<PAGE>
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 [ ]
<TABLE>
<CAPTION>
Check the appropriate box:
<S> <C> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the
[ X ] Definitive Proxy Statement the Commission only
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14A-ll(c) or Rule 14a-12
</TABLE>
NEWS COMMUNICATIONS, INC.
-------------------------
(Name of Registrant as Specified In Its Charter)
NEWS COMMUNICATIONS, INC.
-------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-ll(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: $______________
(2) Form, Schedule or Registration Statement No.: _________________
(3) Filing Party: _________________
(4) Date Filed: __________________
__________
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
NEWS COMMUNICATIONS, INC.
2 Park Avenue
New York, New York 10016
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on July 25, 2000
To the Stockholders of News Communications, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of News Communications, Inc. ("NCI") will be held on July 25, 2000,
at the offices of NCI's counsel, Piper Marbury Rudnick & Wolfe LLP, 1251 Avenue
of the Americas, 29th Floor, New York, NY 10020, at 10:00 a.m. local time.
The Meeting will be held for the following purposes:
1. To elect nine directors of NCI to serve until the next annual meeting
of stockholders or until their successors are duly elected and
qualified (Proposal 1);
2. To consider and act upon a proposal to ratify the appointment by the
Board of Directors of BDO Seidman, LLP as independent auditors for NCI
for the 2000 fiscal year (Proposal 2);
3. To consider and act upon a proposal to approve the 2000 Stock
Incentive Plan, approved by the Board of Directors (Proposal 3); and
4. To transact such other business as may properly come before the
Meeting or any and all adjournments thereof.
The Board of Directors of NCI fixed the close of business on June 23, 2000
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting and at any and all adjournments thereof.
Consequently, only the holders of record of NCI's common stock and $10
Convertible Preferred Stock at the close of business on June 23, 2000 are
entitled to notice of and to vote at the Meeting and at any and all adjournments
thereof.
Whether or not you plan to attend the Meeting, please complete, date and
sign the enclosed proxy card, and return it promptly in the enclosed envelope to
ensure your representation at the Meeting. You are cordially invited to attend
the Meeting and, if you do so, you may personally vote, regardless of whether
you have signed a proxy.
New York, New York
June 23, 2000
By Order of the Board of Directors
Steven Farbman
President and Chief Executive Officer
<PAGE>
NEWS COMMUNICATIONS, INC.
2 Park Avenue
New York, New York 10016
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement and the accompanying proxy card are being furnished in
connection with the solicitation of proxies by and on behalf of the Board of
Directors (the "Board") of News Communications, Inc. ("NCI"), to be used at the
Annual Meeting of Stockholders of NCI (the "Meeting") to be held on Tuesday,
July 25, 2000, at 10:00 a.m. local time, at the offices of NCI's counsel, Piper
Marbury Rudnick & Wolfe LLP, 1251 Avenue of the Americas, New York, NY 10020,
and at any and all adjournments thereof. This Proxy Statement and the
accompanying proxy card are first being mailed to the holders of record of NCI's
common stock and $10 Convertible Preferred Stock on or about June 23, 2000.
Stockholders of NCI represented at the Meeting will consider and vote upon
(i) the election of nine directors to serve until the next annual meeting of
stockholders or until their successors have been duly elected and qualified;
(ii) the ratification of the appointment of independent auditors; (iii) the
approval of the NCI 2000 Stock Incentive Plan; and (iv) such other business as
may properly come before the Meeting or any and all adjournments thereof. NCI
is not aware of any other business to be presented for consideration at the
Meeting.
VOTING AND SOLICITATION OF PROXIES
Only holders of record of shares of common stock and $10 Convertible
Preferred Stock at the close of business on June 23, 2000 (the "Record Date")
are entitled to vote at the Meeting. As of the Record Date, 8,568,162 shares of
common stock were outstanding. Each (i) common stockholder is entitled to one
vote for each share of common stock and (ii) $10 Convertible Preferred
Stockholder is entitled to one vote for each share of $10 Convertible Preferred
Stock held of record on the Record Date for each proposal submitted for
stockholder consideration at the Meeting. The presence, in person or by proxy,
of the holders of a majority of the shares of common stock and $10 Convertible
Preferred Stock, collectively, entitled to vote at the Meeting is necessary to
constitute a quorum for the conduct of business at the Meeting. The election of
each nominee for director requires the approval of a majority of the total
number of votes cast. Abstentions will be considered shares present for
purposes of determining whether a quorum is present at the Meeting and,
therefore, will have the same legal effect as a vote against a motion presented
at the Meeting. Broker non-votes will be considered as shares not entitled to
vote and will, therefore, not be considered in the tabulation of votes.
<PAGE>
All shares represented by properly executed proxies will, unless such
proxies have previously been revoked, be voted at the Meeting in accordance with
the directions on the proxies. A proxy may be revoked at any time prior to
final tabulation of the votes at the Meeting. Stockholders may revoke proxies
by written notice to the Chief Financial Officer of NCI, by delivery of a proxy
bearing a later date, or by personally appearing at the Meeting and casting a
contrary vote. If no direction is indicated, the shares represented by properly
executed proxies will be voted in favor of the Board's nominees for director, as
listed in this Proxy Statement. The persons named in the proxies will have
discretionary authority to vote all proxies with respect to additional matters
that are properly presented for action at the Meeting. Each of the executive
officers and directors has indicated his or her intent to vote all shares of
common stock owned or controlled by him or her in favor of each item set forth
herein.
The proxy solicitation is made by and on behalf of the Board. Solicitation
of proxies for use at the Meeting may be made in person or by mail, telephone or
telegram, by officers and regular employees of NCI. Such persons will receive
no additional compensation for any solicitation activities. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of common stock beneficially owned
by others to forward to such beneficial owners. NCI may reimburse persons
representing beneficial owners of common stock for their costs of forwarding
solicitation materials to such beneficial owners. NCI will bear the entire cost
of the solicitation of proxies, including the preparation, assembly, printing
and mailing of this Proxy Statement, the proxy card and any additional
information furnished to stockholders.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding ownership of
our common stock, as of June 23, 2000 by each person known to us to own
beneficially more than 5% of our outstanding common stock, by each person who is
a director of NCI, by each person listed in the Summary Compensation Table and
by all directors and officers of NCI as a group.
The information contained in the table was furnished by the persons listed
therein. The calculations of the percent of shares beneficially owned are based
on 8,568,162 shares of common stock outstanding on June 23, 2000, plus, with
respect to each such person the number of additional shares that will be
outstanding upon exercise of the warrants and options exercisable within sixty
(60) days set forth herein.
<TABLE>
<CAPTION>
Beneficial Ownership Current
Name and Address of Common Stock Percent of Class
---------------------------------------------- -------------------------------------- ---------------------
<S> <C> <C>
Martin A. Bell 3,333 (1)(8) *
D.H. Blair Investment Banking Corp.
44 Wall Street
New York, NY 10005
Steven Farbman 260,000 (1)(10) 2.66%
2 Park Avenue
New York, New York 10016
Jerry Finkelstein 660,667 (1)(2) 6.76%
2 Park Avenue
New York, NY 10016
Martin Mendelsohn 3,333 (1) *
Verner, Liipfert, Bernhard,
McPherson and Hand
901 15th Street, N.W.
Suite 700
Washington, D.C. 20005
Robert E. Nederlander 51,120 (1)(3) *
810 7th Avenue, 21st Floor
New York, NY 10019
Steven Price 3,333 (1) *
c/o LiveWire Corporation
711 Westchester Avenue
White Plains, NY 10604
Wilbur L. Ross, Jr. 684,547 (1)(3)(4) 7.01%
1251 Avenue of the Americas
New York, NY 10020
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Current
Name and Address of Common Stock Percent of Class
---------------------------------------------- -------------------------------------- ---------------------
<S> <C> <C>
Michael Schenkler 210,144 (1)(5) 2.15%
174-15 Horace Harding Expressway
Fresh Meadows, NY 11365
Gary Weiss 153,333(1) 1.57%
Weiss Capital Group LLC
99 Seaview Blvd.
Port Washington, NY 11050
Melvyn I. Weiss 1,297,069 (1)(3)(6) 13.27%
One Pennsylvania Plaza
New York, NY 10119
J. Morton Davis 2,524,616 (1)(7) 25.84%
D.H. Blair Investment Banking Corp.
44 Wall Street
New York, NY 10005
All Directors and Executive Officers as a 5,851,495 (9) 59.89%
Group (11 persons)
</TABLE>
-------------------------------
* Less than one percent.
(1) Includes the following numbers of shares purchasable upon the exercise of
presently exercisable options and warrants: Mr. Bell--3,333; Mr. Davis--
207,867; Mr. Farbman--3,333; Mr. Finkelstein--396,666; Mr. Mendelsohn--
3,333; Mr. Nederlander--18,333; Mr. Price--3,333; Mr. Ross--125,000; Mr.
Schenkler--10,000; Mr. M. Weiss--26,667; Mr. G. Weiss--153,333.
(2) Includes
(a) 9,945 shares owned by The Jerry Finkelstein Foundation, Inc., of which
Mr. Finkelstein is President, and
(b) 66,667 shares owned by Mr. Finkelstein's wife.
(3) Includes the following numbers of shares issuable upon conversion of shares
of $10 convertible preferred stock: Mr. Nederlander--32,787; Mr. Weiss--
65,574; Mr. Ross--131,148.
(4) Does not include
(a) 16,667 shares owned by Rothschild Inc.
(b) 32,468 shares issuable upon conversion of shares of $10 convertible
preferred stock owned by Arrow Investment Limited Partnership.
(c) 25,974 shares issuable upon exercise of warrants owned by Arrow
Investment Limited Partnership.
(d) 100,000 shares issuable upon exercise of warrants owned by the
Rothschild Recovery Fund L.P.
(e) 16,670 shares of common stock owned by Arrow Investment Limited
Partnership.
Mr. Ross disclaims beneficial ownership of all of such shares.
(5) Includes
(a) 3,000 shares that are issuable upon conversion of our 10% preferred
stock.
4
<PAGE>
Does not include
(b) 13,678 shares owned by Mr. Schenkler's wife as custodian for two minor
children of which Mr. Schenkler disclaims beneficial ownership.
(6) Includes 160,071 shares owned by the M&B Weiss Family Partnership.
(7) Includes
(a) 1,372,303 shares of common stock and warrants to purchase 207,867
shares owned by D.H. Blair Investment Banking Corp., of which J.
Morton Davis is a director and the sole stockholder, and
(b) 19,344 shares of common stock issuable upon exercise of 5,900 shares
of $10 convertible preferred stock.
Does not include
(c) 41,276 shares owned by Rivkalex Corporation ("Rivkalex"), a private
corporation owned by Rosalind Davidowitz, Mr. Davis's wife, and
(d) 749,166 shares of common stock owned by Rosalind Davidowitz.
Mr. Davis and D.H. Blair Investment Banking Corp. expressly
disclaim beneficial ownership of all securities held by Rivkalex and
Rosalind Davidowitz.
(8) Does not include 1,372,303 shares of common stock and warrants to purchase
207,867 shares owned by D.H. Blair Investment Banking Corp., of which
Martin A. Bell is Vice Chairman. Mr. Bell expressly disclaims beneficial
ownership of all securities held by D.H. Blair Investment Banking Corp.
(9) Includes shares issuable upon exercise of the options referenced in (1)
above, conversion of the $10 convertible preferred stock referenced in (3)
above, conversion of the 10% preferred stock referenced in (5) above.
(10) Includes 6,667 shares owned by Mr. Farbman's wife as custodian for two
minor children.
5
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Nine directors will be elected at the Meeting to serve until the next
Annual Meeting of Stockholders or until their successors are duly elected and
qualified. Proxies not marked to the contrary will be voted "FOR" the election
to the Board of each nominee. Management has no reason to believe that any of
the nominees will not be a candidate or will be unable to serve. However, in
the event that any of the nominees should become unable or unwilling to serve as
a director, the proxy will be voted for the election of such person or persons
as shall be designated by the current directors. Each of the following
incumbent directors has consented to be named a nominee in this Proxy Statement
and to serve as a director if elected:
Martin A. Bell Steven Price
Wilbur L. Ross, Jr. Jerry Finkelstein
Michael Schenkler Martin Mendelsohn
Robert E. Nederlander Gary Weiss
Steven Farbman
Information about the foregoing nominees is set forth under "MANAGEMENT"
below.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION TO THE BOARD OF ALL
NOMINEES NAMED ABOVE.
6
<PAGE>
MANAGEMENT
NCI executive officers, directors and other significant employees and their
ages and positions are as follows:
<TABLE>
<CAPTION>
Name of Individual Age Position with News Communications and Subsidiaries
------------------------------ --- ----------------------------------------------------------------------
<S> <C> <C>
Jerry Finkelstein (1)(2)(4) 84 Chairman of the Board and Director of News Communications
Wilbur L. Ross, Jr. (1)(4) 62 Director and Publisher of News Communications
Michael Schenkler (4) 54 Director of News Communications and Officer of Subsidiary
Steven Farbman (1)(4) 39 President, Chief Executive Officer and Director of News Communications
Paul Mastronardi 41 Vice President and Chief Financial Officer of News Communications
Steven Price (3)(4) 38 Director of News Communications
Martin A. Bell (2)(4) 49 Director of News Communications
Gary Weiss (1)(2)(4) 38 Director of News Communications
Robert E. Nederlander (3)(4) 65 Director of News Communications
Martin Mendelsohn (3)(4) 57 Director of News Communications
</TABLE>
(1) Member of Executive Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
(4) Nominee to the Board
Jerry Finkelstein has been a director of News Communications since December
1987 and became Chairman of the Board in August 1993. He served as publisher of
The New York Law Journal from 1960 to 1984. 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.
Wilbur L. Ross, Jr. was elected a director of News Communications in
October 1996. Mr. Ross served as Interim Chief Executive Officer of News
Communications from October 1996 to August 1999. From 1976 to March 31, 2000,
Mr. Ross had been Executive Managing Director of Rothschild Inc. and Chairman of
Rothschild Recovery Fund and Asia Recovery Fund. As of April 1, 2000, he
founded WL Ross & Co. LLC. He remains Chairman of Asia Recovery Fund, of the
former Rothschild Recovery Fund, now renamed WLR Recovery Fund, and of Asia
Recovery Co-Investment Partners. Mr. Ross is also a director of World Airways,
Inc., Mego Financial Corp., a developer of timeshare properties, Casella Waste
Systems Inc. and Pacific Life Insurance Company (Korea).
Michael Schenkler has been a director of News Communications since March
1990, and served as president from December 1991 to July 1999. He has been
publisher of The Queens Tribune since 1979. He has been publisher of the PRESS
of Southeast Queens since its launch in
7
<PAGE>
May of this year. Prior to taking over the Queens Tribune 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.
Steven Farbman has been President and Chief Executive Officer and a
director of News Communications since July 29, 1999. From 1992 to 1999, he
served as Vice President and Chief Operating Officer of American Lawyer Media,
Inc. and its predecessor National Law Publishing Company, a publisher of legal
periodicals. Mr. Farbman serves on the National Council for the School of Media
and Public Affairs at The George Washington University.
Paul Mastronardi has been Vice President and Chief Financial Officer of
News Communications since August 16, 1999. Prior to such date, from December
1997 to June 1999, Mr. Mastronardi served as Vice President, Finance of American
Lawyer Media. From March 1996 to December 1997, he was Vice President and Chief
Financial Officer of the National Law Publishing Company (subsequently purchased
by American Lawyer Media). He served as Director of Financial Planning for
Bantam Doubleday Dell, a division of Bertelsmann Inc., from April 1995 to March
1996. Prior to that time, Mr. Mastronardi spent fourteen years at Gruner & Jahr
USA Publishing, where he served in a variety of capacities, including Staff
Accountant, Manager of Information Systems, Senior Financial Manager and
Director of Financial Planning.
Steven Price has been a director of News Communications since July 29,
1999. Since June 1998, he has been President and Chief Executive Officer of
LiveWire Corporation, a telecommunications investment and management company.
From 1996 to 1998, Mr. Price was President and Chief Executive Officer of
PriCellular Corporation, a publicly traded cellular telephone operator which was
sold in June 1998. Mr. Price served as senior vice president, corporate
development of PriCellular from 1994 to 1996.
Martin A. Bell has been a director of News Communications since July 29,
1999. He has been Vice Chairman of D.H. Blair Investment Banking Corporation
since December 1995, prior to which time he served as Senior Vice President and
General Counsel to the firm. He is also a director of Venus Exploration, Inc.
Gary Weiss has been a director of News Communications since July 29, 1999.
He has been President of Weiss Capital Group LLC, an investment and consulting
firm since 1997. Mr. Weiss is also the Chief Operating Officer of Fullecom,
Inc., a private company engaged in supply chain management services to Web-based
businesses. From 1992 to 1997, Mr. Weiss was a managing director of Bennis &
Reissman Inc.
Robert E. Nederlander has been a director of News Communications since
October 1996. Since 1981, he has been President and/or Director of Nederlander
Organization, Inc., the owner and/or operator of one of the world's largest
chains of legitimate theaters. Mr. Nederlander is also a director of Riddell
Sports, Inc., a sporting goods manufacturer, Mego Financial Corp., Allis
Chalmers Corp., and Cendant Corp.
Martin Mendelsohn has been a director of News Communications since July 29,
1999. Since 1992, he has been a partner at Verner, Liipfert, Bernhard,
McPherson and Hand.
8
<PAGE>
The directors serve until the next annual meeting of stockholders and until
their respective successors are elected and qualified. Officers serve at the
discretion of the Board of Directors.
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth information for each of the fiscal years
ended November 30, 1999, 1998 and 1997 concerning compensation of all
individuals serving as executive officers of NCI during the fiscal year ended
November 30, 1999 and each other executive officer or key employee of NCI whose
total annual salary and bonus exceeded $100,000 in fiscal 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Restricted
Other Annual Compensation Stock
Annual Compensation Compensation Awards Awards
--------------------------------------------------------------------------------------------
Salary Bonus
Name and Principal Position Year ($) ($) ($)
--------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Steven Farbman, President and 1999(3) $ 46,250 --- --- 830,000 $453,125
Chief Executive Officer
Jerry Finkelstein, Chairman 1999 168,083 --- $150,000(1) --- ---
of the Board 1998 195,000 --- --- --- ---
1997 195,000 --- --- --- ---
Wilbur L. Ross, Jr., Chief 1999(2) $ 1 --- --- --- ---
Executive Officer 1998 $ 1 --- --- --- ---
1997 $ 1 --- --- --- ---
Michael Schenkler, President 1999(4) 164,528 --- --- --- ---
and Publisher of The Queens 1998 167,223 --- --- --- ---
Tribune 1997 158,197 --- --- --- ---
</TABLE>
_____________________________
(1) During July 1999, Mr. Finkelstein's Employment Agreement was amended to
reduce his annual salary to $95,000 from $195,000. In connection with the
amendment of Mr. Finkelstein's employment agreement, Mr. Finkelstein also
received a one-time cash payment of $150,000.
(2) Mr. Ross resigned as Chief Executive Officer of News Communications in July
1999.
9
<PAGE>
(3) Mr. Farbman was hired as President and Chief Executive Officer in July
1999. At that time, he received 250,000 shares of our common stock having
a fair market value of $453,125. Mr. Farbman's compensation does not
include an additional $203,906 paid in December 1999 under the terms of his
Employment Agreement, which is more fully described at Employment
Agreements.
(4) Mr. Schenkler served as President of News Communications from December 1991
until his resignation in July 1999.
OPTION GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
Name Number of Percent of Total Exercise or Expiration Date
(a) Securities Options Granted to Base Price (e)
Underlying Options Employees In Fiscal ($/Sh)
(b) Year (d)
(c)
<S> <C> <C> <C> <C>
Steven Farbman 830,000 --- $1.8125 07-28-2009
Paul Mastronardi 100,000 --- $ 1.625 08-16-2009
Jerry Finkelstein 200,000 --- $ 2.25 07-28-2004
</TABLE>
AGGREGATE YEAR-END OPTION VALUES
(November 30, 1999)
<TABLE>
<CAPTION>
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>
Steven Farbman 3,333 830,000 --- ---
Wilbur L. Ross 71,666 --- --- ---
Michael Schenkler 10,000 --- --- ---
Jerry Finkelstein 396,666 --- --- ---
Paul Mastronardi --- 100,000 --- ---
Gary Weiss 153,333 --- --- ---
Employment Agreements
</TABLE>
On July 28, 1999, Steven Farbman, NCI's President and Chief Executive
Officer, entered into an Employment Agreement with NCI (the "Employment
Agreement"). The Employment Agreement expires on November 30, 2004 unless it is
terminated earlier by Mr. Farbman or by NCI.
10
<PAGE>
Under the Employment Agreement, Mr. Farbman will be paid an initial base
salary of $185,000. The base salary will increase annually by an amount equal
to the percentage increase in the cost of living for the New York metropolitan
area, and the Board of Directors will annually review Mr. Farbman's compensation
to determine whether a further increase is warranted. In addition to his base
salary, Mr. Farbman will receive an annual bonus of 15% of the increases in
earnings before interest, taxes, depreciation and amortization for such period
("EBITDA"). Mr. Farbman will also be eligible to receive other cash or stock
bonuses as the Board may determine from time to time in its sole discretion.
Mr. Farbman's designated beneficiary will also have the right to receive
$1,000,000 of a $3,000,000 key man insurance policy that we have agreed to
maintain on the life of Mr. Farbman. NCI has also agreed to provide Mr. Farbman
with an automobile allowance of $20,000 per year.
The Employment Agreement may be terminated by NCI at any time for Cause (as
defined in the Employment Agreement). If Mr. Farbman's employment is terminated
for Cause, NCI will have no further obligations under the Employment Agreement
other than base salary and expenses accrued through the date of termination.
The Employment Agreement may also be terminated by NCI upon Mr. Farbman's death
or disability. In such event, NCI will pay to Mr. Farbman or his estate an
amount equal to his annual base salary at the time of his death unless, in the
case of his death, Mr. Farbman's estate receives the insurance proceeds
described above.
The Employment Agreement may also be terminated by Mr. Farbman for "Good
Reason," which includes, among other things, Mr. Farbman's removal as President
and Chief Executive Officer and as one of the NCI directors, a material change
in Mr. Farbman's duties or responsibilities, a reduction in Mr. Farbman's
compensation, the breach of the Stockholders' Agreement or a change in control.
If Mr. Farbman terminates his employment for Good Reason, he will be entitled to
receive an amount equal to (A) the sum of (x) Mr. Farbman's Base Salary then in
effect and (y) the greater of the Bonus for the year preceding his termination
or the Bonus that he would have received had he completed the year in which his
termination occurred multiplied by (B) the lesser of (x) two (2) or (y) the
number of years remaining in the Term (including fractional portions of a year),
but in no event shall the multiplier be less than one (1).
The Employment Agreement contains a restrictive covenant that restricts Mr.
Farbman from engaging in (i) publication of community oriented newspapers in the
communities served by NCI, (ii) publication of newspapers, magazines or
periodicals the content of which is similar to or competitive with any of NCI's
publications of having a circulation that is directed to a specific demographic
group to whom any of NCI's publications are directed or (iii) a business that
directly competes within the same geographic market in which NCI's business
accounts for, or is projected to account for, more than 5% of our gross
revenues. The Employment Agreement also prohibits Mr. Farbman from soliciting
NCI's customers and employees. These restrictions apply both during the term
and for (x) two (2) years after the termination of Mr. Farbman's employment by
NCI for Cause or by Mr. Farbman without
11
<PAGE>
Good Reason or (y) one (1) year after the termination of Mr. Farbman's
employment by NCI without Cause, by Mr. Farbman for Good Reason or as a result
of Mr. Farbman's disability.
In connection with NCI's employment of Mr. Farbman, on July 28, 1999, we
have also entered into a Restricted Stock Agreement and a Stock Option Agreement
with Mr. Farbman. Under the terms of the Restricted Stock Agreement, NCI issued
to Mr. Farbman 250,000 shares of common stock.
The terms of Mr. Farbman's Stock Option Agreement are set forth in
Directors' and Officers' Options at pages 13-14.
Pursuant to an amended and restated employment agreement entered into by
News Communications and Jerry Finkelstein as of August 20, 1993, and terminating
on August 19, 2003, Mr. Finkelstein is employed as Chairman of the Board of
Directors of News Communications at an annual salary of $195,000. On July 29,
1999, the Board of Directors and Mr. Finkelstein agreed to amend Mr.
Finkelstein's employment agreement to reduce his annual salary to $95,000 from
$195,000. Mr. Finkelstein may also be paid annual bonuses at the discretion of
the Board, based upon such factors as our results of operations and transactions
involving News Communications which are introduced to NCI by Mr. Finkelstein or
in which he is otherwise involved on our behalf of NCI. NCI will also provide
Mr. Finkelstein with medical and other benefits and perquisites. Mr.
Finkelstein may terminate the agreement at any time by giving NCI at least 10
days' notice. In the event of his permanent disability or death, salary and
bonuses shall continue to be paid to him or the legal representative of his
estate until the end of the term of the agreement.
NCI has no established compensation arrangements with NCI's directors. See
"Directors' and Officers' Options" for a discussion of our Directors and
Officers Stock Option Plan and options granted to certain directors and
officers.
However, on July 28, 1999 NCI granted to Gary Weiss, one of NCI's directors
five (5) year options to purchase 150,000 shares of NCI common stock at a price
of $2.25 per share in consideration of services rendered to NCI during our
search for a permanent Chief Executive Officer.
Directors' and Officers' Options
On August 16, 1999, pursuant to a Stock Option Agreement, NCI granted Paul
Mastronardi options to purchase 100,000 shares of NCI common stock at an
exercise price of $1.625 per share. The options shall vest in four equal
installments of 25,000 shares beginning on the first anniversary of the
agreement through the fourth anniversary subject to accelerated vesting
provisions set forth in the Stock Option Agreement.
On July 28, 1999, NCI entered into a Stock Option Agreement with Steven
Farbman. Under the terms of the Stock Option Agreement, NCI granted Mr. Farbman
options to purchase 830,000 shares of NCI common stock at an exercise price of
$1.8125 per share. The options vest in four equal installments of 207,500
shares commencing on July 28, 2000 and on each July 28 thereafter. The vesting
may be such that 10% of the shares shall vest for each
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cumulative $.05 improvement in per share earnings before interest, taxes,
depreciation and amortization over that for the fiscal year ended November 30,
1998.
On July 28, 1999, NCI entered into a Stock Option Agreement with Jerry
Finkelstein. Under the terms of the Stock Option Agreement, NCI granted
Finkelstein immediately exercisable five year options to purchase 200,000 shares
of NCI common stock at an exercise price of $2.25 per share.
On July 28, 1999, pursuant to a Stock Option Agreement, NCI granted Gary
Weiss, one of our directors, immediately exercisable five year options to
purchase 150,000 shares of NCI common stock at an exercise price of $2.25 per
share.
On December 21, 1999, the Board adopted subject to stockholder approval, a
Stock Incentive Plan pursuant to which the Board may award options to purchase
an aggregate of 200,000 shares of our common stock to directors, officers,
employees and consultants. Options under the Stock Incentive Plan may be non-
qualified or incentive stock options for purposes of income taxation under
Section 422 of the Internal Revenue Code of 1986. All qualified incentive stock
options granted under the plan must have an exercise price at least equal to
Fair Market Value (as defined in the plan) as of the grant date while non-
qualified stock options may be granted at an exercise price less than Fair
Market Value. No grants were made under the Stock Incentive Plan during the
fiscal year ended November 30, 1999.
On August 17, 1993, the Board adopted a Discretionary Directors and
Officers Stock Option Plan pursuant to which, as amended, the Board may award
options to purchase an aggregate of 500,000 shares of common stock to directors
and officers of News Communications 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 422 of
the Internal Revenue Code of 1986. No grants were made under the Discretionary
Option Plan during the fiscal years ended November 30, 1998 and 1999.
On August 17, 1993, the Board also adopted a Non-Discretionary Directors
Stock Option Plan pursuant to which each director was granted on August 17, 1993
and is granted each anniversary thereof on which he or she continues to be a
director, a five-year option to purchase 3,333 shares of common stock at the
market price on the date of grant. The Non-Discretionary Option Plan also
provides that any person becoming a director within the six months after any
August 17 will be granted an option for 3,333 shares on the date he or she
becomes a director. Pursuant to the Non-Discretionary Option Plan, each person
who was a director of News Communications, on August 17, 1999 received a grant
of an option to purchase 3,333 shares of common stock exercisable at $1.625 per
share.
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Meetings and Committees of the Board of Directors
The Board held two meetings during the fiscal year ended November 30, 1999
and one meeting in the month of December, 1999. All other Board business was
transacted through written consents of corporate actions. During fiscal 1999,
the Board had three committees: the Executive Committee, the Audit Committee
and the Compensation Committee.
On July 27, 1999, the Board approved the employment of Steven Farbman as
President and Chief Financial Officer, together with other corporate matters.
On September 30, 1999, the Board approved the employment of Paul Mastronardi to
serve as Chief Financial Officer, Vice President and Secretary and appointed new
members to the committees of the Board, together with other corporate matters.
Finally, on December 15, 1999, the Board discussed and approved a number of
corporate matters including a change in NCI's fiscal year from November 30 to
December 31 and the 2000 Stock Incentive Plan.
During fiscal 1999 through September, 1999, the Executive Committee was
comprised of Messrs. Ross, Finkelstein and Schenkler, following which the
Executive Committee was comprised of Messrs. Farbman, Ross, Finkelstein and
Weiss. Mr. Ross served as Chairman of the Executive Committee.
During fiscal 1999 through September, 1999, the Audit Committee was
comprised of Messrs. Nederlander and Tarlow; thereafter, the Audit Committee was
comprised of Messrs. Nederlander, Price and Mendelsohn. The Audit Committee
recommends the independent accountants appointed by the Board to audit our the
financial statements, which includes an inspection of NCI's books and accounts,
and reviews with such accountants the scope of their audit and their report
thereon, including any questions and recommendations that may arise relating to
such audit and report or NCI's internal accounting and auditing system
procedures. The composition of the Audit Committee complies with the independent
director requirements of Nasdaq. Subsequent to this Meeting, the Board will
appoint new members of the Audit Committee.
During fiscal 1999 through September, 1999, the Compensation Committee was
comprised of Messrs. Catsimatidis and Tarlow; thereafter, the Compensation
Committee was comprised of Messrs. Finkelstein, Bell and Weiss. The function of
the Compensation Committee is to review and approve the compensation of
executive officers and establish targets and incentive awards under NCI's
incentive compensation plans. The Compensation Committee reports to the Board.
Subsequent to this Meeting, the Board will appoint new members of the
Compensation Committee.
Compensation Committee Interlocks and Insider Participation
NCI's Compensation Committee was comprised of Messrs. Catsimatidis and
Tarlow through September, 1999 and of Messrs. Finkelstein, Bell and Weiss
thereafter. With the exception of Mr. Finkelstein who serves as Chairman of the
Board, none of Messrs. Catsimatidis, Tarlow, Bell or Weiss is or was an officer
or employee of NCI.
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Board Report on Executive Compensation
General. The Compensation Committee of the Board is responsible for
determining and administering NCI's compensation policies for the remuneration
of NCI's officers. In the absence of a Compensation Committee, the Board is
responsible for such activities. The Compensation Committee or the Board, as
the case may be, annually evaluates individual and corporate performance from
both a short-term and long-term perspective.
Salaries. The policy is to provide salaries (i) that are approximately at
the median of the salaries paid to similar executive officers in similar
companies, adjusted in the Compensation Committee's or the Board's subjective
judgment to reflect differences in duties of the officers and differences in the
size and stage of development of the companies, in order to attract and retain
qualified executives and (ii) that compensate individual employees for their
individual contributions and performance. The Compensation Committee or the
Board determines comparable salaries paid by other companies similar to NCI
through its subjective evaluation of its members' knowledge of salaries paid by
other companies, any studies conducted about NCI's industry, salary requests of
individuals interviewed by NCI for open positions and recommendations of
management. The Compensation Committee or the Board subjectively evaluates this
information and NCI's financial resources and prospects to determine the salary
and severance arrangements for an executive officer.
Components of Executive Compensation. Historically, NCI's executive
employees have received cash-based and equity-based compensation.
Cash-Based Compensation. Base salary represents the primary cash component of
-----------------------
an executive employee's compensation, and is determined by evaluating the
responsibilities associated with an employee's position at NCI and the
employee's overall level of experience. In addition, the Committee, in its
discretion, may award bonuses. The Compensation Committee and the Board believe
that NCI's management and employees are best motivated through stock option
awards and cash incentives.
Equity-Based Compensation. Equity-based compensation principally has been in
-------------------------
the form of stock options. The Compensation Committee and the Board believe
that stock options represent an important component of a well-balanced
compensation program. Because stock option awards provide value only in the
event of share price appreciation, stock options enhance management's focus on
maximizing long-term stockholder value and thus provide a direct relationship
between an executive's compensation and the stockholders' interests. No
specific formula is used to determine stock option awards for an employee.
Rather, individual award levels are based upon the subjective evaluation of each
employee's overall past and expected future contributions to the success of NCI.
Employment Agreements and Miscellaneous Personal Benefits. The
Compensation Committee's and the Board's policy has been to have employment
agreements with each of its executive officers to provide them with specified
minimum positions, periods of employment, salaries, fringe benefits and
severance benefits. These benefits are intended to permit the executive officer
to focus his attention on performing his duties to NCI, rather than on the
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security of his employment, and to provide the officer with benefits deemed by
the Compensation Committee or the Board to be suitable for the executive's
office.
Compensation of the Chief Executive Officer
The philosophy, factors and criteria of the Compensation Committee and the
Board generally applicable to NCI's officers are also applicable to the Chief
Executive Officer. Mr. Farbman, NCI's Chief Executive Officer during part of
fiscal 1999, agreed to receive a base salary of $185,000, together with a bonus,
benefits and key-man life insurance. The new Chief Executive Officer's salary
for fiscal 2000 will be based on the factors set forth above under "Salaries"
and "Components of Executive Compensation."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
July 28, 1999 Stockholder's Agreement. Please see page 7.
July 28, 1999 Restricted Stock Agreement with Steve Farbman. Please see,
Employment Agreements, page 11.
July 28, 1999 Stock Option Agreement with Steve Farbman. Please see,
Employment Agreements, page 11.
August 16, 1999 Stock Option Agreement with Paul Mastronardi. Please see
Director and Officer Options, page 13.
On July 28, 1999, the maturity of the $1,000,000 aggregate principal amount
of indebtedness of our subsidiaries, Tribco Incorporated and Access Network
Corp., to D.H. Blair Investment Banking Corp. was extended to January 31, 2000.
With respect to the repayment of the such indebtedness, on July 28, 1999, NCI
entered into a Subscription Agreement with Messrs. Weiss, Ross and Davis to
which Messrs. Weiss, Ross and Davis agreed to purchase 483,200, 140,297 and
925,372 shares of the NCI common stock, respectively, at a purchase price of
$1.75 per share, on January 31, 2000. On January 31, 2000 NCI sold an aggregate
of 1,548,869 shares at a price of $1.75 per share. The proceeds of the sale of
shares were used to pay $2,710,520.83 representing the unpaid principal balance
and accrued interest on NCI's indebtedness to DH Blair Investment Banking Corp.
and Wilbur L. Ross, Jr.
On January 12, 1999, Messrs. Ross, Weiss and Davis entered into a Standby
Agreement with News Communications in which they agreed to purchase any shares
remaining unsold in the rights offering. The Standby Agreement granted each
such person certain registration rights that will allow them to register for
sale the unsold shares that they purchase during the three-year period following
the closing of the rights offering. Pursuant to the Standby Agreement, Messrs.
Ross, Weiss and Davis purchased, 224,722, 524,399 and 749,149 shares,
respectively.
On December 31, 1998, Messrs. Ross, Weiss and Davis each loaned News
Communications $400,000, for a total of $1,200,000. In consideration for the
loans, each
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such person received a promissory note from News Communications in the principal
amount of $400,000, payable on February 28, 1999, at an interest rate equal to
the prime lending rate then in effect, plus 1%. NCI used $750,000 of the loans
to repay the line of credit from Chase Manhattan Bank, N.A. This indebtedness
was satisfied from proceeds on a rights offering on February 28, 1999.
Dan's Papers leases from Mr. Rattiner 2,810 square feet of office space at
an annual rate of approximately $74,000, plus cost-of-living adjustments, in a
building on Montauk Highway, Bridgehampton, New York, for a term of ten years
terminating in October 2008.
Rothschild Inc., of which Wilbur L. Ross, Jr. was Executive Managing
Director, furnished investment banking services to News Communications in
connection with the issuance and sale of our $10 convertible preferred stock and
associated warrants. In consideration for such services, NCI issued Rothschild
Inc. 16,668 shares of common stock, valued at $6.00 per share.
On November 5, 1997, Dan's Papers and News Communications entered into the
Rothschild Recovery Fund Loan Agreement with Rothschild Recovery Fund L.P.
pursuant to which Dan's Papers borrowed $1,500,000 from Rothschild Recovery
Fund. In addition, in connection with the execution of the Rothschild Recovery
Fund Loan Agreement, NCI issued to Rothschild Recovery Fund a five-year warrant
to purchase 100,000 shares of NCI common stock at an initial exercise price of
$6.75 per share, subject to adjustment. Wilbur L. Ross, Jr. purchased the loan
from Rothschilds Recovery Fund in July 1999. Wilbur L. Ross, Jr. is Chairman of
Rothschild Recovery Fund. This loan has been satisfied from the proceeds of the
sale of NCI's common stock on January 31, 2000 to Messrs. Weiss, Ross and Davis
as set forth above.
In May 1996, News Communications, Tribco and Access obtained a $1,000,000
loan from D. H. Blair Investment Banking Corp., one of NCI's principal
stockholders. This loan has been satisfied from the proceeds of the sale of
NCI's common stock on January 31, 2000 to Messrs. Weiss, Ross and Davis as set
forth above. As additional consideration for the loan, NCI issued D.H. Blair
Investment Banking Corp. a five-year warrant to purchase 66,667 shares of NCI's
common stock at an exercise price of $7.50 per share, subject to adjustment.
The transactions described above are on terms as favorable to News
Communications as those that could have been obtained from independent third
parties and arms-length negotiations.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee of the Board of Directors,
none of whose members is an officer of NCI, the Board of NCI has selected the
firm of BDO Seidman LLP, as independent auditors, for its fiscal year ending
December 31, 2000, subject to ratification
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by the stockholders. BDO Seidman served as NCI's independent auditors during
1999. If the appointment of the firm of BDO Seidman is not approved or if that
firm shall decline to act or their employment is otherwise discontinued, the
Board of Directors will appoint other independent auditors. Representatives of
BDO Seidman will be present at the Meeting, will be afforded an opportunity to
make a statement and will be available to respond to inquiries from
stockholders.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF BDO SEIDMAN, LLP.
PROPOSAL 3
2000 STOCK INCENTIVE PLAN
Our board of directors proposes that you approve the adoption of the 2000
Stock Incentive Plan. The following is a fair and complete summary of the plan
as proposed. This summary is qualified in its entirety by reference to the full
text of the plan, which appears as Exhibit A to this document.
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General
Purpose: The purpose of the plan as proposed is to promote our long-term
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growth and profitability by providing key people with incentives to improve
stockholder value and contribute to our growth and financial success and by
enabling us to attract, retain and reward the best-available people.
Shares Available under the Plan: The number of shares of common stock that
-------------------------------
we may issue with respect to awards available for grant under the proposed plan
will not exceed an aggregate of 200,000 shares. The maximum number of shares of
common stock subject to awards of any combination that may be granted under the
proposed plan during any fiscal year to any one individual is limited to
150,000. These limits will be adjusted to reflect any stock dividends, split-
ups, recapitalizations, mergers, consolidations, business combinations or
exchanges of shares and the like. If any award, or portion of an award, under
the plan expires or terminates unexercised, becomes unexercisable or is
forfeited or otherwise terminated, surrendered or canceled as to any shares, or
if any shares of common stock are surrendered to us in connection with any award
(whether or not such surrendered shares were acquired pursuant to any award),
the shares subject to such award and the surrendered shares will thereafter be
available for further awards under the plan. As of June 22, 2000, the fair
market value of a share of common stock, determined by the last reported sale
price per share of common stock on such date as quoted on the Nasdaq-SmallCap
Market, was $1.1875.
Administration: The proposed plan is currently administered by the
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Compensation Committee of our board, but may be administered by a committee or
committees as the board may appoint from time to time. The administrator has
full power and authority to take all actions necessary to carry out the purpose
and intent of the plan, including, but not limited to, the
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authority to: (i) determine who is eligible for awards, and the time or times at
which such awards will be granted; (ii) determine the types of awards to be
granted; (iii) determine the number of shares covered by or used for reference
purposes for each award; (iv) impose such terms, limitations, restrictions and
conditions upon any such award as the administrator deems appropriate; (v)
modify, amend, extend or renew outstanding awards, or accept the surrender of
outstanding awards and substitute new awards (provided however, that, except as
noted below, any modification that would materially adversely affect any
outstanding award may not be made without the consent of the holder); (vi)
accelerate or otherwise change the time in which an award may be exercised or
becomes payable and to waive or accelerate the lapse, in whole or in part, of
any restriction or condition with respect to such award, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an award following termination of any grantee's employment or
consulting relationship; and (vii) establish objectives and conditions, if any,
for earning awards and determining whether awards will be paid after the end of
a performance period.
In the event of changes in our common stock by reason of any stock
dividend, split-up, recapitalization, merger, consolidation, business
combination or exchange of shares and the like, the administrator may make
adjustments to the number and kind of shares reserved for issuance or with
respect to which awards may be granted under the plan and to the number, kind
and price of shares covered by outstanding awards, and may without the consent
of holders of awards, make any other adjustments in outstanding awards,
including but not limited to reducing the number of shares subject to awards or
providing or mandating alternative settlement methods such as settlement of the
awards in cash or in shares of common stock or any other of our securities or of
any other entity, or in any other matters which relate to awards as the
administrator may determine to be necessary or appropriate.
Without the consent of holders of awards, the administrator, in its sole
discretion, may make any modifications to any awards, including but not limited
to cancellation, forfeiture, surrender or other termination of the awards, in
whole or in part regardless of the vested status of the award, to facilitate any
business combination the board of directors authorizes to comply with
requirements for treatment as a pooling of interests transaction for accounting
purposes under generally accepted accounting principles.
Without the consent of holders of awards, the administrator in its
discretion is authorized to make adjustments in the terms and conditions of, and
the criteria included in, awards in recognition of unusual or nonrecurring
events affecting us, or our financial statements or those of any of our
affiliates, or of changes in applicable laws, regulations, or accounting
principles, whenever the administrator determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the plan.
Participation: Participation in the plan will be open to all of our
-------------
employees, officers, directors, and other individuals providing bona fide
services to us or any of our affiliates, as the administrator may select from
time to time. As of June 23, 2000, all six non-employee directors, and
approximately 250 full time and 44 part-time employees would be eligible to
participate in the plan.
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Type of Awards
The plan as proposed would allow for the grant of stock options, stock
appreciation rights, stock awards, phantom stock awards and performance awards.
The administrator may grant these awards separately or in tandem with other
awards. The administrator will also determine the prices, expiration dates and
other material conditions governing the exercise of the awards. We, or any of
our affiliates, may make or guarantee loans to assist grantees in exercising
awards and satisfying any withholding tax obligations arising from awards.
Stock Options: The proposed plan allows the administrator to grant either
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awards of incentive stock options, as that term is defined in section 422 of the
Internal Revenue Code, or nonqualified stock options; provided, however, that
only our employees or employees of our subsidiaries may receive incentive stock
option awards. Options intended to qualify as incentive stock must have an
exercise price at least equal to fair market value on the date of grant, but
nonqualified stock options may be granted with an exercise price less than fair
market value. The option holder may pay the exercise price in cash, by
tendering shares of common stock, by a combination of cash and shares, or by any
other means the administrator approves.
Stock Appreciation Rights: The proposed plan allows the administrator to
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grant awards of stock appreciation rights which entitle the holder to receive a
payment in cash, in shares of common stock, or in a combination of both, having
an aggregate value equal to the spread on the date of exercise between the fair
market value of the underlying shares on that date and the base price of the
shares specified in the grant agreement.
Stock and Phantom Stock Awards: The proposed plan allows the administrator
------------------------------
to grant restricted or unrestricted stock awards, or awards denominated in
stock-equivalent units to eligible participants with or without payment of
consideration by the grantee. Stock awards and phantom stock awards may be paid
in cash, in shares of common stock, or in a combination of both.
Performance Awards: The proposed plan allows the administrator to grant
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performance awards which become payable in cash, in shares of common stock, or
in a combination of both, on account of attainment of one or more performance
goals established by the administrator. The administrator may establish
performance goals based on our operating income, or that of our affiliates, or
one or more other business criteria the administrator may select that applies to
an individual or group of individuals, a business unit, or us or our affiliate
as a whole, over such performance period as the administrator may designate.
Other Stock-Based Awards: The proposed plan allows the administrator to
------------------------
grant stock-based awards which may be denominated in cash, common stock, or
other securities, stock equivalent units, stock appreciation units, securities
or debentures convertible into common stock, or any combination of the
foregoing. These awards may be paid in common stock or other securities, in
cash, or in a combination of common stock, other securities and cash.
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Awards Under the Plan
Because participation and the types of awards available for grant under the
plan as proposed are subject to the discretion of the administrator, the
benefits or amounts that any participant or groups of participants may receive
if the plan is approved are not currently determinable. To date, no awards have
been granted under the proposed plan.
Amendment and Termination
Our board of directors may terminate, amend or modify the plan or any
portion thereof at any time.
Federal Income Tax Consequences
The following is a general summary of the current federal income tax
treatment of stock options, which would be authorized for grants under the plan
as proposed, based upon the current provisions of the Internal Revenue Code and
regulations promulgated thereunder.
Incentive Stock Options: Incentive stock options under the plan are
-----------------------
intended to meet the requirements of section 422 of the Internal Revenue Code.
No tax consequences result from the grant of the option. If an option holder
acquires stock upon exercise, the option holder will not recognize income for
ordinary income tax purposes (although the difference between the option
exercise price and the fair market value of the stock subject to the option may
result in alternative minimum tax liability to the option holder) and the we
will not be allowed a deduction as a result of such exercise, provided that the
following conditions are met: (a) at all times during the period beginning with
the date of the granting of the option and ending on the day three months before
the date of such exercise, the option holder is our employee or an employee of
one of our subsidiaries; and (b) the option holder makes no disposition of the
stock within two years from the date of the option grant nor within one year
after the transfer of the stock to the option holder. The three-month period
extends to one year in the event of disability and is waived in the event of
death of the employee. If the option holder sells the stock after complying
with these conditions, any gain realized over the price paid for the stock
ordinarily will be treated as capital gain, and any loss will be treated as
capital loss, in the year of the sale.
If the option holder fails to comply with the employment requirement
discussed above, the tax consequences will be substantially the same as for a
nonqualified option, discussed below. If the option holder fails to comply with
the holding period requirements discussed above, the option holder will
recognize ordinary income in an amount equal to the lesser of (i) the excess of
the fair market value of the stock on the date of the exercise of the option
over the exercise price or (ii) the excess of the amount realized upon such
disposition over the adjusted tax basis of the stock. Any additional gain
ordinarily will be recognized by the option holder as capital gain, either long-
term or short-term, depending on the holding period of the shares. If the
option holder is treated as having received ordinary income because of his or
her failure to comply with either condition above, we will be allowed an
equivalent deduction in the same year.
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Nonqualified Stock Options: No tax consequences result from the grant of
--------------------------
the option. An option holder who exercises a nonqualified stock option with
cash generally will realize compensation taxable as ordinary income in an amount
equal to the difference between the exercise price and the fair market value of
the shares on the date of exercise, and we will be entitled to a deduction from
income in the same amount in the fiscal year in which the exercise occurred.
The option holder's basis in these shares will be the fair market value on the
date income is realized, and when the holder disposes of the shares he or she
will recognize capital gain or loss, either long-term or short-term, depending
on the holding period of the shares.
Disallowance of Deductions: The Internal Revenue Code disallows deductions
--------------------------
for publicly held corporations with respect to compensation in excess of
$1,000,000 paid to the corporation's chief executive officer and its four other
most highly compensated officers. However, compensation payable solely on
account of attainment of one or more performance goals is not subject to this
deduction limitation if the performance goals are objective, pre-established and
determined by a compensation committee comprised solely of two or more outside
directors, the material terms under which the compensation is to be paid are
disclosed to the stockholders and approved by a majority vote, and the
compensation committee certifies that the performance goals and other material
terms were in fact satisfied before the compensation is paid. Under this
exception, the deduction limitation does not apply with respect to compensation
otherwise deductible on account of stock options and stock appreciation rights
granted at fair market value under a plan, such as the proposed plan, that
limits the number of shares that may be issued to any individual and which is
approved by the corporation's stockholders.
Required Vote
The affirmative vote of a majority of the votes cast in person or by proxy
at the meeting will be required to approve adoption of the plan. Broker non-
votes and abstentions are not treated as votes cast for this purpose and have no
effect on the outcome of the vote.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" ADOPTION OF THE 2000 STOCK
INCENTIVE PLAN.
COMPLIANCE WITH 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
NCI's directors, executive officers and persons who own more than ten percent of
the common stock (the "Ten Percent Stockholders") to file with the Securities
and Exchange Commission initial reports of beneficial ownership on Form 3 and
reports of changes in beneficial ownership on Form 4 or Form 5. Directors,
executive officers and Ten Percent Stockholders are required to furnish NCI with
copies of all such forms that they file. Based solely on the review of such
forms furnished to NCI, NCI believes that during fiscal 1999, NCI's directors,
executive officers and Ten Percent Stockholders complied with all applicable
Section 16(a) filing requirements.
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OTHER MATTERS
The Board knows of no other matters which are likely to be brought before
the Meeting. If, however, any other matters are properly brought before the
Meeting, the persons named in the enclosed proxy or their substitutes shall vote
thereon in accordance with their judgment pursuant to the discretionary
authority conferred by the form of proxy.
NCI's Annual Report, including certain financial statements, is being
mailed concurrently with this Proxy Statement to all persons who were holders of
record of common stock and $10 Preferred Stock at the close of business on June
23, 2000, which is the record date for voting purposes. The Annual Report does
not constitute a part of the proxy soliciting material.
Upon the written request of any stockholder, NCI will provide, without
charge, a copy of NCI's Annual Report on Form 10-KSB for the fiscal year ended
November 30, 1999, and one month ended December 31, 1999. Written requests for
such report should be directed to the Chief Financial Officer of NCI, 2 Park
Avenue, New York, New York 10016.
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STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholders who wish to present proposals at the 2001 annual meeting of
stockholders and who wish to have their proposals presented in the proxy
statement distributed by the Board in connection with such annual meeting must
submit their proposals in writing, to the attention of the Chief Financial
Officer of NCI, on or before April 25, 2001.
By Order of the Board of Directors
Steven Farbman
President and Chief Executive Officer
New York, New York
June 23, 2000
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NEWS COMMUNICATIONS, INC. PROXY
2 Park Avenue, New York, New York 10016
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
The undersigned hereby appoints Steven Farbman and/or Paul Mastronardi as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of the common
stock of News Communications, Inc. held of record by the undersigned on June 23,
2000, at the Annual Meeting of Stockholders to be held on July 25, 2000 or at
any adjournment thereof.
1. Election of Martin A. Bell, Steven Farbman, Jerry Finkelstein, Martin
Mendelsohn, Robert E. Nederlander, Steven Price, Wilbur L. Ross, Jr.,
Michael Schenkler and Gary Weiss as directors.
[ ] FOR all nine nominees listed (except as marked to the contrary
above)
[ ] WITHHOLD AUTHORITY
(INSTRUCTION: To withhold authority to vote for any of the nominees,
strike a line through the nominee's name in the list above.)
2. Ratification of the appointment of BDO Seidman LLP as NCI's independent
auditors for the fiscal year ending December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the News Communications, Inc. 2000 Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy, when
properly executed, will be voted in the manner directed herein by the
undersigned stockholder. If no direction is given, this proxy will be
voted FOR each of the three proposals.
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<PAGE>
THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
Receipt of Notice of Annual Meeting and Proxy Statement dated June 23,
2000 is hereby acknowledged.
Dated:____________________,2000
Signature:
Signature if held jointly:
Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED PRE-
PAID ENVELOPE OR DELIVER TO: Continental Stock Transfer & Trust Company, 2
Broadway, New York, New York 10004. Facsimile copies of the Proxy, properly
completed and duly executed, will be accepted at (212) 509-5150. If you have
any questions, please call Continental Stock Transfer & Trust Company at (212)
509-4000.
