SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 4, 2001
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News Communications, Inc.
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(Exact name of Registrant as Specified in its Charter)
Nevada 0-18299 13-3346991
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
2 Park Avenue, Suite 1405, New York, New York 10016
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 689-2500
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
The following summarizes the terms of certain agreements to which News
Communications, Inc. (the "Registrant") is a party, copies of which are attached
as Exhibits hereto. The description of each of the agreements are qualified by
reference to the actual agreement attached hereto.
Item 1. Changes in Control of Registrant.
On June 4, 2001, James A. Finkelstein ("Mr. Finkelstein") became the
President and Chief Executive Officer and a member of the Board of Directors of
the Registrant in accordance with the terms of a certain Letter Agreement,
dated May 8, 2001, by and among the Registrant, Mr. Finkelstein, J. Morton
Davis, D.H. Blair Investment Banking Corp. ("Blair Investment"), Rivkalex
Corporation and Rosalind Davidowitz (collectively, the "Davis Group"), Wilbur L.
Ross ("Ross"), Jerry Finkelstein, the Finkelstein Foundation, Inc. and Shirley
Finkelstein (collectively, the "Jerry Finkelstein Group"), Melvyn I. Weiss and
the M&B Weiss Family Partnership (together, the "Weiss Group") and the holders
of the Registrant's $10 Convertible Preferred Stock (the "Letter Agreement").
The terms of the Letter Agreement are more particularly described in Item 5 of
this Report.
Pursuant to the terms of the Letter Agreement, Mr. Finkelstein, the
Jerry Finkelstein Group, Ross, the Weiss Group and the Davis Group (each member
of the Jerry Finkelstein Group, Ross, the Davis Group and the Weiss Group and
Mr. Finkelstein, individually, a "Stockholder" and collectively the
"Stockholders") entered into a Stockholders' Agreement dated as of May 8, 2001
(the "Stockholders' Agreement"). The Stockholders' Agreement provides
that, subject to limited exceptions, Mr. Finkelstein has an irrevocable proxy to
vote all of the shares held by each member of the Davis Group (the "Davis
Shares") until such time as Mr. Finkelstein ceases to be employed as the
President and Chief Executive Officer of the Registrant. By virtue of the
irrevocable proxy granted to Mr. Finkelstein by the Davis Group under the terms
of the Stockholders' Agreement, Mr. Finkelstein currently has sole voting power
with respect to 4,324,752 shares of Common Stock owned by the Davis Group and
22,546 votes as a result of the 5,900 shares of $10 Convertible Preferred Stock
owned by the Davis Group. Accordingly, as of the date hereof, together with the
1,168,000 shares beneficially owned by Mr. Finkelstein, Mr. Finkelstein has sole
voting power with respect to an aggregate of 5,515,298 shares of the
Registrant's Common Stock, or 50.88% of its issued and outstanding Common Stock.
In addition, the Stockholders' Agreement provides that, for so long as
Mr. Finkelstein is President and Chief Executive Officer of the Registrant, the
Stockholders have agreed to act to maintain the size of the Registrant's Board
of Directors at 9 members and to vote their shares so as to elect as directors
of the Registrant the following: (i) four persons designated by Mr. Finkelstein,
one of whom shall initially be Mr. Finkelstein and one of whom shall initially
be Jerry Finkelstein; (ii) one person designated by Ross who shall initially be
Ross; (iii) one person designated by the Weiss Group who shall initially be Gary
Weiss; (iv) one person designated by the Davis Group who shall initially be
Martin A. Bell; and (v) two persons designated by the mutual agreement of the
Davis Group, the Weiss Group and Ross.
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Accordingly, Mr. Finkelstein and the other stockholders that are parties to the
Stockholders' Agreement will control the election of all of the members of the
Board of Directors of the Registrant and Mr. Finkelstein, by virtue of the
shares owned by him and the proxy granted to him by the Davis Group, will
control the voting of more than a majority of the shares of the Registrant.
Item 5. Other Events.
Under the terms of the Letter Agreement, the Davis Group, the Weiss
Group, Ross, the Finkelstein Group and all of the other holders of the
Registrant's $10 Convertible Preferred Stock have agreed, subject to board
approval and the receipt of a fairness opinion, to vote in favor of the
following plan (the "Going Private Plan") if proposed before May 15, 2002:
1. Mr. Finkelstein or an entity controlled by Mr. Finkelstein
would form a new entity ("Newco") and Mr. Finkelstein would contribute
all shares of the Registrant's stock owned by him to Newco.
2. Mr. Finkelstein would purchase, for an aggregate of $310,000,
additional shares of Newco Common Stock which, after giving effect to
the transactions described below, would represent 50.1% of the issued
and outstanding Newco Common Stock.
3. Newco would enter into a merger or other agreement with the
Registrant pursuant to which Newco would acquire all of the shares of
the Registrant not owned by it for an aggregate consideration of $1.30
per share on the following terms:
i. Each of the Jerry Finkelstein Group, Ross, the Weiss
Group, the Davis Group and the holders of the Registrant's $10
Convertible Preferred Stock would receive for each share of the
Registrant's Common Stock owned by them approximately 0.175
shares of Newco Common Stock and approximately $1.125 principal
amount of Newco's 5% Subordinated Notes.
ii. All other stockholders of the Registrant will receive
for each of the Registrant's share owned by them $.35 in cash and
$.95 principal amount of Newco's 8% Senior Subordinated Notes due
on the fourth anniversary of the consummation of the merger.
Pursuant to the terms of the Letter Agreement, in addition to the
Stockholders' Agreement, the following documents were delivered and the
following transactions were consummated:
1. Blair Investment and the Registrant entered into a
Subscription Agreement which was consummated on June 4, 2001 (the
"Blair Investment Subscription Agreement") pursuant to which Blair
Investment purchased 250,000 shares of the Registrant's Common Stock
at a purchase price of $1.00 per share. The shares purchased were
immediately surrendered to the Registrant in order for the Registrant
to satisfy its
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obligations to Mr. Finkelstein under the terms of the
Finkelstein Subscription Agreement described below.
2. Blair Investment and the Registrant entered into a second
Subscription Agreement which was consummated on June 4, 2001 (the
"Blair Investment Debt Conversion Subscription Agreement") pursuant to
which Blair Investment converted $150,000 of the Registrant's
indebtedness to Blair Investment plus accrued interest of $7,594.82
into shares of the Registrant's Common Stock at a purchase price of
$1.00 per share, resulting in the issuance of 157,594 shares of the
Registrant's Common Stock to Blair Investment.
3. Rosalind Davidowitz and the Registrant entered into a
Subscription Agreement which was consummated on June 4, 2001 (the
"Davidowitz Subscription Agreement") pursuant to which Ms. Davidowitz
converted all $1,000,000 of the Registrant's indebtedness to Ms.
Davidowitz plus accrued interest of $38,575.51 into shares of the
Registrant's Common Stock at a purchase price of $1.00 per share,
resulting in the issuance of 1,038,575 shares of the Registrant's
Common Stock to Ms. Davidowitz.
4. Mr. Finkelstein and the Registrant entered into a Subscription
Agreement which was consummated on June 4, 2001 (the "Finkelstein
Subscription Agreement") pursuant to which Mr. Finkelstein purchased
500,000 shares of the Registrant's Common Stock and committed to
purchase 250,000 shares of the Registrant's Common Stock on or before
July 31, 2001. In addition, in consideration for Mr. Finkelstein's
purchase of shares, the Registrant issued to Mr. Finkelstein 250,000
shares of the Registrant's Common Stock (the "Adjustment Shares")
which Blair Investment had surrendered. The Finkelstein Subscription
Agreement provides that if, on the second anniversary of the date of
the Finkelstein Subscription Agreement, the fair market value of the
equity securities of the Registrant is equal to or greater than
$46,000,000 (an "Adjustment Event"), then Mr. Finkelstein would
transfer the Adjustment Shares (or any securities received in respect
of the Adjustment Shares) to Blair Investment unless the Going Private
Plan occurs, in which case Mr. Finkelstein would deliver to Blair
Investment the number of shares of Newco Common Stock and the Newco
Subordinated Notes that Blair Investment would have received had it
owned the Adjustment Shares on the date of the consummation of the
transaction between the Registrant and Newco.
5. Mr. Finkelstein acquired warrants to purchase 3,000,000 shares
of the Registrant's Common Stock, of which warrants to purchase
1,000,000 shares are exercisable at a price of $1.10 per share,
warrants to purchase 1,000,000 shares are exercisable at a price of
$1.50 per share and warrants to purchase 1,000,000 shares are
exercisable at a price of $2.00 per share. The warrants may be
exercised at any time beginning on May 16, 2002 and expire on April
19, 2006.
In connection with the consummation of the transactions
contemplated by the Letter Agreement, on June 4, 2001, the Registrant repaid the
principal amount of $300,000 plus accrued
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interest on a certain Revolving Note dated March 30, 2001, and the corresponding
revolving credit facility was terminated. The Loan Agreement evidencing such
revolving credit facility provided that upon repayment in full of the advances
under the revolving loans, the Registrant would issue to Blair Investment
warrants at an exercise price of $1.00 per share in an amount equal to the
aggregate revolving loans outstanding at any one time during the term of the
Loan Agreement. Accordingly, upon payment in full of the revolving loans, the
Registrant issued to Blair Investment 150,000 warrants and Blair Investment
directed the Registrant to issue 150,000 warrants to Mr. Finkelstein which Mr.
Finkelstein had purchased from Blair Investment pursuant to a Warrant Purchase
Agreement dated as of April 19, 2001.
Item 7. Financial Statements, Pro Form Financial Information and Exhibits.
(c) Exhibits
Exhibit No. Description
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10.1 Letter Agreement dated as of May 8, 2001 by and
between News Communications, Inc. and James
Finkelstein.
10.2 Stockholders' Agreement dated as of May 8, 2001 by
and among Jerry Finkelstein, The Finkelstein
Foundation, Inc., Shirley Finkelstein, Wilbur L.
Ross, Jr.; Melvyn I. Weiss, M&B Weiss Family
Partnership, J. Morton Davis, D.H. Blair
Investment Banking Corp., Rivkalex Corporation,
Rosalind Davidowitz, and James Finkelstein.
10.3 Subscription Agreement dated as of May 8, 2001 by
and between News Communications, Inc. and D.H.
Investment Banking Corp. for the purchase of
250,000 shares of common stock.
10.4 Subscription Agreement dated as of May 8, 2001 by
and between News Communications, Inc. and D.H.
Blair Investment Banking Corp. for the purchase of
150,000 shares of common stock.
10.5 Subscription Agreement dated as of May 8, 2001 by
and between News Communications, Inc. and Rosalind
Davidowitz for the purchase of 1,000,000 shares of
common stock.
10.6 Subscription Agreement dated as of May 8, 2001 by
and between News Communications, Inc. and James
Finkelstein for the purchase of 750,000 shares of
common stock.
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10.7 Warrant to purchase 1,000,000 shares of common
stock of News Communications, Inc. at 1.10 per
share issued to James Finkelstein.
10.8 Warrant to purchase 1,000,000 shares of common
stock of News Communications, Inc. at $1.50 per
share, dated as of May 8, 2001 and issued to James
Finkelstein.
10.9 Warrant to purchase 1,000,000 shares of common
stock of News Communications, Inc. at $2.00 per
share, dated as of May 8, 2001 and issued to James
Finkelstein.
10.10 Warrant Purchase Agreement dated as of April 19,
2001 by and between D.H. Blair Investment Banking
Corp. and James Finkelstein.
10.11 Warrant to purchase 150,000 shares of common stock
of News Communications, Inc. at $1.00 per share,
dated June 4, 2001 and issued to D.H. Blair
Investment Banking Corp.
10.12 Warrant to purchase 150,000 shares of common stock
of News Communications, Inc. at $1.00 per share,
dated June 4, 2001 and issued to James
Finkelstein.
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Signature
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEWS COMMUNICATIONS, INC.
Date: June 13, 2001 By: /s/ James A. Finkelstein
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James A. Finkelstein
President and Chief Executive Officer
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