May 17, 1996

Michael Schenkler
President
News Communications, Inc.
174-15 Horace Harding Expressway
Fresh Meadows, New York 11365

Gentlemen:

         D.H.  Blair  Investment  Banking  Corp.  ("Blair") is pleased to act as
non-exclusive  financial  advisor and investment  banker to News  Communications
Inc.  (the  "Company")  in  connection  with:  (i)  assisting the Company in its
strategic planning including assisting with the development of its business plan
and  introducing  the Company and its  management  to  analysts,  bankers,  fund
managers and brokers (ii) provides  general  business and financial  analysis of
the Company  and/or (iii) advise the Company with respect to the  development of
the Company's business and/or (iv) any proposed business  combination  involving
the Company and another party (a "Third  Party");  and/or (v) any common venture
involving the Company and another party (a "Partner"); and/or (vi) any financing
for the Company  which may be arranged or provided by a party  introduced to the
Company  by  Blair  (a  "Financing  Agent").  This  letter  is  to  confirm  our
understanding  with respect to our engagement.  As used in this letter, the term
"business combination" means any merger, consolidation,  reorganization or other
corporate transaction pursuant to which a significant portion of the business of
the Company is combined with that of a Third Party, including but not limited to
the acquisition, directly or indirectly, by a Third Party of at least 10% of the
capital stock, or all or a substantial  portion of the assets of the Company, or
the acquisition,  directly or indirectly,  by the Company of at least 10% of the
capital stock,  or all or a substantial  portion of the assets of a Third Party,
by way of tender or exchange offer,  negotiated  purchase or otherwise,  whether
effected in either such case in one transaction or a series of transactions.  As
used in this letter,  the term  "common  venture"  means (i) any joint  venture,
partnership,  distribution,  consulting,  research  and  development  or license
agreement or other arrangement with a Partner providing for: (a) the sale by the
Company or any of its affiliates of products  and/or  services of the Partner or
any of its  affiliates or the funding by the Company or any of its affiliates of
the research and  development of the Partner or any of its  affiliates;  (b) the
sale by the Partner or any of its affiliates of any products  and/or services of
the Company or any of its affiliates or the funding by the Partner or any of its
affiliates  of  the  research  and  development  of  the  Company  or any of its
affiliates;  or (c) the sale of products  and/or  services or the funding of any
research and development of the Company,  the Partner or any of their respective
affiliates by any venture


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                                                    News Communications, Inc.
                                                                May 17, 1996
                                                                      Page 2

in which the  Company or any of its  affiliates,  and the  Partner or any of its
affiliates,  have an interest.  As used in this letter, the term "venture sales"
shall  mean the gross  sales  price,  less  freight  and taxes,  if any,  of all
products  and/or  services  sold pursuant to a common  venture.  As used in this
letter,  the term "financing"  shall mean any bank or institutional  loan or any
private  placement or public  offering of debt and/or  equity  securities by the
Company.

         Blair will  assist the Company as  provided  in clauses  (i),  (ii) and
(iii) above and in identifying  potential Third Parties,  Partners and Financing
Agents and in  analyzing,  structuring,  negotiating  and  effecting  a business
combination with a Third Party, common ventures with Partners, and/or financings
with a  Financing  Agent,  on the terms and  conditions  of this  letter.  As an
inducement to Blair's  providing  the services  referred to in clauses (i), (ii)
and (iii) above, simultaneously with the execution of this Agreement the Company
shall issue to Blair a warrant to purchase  400,000  shares of its common stock,
$.01 par value,  at an initial  exercise  price of $2.50 per share,  in the form
annexed hereto as Exhibit A.

         Blair shall not be entitled  to any other fees in  connection  with the
services  to be  provided  hereunder,  provided,  however,  that Blair  shall be
entitled to such  additional fees as Blair and the Company may agree upon in the
event Balir shall serve as the  Financing  Agent in  connection  with any future
financing.

         Additionally,  the Company  agrees to  reimburse  Blair  promptly  upon
request made from time to time, for its actual out-of-pocket expenses, including
reasonable legal and other professional fees and expenses incurred in connection
with Blair's engagement hereunder.

         The Company  agrees to  indemnify  Blair and its  affiliates  and their
respective shareholders,  directors, officers, employees, agents and controlling
persons  (Blair and each such  person  being an  "Indemnified  Party")  from and
against any and all losses, claims,  damages and liabilities,  joint or several,
to which such Indemnified Party may become subject under any applicable  federal
or  state  law,  or  otherwise,  related  to or  arising  out  of  any  business
combination,  common  venture or  financing  contemplated  by this letter or the
engagement of Blair  pursuant to, and the  performance  by Blair of the services
contemplated  by, this letter and will reimburse any  Indemnified  Party for all
expenses  (including,  subject to the provisions of the seventh sentence of this
paragraph,  reasonable  counsel  fees  and  expenses)  as they are  incurred  in
connection  with the  investigation  of,  preparation  for,  or defense  of, any
pending or  threatened  claim or any  action or  proceeding  arising  therefrom,
whether or not such  Indemnified  Party is a party,  provided  that the  Company
shall have the right to control the defense  and  settlement  of any such claim.
The Company will assume the defense of such action or proceeding and will employ
counsel  reasonably  satisfactory to Blair and will pay the fees and expenses of
such counsel. The Company


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                                                    News Communications, Inc.
                                                                May 17, 1996
                                                                      Page 3

shall not be liable  for any  settlement  effected  without  the  consent of the
Company, which consent shall not be unreasonably withheld, and the Company shall
not settle any claim  without the consent of Blair,  which  consent shall not be
unreasonably  withheld.  In  addition,  the  Company  further  agrees  that  any
settlement   entered  into  by  the  Company   shall  include  an  explicit  and
unconditional release from the party bringing the claim, action or proceeding of
all  Indemnified  Persons,  which release shall be  reasonably  satisfactory  to
Blair.  Notwithstanding  the  obligation  of the  Company  to employ  counsel in
connection  with any such action or  proceeding,  an  Indemnified  Party will be
entitled to employ  counsel  separate  from counsel for the Company and from any
other party in such action if such Indemnified Party reasonably  determines that
representation  by counsel  chosen by the Company  constitutes a conflict on any
significant  issue  between  the  positions  of such  Indemnified  Party and the
Company,  or the Company have failed to provide counsel reasonably  satisfactory
to the Indemnified  Party in a timely manner. In such event, the reasonable fees
and disbursements of such separate counsel will be paid promptly by the Company.
In no event will the Company be  responsible  for the fees and  expenses of more
than  one  counsel  (in  addition  to  any  necessary  local  counsel)  for  all
Indemnified  Parties at any time in connection  with any action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction. The Company will not be liable under the foregoing indemnification
provision to the extent that any loss,  claim,  damage,  liability or expense is
finally  judicially  determined  to have  resulted  directly  from Blair's gross
negligence or intentional misconduct.

         The   Company  and  Blair   agree  that  if  any   indemnification   or
reimbursement   sought  pursuant  to  the  preceding   paragraph  is  judicially
determined  to be  unavailable  for a reason other than the gross  negligence or
intentional  misconduct of Blair then,  whether or not Blair is the  Indemnified
Person, the Company, on one hand, and Blair, on the other hand, shall contribute
to the  losses,  claims,  damages,  liabilities  and  expenses  for  which  such
indemnification  or  reimbursement is held unavailable (i) in such proportion as
is appropriate to reflect the relative benefits to the Company, on the one hand,
and Blair, on the other hand, in connection with the  transactions to which such
indemnification or reimbursement  relates, 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)
but also the relative faults of the Company,  on the one hand, and Blair, on the
other hand, as well as any other equitable considerations.

         The Company will furnish Blair with such information as the Company and
Blair believe  appropriate to the assignment (all such  information so furnished
being  "Information").  The Company  recognizes and confirms that Blair (a) will
use and rely  primarily on the  Information  and on  information  available from
generally recognized public sources in performing the services


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                                                    News Communications, Inc.
                                                                May 17, 1996
                                                                      Page 4


contemplated by this letter without having independently  verified the same, (b)
does  not  assume  responsibility  for  the  accuracy  or  completeness  of  the
Information  and such other  information,  and (c) will not make an appraisal of
any assets of the Company for any prospective Third Party, Partner, or Financing
Agent.

         This letter  agreement shall be for a term of two years commencing upon
the date hereof, provided,  however, that the provisions relating to the payment
of fees and expenses of Blair, the indemnification  and contribution  provisions
and the provisions of the succeeding  paragraphs will survive the termination of
this agreement for any reason.

         Except as  required  by  applicable  law,  any advice to be provided by
Blair under this agreement shall not be disclosed  publicly or made available to
third parties without the prior written  approval of Blair, and accordingly such
advice shall not be relied upon by any person or entity other than the Company.

         The Company agrees that Blair has the right  following the closing of a
business  combination,  common  venture  or  financing  to place  two  tombstone
advertisements  in financial and other  newspapers and journals at the Company's
expense describing Blair's services hereunder, provided that Blair will submit a
copy of any such  advertisements  to the Company for  approval,  which  approval
shall not be unreasonably withheld.

         Nothing in this agreement,  expressed or implied, is intended to confer
or does confer on any person or entity  other than the  parties  hereto or their
respective successors and assigns, and to the extent expressly set forth herein,
the  Indemnified  Persons,  any  rights or  remedies  under or by reason of this
agreement or as a result of the services to be rendered by Blair hereunder.  The
Company  further agrees that neither Blair nor any of its  controlling  persons,
affiliates, directors, officers, employees or agents shall have any liability to
the Company for any losses, claims, damages, liabilities or expenses arising out
of or  relating  to this  agreement  or the  services  to be  rendered  by Blair
hereunder,  unless it is finally judicially determined that such losses, claims,
damages,  liabilities or expenses resulted directly from the gross negligence or
willful misconduct of Blair.

         The invalidity or  unenforceability  of any provision of this agreement
shall not affect the validity or  enforceability  of any other provision of this
agreement, which shall remain in full force and effect.

         This agreement may not be amended or modified  except in writing signed
by each of the parties and shall be governed by and  construed  and  enforced in
accordance with the laws of the


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                                                    News Communications, Inc.
                                                                May 17, 1996
                                                                      Page 5

State of New York, without regard to principles of conflict of laws. The Company
and  Blair  hereby  irrevocably  and  unconditionally  consent  to submit to the
exclusive  jurisdiction of the courts of the State of New York and of the United
States  District  Courts  located in the City of New York,  and  hereby  further
irrevocably  and  unconditionally  waive  and agree not to plead or claim in any
such court that any such lawsuit,  claim or other proceeding brought in any such
court has been brought in an inconvenient forum. Any right to trial by jury with
respect to this  agreement or the services to be rendered by Blair  hereunder is
expressly and irrevocably waived. The service of any notice,  process, motion or
other document in connection with any lawsuit, claim or other proceeding arising
out of or relating to this agreement may be effected by registered mail,  return
receipt requested,  if to the Company, to the Company's address set forth herein
(or to such other address as the Company may provide in writing to Blair) or, if
to Blair, to D.H. Blair Investment Banking Corp., 44 Wall Street, 2nd Floor, New
York, N.Y. 10005,  Attention:  Martin A. Bell, Vice Chairman and General Counsel
(or to such other address as Blair may provide in writing to the Company.)

         Please confirm that the foregoing correctly sets forth our agreement by
signing  and  returning  to Blair the  duplicate  copy of this  letter  enclosed
herewith.
                                          Very truly yours,

                                          D.H. BLAIR INVESTMENT BANKING CORP.



                                          By: /s/ J. Morton Davis
                                             --------------------------------
                                              J. Morton Davis
                                              Chairman
Accepted and Agreed
to as of the date first
written above:

NEWS COMMUNICATIONS INC.



By:  /s/ Michael Schenkler
    ---------------------------
     Michael Schenkler
     President


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