Exhibit 10.2
RESTRICTED STOCK AGREEMENT
RESTRICTED STOCK AGREEMENT by and between NEWS COMMUNICATIONS, INC., a
Nevada corporation ("NCI"), and XXXXXX XXXXXXX ("Xxxxxxx"), dated as of July 28,
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1999.
WHEREAS, pursuant to an Employment Agreement dated the date hereof (the
"Employment Agreement"), Xxxxxxx has agreed to become President and Chief
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Executive
Officer of NCI and, in connection therewith, is receiving an award of 250,000
shares of NCI's Common Stock (as defined below); and
WHEREAS, the parties hereto believe that it is in the best interests of NCI
and Xxxxxxx to provide for certain rights and obligations of NCI and Xxxxxxx
with respect to the Shares (as defined below) under certain circumstances.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
Section 1. Definitions. For the purposes of this Agreement, the following
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terms shall have the following respective meanings, and terms used but not
otherwise defined herein shall have the meaning set forth in the Employment
Agreement:
1.1. "Act" shall mean the Securities Act of 1933, as amended, and the
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rules and regulations thereunder.
1.2. "Common Stock" shall mean NCI's Common Stock, par value $.01 per
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share.
1.3. "Non-Vested Shares" shall mean all the Shares that are not Vested
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Shares. Non-Vested Shares shall include any additional shares of Common Stock
received as a dividend to the extent paid on the Non-Vested Shares. Such
additional Non-Vested Shares shall vest at the same time and upon the same
events as the Non-Vested Shares to which such dividends correspond.
1.4. "Permitted Transferees" shall mean Xxxxxxx'x spouse, children
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(natural or adopted), stepchildren, grandchildren or descendants or a trust for
the benefit of, or entity or foundation owned by, Xxxxxxx and/or any one or more
of them.
1.5. "Register," "Registered" and "Registration" refer to a registration
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effected by preparing and filing a registration statement in compliance with the
Act, and the declaration or ordering of the effectiveness of such registration
statement.
1.6. "Registration Expenses" means all expenses that NCI incurs in
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complying with Section 8, including, without limitation, all Registration and
filing fees, printing expenses, fees
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and disbursements of counsel for NCI, Blue Sky fees and expenses, and the
expenses of any special audits incident to or required by any such Registration.
1.7. "Selling Expenses" means (i) all underwriting discounts and selling
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commissions applicable to the sale of securities Registered and sold pursuant to
Section 8, (ii) any additional costs and disbursements of counsel for NCI that
result from inclusion of the Shares in the Registration, and (iii) the expenses
of qualifying the securities covered by the Registration in a jurisdiction to
the extent that the jurisdiction requires such qualification expenses to be
borne by the selling security holders.
1.8. "Shares" shall mean the shares of Common Stock awarded to Xxxxxxx on
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the date hereof and any additional shares of Common Stock received as a dividend
or bonus on, or otherwise on account of, the Shares.
1.9. "Termination Event" shall mean the termination of Xxxxxxx as an
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executive of NCI, whether by reason of retirement, discharge or any other
reason, voluntary or involuntary other than by NCI without Cause or by Xxxxxxx
for Good Reason or upon death or Disability.
1.10. "Vested Shares" shall mean fifty percent (50%) of the Shares on the
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first anniversary of the date hereof and fifty percent (50%) of the Shares on
the second anniversary of the date hereof, so long as Xxxxxxx remains an
employee of NCI on such dates; provided, however, that all of the Shares issued
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to Xxxxxxx shall vest upon the occurrence of any one of the following events if
Xxxxxxx is an employee of NCI on the day prior to the date of such event: (i) a
Change of Control; (ii) the sale of substantially all of NCI's assets to another
entity; (iii) a dissolution of NCI; or (iv) the termination of Xxxxxxx'x
employment by NCI without Cause or by Xxxxxxx for Good Reason or by reason of
Xxxxxxx'x death or Disability. Vested Shares shall include any additional
shares of Common Stock received as a dividend on, or otherwise on account of,
Vested Shares; provided further that notwithstanding anything in this Agreement
to the contrary, the term Vested Shares shall include any additional shares of
Common Stock received as a bonus and any additional shares of Common Stock
received as a dividend to the extent paid on the Vested Shares.
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Section 2. Award of Shares.
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2.1. Award. On the date hereof, NCI hereby awards to Xxxxxxx 250,000
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Shares.
2.2. Unregistered Shares. In connection with the award of the Shares
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contemplated by Section 2.1 above, Xxxxxxx hereby represents and warrants to NCI
that Xxxxxxx understands that the Shares are not registered under the Act or any
applicable state securities or "blue sky" laws and may not be sold or otherwise
transferred or disposed of in the absence of an effective registration statement
under the Act and under any applicable state securities or "blue sky" laws (or
exemptions from the registration requirements thereof).
Section 3. Termination Event. Upon a Termination Event, the Non-Vested
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Shares shall be forfeited by Xxxxxxx and the certificate or certificates
representing such Non-Vested Shares shall be canceled by NCI.
Section 4. Restrictions on Transfer of Shares. Xxxxxxx may not sell,
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assign, transfer, pledge, hypothecate, give away or in any other manner dispose
of or encumber, whether voluntarily or by operation of law, any Non-Vested
Shares, other than as set forth in Sections 4(a) and (b) below. None of the
Vested Shares now owned or hereafter acquired shall be sold, assigned,
transferred, pledged, hypothecated, given away or in any other manner disposed
of or encumbered, whether voluntarily or by operation of law, except in
compliance with the Stockholders' Agreement dated as of July 28, 1999 by and
among NCI, Xxxxxxx and certain other stockholders of the Company (the
"Stockholders' Agreement"), all foreign, federal and state securities laws
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(including, without limitation, the Act), and such disposition is in accordance
with the terms and conditions of this Section 4. Until the Vested Shares shall
have been Registered under the Act, in connection with any transfer of Vested
Shares, NCI may require an opinion of counsel to the transferor, satisfactory to
NCI, that such transfer is in compliance with all foreign, federal and state
securities laws (including, without limitation, the Act). Any attempted
disposition of Vested Shares not in accordance with the terms and conditions of
this Section 4 shall be null and void, and NCI shall not reflect on its records
any change in record ownership of any Vested Shares as a result of any such
disposition, shall otherwise refuse to recognize any such disposition and shall
not in any way give effect to any
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such disposition. Subject to the foregoing general provisions, Non-Vested Shares
may be transferred pursuant to the following specific terms and conditions:
(a) Transfers to Permitted Transferees. Xxxxxxx may sell, assign,
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transfer or give away the right to acquire any or all of the Non-Vested Shares
to Permitted Transferees; provided, however, that such Permitted Transferee(s)
shall, as a condition to any such transfer, agree to be subject to the
provisions of this Agreement (including, without limitation, the provisions of
Sections 3 and 4) and shall have delivered a written acknowledgment to that
effect to NCI.
(b) Transfers Upon Death. Upon the death of Xxxxxxx, the Non-Vested
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Shares held by Xxxxxxx may be transferred and distributed by will or other
instrument taking effect at his death or by the laws of descent and distribution
to Xxxxxxx'x estate, executors, administrators and personal representatives, and
then to Xxxxxxx'x heirs, legatees or distributees whether or not such heirs,
legatees or distributees are Permitted Transferees; provided, however, that any
such transferees shall be subject to the provisions of Sections 3 and 4.
Section 5. Legend. Until the Shares shall have been registered under the
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Act or otherwise transferred in accordance with Rule 144 under the Act, any
certificate(s) representing the Shares shall carry on their face the following
legends:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including repurchase and transfer restrictions) contained
in that certain Restricted Stock Agreement dated July 28, 1999 between
News Communications, Inc. and Xxxxx Xxxxxxx and that certain
Stockholders Agreement dated July 28, 1999 between News
Communications, Inc., Xxxxx Xxxxxxx and certain other parties thereto
(copies of which are available for examination at the offices of News
Communications, Inc.)."
"The shares represented by this Certificate have not been
registered under the Securities Act of 1933, as amended, or the
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securities laws of any state. The shares may not be sold or
transferred in the absence of such registration or an exemption from
registration."
Section 6. Share Certificates. Certificates issued in respect of Shares
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shall be registered in the name of Xxxxxxx or his Permitted Transferees and
shall be deposited by Xxxxxxx or such Permitted Transferees, together with a
stock power endorsed in blank, with NCI. When the Non-Vested Shares vest and
are no longer subject to forfeiture as set forth herein, NCI shall deliver such
certificates to Xxxxxxx. Such stock certificates shall carry such appropriate
legends, and such written instructions shall be given to NCI's transfer agent,
as may be deemed necessary or advisable by counsel to NCI in order to comply
with (i) the requirements of the Act, any state securities laws or any other
applicable laws and (ii) the Stockholders' Agreement.
Section 7. Withholding Taxes. Xxxxxxx acknowledges and agrees that NCI
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has the right to deduct from payments of any kind otherwise due to Xxxxxxx, or
from the Shares held pursuant to Section 6 hereof, or to otherwise collect, any
federal, state or local taxes of any kind required by law to be withheld with
respect to the transfer of the Shares to Xxxxxxx. Notwithstanding the
foregoing, NCI agrees that if Xxxxxxx elects, in accordance with section 83(b)
of the Internal Revenue Code of 1986, as amended, to recognize ordinary income
in 1999, NCI will pay Xxxxxxx an amount equal to 45% of the fair market value of
such Shares as of the date hereof; provided, however, that in the event
Xxxxxxx'x employment is terminated by NCI for Cause or by Xxxxxxx without Good
Reason before all of the Shares become Vested Shares, Xxxxxxx shall promptly pay
to NCI the amount of Xxxxxxx'x taxes paid by NCI as a result of the Section
83(b) election.
Section 8. Registration Rights.
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8.1 Agreement to Register. On or before the earlier to occur of the first
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anniversary of this Agreement or the termination of Xxxxxxx'x employment by NCI
without Cause or by Xxxxxxx for Good Reason or upon a Change of Control, NCI
shall prepare and file a registration statement on Form S-8 or such other
appropriate Form under the Act and, if effectiveness is not automatic, use its
best efforts to cause such registration statement to become effective as
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promptly as practicable. Thereafter, NCI shall maintain the effectiveness of
the registration statement until all of the Shares may be sold without
restriction under the Act.
8.2 Piggyback Registration Rights. (a) Notwithstanding Section 8.1, if
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prior to the first anniversary of this Agreement, NCI determines to Register any
of its securities either for its own account or the account of a stockholder or
stockholders exercising Registration rights, other than a Registration relating
solely to employee benefit plans, or a Registration relating solely to a
transaction pursuant to Rule 145 promulgated under the Act or a Registration on
any Registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
Registration statement covering the sale of the Shares, NCI shall promptly give
to Xxxxxxx notice thereof and, subject to any registration rights which are
superior to Xxxxxxx'x, include in such Registration (and any related
qualification under blue sky laws), and in any underwriting involved therein,
the number of Shares specified in a written request made by Xxxxxxx within ten
(10) days after receipt of such written notice from NCI.
(b) If the Registration of which NCI gives notice is for a Registered
public offering involving an underwriting, Xxxxxxx'x rights to Registration
shall be conditioned upon (i) Xxxxxxx'x participation in such underwriting and
(ii) the inclusion of Xxxxxxx'x Shares in the underwriting pursuant to an
underwriting agreement in customary form with the underwriter or underwriters
selected by NCI; provided, however, that in the event of any reduction in the
securities to be included in the Registration, the securities that may be
included in the Registration and underwriting shall be allocated (1) first, to
NCI, and (2) second, among Xxxxxxx and the other security holders distributing
their securities through such underwriting, in proportion (as nearly as
practicable) to the number of shares owned by each such party unless such other
security holders have rights superior to Xxxxxxx hereunder.
8.3 Expenses of Company Registrations. NCI shall bear all Registration
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Expenses incurred in connection with any Registration, qualification or
compliance pursuant to this Section 8 (exclusive of Selling Expenses).
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8.4 Registration Procedures. In the case of each Registration,
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qualification or compliance effected by NCI pursuant hereto, NCI shall keep
Xxxxxxx advised in writing as to the initiation of each Registration,
qualification and compliance and as to the completion thereof. At its expense,
NCI shall:
(a) Keep such Registration, qualification or compliance effective for
a period of one hundred twenty (120) days or until Xxxxxxx has completed the
distribution described in the registration statement relating thereto, whichever
first occurs;
(b) Furnish such number of prospectuses and other documents incident
thereto as Xxxxxxx from time to time may reasonably request;
(c) Prepare and file with the Securities and Exchange Commission such
amendments and supplements to such Registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement;
(d) Use its best efforts to Register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as Xxxxxxx reasonably requests; provided, however,
that NCI shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions;
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Xxxxxxx shall also enter
into and perform its obligations under such an agreement;
(f) Notify Xxxxxxx at any time (i) when a prospectus relating to the
Shares is required to be delivered under the Act, and (ii) of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
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necessary to make the statements therein not misleading in the light of the
circumstances then existing;
8.4 Indemnification. In connection with any Registration, NCI and Xxxxxxx
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shall enter into a customary indemnification and contribution agreement with
respect to the offer and sale of the Shares.
Section 9. Miscellaneous Provisions.
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9.1 Termination. All provisions of this Agreement shall remain in effect
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until all of the Shares shall have become Vested Shares. Notwithstanding the
foregoing, the provisions of Section 8 shall remain in effect following
termination of this Agreement.
9.2 Equitable Relief. The parties hereto agree and declare that legal
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remedies may be inadequate to enforce the provisions of this Agreement and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.
9.3 Change and Modifications. This Agreement may not be orally changed,
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modified or terminated, nor shall any oral waiver of any of its terms be
effective. This Agreement may be changed, modified or terminated only by an
agreement in writing signed by NCI and Xxxxxxx.
9.4 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New York (without giving effect to
principals of conflicts of laws).
9.5 Headings. The headings are intended only for convenience in finding
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the subject matter and do not constitute part of the text of this Agreement and
shall not be considered in the interpretation of this Agreement.
9.6 Saving Clause. If any provision(s) of this Agreement shall be
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determined to be illegal or unenforceable, such determination shall in no manner
affect the legality or enforceability of any other provision hereof.
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9.7 Notices. Any notice or other communications required or permitted
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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. Notices to NCI or Xxxxxxx shall be addressed as
set forth underneath their signatures below, or to such other address or
addresses as may have been furnished by such party in writing to the other.
9.8 Benefit and Binding Effect. This Agreement shall be binding upon and
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shall inure to the benefit of the parties hereto, their respective successors,
assigns, and legal representatives. The NCI has the right to assign this
Agreement, and such assignee shall become entitled to all the rights of NCI
hereunder to the extent of such assignment.
IN WITNESS WHEREOF, NCI and Xxxxxxx have executed this Agreement as of the
date first above written.
NEWS COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxx., Jr.
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Name: Xxxxxx X. Xxxx, Xx.
Title: Chief Executive Officer
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
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