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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)(1)
News Communications, Inc.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
652484601
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(CUSIP Number)
Paul J. Pollock, Esq.
Piper Marbury Rudnick & Wolfe LLP
1251 Avenue of the Americas
New York, New York 10020-1104
(212) 835-6280
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 25, 2002
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 7 pages)
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(1) The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SEC 1746 (12-91)
SCHEDULE 13D
CUSIP No. 652484601 Page 2 of 7 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
James A. Finkelstein
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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7 SOLE VOTING POWER
NUMBER OF 6,820,991.5 (1), (2) and (3)
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SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
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EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 3,333
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WITH 10 SHARED DISPOSITIVE POWER
4,168,445
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,905,214
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN
ROW (11)
64.2%
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14 TYPE OF REPORTING PERSON
IN
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(1) Includes 509,222.5 shares of Common Stock and 1,578,333 shares of Common
Stock exercisable within 60 days, the voting rights of which are controlled
by Mr. Finkelstein. Includes 4,710,890 shares of Common Stock owned by the
Davis Group and the Finkelstein Group (as defined below) and 22,546 shares
of Common Stock currently issuable upon conversion of 5,900 shares of $10
Convertible Preferred Stock owned by the Davis Group, the voting rights of
which have been transferred to Mr. Finkelstein. Excludes 763,171 shares
which the Davis Group and the Finkelstein Group has the right to purchase
upon exercise of options, warrants and conversion of debt within 60 days.
(2) Excludes 2,084,222.5 shares and warrants to purchase shares of Common Stock
exercisable within 60 days the voting rights of which are controlled by
Hollinger NCI Holdings, LLC.
(3) Excludes all shares owned by other parties to the Stockholders' Agreement,
of which Mr. Finkelstein disclaims beneficial ownership.
*SEE INSTRUCTIONS BEFORE FILLING OUT
Page 2
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1--7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
Page 3
This Schedule 13D, Amendment No. 1 (the "Amendment"), amends the
Schedule 13D of James A. Finkelstein dated June 13, 2001 (collectively, the
"Schedule 13D") relating to his beneficial ownership of shares of News
Communications, Inc. (the "Issuer"). Capitalized terms used but not defined
herein have the meanings ascribed to such terms in the Schedule 13D.
Item 4. Purpose of Transaction.
All securities reported hereunder have been acquired by Mr. Finkelstein
in order to obtain a substantial equity position in the Issuer for investment
purposes. Depending upon market conditions and other factors (including, without
limitation, in the case of JAF-HLR, LLC (the "LLC") the agreement of Hollinger
NCI Holdings, LLC ("Hollinger")) that Mr. Finkelstein may deem material to his
investment decisions, he may acquire additional securities of the Issuer in the
open market, in private transactions, by tender offer or by any other
permissible means. Mr. Finkelstein has no present intention to do so.
While it is not the present intention of Mr. Finkelstein to do so, Mr.
Finkelstein reserves the right, subject to the agreement of Hollinger, to
dispose of some or all of the shares of Common Stock reported hereunder in the
open market, in privately negotiated transactions or by any other permissible
means.
Under the terms of a Stockholders' Agreement dated May 8, 2001 (the
"Stockholders' Agreement") by and among Mr. Finkelstein, Jerry Finkelstein, The
Finkelstein Foundation, Inc., Shirley Finkelstein (with Jerry Finkelstein and
The Finkelstein Foundation, Inc. the "Finkelstein Group"), Wilbur L. Ross,
Melvyn I. Weiss, M&B Weiss Family Partnership, J. Morton Davis, D.H. Blair
Investment Banking Corp. ("Blair"), Rivkalex Corporation and Rosalind Davidowitz
(with J. Morton Davis, D.H. Blair Investment Banking Corp., Rivkalex Corporation
the "Davis Group"), Mr. Finkelstein has the right to designate four of the nine
members of the Board of Directors for as long as he is the President and Chief
Executive Officer of the Issuer. Under the terms of an Operating Agreement of
JAF-HLR, LLC dated as of June 25, 2002 by and among Mr. Finkelstein, Hollinger
and JAF-HLR, LLC (the "Operating Agreement") more particularly described in
Section 6, Mr. Finkelstein has transferred all of his equity interest in the
Issuer to the LLC in which Mr. Finkelstein and Hollinger are the only members.
As a result of the Operating Agreement, Mr. Finkelstein has agreed that two of
his four designees to the Issuer's Board will be persons designated by
Hollinger. Mr. Finkelstein has further agreed to vote his shares which he owns
or has voting power so as to elect the other five designated nominees
constituting the entire Board of Directors. Mr. Finkelstein also has been
granted irrevocable proxies to vote all shares owned by the Davis Group which
currently total 4,469,435 voting shares (which includes the voting power of
5,900 shares of $10 Preferred Stock owned by Blair), and all shares owned by the
Finkelstein Group, which currently total 264,001 shares. Accordingly, Mr.
Finkelstein, the other stockholders that are parties to the Stockholders'
Agreement, and Hollinger, will control the election of all of the members of the
Board of Directors of the Issuer and Mr. Finkelstein, by virtue of the shares
owned by him and the proxy granted to him by the Davis Group and the Finkelstein
Group, will control the voting of more than a majority of the shares of the
Issuer. See Item 6.
Except as set forth above, Mr. Finkelstein has no present plans or
intentions which would result in or relate to any of the transactions described
in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Page 4
Item 5. Interest in Securities of the Issuer.
(a-b) As of the close of business on July 2, 2002, Mr. Finkelstein
beneficially owned 4,171,778 shares of the Issuer's Common Stock. 4,168,445 of
such shares (including warrants to purchase up to 3,150,000 shares of Common
Stock) are owned directly by the LLC and indirectly owned by Mr. Finkelstein as
a result of his ownership interest in the LLC and his shared ability with
Hollinger under the Operating Agreement to dispose or to direct the disposition
of the shares owned by the LLC. The balance of the shares beneficially owned by
Mr. Finkelstein consist of options to purchase 3,333 shares of the Issuer's
Common Stock. The 4,171,778 shares of Common Stock beneficially owned directly
and indirectly by Mr. Finkelstein constitute approximately 30.1% (calculated
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) of the 10,685,811 outstanding shares of Common Stock as disclosed in
the Issuer's Quarterly Report on Form 10-QSB for the quarter ended March 31,
2002 (the "Issuer's Form 10-QSB").
The warrants to purchase shares of Common Stock held by the LLC consist
of a (i) currently exercisable warrant expiring on April 19, 2006 to purchase up
to one million (1,000,000) shares of Common Stock at a price of One Dollar and
Ten Cents ($1.10) per share; (ii) currently exercisable warrant expiring on
April 19, 2006 to purchase up to one million (1,000,000) shares of Common Stock
at a price of One Dollar and Fifty Cents ($1.50) per share; (iii) currently
exercisable warrant expiring on April 19, 2006 to purchase up to one million
(1,000,000) shares of Common Stock at a price of Two Dollars ($2) per share and
(iv) currently exercisable warrant expiring on June 4, 2006 to purchase up to
one hundred fifty thousand (150,000) shares of Common Stock at a price of One
Dollar ($1) per share.
As of the close of business on July 2, 2002, Mr. Finkelstein
beneficially owned directly 2,087,555.5 shares of Common Stock (including
warrants to purchase up to 1,575,000 shares of Common Stock) as a result of his
ability under the Operating Agreement to vote or to direct the vote of such
shares by the LLC and his right to exercise options to purchase 3,333 shares of
the Issuer's Common Stock. The 2,087,555.5 shares of Common Stock beneficially
owned directly by Mr. Finkelstein constitute approximately 16.9% (calculated
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) of the outstanding shares of Common Stock based on the Issuer's Form
10-QSB.
By virtue of irrevocable proxies granted to Mr. Finkelstein by the
Davis Group and the Finkelstein Group, Mr. Finkelstein currently has sole voting
power with respect to an additional 4,710,890 shares of Common Stock owned by
the Davis Group and the Finkelstein Group and 22,546 shares of Common Stock
currently issuable upon conversion of 5,900 shares of $10 Convertible Preferred
Stock owned by the Davis Group. Accordingly, as of the date hereof, together
with the 2,087,555.5 shares beneficially owned by Mr. Finkelstein, Mr.
Finkelstein has sole voting power with respect to an aggregate of 6,820,991.5
shares of the Issuer's Common Stock, or approximately 55.51% (calculated
pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) of its issued and outstanding Common Stock.
By virtue of having entered into the Stockholders' Agreement being the
beneficiary of the irrevocable proxies granted by the Davis Group and the
Finkelstein Group, Mr.
Page 5
Finkelstein may also be deemed under Rule 13d-3 and Rule 13d-5 promulgated under
the Exchange Act to be a member of a "group" with the other stockholders
described in Item 6. However, under the Stockholders' Agreement, except with
respect to the Davis Group and the Finkelstein Group, Mr. Finkelstein has
neither voting power nor investment power with respect to the shares held by
those stockholders. Accordingly, pursuant to Rule 13d-4 promulgated under the
Exchange Act, Mr. Finkelstein expressly disclaims beneficial ownership of the
shares beneficially owned by the stockholders and the filing of this Statement
on Schedule 13D shall not be construed as an admission that Mr. Finkelstein is
the beneficial owner, under Section 13(d) or 13(g) of the Exchange Act, of such
shares beneficially owned by those stockholders.
(c) As more fully described in Item 6, on June 27, 2002, Mr.
Finkelstein contributed all shares of the Issuer's Common Stock and all warrants
to purchase shares of the Issuer's Common Stock owned by him to the LLC.
Immediately after this contribution, Mr. Finkelstein received a distribution
from the LLC of $1,250,000. Except as described in this Item 5, Mr. Finkelstein
has not effected any other transaction in shares of the Issuer's Common Stock
during the past 60 days.
(d) As more fully described in Item 6, except for the rights of
Hollinger under the Operating Agreement, no other person is known to Mr.
Finkelstein to have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, any shares of Common Stock
which Mr. Finkelstein may be deemed to beneficially own.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
Under the Operating Agreement, the initial members of the LLC are
Hollinger and Mr. Finkelstein. All decisions, other than the voting of the
shares of Common Stock held by the LLC, are made jointly by Hollinger and Mr.
Finkelstein. In the event that Hollinger and Mr. Finkelstein are unable to reach
joint agreement upon a matter, the Operating Agreement contains a deadlock
resolution procedure. Under this procedure, Hollinger and Mr. Finkelstein are
first required to negotiate in good faith. If the deadlock remains unresolved
following the conclusion of such good faith negotiations, Hollinger and Mr.
Finkelstein are required to submit to non-binding mediation. In the event
mediation fails to resolve the deadlock, Hollinger and Mr. Finkelstein are
required to submit to binding arbitration for final resolution of the deadlock.
Each of Hollinger and Mr. Finkelstein has the right to direct the LLC's
vote or consent with respect to fifty percent (50%) of the voting capital stock
of the Issuer held from time to time by the LLC. With respect to the shares of
voting capital stock of the Issuer as to which it or he has the right to direct
the LLC's vote or consent, each of Hollinger and Mr. Finkelstein is required to
direct the LLC's vote or consent in favor of the other's nominees to the
Issuer's board of directors. A similar requirement exists with respect to the
removal of directors and the filling of vacancies on the Issuer's board of
directors.
Mr. Finkelstein has the right to designate four (4) nominees to the
Issuer's board of directors under the Stockholders' Agreement. Under the
Operating Agreement, Mr.
Page 6
Finkelstein agreed, for so long as he has the right to designate nominees to the
Issuer's board of directors pursuant to the Stockholders' Agreement, to
designate as two (2) of such four (4) nominees, two (2) nominees designated by
Hollinger, provided, however, that if Mr. Finkelstein ceases to serve as the
President of the Issuer for any reason, then Hollinger has the right to
designate three (3) of such four (4) nominees.
At any time from and after the earliest to occur of (i) eighteen (18)
months after the date of the Operating Agreement; (ii) the death or disability
of Mr. Finkelstein or (iii) Mr. Finkelstein's voluntary termination of
employment with the Issuer, Hollinger has the right to purchase all of Mr.
Finkelstein's interest in the LLC for a purchase price equal to the greater of
(y) One Million Eight Hundred Thousand Dollars ($1,800,000) or (z) the "fair
market value" of such interest as determined pursuant to an appraisal procedure.
Each of Hollinger and Mr. Finkelstein has a right of first refusal
under the Operating Agreement. In the event that either Hollinger or Mr.
Finkelstein (the "Offeror") receives a bona fide written offer (the "Purchase
Offer") to purchase for cash all or a portion of the Offeror's interest in the
LLC from an independent third-party dealing at arm's length with the Offeror
which the Offeror desires to accept, the Offeror is required to first offer
Hollinger or Mr. Finkelstein, as the case may be, the opportunity to purchase
the Offeror's interest at the price and upon the terms and conditions set forth
in the Purchase Offer.
Each of Hollinger and Mr. Finkelstein has a drag along right under the
Operating Agreement. If either Hollinger or Mr. Finkelstein (the "Drag Along
Offeror") proposes to sell all of its or his interest in the LLC for cash
pursuant to a bona fide written offer to an independent third-party (the
"Third-Party Purchaser") in an arms-length transaction, then the Drag Along
Offeror is required to first offer Hollinger or Mr. Finkelstein (the "Other
Member"), as the case may be, the opportunity to purchase the Drag Along
Offeror's interest at the price and upon the terms and conditions the Drag Along
Offeror proposes to sell its or his interest to the Third-Party Purchaser. If
the Other Member declines to purchase the Drag Along Offeror's interest, then
the Drag Along Offeror may require the Other Member to sell all of its or his
interest to the Third-Party Purchaser for the same consideration (calculated on
a percentage interest basis) and otherwise on the same terms and conditions upon
which the Drag Along Offeror's interest is being sold; provided, however, that
under no circumstances may the amount received by the Other Member on account of
its or his interest be less than (i) Three Million Fifty Thousand Dollars
($3,050,000), if Hollinger is the Other Member and (ii) One Million Eight
Hundred Thousand Dollars ($1,800,000), if Mr. Finkelstein is the Other Member,
in either case, after the proceeds from the transaction are distributed in
accordance with the Operating Agreement; provided, further, however, that
following the third (3rd) anniversary of the date of the Operating Agreement,
the amounts set forth in clauses (i) and (ii) of the immediately preceding
proviso increase at the annual rate of ten percent (10%) on a compounded basis.
The LLC will be dissolved in the event of the occurrence of any of the
following events: (i) the written consent to a dissolution by Hollinger and Mr.
Finkelstein; (ii) the written request of Hollinger or Mr. Finkelstein after
December 31, 2007; (iii) the assignment, sale, transfer or other disposition of
all, or substantially all, of the assets, properties and business of the LLC;
(iv) at Hollinger' option by delivery of written notice to Mr. Finkelstein (or
his legal representative) following the (A) death or disability of Mr.
Finkelstein; (B) termination of Mr.
Page 7
Finkelstein's employment with the Issuer or (C) bankruptcy of Mr. Finkelstein or
(v) the occurrence of any event that, under applicable law, would cause the
dissolution of the LLC (except as otherwise expressly provided for in the
Operating Agreement) or that would make it unlawful for the business of the LLC
to be continued.
The aforementioned description of the Operating Agreement set forth in
this Item 6 is a summary and the complete text of the Operating Agreement is
annexed hereto as Exhibit 1.
The Operating Agreement may result in Hollinger and its affiliates and
the LLC being deemed to be in a "group" within the meaning of Rule 13d-5
promulgated under the Securities Exchange Act of 1934, as amended, with Mr.
Finkelstein. Hollinger, the LLC and their respective affiliates make separate
filings on Schedule 13D with respect to their relationship with the Issuer.
Pursuant to Rule 13d-4 promulgated under the Securities Exchange Act of 1934, as
amended, Mr. Finkelstein expressly disclaims beneficial ownership of any equity
securities of the Issuer not reported hereunder as to which any of Hollinger,
the LLC or their respective affiliates may be deemed to possess beneficial
ownership.
On June 26, 2002, pursuant to a certain letter each member of the
Finkelstein Group granted to Mr. Finkelstein an irrevocable proxy to vote the
shares of the Issuer's Common Stock owned by the Finkelstein Group. The
aforementioned letter of the Finkelstein Group in favor of Mr. Finkelstein set
forth in this Item 6 is a summary and the complete text of the Operating
Agreement is annexed hereto as Exhibit 2.
Except as set forth above or in the Schedule 13D, to the knowledge of
Mr. Finkelstein, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) among the foregoing persons or between such
persons and any other person with respect to any securities of the Issuer,
including, but not limited to, transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or withholding
of proxies.
Page 8
Item 7. Material to be Filed as Exhibits.
The following are filed herewith as Exhibits:
Exhibit Description
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1. Operating Agreement of JAF-HLR, LLC dated as of June 25, 2002 by
and between James A. Finkelstein and Hollinger NCI Holdings,
LLC.
2. Irrevocable Proxy dated June 26, 2002 by Jerry Finkelstein,
Shirley Finkelstein and the Finkelstein Foundation, Inc. given in
favor of James A. Finkelstein
Page 9
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: July 3, 2001
/s/ James A. Finkelstein
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James A. Finkelstein
Page 10
STATEMENT OF DIFFERENCES
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The section symbol shall be expressed as............................... 'SS'