Exhibit 2
STOCKHOLDERS' AGREEMENT
STOCKHOLDERS' AGREEMENT, made the 8th day of May, 2001, by and among
XXXXX XXXXXXXXXXX, THE XXXXXXXXXXX FOUNDATION, INC. and XXXXXXX XXXXXXXXXXX
(collectively, the "Xxxxxxxxxxx Group"), each having an address at the Carlyle
Hotel, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000; XXXXXX X. XXXX, XX. ("Xxxx"),
having an address at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000; XXXXXX X. XXXXX
and M&B XXXXX FAMILY PARTNERSHIP (the "Xxxxx Group"), having an address c/o
Xxxxxxx Xxxxx Xxxxxxx Xxxxx & Xxxxxx LLP, Xxx Xxxxxxxxxxxx Xxxxx, Xxx Xxxx, XX
00000; J. XXXXXX XXXXX, X.X. XXXXX INVESTMENT BANKING CORP., RIVKALEX
CORPORATION and XXXXXXXX XXXXXXXXXX (collectively, the "Xxxxx Group"), having an
address c/o X.X. Xxxxx Investment Banking Corp., 00 Xxxx Xxxxxx, Xxx Xxxx, XX
00000, and XXXXX XXXXXXXXXXX ("Xxxxx Xxxxxxxxxxx"), having an address at 00 Xxxx
00xx Xxxxxx, 00xx Xx., Xxx Xxxx, XX 00000 (each member of the Xxxxxxxxxxx Group,
Xxxx, the Xxxxx Group and the Xxxxx Group and Xxxxxxxxxxx, individually, a
"Stockholder" and collectively the "Stockholders").
WHEREAS, the Stockholders and News Communications, Inc., a Nevada
corporation ("NCI"), are parties to an agreement (the "Letter Agreement")
pursuant to which, among other things, Xxxxx Xxxxxxxxxxx has agreed to become
President and Chief Executive Officer of NCI and purchased 1,000,000 shares of
NCI's common stock (the "Common Stock");
WHEREAS, each Stockholder owns, or will own, the number of shares of
Common Stock and/or $10 Convertible Preferred Stock (the "Preferred Stock") set
forth opposite his name on Exhibit A hereto (collectively, the "Shares"); and
WHEREAS, the Stockholders desire to provide for the composition of the
Board of Directors of NCI (the "Board"), the voting of their Shares in certain
circumstances and certain other matters relating to NCI.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable consideration, the
receipt of and sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Definitions. For the purposes of this Agreement, terms used but not
otherwise defined herein shall have the meaning set forth in the Letter
Agreement.
2. Term. Unless otherwise terminated pursuant to the provisions hereof, the
term of this Agreement shall commence on the date hereof and end on May 7,
2006.
3. Representations of the Stockholders and NCI. Each Stockholder represents to
and agrees with the other Stockholders that (i) such Stockholder is the
legal holder and beneficial owner of the Shares set forth opposite such
Stockholder's name on Exhibit A hereto, (ii) such Shares and the Shares
hereafter acquired by such Stockholder will be owned free and clear of all
liens, claims, charges, options and encumbrances other than restrictions on
transfer under this Agreement except as otherwise created by this
Agreement, (iii) such Stockholder has not entered into, and agrees that
such Stockholder will not enter into, any other agreement or arrangement
the performance of which would in any manner conflict with, restrict or be
inconsistent with the performance of such Stockholder's obligations under
this Agreement and (v) this Agreement constitutes the legal, valid and
binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms.
4. Corporate Governance and Related Matters.
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(a) To the extent permitted by applicable law, each Stockholder agrees to use
commercially reasonable efforts to take any and all action necessary, including,
without limitation, the voting of, or the execution of consents with respect to,
their Shares, the calling of special meetings of stockholders, the amendment of
agreements and designations to the Board, the attending of meetings and the
amendment of NCI's Certificate of Incorporation and By-Laws, to cause the size
of the Board to be maintained at nine (9) members, with such directors selected
in accordance with Section 4(c) hereof.
(b) Until such time as Xxxxx Xxxxxxxxxxx ceases to be employed by NCI or this
Agreement is otherwise terminated, each member of the Xxxxx Group hereby
irrevocably appoints Xxxxx Xxxxxxxxxxx as proxy and attorney-in-fact to vote all
of such person's shares. Each member of the Xxxxx Group acknowledges that such
proxy is being given to induce Xxxxx Xxxxxxxxxxx to become engaged by, and make
an investment in, NCI and is, therefore, coupled with an interest and shall be
irrevocable; provided, however, that Xxxxx Xxxxxxxxxxx shall not vote Shares
owned by the Xxxxx Group in any manner which would conflict with the provisions
of this Agreement, which would otherwise permit Xxxxx Xxxxxxxxxxx or an
Affiliate (which for purposes of this Agreement shall have the meaning defined
in Rule 405 of the Securities Act of 1933) of Xxxxx Xxxxxxxxxxx to acquire
Shares owned by the Xxxxx Group on terms less favorable than that outlined in
the Letter Agreement or which would authorize a transaction in which any member
of the Xxxxx Group is treated less favorably than Xxxxx Xxxxxxxxxxx, the
Xxxxxxxxxxx Group, Xxxx or the Xxxxx Group or any Affiliate of such person or
entity.
(c) Xxxxx Xxxxxxxxxxx, Xxxx, each member of the Xxxxxxxxxxx Group and each
member of the Xxxxx Group hereby agrees, so long as Xxxxx Xxxxxxxxxxx is the
Chief Executive Officer and President of NCI, to vote the Shares owned or
controlled by such Stockholder and to use such Stockholder's best efforts to
cause his Affiliates (as defined in Rule 405 of the Securities Act of 1933) to
vote their Shares, or execute consents with respect to their Shares so as to
elect, and to take all other action required to elect, as directors of NCI: (i)
four persons designated by Xxxxx Xxxxxxxxxxx, one of whom shall initially be
Xxxxx Xxxxxxxxxxx, one of whom shall initially be Xxxxx Xxxxxxxxxxx; (ii) one
person to be designated by the Xxxxx Group who shall initially be Xxxxxx Xxxx;
(iii) one person to be designated by Xxxx who shall initially be Xxxxxx Xxxx;
and (iv) one person to be designated by the Xxxxx Group who shall initially be
Xxxx Xxxxx; and (v) two persons to be designated by the mutual agreement of
Xxxx, the Xxxxx Group and the Xxxxx Group. (d) Each Stockholder agrees that if,
at any time, such Stockholder is then entitled to vote for the removal of
directors of NCI, he will not vote any the Shares owned or controlled by such
Stockholder in favor of the removal of any director who shall have been
designated or nominated pursuant to Section 4(c) unless such removal shall be
for Cause or the person(s) entitled to designate or nominate such director shall
have consented to such removal in writing, provided that if the persons entitled
to designate or nominate any director pursuant to Section 4(c) shall request the
removal, with or without Cause, of such director in writing, such Stockholder
shall vote such Stockholder's Shares, and shall use such Stockholder's
commercially reasonable efforts (without requiring the expenditure of funds) to
cause such Stockholder's affiliates to vote such affiliates' Shares, in favor of
such removal. Removal for "Cause" shall mean removal of a director because of
such director's (a) willful and continued failure substantially to perform his
duties with NCI in his established position, (b) willful conduct which is
injurious to NCI or any of its subsidiaries, monetarily or otherwise, (c)
conviction for, or guilty plea to, a felony or a crime involving moral
turpitude, (d) abuse of illegal drugs or other controlled substances or habitual
intoxication or (e) willful breach of this Agreement. (e) If, as a result of
death, disability, retirement, resignation, removal (with or without Cause) or
otherwise, there shall exist or occur any vacancy on the Board: (i) The
person(s) entitled under Section 4(c) to designate or nominate such
director whose death, disability, retirement, resignation or removal
resulted in such vacancy, may, subject to the provisions of Section
4(c), designate another individual (the "Nominee") to fill such vacancy
and serve as a director of the Company; and
(ii) each Stockholder then entitled to vote for the election of the Nominee
as a director of NCI agrees that such Stockholder will vote such
Stockholder's Shares, and shall use such Stockholder's reasonable
efforts to cause its Affiliates to vote its shares, or execute a
written consent, as the case may be, in order to ensure that the
Nominee is elected to the Board.
(f) The right to designate one or more members of the Board by any Stockholder
(or group of Stockholders) pursuant to this Section 4 shall terminate at such
time that the ownership of shares by such Stockholder (or group of Stockholders)
is less than 5% of the outstanding Common Stock on a fully diluted basis
(inclusive of (i) any options, warrants or shares of Preferred Stock owned by
such Stockholder and any Affiliate of such Stockholder, (ii) in the case of
Xxxx, the shares owned by WLR Recovery Fund L.P. and (iii) in the case of Xxxxx
Xxxxxxxxxxx, the Xxxxx Group's Shares to which he has an irrevocable proxy
pursuant to Section 4(b) hereof). The obligations imposed on the Stockholders to
give effect to the rights to designate directors set forth in Section 4(c) shall
terminate as to any person when such person's right to designate a director is
terminated. 5. Injunctive Relief; Specific Performance.
Each of the Stockholders acknowledges that the other Stockholders will
be irreparably damaged in the event of a breach or threatened breach of the
terms, covenants and/or conditions of this Agreement by any Stockholder. In
addition to any other remedy to which the Stockholders may be entitled, the
Stockholders shall be entitled to a preliminary and permanent injunction,
without showing any actual damage or threat of irreparable injury, and/or a
decree for specific performance, in accordance with the provisions hereof. 6.
Miscellaneous.
(a) This Agreement constitutes the entire agreement among the Stockholders with
respect to the subject matter hereof, supersedes all prior agreements or
understandings among the parties hereto with respect to the subject matter
hereof, including that certain Stockholders' Agreement dated July 28, 1999 by
and among NCI, the Xxxxxxxxxxx Group, Xxxx, the Xxxxx Group and Xxxxxx Xxxxxxx,
and may not be modified, amended or terminated except by a written agreement
signed by all of the parties hereto. (b) No waiver of any breach or default
hereunder shall be considered valid unless in writing, and no such waiver shall
be deemed a waiver of any subsequent breach or default of the same or similar
nature.
(c) If any provision of this Agreement shall be held invalid or unenforceable,
such invalidity or unenforceability shall attach only to such provision and
shall not in any manner affect or render invalid or unenforceable any other
severable provision of this Agreement, and this Agreement shall be carried out
as if any such invalid or unenforceable provision were not contained herein. In
the event that any provision is declared invalid or unenforceable, the
Stockholders agree to substitute for such invalid or unenforceable provision a
new provision which reflects, to the closest extent possible, the intent of the
parties. (d) Except as otherwise expressly provided herein, this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors, estates, heirs, legal representatives and permitted
assigns and transferees. (e) The section headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said actions.
(f) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW) EXCEPT THAT MATTERS
PERTAINING TO THE NEVADA BUSINESS CORPORATION LAW SHALL BE GOVERNED BY THE
NEVADA BUSINESS CORPORATION LAW. The Stockholders consent and agree that
jurisdiction and venue for all legal proceedings relating to the subject matter
of this Agreement shall lie exclusively with the appropriate federal or state
court sifting within the State of New York, County of New York. (g) Any notice
or other communications required or permitted hereunder shall be in writing and
shall be deemed effective (i) upon personal delivery, if delivered by hand and
followed by notice by mail or facsimile transmission, (ii) three (3) days after
the date of deposit in the mails, if mailed by certified or registered mail
(return receipt requested), or (iii) on the next business day, if mailed by an
overnight mail service to the parties or sent by facsimile transmission,
addressed to the Stockholders and Xxxxx Xxxxxxxxxxx at their respective
addresses first written above.
(h) This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument. (i) All representations, warranties and agreements
contained herein shall survive the execution and delivery of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
Xxxxx Xxxxxxxxxxx
Xxxxx Xxxxxxxxxxx
THE XXXXXXXXXXX FOUNDATION, INC.
By:
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Xxxxx Xxxxxxxxxxx
President
Xxxxxxx Xxxxxxxxxxx
Xxxxxx X. Xxxx, Xx.
Xxxxxx X. Xxxxx
M&B XXXXX FAMILY PARTNERSHIP
By:
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Name:
General Partner
[Signature pages continue on next page]
X.X. XXXXX INVESTMENT BANKING CORP.
By:
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J. Xxxxxx Xxxxx
RIVKALEX CORPORATION
By:
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Xxxxxxxx Xxxxxxxxxx
President
J. Xxxxxx Xxxxx
Xxxxxxxx Xxxxxxxxxx
EXHIBIT A
The Xxxxxxxxxxx Group = 264,001 shares
Name of Holder Common Common Issuable on
Preferred Conversion
Xxxxx Xxxxxxxxxxx 187,389 --
Xx. Xxxxxxxxxxx (wife) 66,667 --
The Xxxxx Xxxxxxxxxxx Foundation Inc. 9,945 --
Xxxxxx X. Xxxx, Xx. = 585,619 shares of Holder
Common Common Issuable on
Preferred Conversion
Xxxxxx X. Xxxx, Xx. 428,399 157,220(1)
The Xxxxx Group = 4,751,773 shares
Name of Holder Common Common Issuable on
Preferred Conversion
X.X. Xxxxx Investment Banking Corp. 2,697,405(2)(3) 23,190(1)
Rivkalex Corporation 41,006 --
Xxxxxxxx Xxxxxxxxxx (wife) 1,990,172(2) --
The Xxxxx Group = 1,674,038 shares
Name of Holder Common Common Issuable on
Preferred Conversion
Xxxxxx X. Xxxxx 1,138,124 78,610(1)
M&B Xxxxx Family Partnership 457,304 --
Xxxxx Xxxxxxxxxxx = 768,000 shares
Name of Holder Common Common Issuable on
Preferred Conversion
Xxxxx Xxxxxxxxxxx 768,000(4) --
(1) Based upon a conversion price of $2.5442 per share. (2) Assumes an issuance
of 1,350,000 to Xxxxxxxxxx and X.X. Xxxxx upon conversion of their convertible
notes. (3) Includes 250,000 shares to be purchased by X.X. Xxxxx as required by
that certain Letter Agreement dated as of the date hereof by and among Xxxxx
Xxxxxxxxxxx, NCI and the other parties thereto (the "Xxxxxxxxxxx Agreement").
(4) Includes 750,000 shares to be purchased by Xxxxx Xxxxxxxxxxx as required by
the Xxxxxxxxxxx Agreement
