Final Execution Copy

                             SHAREHOLDERS AGREEMENT

            AGREEMENT, dated as of the 22nd day of December, 1997, by and among
NEWS COMMUNICATIONS, INC. (hereinafter referred to as "NCI"), THE WASHINGTON
BLADE, INC. (hereinafter referred to as "TWB") and NEW YORK BLADE NEWS, INC.
(hereinafter referred to as the "CORPORATION"), with its principal place of
business located at 242 West 30th Street, New York, New York 10001. NCI and TWB
are sometimes collectively referred to herein as the "Shareholders."

                             W I T N E S S E T H :

            WHEREAS, NCI and TWB are currently the only shareholders of the
CORPORATION; and

            WHEREAS, the parties hereto desire to provide for the continuity,
management and control of the CORPORATION, as well as to make provisions for the
contingency of any of the parties, or holders of majority interests in such
parties, hereto dying or withdrawing from the CORPORATION.

            NOW, THEREFORE, IN CONSIDERATION OF THE COVE NANTS HEREINAFTER
            CONTAINED AND THE SUM OF ONE ($1) DOLLAR AND OTHER GOOD AND VALUABLE
            CONSIDERATION BY EACH OF THE PARTIES TO THE OTHER PAID, THE RECEIPT
            OF WHICH IS HEREBY ACKNOWLEDGED, IT IS HEREBY MUTUALLY COVENANTED
            AND AGREED BY THE RESPECTIVE PARTIES HERETO, AS FOLLOWS:



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            Section 1. Prior Agreements. Any and all prior shareholders
agreements or memoranda of understanding, heretofore entered into or whether
drafted and unsigned, relating to the CORPORATION, are herewith cancelled,
terminated, made null and void and shall be of no further force and effect.

            Section 2. General Corporate Matters. The CORPORATION has been
organized under the laws of the State of New York, as a subchapter C
corporation, bearing the name New York Blade News, Inc., with its principal
office in the City of New York and State of New York, and has been organized to
provide:

                  (a) The duration of the CORPORATION is to be perpetual.

                  (b) The authorized capital stock of the CORPORATION is Two
Hundred (200) shares of common stock, without par value ("Common Stock").

            Section 3. Share Ownership. Upon the execution of this Agreement,
NCI shall hold 50% of the issued and outstanding shares of Common Stock for a
cash contribution to the initial operating capital of the CORPORATION of
$100,000 and TWB shall hold 50% of the issued and outstanding shares of Common
Stock for a cash contribution to the initial operating capital of the
CORPORATION of $100,000 (NCI and TWB are sometimes collectively referred to
herein as the "Original Shareholders").


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            When the shares representing the 50% interests of each shareholder
are issued, they shall be fully paid and non-assessable and in respect of which
the holder thereof shall not be liable for any further payments or assessments.

            Section 4. Operation of the CORPORATION. With respect to the
operation of the CORPORATION, the parties agree as follows:

                  (a) Outside investors (other than the Original Shareholders)
in the CORPORATION, shall (pursuant to a private placement) contribute $300,000
cash (in the aggregate) for an issue of preferred stock of the CORPORATION, with
an annual dividend rate of 6%; plus, the opportunity to convert their preferred
stock to an issue of non-voting common stock of the CORPORATION, not to exceed,
in aggregate, 25% of the issued and outstanding common stock of the CORPORATION.
After three (3) years from the date of issuance of such preferred stock, the
CORPORATION shall have the option to call the preferred stock for repayment in
full or conversion to non-voting stock.

                  (b) At no charge, NCI will make available to the CORPORATION
space and production people and TWB will provide national copy and govern
editorial and layout, also at no charge to the CORPORATION.

                  (c) At no charge, NCI will furnish to the CORPORATION
distribution of New York Blade News to every logical place that is covered by
NCI and will arrange for supplemental distribution on the most cost effective
basis possible. At no charge, TWB will furnish to the CORPORATION computers and
related equipment needed to carry out the editorial, classified ad, and general
management functions.

                  (d) The initial press run will be 50,000 copies of a 40 or 48
page paper.


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                  (e) The paper will be distributed free throughout the key
areas of Manhattan, as well as other sites in the New York area deemed necessary
by mutual agreement of the Original Shareholders. Printing will be Thursday
night for Friday distribution.

                  (f) To reduce newsprint costs, NCI will arrange for the
CORPORATION to receive the same favorable costs from the Bergen Record as the
other NCI papers.

                  (g) The CORPORATION will install, by the time of its first
issue, at least 75 street boxes in Manhattan, as well as 150 distribution racks.

                  (h) To reduce initial payroll costs, TWB shall contribute (at
its sole expense) two of its key employees to the CORPORATION to serve as
interim Senior Editor and Group Manager, for a period of not less than three (3)
months.

                  (j) The CORPORATION shall supply local copy, sales and
advertising for the newspaper.

            Section 5. Employment. Simultaneously with the execution hereof, the
CORPORATION shall hire, engage and employ each of the individuals listed below
in the following capacities:

            Don Michaels, President and Chief Executive Officer -
Responsibilities include total authority over editorial and design contents and
other authority as directed by the Board of Directors of the CORPORATION;

            Mark Sullivan, interim Senior Editor.

            James Lamont, interim General Manager.

            Section 6. Restriction on Transferability. None of the parties
hereto shall sell, encumber or otherwise dispose of any of its shares of Common
Stock in the CORPORATION


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("Shares"), including, without limitation, to any other shareholder of the
CORPORATION, without first offering all of his or her Shares for purchase by the
Original Shareholders at the value set forth in Section 8 hereof.

                  (a) Any transfer of Shares in contravention of this Agreement
shall be null and void, and the transferee shall not be entitled to any voting,
dividend or other right with respect to such Shares.

                  (b) A shareholder of the CORPORATION ("Shareholder") desiring
to dispose of all of his or her Shares (the "Offering Shareholder") shall first
offer to sell such Shares to the remaining Original Shareholders in proportion
to their respective Proportionate Interest (as hereinafter defined) at the price
set forth in Section 8 hereof and upon the terms and conditions set forth in
Section 9 hereof. The Original Shareholders shall have 90 days from the date of
receipt of the offer from the Offering Shareholder within which to accept all or
part of such offer. If the Original Shareholders elect to accept all or part of
the Shares offered, it shall so signify by written notice to the Offering
Shareholder, with copies thereof to all of the other Shareholders and the
CORPORATION. If either of the Original Shareholders does not have sufficient
surplus to purchase such Shares and/or fails or declines to accept such offer
within 90 days, then the Offering Shareholder shall offer to sell such Shares at
the same price per share and upon the same terms and conditions to the
CORPORATION. The CORPORATION shall have 90 days from the date of receipt of the
offer from the Offering Shareholder within which to accept all or part of such
offer. If the CORPORATION elects to accept all or part of the Shares offered, it
shall so signify by written notice to the Offering Shareholder, with copies
thereof to all of the other Shareholders, if any. If the CORPORATION fails or
declines to accept such offer within such 90 day period, then a succeeding offer
or offers of such


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unaccepted Shares, at the same price and upon the same terms as were offered to
the CORPORATION and upon the terms and conditions hereinafter set forth, shall
thereafter be deemed to have been made to the other shareholders. All parties
being made offers hereunder shall sometimes collectively be referred to in this
Agreement as "Offerees." Each successive offer hereunder shall be made
immediately upon the expiration of the effective period of all prior offers.
Each Offeree shall have a period of 90 days after the receipt of each such offer
within which to elect to accept each such offer, which election may be all or
any part of the Shares so offered.

                  (c) In the event that any or all of the Shares offered
pursuant to the provisions of this Section 6 are not accepted for purchase by
the Offerees during the respective offering periods provided herein, the
Offering Shareholder shall have the right to sell or exchange all of such Shares
free from the restrictions of this Agreement in a bona fide arms-length
transaction, for a period of 120 days from the date that the offer to the last
Offeree expires hereunder; provided, however, that any such sale shall not be
made at a price which is less than and/or upon more favorable terms than those
at which such Shares were offered to the Offerees. At the end of the 120 day
period, the Offering Shareholder shall notify the other Shareholders in writing
of the sale, transfer, assignment, pledge, encumbrance or other disposition of
such Shares, if any, during such period in bona fide transactions. All of such
Shares which remain owned by such Offering Shareholder shall again become
subject to all of the restrictions and provisions of this Agreement, and any
Shares owned by the Offering Shareholder at such time which during such period
have been pledged or hypothecated or have otherwise been encumbered shall again
become subject to the restrictions and provisions hereof


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immediately upon the release of such Shares from such pledge, hypothecation or
other encumbrance.

                  (d) In the event that a Shareholder or the CORPORATION or a
third party elects to purchase the Shares of another Shareholder pursuant to
this Section 6, the purchase price of the Shares sold shall be the value of such
Shares, as determined pursuant to the provisions of Section 8 hereof, and shall
be paid pursuant to the terms and conditions set forth in Section 9 hereof.

                  The Shares sold shall be delivered at the closing in the
following manner: certificates representing such Shares shall be endorsed in
blank, with signatures guaranteed, and further accompanied by the requisite
stock transfer tax stamps; and in the case of purchase from a legal
representative, a certified copy of the authorization and an affidavit to the
effect that all legacies, debts, claims and taxes have been paid or are amply
provided for and other applicable estate tax waivers and releases of tax liens
have been obtained.

                  (e) All of the provisions of this Agreement shall apply to all
of the Shares now owned or which may be issued or transferred hereafter to a
Shareholder in consequence of any additional issuance, purchase, exchange or
reclassification of Shares, corporate reorganization, or any other form or
recapitalization, consolidation, merger, share split, share dividend or which
are acquired by a Shareholder in any other manner.

                  (f) As used herein, the term "Proportionate Interest" of an
Offeree with respect to a particular offer shall mean that number of Shares
which bears the same ratio to the total number of Shares so offered as the
number of Shares then owned by such Offeree who is entitled to receive the
particular offer bears to the total number of Shares then owned by all Offerees
who are entitled to receive such offer.


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                  (g) Notwithstanding anything to the contrary contained in this
Agreement, the Board of Directors shall have the final authority to approve any
sale of Shares to any party. The Board shall be empowered to ask for and obtain
information and documentation from any prospective Shareholder about such
prospective Shareholder's character, background, affiliations and the like in
order to form an independent judgement as to the fitness of such prospective
Shareholder to become a Shareholder. The Board shall determine if, when, at what
price and upon what terms and conditions the Shares may be offered for sale in a
public offering.

            Section 7. Corporate Surplus. It is agreed that in effectuating the
purchase by the CORPORATION of the Shares of any of the Shareholders, pursuant
to Section 6:

                  (a) The entire available surplus of the CORPORATION shall be
used to purchase all or so much of the Shares owned by the withdrawing
Shareholder as is possible.

                  (b) The CORPORATION and the remaining Shareholders shall
promptly take all steps necessary to reduce the capital stock of the CORPORATION
to the extent necessary for the purchase of any balance of Shares unpurchased.

                  (c) In the event that after the application of the surplus by
the CORPORATION all or any part of the Shares of the withdrawing Shareholder is
outstanding, the remaining Shareholders may purchase said outstanding Shares as
is more fully set forth in Section 6 hereof.

            Section 8. Valuation of Shares.

                  Purchase Price By Appraisal.


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            (a) The purchase price to be paid for each of the Shares of a
Shareholder (the "Selling Shareholder") sold pursuant to Section 6 hereof shall
be the amount determined by an independent appraisal as of the last day (the
"Valuation Date") of the month in which the applicable sale event occurs, in
accordance with the procedures hereafter set forth. Upon the sale event, the
Selling Shareholder and the CORPORATION shall select an investment banking firm
or other financial expert with experience in the valuation of newspaper
companies to appraise the market value of the Shares to be sold by the Selling
Shareholder. Such firm or party shall be referred to herein as an "Appraiser."
As soon as practicable thereafter such Appraiser shall appraise the market value
of the Shares to be sold by the Selling Shareholder.

            (b) If the CORPORATION and the Selling Shareholder cannot agree on
the choice of an Appraiser, both the CORPORATION and the Selling Shareholder
shall each name an Appraiser. As soon as practicable thereafter, but in no event
more than ninety (90) days after the Valuation Date, such Appraisers shall then
each independently determine the market value of the Shares to be sold by the
Selling Shareholder. The CORPORATION'S auditors will cooperate fully with the
Appraisers or Appraiser, as the case may be, including but not limited to
providing them with balance sheet and profit and loss information (which need
not be audited) as of the Valuation Date. If the higher of such appraisals does
not exceed the lower by more than 15% of the lower value, the average of such
two amounts shall represent the appraised value of the Shares to be sold. If the
higher of such appraisals exceeds the lower by at least 15% of the lower value,
the two Appraisers shall within five (5) days of the last such appraisal,
appoint a third Appraiser, and such third Appraiser shall as soon as practicable
determine the value of the Shares to be sold by the Selling Shareholder. The
determination of such value by the third Appraiser shall control notwithstanding
any previous determinations made by the other


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two Appraisers. The value of the Shares to be sold as determined under this
Section 8 shall be referred to the "Appraisal Value".

            Section 9. Purchase Price for Shares. Each Selling Shareholder shall
receive 50% of the value of the Shares to be sold by cash at the closing. The
manner of payment for the balance of such purchase price for such Shares shall
be determined by the Board of Directors of the Corporation. In the event that
the Board of Directors determines to pay such balance over time, the following
installment term shall be utilized:

                  (a) 50% of the remaining balance one year after the first
payment set forth above. 

                  (b) The balance one year after the second payment set forth in
Section 9(a).

                  (c) Simultaneously with the payment of the first installment,
the purchaser shall deliver to the withdrawing Shareholder or its legal
representatives two promissory notes representing the amounts of each of the
remaining installments, bearing interest at the rate of 10% per annum from the
date thereof. Said promissory notes shall provide that prepayment of all or any
part thereof may be made at any time with interest to the date of prepayment,
without penalty, and that a default in the payment of any note, which default is
not cured within 30 days, shall cause the remaining unpaid notes to become due
and payable forthwith.

                  (d) Simultaneously with the payment to the withdrawing
Shareholder of the first installment of the purchase price, as hereinabove
provided, the withdrawing Shareholder or its legal representatives, shall
endorse in blank and deliver the Shares to the then attorneys of the
CORPORATION, together with all necessary instruments of transfer and the
necessary


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tax stamps affixed, to be held by such attorneys in escrow, pending payment of
the full purchase price. Upon any proof being furnished to said attorneys of
payment of the full purchase price, said certificates for Shares shall be
delivered to the purchaser. In the event of the default in the making of any
such payments, after 10 days notice by registered mail to all parties, said
attorneys shall redeliver said Shares of Common Stock to the withdrawing
Shareholder, or its legal representatives who may retain any monies paid
pursuant hereto as liquidated damages, actual damages being impossible or
difficult of ascertainment, and who may thereupon exercise all rights as a
Shareholder pursuant to this Agreement, which shall be valid and effective as
though no offer had been made or accepted, and all the parties shall be bound to
all of the terms, conditions and covenants hereof, including, but not limited
to, the employment and salary provi sions, or, in the alternative, the selling
party may demand and enforce the collection of the balance then remaining due.

            Section 10. Dissolution, Bankruptcy, Etc. For the purposes of this
Agreement, the dissolution of or the filing of a Petition in Bankruptcy against
the Shareholder, whether voluntary or involuntary, levy of execution under a
judgment against such Shareholder, or the making of an assignment for the
benefit of creditors by such Shareholder, unless dismissed, withdrawn,
satisfied, released or cured within 60 days by such Shareholder, shall be
equivalent to an offer of sale of Shares and in such case, all of the provisions
of this Agreement shall apply, as though such Shareholder made a voluntary offer
to sell its Shares in the CORPORATION.


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            Section 11. Dissolution. Each of the Shareholders expressly agrees
that in the event of dissolution of the CORPORATION, it will execute and cause
to be filed with the Secretary of State of the State of New York, a Certificate
of Dissolution pursuant to the provisions of the New York Business Corporation
Law and otherwise take all necessary steps and execute all necessary documents
in order to effectuate the termination of the affairs and business of the
CORPORATION with all convenient speed.

            Section 12. Loans. In the event of a sale of Shares by virtue of the
provisions of the Agreement:

                  Any loans or debentures payable by the CORPORATION to the
selling party or by the selling party to the CORPORATION, as of the date of
calculation, whether or not then due, shall be paid and discharged by the
CORPORATION or the selling party, as the case may be, in three equal
installments, the first to be payable 30 days after the first payment applicable
to such sale, the second 30 days thereafter and the third, 30 days after the
second.

            Section 13. Directors. The Shareholders herein shall move for the
election of the following initial directors and shall continue to vote for such
directors during the term of this Agreement:

                  Wilbur Ross
                  Don Michaels

            In the event of the death, permanent disability, removal or
resignation of Mr. Ross, NCI shall select a replacement for Mr. Ross and each of
the Shareholders shall move and vote for the election of such replacement
director. In the event of the death, permanent


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disability, removal or resignation of Mr. Michaels, TWB shall select a
replacement for Mr. Michaels and each of the Shareholders shall move and vote
for the election of such replacement director.

            Section 14. Officers. The Shareholders agree to cause the election
of the following persons as officers of this CORPORATION and they further agree
that they will so instruct the directors and in the event any of such directors
fails or refuses to elect such person, they will cause the removal of such
director or directors:

            President and Chief Executive Officer:    Don Michaels
            Treasurer:                                Wilbur Ross
            Secretary:                                Herman Badillo

            Section 15.  Actions Requiring Agreement of the Shareholders.

            (a) During the term of this Agreement, the following actions by the
CORPORATION shall require an affirmative shareholder vote of all of the
outstanding Shares:

                  (1) Additional Shares. The authorization, issuance or sale of
            any shares (including treasury shares) of any class of capital stock
            of the CORPORATION, or the authorization, issuance or sale of any
            securities convertible into, or options with respect to, warrants to
            purchase or rights to subscribe to, any shares of any class of
            capital stock of the CORPORATION.

                  (2) Stock Redemptions. The redemption, retirement, purchase or
            other acquisition by the CORPORATION of any shares of its capital
            stock, which the


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            CORPORATION is not expressly permitted or required to purchase
            pursuant to other provisions of this Agreement, or of any rights,
            options, warrants or convertible debt entitling the class of the
            holders thereof to purchase shares of any class of the capital stock
            of the CORPORATION.

                  (3) Amendments. The adoption or approval of an amendment to
            the Certificate of Incorporation of the CORPORATION or By-Laws of
            the CORPORATION which would conflict with any provision of this
            Agreement.

                  (4) Reorganizations. The adoption or approval of a plan of
            merger, consolidation, exchange or reclassification of shares of
            capital stock, or any other form of reorganization or
            recapitalization.

                  (5) Liabilities. The incurrence or assumption of any liability
            for money borrowed which singly or in the aggregate exceeds
            $100,000, including, without limitation, notes, debentures, loans,
            letters of credits, financing or credit agreements, agreements or
            commitments for future loans, credit or financing or any other
            instrument or contract for money borrowed, and the guarantee of any
            obligation of any person, firm or corporation.

                  (6) Assets. The purchase or other acquisition, or the sale,
            lease, exchange or other disposition, of the CORPORATION's assets
            other than in the ordinary course of business.


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                  (7) Loans. The lending or advancing of credit to any person,
            firm or corporation in an amount which singly or in the aggregate
            exceeds $10,000, except the extension of credit to customers in the
            ordinary course of business where such extension is not for more
            than 90 days beyond the date payment would ordinarily be due from
            such customers without such extension.

                  (8) Liens. The creation or assumption of any mortgage, pledge,
            security interest or other encumbrance on the CORPORATION's assets
            which singly or in the aggregate exceeds $100,000.

                  (9) Dissolution or Bankruptcy. The CORPORATION's (i) admission
            in writing of its inability to pay its debts as they mature; (ii)
            assignment for the benefit of creditors; (iii) application for or
            consent to the appointment of any receiver, trustee or similar
            officer for the CORPORATION or for all or any substantial part of
            its property or not taking action to cause the discharge of such
            appointment made upon the application of another party; or (iv)
            institution or consent to the institution (by petition, application,
            answer, consent or otherwise) of any bankruptcy, insolvency,
            reorganization, arrangement, readjustment of debt, dissolution,
            liquidation or similar proceeding relating to the CORPORATION under
            the law of any jurisdiction.

            Section 16. Corporate Funds. All cash, checks and instruments for
the payment of monies are to be deposited in the CORPORATION's bank account or
bank accounts as may



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be selected by the Board of Directors of the CORPORATION. All checks drawn upon
the said bank account or bank accounts shall be signed by such person or persons
as the Board of Directors of the CORPORATION may from time to time direct.

            Section 17. Termination. This Agreement shall terminate and the
CORPORATION shall be dissolved upon the occurrence of any of the following:

                  (a) The written agreement of all of the Shareholders to
terminate the CORPORATION,

                  (b) Bankruptcy, receivership, assignment for the benefit of
creditors or dissolution of the CORPORATION, or

                  (c) The withdrawal from the CORPORATION or the death or
permanent disability of all but one of the holders of majority interest in the
companies party hereto.

            Section 18. Legend. All certificates for the Shares of the capital
stock issued by the CORPORATION and owned by the undersigned, shall be endorsed
with the following legend:

            "Ownership and transfer of the shares of stock represented by this
            certificate are subject to an Agreement between the stockholders
            dated as of ____, 1997, a copy of which is on file with the 
            Secretary of the CORPORATION. All purchasers of the shares of stock
            represented by this Certificate shall be deemed to have agreed to 
            and shall be bound by the provisions of said Agreement."


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            Section 19. Notice. All notices referred to in this Agreement
required to be sent or given to any of the parties shall be sent by certified or
registered mail, return receipt requested, to the other parties and to the
CORPORATION at its last known address, or such other address as may hereafter be
given by written notice in accordance with the provisions of this paragraph.

            Section 20. Counterparts. This Agreement may and shall be
simultaneously executed in several counterparts, each of which shall be deemed
to be an original, and such counterparts shall together constitute but one and
the same instrument.

            Section 21. Binding Effect. The terms, covenants and conditions
herein contained shall be binding upon the parties hereto, their successors,
heirs, legal representatives and assigns.

            Section 22. Construction. Whenever the sense of this Agreement so
requires, the masculine gender shall be deemed to include the feminine gender or
neuter, and the plural, the singular and vice versa.

            Section 23. Entire Agreement. This instrument contains the entire
Agreement among the parties, and the same shall not be modified, changed,
altered, terminated or cancelled except by an instrument in writing, executed by
all of the parties hereto.


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            Section 24. Governing Law. The Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to the
contracts wholly negotiated, executed and to be performed in such State.

            Section 25. Resolution of Disputes.

                  (a) All disputes, claims and controversies arising under or
pursuant to this Agreement shall be settled by arbitration by the American
Arbitration Association (the "AAA") sitting in New York, New York, pursuant to
the rules of the AAA then obtaining. The decision of the AAA shall be final and
binding on the parties hereto and judgment thereon may be entered in any court
of competent jurisdiction.

                  (b) Any dispute resulting in a deadlock on the Board of
Directors shall be resolved by submission of such dispute to Endispute, Inc.,
the alternative dispute resolution CORPORATION ("ADR"). The ADR's decision of
the dispute shall be final and binding on the Board of Directors.


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            IN WITNESS WHEREOF, we have hereunto set our hands and seals the
day, month and year first above written.

                            NEWS COMMUNICATIONS, INC.


                            By:   /s/ Wilbur L. Ross, Jr.
                               -------------------------------
                            Title: Chief Executive Officer
                                  ----------------------------


                            THE WASHINGTON BLADE, INC.


                            By:   /s/ Donald J. Michaels
                               -------------------------------
                            Title:  President
                                  ----------------------------

                            NEW YORK BLADE NEWS, INC.


                            By:   /s/ Donald J. Michaels
                               -------------------------------
                            Title:  President
                                  ----------------------------



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