EXHIBIT 10.6
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 750,000 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, subject to adjustment
as provided below. The Purchaser shall purchase 500,000 Shares no later than
April 30, 2001 and the balance of 250,000 Shares from time to time as the
Company's capital needs require but in no event later than July 31, 2001.
Payment of the purchase price for the Shares shall be made by wire transfer of
immediately available funds.
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.
(b) In addition, in consideration for the Purchaser's subscription for
the Shares, the Company hereby issues to the Purchaser an additional 250,000
shares of the Company's Common Stock (the "Adjustment Shares") which X.X. Xxxxx
Investment Banking Corp. ("Xxxxx") is purchasing on the date hereof and is
contributing to NCI. In the event that on the second anniversary of the date of
this Agreement, the Fair Market Value of the equity securities of the Company is
equal to or greater than $46,000,000 (an "Adjustment Event"), then the Purchaser
agrees to transfer the Adjustment Shares (or any securities received in respect
of the Adjustment Shares) to Xxxxx; provided, however, in the event that the
Company has consummated the transaction described in paragraph 6 of that certain
letter agreement dated May 8, 2001 by and among the Company, the Purchaser and
certain other parties thereto, including Xxxxx (the "Letter Agreement"), the
Purchaser shall deliver to Xxxxx the number of shares of Newco Common Stock (as
defined in the Letter Agreement) that Xxxxx would have receive had it owned the
Adjustment Shares on the date of the consummation of the transaction between the
Company and Newco and the Company shall issue to Xxxxx the Subordinated Notes
(as defined in the Letter Agreement) or
other consideration that Xxxxx would have received had it owned the Adjustment
Shares on the date of the consummation of the transaction between the Company
and Newco. The Company and the Purchaser intend for Xxxxx to be a third party
beneficiary of their obligations set forth in this Section 1(b)
(c) For purposes of this Agreement, "Fair Market Value" of the equity
securities of the Company shall mean, as applicable (i) the last sale price on
the relevant date quoted on the Nasdaq Stock Market; (ii) the average of the
high bid and low asked prices on the relevant date quoted on the Nasdaq OTC
Bulletin Board Service or by the National Quotation Bureau, Inc. or a comparable
service as determined in the Board of Directors discretion; or (iii) if no
public trading of the Common Stock exists on the relevant date, then Fair Market
Value shall be determined by an independent nationally recognized appraiser
selected by the Board of Directors of the Company.
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
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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;
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(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
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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.
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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
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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
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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;
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(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
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(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
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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
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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,
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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.
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IN WITNESS WHEREOF, the Purchaser has executed this Agreement the 8th
day of May, 2001.
/s/ Xxxxx Xxxxxxxxxxx
-----------------------------------------
Xxxxx Xxxxxxxxxxx
ACCEPTED AND AGREED TO:
NEWS COMMUNICATIONS, INC.
By: /s/ Xxxx Xxxxxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxxxxx
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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