EXHIBIT 10.3
SUBSCRIPTION AGREEMENT
NEWS COMMUNICATIONS, INC. COMMON STOCK
News Communications, Inc.
0 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Chairman
1. Application. (a) The undersigned (the "Purchaser"), intending to be
legally bound, hereby agrees to purchase an aggregate of 250,000 shares (the
"Shares") of the common stock (the "Common Stock") of News Communications, Inc.
(the "Company"), at a purchase price of $1.00 per Share. Payment of the purchase
price for the Shares shall be made by wire transfer of immediately available
funds concurrently with the purchase of 750,000 shares of the Company's Common
Stock by Xxxxx Xxxxxxxxxxx ("Xxxxxxxxxxx") pursuant to a Subscription Agreement
between Xxxxxxxxxxx and the Company (the "Xxxxxxxxxxx Agreement").
(b) In order to induce Xxxxxxxxxxx to enter into the Xxxxxxxxxxx
Agreement and certain other agreements executed in connection with the
Xxxxxxxxxxx Agreement, the Purchaser agrees to surrender the Shares to the
Company immediately upon receipt thereof, it being acknowledged and agreed that
the Shares are being surrendered in consideration of the covenants set forth in
the Xxxxxxxxxxx Agreement which provide for the 250,000 additional shares of
Common Stock being issued to Xxxxxxxxxxx pursuant to Section 1(b) of the
Xxxxxxxxxxx Agreement (or securities issued in respect thereof) be delivered to
the Purchaser upon the occurrence of the events described therein.
(c) The Shares shall bear the following legends:
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES ACT OF ANY STATE. THEY ARE BEING OFFERED PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT.
THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THE
SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, OR SUCH SALES AND TRANSFERS ARE MADE PURSUANT TO
AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
AGREEMENT TO SURRENDER ALL OF SUCH SHARES ON THE 2ND ANNIVERSARY OF THE
ISSUANCE THEREOF UPON THE OCCURRENCE OF CERTAIN EVENTS. ANY TRANSFEREE
OF SUCH
SHARES SHALL BE SUBJECT TO THE OBLIGATION TO SURRENDER THE SECURITIES
REPRESENTED HEREBY UPON THE OCCURRENCE OF SUCH EVENTS.
2. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Company as follows:
(a) The Purchaser, in making the decision to enter into this
Agreement and to commit to purchase the Shares, has relied upon
independent investigations made by him and his representatives, if any.
No oral representations have been made or oral information furnished to
the Purchaser in connection with the commitment to purchase of the
Shares; and the Purchaser and/or his advisors have had a reasonable
opportunity to ask questions of and receive answers from the Company
concerning the Shares.
(b) The Purchaser has been or will be supplied with or has and
will have sufficient access to all information, including financial
statements and other financial information of the Company, and has been
afforded with an opportunity to ask questions of and receive answers
concerning information to which a reasonable investor would attach
significance in making investment decisions, so that as a reasonable
investor the Purchaser has been able to make the Purchaser's decision
to commit to purchase the Shares.
(c) The Purchaser is able and will be able to bear the
substantial economic risks of an investment in the Shares for an
indefinite period of time, has no need for liquidity in such
investment, has made and will have made commitments to investments that
are not readily marketable which are reasonable in relation to the
Purchaser's net worth and, at the present time, could afford a complete
loss of such investment.
(d) The Purchaser has such knowledge and experience in
financial, tax and business matters so as to enable him to utilize the
information made available to him in connection with the commitment to
purchase and the purchase of the Shares to evaluate the merits and
risks of an investment in the Shares and to make an informed investment
decision with respect thereto.
(e) The Purchaser acknowledges that the purchase of the Shares
involves a high degree of risk and further acknowledges that he can
bear the economic risk of the purchase of the Shares, including the
total loss of his investment. The Purchaser is not relying on the
Company with respect to the tax and other economic considerations of an
investment in the Shares, and the Purchaser has relied on the advice
of, or has consulted with, only his own advisor(s).
(g) The Purchaser has and will have full right and power to
perform pursuant to this Subscription Agreement and make an investment
in the Company and is authorized and otherwise duly qualified to
purchase and hold the Shares and to enter into this Subscription
Agreement.
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(h) The Purchaser will be purchasing the Shares for his own
account, for investment and not with a view to resale or distribution
except in compliance with the Securities Act.
(i) The Purchaser understands that the Shares are being
offered and sold in reliance on an exemption from the registration
requirements of federal and state securities laws under Section 4(2) of
the Securities Act and that the Company is relying upon the truth and
accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in
order to determine the applicability of such exemptions and the
suitability of the Purchaser to acquire the Shares. The
representations, warranties and agreements contained herein are true
and correct as of the date hereof and may be relied upon by the
Company, and the Purchaser will notify the Company immediately of any
adverse change in any such representations and warranties which may
occur prior to the acceptance of the subscription and will promptly
send the Company written confirmation thereof. The representations,
warranties and agreements of the Purchaser contained herein shall
survive the execution and delivery of this Subscription Agreement and
the purchase of the Shares.
(j) The Purchaser further represents and warrants that he is
an "accredited investor" within the meaning of Regulation D under the
Securities Act.
3. Representations and Warranties of the Company. The Company
represents and warrants to the Purchaser as follows:.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and
is duly qualified to do business and in good standing in the State of
New York. The Company has all requisite power and authority and has all
necessary approvals, licenses, permits and authorization to own its
properties and to carry on its business as now conducted. The Company
has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder.
(b) The Company's authorized capital stock consists of:
(i) 100,000,000 shares of Common Stock, of which
8,470,536 are issued and outstanding and 158,333 shares are
held in treasury;
(ii) 500,000 shares of Preferred Stock, of which:
(A) 14 shares designated 8% Convertible
Preferred Stock are issued and outstanding, which
shares are convertible into 2,222 shares of Common
Stock and 2,222 warrants to purchase Common Stock at
an exercise price of $6.00 per share;
(B) 21 shares designated 10% Convertible
Preferred Stock are issued and outstanding, which
shares are convertible into 12,600 shares of Common
Stock; and
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(C) 197,500 shares designated $10
Convertible Preferred Stock are issued and
outstanding, which shares are convertible into
825,432 shares of Common Stock after giving effect to
the issuance of the Shares, the issuance of the
Warrants to Xxxxx Xxxxxxxxxxx to purchase 3,000,000
shares, the purchase of 250,000 shares by X.X. Xxxxx
Investment Banking Corp. and the issuance of
1,150,000 shares issued upon conversion of an
aggregate of $1,150,000 principal amount of notes on
the date hereof.
(c) The Company currently has four Stock Option Plans. 200,000
shares of the Company's Common Stock have been reserved for issuance
upon exercise of options granted under the Company's 1999 Stock Option
Plan, 122,222 shares of the Company's Common Stock have been reserved
for issuance upon exercise of options granted under the Company's 1987
Stock Option Plan, 500,000 shares of the Company's Common Stock have
been reserved for issuance upon exercise of options granted under the
Company's Discretionary Directors and Officers Stock Option Plan and
166,667 shares of the Company's Common Stock have been reserved for
issuance upon exercise of options granted under the Company's
Non-discretionary Directors Stock Option Plan. As of the date hereof,
options to purchase a total of 1,010,661 shares of the Company's Common
Stock have been granted.
(d) 266,667 shares of the Company's Common Stock have been
reserved for issuance upon the exercise of the Warrants issued to the
holders of the $10.00 Convertible Preferred Stock, 32,223 shares of the
Company's Common Stock have been reserved for issuance upon the
exercise of the Warrants issued to the holders of the 8% Convertible
Preferred Stock, 200,000 shares of the Company's Common Stock have been
reserved for issuance upon the exercise of the Warrants issued to X.X.
Xxxxx Investment Banking Corp. and 100,000 shares of the Company's
Common Stock have been reserved for issuance upon the exercise of the
Warrant issued to WLR Recovery Fund L.P.
(e) 1,000,000 shares of the Company's Common Stock have been
reserved for issuance upon the conversion of an 8% Convertible Note
issued to Xxxxxxxx Xxxxxxxxxx and 350,000 shares of the Company's
Common Stock have been reserved for issuance upon the conversion of the
8% Convertible Notes issued to X.X. Xxxxx Investment Banking Corp. An
additional indeterminate number of shares have been reserved for
issuance in satisfaction of the payment of accrued interest on the
Company's 8% Convertible Notes.
(f) Up to 1,000,000 shares of the Company's Common Stock have
been reserved for issuance upon either (i) the conversion of the
outstanding principal amount under a Revolving Note issued to X.X.
Xxxxx Investment Banking Corp. or (ii) if not converted by the maturity
date, the issuance of warrants to purchase the Company's Common Stock
in an amount equal to the maximum advances thereunder at any one time.
An additional indeterminate number of shares have been reserved for
issuance in satisfaction of the payment of accrued interest on the
Revolving Note.
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(g) All the outstanding shares of capital stock of the Company
have been duly and validly issued and are fully paid and
non-assessable. Upon issuance, sale and delivery as contemplated by
this Agreement, the Shares will be duly authorized, validly issued,
fully paid and non-assessable shares.
(h) The shares of the Company's Common Stock issuable upon
exercise of the Options, Warrants and Convertible Notes have been duly
authorized and reserved for issuance by all necessary corporate action
on the part of the Company. The shares of Common Stock issuable upon
exercise of the Warrants, have been duly and/or validly reserved for
issuance and, when issued and paid for in accordance with the terms of
the Warrants, will be validly issued, fully paid and nonassessable.
(i) Except as provided above and in Schedule A attached
hereto, no subscription, warrant, option, convertible security or other
right (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company is authorized or outstanding, (ii) the
Company has no obligation (contingent or otherwise) to issue any
subscription, warrant, option, convertible security or other such right
or to issue or distribute to holders of any shares of its capital stock
any evidences of indebtedness or assets of the Company, and (iii) the
Company has no obligation (contingent or otherwise) to purchase, redeem
or otherwise acquire any shares of its capital stock or any interest
therein or to pay any dividend or make any other distribution in
respect thereof.
(j) The Company has authorized the execution, delivery, and
performance of this Agreement and each of the transactions and
agreements contemplated hereby. No other corporate action (including
stockholder approval) is necessary to authorize such execution,
delivery and performance of this Agreement, and upon such execution and
delivery this Agreement shall constitute the valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and
general principles of equity. The Company has authorized the issuance
and delivery of the Shares in accordance with this Agreement.
4. Registration Rights.
(a) Agreement to Register. At any time from the date of
purchase of the Shares until the fifth anniversary of the date hereof,
at the request of the Purchaser (the "Registration Request"), the
Company shall prepare and use its best efforts to file with the
Securities and Exchange Commission (the "SEC") within 60 days of the
Registration Request a registration statement covering the resale of
the Shares (each, a "Registration Statement"), shall use its best
efforts to cause such Registration Statement to become effective as
soon as possible thereafter and to do all other things necessary to
cause such Registration Statement to be declared effective by the SEC
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable
blue sky and other state securities laws in such jurisdictions as the
Purchaser may reasonably request, and appropriate compliance with
applicable regulations issued under the Securities Act) and as would
permit or facilitate
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the sale and distribution of all or such portion of such Shares. The
Purchaser shall have the right to make such Registration Request on one
occasion.
(b) If the Purchaser desires to distribute the Shares by means
of an underwriting, he shall make a Registration Request and so advise
the Company and shall select an underwriter reasonably acceptable to
the Company. At such time, the Company and the Purchaser shall enter
into an underwriting agreement in customary form with the underwriter
selected for such underwriting by the Company. The Company shall not be
required to effect more than two underwritten offerings of Shares. The
Company shall pay all expenses, other than underwriters' discounts and
commissions and fees and disbursements of experts and counsel retained
by the Purchaser, relating to an underwriting of the Shares covered by
the first request, and the Purchaser shall pay all reasonable
registration expenses arising from the second such underwriting.
(c) If, at any time during the five-year period following the
date hereof, the Company proposes to file with the SEC a Registration
Statement with respect to any class of securities (other than pursuant
to a registration statement on Forms S-4 or S-8 or any successor form)
under the Securities Act, the Company shall notify the Purchaser at
least twenty (20) days prior to the filing of the Registration
Statement and will offer to include all or any portion of the Shares in
the Registration Statement. At the written request of the Purchaser,
delivered to the Company within ten (10) days after the date of the
Company's notice, the Purchaser shall state the number of Shares that
he wishes to sell under the proposed Registration Statement.
(d) If the Registration Statement is filed with respect to an
underwritten offering, the Company and the Purchaser shall enter into
an underwriting agreement in customary form with the underwriter
selected for such underwriting by the Company. The Company shall pay
all expenses, other than underwriters' discounts and commissions and
fees and disbursements of experts and counsel retained by the
Purchaser, relating to an underwriting of the Shares.
(e) The Purchaser, if reasonably requested by the Company or
by the underwriter with respect to any public offering, shall agree not
to sell, make any short sale of, loan, grant any options for the
purchase of, or otherwise dispose of any of the Shares (other than
those included in the Registration Statement) without the prior written
consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days), from
the effective date of such Registration Statement, or the commencement
of the offering, as applicable, as may be requested by the
underwriters, provided that all other holders of the class of
securities being registered pursuant to the Registration Statement
shall make the same agreements as those made by the Purchaser under
this Section 4(e).
(f) The Purchaser shall promptly provide the Company with such
non-confidential and non-proprietary information as it shall reasonably
request and that is available to the Purchaser in order to prepare the
Registration Statement.
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(g) All reasonable and necessary expenses in connection with
the preparation of the Registration Statement, including, without
limitation, any and all legal, accounting and filing fees, but not
including fees and disbursements of experts and counsel retained by the
Purchaser or underwriting discounts and commissions to be paid by the
Purchaser, shall be borne by the Company.
(h) The Company shall use its best efforts to cause the
Registration Statement to become effective, permitting the sale of the
Shares in accordance with the intended method or methods of
distribution thereof, and pursuant thereto, the Company shall as
expeditiously as possible:
(i) prepare and file with the SEC a Registration
Statement relating on any appropriate form under the
Securities Act, which form shall be available for the sale of
the Shares in accordance with the intended method or methods
of distribution thereof and use its best efforts to cause such
Registration Statement to become effective and keep such
Registration Statement effective in accordance with Section
4(h)(ii) below;
(ii) prepare and file with the SEC such amendments
and post-effective amendments to the Registration Statement as
may be necessary to keep the Registration effective until all
such Shares are sold; cause the prospectus to be supplemented
by any required prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such
Registration Statement during the applicable period in
accordance with the intended method or methods of distribution
by the sellers thereof as set forth in such Registration
Statement or supplement to the prospectus; provided, however,
that the Company may, from time to time, request that the
Purchaser immediately discontinue the disposition of the
Shares if the Company determines, in the good faith exercise
of its reasonable business judgment, that the offering and
disposition of the Shares could materially interfere with bona
fide financing, acquisition or other material business plans
of the Company or would require disclosure of non-public
information, the premature disclosure of which could
materially and adversely affect the Company (it being
acknowledged that the Company is not required to disclose in
such request any such transaction, plan or non-public
information), so long as the Company promptly after the
disclosure of such transaction, plan or non-public information
complies with this Section 4(h)(ii);
(iii) notify the Purchaser and the underwriter, if
any, promptly, and (if requested by any such person) confirm
such advice in writing, (A) when the prospectus or any
prospectus supplement or post-effective amendment has been
filed, and, with respect to the Registration Statement or any
post-effective amendment thereto, when the same has become
effective, (B) of any request by the SEC for amendments or
supplements to the Registration Statement or the prospectus or
for additional information, (C) of the issuance by the SEC of
any stop order suspending the effectiveness of the
Registration Statement or the
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initiation of any proceedings for that purpose, (D) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation of any proceedings for such
purpose and (E) subject to the proviso below, of the happening
of any event as a result of which the prospectus included in
such Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing and, subject to Section 4(g)(ii)
above, at the request of any such person, prepare and furnish
to such person a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the Purchaser of such shares,
such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
provided, however, the Company need not disclose the event if
it otherwise has not disclosed such event to the public;
(iv) if requested by the underwriter or the
Purchaser, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the underwriter
and the Purchaser agree should be included therein relating to
the plan of distribution with respect to such Shares,
including, without limitation, the purchase price being paid
therefor by such underwriters and with respect to any other
terms of the underwritten offering of the Shares to be sold in
such offering; and make all required filings of such
prospectus supplements or post-effective amendments as soon as
notified of the matters to be incorporated in such prospectus
supplements or post-effective amendments;
(v) deliver to the Purchaser and the underwriters, if
any, without charge, as many copies of the prospectus
(including each preliminary prospectus) in conformity with the
requirement of the Securities Act and any amendments or
supplements thereto as such persons may reasonably request and
such other documents as they may reasonably request to
facilitate the prior sale or other disposition of the Shares;
(vi) prior to any public offering of Shares, register
or qualify or cooperate with the Purchaser, or the
underwriters, if any, in connection with the registration or
qualification of such Shares for offer and sale under the
securities or blue sky laws of such jurisdictions as the
Purchaser or underwriters, if any, reasonably requests in
writing and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of
the Shares covered by the Registration Statement; provided,
however, that the Company shall not be required to qualify to
do business in any jurisdiction where it is not then so
qualified or to take any action that would subject it to
general service of process in any such jurisdiction where it
is not then so subject or would subject the Company to any tax
in any such jurisdiction where it is not then so subject; and
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(vii) with a view to making available the benefits of
certain rules and regulations of the SEC which may at any time
permit the sale of Shares to the public without registration,
during such time as a public market exists for its equity
securities, the Company agrees to:
(A) make and keep public information
available, as those terms are understood and defined
in Rule 144 under the Securities Act, at all times
after the effective date of the first registration
under the Securities Act filed by the Company for an
offering of its equity securities to the general
public;
(B) use its best efforts to file with the
SEC in a timely manner all reports and other
documents required of the Company under the
Securities Act and the Securities Exchange Act of
1934, as amended (the "Exchange Act") (at any time
after it has become subject to such reporting
requirements); and
(C) furnish to the Purchaser forthwith upon
request a written statement by the Company as to the
Company's compliance with the reporting requirements
of said Rule 144, and of the Securities Act and the
Exchange Act, a copy of the most recent annual or
quarterly report of the Company and such other
reports and documents of the Company as the Purchaser
may reasonably request in availing itself of any rule
or regulation of the SEC allowing a holder to sell
any such securities without registration.
(i) Notwithstanding the provisions of this Section 4 to the
contrary, the Company:
(i) may require the Purchaser to furnish to the
Company such information regarding the distribution of such
securities as the Company may from time to time reasonably
request in writing, and the Company may limit such
registration rights to situations where a proposed
distribution of Shares is to be effected forthwith upon the
effectiveness of the Registration Statement; and
(ii) may require the Purchaser to covenant that he
has not taken, and will not take, directly or indirectly, any
action designed, or which might reasonably be expected, to
cause or result in, under the Exchange Act or otherwise, or
which has caused or resulted in, stabilization or manipulation
of the price of any security of the Company to facilitate the
sale or resale of the Shares.
(j) The Purchaser agrees by acquisition of such Shares that,
upon receipt of the request referred to in the proviso of Section
4(h)(ii) or of any notice from the Company of the happening of any
event of the kind described in Section 4(h)(iii) hereof (other than as
provided in Section 4(h)(iii)(A) hereof), the Purchaser shall forthwith
discontinue disposition of Shares until he is advised in writing by the
Company that the use of the prospectus may be resumed, and has received
copies of any additional
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or supplemental documents or filings that are incorporated by reference
in the prospectus, and, if so directed by the Company, the Purchaser
shall deliver to the Company (at the Company's expense) all copies
other than permanent file copies then in the Purchaser's possession, of
the prospectus covering such Shares current prior to the time of
receipt of such notice.
5. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Purchaser
against any losses, claims, damages, liabilities or expenses, joint or several,
to which the Purchaser may become subject, under the Securities Act, the
Exchange Act, or other federal or state statutory law or regulations, or at
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof
as contemplated below) arise out of or are based upon (i) any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement, any preliminary prospectus, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state in
any of them a material fact required to be stated therein or necessary to make
the statements in any of them not misleading, (ii) in whole or in part, any
inaccuracy in the representations and warranties of the Company contained
herein, or (iii) any failure of the Company to perform its obligations hereunder
or under law; and will reimburse the Purchaser for any legal and other expenses
as such expenses are reasonably incurred by the Purchaser in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Registration Statement, any preliminary prospectus, or any amendment or
supplement thereto in reliance upon and in conformity with information furnished
to the Company by each of the Purchaser expressly for the inclusion in any
Registration Statement or any preliminary prospectus. This indemnity agreement
will be in addition to any liability that the Company may otherwise have. The
Company will not, without the prior written consent of the Purchaser, settle or
compromise or consent to the entry of any judgment in any pending or threatened
action or claim or related cause of action or portion of such cause of action in
respect of which indemnification may be sought hereunder (whether or not the
Purchaser is a party to such action or claim), unless such settlement,
compromise or consent includes an unconditional release of the Purchaser from
all liability arising out of such action or claim (or related cause of action or
portion thereof).
(b) The Purchaser agrees to indemnify and hold harmless the Company,
each of its directors, each of its officers who sign any Registration Statement,
and each person, if any, who controls the Company within the meaning of the
Securities Act, against any losses, claims, damages, liabilities or expenses to
which the Company, or any such director, officer, or controlling person may
become subject, under the Securities Act, the Exchange Act, or other federal or
state statutory law or regulation, or
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at common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of the Purchaser), insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon (i) any untrue or
alleged untrue statement of any material fact contained any Registration
Statement, any preliminary prospectus, or any amendment or supplement thereto,
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in any Registration Statement, any preliminary prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with information
furnished to the Company by the Purchaser expressly for the use in any
Registration Statement or any preliminary prospectus; and will reimburse the
Company, or any such director, officer, or controlling person for any legal and
other expense reasonably incurred by the Company, or any such director, officer,
or controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. As to the Purchaser, in no event shall any indemnity under this
subsection (b) exceed the net proceeds from sale of the number of Shares sold by
the Purchaser. This indemnity agreement will be in addition to any liability
which the Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 5
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 5, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability that it may have to any indemnified party for contribution or
otherwise than under the indemnity agreement contained in this Section 5 or to
the extent it is not prejudiced as a proximate result of such failure. In case
any such action is brought against any indemnified party and such indemnified
party seeks or intends to seek indemnity from an indemnifying party, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with all other indemnifying parties similarly notified, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be a conflict
between the positions of the indemnifying party and the indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 5 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for
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the expenses of more than one separate counsel, approved by the Purchaser in the
case of paragraph (a), representing the indemnified parties who are parties to
such action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, in
each of which cases the fees and expenses of counsel shall be at the expense of
the indemnifying party.
(d) If the indemnification provided for in this Section 5 is required
but is for any reason held to be unavailable to or otherwise insufficient to
hold harmless an indemnified party under subsections (a), (b) or (c) in respect
of any losses, claims, damages, liabilities or expenses referred to herein, then
each applicable indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of any losses, claims, damages,
liabilities or expenses referred to herein (including any investigative, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claim asserted, but
after deducting any contribution received by the Company and the Purchaser from
any other persons, such as persons who control the Company within the meaning of
the Act, officers of the Company who signed the Registration Statement and
directors of the Company who also may be liable for contribution) (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Purchaser from the offering of the Shares or any public offering
of the Shares, as the case may be or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Purchaser in connection
with the statements or omissions or inaccuracies in the representations and
warranties herein which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Purchaser, on the
other, shall be deemed to be in the same proportion as the total net proceeds
from the sale of the Shares (before deducting expenses) received by the Company
bear to the total compensation received by the Purchaser hereunder. The relative
fault of the Company and the Purchaser shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact or the
inaccurate or the alleged inaccurate representation and/or warranty relates to
information supplied by the Company or the Purchaser and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in subsection (c) of
this Section 5, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in subsection (c) of this Section 5 with respect to notice
of commencement of any actions shall apply if a claim for contribution is to be
made under this subsection (d); provided, however, that no additional notice
shall be required with respect to any action for which notice has been given
under subsection (c) for purposes of indemnification. The Company and the
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 5 were determined solely by pro rata allocation or by any other
method of allocation that does not take account of
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the equitable considerations referred to in this Section 5. Notwithstanding the
provisions of this Section 5, the Purchaser shall not be required to contribute
any amount in excess of the amount of compensation received by each of them. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
6. Miscellaneous.
(a) This Agreement shall survive the death or disability of the
Purchaser and shall be binding upon the Purchaser's heirs, executors,
administrators, successors and permitted assigns.
(b) This Agreement and the documents referred to herein constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof and together supersede all prior discussions or agreements in respect
thereof.
(c) This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute a
single document.
(d) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. Any dispute arising out of or in
connection with this Agreement shall be settled by arbitration in accordance
with the rules of the American Arbitration Association then in effect. The
location of any hearing shall be New York, New York.
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IN WITNESS WHEREOF, the Purchaser has executed this Agreement this 8th
day of May, 2001.
X.X. XXXXX INVESTMENT BANKING CORP.
By: /s/ J. Xxxxxx Xxxxx
-----------------------------------------
Name: J. Xxxxxx Xxxxx
Title:
ACCEPTED AND AGREED TO:
NEWS COMMUNICATIONS, INC.
By: /s/ Xxxx Xxxxxxxxxxx
-----------------------------
Name: Xxxx Mastornardi
Title VP-CFO
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Schedule A
1. Pursuant to that certain Letter Agreement dated December 11, 2000 by and
between the Company and Xxxxxx X. Xxxxxxx, the Company has agreed to purchase
from Xx. Xxxxxxx 150,000 shares of the Company's common stock for an aggregate
purchase price of $300,000.
2. The Company has an obligation to pay to each holder of its 10% Convertible
Preferred Stock on September 19th of each year dividends in the amount of $500
per share. The Company has the option to pay such dividends in cash or in shares
of the Company's common stock.
3. The Company made a verbal commitment to grant to its Controller Options to
purchase 10,000 shares of its common stock.
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