SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/x/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NEWS COMMUNICATIONS, INC.
- --------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------
NEWS COMMUNICATIONS, INC.
By Noah Scooler, Esq., Graubard Mollen & Miller, Counsel
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
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(4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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--------------------
1 Set forth the amount on which the filing fee is calculated and
state how it was determined.
<PAGE>
NEWS COMMUNICATIONS, INC.
174-15 Horace Harding Expressway
Fresh Meadows, New York 11365
--------------------
NOTICE OF SPECIAL MEETING
IN LIEU OF ANNUAL MEETING
OF STOCKHOLDERS
--------------------
December 15, 1995
--------------------
NOTICE IS HEREBY GIVEN that a Special Meeting in Lieu of Annual Meeting of
Stockholders of NEWS COMMUNICATIONS, INC. ("Company") will be held at the
offices of Graubard Mollen & Miller, counsel for the Company, 600 Third Avenue,
New York, New York, on December 15, 1995, at 10:00 A.M., for the following
purposes, all as more fully described in the attached Proxy Statement:
1. To elect 13 Directors to serve for the ensuing year, and until
their respective successors are elected and qualified.
2. To approve an amendment to the Company's 1987 Stock Option Plan
("Plan") to increase the number of shares of Common Stock, $0.01 par value,
available for issuance pursuant to the Plan from 166,666 shares to 366,666
shares.
3. To transact such other business as may properly come before the
Meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on November 9, 1995, as
the record date for the determination of the stockholders entitled to notice of,
and to vote at, the Meeting or any adjournment thereof.
You are requested to date, sign and return the accompanying form of proxy in the
envelope enclosed for that purpose (to which no postage need be affixed if
mailed in the United States) whether or not you expect to attend the Meeting in
person. The proxy is revocable by you at any time prior to its exercise by
written notice to the Secretary of the Company or by executing a proxy with a
later date. The prompt return of the proxy will be of assistance in preparing
for the Meeting and your cooperation in this respect will be appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
MARTIN J. McLAUGHLIN
Secretary
Fresh Meadows, New York
November 10, 1995
<PAGE>
NEWS COMMUNICATIONS, INC.
__________________________
PROXY STATEMENT
___________________________
SPECIAL MEETING IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On December 15, 1995
____________________________
This Proxy Statement is furnished in connection with the solicitation of
proxies, in the accompanying form, by the Board of Directors of NEWS
COMMUNICATIONS, INC. ("Company") for use in voting at the Special Meeting in
Lieu of Annual Meeting of Stockholders to be held at the offices of Graubard
Mollen & Miller, counsel for the Company, 600 Third Avenue, New York, New York,
on Friday, December 15, 1995, at 10:00 A.M., and at any and all adjournments
thereof. Any proxy given pursuant to this solicitation may be revoked by the
person giving it by giving written notice of its revocation to the Secretary of
the Company or by filing with the Secretary a duly executed proxy bearing a
later date. Unless otherwise specified in the proxy, shares represented by
proxies will be voted for the election as Directors of the Company of the
nominees listed herein and approval of the amendment to the Company's 1987 Stock
Option Plan.
The Company's executive offices are located at 174-15 Horace Harding
Expressway, Fresh Meadows, New York 11365. On or about November 10, 1995, this
Proxy Statement and the accompanying form of proxy, together with a copy of the
Company's Annual Report on Form 10-KSB of the Company for the fiscal year ended
November 30, 1994, are to be mailed to each stockholder of record at the close
of business on November 9, 1995.
VOTING SECURITIES
Only stockholders of record at the close of business on November 9, 1995,
will be entitled to vote at the Meeting and any and all adjournments thereof.
As of November 9, 1995, the Company had issued and outstanding 7,805,365 shares
of Common Stock, par value $.01 per share, the Company's only class of voting
securities outstanding. Each stockholder of the Company will be entitled to one
vote for each share of Common Stock registered in his name on the record date.
A majority of all of the outstanding shares of Common Stock constitutes a quorum
and is required to be present in person or by proxy to conduct business at the
Meeting.
The following table sets forth certain information with respect to (i)
those persons or groups known to the Company to beneficially own more than 5% of
the Company's Common Stock, (ii) each Director and nominee of the Company, (iii)
each executive officer of the Company listed in the summary compensation table
on page 7 of this Proxy Statement, and (iv) all directors and officers as a
group. The information is determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934 and is based upon information furnished by the
persons listed. Except as otherwise indicated, each stockholder listed
possesses sole voting and investment power with respect to his shares.
<PAGE>
<TABLE><CAPTION>
Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class
---------------- -------------------- --------------
<S> <C> <C>
Gary Ackerman 466,001(1) 5.9%
218-14 Northern Boulevard
Bayside, N.Y. 11432
Eric Breindel 52,500(3) *
210 South Street
New York, N.Y. 10022
John Catsimatidis 45,000(3) *
832 11th Avenue
New York, N.Y. 10019
Jerry Finkelstein 1,479,503(2)(3) 17.4%
150 East 58th Street
New York, N.Y. 10158
Joseph K. Fisher 39,167(3) *
301 East 57th Street
New York, N.Y. 10021
David Jaroslawicz 39,834(3) *
150 Williams Street
New York, N.Y. 10038
William J. Kelleher, Jr. 21,000 *
199 Water Street
New York, N.Y. 10038
Andrew J. Maloney 43,000(3) *
1 World Trade Center
New York, N.Y. 10001
Christopher C. McGrath 39,167(3) *
120 Washington Avenue
Albany, N.Y. 12210
Martin J. McLaughlin 61,751(3) *
36 West 44th Street
New York, N.Y. 10036
Daniel Rattiner 172,547(3)(4) 2.2%
26 Three Mile Harbor
Hog Creek Road
East Hampton, N.Y. 11932
Michael Schenkler 477,599(3)(5) 6.0%
174-15 Horace Harding Expressway
Fresh Meadows, N.Y. 11365
Andrew J. Stein 170,000(3) 2.2%
625 Madison Avenue
New York, N.Y. 10022
Arthur Tarlow 73,726(3)(6) *
1505 Kellum Place
Mineola, N.Y. 11501
All Directors and Executive Officers as a Group 3,208,570(7) 34.3%
(16 persons)
J. Morton Davis(8) 920,429 11.1%
D.H. Blair Holdings, Inc.(8)
D.H. Blair Investment Banking Corp.(8)
44 Wall Street, New York, NY 10005
</TABLE>
___________________________________
(Footnotes are on next page.)
2
<PAGE>
___________________________________
* Less than one percent.
(1) Includes (i) 5,334 shares owned by Mr. Ackerman's children for whom Mr.
Ackerman is custodian and (ii) 44,560 shares, of which (a) 22,280 are
issuable together with 200,000 Redeemable Class B Warrants ("B Warrants")
upon the exercise of 200,000 presently exercisable Redeemable Class A
Warrants ("A Warrants"), and (b) 22,280 are issuable upon the subsequent
exercise of the 200,000 B Warrants, which may be immediately exercised upon
their acquisition.
(2) Includes (i) 29,834 shares owned by The Jerry Finkelstein Foundation, Inc.,
of which Mr. Finkelstein is President, and (ii) 200,000 shares owned by Mr.
Finkelstein's wife.
(3) Includes the following numbers of shares purchasable upon the exercise of
presently exercisable options: Mr. Breindel -- 52,500; Mr. Catsimatidis --
45,000; Mr. Finkelstein -- 687,500; Mr. Fisher -- 39,167;
Mr. Jaroslawicz -- 37,500; Mr. Kelleher -- 20,000; Mr. Maloney -- 43,000;
Mr. McGrath -- 37,500; Mr. McLaughlin -- 60,000; Mr. Rattiner -- 35,000;
Mr. Schenkler -- 132,500; Mr. Stein -- 120,000; Mr. Tarlow -- 57,500.
(4) Includes (i) 500 shares owned by Mr. Rattiner's wife, (ii) 1,800 shares
issuable upon conversion of the Company's 10% Preferred Stock, and (iii)
4,010 shares, of which (a) 2,005 are issuable together with 18,000
presently exercisable A Warrants, and (b) 2,005 are issuable upon the
subsequent exercise of the 18,000 B Warrants, which may be immediately
exercised upon their acquisition.
(5) Includes 22,280, shares of which (i) 11,140 are issuable, together with
100,000 B Warrants, upon the exercise of 100,000 presently exercisable A
Warrants, and (ii) 11,140 are issuable upon the subsequent exercise of the
100,000 B Warrants, which may be immediately exercised upon their
acquisition. Also includes 32,386 shares owned by Mr. Schenkler's wife as
custodian for two minor children of which Mr. Schenkler disclaims
beneficial ownership. Such shares include (i) 9,000 shares that are
issuable upon conversion of the Company's 10% Non-Voting Preferred Stock,
and (ii) 10,026 shares that are issuable, together with 90,000 B Warrants,
upon the exercise of 90,000 presently exercisable A Warrants, and (iii)
10,026 shares issuable upon the subsequent exercise of the 90,000 B
Warrants, which may be immediately exercised on their acquisition.
(6) Includes 4,010 shares, of which (i) 2,005 are issuable, together with
18,000 B Warrants, upon the exercise of 18,000 presently exercisable A
Warrants, and (ii) 2,005 are issuable upon the subsequent exercise of the
18,000 B Warrants, which may be immediately exercised upon their
acquisition.
(7) Includes shares issuable upon the exercise of the options and Warrants and
upon the conversion of the 10% Preferred Stock referred to in (3), (4), (5)
and (6) above.
(8) Includes (i) 440,914 shares of Common Stock owned by D.H. Blair Investment
Banking Corp. ("Blair Investment"), a wholly-owned subsidiary of D.H. Blair
Holdings, Inc. ("Blair Holdings"), of which J. Morton Davis is a
shareholder and director, (ii) 61,915 shares owned by Rivkalex Corporation
("Rivkalex"), a private corporation owned by Rosalind Davidowitz, Mr.
Davis's wife, (iii) 7,200 shares owned by Rosalind Davidowitz, and (iv)
410,400 shares issuable upon exercise of 76 Units of an option owned by
Blair Investment, of which each Unit consists of one share of 10% Preferred
Stock and 18,000 Class A Warrants. Each share of 10% Preferred Stock is
convertible at any time into 1,800 shares of Common Stock. Each Class A
Warrant entitles the holder thereof to purchase .10 shares of Common Stock
and one Class B Warrant. Each Class B Warrant, when issued, entitles the
holder to purchase .10 shares of Common Stock. Mr. Davis, Blair Holdings
and Blair Investment expressly disclaim beneficial ownership of all
securities held by Rivkalex and Rosalind Davidowitz.
3
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors has presently been fixed at thirteen members, all of
whom are to be elected at the Meeting to serve for the ensuing year and until
their respective successors are elected and qualified. The persons listed below
have been nominated by the Board of Directors for election to such positions.
The proxies given pursuant to this solicitation will be voted for the nominees
listed below unless authority is withheld. Should a nominee become unavailable
for any reason, the proxies will be voted for an alternative nominee to be
determined by the persons named in the proxy. The Board of Directors has no
reason to believe that any nominee will be unavailable. Proxies cannot be voted
for a greater number of persons than the number of nominees named. The election
of Directors requires a plurality vote of those shares voted at the Meeting with
respect to the election of Directors. There is no cumulative voting. The names
of the nominees, together with certain information furnished by them, are as
follows:
<TABLE><CAPTION>
Year
First Position with
Elected the Company
Name Age Director and Subsidiaries
---- --- -------- ----------------
<S> <C> <C> <C>
Gary Ackerman 52 1990 Director of the Company
Eric Breindel 39 1993 Director of the Company
John Catsimatidis 47 1991 Director of the Company
Jerry Finkelstein 79 1987 Chairman of the Board and Director of the Company and
director and officer of subsidiaries
Joseph K. Fisher 48 1990 Director of the Company
David Jaroslawicz 48 1990 Director of the Company
William J. Kelleher 48 1994 Director of the Company
Andrew J. Maloney 63 1993 Director of the Company
Christopher C. McGrath 58 1987 Director and Treasurer of the Company
Martin J. McLaughlin 56 1990 Director and Secretary of the Company and director and
officer of subsidiaries
Michael Schenkler 49 1990 Director, President and Chief Executive Officer of the
Company and director and officer of subsidiaries
Andrew J. Stein 50 1994 Director of the Company
Arthur Tarlow 65 1993 Director of the Company
</TABLE>
Gary Ackerman has served in the United States House of Representatives as
the Representative from New York since March 1983. From 1979 until 1983, Mr.
Ackerman was a member of the New York State Senate. From 1970 to 1979, Mr.
Ackerman was the founder, editor and publisher of The Queens Tribune.
Eric Breindel has been Editorial Page Editor of the New York Post since
-------------
1986. He also writes for Commentary, The New Republic, The Wall Street Journal
---------- ---------------- -----------------------
and other periodicals. He is the recipient of numerous professional awards and
honors and appears regularly as a commentator on both television and radio news
programs. Mr. Breindel is a graduate of Harvard College and Harvard Law School.
4
<PAGE>
John Catsimatidis is the Chairman of Red Apple Group, Inc., a holding
company for supermarket chains in New York. Since July 1988, Mr. Catsimatidis
has served as Chairman of the Board, Chief Executive Officer, Treasurer and
director of Sloan Supermarkets, Inc., an American Stock Exchange listed company.
Mr. Catsimatidis is also currently the Chairman of the Board, Chief Executive
Officer, President and director of United Refining Company, a refiner and
retailer of petroleum products.
Jerry Finkelstein became Chairman of the Board of the Company in August
1993. He served as publisher of The New York Law Journal from 1960 to 1984.
------------------------
Mr. Finkelstein was Chairman of the Board of Struthers Wells Corporation for
more than five years prior to November 1993, when he resigned. Struthers Wells
Corporation filed for protection under Chapter XI of the United States
Bankruptcy Code in February 1994. Mr. Finkelstein is a former member of the
Board of Directors of Rockefeller Center, Inc., Chicago Milwaukee Corporation,
Chicago Milwaukee Railroad Corporation and TPI Enterprise, Inc. (formerly
Telecom Plus International Inc.), a communications company. He is also a former
Commissioner of the Port Authority of New York and New Jersey. Mr. Finkelstein
is the father of Andrew J. Stein.
Joseph K. Fisher has served as President and Chief Executive Officer of
Fisher & Company, a New York based marketing communications firm since March
1988. From 1978 to 1988, he was Chairman and Chief Executive Officer of Fisher,
Jackson, Levy, Flaxman, an advertising agency, and, from 1981 to 1987, he was
President of Steadman, Sheehan, Meara and Fisher, a public relations firm. Mr.
Fisher has been a director of International Thoroughbred Breeders, an American
Stock Exchange company, since 1986 and a director of the New York Drama League
since 1987.
David Jaroslawicz has been an attorney in private practice in New York and
California for more than the past five years. He is a member of the Bar of New
York, California and Florida.
William J. Kelleher, Jr., since November 1993, has been General Counsel to
Colonia Insurance Company. Previously, from 1983, he was in private practice,
specializing in litigation in federal and state courts. From 1981 to 1983, he
was Chief, Market Integrity Section, of the United States Commodity Futures
Trading Commission. From 1979 to 1981, he was Chief Counsel to the New York
State Senate Committee on Investigations, Taxation and Government Operations.
From 1978 to 1979, he was Chief of Investigations for the District Attorney of
Queens County, New York, and from 1973 to 1978, he was an Assistant United
States Attorney for the United States Attorney's Office for the Southern
District of New York.
Andrew J. Maloney is a partner at the New York law firm of Brown & Wood.
From 1986 until December 1992, Mr. Maloney was United States Attorney for the
Eastern District of New York. Mr. Maloney is a graduate of the United States
Military Academy at West Point and Fordham Law School.
Christopher C. McGrath has been a government relations consultant since
August 1, 1988. Prior to that time, from November 1986 through July 1988, he
was Executive Director of the New York State Petroleum Council, a subsidiary of
the American Petroleum Institute, a trade association representing major oil
companies. Previously, he was Director of Government Relations of the New York
State Petroleum Council. In December 1987, he became Treasurer of the Company.
Martin J. McLaughlin has been a local government lobbyist since 1982 for
corporate clients in various industries, such as real estate and utilities. Mr.
McLaughlin also performs public relations work for various corporate clients.
In March 1991, he became Secretary of the Company.
Michael Schenkler became the Vice President of the Company in August 1990
and was elected President in December 1991. He has been President and Publisher
of The Queens Tribune since 1979. Prior to taking over The Queens Tribune full
time in 1982, Mr. Schenkler spent 15 years as an educator employed by the Board
of Education of New York City, where he served as a teacher, assistant principal
and principal.
5
<PAGE>
Andrew J. Stein is President of Benake Corporation, a management consulting
firm. Prior to assuming such position in 1993, Mr. Stein was actively involved
in public affairs. From 1986 to 1993, he was President of the Council, New York
City. From 1978 to 1985, he was President of the Borough of Manhattan and from
1969 to 1977, he was a member of the New York State Assembly. Mr. Stein is
presently Chairman of the New York State Commission for the Study of Youth Crime
and Violence and Reform of the Juvenile Justice System under appointment of
Governor Mario Cuomo. He was also Chairman of the New York City Commission on
Public Information and Communication, and has been a Trustee of the New York
City Employees Retirement System and an ex officio member of The Museum of The
City of New York, The New York Public Library, The Metropolitan Museum of Art
and The Queens Borough Public Library. Mr. Stein is a son of Mr. Finkelstein.
Arthur Tarlow is an attorney currently of counsel to Meyer, Suozzi, English
& Klein, P.C. of Mineola, New York, where he has been practicing for more than
10 years as a specialist in taxation, estates and trusts. He is also a
Certified Public Accountant and has been a partner in the accounting firm of
David Tarlow & Company for more than 25 years. He is a member of the New York
State Bar Association, admitted to practice before the U.S. Tax Court, and a
member of the New York State Society of CPAs and the American Institute of
Certified Public Accountants.
The Directors serve until the next annual meeting of stockholders or until
their respective successors are elected and qualified.
During the fiscal year ended November 30, 1994, the Company's Board of
Directors held three meetings. All of the persons who were Directors at the
times of such meetings attended at least 75% of the meetings other than Messrs.
Fisher and McGrath. The Board of Directors has established a Compensation
Committee, an Audit Committee and a Nominating Committee. The Compensation
Committee makes recommendations to the Board of Directors regarding remuneration
of the executive officers and directors of the Company and its subsidiaries.
The Compensation Committee is composed of Messrs. Finkelstein, Fisher and
Jaroslawicz. The Audit Committee recommends annually to the Board of Directors
the independent auditors for the Company and its subsidiaries; meets with the
independent auditors concerning their audit, their evaluation of the Company's
financial statements, accounting developments that may affect the Company, and
nonaudit services; meets with management concerning similar matters; and makes
recommendations to all of the aforesaid groups that it deems appropriate. The
Audit Committee is composed of Messrs. McGrath, Fisher and Jaroslawicz. The
Nominating Committee, which consists of Messrs. Finkelstein, McLaughlin and
Schenkler, makes recommendations to the Board as to persons to be nominated as
Directors. None of these Committees held any meetings during the fiscal year
ended November 30, 1994 as all of the matters within their respective provinces
were considered by the Board of Directors as a whole. The Board of Directors
also appoints special committees from time to time to consider and advise upon
specific contracts or transactions.
Executive Officers
In addition to Messrs. Finkelstein and Schenkler, the following persons are
executive officers or other significant employees of the Company or its
subsidiaries:
Position with
the Company
Name Age and Subsidiaries
---- --- ----------------
Thomas Allon 32 Executive Vice President of the
Company
Robert Berkowitz 47 Controller of the Company
6
<PAGE>
Position with
the Company
Name Age and Subsidiaries
---- --- ----------------
Daniel Rattiner 55 President, Publisher, Editor
and Director of Dan's Papers,
Inc.
Thomas Allon was elected Executive Vice President of the Company in
November 1994. He has been Publisher of the Manhattan Spirit and Our Town since
1992. From 1990 to 1991 he was ManagingAssociate Publisher of the Manhattan
Spirit.
Robert Berkowitz has served as Controller of the Company since December
1992. From November 1991 to November 1992, Mr. Berkowitz was a financial and
management consultant with Gobstein, Weingarten & Goldfarb, a certified public
accounting firm. From August 1989 to November 1991 he was the Chief Accounting
Officer for Meringoff Equities, an owner and manager of commercial real estate.
From August 1980 to August 1989 he was Vice-President and Controller of the
Trump Group, a private investment company specializing in the acquisition and
operation of both public and private companies. From 1977 to 1980 he was with
the public accounting firm of Price Waterhouse.
Daniel Rattiner is Publisher and Editor of Dan's Papers, having held these
positions since he began the publication in 1960. He has also been President
and a director of Dan's Papers, Inc. ("DPI") since its organization in October
1988.
Officers serve at the discretion of the Board of Directors.
Executive Compensation
The following tables show compensation paid by the Company and its
subsidiaries to certain of its executive officers (including the chief executive
officer) for the fiscal years ended November 30, 1994, 1993 and 1992 and certain
information with respect to stock options granted to such executive officers.
<TABLE><CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term
Compensation
Awards
Other
Annual
Compensa-
Salary Bonus tion
Options
Name and Principal Position Year ($) ($) ($) (#)
<S> <C> <C> <C> <C> <C>
Michael Schenkler, President and Chief 1994 142,553 --- --- 67,500
Executive Officer of the Company and 1993 142,553 --- --- 45,000
officer of subsidiaries 1992 142,553 --- --- ___
Daniel Rattiner, Officer of Dan's 1994 124,016 39,367 15,000(1) ---
Papers, Inc. 1993 120,406 20,285 15,000(1) 35,000
1992 117,231 10,203 15,000(1) ---
Jerry Finkelstein, Chairman of the Board 1994 175,392 --- --- 217,500
of the Company and officer of 1993 --- --- --- 310,000
subsidiaries 1992 --- --- --- ---
</TABLE>
(1) Mr. Rattiner is entitled to receive an aggregate of $15,000 per year for
discounted trade-sale merchandise from advertisers (who provide such
merchandise to Mr. Rattiner in lieu of paying the Company for advertising).
7
<PAGE>
<TABLE><CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
Number of Percent of
Securities Total Options/
Underlying SARs Granted Exercise or
Options/SARs to Employees Base Price
Granted (#) in Fiscal Year ($/Sh) Expiration Date
<S> <C> <C> <C> <C>
Michael Schenkler 7,500 1.1 2.00 4/8/99
10,000 1.4 2.625 8/17/99
50,000 7.1 2.00 11/7/99
Jerry Finkelstein 7,500 1.1 2.00 4/8/99
150,000 21.4 2.625 8/12/99
10,000 1.4 2.625 8/17/99
50,000 7.1 2.00 11/7/99
</TABLE>
<TABLE><CAPTION>
AGGREGATE YEAR-END OPTION VALUES
(November 30, 1994)
Number of unexercised options at Value of unexercised in-the-money
fiscal year-end(#) options at fiscal year-end($)
Name Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C>
Michael Schenkler 122,500 --- 35,625 ---
Jerry Finkelstein 527,000 --- 67,500 ---
Daniel Rattiner 35,000 --- 4,375 ---
</TABLE>
Employment Contracts and Other Employment Agreements
Pursuant to an employment agreement entered into by the Company and Michael
Schenkler as of October 15, 1994, and terminating October 14, 1999, Mr.
Schenkler is employed as President of the Company and President of Tribco. Mr.
Schenkler earns a base salary of $150,000 per year (subject to cost-of-living
increases) and such annual bonuses as the Board of Directors of the Company may
determine in its sole discretion. The agreement requires Mr. Schenkler to
protect confidential information of the Company and restricts him from engaging
in certain competitive activities during the term of his employment and for one
year thereafter.
Pursuant to an employment agreement terminating in 1998, as amended, as
compensation for his services to DPI, Daniel Rattiner earns a base salary from
DPI of $100,000 per year, adjusted for increases in the consumer price index
after 1988, plus a bonus in each fiscal year based on net profits (as defined)
of DPI. Mr. Rattiner may terminate his employment at any time. Mr. Rattiner
has pledged to keep secret DPI's confidential matters and, in the event he
leaves the employ of DPI, not to compete with DPI for specific periods of time,
depending on the reasons for his separation.
Pursuant to an employment agreement entered into by the Company and Jerry
Finkelstein as of August 20, 1993, and terminating on August 19, 1998, Mr.
Finkelstein is employed as Chairman of the Board of Directors of the Company
("Board")at an annual salary of $195,000. Mr. Finkelstein may also be paid
annual bonuses at the discretion of the Board. Mr. Finkelstein may terminate
the agreement at any time on at least 10 days' notice to the Company. In the
event of his permanent disability or death, salary and bonuses
8
<PAGE>
shall continue to paid to him or the legal representative of his estate until
the end of the term of the agreement. Under the agreement, Mr. Finkelstein is
required to devote such time to the affairs of the Company as he deems necessary
and appropriate.
Pursuant to an employment agreement entered into by the Company and Thomas
Allon as of November 1, 1994, and terminating November 30, 1997, Mr. Allon is
employed as Executive Vice President of the Company. Mr. Allon earns a base
salary of $80,000 per year (subject to cost-of-living increases) and, for fiscal
years beginning December 1, 1994, is entitled to a bonus of 5% of the net
profits of the Company derived from the Company's publications Manhattan Spirit,
Our Town, Manhattan File, Chelsea-Clinton News and Westsider, but in no event
shall such bonus be less than $45,000 nor more than $70,000 for any fiscal year.
The agreement requires Mr. Allon to protect confidential information of the
Company and restricts him from engaging in certain competitive activities during
the term of his employment and for one year thereafter.
The Company has no established compensation arrangements with its
directors. See "Directors' and Officers' Options," below.
Directors' and Officers' Options
On August 17, 1993, the Board adopted a "Discretionary Directors and
Officers Stock Option Plan" (the "Discretionary Option Plan") pursuant to which,
as amended, the Board may award options to purchase an aggregate of 2,000,000
shares of Common Stock to directors and officers of the Company and its
subsidiaries which shall be exercisable at the market price on the date of grant
for periods, and under conditions, specified by the Board in such grants.
Options under the Discretionary Option Plan are non-qualified and non-incentive
options for purposes of income taxation and are not intended to qualify under
Section 422A of the Internal Revenue Code of 1986. During the fiscal year ended
November 30, 1994, the following grants of five-year options were made to
executive officers and directors of the Company under the Discretionary Option
Plan (not including grants to Messrs. Finkelstein and Schenkler which are
reported in the second table above):
<TABLE><CAPTION>
No. of Shares Exercise
Optionee Date of Grant Subject to Grant Price
-------- ------------- ---------------- ---------
<S> <C> <C> <C>
Thomas Allon 8/12/94 40,000 $2.625
Eric Breindel 4/8/94 7,500 $2.00
11/7/94 15,000 $2.00
John Catsimatidis 4/8/94 10,000 $2.00
8/12/94 5,000 $2.625
Joseph K. Fisher 4/8/94 7,500 $2.00
David Jaroslawicz 4/8/94 7,500 $2.00
Andrew J. Maloney 4/8/94 10,000 $2.00
8/12/94 3,000 $2.625
Christopher J. McGrath 4/8/94 7,500 $2.00
Martin J. McLaughlin 4/8/94 10,000 $2.00
8/12/94 5,000 $2.625
11/7/94 15,000 $2.00
Arthur Tarlow 4/8/94 7,500 $2.00
8/12/94 5,000 $2.625
11/7/94 15,000 $2.00
</TABLE>
9
<PAGE>
On June 22, 1995, Mr. Finkelstein was granted a five-year option to
purchase 350,000 shares of Common Stock at $2.00 per share pursuant to the
Discretionary Option Plan.
On August 17, 1993, the Board also adopted a "Non-Discretionary Directors
Stock Option Plan" (the "Non-Discretionary Option Plan") pursuant to which each
director is granted on August 17, 1993 and each anniversary thereof on which he
or she continues to be a director, a five-year option to purchase 10,000 shares
of Common Stock at the market price on the date of grant. The Non-Discretionary
Plan also provides that any person becoming a director within the six month
after any August 17 will be granted an option for 10,000 shares on the date he
or she becomes a director. The Non-Discretionary Option Plan was approved by
the stockholders of the Company on July 15, 1994. Pursuant to the
Non-Discretionary Option Plan, each person who was a director of the Company
(other than Mr. Ackerman) received grants of options to purchase 10,000 shares
of Common Stock exercisable at $2.625 per share on August 17, 1994 and 10,000
shares of Common Stock exercisable at $2.50 per share on August 17, 1995.
Certain Transactions
The Company has the option, in certain circumstances, to acquire Mr.
Rattiner's shares in DPI. Mr. Rattiner can require the Company to purchase his
20% interest in DPI at any time on or after October 13, 1993 for a price equal
to 20% of DPI's retained earnings (if any) plus the greater of $200,000 or 20%
of DPI's gross collected revenues (after deduction of advertising agency
commissions) for the full fiscal year prior to the year in which notice is
given; provided, however, that DPI's after-tax profits are at least equal to 7%
of the gross collected revenues (after deduction of advertising agency
commissions).
DPI leases from Mr. Rattiner 1,910 square feet of office space at an annual
rate of $38,200 (plus cost-of-living adjustments) in a building on Montauk
Highway, Bridgehampton, New York, for a term of ten years terminating in October
1998 (plus a five-year option).
Gristede's and Sloan's, supermarket chains that are owned by Red Apple
Group, Inc., of which Mr. Catsimatidis is Chairman, advertise in the Company's
Manhattan Spirit, Our Town and Dan's Papers publications. Such advertising is
placed at the Company's standard rates and has not exceeded $50,000 in any year.
Auditors
The independent accounting firm of Mortenson and Associates, P.C. served as
auditors of the Company for the fiscal year ended November 30, 1994, and has
been selected by the Board of Directors to serve as auditors of the Company for
the fiscal year ending November 30, 1995. A representative of Mortenson and
Associates, P.C. is expected to be present at the Meeting. The representative
will have the opportunity to make a statement and will be available to respond
to appropriate questions from stockholders.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, Directors and persons who beneficially own more than ten
percent of the Company's Common Stock to file reports of ownership and changes
in ownership with the Securities and Exchange Commission. These reporting
persons also are required to furnish the Company with copies of all Section
16(a) forms they file. To the Company's knowledge, based solely on its review
of the copies of such forms furnished to it, the Company believes that all
Section 16(a) reporting requirements were complied with during the fiscal year
ended November 30, 1994, except that one report covering one transaction was
filed late by each of Messrs. Catsimatidis, Maloney and McLaughlin and two
reports each covering one transaction were filed late by Mr. Finkelstein.
10
<PAGE>
APPROVAL OF AMENDMENT TO 1987 STOCK OPTION PLAN
The Company's 1987 Stock Option Plan ("Plan") was adopted by the Board of
Directors and approved by the stockholders in 1987. As originally adopted, it
provided for the grant of options of up to 166,666 shares. Such number of
options have been granted and the Board believes that it is in the best
interests of the Company to increase the number of options which may be granted
under the Plan by 200,000 so that options for a total of 366,666 shares may be
granted. The Board believes that the ability to receive options is an important
incentive to employees of the Company and that such increase will enable the
Company to continue to attract and retain employees of high caliber by offering
them the opportunity to acquire a proprietary interest in the Company and to
participate in the appreciation in value of the Company's Common Stock.
Accordingly, on July 6, 1995, the Board adopted an amendment to the Plan
increasing the number of shares for which options may be granted to 366,666 and
will present a resolution to approve such amendment. On November 6, 1995, the
last sale price of the Company's Common Stock, as reported on Nasdaq, was $2.56.
Summary of the Plan
Eligibility. Awards may be made to key employees and directors
(including non-employee directors) of the Company and its subsidiaries. As of
November 1, 1995, approximately 320 persons were eligible to participate in the
Plan.
Shares Subject to the Plan. The total number of shares of Common
Stock reserved and available for distribution under the Plan, as amended, is
366,666 shares. In the event of a merger, reorganization, consolidation,
recapitalization, dividend (other than a cash dividend), stock split, reverse
stock split, or other change in corporate structure affecting the stock, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan and in the number and exercise price of
shares subject to outstanding options as is determined by the Board as
appropriate in order to prevent dilution or enlargement of rights.
Term and Termination. The Plan was originally adopted and approved by
the stockholders on November 24, 1987 and will expire on November 24, 1997.
Administration. The Plan is administered and interpreted by the Board
of Directors.
Agreement. Each grant of a stock option shall be confirmed by, and
subject to the terms of, an agreement between the holder and the Company.
Option Price. The option price per share of Common Stock shall be not
less than 100% of the fair market value, which usually will be the last sale
price of the Common Stock as quoted on Nasdaq on the day prior to the date on
which the award is made. However, the option price of any qualified incentive
stock option granted to a stockholder of the Company who owns at least 10% of
the Company's Common Stock at the time of grant shall not be less than 110% of
fair market value.
Exercise Period. Each option granted under the Plan shall terminate
(become non-exercisable) after the expiration of ten years from the date of its
grant. However, qualified incentive stock options granted to any stockholder
who, at the time of grant, owns at least 10% of the Company's Common Stock,
terminate after the expiration of five years from the date of the grant.
Types of Options. Options may be either qualified incentive stock
options which qualify for favorable tax treatment under Section 422A of the
Internal Revenue Code of 1986 or non-qualified stock options which do not
qualify for such favorable tax treatment. The aggregate fair market value with
respect to which qualified incentive stock options can become exercisable by a
participant for the first time during any calendar year under the Plan or other
similar plans shall not exceed $100,000.
Termination of Option. Upon termination of employment with the
Company or its subsidiaries of a participant, all options granted to that
participant which are not exercisable on the date of termination
11
<PAGE>
immediately terminate and any remaining exercisable options terminate if not
exercised within thirty days following termination of employment if the
termination was not the result of death or retirement or three months following
termination of employment if termination was because of death, retirement or
with the consent of the Company.
Non-Transferability. No option granted under the Plan is assignable
or transferable except that, in the event of the death of a participant, an
option may be transferred by will or by the laws of descent and distribution.
Federal Income Tax Considerations
Under present law, no federal income tax consequences to the Company result
upon the grant or exercise of a qualified incentive stock option. As to an
optionee, no federal income tax consequences result upon the grant of a
qualified incentive stock option. Upon the exercise of a qualified incentive
stock option, although there would be no recognition of taxable income for
federal tax purposes, the difference between the exercise price and the market
price on the date of exercise wold be an item of tax preference for purposes of
applying the federal alternative minimum tax rules.
The grant of a non-qualified stock option does not have any federal income
tax consequences for either the Company or the optionee. However, upon exercise
of a non-qualified stock option, the optionee recognizes ordinary income in an
amount equal to the difference between the fair market value of the stock
acquired and the amount paid for such stock. The exercise of a non-qualified
stock option will not result in the recognition of an item of tax preference
subject to the alternative minimum tax. The Company will be entitled to an
ordinary deduction in an amount equal to the ordinary income recognized by the
optionee on exercise of the option.
Vote Required
The affirmative vote of a majority of the shares present at the Meeting, in
person or by proxy, is required to approve the amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
VOTES REQUIRED FOR APPROVAL
The 13 nominees for Director receiving a plurality of the votes cast at the
Meeting in person or by proxy shall be elected. All other matters require for
approval the favorable vote of a majority of shares present at the Meeting in
person or by proxy. Under Nevada law, based on the Company's understanding of
state law requirements and the Company's Articles of Incorporation and By-Laws,
abstentions and broker non-votes, if applicable, will be counted and will have
the effect of a negative vote on the proposal to approve the amendment to the
Company's 1987 Stock Option Plan as approval of that proposal requires a
favorable vote of a majority of the shares present at the Meeting.
OTHER MATTERS
The Board of Directors knows of no matter which will be presented for
consideration at the Meeting other than the matters referred to in this Proxy
Statement. Should any other matter properly come before the Meeting, it is the
intention of the persons named in the accompanying proxy to vote such proxy in
accordance with their best judgment.
12
<PAGE>
1996 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 1996 Annual Meeting of
Stockholders (presently scheduled to be held on June 18, 1996) to be eligible
for inclusion in the Company's Proxy Statement, they must be received by the
Company at its principal office in Fresh Meadows, New York, on or before January
31, 1996.
SOLICITATION OF PROXIES
The cost of proxy solicitations will be borne by the Company. In addition
to solicitations of proxies by use of the mails, some officers or employees of
the Company, without additional remuneration, may solicit proxies personally or
by telephone. The Company will also request brokers, dealers, banks and their
nominees to solicit proxies from their clients, where appropriate, and will
reimburse them for reasonable expenses related thereto.
BY ORDER OF THE BOARD OF DIRECTORS
MICHAEL SCHENKLER
President
Fresh Meadows, New York
November 10, 1995
13
<PAGE>
APPENDIX A
NEWS COMMUNICATIONS, INC.
1987 Stock Option Plan, As Amended
1. Name and Purpose. The purpose of this Plan, which shall be known
as the "News Communications 1987 Stock Option Plan" (the "Plan") is to advance
the interests of News Communications, Inc. (the "Company") by providing material
incentive for the continued services of those key employees and directors
(including Non-Employee Directors) of the Company and its Subsidiaries who make
significant contributions toward the Company's success and development, by
encouraging those key employees and directors (including Non-Employee Directors)
to increase their proprietary interest in the Company, and by attracting new,
able executives to employment with the Company and its Subsidiaries.
2. Definitions. For purposes of this Plan, the following terms,
when capitalized, shall have the meaning designated herein unless a different
meaning is plainly required by the context. Where applicable, the masculine
pronoun shall mean or include the feminine and the singular shall include the
plural.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Effective Date" shall mean the date on which this Plan
shall have been approved by the directors and stockholders of the Company.
(c) "Fair Market Value" of the Company's common shares on a
certain date shall mean, if the Company's common shares are listed on Nasdaq,
the last sale price as quoted by the Nasdaq System on the trading day
immediately prior to the date specified, or if the Company's common shares are
not quoted on Nasdaq on such date, on the next preceding date on which the
common shares are traded. If the Company's common shares are not listed on
Nasdaq, then "Fair Market Value" of the common shares on a certain date shall be
that value which the Board determines, in good faith, to be the fair market
value of the common shares on such date.
(d) "Key Employee" shall mean any employee of the Company and
its Subsidiaries (as defined in subparagraph 2(j) below) who, in the opinion of
the Board, has demonstrated a capacity for contributing in a substantial measure
to the success of the Company and its Subsidiaries.
(e) "Non-Employee Director" shall mean a member of the Board who
is not also an employee of the Company or its Subsidiaries.
(f) "Non-Qualified Stock Options" shall mean those options,
granted by the Company, pursuant to this Plan, which do not qualify for
favorable tax treatment under Section 422A of the Internal Revenue Code of 1986
(the "Code" ).
(g) "Participant" shall mean a Key Employee or Participating
Director selected by the Board (under subparagraph 3(a) below) to receive
options, whether Qualified Incentive Stock Options or Non-Qualified Stock
Options, granted under this Plan.
(h) "Participating Director" shall mean any director of the
Company and its Subsidiaries who, in the unanimous opinion of all of the
disinterested directors, had demonstrated a capacity for contributing in a
substantial measure to the success of the Company and its Subsidiaries.
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<PAGE>
(i) "Qualified Incentive Stock Options" shall mean those
options, granted by the Company pursuant to this Plan, which qualify for
favorable tax treatment under Section 422A of the Code.
(j) "Subsidiary" shall mean an affiliated employer during any
period that 50% or more of its common stock or, in the case of a partnership,
50% or more of the capital interest thereof, is owned directly or indirectly by
the Company, or during any period that it is a member with the Company in a
controlled group of corporations, or is otherwise under common control with the
Company within the meaning of Section 414(b) and (c) of the Code.
3. Administration; Selection of Participants.
(a) The Plan shall be administered by the Board, which shall
select the Participants from among the Key Employees and Participating Directors
and shall grant to the Participants stock options under, and in accordance with,
the provisions of the Plan.
(b) Subject to the express provisions of this Plan, the Board
shall have authority to adopt regulations and procedures which are consistent
with the terms of this Plan; to adopt and amend such stock option agreements as
they deem advisable; and to determine the terms and provisions of such stock
option agreements, including the number of shares with respect to which options
are granted to a Participant, the option price for such shares, and the date or
dates when the option or parts of it may be exercised -- which terms shall
comply with any applicable requirements of paragraph 5 below. The Board shall
have authority to construe and interpret such stock option agreements; to impose
such limitations and restrictions as are deemed necessary or advisable by
counsel for the Company so that compliance with the federal securities laws and
with the securities laws of the various states may be assured; and to make all
other determinations necessary or advisable for administering this Plan. All
decisions and interpretations made by the Board shall be binding and conclusive
on all Participants, their legal representatives and beneficiaries.
4. Shares Subject to the Plan.
(a) The shares to be issued and delivered by the Company upon
exercise of options granted under this Plan (whether Qualified Incentive Stock
Options or Non-Qualified Stock Options) are the Company's Common Shares, par
value $.01 per share, which may be either authorized but unissued shares, or
treasury shares, in the discretion of the Board.
(b) The aggregate number of the Company's common shares which
may be issued under this Plan shall not exceed 366,666; subject, however, to the
adjustment provided in Paragraph 10 in the event of stock splits, certain stock
dividends, exchanges of shares, or the like, occurring after the Effective Date.
No stock option may be granted under this Plan which could cause such maximum
limit to be exceeded.
(c) Shares covered by an option which is no longer exercisable
with respect to such shares shall again be available for issuance in connection
with other options granted under this Plan.
5. Terms of Options. Options granted under the Plan shall be
evidenced by stock option agreements authorized by the Board and executed by a
duly authorized officer of the Company. Such stock option agreements shall
contain such terms as the Board shall determine, subject to the following
limitations and requirements:
(a) Option price: The option price per common share shall be
not less than 100% of the Fair Market Value of the common shares on the date of
grant of such option; provided, however, that the option price of any Qualified
Incentive Stock Options granted to any stockholder of the Company who owns at
least 10% of the Company's common shares shall not be less than 110% of such
Fair Market Value.
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<PAGE>
(b) Period within which option may be exercised: Each option
granted under this Plan shall terminate (become non-exercisable) after the
expiration of ten years from the date of grant of such option; provided,
however, that Qualified Incentive Stock Options granted to any stockholder of
the Company who owns, at the time of grant, at least 10% of the Company's common
shares, shall terminate after the expiration of five years from the date of
grant of such option.
(c) Termination of option by reason of termination of
employment: Upon termination of the employment with or directorship in the
Company and its Subsidiaries of a Participant granted options under the Plan,
all options granted under this Plan to such Participant which are not
exercisable on the date of such termination shall immediately terminate, and any
remaining exercisable options shall terminate if not exercised before the
expiration of the applicable period specified below, or at such earlier time as
may be applicable under subparagraph 5(b) above:
(i) No later than thirty (30) days following such
termination of employment or directorship, if such termination was not a result
of death or retirement of the Participant.
(ii) No later than three months following such termination
of employment or directorship, if such termination was because of death, or
because of retirement under the provisions of any retirement plan of the Company
or any Subsidiary, or with the consent of the Company.
Whether time spent on leave of absence granted by the Company or
any Subsidiary shall constitute continued employment or continued status as a
director for purposes of this Plan, shall be determined by the Board in its sole
discretion.
Notwithstanding the foregoing, the Board may, in its sole
discretion, impose more restrictive conditions on the exercise of an option
granted under the Plan, including, without limitation, providing for no exercise
of any option after termination of a Participant's employment or directorship;
however, any and all such conditions shall be specified in the stock option
agreement limiting and defining such option.
(d) Non-transferability: No option under this Plan shall be
assignable or transferable except, in the event of the death of a Participant,
by his will or by the laws of descent and distribution. In the event of the
death of a Participant, the representative or representatives of his estate, or
the person or persons who acquired (by bequest or inheritance) the rights to
exercise his stock options granted under the Plan, may exercise any of the
unexercised options or part thereof prior to the expiration of the applicable
exercise period, as specified in subparagraphs 5(b) and 5(c) above, or in the
stock option agreement relating to such options. No transfer of an option by a
participant by will or by laws of descent and distribution shall be effective to
bind the Company unless the Company shall have been furnished with written
notice thereof and a copy of the will and such other evidence as the Company may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions of such option.
(e) More than one option granted to a Participant: More than
one option, and more than one form of option, may be granted to a Participant
under this Plan.
(f) Partial exercise: Unless otherwise provided in the stock
option agreement, any exercise of an option granted under this Plan may be made
in whole or in part.
(g) Limitation on Amount of Qualified Incentive Stock Options:
The aggregate fair market value (determined at the time the option is granted)
with respect to which Qualified Incentive Stock Options become exercisable by a
Participant for the first time during any calendar year (including all such
plans of the Company and its Subsidiaries) shall not exceed $100,000.
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<PAGE>
6. Period of Granting Options. No option shall be granted under
this Plan subsequent to ten years after the Effective Date.
7. No Effect Upon Employment Status. The fact that an employee has
been designated a Key Employee or selected as a Participant shall not limit or
otherwise qualify the right of his employer to terminate his employment at any
time.
8. Method of Exercise. Any option granted under this Plan may be
exercised by written notice to the Board, signed by the Participant, or by such
other person as is entitled to exercise such option. The notice of exercise
shall state the number of shares in respect of which the option is being
exercised, and shall be accompanied by the payment, in cash, and/or, as provided
below, in the common shares of the Company, of the full option price for such
shares. At the written request of the Participant and upon approval by the
Board, shares acquired pursuant to the exercise of any option may be paid for at
the time of exercise by the surrender of common shares of the Company held by or
for the account of the Participant at the time of exercise (for Qualified
incentive Stock Options only to the extent permitted by subsection (c)(4) of
Section 422A of the Code, without liability to the Company). In such case, the
fair market value of the surrendered shares shall be determined by the Board as
of the date of exercise in the same manner as such value is determined upon the
grant of an option. A certificate or certificates for the common shares of the
Company purchased through the exercise of an option shall be issued in regular
course after the exercise of the option and payment therefor. The Company
shall be afforded reasonable opportunity after exercise of any option to comply
with any requirements for stock exchange listing, for registration under
applicable securities or other laws and for compliance with other laws and
regulations, if any, before issuance of the shares being purchased on such
exercise. During the option period, no person entitled to exercise any option
granted under this Plan shall have any of the rights or privileges of a
shareholder with respect to any shares issuable upon exercise of such option
until certificates representing such shares shall have been issued and
delivered. The exercise of any option shall be contingent upon receipt from the
Participant of a representation that, at the time of such exercise, it is his or
her then present intention to acquire the shares being purchased for investment
and not for distribution (unless the Plan has been duly registered under the
Securities Act of 1933 and the Company has waived the requirement that such
representation be made).
9. Implied Consent of Participants. Every Participant, by his
acceptance of an option under this Plan, shall be deemed to have consented to be
bound, on his own behalf and on behalf of his heirs, assigns, and legal
representatives, by all of the terms and conditions of this Plan.
10. Share Adjustments. In the event there is any change in the
Company's common shares resulting from stock splits, stock dividends of more
than 5% in any year, combinations or exchanges of shares, or other similar
capital adjustments, equitable proportionate adjustments shall be made by the
Board in (1) the number of shares available for option under this Plan, (2) the
number of shares subject to options granted under this Plan, and (3) the option
price of optioned shares.
11. Merger, Consolidation, or Sale of Assets. In the event the
Company shall consolidate with, merge into, or transfer all or substantially all
of its assets to another corporation or corporations (herein referred to as
"successor employer corporation"), such successor employer corporation may
obligate itself to continue this Plan and to assume all obligations under the
Plan (for Qualified Incentive Stock Options, in a manner consistent with the
provisions of Section 425(a) of the Code, or the provisions of that Section as
it may be hereafter amended or as it may be replaced by any other section or
sections of the Code of like intent or purpose). In the event that such
successor employer corporation does not obligate itself to continue this Plan as
above provided, this Plan shall terminate upon such consolidation, merger or
transfer, and any option previously granted hereunder shall terminate. If
practical, the Company shall give each Participant (20) days prior notice of any
possible transaction which might terminate this Plan and the options previously
granted hereunder.
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<PAGE>
12. Company Responsibility. All expenses of this Plan, including the
cost of maintaining records, shall be borne by the Company. The Company shall
have no responsibility or liability for any act or thing done or left undone
with respect to the price, time, quality, or other conditions and circumstances
of the purchase of shares under the terms of the Plan, so long as the Company
acts in good faith.
13. Law Governing. With respect to Qualified Incentive Stock
Options, the Plan is intended to comply with the provisions of Section 422A of
the Code. Any provisions of the Plan which conflict with the provisions of
Section 422A shall be deemed to be hereby amended so as to comply therewith.
14. Securities Laws. The Committee shall take all necessary or
appropriate actions to ensure that all option grants and all exercises thereof
under this Plan are in full compliance with all federal and state securities
laws.
15. Amendment and Termination. The Board may terminate this Plan at
any time, and may amend the Plan at any time or from time to time, without
obtaining any approval of the Company's stockholders; except that the Plan may
not be amended (1) except with the approval of the holders of a majority of the
outstanding shares of the Company's capital stock entitled to vote present at a
meeting at which a quorum is present, to increase the aggregate number of shares
issuable under the Plan (excepting proportionate adjustments made under
paragraph 10 to give effect to stock splits, etc.); (2) to change the option
price of optioned shares (excepting proportionate adjustments made under
paragraph 10); (3) to change the requirement that the option price per common
share not be less than 100% of the Fair Market Value of the common shares on the
date the option is granted (or less than 110% in the case of 10% stockholders
being issued Qualified Incentive Stock Options); (4) to extend the time within
which options may be granted or the time within which a granted option may be
exercised; (5) to change, without the consent of the Participant, any option
previously granted to him under the Plan; or (6) if such amendment would result
in a material increase in the cost of the Plan to the Company. If the Plan is
terminated, any unexercised option shall continue to be exercisable in
accordance with its terms, except as provided in paragraph 11 above.
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