein by reference. 3. Blair Investment executed a letter dated May 8, 2001 and delivered to each holder of the Issuer's $10 Convertible Preferred Stock (the "$10 Letter Agreement"). Under the terms of the $10 Letter Agreement, if the Going Private Plan occurs, Blair Investment agreed to ensure that the holders of the Issuer's $10 Convertible Preferred Stock would receive common stock in Newco having a value of $.20 per share. This would be effectuated by Blair Investment transferring to each holder of $10 Convertible Preferred Stock such number of shares of Newco's common stock necessary for each holder of $10 Convertible Preferred Stock to receive 0.2 shares of Newco's common stock having a value of $.20 per share. In exchange for such transfer, each holder of the $10 Convertible Preferred Stock would transfer to Blair Investment subordinated notes in Newco having a value equal to the Newco shares transferred. The $10 Letter Agreement is attached as Exhibit 9 to this Schedule 13D and the terms thereof are incorporated herein by reference 4. Blair Investment also entered into a letter agreement with Ross, Melvyn I. Weiss ("Weiss"), Jerry Finkelstein and Hillel Weinberger dated May 23, 2001 (the "Weinberger Letter"). Under the terms of the Weinberger Letter, Blair Investment, Ross, Weiss and Jerry Finkelstein agreed to exchange, on a pro rata basis, 150,000 shares of the Issuer's Common Stock which would be entitled to receive the Control Shareholder Consideration for the 150,000 shares of the Issuer's Common Stock owned by Mr. Weinberger with respect to which Mr. Weinberger would be entitled to receive the General Shareholder Consideration. The Weinberger Letter is attached as Exhibit 10 to this Schedule 13D and the terms thereof are incorporated herein by reference The foregoing description of each of the agreements incorporated by reference into this Item 6 are qualified by reference to the actual agreement attached as an exhibit to this Schedule 13D. Page 9 of 10 pages Item 7. Material to be Filed as Exhibits. --------------------------------- The following are filed herewith as Exhibits: Exhibit Description 1. Letter Agreement dated as of May 8, 2001 by and between News Communications, Inc. and James Finkelstein. 2. Stockholders' Agreement dated as of May 8, 2001 by and among Jerry Finkelstein, The Finkelstein Foundation, Inc., Shirley Finkelstein, Wilbur L. Ross, Jr.; Melvyn I. Weiss, M&B Weiss Family Partnership, J. Morton Davis, D.H. Blair Investment Banking Corp., Rivkalex Corporation, Rosalind Davidowitz, and James Finkelstein. 3. Subscription Agreement dated as of May 8, 2001 by and between News Communications, Inc. and D.H. Investment Banking Corp. for the purchase of 250,000 shares of common stock 4. Subscription Agreement dated as of May 8, 2001 by and between News Communications, Inc. and D.H. Investment Banking Corp. for the purchase of 150,000 shares of common stock 5. Subscription Agreement dated as of May 8, 2001 by and between News Communications, Inc. and Rosalind Davidowitz for the purchase of 1,000,000 shares of common stock. 6. Subscription Agreement dated as of May 8, 2001 by and between News Communications, Inc. and James Finkelstein for the purchase of 750,000 shares of common stock. 7. Warrant to purchase 150,000 shares of common stock of News Communications, Inc. at $1,00 per share. 8. Warrant Purchase Agreement dated as of April 19, 2001 by and between D.H. Blair Investment Banking Corp. and James Finkelstein. 9. Form of Letter from D.H. Blair Investment Banking Corp. to the holders of $10 Convertible Preferred Stock of News Communications, Inc. 10. Letter Agreement dated May 23, 2001 by and among Wilbur L. Ross, Jr., Melvyn I. Weiss, Jerry Finkelstein and Hillel Weinberger. ---------------------------------------------------------------------------- (1) Filing of this statement shall not be deemed an admission that J. Morton Davis or Blair Investment beneficially own securities attributed to Rosalind Davidowitz for any purpose. J. Morton Davis and Blair Investment expressly disclaim beneficial ownership of all securities held by Rosalind Davidowitz for any purpose. Rosalind Davidowitz expressly disclaims beneficial ownership of all securities owned by Mr. Davis or Blair Investment for any purpose. Page 10 of 10 pages SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. /s/ J. Morton Davis Date: June 7, 2001 ________________________ New York, New York J. Morton Davis D.H. BLAIR INVESTMENT BANKING CORP. by: /s/ David Nachamie Date: June 7, 2001 _____________________________ New York, New York David Nachamie Treasurer Date: June 7, 2001 /s/ Rosalind Davidowitz New York, New York ____________________________ Rosalind Davidowitz EX-99 2 exhibit1.txt Exhibit 1 Mr. James Finkelstein May 8, 2001 Page 10 - 10 - NEWY1:768117:15:5/8/01 4:45 PM 28507-20 News Communications, Inc. 2 Park Avenue, Suite 1405 New York, NY 10016 May 8, 2001 Mr. James Finkelstein JAF Communications, LLC 55 East 59th Street, 14th Fl. New York, NY 10022 Dear Jimmy: We are delighted that you have decided to move forward with News Communications, Inc. ("NCI"). In this regard, the following sets forth the terms upon which you will, among other matters, become President, Chief Executive Officer and a Director of NCI, you will make an investment in NCI and you or an entity created by you could elect to take NCI private. 1. Your employment would be on the following terms: Title: President and Chief Executive Officer. In addition, at your election, you will also be appointed as Chairman of the Board. You will do whatever is necessary to fulfill the requirements of President and Chief Executive Officer. Base Salary: $150,000 per annum until December 31, 2001. The base salary shall automatically increase on January 1, 2002 and on the first day of each calendar year thereafter by not less than 5% per annum. In addition, the Compensation Committee of NCI at least annually will review your base salary and other compensation with a view to the increase thereof based upon your performance, the performance of NCI, inflation, then prevailing industry salary scales and other relevant factors Benefits: You will be entitled to those benefits made available to senior executives of NCI, including an automobile allowance, vacation time, medical and dental insurance coverage and participation in a 401k or profit sharing plan, all in accordance with then current NCI policy. Expenses: NCI will pay or reimburse you for reasonable and necessary business expenses incurred by you in the course of your employment, subject to NCI's then current policies for senior executives regarding such business expenses. Term: No definitive term. 2. Pursuant to a Subscription Agreement in the form of Exhibit A hereto, you shall purchase 750,000 shares of NCI's Common Stock at a purchase price of $1.00 per share, or $750,000 in the aggregate, of which 500,000 shares shall be purchased within two business days after this Agreement has been fully executed and 250,000 shares shall be purchased from time to time as NCI's capital needs require but in no event shall the balance of the shares be purchased later than July 31, 2001. NCI shall also issue to you in consideration for your investment 250,000 additional shares which D.H. Blair Investment Banking Corp. ("Blair") is purchasing pursuant to paragraph 5 (the "Blair Shares") and is contributing to NCI. In the event that the fair market value of NCI's equity securities on the second anniversary of your initial purchase is equal to or greater than $46 million, you shall transfer the Blair Shares (or any securities issued in respect thereof) to Blair or its designees; provided, however, in the event that the Company has consummated the transaction described in paragraph 6 of this letter agreement, you shall deliver to Blair the number of shares of Newco Common Stock (as described in paragraph 6) that Blair would have received had it owned the Blair Shares on the date of the consummation of the transaction between the Company and Newco and the Company shall issue to Blair the Subordinated Notes (as defined in paragraph 6) or other consideration that Blair would have received had it owned the Blair Shares on the date of the consummation of the transaction between the Company and Newco. 3. As further consideration for your investment in NCI, NCI shall issue to you 5-year warrants, in the form of Exhibit B hereto, to purchase 3,000,000 shares of NCI's Common Stock, of which 1,000,000 warrants shall have an initial exercise price of $1.10 per share, 1,000,000 warrants shall have an initial exercise price of $1.50 per share and 1,000,000 warrants shall have an initial exercise price of $2.00 per share. The warrants shall not become exercisable until May 16, 2002. 4. You, Jerry Finkelstein, The Finkelstein Foundation, Inc. and Shirley Finkelstein (collectively, the "Finkelstein ------------ Group"), Wilbur L. Ross, Jr. ("Ross"), Melvyn I. Weiss and M&B Weiss Family Partnership (together, the "Weiss Group"), J. Morton ----- ---- ----------- Davis, ("Davis"), Blair, Rivkalex Corporation and Rosalind Davidowitz (collectively, the "Davis Group") shall enter into a ----- ------------ Stockholders Agreement, in the form of Exhibit C hereto (the "Stockholders Agreement"), pursuant to which, among other matters, the ----------------------- Board of Directors of NCI shall be fixed at 9 members, you shall have the right to designate 4 members of the Board, one of whom shall initially be Jerry Finkelstein, Ross shall have the right to designate one member of the Board, the Weiss Group shall have the right to designate one member of the Board, the Davis Group shall have the right to designate one member of the Board and Ross, the Weiss Group, the Davis Group shall mutually agree on two members of the Board; and each member of the Davis Group shall grant to you an irrevocable proxy to vote all of the shares owned by each of them during the term of the Stockholders' Agreement or otherwise enter into a voting trust agreement under which you shall have the right to vote the shares owned by each member of the Davis Group. 5. Pursuant to a Subscription Agreement in the form of Exhibit D hereto, D.H. Blair Investment Banking Corp. and Rosalind Davidowitz shall convert NCI's indebtedness to them in the aggregate principal amount of $1,150,000, together with all accrued interest thereon, into shares of NCI's Common Stock at a conversion price of $1.00 per share. In addition, Davis or his designees shall subscribe for the Blair Shares at a price of $1.00 per share, or $250,000 in the aggregate, pursuant to a Subscription Agreement in the form of Exhibit E, which Blair Shares shall immediately be surrendered to NCI. 6. In addition to the foregoing transactions, you have expressed an interest in acquiring all of the issued and outstanding shares of NCI. Based upon our discussions to date, the Finkelstein Group, Ross, the Weiss Group and the Davis Group will agree to vote their shares in favor of and to participate in a transaction on the following terms if such transaction is initiated on or before May 15, 2002: a. You would form a new entity ("Newco") and will contribute all 1,018,000 shares owned by you to Newco. b. You would subscribe for and purchase, for an aggregate of $310,000, 310,000 shares of Newco Common Stock or such other number of shares of Newco Common Stock so that, after giving effect to the transactions contemplated by this Paragraph 6 and this agreement, shares of Newco Common Stock owned by you shall represent 50.1% of the issued and outstanding Newco Common Stock on a fully diluted basis. c. Newco will enter into a merger agreement with NCI pursuant to which it will acquire all of the shares of NCI not owned by it for an aggregate consideration of $1.30 per share on the following terms: i. Each of the Finkelstein Group (other than you), Ross, the Weiss Group, the Davis Group and the holders of NCI's $10 Convertible Preferred Stock (assuming conversion of all of such shares into NCI's Common Stock) will receive for each NCI share owned by them approximately 0.175 shares of Newco Common Stock (having a value of approximately $0.175) and approximately $1.125 principal amount of Newco's 5% Subordinated Notes in the form of Exhibit F hereto (the "Subordinated Notes"), for an aggregate value of $1.30 per share. Notwithstanding the foregoing, in the event that, as a result of such transaction, any holder of NCI's $10 Convertible Preferred Stock would receive a share of Newco Common Stock having a value of less than $.20 per share in exchange for a share of NCI Common Stock, at the election of any holder, Blair shall transfer to such holder a number of shares of Newco Common Stock as shall be necessary to give such holder $.20 of value of Newco Common Stock in exchange for an equal value of Subordinated Notes. All options and warrants held by you and each of the forgoing persons shall be cancelled immediately prior to the consummation of the merger. ii. All other stockholders of NCI will receive for each NCI share owned by them $.35 in cash and $.95 principal amount of Newco's 8% Senior Subordinated Notes due on the fourth anniversary of the consummation of the merger. Although the Finkelstein Group, Ross, the Weiss Group and the Davis Group will cooperate with you in effectuating the foregoing transaction, the foregoing agreement to vote in favor of the transaction is conditioned upon the following: i. The approval of the terms of the transaction by a committee of the disinterested directors of NCI. ii. The receipt of an opinion satisfactory to the Board from a recognized financial institution that the transaction is fair to the stockholders of NCI from a financial point of view. iii. The execution of a stockholders' agreement in the form of Exhibit G hereto. v. You have performed all of your obligations outlined in this agreement. 7. Each of Ross, each member of the Finkelstein Group, each member of the Weiss Group and each member of the Davis Group agree that, until May 15, 2002 or such later date as a transaction initiated on or before May 15, 2002 pursuant to Paragraph 6 shall close or be formally abandoned, none of them shall sell, assign or transfer any of the shares of NCI's capital stock owned by them unless the transferee agrees to be bound by all of the provisions of this agreement and the Stockholders Agreement as if they were a signatory hereto and thereto. 8. This agreement is a full and accurate embodiment of our understanding with regard to the subject matter contained herein and it supersedes any prior agreements or understandings. The terms of this agreement may not be modified except by mutual consent. All modifications must be reduced to writing and signed by all parties hereto to be effective. 9. If any provision of this agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall apply only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 10. This agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, estates, heirs, legal representatives and permitted assigns and transferees. 11. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW) EXCEPT THAT MATTERS PERTAINING TO THE NEVADA BUSINESS CORPORATION LAW SHALL BE GOVERNED BY THE NEVADA BUSINESS CORPORATION LAW. Jurisdiction and venue for all legal proceedings relating to the subject matter of this agreement shall lie exclusively with the appropriate federal or state court sitting within the State of New York, County of New York. 12. This agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13. All representations, warranties and agreements contained herein shall survive the execution and delivery of this agreement. 14. NCI shall promptly, after the date hereof, reimburse you for up to $60,000 for reasonable attorneys fees and costs incurred by you in connection with the negotiation and execution of this agreement and the other agreements contemplated hereby. 15. Upon a final judicial determination of any breach by you of Section 1 of this agreement, NCI's sole remedy shall be the termination of the salary and benefits provided in such paragraph after the date of such judicial determination. Please indicate your acceptance by signing below. We look forward to a long a prosperous association. Sincerely, NEWS COMMUNICATIONS, INC. By: ________________________ Name: Title: [Signatures continue on next page] Jerry Finkelstein THE FINKELSTEIN FOUNDATION, INC. By: ----------------------------------------- Jerry Finkelstein President Shirley Finkelstein Wilbur L. Ross, Jr. Melvyn I. Weiss M&B WEISS FAMILY PARTNERSHIP By: --------------------------------------- Name: General Partner D.H. BLAIR INVESTMENT BANKING CORP. By: ----------------------------------------- J. Morton Davis [Signatures continue on next page] RIVKALEX CORPORATION By: ----------------------------------------- Rosalind Davidowitz President J. Morton Davis Rosalind Davidowitz The undersigned holders of NCI's $10 Convertible Preferred Stock hereby agree to convert their shares and accept the consideration described in paragraph 6(c)(i) above. ----------------------------- Mark Dickstein ----------------------------- Sy Syms ----------------------------- Marcy Syms Merns ----------------------------- Yves-Andre Istel [Signatures continue on next page] ----------------------------- Robert Nederlander ----------------------------- Estate of Edward S. Gordon ARROW INVESTMENT LIMITED PARTNERSHIP By:___________________________ Name: Title: ----------------------------- Hillel Weinberger ----------------------------- Gary Hindes ----------------------------- Victor Kiam ----------------------------- ----------------------------- Michael E. Ryan and Michael S. Insel, Trustees under Article SIXTH o/w/o Sydney Gruson AGREED AND ACCEPTED: - --------------------------------- James Finkelstein EX-99 3 exhibit2.txt Exhibit 2 STOCKHOLDERS' AGREEMENT STOCKHOLDERS' AGREEMENT, made the 8th day of May, 2001, by and among JERRY FINKELSTEIN, THE FINKELSTEIN FOUNDATION, INC. and SHIRLEY FINKELSTEIN (collectively, the "Finkelstein Group"), each having an address at the Carlyle Hotel, 35 East 76th Street, New York, NY 10021; WILBUR L. ROSS, JR. ("Ross"), having an address at 101 East 52nd Street, New York, NY 10022; MELVYN I. WEISS and M&B WEISS FAMILY PARTNERSHIP (the "Weiss Group"), having an address c/o Milberg Weiss Bershad Hynes & Lerach LLP, One Pennsylvania Plaza, New York, NY 10119; J. MORTON DAVIS, D.H. BLAIR INVESTMENT BANKING CORP., RIVKALEX CORPORATION and ROSALIND DAVIDOWITZ (collectively, the "Davis Group"), having an address c/o D.H. Blair Investment Banking Corp., 44 Wall Street, New York, NY 10005, and JAMES FINKELSTEIN ("James Finkelstein"), having an address at 55 East 59th Street, 14th Fl., New York, NY 10022 (each member of the Finkelstein Group, Ross, the Davis Group and the Weiss Group and Finkelstein, individually, a "Stockholder" and collectively the "Stockholders"). WHEREAS, the Stockholders and News Communications, Inc., a Nevada corporation ("NCI"), are parties to an agreement (the "Letter Agreement") pursuant to which, among other things, James Finkelstein has agreed to become President and Chief Executive Officer of NCI and purchased 1,000,000 shares of NCI's common stock (the "Common Stock"); WHEREAS, each Stockholder owns, or will own, the number of shares of Common Stock and/or $10 Convertible Preferred Stock (the "Preferred Stock") set forth opposite his name on Exhibit A hereto (collectively, the "Shares"); and WHEREAS, the Stockholders desire to provide for the composition of the Board of Directors of NCI (the "Board"), the voting of their Shares in certain circumstances and certain other matters relating to NCI. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt of and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. Definitions. For the purposes of this Agreement, terms used but not otherwise defined herein shall have the meaning set forth in the Letter Agreement. 2. Term. Unless otherwise terminated pursuant to the provisions hereof, the term of this Agreement shall commence on the date hereof and end on May 7, 2006. 3. Representations of the Stockholders and NCI. Each Stockholder represents to and agrees with the other Stockholders that (i) such Stockholder is the legal holder and beneficial owner of the Shares set forth opposite such Stockholder's name on Exhibit A hereto, (ii) such Shares and the Shares hereafter acquired by such Stockholder will be owned free and clear of all liens, claims, charges, options and encumbrances other than restrictions on transfer under this Agreement except as otherwise created by this Agreement, (iii) such Stockholder has not entered into, and agrees that such Stockholder will not enter into, any other agreement or arrangement the performance of which would in any manner conflict with, restrict or be inconsistent with the performance of such Stockholder's obligations under this Agreement and (v) this Agreement constitutes the legal, valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms. 4. Corporate Governance and Related Matters. ---------------------------------------- (a) To the extent permitted by applicable law, each Stockholder agrees to use commercially reasonable efforts to take any and all action necessary, including, without limitation, the voting of, or the execution of consents with respect to, their Shares, the calling of special meetings of stockholders, the amendment of agreements and designations to the Board, the attending of meetings and the amendment of NCI's Certificate of Incorporation and By-Laws, to cause the size of the Board to be maintained at nine (9) members, with such directors selected in accordance with Section 4(c) hereof. (b) Until such time as James Finkelstein ceases to be employed by NCI or this Agreement is otherwise terminated, each member of the Davis Group hereby irrevocably appoints James Finkelstein as proxy and attorney-in-fact to vote all of such person's shares. Each member of the Davis Group acknowledges that such proxy is being given to induce James Finkelstein to become engaged by, and make an investment in, NCI and is, therefore, coupled with an interest and shall be irrevocable; provided, however, that James Finkelstein shall not vote Shares owned by the Davis Group in any manner which would conflict with the provisions of this Agreement, which would otherwise permit James Finkelstein or an Affiliate (which for purposes of this Agreement shall have the meaning defined in Rule 405 of the Securities Act of 1933) of James Finkelstein to acquire Shares owned by the Davis Group on terms less favorable than that outlined in the Letter Agreement or which would authorize a transaction in which any member of the Davis Group is treated less favorably than James Finkelstein, the Finkelstein Group, Ross or the Weiss Group or any Affiliate of such person or entity. (c) James Finkelstein, Ross, each member of the Finkelstein Group and each member of the Weiss Group hereby agrees, so long as James Finkelstein is the Chief Executive Officer and President of NCI, to vote the Shares owned or controlled by such Stockholder and to use such Stockholder's best efforts to cause his Affiliates (as defined in Rule 405 of the Securities Act of 1933) to vote their Shares, or execute consents with respect to their Shares so as to elect, and to take all other action required to elect, as directors of NCI: (i) four persons designated by James Finkelstein, one of whom shall initially be James Finkelstein, one of whom shall initially be Jerry Finkelstein; (ii) one person to be designated by the Davis Group who shall initially be Martin Bell; (iii) one person to be designated by Ross who shall initially be Wilbur Ross; and (iv) one person to be designated by the Weiss Group who shall initially be Gary Weiss; and (v) two persons to be designated by the mutual agreement of Ross, the Weiss Group and the Davis Group. (d) Each Stockholder agrees that if, at any time, such Stockholder is then entitled to vote for the removal of directors of NCI, he will not vote any the Shares owned or controlled by such Stockholder in favor of the removal of any director who shall have been designated or nominated pursuant to Section 4(c) unless such removal shall be for Cause or the person(s) entitled to designate or nominate such director shall have consented to such removal in writing, provided that if the persons entitled to designate or nominate any director pursuant to Section 4(c) shall request the removal, with or without Cause, of such director in writing, such Stockholder shall vote such Stockholder's Shares, and shall use such Stockholder's commercially reasonable efforts (without requiring the expenditure of funds) to cause such Stockholder's affiliates to vote such affiliates' Shares, in favor of such removal. Removal for "Cause" shall mean removal of a director because of such director's (a) willful and continued failure substantially to perform his duties with NCI in his established position, (b) willful conduct which is injurious to NCI or any of its subsidiaries, monetarily or otherwise, (c) conviction for, or guilty plea to, a felony or a crime involving moral turpitude, (d) abuse of illegal drugs or other controlled substances or habitual intoxication or (e) willful breach of this Agreement. (e) If, as a result of death, disability, retirement, resignation, removal (with or without Cause) or otherwise, there shall exist or occur any vacancy on the Board: (i) The person(s) entitled under Section 4(c) to designate or nominate such director whose death, disability, retirement, resignation or removal resulted in such vacancy, may, subject to the provisions of Section 4(c), designate another individual (the "Nominee") to fill such vacancy and serve as a director of the Company; and (ii) each Stockholder then entitled to vote for the election of the Nominee as a director of NCI agrees that such Stockholder will vote such Stockholder's Shares, and shall use such Stockholder's reasonable efforts to cause its Affiliates to vote its shares, or execute a written consent, as the case may be, in order to ensure that the Nominee is elected to the Board. (f) The right to designate one or more members of the Board by any Stockholder (or group of Stockholders) pursuant to this Section 4 shall terminate at such time that the ownership of shares by such Stockholder (or group of Stockholders) is less than 5% of the outstanding Common Stock on a fully diluted basis (inclusive of (i) any options, warrants or shares of Preferred Stock owned by such Stockholder and any Affiliate of such Stockholder, (ii) in the case of Ross, the shares owned by WLR Recovery Fund L.P. and (iii) in the case of James Finkelstein, the Davis Group's Shares to which he has an irrevocable proxy pursuant to Section 4(b) hereof). The obligations imposed on the Stockholders to give effect to the rights to designate directors set forth in Section 4(c) shall terminate as to any person when such person's right to designate a director is terminated. 5. Injunctive Relief; Specific Performance. Each of the Stockholders acknowledges that the other Stockholders will be irreparably damaged in the event of a breach or threatened breach of the terms, covenants and/or conditions of this Agreement by any Stockholder. In addition to any other remedy to which the Stockholders may be entitled, the Stockholders shall be entitled to a preliminary and permanent injunction, without showing any actual damage or threat of irreparable injury, and/or a decree for specific performance, in accordance with the provisions hereof. 6. Miscellaneous. (a) This Agreement constitutes the entire agreement among the Stockholders with respect to the subject matter hereof, supersedes all prior agreements or understandings among the parties hereto with respect to the subject matter hereof, including that certain Stockholders' Agreement dated July 28, 1999 by and among NCI, the Finkelstein Group, Ross, the Weiss Group and Steven Farbman, and may not be modified, amended or terminated except by a written agreement signed by all of the parties hereto. (b) No waiver of any breach or default hereunder shall be considered valid unless in writing, and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. (c) If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. In the event that any provision is declared invalid or unenforceable, the Stockholders agree to substitute for such invalid or unenforceable provision a new provision which reflects, to the closest extent possible, the intent of the parties. (d) Except as otherwise expressly provided herein, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, estates, heirs, legal representatives and permitted assigns and transferees. (e) The section headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said actions. (f) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW) EXCEPT THAT MATTERS PERTAINING TO THE NEVADA BUSINESS CORPORATION LAW SHALL BE GOVERNED BY THE NEVADA BUSINESS CORPORATION LAW. The Stockholders consent and agree that jurisdiction and venue for all legal proceedings relating to the subject matter of this Agreement shall lie exclusively with the appropriate federal or state court sifting within the State of New York, County of New York. (g) Any notice or other communications required or permitted hereunder shall be in writing and shall be deemed effective (i) upon personal delivery, if delivered by hand and followed by notice by mail or facsimile transmission, (ii) three (3) days after the date of deposit in the mails, if mailed by certified or registered mail (return receipt requested), or (iii) on the next business day, if mailed by an overnight mail service to the parties or sent by facsimile transmission, addressed to the Stockholders and James Finkelstein at their respective addresses first written above. (h) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (i) All representations, warranties and agreements contained herein shall survive the execution and delivery of this Agreement. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. James Finkelstein Jerry Finkelstein THE FINKELSTEIN FOUNDATION, INC. By: ----------------------------------------- Jerry Finkelstein President Shirley Finkelstein Wilbur L. Ross, Jr. Melvyn I. Weiss M&B WEISS FAMILY PARTNERSHIP By: ----------------------------------------- Name: General Partner [Signature pages continue on next page] D.H. BLAIR INVESTMENT BANKING CORP. By: ----------------------------------------- J. Morton Davis RIVKALEX CORPORATION By: ----------------------------------------- Rosalind Davidowitz President J. Morton Davis Rosalind Davidowitz EXHIBIT A The Finkelstein Group = 264,001 shares Name of Holder Common Common Issuable on Preferred Conversion Jerry Finkelstein 187,389 -- Mr. Finkelstein (wife) 66,667 -- The Jerry Finkelstein Foundation Inc. 9,945 -- Wilbur L. Ross, Jr. = 585,619 shares of Holder Common Common Issuable on Preferred Conversion Wilbur L. Ross, Jr. 428,399 157,220(1) The Davis Group = 4,751,773 shares Name of Holder Common Common Issuable on Preferred Conversion D.H. Blair Investment Banking Corp. 2,697,405(2)(3) 23,190(1) Rivkalex Corporation 41,006 -- Rosalind Davidowitz (wife) 1,990,172(2) -- The Weiss Group = 1,674,038 shares Name of Holder Common Common Issuable on Preferred Conversion Melvin I. Weiss 1,138,124 78,610(1) M&B Weiss Family Partnership 457,304 -- James Finkelstein = 768,000 shares Name of Holder Common Common Issuable on Preferred Conversion James Finkelstein 768,000(4) -- (1) Based upon a conversion price of $2.5442 per share. (2) Assumes an issuance of 1,350,000 to Davidowitz and D.H. Blair upon conversion of their convertible notes. (3) Includes 250,000 shares to be purchased by D.H. Blair as required by that certain Letter Agreement dated as of the date hereof by and among James Finkelstein, NCI and the other parties thereto (the "Finkelstein Agreement"). (4) Includes 750,000 shares to be purchased by James Finkelstein as required by the Finkelstein Agreement EX-99 4 exhibit3.txt Exhibit 3 - 15 - Newy1:784237:5:5/7/01 28507-20 SUBSCRIPTION AGREEMENT NEWS COMMUNICATIONS, INC. COMMON STOCK News Communications, Inc. 2 Park Avenue, Suite 1405 New York, NY 10016 Attn: Chairman 1. Application. (a) The undersigned (the "Purchaser"), intending to be legally bound, hereby agrees to purchase an aggregate of 250,000 shares (the "Shares") of the common stock (the "Common Stock") of News Communications, Inc. (the "Company"), at a purchase price of $1.00 per Share. Payment of the purchase price for the Shares shall be made by wire transfer of immediately available funds concurrently with the purchase of 750,000 shares of the Company's Common Stock by James Finkelstein ("Finkelstein") pursuant to a Subscription Agreement between Finkelstein and the Company (the "Finkelstein Agreement"). (b) In order to induce Finkelstein to enter into the Finkelstein Agreement and certain other agreements executed in connection with the Finkelstein Agreement, the Purchaser agrees to surrender the Shares to the Company immediately upon receipt thereof, it being acknowledged and agreed that the Shares are being surrendered in consideration of the covenants set forth in the Finkelstein Agreement which provide for the 250,000 additional shares of Common Stock being issued to Finkelstein pursuant to Section 1(b) of the Finkelstein Agreement (or securities issued in respect thereof) be delivered to the Purchaser upon the occurrence of the events described therein. (c) The Shares shall bear the following legends: THE SECURITIES offered hereby HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES ACT OF ANY STATE. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN AGREEMENT TO SURRENDER ALL OF SUCH SHARES ON THE 2ND ANNIVERSARY OF THE ISSUANCE THEREOF UPON THE OCCURRENCE OF CERTAIN EVENTS. ANY TRANSFEREE OF SUCH SHARES SHALL BE SUBJECT TO THE OBLIGATION TO SURRENDER THE SECURITIES REPRESENTED HEREBY UPON THE OCCURRENCE OF SUCH EVENTS. 2. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as follows: (a) The Purchaser, in making the decision to enter into this Agreement and to commit to purchase the Shares, has relied upon independent investigations made by him and his representatives, if any. No oral representations have been made or oral information furnished to the Purchaser in connection with the commitment to purchase of the Shares; and the Purchaser and/or his advisors have had a reasonable opportunity to ask questions of and receive answers from the Company concerning the Shares. (b) The Purchaser has been or will be supplied with or has and will have sufficient access to all information, including financial statements and other financial information of the Company, and has been afforded with an opportunity to ask questions of and receive answers concerning information to which a reasonable investor would attach significance in making investment decisions, so that as a reasonable investor the Purchaser has been able to make the Purchaser's decision to commit to purchase the Shares. (c) The Purchaser is able and will be able to bear the substantial economic risks of an investment in the Shares for an indefinite period of time, has no need for liquidity in such investment, has made and will have made commitments to investments that are not readily marketable which are reasonable in relation to the Purchaser's net worth and, at the present time, could afford a complete loss of such investment. (d) The Purchaser has such knowledge and experience in financial, tax and business matters so as to enable him to utilize the information made available to him in connection with the commitment to purchase and the purchase of the Shares to evaluate the merits and risks of an investment in the Shares and to make an informed investment decision with respect thereto. (e) The Purchaser acknowledges that the purchase of the Shares involves a high degree of risk and further acknowledges that he can bear the economic risk of the purchase of the Shares, including the total loss of his investment. The Purchaser is not relying on the Company with respect to the tax and other economic considerations of an investment in the Shares, and the Purchaser has relied on the advice of, or has consulted with, only his own advisor(s). (g) The Purchaser has and will have full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company and is authorized and otherwise duly qualified to purchase and hold the Shares and to enter into this Subscription Agreement. (h) The Purchaser will be purchasing the Shares for his own account, for investment and not with a view to resale or distribution except in compliance with the Securities Act. (i) The Purchaser understands that the Shares are being offered and sold in reliance on an exemption from the registration requirements of federal and state securities laws under Section 4(2) of the Securities Act and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Shares. The representations, warranties and agreements contained herein are true and correct as of the date hereof and may be relied upon by the Company, and the Purchaser will notify the Company immediately of any adverse change in any such representations and warranties which may occur prior to the acceptance of the subscription and will promptly send the Company written confirmation thereof. The representations, warranties and agreements of the Purchaser contained herein shall survive the execution and delivery of this Subscription Agreement and the purchase of the Shares. (j) The Purchaser further represents and warrants that he is an "accredited investor" within the meaning of Regulation D under the Securities Act. 3. Representations and Warranties of the Company. The Company represents and warrants to the Purchaser as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and is duly qualified to do business and in good standing in the State of New York. The Company has all requisite power and authority and has all necessary approvals, licenses, permits and authorization to own its properties and to carry on its business as now conducted. The Company has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder. (b) The Company's authorized capital stock consists of: (i) 100,000,000 shares of Common Stock, of which 8,470,536 are issued and outstanding and 158,333 shares are held in treasury; (ii) 500,000 shares of Preferred Stock, of which: (A) 14 shares designated 8% Convertible Preferred Stock are issued and outstanding, which shares are convertible into 2,222 shares of Common Stock and 2,222 warrants to purchase Common Stock at an exercise price of $6.00 per share; (B) 21 shares designated 10% Convertible Preferred Stock are issued and outstanding, which shares are convertible into 12,600 shares of Common Stock; and (C) 197,500 shares designated $10 Convertible Preferred Stock are issued and outstanding, which shares are convertible into 825,432 shares of Common Stock after giving effect to the issuance of the Shares, the issuance of the Warrants to James Finkelstein to purchase 3,000,000 shares, the purchase of 250,000 shares by D.H. Blair Investment Banking Corp. and the issuance of 1,150,000 shares issued upon conversion of an aggregate of $1,150,000 principal amount of notes on the date hereof. (c) The Company currently has four Stock Option Plans. 200,000 shares of the Company's Common Stock have been reserved for issuance upon exercise of options granted under the Company's 1999 Stock Option Plan, 122,222 shares of the Company's Common Stock have been reserved for issuance upon exercise of options granted under the Company's 1987 Stock Option Plan, 500,000 shares of the Company's Common Stock have been reserved for issuance upon exercise of options granted under the Company's Discretionary Directors and Officers Stock Option Plan and 166,667 shares of the Company's Common Stock have been reserved for issuance upon exercise of options granted under the Company's Non-discretionary Directors Stock Option Plan. As of the date hereof, options to purchase a total of 1,010,661 shares of the Company's Common Stock have been granted. (d) 266,667 shares of the Company's Common Stock have been reserved for issuance upon the exercise of the Warrants issued to the holders of the $10.00 Convertible Preferred Stock, 32,223 shares of the Company's Common Stock have been reserved for issuance upon the exercise of the Warrants issued to the holders of the 8% Convertible Preferred Stock, 200,000 shares of the Company's Common Stock have been reserved for issuance upon the exercise of the Warrants issued to D.H. Blair Investment Banking Corp. and 100,000 shares of the Company's Common Stock have been reserved for issuance upon the exercise of the Warrant issued to WLR Recovery Fund L.P. (e) 1,000,000 shares of the Company's Common Stock have been reserved for issuance upon the conversion of an 8% Convertible Note issued to Rosalind Davidowitz and 350,000 shares of the Company's Common Stock have been reserved for issuance upon the conversion of the 8% Convertible Notes issued to D.H. Blair Investment Banking Corp. An additional indeterminate number of shares have been reserved for issuance in satisfaction of the payment of accrued interest on the Company's 8% Convertible Notes. (f) Up to 1,000,000 shares of the Company's Common Stock have been reserved for issuance upon either (i) the conversion of the outstanding principal amount under a Revolving Note issued to D.H. Blair Investment Banking Corp. or (ii) if not converted by the maturity date, the issuance of warrants to purchase the Company's Common Stock in an amount equal to the maximum advances thereunder at any one time. An additional indeterminate number of shares have been reserved for issuance in satisfaction of the payment of accrued interest on the Revolving Note. (g) All the outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and non-assessable. Upon issuance, sale and delivery as contemplated by this Agreement, the Shares will be duly authorized, validly issued, fully paid and non-assessable shares. (h) The shares of the Company's Common Stock issuable upon exercise of the Options, Warrants and Convertible Notes have been duly authorized and reserved for issuance by all necessary corporate action on the part of the Company. The shares of Common Stock issuable upon exercise of the Warrants, have been duly and/or validly reserved for issuance and, when issued and paid for in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable. (i) Except as provided above and in Schedule A attached hereto, no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire any shares of capital stock of the Company is authorized or outstanding, (ii) the Company has no obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right or to issue or distribute to holders of any shares of its capital stock any evidences of indebtedness or assets of the Company, and (iii) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. (j) The Company has authorized the execution, delivery, and performance of this Agreement and each of the transactions and agreements contemplated hereby. No other corporate action (including stockholder approval) is necessary to authorize such execution, delivery and performance of this Agreement, and upon such execution and delivery this Agreement shall constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and general principles of equity. The Company has authorized the issuance and delivery of the Shares in accordance with this Agreement. 4. Registration Rights. (a) Agreement to Register. At any time from the date of purchase of the Shares until the fifth anniversary of the date hereof, at the request of the Purchaser (the "Registration Request"), the Company shall prepare and use its best efforts to file with the Securities and Exchange Commission (the "SEC") within 60 days of the Registration Request a registration statement covering the resale of the Shares (each, a "Registration Statement"), shall use its best efforts to cause such Registration Statement to become effective as soon as possible thereafter and to do all other things necessary to cause such Registration Statement to be declared effective by the SEC (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky and other state securities laws in such jurisdictions as the Purchaser may reasonably request, and appropriate compliance with applicable regulations issued under the Securities Act) and as would permit or facilitate the sale and distribution of all or such portion of such Shares. The Purchaser shall have the right to make such Registration Request on one occasion. (b) If the Purchaser desires to distribute the Shares by means of an underwriting, he shall make a Registration Request and so advise the Company and shall select an underwriter reasonably acceptable to the Company. At such time, the Company and the Purchaser shall enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company. The Company shall not be required to effect more than two underwritten offerings of Shares. The Company shall pay all expenses, other than underwriters' discounts and commissions and fees and disbursements of experts and counsel retained by the Purchaser, relating to an underwriting of the Shares covered by the first request, and the Purchaser shall pay all reasonable registration expenses arising from the second such underwriting. (c) If, at any time during the five-year period following the date hereof, the Company proposes to file with the SEC a Registration Statement with respect to any class of securities (other than pursuant to a registration statement on Forms S-4 or S-8 or any successor form) under the Securities Act, the Company shall notify the Purchaser at least twenty (20) days prior to the filing of the Registration Statement and will offer to include all or any portion of the Shares in the Registration Statement. At the written request of the Purchaser, delivered to the Company within ten (10) days after the date of the Company's notice, the Purchaser shall state the number of Shares that he wishes to sell under the proposed Registration Statement. (d) If the Registration Statement is filed with respect to an underwritten offering, the Company and the Purchaser shall enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company. The Company shall pay all expenses, other than underwriters' discounts and commissions and fees and disbursements of experts and counsel retained by the Purchaser, relating to an underwriting of the Shares. (e) The Purchaser, if reasonably requested by the Company or by the underwriter with respect to any public offering, shall agree not to sell, make any short sale of, loan, grant any options for the purchase of, or otherwise dispose of any of the Shares (other than those included in the Registration Statement) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days), from the effective date of such Registration Statement, or the commencement of the offering, as applicable, as may be requested by the underwriters, provided that all other holders of the class of securities being registered pursuant to the Registration Statement shall make the same agreements as those made by the Purchaser under this Section 4(e). (f) The Purchaser shall promptly provide the Company with such non-confidential and non-proprietary information as it shall reasonably request and that is available to the Purchaser in order to prepare the Registration Statement. (g) All reasonable and necessary expenses in connection with the preparation of the Registration Statement, including, without limitation, any and all legal, accounting and filing fees, but not including fees and disbursements of experts and counsel retained by the Purchaser or underwriting discounts and commissions to be paid by the Purchaser, shall be borne by the Company. (h) The Company shall use its best efforts to cause the Registration Statement to become effective, permitting the sale of the Shares in accordance with the intended method or methods of distribution thereof, and pursuant thereto, the Company shall as expeditiously as possible: (i) prepare and file with the SEC a Registration Statement relating on any appropriate form under the Securities Act, which form shall be available for the sale of the Shares in accordance with the intended method or methods of distribution thereof and use its best efforts to cause such Registration Statement to become effective and keep such Registration Statement effective in accordance with Section 4(h)(ii) below; (ii) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration effective until all such Shares are sold; cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof as set forth in such Registration Statement or supplement to the prospectus; provided, however, that the Company may, from time to time, request that the Purchaser immediately discontinue the disposition of the Shares if the Company determines, in the good faith exercise of its reasonable business judgment, that the offering and disposition of the Shares could materially interfere with bona fide financing, acquisition or other material business plans of the Company or would require disclosure of non-public information, the premature disclosure of which could materially and adversely affect the Company (it being acknowledged that the Company is not required to disclose in such request any such transaction, plan or non-public information), so long as the Company promptly after the disclosure of such transaction, plan or non-public information complies with this Section 4(h)(ii); (iii) notify the Purchaser and the underwriter, if any, promptly, and (if requested by any such person) confirm such advice in writing, (A) when the prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the SEC for amendments or supplements to the Registration Statement or the prospectus or for additional information, (C) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation of any proceedings for such purpose and (E) subject to the proviso below, of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, subject to Section 4(g)(ii) above, at the request of any such person, prepare and furnish to such person a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the Purchaser of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; provided, however, the Company need not disclose the event if it otherwise has not disclosed such event to the public; (iv) if requested by the underwriter or the Purchaser, promptly incorporate in a prospectus supplement or post-effective amendment such information as the underwriter and the Purchaser agree should be included therein relating to the plan of distribution with respect to such Shares, including, without limitation, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the Shares to be sold in such offering; and make all required filings of such prospectus supplements or post-effective amendments as soon as notified of the matters to be incorporated in such prospectus supplements or post-effective amendments; (v) deliver to the Purchaser and the underwriters, if any, without charge, as many copies of the prospectus (including each preliminary prospectus) in conformity with the requirement of the Securities Act and any amendments or supplements thereto as such persons may reasonably request and such other documents as they may reasonably request to facilitate the prior sale or other disposition of the Shares; (vi) prior to any public offering of Shares, register or qualify or cooperate with the Purchaser, or the underwriters, if any, in connection with the registration or qualification of such Shares for offer and sale under the securities or blue sky laws of such jurisdictions as the Purchaser or underwriters, if any, reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Shares covered by the Registration Statement; provided, however, that the Company shall not be required to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or would subject the Company to any tax in any such jurisdiction where it is not then so subject; and (vii) with a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of Shares to the public without registration, during such time as a public market exists for its equity securities, the Company agrees to: (A) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its equity securities to the general public; (B) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act") (at any time after it has become subject to such reporting requirements); and (C) furnish to the Purchaser forthwith upon request a written statement by the Company as to the Company's compliance with the reporting requirements of said Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company and such other reports and documents of the Company as the Purchaser may reasonably request in availing itself of any rule or regulation of the SEC allowing a holder to sell any such securities without registration. (i) Notwithstanding the provisions of this Section 4 to the contrary, the Company: (i) may require the Purchaser to furnish to the Company such information regarding the distribution of such securities as the Company may from time to time reasonably request in writing, and the Company may limit such registration rights to situations where a proposed distribution of Shares is to be effected forthwith upon the effectiveness of the Registration Statement; and (ii) may require the Purchaser to covenant that he has not taken, and will not take, directly or indirectly, any action designed, or which might reasonably be expected, to cause or result in, under the Exchange Act or otherwise, or which has caused or resulted in, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. (j) The Purchaser agrees by acquisition of such Shares that, upon receipt of the request referred to in the proviso of Section 4(h)(ii) or of any notice from the Company of the happening of any event of the kind described in Section 4(h)(iii) hereof (other than as provided in Section 4(h)(iii)(A) hereof), the Purchaser shall forthwith discontinue disposition of Shares until he is advised in writing by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental documents or filings that are incorporated by reference in the prospectus, and, if so directed by the Company, the Purchaser shall deliver to the Company (at the Company's expense) all copies other than permanent file copies then in the Purchaser's possession, of the prospectus covering such Shares current prior to the time of receipt of such notice. 5. Indemnification. (a) The Company agrees to indemnify and hold harmless the Purchaser against any losses, claims, damages, liabilities or expenses, joint or several, to which the Purchaser may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulations, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them not misleading, (ii) in whole or in part, any inaccuracy in the representations and warranties of the Company contained herein, or (iii) any failure of the Company to perform its obligations hereunder or under law; and will reimburse the Purchaser for any legal and other expenses as such expenses are reasonably incurred by the Purchaser in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto in reliance upon and in conformity with information furnished to the Company by each of the Purchaser expressly for the inclusion in any Registration Statement or any preliminary prospectus. This indemnity agreement will be in addition to any liability that the Company may otherwise have. The Company will not, without the prior written consent of the Purchaser, settle or compromise or consent to the entry of any judgment in any pending or threatened action or claim or related cause of action or portion of such cause of action in respect of which indemnification may be sought hereunder (whether or not the Purchaser is a party to such action or claim), unless such settlement, compromise or consent includes an unconditional release of the Purchaser from all liability arising out of such action or claim (or related cause of action or portion thereof). (b) The Purchaser agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who sign any Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, or any such director, officer, or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Purchaser), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any untrue or alleged untrue statement of any material fact contained any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished to the Company by the Purchaser expressly for the use in any Registration Statement or any preliminary prospectus; and will reimburse the Company, or any such director, officer, or controlling person for any legal and other expense reasonably incurred by the Company, or any such director, officer, or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. As to the Purchaser, in no event shall any indemnity under this subsection (b) exceed the net proceeds from sale of the number of Shares sold by the Purchaser. This indemnity agreement will be in addition to any liability which the Purchaser may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 5, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 5 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Purchaser in the case of paragraph (a), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party. (d) If the indemnification provided for in this Section 5 is required but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under subsections (a), (b) or (c) in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company and the Purchaser from any other persons, such as persons who control the Company within the meaning of the Act, officers of the Company who signed the Registration Statement and directors of the Company who also may be liable for contribution) (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the offering of the Shares or any public offering of the Shares, as the case may be or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Purchaser, on the other, shall be deemed to be in the same proportion as the total net proceeds from the sale of the Shares (before deducting expenses) received by the Company bear to the total compensation received by the Purchaser hereunder. The relative fault of the Company and the Purchaser shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied by the Company or the Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in subsection (c) of this Section 5, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in subsection (c) of this Section 5 with respect to notice of commencement of any actions shall apply if a claim for contribution is to be made under this subsection (d); provided, however, that no additional notice shall be required with respect to any action for which notice has been given under subsection (c) for purposes of indemnification. The Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined solely by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 5. Notwithstanding the provisions of this Section 5, the Purchaser shall not be required to contribute any amount in excess of the amount of compensation received by each of them. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 6. Miscellaneous. (a) This Agreement shall survive the death or disability of the Purchaser and shall be binding upon the Purchaser's heirs, executors, administrators, successors and permitted assigns. (b) This Agreement and the documents referred to herein constitute the entire agreement between the parties hereto with respect to the subject matter hereof and together supersede all prior discussions or agreements in respect thereof. (c) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute a single document. (d) This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Any dispute arising out of or in connection with this Agreement shall be settled by arbitration in accordance with the rules of the American Arbitration Association then in effect. The location of any hearing shall be New York, New York. IN WITNESS WHEREOF, the Purchaser has executed this Agreement this 8th day of May, 2001. D.H. BLAIR INVESTMENT BANKING CORP. By: ------------------------------------------------ Name: Title: ACCEPTED AND AGREED TO: NEWS COMMUNICATIONS, INC. By: ___________________________ Name: Title Schedule A 1. Pursuant to that certain Letter Agreement dated December 11, 2000 by and between the Company and Steven A. Farbman, the Company has agreed to purchase from Mr. Farbman 150,000 shares of the Company's common stock for an aggregate purchase price of $300,000. 2. The Company has an obligation to pay to each holder of its 10% Convertible Preferred Stock on September 19th of each year dividends in the amount of $500 per share. The Company has the option to pay such dividends in cash or in shares of the Company's common stock. 3. The Company made a verbal commitment to grant to its Controller Options to purchase 10,000 shares of its common stock. EX-99 5 exhibit4.txt EXHIBIT 4 12 Newy1:784879:2:5/8/01 SUBSCRIPTION AGREEMENT NEWS COMMUNICATIONS, INC. COMMON STOCK News Communications, Inc. 2 Park Avenue, Suite 1405 New York, NY 10016 Attn: Chairman 1. Application. The undersigned (the "Purchaser"), intending to be legally bound, hereby agrees to purchase ----------- an aggregate number of shares (the "Shares") of the common stock of News Communications, Inc. (the "Company"), at a purchase price of $1.00 per Share, determined by dividing (i) the unpaid principal balance of the Company's $150,000 indebtedness to D.H. Blair Investment Banking Corp. and all accrued and unpaid interest thereon (the "Note") by (ii) $1.00. The undersigned shall pay the purchase price for the Shares by tendering the Note to the Company which the Company shall mark cancelled. THE SECURITIES offered hereby HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES ACT OF ANY STATE. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. 2. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as follows: (a) The Purchaser, in making the decision to enter into this Agreement and to commit to purchase the Shares, has relied upon independent investigations made by her and her representatives, if any. No oral representations have been made or oral information furnished to the Purchaser in connection with the commitment to purchase of the Shares; and the Purchaser and/or her advisors have had a reasonable opportunity to ask questions of and receive answers from the Company concerning the Shares. (b) The Purchaser has been or will be supplied with or has and will have sufficient access to all information, including financial statements and other financial information of the Company, and has been afforded with an opportunity to ask questions of and receive answers concerning information to which a reasonable investor would attach significance in making investment decisions, so that as a reasonable investor the undersigned has been able to make the undersigned's decision to commit to purchase the Shares. (c) The Purchaser is able and will be able to bear the substantial economic risks of an investment in the Shares for an indefinite period of time, has no need for liquidity in such investment, has made and will have made commitments to investments that are not readily marketable which are reasonable in relation to the undersigned's net worth and, at the present time, could afford a complete loss of such investment. (d) The Purchaser has such knowledge and experience in financial, tax and business matters so as to enable her to utilize the information made available to her in connection with the commitment to purchase and the purchase of the Shares to evaluate the merits and risks of an investment in the Shares and to make an informed investment decision with respect thereto. (e) The Purchaser acknowledges that the purchase of the Shares involves a high degree of risk and further acknowledges that she can bear the economic risk of the purchase of the Shares, including the total loss of her investment. The Purchaser is not relying on the Company with respect to the tax and other economic considerations of an investment in the Shares, and the Purchaser has relied on the advice of, or has consulted with, only her own advisor(s). (g) The Purchaser has and will have full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company and is authorized and otherwise duly qualified to purchase and hold the Shares and to enter into this Subscription Agreement. (h) The Purchaser will be purchasing the Shares for her own account, for investment and not with a view to resale or distribution except in compliance with the Securities Act. (i) The Purchaser understands that the Shares are being offered and sold in reliance on an exemption from the registration requirements of federal and state securities laws under Section 4(2) of the Securities Act and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Shares. The representations, warranties and agreements contained herein are true and correct as of the date hereof and may be relied upon by the Company, and the undersigned will notify the Company immediately of any adverse change in any such representations and warranties which may occur prior to the acceptance of the subscription and will promptly send the Company written confirmation thereof. The representations, warranties and agreements of the Purchaser contained herein shall survive the execution and delivery of this Subscription Agreement and the purchase of the Shares. (j) Neither the Purchaser nor any of her affiliates or agents will, directly or indirectly, maintain any short position in the Shares or any other securities of the Company for so long as any of the Shares are owned by the undersigned. 3. Accredited Investor Status. The Purchaser further represents and warrants that she is an "accredited investor" within the meaning of Regulation D under the Securities Act. 4. Registration Rights. (a) Agreement to Register. At any time from the date of purchase of the Shares until the fifth anniversary of the date hereof, at the request of the Purchaser (the "Registration Request"), the Company shall prepare and use its best efforts to file with the Securities and Exchange Commission (the "SEC") within 60 days of the Registration Request a registration statement covering the resale of the Shares (each, a "Registration Statement"), shall use its best efforts to cause such Registration Statement to become effective as soon as possible thereafter and to do all other things necessary to cause such Registration Statement to be declared effective by the SEC (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky and other state securities laws in such jurisdictions as the Purchaser may reasonably request, and appropriate compliance with applicable regulations issued under the Securities Act) and as would permit or facilitate the sale and distribution of all or such portion of such Shares. The Purchaser shall have the right to make such Registration Request on one occasion. (b) If the Purchaser desires to distribute the Shares by means of an underwriting, she shall make a Registration Request and so advise the Company and shall select an underwriter reasonably acceptable to the Company. At such time, the Company and the Purchaser shall enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company. The Company shall not be required to effect more than two underwritten offerings of Shares. The Company shall pay all expenses, other than underwriters' discounts and commissions and fees and disbursements of experts and counsel retained by the undersigned, relating to an underwriting of the Shares covered by the first request, and the Purchaser shall pay all reasonable registration expenses arising from the second such underwriting. (c) If, at any time during the five-year period following the date hereof, the Company proposes to file with the SEC a Registration Statement with respect to any class of securities (other than pursuant to a registration statement on Forms S-4 or S-8 or any successor form) under the Securities Act, the Company shall notify the Purchaser at least twenty (20) days prior to the filing of the Registration Statement and will offer to include all or any portion of the Shares in the Registration Statement. At the written request of the Purchaser, delivered to the Company within ten (10) days after the date of the Company's notice, the Purchaser shall state the number of Shares that she wishes to sell under the proposed Registration Statement. (d) If the Registration Statement is filed with respect to an underwritten offering, the Company and the Purchaser shall enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company. The Company shall pay all expenses, other than underwriters' discounts and commissions and fees and disbursements of experts and counsel retained by the Purchaser, relating to an underwriting of the Shares. (e) The Purchaser, if reasonably requested by the Company or by the underwriter with respect to any public offering, shall agree not to sell, make any short sale of, loan, grant any options for the purchase of, or otherwise dispose of any of the Shares (other than those included in the Registration Statement) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days), from the effective date of such Registration Statement, or the commencement of the offering, as applicable, as may be requested by the underwriters, provided that all other holders of the class of securities being registered pursuant to the Registration Statement shall make the same agreements as those made by the Purchaser under this Section 4(e). (f) The Purchaser shall promptly provide the Company with such non-confidential and non-proprietary information as it shall reasonably request and that is available to the Purchaser in order to prepare the Registration Statement. (g) All reasonable and necessary expenses in connection with the preparation of the Registration Statement, including, without limitation, any and all legal, accounting and filing fees, but not including fees and disbursements of experts and counsel retained by the Purchaser or underwriting discounts and commissions to be paid by the Purchaser, shall be borne by the Company. (h) The Company shall use its best efforts to cause the Registration Statement to become effective, permitting the sale of the Shares in accordance with the intended method or methods of distribution thereof, and pursuant thereto, the Company shall as expeditiously as possible: (i) prepare and file with the SEC a Registration Statement relating on any appropriate form under the Securities Act, which form shall be available for the sale of the Shares in accordance with the intended method or methods of distribution thereof and use its best efforts to cause such Registration Statement to become effective and keep such Registration Statement effective in accordance with Section 4(h)(ii) below; (ii) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration effective until all such Shares are sold; cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof as set forth in such Registration Statement or supplement to the prospectus; provided, however, that the Company may, from time to time, request that the Purchaser immediately discontinue the disposition of the Shares if the Company determines, in the good faith exercise of its reasonable business judgment, that the offering and disposition of the Shares could materially interfere with bona fide financing, acquisition or other material business plans of the Company or would require disclosure of non-public information, the premature disclosure of which could materially and adversely affect the Company (it being acknowledged that the Company is not required to disclose in such request any such transaction, plan or non-public information), so long as the Company promptly after the disclosure of such transaction, plan or non-public information complies with this Section 4(h)(ii); (iii) notify the Purchaser and the underwriter, if any, promptly, and (if requested by any such person) confirm such advice in writing, (A) when the prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the SEC for amendments or supplements to the Registration Statement or the prospectus or for additional information, (C) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation of any proceedings for such purpose and (E) subject to the proviso below, of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, subject to Section 4(g)(ii) above, at the request of any such person, prepare and furnish to such person a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the Purchaser of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; provided, however, the Company need not disclose the event if it otherwise has not disclosed such event to the public; (iv) if requested by the underwriter or the Purchaser, promptly incorporate in a prospectus supplement or post-effective amendment such information as the underwriter and the Purchaser agree should be included therein relating to the plan of distribution with respect to such Shares, including, without limitation, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the Shares to be sold in such offering; and make all required filings of such prospectus supplements or post-effective amendments as soon as notified of the matters to be incorporated in such prospectus supplements or post-effective amendments; (v) deliver to the Purchaser and the underwriters, if any, without charge, as many copies of the prospectus (including each preliminary prospectus) in conformity with the requirement of the Securities Act and any amendments or supplements thereto as such persons may reasonably request and such other documents as they may reasonably request to facilitate the prior sale or other disposition of the Shares; (vi) prior to any public offering of Shares, register or qualify or cooperate with the Purchaser, or the underwriters, if any, in connection with the registration or qualification of such Shares for offer and sale under the securities or blue sky laws of such jurisdictions as the Purchaser or underwriters, if any, reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Shares covered by the Registration Statement; provided, however, that the Company shall not be required to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or would subject the Company to any tax in any such jurisdiction where it is not then so subject; and (vii) with a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of Shares to the public without registration, during such time as a public market exists for its equity securities, the Company agrees to: (A) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its equity securities to the general public; (B) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act") (at any time after it has become subject to such reporting requirements); and (C) furnish to the Purchaser forthwith upon request a written statement by the Company as to the Company's compliance with the reporting requirements of said Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company and such other reports and documents of the Company as the Purchaser may reasonably request in availing itself of any rule or regulation of the SEC allowing a holder to sell any such securities without registration. (i) Notwithstanding the provisions of this Section 4 to the contrary, the Company: (i) may require the Purchaser to furnish to the Company such information regarding the distribution of such securities as the Company may from time to time reasonably request in writing, and the Company may limit such registration rights to situations where a proposed distribution of Shares is to be effected forthwith upon the effectiveness of the Registration Statement; and (ii) may require the Purchaser to covenant that she has not taken, and will not take, directly or indirectly, any action designed, or which might reasonably be expected, to cause or result in, under the Exchange Act or otherwise, or which has caused or resulted in, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. (j) The Purchaser agrees by acquisition of such Shares that, upon receipt of the request referred to in the proviso of Section 4(h)(ii) or of any notice from the Company of the happening of any event of the kind described in Section 4(h)(iii) hereof (other than as provided in Section 4(h)(iii)(A) hereof), the Purchaser shall forthwith discontinue disposition of Shares until she is advised in writing by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental documents or filings that are incorporated by reference in the prospectus, and, if so directed by the Company, the Purchaser shall deliver to the Company (at the Company's expense) all copies other than permanent file copies then in the Purchaser's possession, of the prospectus covering such Shares current prior to the time of receipt of such notice. 5. Indemnification. (a) The Company agrees to indemnify and hold harmless the Purchaser against any losses, claims, damages, liabilities or expenses, joint or several, to which the Purchaser may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulations, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them not misleading, (ii) in whole or in part, any inaccuracy in the representations and warranties of the Company contained herein, or (iii) any failure of the Company to perform its obligations hereunder or under law; and will reimburse the Purchaser for any legal and other expenses as such expenses are reasonably incurred by the Purchaser in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto in reliance upon and in conformity with information furnished to the Company by each of the Purchaser expressly for the inclusion in any Registration Statement or any preliminary prospectus. This indemnity agreement will be in addition to any liability that the Company may otherwise have. The Company will not, without the prior written consent of the Purchaser, settle or compromise or consent to the entry of any judgment in any pending or threatened action or claim or related cause of action or portion of such cause of action in respect of which indemnification may be sought hereunder (whether or not the Purchaser is a party to such action or claim), unless such settlement, compromise or consent includes an unconditional release of the Purchaser from all liability arising out of such action or claim (or related cause of action or portion thereof). (b) The Purchaser agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who sign any Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, or any such director, officer, or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Purchaser), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any untrue or alleged untrue statement of any material fact contained any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished to the Company by the Purchaser expressly for the use in any Registration Statement or any preliminary prospectus; and will reimburse the Company, or any such director, officer, or controlling person for any legal and other expense reasonably incurred by the Company, or any such director, officer, or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. As to the Purchaser, in no event shall any indemnity under this subsection (b) exceed the net proceeds from sale of the number of Shares sold by the Purchaser. This indemnity agreement will be in addition to any liability which the Purchaser may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 5, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 5 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Purchaser in the case of paragraph (a), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party. (d) If the indemnification provided for in this Section 5 is required but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under subsections (a), (b) or (c) in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company and the Purchaser from any other persons, such as persons who control the Company within the meaning of the Act, officers of the Company who signed the Registration Statement and directors of the Company who also may be liable for contribution) (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the offering of the Shares or any public offering of the Shares, as the case may be or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Purchaser, on the other, shall be deemed to be in the same proportion as the total net proceeds from the sale of the Shares (before deducting expenses) received by the Company bear to the total compensation received by the Purchaser hereunder. The relative fault of the Company and the Purchaser shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied by the Company or the Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in subsection (c) of this Section 5, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in subsection (c) of this Section 5 with respect to notice of commencement of any actions shall apply if a claim for contribution is to be made under this subsection (d); provided, however, that no additional notice shall be required with respect to any action for which notice has been given under subsection (c) for purposes of indemnification. The Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined solely by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 5. Notwithstanding the provisions of this Section 5, the Purchaser shall not be required to contribute any amount in excess of the amount of compensation received by each of them. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 6. Miscellaneous. (a) This Agreement shall survive the death or disability of the undersigned and shall be binding upon the undersigned's heirs, executors, administrators, successors and permitted assigns. (b) This Agreement and the documents referred to herein constitute the entire agreement between the parties hereto with respect to the subject matter hereof and together supersede all prior discussions or agreements in respect thereof. (c) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute a single document. (d) This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Any dispute arising out of or in connection with this Agreement shall be settled by arbitration in accordance with the rules of the American Arbitration Association then in effect. The location of any hearing shall be New York, New York. IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the 8th day of May, 2001. D.H. BLAIR INVESTMENT BANKING CORP. By: --------------------------------------------------------- Name: Title: EX-99 6 exhibit5.txt EXHIBIT 5 12 Newy1:768237:4:5/8/01 SUBSCRIPTION AGREEMENT NEWS COMMUNICATIONS, INC. COMMON STOCK News Communications, Inc. 2 Park Avenue, Suite 1405 New York, NY 10016 Attn: Chairman 1. Application. The undersigned (the "Purchaser"), intending to be legally bound, hereby agrees to purchase an aggregate number of shares (the "Shares") of the common stock of News Communications, Inc. (the "Company"), at a purchase price of $1.00 per Share, determined by dividing (i) the unpaid principal balance of the Company's $1,000,000 indebtedness to Rosalind Davidowitz and all accrued and unpaid interest thereon (the "Note") by (ii) $1.00. The undersigned shall pay the purchase price for the Shares by tendering the Note to the Company which the Company shall mark cancelled. THE SECURITIES offered hereby HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES ACT OF ANY STATE. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. 2. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as follows: (a) The Purchaser, in making the decision to enter into this Agreement and to commit to purchase the Shares, has relied upon independent investigations made by her and her representatives, if any. No oral representations have been made or oral information furnished to the Purchaser in connection with the commitment to purchase of the Shares; and the Purchaser and/or her advisors have had a reasonable opportunity to ask questions of and receive answers from the Company concerning the Shares. (b) The Purchaser has been or will be supplied with or has and will have sufficient access to all information, including financial statements and other financial information of the Company, and has been afforded with an opportunity to ask questions of and receive answers concerning information to which a reasonable investor would attach significance in making investment decisions, so that as a reasonable investor the undersigned has been able to make the undersigned's decision to commit to purchase the Shares. (c) The Purchaser is able and will be able to bear the substantial economic risks of an investment in the Shares for an indefinite period of time, has no need for liquidity in such investment, has made and will have made commitments to investments that are not readily marketable which are reasonable in relation to the undersigned's net worth and, at the present time, could afford a complete loss of such investment. (d) The Purchaser has such knowledge and experience in financial, tax and business matters so as to enable her to utilize the information made available to her in connection with the commitment to purchase and the purchase of the Shares to evaluate the merits and risks of an investment in the Shares and to make an informed investment decision with respect thereto. (e) The Purchaser acknowledges that the purchase of the Shares involves a high degree of risk and further acknowledges that she can bear the economic risk of the purchase of the Shares, including the total loss of her investment. The Purchaser is not relying on the Company with respect to the tax and other economic considerations of an investment in the Shares, and the Purchaser has relied on the advice of, or has consulted with, only her own advisor(s). (g) The Purchaser has and will have full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company and is authorized and otherwise duly qualified to purchase and hold the Shares and to enter into this Subscription Agreement. (h) The Purchaser will be purchasing the Shares for her own account, for investment and not with a view to resale or distribution except in compliance with the Securities Act. (i) The Purchaser understands that the Shares are being offered and sold in reliance on an exemption from the registration requirements of federal and state securities laws under Section 4(2) of the Securities Act and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Shares. The representations, warranties and agreements contained herein are true and correct as of the date hereof and may be relied upon by the Company, and the undersigned will notify the Company immediately of any adverse change in any such representations and warranties which may occur prior to the acceptance of the subscription and will promptly send the Company written confirmation thereof. The representations, warranties and agreements of the Purchaser contained herein shall survive the execution and delivery of this Subscription Agreement and the purchase of the Shares. (j) Neither the Purchaser nor any of her affiliates or agents will, directly or indirectly, maintain any short position in the Shares or any other securities of the Company for so long as any of the Shares are owned by the undersigned. 3. Accredited Investor Status. The Purchaser further represents and warrants that she is an "accredited investor" within the meaning of Regulation D under the Securities Act. 4. Registration Rights. (a) Agreement to Register. At any time from the date of purchase of the Shares until the fifth anniversary of the date hereof, at the request of the Purchaser (the "Registration Request"), the Company shall prepare and use its best efforts to file with the Securities and Exchange Commission (the "SEC") within 60 days of the Registration Request a registration statement covering the resale of the Shares (each, a "Registration Statement"), shall use its best efforts to cause such Registration Statement to become effective as soon as possible thereafter and to do all other things necessary to cause such Registration Statement to be declared effective by the SEC (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky and other state securities laws in such jurisdictions as the Purchaser may reasonably request, and appropriate compliance with applicable regulations issued under the Securities Act) and as would permit or facilitate the sale and distribution of all or such portion of such Shares. The Purchaser shall have the right to make such Registration Request on one occasion. (b) If the Purchaser desires to distribute the Shares by means of an underwriting, she shall make a Registration Request and so advise the Company and shall select an underwriter reasonably acceptable to the Company. At such time, the Company and the Purchaser shall enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company. The Company shall not be required to effect more than two underwritten offerings of Shares. The Company shall pay all expenses, other than underwriters' discounts and commissions and fees and disbursements of experts and counsel retained by the undersigned, relating to an underwriting of the Shares covered by the first request, and the Purchaser shall pay all reasonable registration expenses arising from the second such underwriting. (c) If, at any time during the five-year period following the date hereof, the Company proposes to file with the SEC a Registration Statement with respect to any class of securities (other than pursuant to a registration statement on Forms S-4 or S-8 or any successor form) under the Securities Act, the Company shall notify the Purchaser at least twenty (20) days prior to the filing of the Registration Statement and will offer to include all or any portion of the Shares in the Registration Statement. At the written request of the Purchaser, delivered to the Company within ten (10) days after the date of the Company's notice, the Purchaser shall state the number of Shares that she wishes to sell under the proposed Registration Statement. (d) If the Registration Statement is filed with respect to an underwritten offering, the Company and the Purchaser shall enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company. The Company shall pay all expenses, other than underwriters' discounts and commissions and fees and disbursements of experts and counsel retained by the Purchaser, relating to an underwriting of the Shares. (e) The Purchaser, if reasonably requested by the Company or by the underwriter with respect to any public offering, shall agree not to sell, make any short sale of, loan, grant any options for the purchase of, or otherwise dispose of any of the Shares (other than those included in the Registration Statement) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days), from the effective date of such Registration Statement, or the commencement of the offering, as applicable, as may be requested by the underwriters, provided that all other holders of the class of securities being registered pursuant to the Registration Statement shall make the same agreements as those made by the Purchaser under this Section 4(e). (f) The Purchaser shall promptly provide the Company with such non-confidential and non-proprietary information as it shall reasonably request and that is available to the Purchaser in order to prepare the Registration Statement. (g) All reasonable and necessary expenses in connection with the preparation of the Registration Statement, including, without limitation, any and all legal, accounting and filing fees, but not including fees and disbursements of experts and counsel retained by the Purchaser or underwriting discounts and commissions to be paid by the Purchaser, shall be borne by the Company. (h) The Company shall use its best efforts to cause the Registration Statement to become effective, permitting the sale of the Shares in accordance with the intended method or methods of distribution thereof, and pursuant thereto, the Company shall as expeditiously as possible: (i) prepare and file with the SEC a Registration Statement relating on any appropriate form under the Securities Act, which form shall be available for the sale of the Shares in accordance with the intended method or methods of distribution thereof and use its best efforts to cause such Registration Statement to become effective and keep such Registration Statement effective in accordance with Section 4(h)(ii) below; (ii) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration effective until all such Shares are sold; cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof as set forth in such Registration Statement or supplement to the prospectus; provided, however, that the Company may, from time to time, request that the Purchaser immediately discontinue the disposition of the Shares if the Company determines, in the good faith exercise of its reasonable business judgment, that the offering and disposition of the Shares could materially interfere with bona fide financing, acquisition or other material business plans of the Company or would require disclosure of non-public information, the premature disclosure of which could materially and adversely affect the Company (it being acknowledged that the Company is not required to disclose in such request any such transaction, plan or non-public information), so long as the Company promptly after the disclosure of such transaction, plan or non-public information complies with this Section 4(h)(ii); (iii) notify the Purchaser and the underwriter, if any, promptly, and (if requested by any such person) confirm such advice in writing, (A) when the prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the SEC for amendments or supplements to the Registration Statement or the prospectus or for additional information, (C) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation of any proceedings for such purpose and (E) subject to the proviso below, of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, subject to Section 4(g)(ii) above, at the request of any such person, prepare and furnish to such person a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the Purchaser of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; provided, however, the Company need not disclose the event if it otherwise has not disclosed such event to the public; (iv) if requested by the underwriter or the Purchaser, promptly incorporate in a prospectus supplement or post-effective amendment such information as the underwriter and the Purchaser agree should be included therein relating to the plan of distribution with respect to such Shares, including, without limitation, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the Shares to be sold in such offering; and make all required filings of such prospectus supplements or post-effective amendments as soon as notified of the matters to be incorporated in such prospectus supplements or post-effective amendments; (v) deliver to the Purchaser and the underwriters, if any, without charge, as many copies of the prospectus (including each preliminary prospectus) in conformity with the requirement of the Securities Act and any amendments or supplements thereto as such persons may reasonably request and such other documents as they may reasonably request to facilitate the prior sale or other disposition of the Shares; (vi) prior to any public offering of Shares, register or qualify or cooperate with the Purchaser, or the underwriters, if any, in connection with the registration or qualification of such Shares for offer and sale under the securities or blue sky laws of such jurisdictions as the Purchaser or underwriters, if any, reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Shares covered by the Registration Statement; provided, however, that the Company shall not be required to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or would subject the Company to any tax in any such jurisdiction where it is not then so subject; and (vii) with a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of Shares to the public without registration, during such time as a public market exists for its equity securities, the Company agrees to: (A) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its equity securities to the general public; (B) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act") (at any time after it has become subject to such reporting requirements); and (C) furnish to the Purchaser forthwith upon request a written statement by the Company as to the Company's compliance with the reporting requirements of said Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company and such other reports and documents of the Company as the Purchaser may reasonably request in availing itself of any rule or regulation of the SEC allowing a holder to sell any such securities without registration. (i) Notwithstanding the provisions of this Section 4 to the contrary, the Company: (i) may require the Purchaser to furnish to the Company such information regarding the distribution of such securities as the Company may from time to time reasonably request in writing, and the Company may limit such registration rights to situations where a proposed distribution of Shares is to be effected forthwith upon the effectiveness of the Registration Statement; and (ii) may require the Purchaser to covenant that she has not taken, and will not take, directly or indirectly, any action designed, or which might reasonably be expected, to cause or result in, under the Exchange Act or otherwise, or which has caused or resulted in, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. (j) The Purchaser agrees by acquisition of such Shares that, upon receipt of the request referred to in the proviso of Section 4(h)(ii) or of any notice from the Company of the happening of any event of the kind described in Section 4(h)(iii) hereof (other than as provided in Section 4(h)(iii)(A) hereof), the Purchaser shall forthwith discontinue disposition of Shares until she is advised in writing by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental documents or filings that are incorporated by reference in the prospectus, and, if so directed by the Company, the Purchaser shall deliver to the Company (at the Company's expense) all copies other than permanent file copies then in the Purchaser's possession, of the prospectus covering such Shares current prior to the time of receipt of such notice. 5. Indemnification. (a) The Company agrees to indemnify and hold harmless the Purchaser against any losses, claims, damages, liabilities or expenses, joint or several, to which the Purchaser may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulations, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them not misleading, (ii) in whole or in part, any inaccuracy in the representations and warranties of the Company contained herein, or (iii) any failure of the Company to perform its obligations hereunder or under law; and will reimburse the Purchaser for any legal and other expenses as such expenses are reasonably incurred by the Purchaser in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto in reliance upon and in conformity with information furnished to the Company by each of the Purchaser expressly for the inclusion in any Registration Statement or any preliminary prospectus. This indemnity agreement will be in addition to any liability that the Company may otherwise have. The Company will not, without the prior written consent of the Purchaser, settle or compromise or consent to the entry of any judgment in any pending or threatened action or claim or related cause of action or portion of such cause of action in respect of which indemnification may be sought hereunder (whether or not the Purchaser is a party to such action or claim), unless such settlement, compromise or consent includes an unconditional release of the Purchaser from all liability arising out of such action or claim (or related cause of action or portion thereof). (b) The Purchaser agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who sign any Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, or any such director, officer, or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Purchaser), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any untrue or alleged untrue statement of any material fact contained any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished to the Company by the Purchaser expressly for the use in any Registration Statement or any preliminary prospectus; and will reimburse the Company, or any such director, officer, or controlling person for any legal and other expense reasonably incurred by the Company, or any such director, officer, or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. As to the Purchaser, in no event shall any indemnity under this subsection (b) exceed the net proceeds from sale of the number of Shares sold by the Purchaser. This indemnity agreement will be in addition to any liability which the Purchaser may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 5, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 5 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Purchaser in the case of paragraph (a), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party. (d) If the indemnification provided for in this Section 5 is required but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under subsections (a), (b) or (c) in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company and the Purchaser from any other persons, such as persons who control the Company within the meaning of the Act, officers of the Company who signed the Registration Statement and directors of the Company who also may be liable for contribution) (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the offering of the Shares or any public offering of the Shares, as the case may be or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Purchaser, on the other, shall be deemed to be in the same proportion as the total net proceeds from the sale of the Shares (before deducting expenses) received by the Company bear to the total compensation received by the Purchaser hereunder. The relative fault of the Company and the Purchaser shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied by the Company or the Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in subsection (c) of this Section 5, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in subsection (c) of this Section 5 with respect to notice of commencement of any actions shall apply if a claim for contribution is to be made under this subsection (d); provided, however, that no additional notice shall be required with respect to any action for which notice has been given under subsection (c) for purposes of indemnification. The Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined solely by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 5. Notwithstanding the provisions of this Section 5, the Purchaser shall not be required to contribute any amount in excess of the amount of compensation received by each of them. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 6. Miscellaneous. (a) This Agreement shall survive the death or disability of the undersigned and shall be binding upon the undersigned's heirs, executors, administrators, successors and permitted assigns. (b) This Agreement and the documents referred to herein constitute the entire agreement between the parties hereto with respect to the subject matter hereof and together supersede all prior discussions or agreements in respect thereof. (c) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute a single document. (d) This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Any dispute arising out of or in connection with this Agreement shall be settled by arbitration in accordance with the rules of the American Arbitration Association then in effect. The location of any hearing shall be New York, New York. IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the 8th day of May, 2001. Rosalind Davidowitz EX-99 7 exhibit6.txt EXHIBIT 6 15 Newy1:768152:13:5/7/01 SUBSCRIPTION AGREEMENT NEWS COMMUNICATIONS, INC. COMMON STOCK News Communications, Inc. 2 Park Avenue, Suite 1405 New York, NY 10016 Attn: Chairman 1. Application. (a) The undersigned (the "Purchaser"), intending to be legally bound, hereby agrees to purchase, an aggregate of 750,000 shares (the "Shares") of the common stock (the "Common Stock") of News Communications, Inc. (the "Company"), at a purchase price of $1.00 per Share, subject to adjustment as provided below. The Purchaser shall purchase 500,000 Shares no later than April 30, 2001 and the balance of 250,000 Shares from time to time as the Company's capital needs require but in no event later than July 31, 2001. Payment of the purchase price for the Shares shall be made by wire transfer of immediately available funds. THE SECURITIES offered hereby HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES ACT OF ANY STATE. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH SALES AND TRANSFERS ARE MADE PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. (b) In addition, in consideration for the Purchaser's subscription for the Shares, the Company hereby issues to the Purchaser an additional 250,000 shares of the Company's Common Stock (the "Adjustment Shares") which D.H. Blair Investment Banking Corp. ("Blair") is purchasing on the date hereof and is contributing to NCI. In the event that on the second anniversary of the date of this Agreement, the Fair Market Value of the equity securities of the Company is equal to or greater than $46,000,000 (an "Adjustment Event"), then the Purchaser agrees to transfer the Adjustment Shares (or any securities received in respect of the Adjustment Shares) to Blair; provided, however, in the event that the Company has consummated the transaction described in paragraph 6 of that certain letter agreement dated May 8, 2001 by and among the Company, the Purchaser and certain other parties thereto, including Blair (the "Letter Agreement"), the Purchaser shall deliver to Blair the number of shares of Newco Common Stock (as defined in the Letter Agreement) that Blair would have receive had it owned the Adjustment Shares on the date of the consummation of the transaction between the Company and Newco and the Company shall issue to Blair the Subordinated Notes (as defined in the Letter Agreement) or other consideration that Blair would have received had it owned the Adjustment Shares on the date of the consummation of the transaction between the Company and Newco. The Company and the Purchaser intend for Blair to be a third party beneficiary of their obligations set forth in this Section 1(b) (c) For purposes of this Agreement, "Fair Market Value" of the equity securities of the Company shall mean, as applicable (i) the last sale price on the relevant date quoted on the Nasdaq Stock Market; (ii) the average of the high bid and low asked prices on the relevant date quoted on the Nasdaq OTC Bulletin Board Service or by the National Quotation Bureau, Inc. or a comparable service as determined in the Board of Directors discretion; or (iii) if no public trading of the Common Stock exists on the relevant date, then Fair Market Value shall be determined by an independent nationally recognized appraiser selected by the Board of Directors of the Company. 2. Representations and Warranties of the Purchaser. The Purchaser represents and warrants to the Company as follows: (a) The Purchaser, in making the decision to enter into this Agreement and to commit to purchase the Shares, has relied upon independent investigations made by him and his representatives, if any. No oral representations have been made or oral information furnished to the Purchaser in connection with the commitment to purchase of the Shares; and the Purchaser and/or his advisors have had a reasonable opportunity to ask questions of and receive answers from the Company concerning the Shares. (b) The Purchaser has been or will be supplied with or has and will have sufficient access to all information, including financial statements and other financial information of the Company, and has been afforded with an opportunity to ask questions of and receive answers concerning information to which a reasonable investor would attach significance in making investment decisions, so that as a reasonable investor the Purchaser has been able to make the Purchaser's decision to commit to purchase the Shares. (c) The Purchaser is able and will be able to bear the substantial economic risks of an investment in the Shares for an indefinite period of time, has no need for liquidity in such investment, has made and will have made commitments to investments that are not readily marketable which are reasonable in relation to the Purchaser's net worth and, at the present time, could afford a complete loss of such investment. (d) The Purchaser has such knowledge and experience in financial, tax and business matters so as to enable him to utilize the information made available to him in connection with the commitment to purchase and the purchase of the Shares to evaluate the merits and risks of an investment in the Shares and to make an informed investment decision with respect thereto. (e) The Purchaser acknowledges that the purchase of the Shares involves a high degree of risk and further acknowledges that he can bear the economic risk of the purchase of the Shares, including the total loss of his investment. The Purchaser is not relying on the Company with respect to the tax and other economic considerations of an investment in the Shares, and the Purchaser has relied on the advice of, or has consulted with, only his own advisor(s). (g) The Purchaser has and will have full right and power to perform pursuant to this Subscription Agreement and make an investment in the Company and is authorized and otherwise duly qualified to purchase and hold the Shares and to enter into this Subscription Agreement. (h) The Purchaser will be purchasing the Shares for his own account, for investment and not with a view to resale or distribution except in compliance with the Securities Act. (i) The Purchaser understands that the Shares are being offered and sold in reliance on an exemption from the registration requirements of federal and state securities laws under Section 4(2) of the Securities Act and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of the Purchaser to acquire the Shares. The representations, warranties and agreements contained herein are true and correct as of the date hereof and may be relied upon by the Company, and the Purchaser will notify the Company immediately of any adverse change in any such representations and warranties which may occur prior to the acceptance of the subscription and will promptly send the Company written confirmation thereof. The representations, warranties and agreements of the Purchaser contained herein shall survive the execution and delivery of this Subscription Agreement and the purchase of the Shares. (j) The Purchaser further represents and warrants that he is an "accredited investor" within the meaning of Regulation D under the Securities Act. 3. Representations and Warranties of the Company. The Company represents and warrants to the Purchaser as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and is duly qualified to do business and in good standing in the State of New York. The Company has all requisite power and authority and has all necessary approvals, licenses, permits and authorization to own its properties and to carry on its business as now conducted. The Company has all requisite power and authority to execute and deliver this Agreement and to perform its obligations hereunder. (b) The Company's authorized capital stock consists of: (i) 100,000,000 shares of Common Stock, of which 8,470,536 are issued and outstanding and 158,333 shares are held in treasury;ssued and and outstanding and 158,333 shares are held in treasury; (ii) 500,000 shares of Preferred Stock, of which: (A) 14 shares designated 8% Convertible Preferred Stock are issued and outstanding, which shares are convertible into 2,222 shares of Common Stock and 2,222 warrants to purchase Common Stock at an exercise price of $6.00 per share; (B) 21 shares designated 10% Convertible Preferred Stock are issued and outstanding, which shares are convertible into 12,600 shares of Common Stock; and (C) 197,500 shares designated $10 Convertible Preferred Stock are issued and outstanding, which shares are convertible into 825,432 shares of Common Stock after giving effect to the issuance of the Shares, the issuance of the Warrants to James Finkelstein to purchase 3,000,000 shares, the purchase of 250,000 shares by D.H. Blair Investment Banking Corp. and the issuance of 1,150,000 shares issued upon conversion of an aggregate of $1,150,000 principal amount of notes on the date hereof. (c) The Company currently has four Stock Option Plans. 200,000 shares of the Company's Common Stock have been reserved for issuance upon exercise of options granted under the Company's 1999 Stock Option Plan, 122,222 shares of the Company's Common Stock have been reserved for issuance upon exercise of options granted under the Company's 1987 Stock Option Plan, 500,000 shares of the Company's Common Stock have been reserved for issuance upon exercise of options granted under the Company's Discretionary Directors and Officers Stock Option Plan and 166,667 shares of the Company's Common Stock have been reserved for issuance upon exercise of options granted under the Company's Non-discretionary Directors Stock Option Plan. As of the date hereof, options to purchase a total of 1,010,661 shares of the Company's Common Stock have been granted. (d) 266,667 shares of the Company's Common Stock have been reserved for issuance upon the exercise of the Warrants issued to the holders of the $10.00 Convertible Preferred Stock, 32,223 shares of the Company's Common Stock have been reserved for issuance upon the exercise of the Warrants issued to the holders of the 8% Convertible Preferred Stock, 200,000 shares of the Company's Common Stock have been reserved for issuance upon the exercise of the Warrants issued to D.H. Blair Investment Banking Corp. and 100,000 shares of the Company's Common Stock have been reserved for issuance upon the exercise of the Warrant issued to WLR Recovery Fund L.P. (e) 1,000,000 shares of the Company's Common Stock have been reserved for issuance upon the conversion of an 8% Convertible Note issued to Rosalind Davidowitz and 350,000 shares of the Company's Common Stock have been reserved for issuance upon the conversion of the 8% Convertible Notes issued to D.H. Blair Investment Banking Corp. An additional indeterminate number of shares have been reserved for issuance in satisfaction of the payment of accrued interest on the Company's 8% Convertible Notes. (f) Up to 1,000,000 shares of the Company's Common Stock have been reserved for issuance upon either (i) the conversion of the outstanding principal amount under a Revolving Note issued to D.H. Blair Investment Banking Corp. or (ii) if not converted by the maturity date, the issuance of warrants to purchase the Company's Common Stock in an amount equal to the maximum advances thereunder at any one time. An additional indeterminate number of shares have been reserved for issuance in satisfaction of the payment of accrued interest on the Revolving Note. (g) All the outstanding shares of capital stock of the Company have been duly and validly issued and are fully paid and non-assessable. Upon issuance, sale and delivery as contemplated by this Agreement, the Shares will be duly authorized, validly issued, fully paid and non-assessable shares. (h) The shares of the Company's Common Stock issuable upon exercise of the Options, Warrants and Convertible Notes have been duly authorized and reserved for issuance by all necessary corporate action on the part of the Company. The shares of Common Stock issuable upon exercise of the Warrants, have been duly and/or validly reserved for issuance and, when issued and paid for in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable. (i) Except as provided above and in Schedule A attached hereto, no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire any shares of capital stock of the Company is authorized or outstanding, (ii) the Company has no obligation (contingent or otherwise) to issue any subscription, warrant, option, convertible security or other such right or to issue or distribute to holders of any shares of its capital stock any evidences of indebtedness or assets of the Company, and (iii) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any shares of its capital stock or any interest therein or to pay any dividend or make any other distribution in respect thereof. (j) The Company has authorized the execution, delivery, and performance of this Agreement and each of the transactions and agreements contemplated hereby. No other corporate action (including stockholder approval) is necessary to authorize such execution, delivery and performance of this Agreement, and upon such execution and delivery this Agreement shall constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights and general principles of equity. The Company has authorized the issuance and delivery of the Shares in accordance with this Agreement. 4. Registration Rights. (a) Agreement to Register. At any time from the date of purchase of the Shares until the fifth anniversary of the date hereof, at the request of the Purchaser (the "Registration Request"), the Company shall prepare and use its best efforts to file with the Securities and Exchange Commission (the "SEC") within 60 days of the Registration Request a registration statement covering the resale of the Shares (each, a "Registration Statement"), shall use its best efforts to cause such Registration Statement to become effective as soon as possible thereafter and to do all other things necessary to cause such Registration Statement to be declared effective by the SEC (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky and other state securities laws in such jurisdictions as the Purchaser may reasonably request, and appropriate compliance with applicable regulations issued under the Securities Act) and as would permit or facilitate the sale and distribution of all or such portion of such Shares. The Purchaser shall have the right to make such Registration Request on one occasion. (b) If the Purchaser desires to distribute the Shares by means of an underwriting, he shall make a Registration Request and so advise the Company and shall select an underwriter reasonably acceptable to the Company. At such time, the Company and the Purchaser shall enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company. The Company shall not be required to effect more than two underwritten offerings of Shares. The Company shall pay all expenses, other than underwriters' discounts and commissions and fees and disbursements of experts and counsel retained by the Purchaser, relating to an underwriting of the Shares covered by the first request, and the Purchaser shall pay all reasonable registration expenses arising from the second such underwriting. (c) If, at any time during the five-year period following the date hereof, the Company proposes to file with the SEC a Registration Statement with respect to any class of securities (other than pursuant to a registration statement on Forms S-4 or S-8 or any successor form) under the Securities Act, the Company shall notify the Purchaser at least twenty (20) days prior to the filing of the Registration Statement and will offer to include all or any portion of the Shares in the Registration Statement. At the written request of the Purchaser, delivered to the Company within ten (10) days after the date of the Company's notice, the Purchaser shall state the number of Shares that he wishes to sell under the proposed Registration Statement. (d) If the Registration Statement is filed with respect to an underwritten offering, the Company and the Purchaser shall enter into an underwriting agreement in customary form with the underwriter selected for such underwriting by the Company. The Company shall pay all expenses, other than underwriters' discounts and commissions and fees and disbursements of experts and counsel retained by the Purchaser, relating to an underwriting of the Shares. (e) The Purchaser, if reasonably requested by the Company or by the underwriter with respect to any public offering, shall agree not to sell, make any short sale of, loan, grant any options for the purchase of, or otherwise dispose of any of the Shares (other than those included in the Registration Statement) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days), from the effective date of such Registration Statement, or the commencement of the offering, as applicable, as may be requested by the underwriters, provided that all other holders of the class of securities being registered pursuant to the Registration Statement shall make the same agreements as those made by the Purchaser under this Section 4(e). (f) The Purchaser shall promptly provide the Company with such non-confidential and non-proprietary information as it shall reasonably request and that is available to the Purchaser in order to prepare the Registration Statement. (g) All reasonable and necessary expenses in connection with the preparation of the Registration Statement, including, without limitation, any and all legal, accounting and filing fees, but not including fees and disbursements of experts and counsel retained by the Purchaser or underwriting discounts and commissions to be paid by the Purchaser, shall be borne by the Company. (h) The Company shall use its best efforts to cause the Registration Statement to become effective, permitting the sale of the Shares in accordance with the intended method or methods of distribution thereof, and pursuant thereto, the Company shall as expeditiously as possible: (i) prepare and file with the SEC a Registration Statement relating on any appropriate form under the Securities Act, which form shall be available for the sale of the Shares in accordance with the intended method or methods of distribution thereof and use its best efforts to cause such Registration Statement to become effective and keep such Registration Statement effective in accordance with Section 4(h)(ii) below; (ii) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement as may be necessary to keep the Registration effective until all such Shares are sold; cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof as set forth in such Registration Statement or supplement to the prospectus; provided, however, that the Company may, from time to time, request that the Purchaser immediately discontinue the disposition of the Shares if the Company determines, in the good faith exercise of its reasonable business judgment, that the offering and disposition of the Shares could materially interfere with bona fide financing, acquisition or other material business plans of the Company or would require disclosure of non-public information, the premature disclosure of which could materially and adversely affect the Company (it being acknowledged that the Company is not required to disclose in such request any such transaction, plan or non-public information), so long as the Company promptly after the disclosure of such transaction, plan or non-public information complies with this Section 4(h)(ii); (iii) notify the Purchaser and the underwriter, if any, promptly, and (if requested by any such person) confirm such advice in writing, (A) when the prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the SEC for amendments or supplements to the Registration Statement or the prospectus or for additional information, (C) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or the initiation of any proceedings for such purpose and (E) subject to the proviso below, of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, subject to Section 4(g)(ii) above, at the request of any such person, prepare and furnish to such person a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the Purchaser of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; provided, however, the Company need not disclose the event if it otherwise has not disclosed such event to the public; (iv) if requested by the underwriter or the Purchaser, promptly incorporate in a prospectus supplement or post-effective amendment such information as the underwriter and the Purchaser agree should be included therein relating to the plan of distribution with respect to such Shares, including, without limitation, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the Shares to be sold in such offering; and make all required filings of such prospectus supplements or post-effective amendments as soon as notified of the matters to be incorporated in such prospectus supplements or post-effective amendments; (v) deliver to the Purchaser and the underwriters, if any, without charge, as many copies of the prospectus (including each preliminary prospectus) in conformity with the requirement of the Securities Act and any amendments or supplements thereto as such persons may reasonably request and such other documents as they may reasonably request to facilitate the prior sale or other disposition of the Shares; (vi) prior to any public offering of Shares, register or qualify or cooperate with the Purchaser, or the underwriters, if any, in connection with the registration or qualification of such Shares for offer and sale under the securities or blue sky laws of such jurisdictions as the Purchaser or underwriters, if any, reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Shares covered by the Registration Statement; provided, however, that the Company shall not be required to qualify to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or would subject the Company to any tax in any such jurisdiction where it is not then so subject; and (vii) with a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of Shares to the public without registration, during such time as a public market exists for its equity securities, the Company agrees to: (A) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its equity securities to the general public; (B) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act") (at any time after it has become subject to such reporting requirements); and (C) furnish to the Purchaser forthwith upon request a written statement by the Company as to the Company's compliance with the reporting requirements of said Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company and such other reports and documents of the Company as the Purchaser may reasonably request in availing itself of any rule or regulation of the SEC allowing a holder to sell any such securities without registration. (i) Notwithstanding the provisions of this Section 4 to the contrary, the Company: (i) may require the Purchaser to furnish to the Company such information regarding the distribution of such securities as the Company may from time to time reasonably request in writing, and the Company may limit such registration rights to situations where a proposed distribution of Shares is to be effected forthwith upon the effectiveness of the Registration Statement; and (ii) may require the Purchaser to covenant that he has not taken, and will not take, directly or indirectly, any action designed, or which might reasonably be expected, to cause or result in, under the Exchange Act or otherwise, or which has caused or resulted in, stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares. (j) The Purchaser agrees by acquisition of such Shares that, upon receipt of the request referred to in the proviso of Section 4(h)(ii) or of any notice from the Company of the happening of any event of the kind described in Section 4(h)(iii) hereof (other than as provided in Section 4(h)(iii)(A) hereof), the Purchaser shall forthwith discontinue disposition of Shares until he is advised in writing by the Company that the use of the prospectus may be resumed, and has received copies of any additional or supplemental documents or filings that are incorporated by reference in the prospectus, and, if so directed by the Company, the Purchaser shall deliver to the Company (at the Company's expense) all copies other than permanent file copies then in the Purchaser's possession, of the prospectus covering such Shares current prior to the time of receipt of such notice. 5. Indemnification. (a) The Company agrees to indemnify and hold harmless the Purchaser against any losses, claims, damages, liabilities or expenses, joint or several, to which the Purchaser may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulations, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Company), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact required to be stated therein or necessary to make the statements in any of them not misleading, (ii) in whole or in part, any inaccuracy in the representations and warranties of the Company contained herein, or (iii) any failure of the Company to perform its obligations hereunder or under law; and will reimburse the Purchaser for any legal and other expenses as such expenses are reasonably incurred by the Purchaser in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto in reliance upon and in conformity with information furnished to the Company by each of the Purchaser expressly for the inclusion in any Registration Statement or any preliminary prospectus. This indemnity agreement will be in addition to any liability that the Company may otherwise have. The Company will not, without the prior written consent of the Purchaser, settle or compromise or consent to the entry of any judgment in any pending or threatened action or claim or related cause of action or portion of such cause of action in respect of which indemnification may be sought hereunder (whether or not the Purchaser is a party to such action or claim), unless such settlement, compromise or consent includes an unconditional release of the Purchaser from all liability arising out of such action or claim (or related cause of action or portion thereof). (b) The Purchaser agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who sign any Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses to which the Company, or any such director, officer, or controlling person may become subject, under the Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at common law or otherwise (including in settlement of any litigation, if such settlement is effected with the written consent of the Purchaser), insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out of or are based upon (i) any untrue or alleged untrue statement of any material fact contained any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Registration Statement, any preliminary prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished to the Company by the Purchaser expressly for the use in any Registration Statement or any preliminary prospectus; and will reimburse the Company, or any such director, officer, or controlling person for any legal and other expense reasonably incurred by the Company, or any such director, officer, or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. As to the Purchaser, in no event shall any indemnity under this subsection (b) exceed the net proceeds from sale of the number of Shares sold by the Purchaser. This indemnity agreement will be in addition to any liability which the Purchaser may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 5, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party for contribution or otherwise than under the indemnity agreement contained in this Section 5 or to the extent it is not prejudiced as a proximate result of such failure. In case any such action is brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be a conflict between the positions of the indemnifying party and the indemnified parties which are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Purchaser in the case of paragraph (a), representing the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party. (d) If the indemnification provided for in this Section 5 is required but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under subsections (a), (b) or (c) in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company and the Purchaser from any other persons, such as persons who control the Company within the meaning of the Act, officers of the Company who signed the Registration Statement and directors of the Company who also may be liable for contribution) (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Purchaser from the offering of the Shares or any public offering of the Shares, as the case may be or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties herein which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Purchaser, on the other, shall be deemed to be in the same proportion as the total net proceeds from the sale of the Shares (before deducting expenses) received by the Company bear to the total compensation received by the Purchaser hereunder. The relative fault of the Company and the Purchaser shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty relates to information supplied by the Company or the Purchaser and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in subsection (c) of this Section 5, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. The provisions set forth in subsection (c) of this Section 5 with respect to notice of commencement of any actions shall apply if a claim for contribution is to be made under this subsection (d); provided, however, that no additional notice shall be required with respect to any action for which notice has been given under subsection (c) for purposes of indemnification. The Company and the Purchaser agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined solely by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 5. Notwithstanding the provisions of this Section 5, the Purchaser shall not be required to contribute any amount in excess of the amount of compensation received by each of them. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 6. Miscellaneous. (a) This Agreement shall survive the death or disability of the Purchaser and shall be binding upon the Purchaser's heirs, executors, administrators, successors and permitted assigns. (b) This Agreement and the documents referred to herein constitute the entire agreement between the parties hereto with respect to the subject matter hereof and together supersede all prior discussions or agreements in respect thereof. (c) This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute a single document. (d) This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Any dispute arising out of or in connection with this Agreement shall be settled by arbitration in accordance with the rules of the American Arbitration Association then in effect. The location of any hearing shall be New York, New York. IN WITNESS WHEREOF, the Purchaser has executed this Agreement the 8th day of May, 2001. James Finkelstein ACCEPTED AND AGREED TO: NEWS COMMUNICATIONS, INC. By: ___________________________ Name: Title: Schedule A 1. Pursuant to that certain Letter Agreement dated December 11, 2000 by and between the Company and Steven A. Farbman, the Company has agreed to purchase from Mr. Farbman 150,000 shares of the Company's common stock for an aggregate purchase price of $300,000. 2. The Company has an obligation to pay to each holder of its 10% Convertible Preferred Stock on September 19th of each year dividends in the amount of $500 per share. The Company has the option to pay such dividends in cash or in shares of the Company's common stock. 3. The Company made a verbal commitment to grant to its Controller Options to purchase 10,000 shares of its common stock. EX-99 8 exhibit7.txt EXHIBIT 7 - 7 - NEWY1:2002941:3:6/12/01 28507-20 WARRANT THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY STATE SECURITIES LAW, HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRRED, PLEDGED, HYPOTHECATED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED. News Communications, Inc. (the "Company") hereby grants to D.H. Blair Investment Banking Corp. (the "Holder") the right, privilege, and option to purchase up to 150,000 shares of its common stock, par value $.01 per share ("Common Stock"), at the purchase price of $1.00 per share, subject to adjustment as hereinafter provided (the "Warrant Price") in the manner and subject to the conditions hereinafter provided. 1. Time of Exercise of Warrant. This Warrant may be exercised at any time or from time to time beginning on June 4, 2001 through 5:00 p.m., Eastern Time, on June 4, 2006. The Company in its sole discretion may extend the duration of the period in which this Warrant may be exercised. 2. Method of Exercise. This Warrant shall be exercised in whole at any time or in part from time to time, by delivery of this Warrant with the Purchase Form attached hereto duly completed and executed to the Company at its principal executive offices accompanied by a certified or cashier's check payable to the order of the Company in payment of the Warrant Price, for the number of whole shares specified, together with appropriate endorsements or transfer documents, if any, and a check for payment of any applicable transfer or similar tax, if required. Upon clearance of the check, the Company shall make immediate delivery of a stock certificate evidencing the number of whole shares to which the Holder may be entitled. The Company shall not be required to make any cash or other adjustment in respect of any fraction of a share to which the holder would otherwise be entitled. The Holder, by acceptance of this Warrant, expressly waives any right to receive a certificate for any fraction of a share or cash payment upon the exercise of this Warrant. In case of the purchase of less than all the shares purchasable under this Warrant, the Company shall cancel this Warrant upon surrender hereof and shall execute and deliver a new Warrant of like tenor and date for the balance of the shares purchasable hereunder. The Company agrees at all times to reserve or hold available a sufficient number of shares of Common Stock to cover the number of shares issuable upon the exercise of this and all other Warrants of like tenor then outstanding. All shares of Common stock issued hereunder and in conformity herewith upon payment of the Warrant Price shall be validly issued, fully paid and non-assessable. 3. Anti-Dilution Provisions. If and to the extent that the number of issued shares of Common Stock of the Company shall be increased or reduced by change in par value, split up, stock split, reclassification, distribution of a dividend payable in stock, or the like, the number of shares subject to this Warrant and the Warrant Price shall be proportionately adjusted so that the Holder, upon exercise hereof shall be entitled to receive the number of shares of Common Stock which the Holder would have owned immediately following such action had this Warrant been exercised immediately prior thereto. In case of any reorganization or any consolidation or merger to which the Company is a party other than a merger or consolidation in which the Company is the continuing corporation, or in case of any sale or conveyance to another entity of the property of the Company as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Company) (any such reorganization, reclassification, consolidation, merger, statutory exchange, sale or conveyance, a "Restructuring Event"), this Warrant shall terminate upon the effective time of such Restructuring Event unless provision is made in connection with the transaction in the sole discretion of the parties thereto for the continuation or assumption of this Warrant, or the substitution of this Warrant with new warrants of the surviving or successor entity or a parent thereof. In the event of such termination, the holder of this Warrant will be permitted for a period of at least 20 days prior to the effective time of the Restructuring Event, to exercise this Warrant, in whole or in part; provided, however, that any such exercise of this Warrant shall be deemed to have occurred immediately prior to the effective time of such Restructuring Event. If so exercised, the Holder of this Warrant shall have the right thereafter to receive the kind and amount of securities, cash or other property which he would have owned or have been entitled to receive immediately after such Restructuring Event had this Warrant been exercised immediately prior to the effective date of such Restructuring Event. The issuer of any shares of stock or other securities or property thereafter deliverable on the exercise of this Warrant shall be responsible for all of the agreements and obligations of the Company hereunder. In case the Company shall sell any shares of Common Stock for a consideration per share less than then-current Warrant Price, the Warrant Price in effect immediately prior to such sale shall be changed to a price (including any applicable fraction of a cent) determined by multiplying the Warrant Price in effect immediately prior thereto by a fraction, the numerator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to the issuance of such additional shares and the number of shares of Common Stock which the aggregate consideration received for the issuance of such additional shares would purchase at the Warrant Price in effect immediately prior to such sale and the denominator of which shall be the number of shares of Common Stock outstanding immediately after the issuance of such additional shares; provided, however, that no such adjustment shall be made upon (i) the exercise of any options, warrants or other rights to acquire Common Stock outstanding on the date of issuance of this Warrant or (ii) the exercise of any options, warrants or other rights to acquire Common stock granted pursuant to any employee benefit plan of the Company, whether such plan is in effect on the date of issuance of this Warrant or thereafter adopted or (iii) the issuance of any equity securities contemplated by that certain Letter Agreement dated May 8, 2001 and consummated on the date hereof by and among the Holder, James Finkelstein, Jerry Finkelstein, The Finkelstein Foundation, Inc., Shirley Finkelstein, Wilbur L. Ross, Jr., Melvyn I. Weiss, M&B Weiss Family Partnership, J. Morton Davis, Rivkalex Corporation and Rosalind Davidowitz. No adjustment in the Warrant Price shall be required unless such adjustment would require an increase or decrease of at least $0.05 per share of Common Stock; provided, however, that any adjustments which by reason of this paragraph are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 3 shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. The Company shall not issue fractional shares of Common Stock upon exercise of this Warrant. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall forthwith give written notice thereto to the Holder of this Warrant stating the adjusted Warrant Price and the adjusted number of shares purchasable upon the exercise hereof resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 4. Rights Prior to and Subsequent to Exercise of Warrant. This Warrant does not entitle the Holder to any of the rights of a stockholder of the Company, including, without limitation, the right to receive dividends or other distributions, to exercise any preemptive rights, to vote, or to consent or to receive notice as a stockholder of the Company. If, however, at any time prior to its expiration or redemption of this Warrant and prior to its exercise, any of the following events shall occur: (a) the Company shall declare any dividend payable in any securities upon its shares of Common Stock or make any distribution (other than a regular cash dividend) to the holders of its shares of Common Stock; or (b) the Company shall offer to the holders of its shares of Common Stock any additional shares of Common Stock or securities convertible into or exchangeable for shares of Common stock or any right to subscribe for or purchase any thereof; or (c) a dissolution, liquidation or winding up of the Company (other than in connection with a consolidation, merger, sale, transfer or lease of all or substantially all of its property, assets, and business as an entirety) shall be proposed, then in any one or more of said events the Company shall give notice in writing of such event to the Holder at his last address as it shall appear on the Company's records at least twenty (20) days' prior to the date fixed as a record date or the date of closing the transfer books for the determination of stockholders entitled to such dividends, distribution, or subscription rights, or for the determination of stockholders entitled to vote on such proposed dissolution, liquidation or winding up. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to publish, mail or receive such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of any action taken in connection with such dividend, distribution or subscription rights, or such proposed dissolution, liquidation or winding up. Each person in whose name any certificate for shares of Common Stock is to be issued shall for all purposes be deemed to have become the holder of record of such shares on the date on which this instrument was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such stock certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares of Common Stock at the close of business on the next succeeding date on which the stock transfer books are open. 5. Condition of Exercise of Warrant. In order to enable the Company to comply with the Securities Act of 1933, as amended (the "Securities Act"), and relevant state law, the Company may require the Holder as a condition of the exercising of this Warrant, to give written assurance satisfactory to the Company that the shares subject to this Warrant are being acquired for his own account, for investment only, with no view to the distribution of same, and that any subsequent resale of any such shares either shall be made pursuant to a registration statement under the Securities Act which has become effective and is current with regard to the shares being sold, or shall be pursuant to an exemption from registration under the Securities Act. If the shares of Common Stock purchased pursuant to the exercise of this Warrant are not subject to an effective registration statement under the Securities Act, the certificate(s) evidencing shares of Common Stock purchased upon exercise of this Warrant shall bear the following restrictive legend or a similar legend to the same effect: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR UNDER ANY STATE SECURITIES LAW, HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED. 6. Loss, etc. of Warrant. Upon receipt of evidence satisfactory to the Company, of the loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to the Company, if lost, stolen, or destroyed, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute, and deliver to the Holder a new Warrant of like date, tenor and denomination. 7. Governing Law. This Warrant and any dispute, disagreement, or issue of construction or interpretation arising hereunder whether relating to its execution, its validity, the obligations provided herein or performance shall be governed or interpreted according to the law of the State of New York. IN WITNESS WHEREOF, News Communications, Inc. has caused this Warrant to be executed on the 4th day of June, 2001. NEWS COMMUNICATIONS, INC. By: Jerry Finkelstein Chairman PURCHASE The undersigned, , pursuant to the provisions of the foregoing Warrant, hereby agrees to subscribe for and purchase shares of the Common Stock of NEWS COMMUNICATIONS, INC. covered by said Warrant, and makes payment therefor in full at the price per share provided by said Warrant. The undersigned represents that the exercise of the foregoing warrant was solicited by . If not solicited by , please write "unsolicited" in the space below. Unless otherwise indicated, it will be assumed that the exercise was solicited by . (Write "unsolicited" on above line if not solicited by ) Signature: Address: FULL ASSIGNMENT FOR VALUE RECEIVED hereby sells, assigns and transfers unto the foregoing Warrant and all rights evidenced thereby, and does irrevocably constitute and appoint , attorney, to transfer said Warrant on the books of NEWS COMMUNICATIONS, INC. Dated: Signature: Address: PARTIAL ASSIGNMENT FOR VALUE RECEIVED hereby assigns and transfers unto the right to purchases shares of Common Stock of NEWS COMMUNICATIONS, INC. by the foregoing Warrant, and a proportionate part of said Warrant and the rights evidenced hereby, and does irrevocably constitute and appoint , attorney to transfer that part of said Warrant on the books of NEWS COMMUNICATIONS, INC. Dated: Signature: Address: EX-99 9 exhibit8.txt Exhibit 8 - 10 - NEWY1:2003586:1:6/11/01 28507-20 WARRANT PURCHASE AGREEMENT WARRANT PURCHASE AGREEMENT, dated as of April 19, 2001, by and between D.H. Blair Investment Banking Corp., a Delaware corporation having a principal place of business at 44 Wall Street, New York, New York, 10005 ("Seller") and James M. Finkelstein, an individual residing at 655 Park Avenue, New York, New York, 10021 ("Buyer"). WHEREAS, Seller is, in connection with a revolving loan agreement, entitled to options to purchase shares of Common Stock of News Communications, Inc. ("NCI") at an exercise price of $1.00 per share (the "Options"); and WHEREAS, the Options are not presently exercisable for freely tradable registered shares of Common Stock of NCI; and WHEREAS, Buyer desires to purchase half of the Options (the "Purchase Options") from Seller, and Seller desires to sell the Purchase Options to Buyer, upon the terms, and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties, intending to be legally bound hereby, agree as follows: ARTICLE I PURCHASE AND SALE OF PURCHASE OPTIONS Section 1.01 Purchase and Sale of Purchase Options. Upon the terms and subject to the conditions set forth herein, Seller hereby sells, transfers and delivers to Buyer, and Buyer hereby purchases, acquires and accepts from Seller, the Purchase Options, for the consideration set forth in Section 1.02 hereof. Section 1.02 Consideration. The consideration (the "Consideration") for the Purchase Options is $.0l per Purchase Option payable by cash or check from Buyer to Seller simultaneously with the issuance of the Options to Seller by NCI. Seller shall thereupon seek to transfer record ownership of the Purchase Options to Buyer. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER Seller hereby represents and warrants to Buyer that: Section 2.01 Ownership of Purchase Options. The Purchase Options are owned by Seller free and clear of all liens, mortgages, charges, securities, interest, encumbrances (including, but not limited to adverse claims) or other restrictions or limitation of any kind whatsoever (individually and collectively, "Liens" other than those relating to federal and state securities laws). Upon delivery of and payment for the Purchase Options as provided for in this Agreement, Buyer will acquire good and marketable title to the Purchase Options, free and clear of all Liens. Section 2.02 Authorization, Etc. Seller has the power and capacity to enter into this Agreement, and this Agreement is a valid and binding obligation of Seller enforceable against Seller in accordance with its terms. Section 2.03 No Consent. Neither the execution, delivery or performance by Seller of this Agreement nor the consummation by Seller of the transactions contemplated hereby, will require any permit, authorization, consent, waiver, approval, license or other order or action of, or notice to, or declaration, filing or registration with, any third party or any governmental body, or other regulatory or administrative authority, agency, bureau or commission, domestic or foreign ("Government Agency"). Section 2.04 No Violation. Neither the execution, delivery or performance by Seller of this Agreement nor the consummation of the transactions contemplated hereby will (i) violate, breach or be in conflict with, or constitute a default (or an event which, notice or lapse of time or both, would constitute a default) under, or permit the termination of, or accelerate the performance required by, or cause the acceleration of the maturity of any debt or obligation of Seller or result in the creation or imposition of any Liens upon any property or assets of Seller, or (ii) violate any order, writ, injunction, decree, judgment, ruling, law, statute, rule or regulation of any governmental, judicial, legislative, executive, administrative or regulatory authority of the United States, or of any governmental, judicial, legislative, executive, administrative or regulatory authority of the United States, or of any state, local or foreign government or any subdivision thereof, or of any Governmental Agency (collectively, "Laws"), applicable to Seller or by which any of Seller's property or assets are bound. Section 2.05 Disclosure. No representations or warranties by Seller contained in this Agreement and no statement contained in any document, certificate, or other writing furnished by Seller to Buyer pursuant to the provisions of this Agreement contains any untrue statement of material fact or omits to state any material fact necessary, in light of the circumstances under which it was made, in order to make the statements herein not misleading. ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller that Buyer is acquiring the option for his own account and not with a view to or for sale in connection with any distribution thereof, and that Buyer is an "accredited investor" as that term is defined under the rules and regulations promulgated under the Securities Act of 1933, as amended. ARTICLE IV SURVIVAL OF REPRESENTATIONS Each of the representations and warranties contained in Articles II and III hereof shall survive the purchase and sale of the Purchase Options and the consummation of the other transactions contemplated hereby, and shall remain in full force and effect until 30 days after the expiration of the statute of limitations (including any extension thereof) applicable to any claim arising in respect of matters covered by such representations and warranties, and shall be effective with respect to any inaccuracy contained in or breach of such representations and warranties, notice of which is duly given in accordance with Section 6.02 hereof within such period. ARTICLE V INDEMNIFICATION Section 5.01 Indemnification. Subject to the terms and limitations set forth in Section 5.02 hereof: (a) Seller shall indemnify, defend and hold harmless Buyer and each of his successors and assigns, from and against any and all claims, penalties, fines, sanctions, demands, suits, losses, liabilities, damages, obligations, payments, costs and expenses, paid or incurred, whether or not relating to, resulting from or arising out of any Third Party Claim or any Direct Claim (each as defined in Section 5.02 hereof)(including, without limitation, the reasonable costs and expenses of any and all actions, suits, proceedings, demands, assessments, judgments, settlements and compromises relating thereto and reasonable attorneys' fees in connection therewith) (individually and collectively "Indemnifiable Losses") relating to, resulting from or arising out of any breach of any of the representations, warranties or covenants of Seller contained in this Agreement or any of the transactions contemplated thereby. (b) Buyer shall indemnify, defend and hold harmless Seller and each of his successors and assigns, from and against any and all Indemnifiable Losses relating to, resulting from or arising out of any breach of any of the representations, warranties or covenants of Buyer contained in this Agreement or any of the transactions contemplated hereby. (c) For purposes of this Agreement, "Indemnity Payment" shall mean any amounts of Indemnifiable Losses required to be paid pursuant to this Section 5.01. (d) For purposes of this Agreement, "Indemnitee" shall mean any person, entity or group entitled to indemnification under this Agreement. (e) For purposes of this Agreement, "Indemnifying Party" shall mean any person, entity or group required to provide indemnification under this Agreement. Section 5.02 Defense of Claims. ----------------- (a) If an Indemnitee receives notice of the assertion of any claim or of the commencement of any action or proceeding by any person, entity or group (a "Third Party Claim") against such Indemnitee, with respect to which an Indemnifying Party is obligated to provide indemnification under Section 5.01 of this Agreement, the Indemnitee shall give such Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third Party Claim. Such notice shall describe the Third Party Claim in reasonable detail, and shall indicate the estimated amount, if practicable, of the Indemnifiable Loss that has been or may be sustained by the Indemnitee. The Indemnifying Party shall have the right to participate in or, by giving written notice to the Indemnitee, to elect to assume the defense of any Third Party Claim at such Indemnifying Party's own expense and by such Indemnifying Party's own counsel (reasonably satisfactory to the Indemnitee), and the Indemnitee shall cooperate in good faith in such defense. (b) If within 10 calendar days after an Indemnitee receives written notice from an Indemnifying Party that such Indemnifying Party has elected to assume the defense of any Third Party Claim as provided in the last sentence of Section 5.02(a) hereof, the Indemnifying Party shall not be liable for any legal expenses subsequently incurred by the Indemnitee in connection with the defense thereof; provided, however, that if the Indemnifying Party fails to take reasonable steps necessary to defend diligently such Third Party Claim within 10 calendar days after receiving notice from the Indemnitee that the Indemnitee believes the Indemnifying Party has failed to take such steps, the Indemnitee may assume its own defense, and the Indemnifying Party shall be liable for any reasonable expenses therefor. Without the prior written consent of the Indemnitee, the Indemnifying Party shall not enter into any settlement of the Third Party Claim which would lead to liability or create any financial or other obligation on the part of the Indemnitee for which the Indemnitee is not entitled to reimbursement hereunder. (c) Any claim by an Indemnitee on account of any Indemnifiable Loss which does not result from a Third Party Claim (a "Direct Claim") shall be asserted by giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than 30 calendar days after the Indemnitee becomes aware of such Direct Claim, and the Indemnifying Party shall have a period of 30 calendar days within which to respond to such Direct Claim. If the Indemnifying Party does not so respond within such 30 calendar day period, the Indemnifying Party shall be deemed to have rejected such claim, in which event the Indemnitee shall be free to pursue such remedies as may be available to the Indemnitee under any applicable Laws, subject to the terms of this Agreement, including, without limitation, the enforcement of the Indemnitee's rights under this Agreement. (d) A failure to give timely notice as provided in this Section 5.02 shall not affect the rights or obligations of any party hereunder except and only to the extent that, as a result of such failure, any party which was entitled to receive such notice was deprived of its right to recover any payment under its applicable insurance coverage or incurred an obligation or liability which otherwise would have been avoided. (e) Upon making any Indemnity Payment the Indemnifying Party shall, to the extent of such Indemnity Payment, be subrogated to all rights of the Indemnitee against any third party in respect of the Indemnifiable Loss to which the lndemnity Payment related; provided, however, that (i) the Indemnifying Party shall then be in compliance with its obligations under this Agreement in respect of such Indemnifiable Loss, and (ii) until the Indemnitee recovers full payment of its Indemnifiable Loss, any and all claims of the Indemnifying Party against any such third party on account of said Indemnity Party is hereby made expressly subordinated and subjected in right of payment to the Indemnitee's rights against such third party. Without limiting the generality of any other provision hereof, each such Indemnitee and Indemnifying Party shall duly execute upon request all instruments reasonably necessary to evidence and perfect the above-described subrogation and subordination rights. ARTICLE VI MISCELLANEOUS Section 6.01 Headings. The descriptive headings of the several Articles of this Agreement are inserted for convenience of reference only and do not constitute a part of this Agreement. Section 6.02 Notices. Any notices or other communications required or permitted hereunder shall be given in writing and shall be delivered or sent by personal delivery or certified or registered mail, postage prepaid, or by telex, cable, or facsimile transmission, addressed to either party at his or its address first above written or to such other address as shall be furnished in writing by such party, and any such notice or communication shall be effective and be deemed to have been given as of the date so dispatched, delivered or mailed; provided, that, any notice or communications changing any of the addresses set forth above shall be effective and deemed given only upon its receipt. Section 6.03 Successors. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Section 6.04 Further Assurances. Each of the parties hereto agrees that, from and after the date hereof, upon the reasonable request of any other party hereto and without further consideration, such party will execute and deliver to such other party such documents and further assurances and will take such other actions (without cost to such party) as such other party may reasonably request in order to carry out the purpose and intention of this Agreement, including but not limited to the effective consummation of the transactions contemplated under such provisions of this Agreement, the vesting in Buyer of title to the Purchase Options in accordance with such terms of this Agreement, and the correction of errors and defects. Section 6.05 Entire Agreement. This Agreement constitutes the sole and entire agreement between the parties hereto with respect to the subject matter hereof, and supersede all prior arrangements or understandings with respect thereto; and there are no express or implied restrictions, agreements, promises, representations, warranties, covenants or undertakings other than those expressly set forth herein. Section 6.06 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, unenforceable or against its regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain full force and effect and shall in no way be affected, impaired or invalidated. Section 6.07 Counterparts. This Agreement may be executed in two or more counterparts all of which shall be considered one and the same agreement and each of which shall be deemed an original. Section 6.08 Governing Law; Consent to Jurisdiction. This Agreement shall be governed by the laws of the State of New York (regardless of the laws that might be applicable under principles of conflict of laws) as to all matters, including, but not limited to, matters of validity, construction, effect or performance. Each of the parties hereto agrees that any legal action or proceeding arising under or related to this Agreement or any of the transactions contemplated hereby may be brought in the courts of the State of New York, or of the United States of America for the Southern District of New York, and hereby irrevocably consents to the service of process outside the territorial jurisdiction of said courts by mailing copies thereof by registered mail, postage prepaid, pursuant to Section 6.02 hereof. Section 6.09 Amendments, Etc. This Agreement may not be modified, amended, altered or supplemented, and no provision hereof may be waived by any party hereto, except upon the execution and delivery of a written instrument executed by the parties hereto or the party making any such waiver. No consent of any third party shall be required to modify, alter, amend, supplement or waive any of the provisions of this Agreement. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the day and year first above written. D.H. BLAIR INVESTMENT BANKING CORP. By: ---------------------------------------------- J. MORTON DAVIS Chairman JAMES A. FINKELSTEIN EX-99 10 exhibit9.txt EXHIBIT 9 D.H. Blair Investment Banking Corp. 44 Wall Street New York, NY 10005 May 8, 2001 VIA FEDERAL EXPRESS [$10 Preferred Holder] Re: James Finkelstein Letter Agreement Dear [Holder]: As you are aware, the good news is that James Finkelstein has agreed to become the new President and Chief Executive Officer of News Communications, Inc. pursuant to the terms of a certain letter agreement, a copy of which has been provided to you. The letter agreement contemplates a potential transaction where a new entity in which Mr. Finkelstein would have a 50.1% ownership interest would acquire News Communications. The letter agreement contemplates that you, the other holders of New Communications' $10 Convertible Preferred Stock and certain other shareholders of News Communications, including D.H. Blair Investment Banking Corp., would acquire the balance of the shares in the new entity. Since you received a copy of the letter agreement, it has been slightly revised. Attached please find a black-lined version showing the changes. Based upon the current capitalization of News Communications, a copy of which is attached (and assuming a conversion price of $1.54 for your shares of $10 Preferred Stock), each share of News Communications' common stock held by you would be converted into .1752 shares of common stock in the new entity having a value of $.1752 per share and subordinated notes in the new entity having a principal amount of $1.1248 per share, or an aggregate value of $1.30 per share. The letter agreement also contemplates that you will vote in favor of the transaction described above, that you will convert your shares of $10 Convertible Preferred Stock into common stock prior to such transaction and that you will waive your right to designate one half of the members of the Board. We believe that the proposed arrangement with Mr. Finkelstein represents the best opportunity for a meaningful return on our equity investment in News Communications. Wilbur Ross concurs and has agreed to vote in favor of the transaction as long as he and the other holders of the $10 Preferred Stock receive shares in the new entity having a value of $.20 per share. Since the conversion ratio as currently contemplated would result in you and the other holders of $10 Preferred Stock receiving stock in the new entity having a value of less than $.20 per share, D.H. Blair Investment Banking Corp. has agreed to make up the difference. Accordingly, in consideration for your agreement to consent to the foregoing, if, for any reason whatsoever, you would receive shares of stock in the new entity having a value of less than $.20 per share, at your election, immediately after the consummation of the transaction with the new entity, D.H. Blair will cause to be transferred to you a number of shares of the new entity's common stock so that you will hold .2 shares of the common stock of the new entity having a value of $.20. In consideration for this transfer, you would transfer to D.H. Blair Investment Banking Corp. subordinated notes in Newco having a value equal to the shares transferred to you. We would enter into a formal agreement to undertake the exchange at the time the transaction is authorized. Based upon the currently contemplated capitalization of the new entity, and as an inducement to preferred holders, D.H. Blair Investment Banking Corp. would transfer to you and the other holders of $10 Preferred Stock an aggregate of 19,246 shares of the new entity's common stock or 109,852 of its current shares and you would transfer, if you choose to take the shares, subordinated notes of the same value. It is possible that the capitalization of News Communications at the time of the transaction will be slightly different than that set forth on the attached capitalization summary. This will cause the numbers outlined above to change. However, we do not believe that any such change will be materially different. If the above is acceptable to you, please sign the FOUR (4) signature pages to the letter agreement and the FOUR (4) copies of the Waivers enclosed herewith. Once executed, please return the signed documents to the following address at your earliest convenience: Kay L. Kim Piper Marbury Rudnick & Wolfe LLP 1251 Avenue of the Americas New York, NY 10020 If you have any questions with regard to the foregoing, please contact either Wilbur Ross at (212) 826-2211 or Martin A. Bell at (212) 495-4595. I urge you to sign this as expeditiously as possible and return it so that the Company can promptly effectuate this vital transaction, in order to bring on James Finkelstein, an outstanding world-class publishing executive, so that he can take the Company out of its dismal recent status and grow its important platform of publishing holdings into a potentially outstanding growth company that will benefit every one of us. Thank you so much for your kind cooperation. May you go from strength to strength! With kindest personal regards and best wishes for everything great always, I am Sincerely, D.H. Blair Investment Banking Corp. By:_________________________________ J. Morton Davis Chairman EX-99 11 exhibit10.txt EXHIBIT 10 May 23, 2001 Mr. Hillel Weinberger 667 Madison Avenue 7th Floor New York, NY 10021-8087 Re: News Communications/James Finkelstein Dear Hillel: We refer to a certain letter agreement dated May 8, 2001 between News Communications, James Finkelstein and certain other stockholders of News Communications, including the undersigned. The letter agreement contemplates a potential transaction where a new entity in which Mr. Finkelstein would have a 50.1% ownership interest would acquire News Communications. As part of the transaction certain holders of News Communications securities would receive stock and subordinated notes of the new entity having an aggregate value of $1.30 per share (the "Control Shareholder Consideration"). The remainder of the holders of News Communications securities would be entitled to receive cash and senior subordinated notes of the new entity also having a value of $1.30 per share (the "General Shareholder Consideration"). You have advised us that, in addition to 24,000 shares of News Communications $10 Convertible Preferred Stock, you are the owner of 150,000 shares of News Communications Common Stock and would like to receive the Control Shareholder Consideration with respect to these shares. Since the terms of the letter agreement cannot be changed at this time, the undersigned are willing to exchange, on a pro rata basis (based upon the number of shares held by the undersigned and affiliates), 150,000 shares of News Communications Common Stock which would be entitled to receive the Control Shareholder Consideration for the 150,000 shares of News Communications Common Stock owned by you with respect to which you would be entitled to receive the General Shareholder Consideration (the "Exchange Shares"). The undersigned's obligation to make the foregoing exchange is conditioned upon your execution of the letter agreement and the related waiver of the right of the holders of the $10 Convertible Preferred Stock to designate a majority of the members of the Board of News Communications. In addition, you acknowledge and agree that the undertaking of D.H. Blair Investment Banking Corp. set forth in its May 8, 2001 letter to you shall not apply with respect to any shares of the new entity received in respect to the Exchange Shares. If the foregoing terms are acceptable to you, it would take place immediately prior to the consummation of the consummation of the transaction described above. Please acknowledge your acceptance of the foregoing by signing where indicated below and returning the same, together with the letter agreement and waiver, to the Paul J. Pollock at Piper Marbury Rudnick & Wolfe LLP, 1251 Avenue of the Americas, New York, New York 10020. Very truly yours, D.H. Blair Investment Banking Corp. By: /s/ J. Morton Davis ---------------------------------------- Name: J. Morton Davis Title: Chairman /s/ Wilbur L. Ross, Jr. ------------------------------------------ Wilbur L. Ross, Jr. /s/ Melvyn I. Weiss --------------------------------------------- Melvyn I. Weiss /s/ Jerry Finkelstein --------------------------------------------- Jerry Finkelstein ACCEPTED AND AGREED TO: /s/ Hillel Weinberger Hillel Weinberger -----END PRIVACY-ENHANCED MESSAGE-----