SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.__13__)
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)
July 28, 1999
-----------------------------------------------------------
(Date of Event which Requires FIling of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b) (3) or (4), check the following box [ ].
*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).
Page 1 of 7 pages
<PAGE>
CUSIP No. 652484601 13D Page 2 of 7 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 2,439,909
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 2,439,909
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,439,909
- --------------------------------------------------------------------------------
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)
35%
- -------------------------------------------------------------------------------
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 below other than
the Reporting Parties.
<PAGE>
CUSIP No. 652484601 13D Page 3 of 7 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 0
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 1,590,003
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 0
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,590,003
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,590,003
- --------------------------------------------------------------------------------
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)
23.4%
- --------------------------------------------------------------------------------
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
below other than the Reporting Parties.
<PAGE>
CUSIP No. 652484601 13D Page 4 of 7 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 849,906
BENEFICIALLY --------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING --------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 849,906
--------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
849,906
- --------------------------------------------------------------------------------
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)
12.9%
- -------------------------------------------------------------------------------
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 below other than
the Reporting Parties.
<PAGE>
Page 5 of 7 pages
Item 2. (a) is hereby amended as follows:
J. Morton Davis, D.H. Blair Investment Banking Corp. ("Blair
Investment") and Rosalind Davidowitz, (together, the "Reporting
Parties").
Item 5. Interest in the Securities of the Issuer is amended in its entirety:
(a) As of July 28, 1999, Mr. Davis may be deemed to beneficially own
2,439,909 shares or 35% of the Issuer's shares issued and
outstanding as follows: (i) 1,372,303 shares owned by Blair
Investment (ii) Warrants to purchase 207,867 shares owned by Blair
Investment (iii) 9,833 shares issuable upon exercise of 1,967
shares of $10 convertible preferred stock (1) owned by Blair
Investment (iv) 41,006 shares owned by Rivkalex Corporation (2)
and (v) 808,900 shares owned by Rosalind Davidowitz.
As of July 28, 1999 Blair Investment may be deemed to beneficially
own 1,590,003 shares or 23.4% of the Issuer's shares as indicated
in (i) - (iii) above.
As of July 28, 1999 Rosalind Davidowitz may be deemed to
beneficially own 849,906 shares or 12.9% of the Issuer's shares as
indicated in (iv) and (v) 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 below, other than the Reporting Parties.
Item 6. Contracts, Arrangements, Understandings or Relationships with
respect to the securities of the Issuer.
(a) On July 28, 1999, the Reporting Parties entered into a certain
Stockholders' Agreement (the "Stockholders' Agreement") by and among the Issuer,
Jerry Finkelstein, the Finkelstein Foundation, Inc. and Shirley Finkelstein
(collectively, the "Finkelstein Group"); Melvyn I. Weiss and M&B Weiss Family
Partnership (the "Weiss Group"); Wilbur L. Ross, Jr. ("Ross"); J. Morton Davis,
Blair Investment, Rivkalex Corporation and Rosalind Davidowitz (collectively,
the "Davis Group"); and Steven Farbman (each member of the Finkelstein Group,
Ross, the Davis Group and the Weiss Group and Farbman, individually, a
"Stockholder" and collectively the "Stockholders"). The Stockholders' Agreement
is listed as Exhibit A to Item 7 and the terms thereof are incorporated herein
by reference.
Under the terms of the Stockholders' Agreement, for so long as
Farbman is President and Chief Executive Officer of the Issuer, the Stockholders
have agreed to act to reduce the size of the Issuer's Board of Directors to, and
to maintain the size of the Board at, 9 members. The Stockholders have also
agreed to vote their Shares so as to elect as directors of the Issuer (i)
Finkelstein; (ii) two persons designated by Ross, one of whom shall initially be
Ross and the other of whom shall initially be Robert Nederlander; (iii) three
persons designated by Farbman, one of whom shall be Farbman, one of whom shall
initially be Steven Price and one of whom shall initially be Michael Schenkler;
(iv) one person to be designated by the Weiss Group who shall initially be Gary
Weiss; (v) one person to be designated by the Davis Group who shall initially be
Martin A. Bell; and (vi) one person to be designated by the Davis Group, the
Weiss Group and the Finkelstein Group acting jointly who shall initially be
Martin Mendelson. As a result of the Stockholders' Agreement and the collective
ownership by the Stockholders of more than 66% of the Issuer's Common Stock,
upon the receipt of resignations from the existing Board members who are not
being designated for election as directors of the Issuer as described above, the
Stockholders will control the election of the members of the entire Board of
Directors.
<PAGE>
Page 6 of 7 pages
In addition, the Stockholders' Agreement provides for the disposition of
shares of the Issuer's Common Stock under certain circumstances in a specified
manner. The Stockholder may not sell, other than in open market transactions,
20% or more of the Issuer's Common Stock on a fully diluted basis unless the
shares are first offered to Farbman. Farbman was also granted Tag-a-long rights
in the event that he does not exercise his right of first refusal. Conversely,
subject to Farbman's first refusal right, if the Stockholders individually or as
a group seek to sell shares representing 50% or more of the Issuer's outstanding
Common Stock on a fully diluted basis, such Stockholders may force Farbman to
sell some or all of his shares in the disposition.
Finally, pursuant to a subscription agreement dated July 28, 1999 by and
among the Issuer and Messrs. Weiss, Ross and Davis, Messrs. Weiss, Ross and
Davis have agreed to purchase 445,671, 129,400 and 1,493,625 shares of the
Issuer's common stock, respectively, at a purchase price of $1.75 per share, on
January 31, 2000, at the request of the Issuer. The proceeds from the sale of
the shares will be used to repay the Issuer's $2,500,000 principal amount of
indebtedness to Blair Investment, of which Mr. Davis is a director and the sole
stockholder, and the Rothschild Recovery Fund L.P., of which Mr. Ross is the
Managing Member.
(b) Blair Investment has granted Mr. Finkelstein an option to
purchase 100,000 shares of the Issuer's Common Stock at $2.25 per share
exercisable for a period of five years from the date of the grant. The
foregoing is qualified by reference to the actual agreement attached as Exhibit
B.
Item 7. Material to be Filed as Exhibits.
The following is filed herewith as Exhibit A:
Stockholders' Agreement dated July 28, 1999 by and among News
Communications, Inc., Jerry Finkelstein, The Finkelstein Foundation, Inc.,
Shirley Finkelstein, Wilbur L. Ross, Jr.; Melvyn I. Weiss, M&B Weiss Family
Partnership, J. Morton Davis, Blair Investment, Rivkalex Corporation, Rosalind
Davidowitz, and Steven Farbman.
The following is filed herewith as Exhibit B:
Stock Option Agreement, dated as of July 28, 1999, by and between Blair
Investment and Jerry Finkelstein.
- -----------------------------------------------------------------------------
(1) Each share of $10.00 Convertible Preferred Stock is convertible into five
Shares.
(2) Rivkalex Corporation is a private corporation owned by Rosalind Davidowitz,
Mr. Davis' wife. Filing of this statement shall not be deemed an admission that
J. Morton Davis or Blair Investment beneficially own securities attributed to
Rivkalex or Rosalind Davidowitz for any purpose. J. Morton Davis and Blair
Investment expressly disclaim beneficial ownership of all securities held by
Rivkalex and 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>
Page 7 of 7 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: August 3, 1999 ________________________
New York, New York J. Morton Davis
D.H. BLAIR INVESTMENT BANKING CORP.
by: /s/ David Nachamie
Date: August 3, 1999 _____________________________
New York, New York David Nachamie
Treasurer
Date: August 3, 1999 /s/ Rosalind Davidowitz
New York, New York ____________________________
Rosalind Davidowitz
Newy1:142893:7:7/28/99
28507-20
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, made this 28th day of July, 1999, by and among
NEWS COMMUNICATIONS, INC. ("NCI"), a Nevada corporation with offices at 174-15
Horace Harding Expressway, Fresh Meadows, New York 11365, 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
1251 Avenue of the Americas, New York, NY 10020; 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
STEVEN FARBMAN ("Farbman"), residing at One North Bridge Terrace, Mt. Kisco, New
York 10549 (each member of the Finkelstein Group, Ross, the Davis Group and the
Weiss Group and Farbman, individually, a "Stockholder" and collectively the
"Stockholders").
WHEREAS, Farbman and NCI are parties to (i) an Employment Agreement
dated the date hereof (the "Employment Agreement") pursuant to which Farbman has
agreed to become President and Chief Executive Officer of NCI and (ii) a
Restricted Stock Agreement (the "Restricted Stock Agreement") dated the date
hereof pursuant to which Farbman received 250,000 shares of NCI common stock
(the "Common Stock") and (iii) a Stock Option Agreement dated the date hereof
pursuant to which NCI has granted to Farbman options to purchase 830,000 shares
of Common Stock.
WHEREAS, each Stockholder beneficially owns the number of shares of
Common Stock and $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 voting their Shares in
certain circumstances, the transfer of Shares now owned or hereafter acquired by
the Stockholders 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 Employment
Agreement.
2. Representations of the Stockholders and NCI.
(a) 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, (iii) such Stockholder
will have the right to transfer such Shares upon the terms and subject to the
conditions of this Agreement, (iv) 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.
(b) NCI represents that it is not a party to any agreement
which would contravene the provisions of this Agreement.
3. Corporate Governance and Related Matters.
(a) To the extent permitted by applicable law, NCI and 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 of
Directors of NCI (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 reduced to, and to maintain the size of the Board at, nine (9) members,
with such directors selected in accordance with Section 3(b) hereof.
(b) Each Stockholder hereby agrees, so long as Farbman is the
Chief Executive Officer and President of NCI, to vote the Shares owned 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) Finkelstein; (ii) two
persons designated by Ross, one of whom shall initially be Ross and the other of
whom shall initially be Robert Nederlander; (iii) three persons designated by
Farbman, one of whom shall be Farbman, one of whom shall initially be Steven
Price and one of whom shall initially be Michael Schenkler (in the future, one
of Farbman's designess may, with the consent of the other Stockholders, be NCI's
Chief Financial Officer and both of whom must be reasonably acceptable to the
Board); (iv) one person to be designated by the Weiss Group who shall initially
be Gary Weiss; (v) one person to be designated by the Davis Group who shall
initially be Martin A. Bell; and (vi) one person to be designated by the Davis
Group, the Weiss Group and the Finkelstein Group acting jointly.
(c) 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 of his Shares in favor of the removal of any director who
shall have been designated or nominated pursuant to Section 3(b) 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
3(b) 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.
(d) 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 3(b) to
designate or nominate such director whose death, disability,
retirement, resignation or removal resulted in such vacancy, may,
subject to the provisions of Sections 3(b), 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.
(e) The right to designate one or more members of the Board by
any Stockholder (or group of Stockholders) pursuant to this Section 3 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
and (ii) in the case of Ross, the shares owned by Rothschild North America Inc.,
Rothschild Recovery Fund L.P. and Rothschild Inc.). The obligations imposed on
the Stockholders to give effect to the rights to designate directors set forth
in Section 3(b) shall terminate as to any person when such person's right to
designate a director is terminated.
4. Restriction on Transfer of Shares.
(a) Each Stockholder hereby agrees that he shall not, as long
as this Agreement is in effect, directly or indirectly sell, pledge, give,
transfer, assign, encumber or in any way dispose of (collectively, a "Transfer")
any of the Shares (or any interest therein) except as may be expressly permitted
by this Agreement or by the Restricted Stock Agreement.
(b) Notwithstanding the general prohibition on Transfers
contained in Section 4(a) hereof, NCI and the Stockholders agree that any of the
following Transfers shall be permitted under this Agreement:
(i) a Transfer to a spouse, children (natural or
adopted), stepchildren, grandchildren or descendants or a trust for the
benefit of any of them, or entity or foundation owned by a Stockholder,
a spouse, children (natural or adopted), stepchildren, grandchildren or
descendants (the "Trust");
(ii) a Transfer by any Stockholder to an Affiliate of
such Stockholder;
(iii) a Transfer by any Stockholder in an open market
transaction or in connection with an offer to purchase Common Stock of
NCI made to all stockholders, or in connection with the merger of NCI
with or into another company; and
(iv) a Transfer in accordance with Sections 5, 6, or 7
hereof or pursuant to the Restricted Stock Agreement;
(c) As a further condition of any Transfer pursuant to clauses
(i) or (ii) of this Section 4, each transferee shall, prior to such Transfer,
agree in writing to be bound by all of the provisions of this Agreement, and no
such transferee shall be permitted to make any Transfer that the original
transferor was not permitted to make.
5. Right of First Refusal
(a) If at any time any of the Stockholders, other than
Farbman, individually or as a group, propose to sell such number of Shares as
shall represent 20% or more of the outstanding Common Stock on a fully diluted
basis (the "Offered Shares") to any Person other than an Affiliate of such
Stockholder (or group of Stockholders) in any one transaction or series of
related transaction not permitted by paragraphs (i), (ii) and (iii) of Section
4(b) (each, a "Disposition"), then the Stockholder (or group of Stockholders)
shall, prior to agreeing to such Disposition, provide Farbman with written
notice (a "Disposition Notice") of his or its intention to make the Disposition
and describing the terms and conditions of the Disposition in reasonable detail,
including the proposed price per Share, the method of payment and the identity
of the proposed purchaser.
(b) Farbman shall have the exclusive right during the period
commencing on his receipt of the Disposition Notice and expiring twenty (20)
days thereafter (the "Exclusive Period") to elect to purchase the Offered Shares
at the same price and subject to the same material terms and conditions as
described in the Disposition Notice. Farbman may elect to purchase the Offered
Shares by notifying the Stockholder (or group of Stockholders) in writing before
expiration of such twenty (20) day period.
(c) If Farbman gives notice of his election to purchase the
Offered Shares, then the closing for such Disposition shall be held at the
offices of NCI within twenty (20) days after such notice or on such other date
as is specified in the Disposition Notice. At the closing, Farbman shall pay for
the Offered Shares in accordance with the terms contained in the Disposition
Notice, and the Stockholder (or group of Stockholders) shall deliver
certificates representing the Offered Shares free and clear of all liens,
charges and encumbrances and properly endorsed for transfer.
(d) If Farbman fails to notify the Stockholder (or group of
Stockholders) during the Exclusive Period, then Farbman shall be deemed to have
waived his Right of First Refusal.
6. Tag-Along Rights.
(a) To the extent Farbman does not exercise his right of first
refusal as to the Disposition of the Offered Shares pursuant to Section 5, then
Farbman may elect to participate in such Disposition at the same price per Share
as that offered to and subject to the same material terms and conditions as the
Stockholder (or group of Stockholders); provided, however, that Farbman may not
elect to participate in such Disposition if the purchaser is willing to purchase
Shares of Preferred Stock only.
(b) The election pursuant to Subsection 6(a) above shall be
exercised by giving written notice to the Stockholder (or group of Stockholders)
within the Exclusive Period. If Farbman gives notice of his election to sell, he
shall be obligated to sell the number of Shares specified in his notice upon the
terms and subject to the conditions specified in Subsection 6(a) above to the
proposed purchaser, conditional upon the closing of the Disposition.
(c) If the purchaser pursuant to the Disposition has a
specified limited number of (i) Shares of Common Stock that it is willing to
purchase in the aggregate, Farbman shall have the right to sell to the purchaser
up to that number of Shares of Common Stock owned by Farbman which is in the
same proportion to his total ownership of Shares of Common Stock as the number
of Shares being sold by the Stockholder (or group of Stockholders) is to the
total number of Shares of Common Stock owned by the Stockholder (or group of
Stockholders); and (ii) Shares of Common Stock and Preferred Stock that it is
willing to purchase, Farbman shall have the right to sell to the purchaser up to
that number of Shares of Common Stock owned by Farbman which is in the same
proportion to his total ownership of Shares of Common Stock as the number of
Shares of Common Stock into which the Shares of Preferred Stock being sold by
the Stockholder (or group of Stockholders) is convertible at the time of such
Disposition is to the number of Shares of Common Stock into which the total
number of Shares of Preferred Stock owned by the Stockholder (or group of
Stockholders) is convertible at the time of such Disposition.
(d) If Farbman gives notice during the Exclusive Period of his
election to participate in the Disposition, then Farbman will use his best
efforts to cooperate in the Disposition and will take all necessary and
desirable actions in connection with the consummation of the Disposition,
including, but not limited to, (i) the provision of reasonable and customary
representations and warranties; provided, however, that Farbman shall not be
required to incur more than his pro rata portion of any out-of-pocket expenses
in connection with such Disposition which are not reimbursed by the Stockholder
(or group of Stockholders); and provided further that Farbman shall not be
required to provide different representations and warranties or indemnification
than any other selling participant in the Disposition and (ii) the closing of
such Disposition within twenty (20) days of such notice or on such other date as
is provided in the Disposition Notice.
(e) If Farbman fails to notify the Stockholder (or group of
Stockholders) during the Exclusive Period, then Farbman shall be deemed to have
waived his Tag-Along Right.
7. Drag-Along Rights.
(a) If at any time the Stockholders, other than Farbman,
individually or as a group, agree to sell such number of shares as shall
represent 50% or more of the outstanding Common Stock on a fully diluted basis
(the "Drag Along Offered Shares") to any Person other than an Affiliate of such
Stockholder (or group of Stockholders) in any one transaction or series of
related transactions not permitted by paragraphs (i), (ii) or (iii) of Section
4(b), and to the extent Farbman does not exercise his right of first refusal or
his tag-along right as to the Disposition of the Drag Along Offered Shares
pursuant to Sections 5 and 6, respectively, then the Stockholder (or group of
Stockholders) may, within ten (10) days after the Exclusive Period, give written
notice to Farbman stating that Farbman must participate in the Disposition of
the Drag Along Offered Shares by selling the same percentage of his Shares as
the Stockholder (or group of Stockholders) is selling, at the same price per
Share and otherwise on the same terms and conditions upon which the Stockholder
(or group of Stockholders) is selling his (or its) Shares; provided, however,
that Farbman shall not be required to participate if the purchaser is willing to
purchase Shares of Preferred Stock only.
(b) If the Stockholder (or group of Stockholders) gives notice
that Farbman must participate in the Disposition, Farbman will use his best
efforts to cooperate in the Disposition and will take all necessary and
desirable actions in connection with the consummation of the Disposition,
including, but not limited to, (i) the provision of reasonable and customary
representations and warranties; provided, however, that Farbman shall not be
required to incur more than his pro rata portion of any out-of-pocket expenses
in connection with such Disposition which are not reimbursed by the Stockholder
(or group of Stockholders); and provided further that Farbman shall not be
required to provide different representations and warranties or indemnification
than any other selling participant in the Disposition and the closing of such
Disposition within twenty (20) days of such notice or on such other date as is
provided in the Disposition Notice.
(c) If the purchaser pursuant to the Disposition has a
specified limited number of (i) Shares of Common Stock that it is willing to
purchase in the aggregate, Farbman shall be required to sell to the purchaser up
to that number of Shares of Common Stock owned by Farbman which is in the same
proportion to his total ownership of Shares of Common Stock as the number of
Shares being sold by the Stockholder (or group of Stockholders) is to the total
number of Shares of Common Stock owned by the Stockholder (or group of
Stockholders); and (ii) Shares of Common Stock and Preferred Stock that it is
willing to purchase, Farbman shall be required to sell to the purchaser up to
that number of Shares of Common Stock owned by Farbman which is in the same
proportion to his total ownership of Shares of Common Stock as the number of
Shares of Common Stock into which the Shares of Preferred Stock being sold by
the Stockholder (or group of Stockholders) is convertible at the time of such
Disposition is to the number of Shares of Common Stock into which the total
number of Shares of Preferred Stock owned by the Stockholder (or group of
Stockholders) is convertible at the time of such Disposition.
(d) The obligation of Farbman to participate in the
Disposition is also subject to the satisfaction of the following conditions: (i)
upon the consummation of the Disposition, Farbman will receive the same form and
amount of consideration per share for his Shares as the Stockholder (or group of
Stockholders) will receive for his or its Shares, or if the Stockholder (or
group of Stockholders) is given an option as to the form and amount of
consideration to be received, Farbman will be given the same option; and (ii)
the price per Share will be payable in cash or publicly-traded securities;
provided, however, that if the Stockholder (or group of Stockholders) sells any
Preferred Stock, Farbman will receive the same form of consideration for his
Shares of Common Stock, and the amount of consideration per share payable to him
will be calculated by dividing the total consideration to be received for the
Preferred Stock being sold by the number of Shares of Common Stock into which
such Preferred Stock is convertible at the time of such Disposition.
(e) If the Stockholder (or group of Stockholders) fails to
notify Farbman within ten (10) days after the Exclusive Period, then the
Stockholder (or group of Stockholders) shall be deemed to have waived his (or
its) Drag-Along Right.
8. 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.
9 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 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) A copy of this Agreement shall be filed with the Secretary
of NCI and kept with the records of NCI.
(h) 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 Farbman at
their respective addresses first written above.
(i) 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.
(j) All representations, warranties and agreements contained
herein shall survive the execution and delivery of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written. NEWS COMMUNICATIONS, INC.
By:
Steven Farbman
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 INVESTEMENT BANKING CORP.
By:
J. Morton Davis
RIVKALEX CORPORATION
By:
Rosalind Davidowitz
President
J. Morton Davis
Rosalind Davidowitz
<PAGE>
EXHIBIT A
Stockholder
No. of Shares
The Finkelstein Group 164,001
Wilbur L. Ross, Jr. 369,768
The Weiss Group 1,273,558
The Davis Group 2,439,003
Steven Farbman 250,000
Newy1:155130:1:8/4/99
28507-20
STOCK OPTION AGREEMENT
AGREEMENT made as of the 28th day of July, 1999 by and between
D.H. Blair Investment Banking Corp., having its executive offices at 44 Wall
Street, New York, NY 10005 ("Blair"), and JERRY FINKELSTEIN, residing at The
Carlyle Hotel, Room 1907, 35 East 76th Street, New York, NY 10021
("Finkelstein").
W I T N E S S E T H:
WHEREAS, Finkelstein desires to acquire from Blair, and Blair
desires to grant to Finkelstein, an option to purchase 100,000 shares of common
stock of News Communications, Inc. (the "Company") owned by Blair.
NOW, THEREFORE, for $10.00 and other good and valuable
consideration, the sufficiency and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
1. Grant of Option. Upon the terms and subject to the
conditions set forth herein, Blair hereby grants to Finkelstein the right and
option (the "Option") to purchase 100,000 shares of the Company's common stock
at an exercise price of $2.25 per share. Finkelstein may exercise all or part of
the Option any time and from time to time until July 28, 2004.
2. Method of Exercising Option. Finkelstein may exercise the
Option by delivering to Blair (i) a written notice stating the number of shares
of common stock that Finkelstein has elected to purchase at that time from Blair
and (ii) full payment of the purchase price of the shares of common stock then
to be purchased. Payment of the purchase price for the shares of common stock
upon any exercise of the Option may be made by certified or bank cashier's check
payable to the order of Blair or by wire transfer subject to the instructions of
Blair, together with such amount as Blair shall, in its sole discretion, deem
necessary to satisfy any tax obligation arising by reason of the transfer of
such shares of common stock.
3. Issuance of Common Stock upon Exercise of Option. As
promptly as practicable after receipt of such written notification of
Finkelstein's election to exercise the Option and full payment of such purchase
price, Blair shall transfer to Finkelstein the number of shares of common stock
with respect to which the Option has been so exercised and shall deliver to
Finkelstein a certificate or certificates therefor, duly endorsed in blank or
accompanied by appropriate stock powers in Finkelstein's name.
4. Securities Law Acknowledgments. Finkelstein acknowledges
that the shares of common stock issued upon exercise of the Option may not be
registered under applicable securities laws, that such shares of common stock
purchased upon the exercise of the Option must be held indefinitely unless
subsequently registered under the applicable securities laws or unless an
exemption therefrom is available. The shares of common stock issued pursuant to
the terms of this Agreement shall represent fully paid and nonassessable shares
of common stock.
5. Transferability. The Option may be transferred by
Finkelstein only to a member of Finkelstein's immediate family or pursuant to
applicable laws of descent and distribution.
6. Rights as Stockholder. Finkelstein shall have no rights as
a stockholder with respect to any share of common stock covered by the Option
until Finkelstein shall have become the holder of record of such share of common
stock, and no adjustment shall be made for dividends or distributions or other
rights in respect of such share of common stock for which the record date is
prior to the date upon which Finkelstein shall become the holder of record
thereof.
7. Notice. Every notice or other communication relating to
this Agreement shall be in writing and shall be mailed to or delivered to the
party for whom it is intended at such address as may, from time to time, be
designated in a notice mailed or delivered to the other party as herein
provided; provided that, unless and until some other address be so designated,
all notices or communications shall be mailed or delivered to the parties at
their addresses first set forth above.
8. Entire Agreement. This Agreement sets forth the complete
understanding of Blair and Finkelstein with respect to the subject matter hereof
and supersedes all prior understandings, whether oral or written.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to principles of conflicts of law).
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
D.H. BLAIR INVESTMENT BANKING CORP.
By: ____________________________________
Name:
Title:
---------------------------------
Jerry Finkelstein
