Exhibit 3
- 15 -
Newy1:784237:5:5/7/01
28507-20
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.
(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
(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.
(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 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.
(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 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
(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 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 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 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 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.
IN WITNESS WHEREOF, the Purchaser has executed this Agreement this 8th
day of May, 2001.
X.X. XXXXX INVESTMENT BANKING CORP.
By:
------------------------------------------------
Name:
Title:
ACCEPTED AND AGREED TO:
NEWS COMMUNICATIONS, INC.
By: ___________________________
Name:
Title
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.
