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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
King World Productions, Inc.
(Name of Issuer)
Common Stock, $0.01 par value per share
(Title of Class of Securities)
495667107
(CUSIP Number)
Marshall E. Eisenberg
Neal Gerber & Eisenberg
2 North LaSalle Street
Suite 2200
Chicago, Illinois 60602
(312) 269-8000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 6, 1995
(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 which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ X ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*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 on 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).
(continued on following pages)
Page 1 of 124 Pages<PAGE>
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1. NAME OF REPORTING PERSON
Oprah Winfrey
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ X ] Each reporting person specifically disclaims
membership in a "group". See Item 4 for more
details.
3. SEC USE ONLY
4. SOURCE OF FUNDS
OO (See Item 3)
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER 7. SOLE VOTING POWER
OF 1,800,000
SHARES
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY -0-
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 1,800,000
WITH
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,800,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.65%, based upon the number of shares of the issuer's common
stock outstanding on November 8, 1995 as disclosed in the issuer's
Annual Report on Form 10-K for the fiscal year ended August 31,
1995
14. TYPE OF REPORTING PERSON
PN
Page 2 of 124 Pages<PAGE>
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1. NAME OF REPORTING PERSON
Jeffrey D. Jacobs
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ X ] Each reporting person specifically disclaims
membership in a "group". See Item 4 for more
details.
3. SEC USE ONLY
4. SOURCE OF FUNDS
OO (See Item 3)
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER 7. SOLE VOTING POWER
OF 200,843
SHARES
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY -0-
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 200,843
WITH
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
200,843
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[X]
The aggregate amount set forth in row 11 excludes 843 shares of
Common Stock (less than 0.01% of the shares of Common Stock) owned
by an individual retirement account for the benefit of Mr. Jacobs'
wife. See Items 3 and 5.
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.54%, based upon the number of shares of the issuer's common
stock outstanding on November 8, 1995 as disclosed in the issuer's
Annual Report on Form 10-K for the fiscal year ended August 31,
1995
14. TYPE OF REPORTING PERSON
PN
Page 3 of 124 Pages<PAGE>
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Item 1. Security and Issuer
-------------------
This Statement on Schedule 13D relates to the Common Stock, $0.01 par
value per share (the "Common Stock"), of King World Productions, Inc., a
Delaware corporation (the "Issuer"). The principal executive offices of the
Issuer are located at 1700 Broadway, New York, New York 10019.
Item 2. Identity and Background
-----------------------
This Statement on Schedule 13D is being filed by each of Oprah Winfrey
and Jeffrey D. Jacobs. Information with respect to each of the Reporting
Persons is as follows:
(a) Name: Oprah Winfrey
(b) Business Address: 110 North Carpenter Street
Chicago, Illinois 60607
(c) Principal Occupation: Talk Show Hostess; Actress
(d) Criminal Convictions: none
(e) Judgments Against: none
(f) Citizenship: United States of America
(a) Name: Jeffrey D. Jacobs
(b) Business Address: 110 North Carpenter Street
Chicago, Illinois 60607
(c) Principal Occupation: President of Harpo, Inc. ("Harpo"), the
producer of The Oprah Winfrey Show (the
"Show")
(d) Criminal Convictions: none
(e) Judgments Against: none
(f) Citizenship: United States of America
Item 3. Source and Amount of Funds
--------------------------
All of the Options (as hereinafter defined) were acquired pursuant to
the Stock Option Agreements (as hereinafter defined) and the March 1994
Agreement (as hereinafter defined). An aggregate of 843 shares of Common
Stock beneficially owned by Jeffrey D. Jacobs were acquired with funds of an
individual retirement account for the benefit of Mr. Jacobs.
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In addition, an aggregate of 843 shares of Common Stock were acquired
with funds of an individual retirement account for the benefit of Jeffrey D.
Jacobs' wife. Mr. Jacobs disclaims beneficial ownership of the shares of
Common Stock owned of record by the individual retirement account for the
benefit of Mr. Jacobs' wife and Mr. Jacobs' wife disclaims beneficial
ownership of the shares of Common Stock owned of record by the individual
retirement account for the benefit of Mr. Jacobs.
Item 4. Purpose of Transaction
----------------------
The Reporting Persons are the principals of Harpo. As partial
consideration for each Reporting Person causing Harpo to amend certain of its
contractual agreements with the Issuer pursuant to an Agreement dated as of
January 30, 1991, as amended (the "Harpo Agreement"), between the Issuer and
Harpo relating to Harpo's grant to the Issuer of a license to distribute the
Show, pursuant to Stock Option Agreements dated as of January 28, 1991 (the
"1991 Stock Option Agreements") between the Issuer and each of the Reporting
Persons, Ms. Winfrey and Mr. Jacobs, respectively, acquired options (the "1991
Options") to purchase an aggregate of 900,000 and 100,000 shares of Common
Stock at an exercise price of $25.50 per share. The 1991 Options expire upon
the earlier to occur of (i) January 28, 2001; (ii) nine months after the death
of a Reporting Person or the termination of the Harpo Agreement other than as
a result of a material breach thereof by Harpo; or (iii) concurrently with the
termination of the Harpo Agreement as a result of a material breach thereof
by Harpo.
In consideration for each Reporting Person causing Harpo to produce the
Show during the 1995/1996 television season, pursuant to an Agreement dated
March 17, 1994 (the "March 1994 Agreement") between the Issuer and Harpo, and
Stock Option Agreements dated as of March 17, 1994 (the "1994 Stock Option
Agreements") between the Issuer and each of the Reporting Persons, Ms. Winfrey
and Mr. Jacobs, respectively, acquired options (the "1994 Options") to
purchase an aggregate of 450,000 and 50,000 shares of Common Stock at an
exercise price of $33.625 per share. The 1994 Options expire upon the earlier
to occur of (i) March 18, 2004; (ii) nine months after the death of a
Reporting Person or the termination of the Harpo Agreement other than as a
result of a material breach thereof by Harpo; or (iii) concurrently with the
termination of the Harpo Agreement as a result of a material breach thereof
by Harpo.
In addition, pursuant to the March 1994 Agreement, the Issuer agreed
that in the event that Harpo elects to produce the Show during the 1996/1997,
1997/1998, 1998/1999 or 1999/2000 television seasons, the Issuer would grant
to Ms. Winfrey and Mr. Jacobs, respectively, options to purchase an aggregate
of 225,000 and 25,000 shares of Common Stock for each such television year at
an exercise price per share equal to the closing price of the Common Stock on
the date such election by Harpo is received by the Issuer. On October 6,
1995, Harpo elected to produce the Show during the 1996/1997 and 1997/1998
televisions seasons. Accordingly, on such date Ms. Winfrey and Mr. Jacobs,
respectively, pursuant to Stock Option Agreements dated as of October 6, 1995
(the "1995 Stock Option Agreements;" and together with the 1991 Stock Option
Agreements and the 1994 Stock Option Agreements, the "Stock Option
Agreements"), acquired options (the "1995 Options;" and together with the 1991
Options and the 1994 Options, the "Options") to purchase an aggregate of
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450,000 and 50,000 shares of Common Stock at an exercise price of $36.00 per
share. The 1995 Options expire upon the earlier to occur of (i) October 6,
2005; (ii) nine months after the death of a Reporting Person or the
termination of the Harpo Agreement other than as a result of a material breach
thereof by Harpo; or (iii) concurrently with the termination of the Harpo
Agreement as a result of a material breach thereof by Harpo.
The Options were acquired by the Reporting Persons for investment
purposes. None of the Reporting Persons has any current intention to purchase
any shares of Common Stock, except for the shares of Common Stock which may
be acquired upon exercise of the Options. However, depending on market
conditions and other factors, one or both of the Reporting Persons may sell
any or all of their Options, hold or sell any or all of the shares of Common
Stock acquired upon exercise of their Options, or purchase additional shares
of Common Stock, all on such terms and conditions and at such times as either
of them consider desirable.
Except as described above, none of the Reporting Persons has any plans
or proposals which relate to or would result in any of the actions listed in
paragraphs (a) through (j) of Item 4 of Schedule 13D.
The Reporting Persons are filing this Statement on Schedule 13D with the
Securities and Exchange Commission because they may be deemed to be a "group"
by virtue of Rule 13d-5(b) as promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the "Act"). However, each Reporting Person
specifically disclaims beneficial ownership of the shares of Common Stock held
by the other Reporting Person and specifically disclaims membership in a
"group" for purposes of Section 13(d) of the Act.
Item 5. Interest in Securities of the Issuer
------------------------------------
As of the date hereof, Ms. Winfrey beneficially owns 1,800,000 shares
of Common Stock, constituting approximately 4.65% of the total number of
outstanding shares of Common Stock, and Mr. Jacobs beneficially owns 200,843
shares of Common Stock, constituting approximately 0.54% of the total number
of outstanding shares of Common Stock. The shares of Common Stock
beneficially owned by Mr. Jacobs excludes 843 shares of Common Stock owned by
an individual retirement account for the benefit of Mr. Jacobs' wife (less
than 0.01% of the outstanding shares of Common Stock).
Upon exercise of the Options, each Reporting Person will have sole
voting and dispositive power with respect to the shares of Common Stock
beneficially owned by such Reporting Person. During the past 60 days, neither
of the Reporting Persons has effected any transactions in Common Stock except
as otherwise described herein.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
--------------------------------------------------------------
With respect to Common Stock acquired pursuant to an exercise of the
1991 Options, each of Ms. Winfrey and Mr. Jacobs have agreed to limit their
respective sales of shares of such Common Stock, other than sales pursuant to
Page 6 of 124 Pages<PAGE>
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an underwritten, firm commitment public offering, in any three month period
to a number of shares of Common Stock not to exceed the greater of (i) one
percent of the outstanding shares of Common Stock and (ii) the average weekly
reported volume of trading in the Common Stock on The New York Stock Exchange
and all other national securities exchanges during the four calendar weeks
preceding the date of any sale. In addition, with respect to Common Stock
acquired pursuant to an exercise of the 1994 Options or the 1995 Options,
Ms. Winfrey and Mr. Jacobs have agreed to limit their aggregate sales of
shares of such Common Stock as set forth in the preceding sentence. Upon a
Change in Control (as defined in Exhibit B to the March 1994 Agreement), the
restrictions described in this paragraph will be reduced or eliminated to the
extent that any volume of sale restrictions which then apply to the sale of
Common Stock by Roger King, the Chairman of the Board of the Issuer, and/or
any other person who was an executive officer of the Issuer prior to such
Change in Control, are less restrictive than the restrictions set forth in the
preceding sentence.
As security for certain indebtedness of Harpo to the Issuer (the "Harpo
Indebtedness"), the Reporting Persons have pledged to the Issuer (i) all of
their respective rights under the Options, (ii) all shares of Common Stock
which are issued pursuant to an exercise of the Options and (iii) all proceeds
thereof; provided, however, that (i) unless and until the Issuer notifies the
Reporting Persons that the share of the adjusted gross profits (determined
under the Harpo Agreement) which the Issuer reasonably projects will be
payable to Harpo would be inadequate to fully secure Harpo's obligations with
respect to the Harpo Indebtedness, the Reporting Persons may exercise the
Options, sell the shares of Common Stock issued to them upon exercise of the
Options and retain the proceeds thereof without restriction and (ii) the
number of shares of Common Stock (and the portions of the Options
corresponding thereto) subject to such pledge is limited to the number of
shares of Common Stock having an aggregate value equal to the amount of the
inadequacy described above.
Pursuant to the Stock Option Agreements, the Issuer granted to each of
the Reporting Persons certain rights to register the shares of Common Stock
owned by each of the Reporting Persons under the Securities Act of 1933, as
amended. In the event that there is a firm commitment public offering of the
Issuer's securities pursuant to a registration covering shares of Common Stock
held by the Reporting Persons and the Reporting Persons do not elect to sell
any shares of Common Stock to the underwriters of the Issuer's securities in
connection with such offering, each of the Reporting Persons has agreed to
refrain from selling any shares of Common Stock during the period of
distribution of the Issuer's securities by such underwriters and the period
in which the underwriting syndicate participates in the after market therefor,
in either case, not to exceed 150 days after the effective date of the
registration statement with respect to such offering.
Pursuant to the March 1994 Agreement, upon a Change in Control, in the
event that (i) Harpo commits to produce the Show for an additional television
season after an agreement is reached to effect any transaction constituting
a Change in control and (ii) such Change in Control occurs, the Issuer has
agreed pay Harpo $25,000,000 upon the date of such Change in Control.
Page 7 of 124 Pages
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Item 7. Material to be Filed as Exhibits
--------------------------------
Exhibit 99.1: Agreement to File Statement on Schedule 13D pursuant
to Rule 13d-1(f).
Exhibit 99.2: Stock Option Agreement dated as of January 28, 1991
between the Issuer and Oprah Winfrey.
Exhibit 99.3: Stock Option Agreement dated as of January 28, 1991
between the Issuer and Jeffrey D. Jacobs.
Exhibit 99.4: Agreement dated March 17, 1994 among the Issuer,
Oprah Winfrey and Jeffrey D. Jacobs.
Exhibit 99.5: Stock Option Agreement dated as of March 17, 1994
between the Issuer and Oprah Winfrey.
Exhibit 99.6: Stock Option Agreement dated as of March 17, 1994
between the Issuer and Jeffrey D. Jacobs.
Exhibit 99.7: Stock Option Agreement dated as of October 6, 1995
between the Issuer and Oprah Winfrey.
Exhibit 99.8: Stock Option Agreement dated as of October 6, 1995
between the Issuer and Jeffrey D. Jacobs.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: December 21, 1995.
/s/ Oprah Winfrey
Oprah Winfrey
/s/ Jeffrey D. Jacobs
Jeffrey D. Jacobs
Page 8 of 124 Pages<PAGE>
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EXHIBIT 99.1
AGREEMENT TO FILE STATEMENT ON SCHEDULE 13D
AGREEMENT TO FILE STATEMENT ON SCHEDULE 13D dated December __, 1995
between the undersigned parties (the "Holders").
W I T N E S S E T H
WHEREAS, the Holders beneficially own options to purchase common stock
of King World Productions, Inc., a Delaware corporation (the "Company"); and
WHEREAS, the Holders desire to jointly file a Statement on Schedule 13D
with the Securities and Exchange Commission with respect to their investments
in the Company in order to satisfy their obligations under Regulation 13D as
promulgated pursuant to the Securities Exchange Act of 1934 (the "Act").
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
hereby agree as follows:
1. Each of the Holders hereby agrees to jointly file a Schedule 13D,
and any and all amendments thereto, with the Securities and Exchange
Commission with respect to their investments in the Company in order to
satisfy their obligations under Section 13(d) of the Act and the regulations
promulgated pursuant thereto.
2. This Agreement may be executed in one more counterparts, each of
which shall be deemed to constitute an original, but all of which shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
/s/ Oprah Winfrey
Oprah Winfrey
/s/ Jeffrey D. Jacobs
Jeffrey D. Jacobs
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EXHIBIT 99.2
THE TRANSFER OF THE OPTION EVIDENCED BY THIS
AGREEMENT IS SUBJECT TO RESTRICTIONS CONTAINED
HEREIN. THE OPTION HAS BEEN ISSUED IN RELIANCE UPON
THE REPRESENTATION OF THE HOLDER THAT IT HAS BEEN
ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARDS THE RESALE OR OTHER DISTRIBUTION THEREOF.
NEITHER THE OPTION NOR THE SHARES ISSUABLE UPON THE
EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
THIS OPTION, AND THE OPTION SHARES ISSUABLE UPON
EXERCISE IN ACCORDANCE WITH THE TERMS CONTAINED
HEREIN, ARE SUBJECT TO A LIEN IN FAVOR OF KING WORLD
PRODUCTIONS, INC. (THE "COMPANY") TO SECURE CERTAIN
OBLIGATIONS OF HARPO, INC. ("HARPO") TO THE COMPANY
PURSUANT TO AN AGREEMENT DATED JANUARY 28, 1991
BETWEEN THE COMPANY AND HARPO.
KING WORLD PRODUCTIONS, INC.
830 Morris Turnpike
Short Hills, New Jersey 07078
Ms. Oprah Winfrey As of January 28, 1991
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
Dear Ms. Winfrey:
This is the stock option agreement referred to in the Agreement (the
"Harpo Agreement"), dated as of January 30, 1987, as amended to date, between
Harpo, Inc. ("Harpo") and the undersigned (the "Company"). As partial
consideration for your causing Harpo to enter into the January 28, 1991
amendment to the Harpo Agreement, and as an inducement for you to render
services with respect to certain Episodes (as such term is defined in the
Harpo Agreement) that are to be distributed under the Harpo Agreement, the
Company hereby grants to you an option (the "Option") to purchase nine hundred
thousand (900,000) shares of the Company's Common Stock, $.01 par value
("Common Stock"; such shares of Common Stock, as the same may be adjusted as
described in Section 6 below, being herein referred to as the "Option
Shares"). The terms and conditions of the Option are set out below.
The Option will be treated as and shall constitute a "non-qualified
stock option" for Federal income tax purposes. The option will not constitute
or be treated either by you or by the Company as an "incentive stock option"
as defined under Section 422A of the Internal Revenue Code of 1986, as amended
(the "Code").
1. Date of Grant. The Option is granted to you on the date hereof.
2. Termination of the Option. Your right to exercise the option (and
to purchase the Option Shares) shall expire and terminate in all events on (i)
January 28, 2001, or (ii) such earlier date provided in Section 7 below.
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3. Option Price. The purchase price to be paid upon the exercise of
the Option (the "Option Price") will, subject to adjustment under Section 6
below, be $25.50 per Option Share, the lowest closing price of the Common
Stock on the New York Stock Exchange during the week ended February 1, 1991.
4. Vesting Provisions--Entitlement to Exercise the Option and
Purchase Option Shares.
(a) Except as otherwise provided in Section 7, you will become
entitled to exercise the Option with respect to 12.5% of the Option Shares
beginning on August 31, 1991, and with respect to an additional 12.5% of the
Option Shares beginning on August 31, 1992. You will become entitled to
exercise the Option with respect to an additional 20% of the Option Shares
beginning on each of August 31, 1993 and August 31, 1994, and with respect to
an additional 17.5% of the Option Shares beginning on each of August 31, 1995
and August 31, 1996.
(b) The Board of Directors of the Company, in its sole
discretion, may at any time accelerate the time at which the Option may be
exercised by you with respect to any Option Shares.
5. Exercise of Option.
(a) To exercise the Option, you must deliver a completed copy
of the attached Option Exercise Form to the address indicated on the Form,
specifying the number of Option Shares being purchased as a result of such
exercise, together with payment of the full Option Price for the Option Shares
being purchased.
(b) Payment of the Option Price may be made, at your option, (i)
in cash; (ii) by delivery, together with a properly executed Option Exercise
Form, of irrevocable instructions to a broker to promptly deliver to the
Company the amount of proceeds from the sale of option Shares required to pay
the Option Price; (iii) by delivery to the Company of a number of shares of
Common Stock, free and clear of all liens, claims, security interests and
other encumbrances of any kind, having a fair market value equal to the Option
Price of the Option Shares to be issued to you upon such exercise; or (iv) by
any combination of the foregoing methods of payment. For the purpose of clause
(iii), the "fair market value" of the Common Stock shall be the closing price
of the Common Stock on the last business day prior to the day on which the
shares of Common Stock are delivered to the Company, as reported on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or on the NASDAQ National Market System or, if the Common
Stock is not then listed on a national securities exchange or quoted on the
NASDAQ National Market System, the last reported bid price of the Common Stock
on the NASDAQ inter-dealer quotation system or any other recognized quotation
or reporting system at the close of business on the last business day prior
to the day on which the shares of Common Stock are delivered to the Company.
(c) In the event of any exercise of the Option, a certificate
or certificates representing the Option Shares so purchased, registered in
your name, shall be delivered to you within a reasonable time.
(d) You agree that Option Shares shall be held by you for
investment and may not be resold unless registered under the Securities Act
of 1933, as amended (the "Securities Act"), or an exemption from registration
Page 11 of 124 Pages<PAGE>
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is available, and that the Option Shares will bear a legend referring to such
limitation, to the restrictions on transfer of the Option Shares referred to
elsewhere in this Agreement, and to any security interests encumbering the
Option Shares.
6. Adjustments. If the total outstanding shares of Common Stock of
the Company shall be increased or decreased or changed into or exchanged for
a different number or kind of shares of stock or other securities of the
Company or of another corporation through reorganization, merger or
consolidation, recapitalization, stock split, combination or exchange of
shares or declaration of any dividends payable in stock or other corporate
transaction, then the number of Option Shares (and the Option Price per share)
subject to the unexercised portion of the Option shall be appropriately
adjusted (to the nearest possible full share) by the Board of Directors of the
Company.
7. Default under the Harpo Agreement.
(a) In the event that you die, or the term of the Harpo
Agreement terminates for any other reason except a material breach by Harpo,
then the Option may be exercised by you or your estate only within the nine
(9) month period following your death or the termination of the term of the
Harpo Agreement, and only to the extent that you were entitled to exercise the
Option on the date of your death or such termination.
(b) In the event that the term of the Harpo Agreement terminates
by reason of a material breach thereof by Harpo, then your right to exercise
the Option as to any and all Option Shares that have not theretofore been
issued shall terminate simultaneously with the termination of such term.
(c) In the event that the Company exercises its rights pursuant
to Paragraph 17 or 18 of the Harpo Agreement and the term of the Harpo
Agreement is suspended, then your rights to exercise the Option pursuant to
Section 4 shall be suspended and, upon the revocation of such suspension, each
of the dates set forth in Section 4 with respect to any portion of the Option
Shares that has not theretofore become exercisable shall be postponed by a
number of days equal to the number of days during which the operation of the
Harpo Agreement was suspended.
(d) Notwithstanding any provision contained herein to the
contrary, in no event may the Option be exercised to any extent after January
28, 2001.
8. Representations.
(a) You represent and warrant that you are acquiring the Option
and the Option Shares for investment purposes only and not with a view towards
the resale or distribution thereof.
(b) You understand that neither the Options nor the Option
Shares have been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements thereof
pursuant to Section 4(2) of the Securities Act.
(c) You represent and warrant that (i) you have the financial
ability to bear the economic risk of investment in the Option and the Option
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Shares and (ii) you, together with the financial advisers who have assisted
you in acquiring the Option, have such knowledge and experience in financial
and business matters as to be capable of evaluating the merit and risks of an
investment in the Option and the option Shares and have had sufficient
opportunity to obtain, and have obtained, all information regarding the
Company as you have deemed relevant in order to evaluate the merits and risks
of such investment.
(d) You represent and warrant that you understand the Federal,
state and local income tax consequences of the granting of the Option to you,
the exercise of the Option and purchase of Option Shares, and the subsequent
sale or other disposition of any Option Shares.
9. Covenants of the Company. The Company will at all times reserve
and keep available out of its authorized and unissued shares of Common Stock,
solely for the purpose of issue upon the exercise of the Option, such number
of shares of Common Stock as shall then be issuable upon the exercise of the
Option. The Company covenants that all Option Shares, when issued in
accordance with the terms hereof, shall be duly and validly issued, fully paid
and nonassessable. The Company will take all such action as may be necessary
to assure that all Option Shares may be so issued without violation of any
applicable law or regulation, or of any requirements of any national
securities exchange upon which the Common Stock of the Company may then be
listed. The Company will not take any action which results in any adjustment
of the Option Price if the total number of Option Shares issued and issuable
after such action would exceed the total number of shares of Common Stock then
authorized by the Company's Certificate of Incorporation. The Company has not
granted and will not grant any right of first refusal with respect to the
Option Shares, and there are no preemptive rights associated with such shares.
10. Required Registration.
(a) At any time you may, by notice to the Company (the
"Registration Notice") request that it register for sale under the Securities
Act, in the manner specified in your Registration Notice, all or any portion
of the Option Shares that you have purchased, or will purchase on or before
the effective date of such registration statement, or, provided that deferral
of the date of purchase to the closing date of sale of such shares in the
manner contemplated by the proposed registration will not disqualify the
offering from registration on Form S-3 (or any successor to such form), then
on such closing date pursuant to such exercise.
(b) Promptly following receipt of your Registration Notice the
Company shall commence to prepare and, unless it elects to purchase all of the
Option Shares specified in such Registration Notice through the procedures
specified in Section 10(e) below, shall file a registration statement under
the Securities Act for the sale of the Option Shares specified in such
Registration Notice (less any shares to be purchased pursuant to Section 10(e)
below) and shall use its best efforts to cause such registration statement to
become effective and to remain in effect for the Required Effective Period for
public sale in accordance with the method of disposition specified by you, the
number of Option Shares specified in such Registration Notice, provided,
however, that the Company shall not be required to file a "shelf" registration
except on Form S-3 (or any successor to such Form). The "Required Effective
Period" shall be the greater of (A) the 180 day period following the effective
date of such registration statement; and (B) unless the proposed plan of
Page 13 of 124 Pages<PAGE>
<PAGE>
distribution involves a firm commitment underwritten public offering, the
period required to dispose of all of the shares included in such registration
statement assuming the sale in each three month period of the maximum number
of shares permitted to be sold under the limitations of Section 14 of this
Agreement. If such method of disposition shall be an underwritten public
offering, the Company may designate the managing underwriter of such offering.
The Company shall not be obligated to register Option Shares pursuant to this
Section 10 (i) on more than three occasions in the aggregate; (ii) on more
than one occasion in any period of twelve consecutive months with respect to
shares acquired on exercise of any options acquired by any person at any time
under the Harpo Agreement (including any existing or subsequent amendments to
that agreement); or (iii) at any time when the registration, offering or sale
of Option Shares would violate any law, rule or regulation. For purposes of
the foregoing sentence, a registration under this Option or under the option
agreement issued on this same date to Jeffrey D. Jacobs shall be aggregated
and any request for registration given by Jeffrey D. Jacobs pursuant to this
Section 10 shall, as a condition to its effectiveness, be confirmed in writing
by Oprah Winfrey (if she is then competent to give such confirmation). In
addition, if, in the good faith opinion of the Board of Directors of the
Company, registration would materially interfere with pre-existing contractual
obligations to which the Company is then subject or financing arrangements or
other material transactions involving the Company or any of its material
subsidiaries are pending at the time the Registration Notice is given, or are
under active consideration by the Company, the Company may elect to defer
registration for such period of time, in no event in excess of one hundred
twenty (120) days from the date on which the Registration Notice was given,
as in the good faith judgment of the Board of Directors of the Company is
necessary in order to preclude adverse impact upon such financing or other
transaction. In the event of such deferral, if the shares to be registered
are to be acquired on exercise of this Option following the date of such
Registration Notice, the date on which the Option was exercised shall, for
purposes of Section 2 and 7(d) hereof, be deemed to be the date on which the
Registration Notice was given. The obligation of the Company under this
Section 10 shall be deemed satisfied only when a registration statement
covering all option Shares specified in your Registration Notice and not
purchased by the Company pursuant to Section 10(e) below shall have become
effective and, (X) if the method of disposition you specify is a firm
commitment underwritten public offering, all such Option Shares shall have
been sold pursuant thereto; or (Y) if it is not such an offering, has remained
in effect for the required Effective Period specified herein or until the
distribution of the shares covered thereby is completed, whichever is shorter.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 10, for sale in accordance with the
method of disposition you specify, shares of Common Stock to be sold by the
Company for its own account or by other security holders of the Company for
their accounts, or both, except as and to the extent that, in the opinion of
the managing underwriter (if such method of disposition shall be an
underwritten public offering), such inclusion would adversely affect the
marketing of the Option Shares to be sold.
(d) The procedures for registration of shares under this Section
10 shall conform to the following:
Page 14 of 124 Pages<PAGE>
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1. Obligations of the Company. If and whenever the
Company is required by the provisions of Section 10 or 11 to effect the
registration of shares the Company will:
1.1 Prepare and file with the Commission a
registration statement with respect to such securities and use its best
efforts to cause such registration statement to become and remain effective
for the required Effective Period or until the securities covered by such
registration statement have been sold in accordance with the method of
disposition specified by the Optionee, whichever is shorter, and prepare and
file with the Commission such amendments or supplements to such registration
statement and supplements to the prospectus contained therein as may be
necessary to keep such registration statement effective for the required
Effective Period or until the shares covered by such registration statement
have been sold in accordance with such method of disposition, whichever is
shorter;
1.2 If the offering is to be underwritten in whole
or in part, enter into a written underwriting agreement in form and substance
reasonably satisfactory to the managing underwriter or underwriters of the
public offering of such securities;
1.3 Furnish to the shareholders participating in
such registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
1.4 Use its best efforts to register or qualify the
shares covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as such Optionee may reasonably request
within 20 days following the original filing of such registration statement,
except that the Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a
foreign corporation in any jurisdiction wherein it is not so qualified;
1.5 Notify the Optionee promptly after it shall
receive notice thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
1.6 Notify such Optionee promptly of any request by
the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
1.7 Prepare and file with the Commission, promptly
upon the request of any such Optionee, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
Optionee, is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Option Shares by such
Optionee;
Page 15 of 124 Pages<PAGE>
<PAGE>
1.8 Prepare and promptly file with the Commission
and promptly notify such Optionee of the filing of such amendment or
supplement to such registration statement or prospectus as may be necessary
to correct any statements or omissions if, at the time when a prospectus
relating to such shares is required to be delivered under the Securities Act,
any event shall have occurred as the result of which any such prospectus or
any other prospectus as then in effect would include an untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading;
1.9 In case any of such Optionee or any underwriters
for any such Optionee is required to deliver a prospectus at a time when the
prospectus then in effect may no longer be used under the Securities Act,
prepare promptly upon request such amendment or amendments to such
registration statement and such prospectus or prospectus as may be necessary
to permit compliance with the requirements of the Securities Act;
1.10 Advise such Optionee, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order
by the Commission suspending the effectiveness of such registration statement;
or the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued;
1.11 If such registration is by way of an
underwritten public offering and if the Optionee so requests, use its best
efforts to cause counsel and the independent certified public accountants to
the Company to furnish on the effective date of the registration statement and
at the closing provided for in the underwriting agreement, (i) an opinion
dated such date, of the counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and to the Optionee,
covering such matters with respect to the registration statement and
prospectus and each amendment or supplement thereto, proceedings under state
and federal securities laws and other matters relating to the Company, the
securities included in the registration statement and the offer and sale of
such securities as are customarily the subject of opinions of issuer's counsel
provided to underwriters at or about the time such registration statement
becomes effective and the sale is closed; and (ii) a letter dated each such
date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the Optionee, stating that they
are independent certified public accountants within the meaning of the
Securities Act and providing such assurances as are customarily provided by
the independent certified public accountants for an issuer in connection with
the registration of securities, including information as to the period ending
not more than five business days prior to the date of such letter with respect
to the registration statement and prospectus, as the underwriters or the
Optionee may reasonably request. If the furnishing of such opinion and/or
letter causes Company to incur any additional cost or expense, you agree to
reimburse Company therefor at the closing provided for in the underwriting
agreement.
2. Obligations of Optionee. It shall be a condition to
the inclusion of any shares of Optionee in a registration statement that the
Optionee cooperate in the execution and filing of the registration statement
and any necessary state securities law filings, and if the offering is to be
Page 16 of 124 Pages<PAGE>
<PAGE>
underwritten, that such holder become a party to the underwriting agreement
and, if so requested by the managing underwriter, to Powers of Attorney and/or
custodial agreements or other suitable arrangements as the managing under
writer deems reasonably necessary in order to insure orderly sale of the
shares.
As among the holders of shares included in any registration statement
decisions respecting the terms and conditions of any underwriting agreements
shall be made by the party initiating the registration; so that in the case
of a registration required pursuant to a request by the Optionee under Section
10, determinations with respect to the under writing agreement shall be made
by the Optionee in his or her reasonable judgment after appropriate
consultation with the Company and with other persons whose shares are to be
included in such offering; and if the Optionee is party to a registration
statement pursuant to Section 11, the Option Shall not have the right to make
such determinations, but shall be informed of them, and consulted with respect
thereto.
11. Incidental Registration. If the Company at any time (other than
pursuant to Section 10 hereof) proposes to register any of its Common Stock
under the Securities Act for sale to the public, whether for its own account
or for the account of other security holders or both (except with respect to
registration statements on Forms S-4 or S-8 or another form not available for
registering the Option Shares for sale to the public), it will give written
notice at such time to you of its intention to do so. Upon your written
request, given within 30 days after receipt of any such notice by the Company,
to register any of the Option Shares that you have purchased, or will purchase
on or before the effective date of such registration statement, pursuant to
the exercise of the Option (which request shall state the intended method of
disposition thereof), the Company will use its best efforts to cause such
Option Shares to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by you of the Option Shares
so registered. In the event that any registration pursuant to this Section
11 shall be, in whole or in part, an underwritten public offering of Common
Stock, any request by you pursuant to this Section 11 to register Option
Shares shall specify that either (i) such Option Shares are to be included in
the underwriting on the same terms and conditions as the shares of Common
Stock otherwise being sold through underwriters under such registration; or
(ii) such Option Shares are to be sold in the open market without any
underwriting, on terms and conditions comparable to those normally applicable
to offerings of common stock in reasonably similar circumstances. The number
of Option Shares to be included in such an underwriting may be reduced if and
to the extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the securities to be sold
therein by the Company or other security holders of the Company.
Notwithstanding anything to the contrary contained in this Section 11, in the
event that there is a firm commitment underwritten public offering of
securities of the Company pursuant to a registration covering Option Shares
and you do not elect to sell any Option Shares to the underwriters of the
Company's securities in connection with such offering, you agree to refrain
from selling any Option Shares during the period of distribution of the
Company's securities by such underwriters and the period in which the
underwriting syndicate participates in the after market; provided, however,
that you shall, in any event, be entitled to sell option Shares commencing on
the 150th day after the effective date of such registration statement.
Page 17 of 124 Pages<PAGE>
<PAGE>
12. Expenses.
(a) The expenses incurred by the Company in
complying with the first two registrations pursuant to
Section 10 and all registrations pursuant to Section 11
hereof shall be paid as follows:
(i) all registration and filing fees, printing
expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees
of the National Association of Securities Dealers,
Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and other costs not
described in (ii) below shall be paid by the Company;
and
(ii) fees and expenses of your counsel, all
underwriting discounts and selling commissions
applicable to the sale of Option Shares, and any
additional cost or expense incurred by Company
pursuant to your request under Section 10(d)1.11
shall be paid by you.
(b) All expenses of the third registration pursuant to Section
10 shall be paid for by you.
13. Indemnification. In the event of a registration of Option Shares
under the Securities Act pursuant to Section 10 or 11 hereof, the Company will
indemnify and hold you harmless against any losses, claims, damages or
liabilities, joint or several, to which you may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such Option Shares were registered
under the Securities Act pursuant to Section 10 or 11, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplemental thereof, or arise out of or are based upon 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, and will
reimburse you for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished in writing by you for inclusion in such
registration statement.
In the event of a registration of any of the Option Shares under the
Securities Act pursuant to Section 10 or 11 hereof, you will indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who
signs the registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within the meaning
of the Securities Act, against all losses, claims, damages or liabilities,
Page 18 of 124 Pages<PAGE>
<PAGE>
joint or several, to which the Company or such officer or director or
underwriter or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement under which such Option Shares were registered under
the Securities Act pursuant to Section 10 or ll, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon 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, and will reimburse the Company and each
such officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that you will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
furnished to the Company by you in writing for inclusion in such registration
statement.
Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have
to any indemnified party other than under this Section 13. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 13 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; 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 there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party, or
if the interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party shall have
the right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party shall have failed to retain counsel
for the indemnified person as aforesaid or (ii) the indemnifying party and
such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm qualified
Page 19 of 124 Pages<PAGE>
<PAGE>
in such jurisdiction to act as counsel for the indemnified party. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
If the indemnification provided for in the first two paragraphs of this
Section 13 is unavailable or insufficient to hold harmless an indemnified
party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions in respect thereof referred to therein, then each
indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
you, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or actions as well as
any other relevant equitable considerations, including the failure to give any
notice under the third paragraph of this Section 13. The relative fault shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact relates to information supplied
by the Company, on the one hand, or you, on the other, and to the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and you agree that it
would not be just and equitable if contributions pursuant to this paragraph
were determined by pro rata allocation or by any other method of allocation
which did not take account of the equitable considerations referred to above
in this paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or action in respect
thereof, referred to above in this paragraph, shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentations (within the meaning of Section ll(f)
of the Securities Act) shall be entitled to contribution from any person who
is not guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Section 13
shall be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters. Upon your reasonable request, or
upon the reasonable request of any underwriter of Option Shares, the Company
shall obtain, if reasonably available, an insurance policy covering the risks
described above in this Section 13 in an amount and with a deductible
reasonably requested by you or such underwriter and naming you, any
underwriter of such stock and any person controlling you or such underwriter
as beneficiaries. The costs of obtaining and maintaining any such insurance
shall be borne by the Company.
14. Sale of Option Shares. (a) You hereby agree to limit your sales
of Option Shares, except for sales pursuant to an underwritten, firm
commitment public offering under Section 10 or ll, in any three month period
to a number of shares not exceeding the greater of (i) one percent of the
outstanding shares of Common Stock of the Company, as disclosed in its public
report most recently filed with the Securities and Exchange Commission before
the date of any sale and (ii) the average weekly reported volume of trading
in Common Stock of the Company on the New York Stock Exchange and all other
national securities exchanges during the four calendar weeks preceding the
date of any sale. Notwithstanding anything to the contrary contained in this
Page 20 of 124 Pages<PAGE>
<PAGE>
Agreement, you shall not be entitled to register, sell or dispose of any
Option Shares that are subject to any liens, claims, security interests and
other encumbrances of any kind, unless and until the same are removed (or will
be removed in conjunction with their sale) or substitute collateral provided
as hereinafter provided.
(b) In order to secure payment of the loans made by the Company to
Harpo pursuant to the Harpo Agreement (the "Loans"), you hereby grant to the
Company a first lien and security interest (the "Security Interest") in (i)
your rights under this Option, (ii) all shares of Common Stock hereafter
issuable or issued pursuant to the exercise of the Option and (iii) all
proceeds thereof, provided that unless and until the Company notifies you that
the share of adjusted gross profits (determined pursuant to the Harpo
Agreement) which the Company reasonably projects at the time of such notice
that will be payable to Harpo would be inadequate to fully secure the Loans
(an "Additional Security Notice"), and specifying, in reasonable detail, the
amount of such inadequacy (the "Security Shortfall"), you may exercise the
Option, sell the Option Shares issued to you upon such exercise or retain the
proceeds thereof without restriction, provided that the Security Interest
shall be limited to such number of shares of Common Stock (and to the Option
to the extent corresponding to such shares) that, as of the date of such
Additional Security Notice, would upon sale at a price per share equal to the
closing price of the Common Stock on the New York Stock Exchange, generate Net
Realizable Value equal to the projected amount of the Security Shortfall. The
Net Realizable Value of the Option Share at any time shall be the fair market
value of such share at such time less the sum of (i) the Option Price for such
option Share, and (ii) a provision for taxes equal to the difference between
such fair market value and such Option Price (the "Option Gain") multiplied
by the highest rate of federal and state income tax to which the Option Gain
will be subject (with offset for the deductibility of such state taxes). You
hereby agree to take such steps as are necessary to perfect the Security
Interest, including the execution and filing of UCC-1 financing statements in
such form as reasonably requested by the Company, the delivery to the Company
of certificates evidencing the option Shares, the delivery to such third party
financial intermediaries as may from time to time be requested by the Company
of written notice confirming the Security Interest and obtaining the
confirmation of any such financial intermediary that such Option Shares are
subject to the Security Interest.
15. Defaults. It shall constitute a breach of this Agreement by
either party if such party shall fail or refuse to fully perform any of its
obligations under this Agreement and shall not have cured such failure or
refusal within 30 days after receipt from the other party of written notice
advising it of such failure or refusal, or, in the event that such failure or
refusal is of a nature that cannot be cured within 30 days, then if such party
shall not begin to cure the same within such 30 day period and thereafter
diligently prosecute such cure to completion.
16. Successors; No Assignment. Each of the covenants, terms, provisions
and agreements contained herein shall be binding upon and inure to the benefit
of the parties' successors and assigns. Neither the Option, nor any of the
rights granted to you pursuant hereto, may be transferred to assigned
(including, without limitation, by operation of law), except by will or the
laws of descent and distribution.
Page 21 of 124 Pages<PAGE>
<PAGE>
17. Withholding Taxes. In the event that the Company is required to
withhold any Federal, state or local taxes in respect of the grant of the
Option or in respect of the acquisition of any Option Shares, the Company may
deduct from any payments of any kind otherwise due to you under the Harpo
Agreement the aggregate amount of such Federal, state or local taxes required
to be so withheld or, if such payments are insufficient to satisfy such
Federal, state or local taxes or if no such payments are due or to become due,
then, you will be required to pay to the Company, or to make other
arrangements satisfactory to the Company regarding payment to the Company of,
the aggregate amount of any such taxes. All matters with respect to the total
amount of taxes to be withheld shall be determined by the Company in its sole
discretion.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. If any one or more
provisions of this Agreement shall be found to be illegal or unenforceable in
any respect, the validity and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
Please acknowledge receipt of this Option Agreement and agreement
with the terms hereof by signing the enclosed copy of this Option Agreement
in the space provided below.
KING WORLD PRODUCTIONS, INC.
By:__________________________
Accepted and Agreed:
_____________________
OPRAH WINFREY
Page 22 of 124 Pages<PAGE>
<PAGE>
King World Productions, Inc.
OPTION EXERCISE FORM
Oprah Winfrey hereby exercises her right to purchase _____________
shares of Common Stock, $.01 par value, of King World Productions, Inc.
pursuant to the option granted to her on January 28, 1991, memorialized in the
attached Option Agreement dated April ____, 1992 between her and King World
Productions, Inc.
Date: _______________________ _______________________________
OPRAH WINFREY
Send a completed copy of this Option Exercise Form to:
Vice President - Finance
King World Productions, Inc.
830 Morris Turnpike
Short Hills, New Jersey 07078
Page 23 of 124 Pages<PAGE>
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<PAGE>
EXHIBIT 99.3
THE TRANSFER OF THE OPTION EVIDENCED BY THIS
AGREEMENT IS SUBJECT TO RESTRICTIONS CONTAINED
HEREIN. THE OPTION HAS BEEN ISSUED IN RELIANCE UPON
THE REPRESENTATION OF THE HOLDER THAT IT HAS BEEN
ACQUIRED FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARDS THE RESALE OR OTHER DISTRIBUTION THEREOF.
NEITHER THE OPTION NOR THE SHARES ISSUABLE UPON THE
EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933.
THIS OPTION, AND THE OPTION SHARES ISSUABLE UPON
EXERCISE IN ACCORDANCE WITH THE TERMS CONTAINED
HEREIN, ARE SUBJECT TO A LIEN IN FAVOR OF KING WORLD
PRODUCTIONS, INC. (THE "COMPANY") TO SECURE CERTAIN
OBLIGATIONS OF HARPO, INC. ("HARPO") TO THE COMPANY
PURSUANT TO AN AGREEMENT DATED JANUARY 28, 1991
BETWEEN THE COMPANY AND HARPO.
KING WORLD PRODUCTIONS, INC.
830 Morris Turnpike
Short Hills, New Jersey 07078
Mr. Jeffrey D. Jacobs As of January 28, 1991
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
Dear Mr. Jacobs:
This is the stock option agreement referred to in the Agreement (the
"Harpo Agreement"), dated as of January 30, 1987, as amended to date, between
Harpo, Inc. ("Harpo") and the undersigned (the "Company"). As partial
consideration for your causing Harpo to enter into the January 28, 1991
amendment to the Harpo Agreement, and as an inducement for you to render
services with respect to certain Episodes (as such term is defined in the
Harpo Agreement) that are to be distributed under the Harpo Agreement, the
Company hereby grants to you an option (the "Option") to purchase one hundred
thousand (100,000) shares of the Company's Common Stock, $.O1 par value
("Common Stock"; such shares of Common Stock, as the same may be adjusted as
described in Section 6 below, being herein referred to as the "Option
Shares"). The terms and conditions of the Option are set out below.
The Option will be treated as and shall constitute a "non-qualified
stock option" for Federal income tax purposes. The Option will not constitute
or be treated either by you or by the Company as an "incentive stock option"
as defined under Section 422A of the Internal Revenue Code of 1986, as amended
(the "Code").
1. Date of Grant. The Option is granted to you on the date hereof.
2. Termination of the Option. Your right to exercise the option (and
to purchase the Option Shares) shall expire and terminate in all events on (i)
January 28, 2001, or (ii) such earlier date provided in Section 7 below.
Page 24 of 124 Pages<PAGE>
<PAGE>
3. Option Price. The purchase price to be paid upon the exercise of
the Option (the "Option Price") will, subject to adjustment under Section 6
below, be $25.50 per Option Share, the lowest closing price of the Common
Stock on the New York Stock Exchange during the week ended February 1, 1991.
4. Vesting Provisions--Entitlement to Exercise the Option and
Purchase Option Shares.
(a) Except as otherwise provided in Section 7, you will become
entitled to exercise the Option with respect to 12.5% of the Option Shares
beginning on August 31, 1991, and with respect to an additional 12.5% of the
Option Shares beginning on August 31, 1992. You will become entitled to
exercise the Option with respect to an additional 20% of the Option Shares
beginning on each of August 31, 1993 and August 31, 1994, and with respect to
an additional 17.5% of the Option Shares beginning on each of August 31, 1995
and August 31, 1996.
(b) The Board of Directors of the Company, in its sole
discretion, may at any time accelerate the time at which the Option may be
exercised by you with respect to any Option Shares.
5. Exercise of Option.
(a) To exercise the Option, you must deliver a completed copy
of the attached Option Exercise Form to the address indicated on the Form,
specifying the number of Option Shares being purchased as a result of such
exercise, together with payment of the full Option Price for the Option Shares
being purchased.
(b) Payment of the Option Price may be made, at your option, (i)
in cash; (ii) by delivery, together with a properly executed Option Exercise
Form, of irrevocable instructions to a broker to promptly deliver to the
Company the amount of proceeds from the sale of Option Shares required to pay
the Option Price,; (iii) by delivery to the Company of a number of shares of
Common Stock, free and clear of all liens, claims, security interests and
other encumbrances of any kind, having a fair market value equal to the option
Price of the Option Shares to be issued to you upon such exercise; or (iv) by
any combination of the foregoing methods of payment. For the purpose of clause
(iii), the "fair market value" of the Common Stock shall be the closing price
of the Common Stock on the last business day prior to the day on which the
shares of Common Stock are delivered to the Company, as reported on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or on the NASDAQ National Market System or, if the Common
Stock is not then listed on a national securities exchange or quoted on the
NASDAQ National Market System, the last reported bid price of the Common Stock
on the NASDAQ inter-dealer quotation system or any other recognized quotation
or reporting system at the close of business on the last business day prior
to the day on which the shares of Common Stock are delivered to the Company.
(c) In the event of any exercise of the Option, a certificate
or certificates representing the Option Shares so purchased, registered in
your name, shall be delivered to you within a reasonable time.
(d) You agree that Option Shares shall be held by you for
investment and may not be resold unless registered under the Securities Act
of 1933, as amended (the "Securities Act"), or an exemption from registration
is available, and that the option Shares will bear a legend referring to such
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limitation, to the restrictions on transfer of the Option Shares referred to
elsewhere in this Agreement, and to any security interests encumbering the
Option Shares.
6. Adjustments. If the total outstanding shares of Common Stock of
the Company shall be increased or decreased or changed into or exchanged for
a different number or kind of shares of stock or other securities of the
Company or of another corporation through reorganization, merger or
consolidation, recapitalization, stock split, combination or exchange of
sharer or declaration of any dividends payable in stock or other corporate
transaction, then the number of Option Shares (and the Option Price per share)
subject to the unexercised portion of the Option shall be appropriately
adjusted (to the nearest possible full share) by the Board of Directors of the
Company.
7. Default under the Harpo Agreement.
(a) In the event that you die, or the term of the Harpo
Agreement terminates for any other reason except a material breach by Harpo,
then the Option may be exercised by you or your estate only within the nine
(9) month period following your death or the termination of the term of the
Harpo Agreement, and only to the extent that you were entitled to exercise the
Option on the date of your death or such termination.
(b) In the event that the term of the Harpo Agreement terminates
by reason of a material breach thereof by Harpo, then your right to exercise
the Option as to any and all Option Shares that have not theretofore been
issued shall terminate simultaneously with the termination of such term.
(c) In the event that the Company exercises its rights pursuant
to Paragraph 17 or 18 of the Harpo Agreement and the term of the Harpo
Agreement is suspended, then your rights to exercise the Option pursuant to
Section 4 shall be suspended and, upon the revocation of such suspension, each
of the dates set forth in Section 4 with respect to any portion of the Option
Shares that has not theretofore become exercisable shall be postponed by a
number of days equal to the number of days during which the operation of the
Harpo Agreement was suspended.
(d) Notwithstanding any provision contained herein to the
contrary, in no event may the Option be exercised to any extent after January
28, 2001.
8. Representations.
(a) You represent and warrant that you are acquiring the Option
and the Option Shares for investment purposes only and not with a view towards
the resale or distribution thereof.
(b) You understand that neither the Options nor the Option
Shares have been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements thereof
pursuant to Section 4(2) of the Securities Act.
(c) You represent and warrant that (i) you have the financial
ability to bear the economic risk of investment in the Option and the Option
Shares and (ii) you, together with the financial advisers who have assisted
you in acquiring the Option, have such knowledge and experience in financial
Page 26 of 124 Pages<PAGE>
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and business matters as to be capable of evaluating the merit and risks of an
investment in the Option and the option Shares and have had sufficient
opportunity to obtain, and have obtained, all information regarding the
Company as you have deemed relevant in order to evaluate the merits and risks
of such investment.
(d) You represent and warrant that you understand the Federal,
state and local income tax consequences of the granting of the Option to you,
the exercise of the Option and purchase of Option Shares, and the subsequent
sale or other disposition of any Option Shares.
9. Covenants of the Company. The Company will at all times reserve
and keep available out of its authorized and unissued shares of Common Stock,
solely for the purpose of issue upon the exercise of the Option, such number
of shares of Common Stock as shall then be issuable upon the exercise of the
Option. The Company covenants that all Option Shares, when issued in
accordance with the terms hereof, shall be duly and validly issued, fully paid
and nonassessable. The Company will take all such action as may be necessary
to assure that all Option Shares may be so issued without violation of any
applicable law or regulation, or of any requirements of any national
securities exchange upon which the Common Stock of the Company may then be
listed. The Company will not take any action which results in any adjustment
of the Option Price if the total number of Option Shares issued and issuable
after such action would exceed the total number of shares of Common Stock then
authorized by the Company's Certificate of Incorporation. The Company has not
granted and will not grant any right of first refusal with respect to the
Option Shares, and there are no preemptive rights associated with such shares.
10. Required Registration.
(a) At any time you may, by notice to the Company (the
"Registration Notice") request that it register for sale under the Securities
Act, in the manner specified in your Registration Notice, all or any portion
of the Option Shares that you have purchased, or will purchase on or before
the effective date of such registration statement, or, provided that deferral
of the date Of purchase to the closing date of sale of such shares in the
manner contemplated by the proposed registration will not disqualify the
offering from registration on Form S-3 (or any successor to such form), then
on such closing date pursuant to such exercise.
(b) Promptly following receipt of your Registration Notice the
Company shall commence to prepare and, unless it elects to purchase all of the
Option Shares specified in such Registration Notice through the procedures
specified in Section 10(e) below, shall file a registration statement under
the Securities Act for the sale of the Option Shares specified in such
Registration Notice (less any shares to be purchased pursuant to Section 10(e)
below) and shall use its best efforts to cause such registration statement to
become effective and to remain in effect for the Required Effective Period for
public sale in accordance with the method of disposition specified by you, the
number of Option Shares specified in such Registration Notice, provided,
however, that the Company shall not be required to file a "shelf" registration
except on Form S-3 (or any successor to such Form). The "Required Effective
Period" shall be the greater of (A) the 180 day period following the effective
date of such registration statement; and (B) unless the proposed plan of
distribution involves a firm commitment underwritten public offering, the
period required to dispose of all of the shares included in such registration
statement assuming the sale in each three month period of the maximum number
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of shares permitted to be sold under the limitations of Section 14 of this
Agreement. If such method of disposition shall be an underwritten public
offering, the Company may designate the managing underwriter of such offering.
The Company shall not be obligated to register Option Shares pursuant to this
Section 10 (i) on more than three occasions in the aggregate; (ii) on more
than one occasion in any period of twelve consecutive months with respect to
shares acquired on exercise of any options acquired by any person at any time
under the Harpo Agreement (including any existing or subsequent amendments to
that agreement); or (iii) at any time when the registration, offering or sale
of Option Shares would violate any law, rule or regulation. For purposes of
the foregoing sentence, a registration under this Option or under the option
agreement issued on this same date to Jeffrey D. Jacobs shall be aggregated
and any request for registration given by Jeffrey D. Jacobs pursuant to this
Section 10 shall, as a condition to its effectiveness, confirmed in writing
by Oprah Winfrey (if she is then competent to give such confirmation). In
addition, if, in the good faith opinion of the Board of Directors of the
Company, registration would materially interfere with preexisting contractual
obligations to which the Company is then subject or financing arrangements or
other material transactions involving the Company or any of its material
subsidiaries are pending at the time the Registration Notice is given, or are
under active consideration by the Company, the Company may elect to defer
registration for such period of time, in no event in excess of one hundred
twenty (120) days from the date on which the Registration Notice was given,
as in the good faith judgment of the Board of Directors of the Company is
necessary in order to preclude adverse impact upon such financing or other
transaction. In the event of such deferral, if the shares to be registered are
to be acquired on exercise of this Option following the date of such
Registration Notice, the date on which the Option was exercised shall, for
purposes of Section 2 and 7(d) hereof, be deemed to be the date on which the
Registration Notice was given. The obligation of the Company under this
Section 10 shall be deemed satisfied only when a registration statement
covering all Option Shares specified in your Registration Notice and not
purchased by the Company pursuant to Section 10(e) below shall have become
effective and, (X) if the method of disposition you specify is a firm
commitment underwritten public offering, all such Option Shares shall have
been sold pursuant thereto; or (Y) if it is not such an offering, has remained
in effect for the required Effective Period specified herein or until the
distribution of the shares covered thereby is completed, whichever is shorter.
(c) The Company shall be entitled to include in any registration
statement referred to in this Section 10, for sale in accordance with the
method of disposition you specify, shares of Common Stock to be sold by the
Company for its own account or by other security holders of the Company for
their accounts, or both, except as and to the extent that, in the opinion of
the managing underwriter (if such method of disposition shall be an
underwritten public offering), such inclusion would adversely affect the
marketing of the Option Shares to be sold.
(d) The procedures for registration of shares under this Section
10 shall conform to the following:
1. Obligations of the Company. If and whenever the Company is
required by the provisions of Section 10 or 11 to effect the registration of
shares the Company will:
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1.1 Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for the required
Effective Period or until the securities covered by such registration
statement have been sold in accordance with the method of disposition
specified by the Optionee, whichever is shorter, and prepare and file with the
Commission such amendments or supplements to such registration statement and
supplements to the prospectus contained therein as may be necessary to keep
such registration statement effective for the required Effective Period or
until the shares covered by such registration statement have been sold in
accordance with such method of disposition, whichever is shorter;
1.2 If the offering is to be underwritten in whole or in
part, enter into a written underwriting agreement in form and substance
reasonably satisfactory to the managing underwriter or underwriters of the
public offering of such securities;
1.3 Furnish to the shareholders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
1.4 Use its best efforts to register or qualify the shares
covered by such registration statement under such state securities or blue sky
laws of such jurisdictions as such Optionee may reasonably request within 20
days following the original filing of such registration statement, except that
the Company shall not for any purpose be required to execute a general consent
to service of process or to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified;
1.5 Notify the Optionee promptly after it shall receive
notice thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
1.6 Notify such Optionee promptly of any request by the
Commission for the amending or supplementing of such registration statement
or prospectus or for additional information;
1.7 Prepare and file with the Commission, promptly upon
the request of any such Optionee, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
Optionee, is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the option Shares by such
Optionee;
1.8 Prepare and promptly file with the Commission and
promptly notify such Optionee of the filing of such amendment or supplement
to such registration statement or prospectus as may be necessary to correct
any statements or omissions if, at the time when a prospectus relating to such
shares is required to be delivered under the Securities Act, any event shall
have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances in which they were made, not
misleading;
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1.9 In case any of such Optionee or any underwriters for
any such Optionee is required to deliver a prospectus at a time when the
prospectus then in effect may no longer be used under the Securities Act,
prepare promptly upon request such amendment or amendments to such
registration statement and such prospectus or prospectus as may be necessary
to permit compliance with the requirements of the Securities Act;
1.10 Advise such Optionee, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement; or the
initiation or threatening of any proceeding for that purpose and promptly use
its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such stop order should be issued;
1.11 If such registration is by way of an underwritten
public offering and if the Optionee so requests, use its best efforts to cause
counsel and the independent certified public accountants to the Company to
furnish on the effective date of the registration statement and at the closing
provided for in the underwriting agreement, (i) an opinion dated such date,
of the counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the Optionee, covering such
matters with respect to the registration statement and prospectus and each
amendment or supplement thereto, proceedings under state and federal
securities laws and other matters relating to the Company, the securities
included in the registration statement and the offer and sale of such
securities as are customarily the subject of opinions of issuer's counsel
provided to underwriters at or about the time such registration statement
becomes effective and the sale is closed; and (ii) a letter dated each such
date, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the Optionee, stating that they
are independent certified public accountants within the meaning of the
Securities Act and providing such assurances as are customarily provided by
the independent certified public accountants for an issuer in connection with
the registration of securities, including information as to the period ending
not more than five business days prior to the date of such letter with respect
to the registration statement and prospectus, as the underwriters or the
Optionee may reasonably request. If the furnishing of such opinion and/or
letter causes Company to incur any additional cost or expense, you agree to
reimburse Company therefor at the closing provided for in the underwriting
agreement.
2. Obligations of Optionee. It shall be a condition to the
inclusion of any shares of Optionee in a registration statement that the
Optionee cooperate in the execution and filing of the registration statement
and any necessary state securities law filings, and if the offering is to be
underwritten, that such holder become a party to the underwriting agreement
and, if so requested by the managing underwriter, to Powers of Attorney and/or
custodial agreements or other suitable arrangements as the managing
underwriter deems reasonably necessary in order to insure orderly sale of the
shares.
As among the holders of shares included in any registration
statement decisions respecting the terms and conditions of any underwriting
agreements shall be made by the party initiating the registration; so that in
the case of a registration required pursuant to a request by the Optionee
under Section 10, determinations with respect to the under writing agreement
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shall be made by the Optionee in his or her reasonable judgment after
appropriate consultation with the Company and with other persons whose shares
are to be included in such offering; and if the Optionee is party to a
registration statement pursuant to Section 11, the Optionee shall not have the
right to make such determinations, but shall be informed of them, and
consulted with respect thereto.
11. Incidental Registration. If the Company at any time (other
than pursuant to Section 10 hereof) proposes to register any of its Common
Stock under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Forms S-4 or S-8 or another form not
available for registering the Option Shares for sale to the public), it will
give written notice at such time to you of its intention to do so. Upon your
written request, given within 30 days after receipt of any such notice by the
Company, to register any of the Option Shares that you have purchased, or will
purchase on or before the effective date of such registration statement,
pursuant to the exercise of the Option (which request shall state the intended
method of disposition thereof), the Company will use its best efforts to cause
such Option Shares to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by you of the Option Shares
so registered. In the event that any registration pursuant to this Section 11
shall be, in whole or in part, an underwritten public offering of Common
Stock, any request by you pursuant to this Section 11 to register Option
Shares shall specify that either (i) such Option Shares are to be included in
the underwriting on the same terms and conditions as the shares of Common
Stock otherwise being sold through underwriters under such registration; or
(ii) such Option Shares are to be sold in the open market without any
underwriting, on terms and conditions comparable to those normally applicable
to offerings of common stock in reasonably similar circumstances. The number
of Option Shares to be included in such an underwriting may be reduced if and
to the extent that the managing underwriter shall of the opinion that such
inclusion would adversely affect the marketing of the securities to be sold
therein by the Company or other security holders of the Company.
Notwithstanding anything to the contrary contained in this Section
11, in the event that there is a firm commitment underwritten public offering
of securities of the Company pursuant to a registration covering Option Shares
and you do not elect to sell any Option Shares to the underwriters of the
Company's securities in connection with such offering, you agree to refrain
from selling any Option Shares during the period of distribution of the
Company's securities by such underwriters and the period in which the
underwriting syndicate participates in the after market; provided, however,
that you shall, in any event, be entitled to option Shares commencing on the
150th day after the effective date of such registration statement.
12. Expenses.
(a) The expenses incurred by the Company in complying with the
first two registrations pursuant to Section 10 and all registrations pursuant
to Section 11 hereof shall be paid as follows:
(i) all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants
for the Company, fees of the National Association of Securities
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Dealers, Inc., transfer taxes, fees of transfer agents and registrars, costs
of insurance and other costs not described in (ii) below shall be paid by the
Company; and
(ii) fees and expenses of your counsel, all underwriting
discounts and selling commissions applicable to the sale of Option
Shares, and any additional cost or expense incurred by Company
pursuant to your request under Section 10(d)1.11 shall be paid by
you.
(b) All expenses of the third registration pursuant to Section
10 shall be paid for by you.
13. Indemnification. In the event of a registration of Option Shares
under the Securities Act pursuant to Section 10 or 11 hereof, the Company will
indemnify and hold you harmless against any losses, claims, damages or
liabilities, joint or several, to which you may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such Option Shares were registered
under the Securities Act pursuant to Section 10 or 11, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplemental thereof, or arise out of or are based upon 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, and will
reimburse you for any legal or other expenses reasonably incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
in any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished in writing by you for inclusion in such registration
statement.
In the event of a registration of any of the Option Shares under the
Securities Act pursuant to Section 10 or 11 hereof, you will indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who
signs the registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within the meaning
of the Securities Act, against all losses, claims, damages or liabilities,
joint or several, to which the Company or such officer or director or
underwriter or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement under which such Option Shares were registered under
the Securities Act pursuant to Section 10 or 11, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon 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, and will reimburse the Company and each
such officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that you will be liable hereunder in any such case if and only to the
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extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with information
furnished to the Company by you in writing for inclusion in such registration
statement.
Promptly after receipt by an indemnified party hereunder of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have
to any indemnified party other than under this Section 13. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 13 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; 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 there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party, or
if the interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party shall have
the right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party shall have failed to retain counsel
for the indemnified person as aforesaid or (ii) the indemnifying party and
such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in connection
with any action or related actions in the same jurisdiction, be liable for the
fees and disbursements of more than one separate firm qualified in such
jurisdiction to act as counsel for the indemnified party. The indemnifying
party shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there be
a final judgment for the plaintiff, the indemnifying party agrees to indemnify
the indemnified party from and against any loss or liability by reason of such
settlement or judgment.
If the indemnification provided for in the first two paragraphs of this
Section 13 is unavailable or insufficient to hold harmless an indemnified
party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions in respect thereof referred to therein, then each
indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
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you, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or actions as well as
any other relevant equitable considerations, including the failure to give any
notice under the third paragraph of this Section 13. The relative fault shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact relates to information supplied
by the Company, on the one hand, or you, on the other, and to the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and you agree that it would
not be just and equitable if contributions pursuant to this paragraph were
determined by pro rata allocation or by any other method of allocation which
did not take account of the equitable considerations referred to above in this
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or action in respect thereof,
referred to above in this paragraph, shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. No person guilty
of fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Section 13
shall be on such other terms and conditions as are at the time customary and
reasonably required by such underwriters. Upon your reasonable request, or
upon the reasonable request of any underwriter of Option Shares, the Company
shall obtain, if reasonably available, an insurance policy covering the risks
described above in this Section 13 in an amount and with a deductible
reasonably requested by you or such underwriter and naming you, any
underwriter of such stock and any person controlling you or such underwriter
as beneficiaries. The costs of obtaining and maintaining any such insurance
shall be borne by the Company.
14. Sale of Option Shares. (a) You hereby agree to limit your sales
of Option Shares, except for sales pursuant to an underwritten, firm
commitment public offering under Section 10 or 11, in any three month period
to a number of shares not exceeding the greater of (i) one percent of the
outstanding shares of Common Stock of the Company, as disclosed in its public
report most recently filed with the Securities and Exchange Commission before
the date of any sale and (ii) the average weekly reported volume of trading
in Common Stock of the Company on the New York Stock Exchange and all other
national securities exchanges during the four calendar weeks preceding the
date of any sale. Notwithstanding anything to the contrary contained in this
Agreement, you shall not be entitled to register, sell or dispose of any
Option Shares that are subject to any liens, claims, security interests and
other encumbrances of any kind, unless and until the same are removed (or will
be removed in conjunction with their sale) or substitute collateral provided
as hereinafter provided.
(b) In order to secure payment of the loans made by the Company to
Harpo pursuant to the Harpo Agreement (the Loans"), you hereby grant to the
Company a first lien and security interest (the "Security Interest") in (i)
your rights under this Option, (ii) all shares of Common Stock hereafter
issuable or issued pursuant to the exercise of the Option and (iii) all
proceeds thereof, provided that unless and until the Company notifies you that
the share of adjusted gross profits (determined pursuant to the Harpo
Agreement) which the Company reasonably projects at the time of such notice
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that will be payable to Harpo would be inadequate to fully secure the Loans
(an "Additional Security Notice"), and specifying, in reasonable detail, the
amount of such inadequacy (the "Security Shortfall"), you may exercise the
Option, sell the Option Shares issued to you upon such exercise or retain the
proceeds thereof without restriction, provided that the Security Interest
shall be limited to such number of shares of Common Stock (and to the Option
to the extent corresponding to such shares) that, as of the date of such
Additional Security Notice, would upon sale at a price per share equal to the
closing price of the Common Stock on the New York Stock Exchange, generate Net
Realizable Value equal to the projected amount of the Security Shortfall. The
Net Realizable Value of the Option Share at any time shall be the fair market
value of such share at such time less the sum of (i) the Option Price for such
Option Share, and (ii) a provision for taxes equal to the difference between
such fair market value and such Option Price (the "Option Gain") multiplied
by the highest rate of federal and state income tax to which the Option Gain
will be subject (with offset for the deductibility of such state taxes). You
hereby agree to take such steps as are necessary to perfect the Security
Interest, including the execution and filing of UCC-1 financing statements in
such form as reasonably requested by the Company, the delivery to the Company
of certificates evidencing the option Shares, the delivery to such third party
financial intermediaries as may from time to time be requested by the Company
of written notice confirming the Security Interest and obtaining the
confirmation of any such financial intermediary that such Option Shares are
subject to the Security Interest.
15. Defaults. It shall constitute a breach of this Agreement by
either party if such party shall fail or refuse to fully perform any of its
obligations under this Agreement and shall not have cured such failure or
refusal within 30 days after receipt from the other party of written notice
advising it of such failure or refusal, or, in the event that such failure or
refusal is of a nature that cannot be cured within 30 days, then if such party
shall not begin to cure the same within such 30 day period and thereafter
diligently prosecute such cure to completion.
16. Successors: No Assignment. Each of the covenants, terms,
provisions and agreements contained herein shall be binding upon and inure to
the benefit of the parties' successors and assigns. Neither the Option, nor
any of the rights granted to you pursuant hereto, may be transferred to
assigned (including, without limitation, by operation of law), except by will
or the laws of descent and distribution.
17. Withholding Taxes. In the event that the Company is required
to withhold any Federal, state or local taxes in respect of the grant of the
Option or in respect of the acquisition of any Option Shares, the Company may
deduct from any payments of any kind otherwise due to you under the Harpo
Agreement the aggregate amount of such Federal, state or local taxes required
to be so withheld or, if such payments are insufficient to satisfy such
Federal, state or local taxes or if no such payments are due or to become due,
then, you will be required to pay to the Company, or to make other
arrangements satisfactory to the Company regarding payment to the Company of,
the aggregate amount of any such taxes. All matters with respect to the total
amount of taxes to be withheld shall be determined by the Company in its sole
discretion.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. If any one or more
provisions of this Agreement shall be found to be illegal or unenforceable
in any respect, the validity and enforceability of the remaining provisions
Page 35 of 124 Pages<PAGE>
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hereof shall not in any way be affected or impaired thereby.
Please acknowledge receipt of this Option Agreement and agreement with
the terms hereof by signing the enclosed copy Of this option Agreement in the
space provided below.
KING WORLD PRODUCTIONS, INC.
By:
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<PAGE>
King World Productions, Inc.
OPTION EXERCISE FORM
Jeffrey D. Jacobs hereby exercises his right to purchase
shares of Common Stock, $.01 par value, of King World Productions, Inc.
pursuant to the option granted to him on January 28, 1991, memorialized in the
attached Option Agreement dated April , 1992 between him and King World
Productions, Inc.
Date:
JEFFREY D. JACOBS
Send a completed copy of this Option Exercise Form to:
Vice President - Finance
King World Productions, Inc.
830 Morris Turnpike
Short Hills, New Jersey 07078
Page 37 of 124 Pages<PAGE>
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EXHIBIT 99.4
March 17, 1994
Mr. Stephen W. Palley
King World
1700 Broadway
35th Floor
New York, NY 10019
Dear Steve:
Pursuant to our conversations, may the following (sometimes herein referred
to as the "Amendment") serve as a deal memorandum and an amendment to the
existing agreement as amended to date (sometimes referred to as the "Existing
Agreement") between the parties King World Productions, Inc. ("King World")
and HARPO, Inc. ("HARPO"). As used herein, the term "Agreement" refers to the
Existing Agreement as modified by this Amendment.
For good and valuable consideration as set forth herein, the parties agree as
follows:
1. HARPO agrees to produce an additional television season of The Oprah
Winfrey Show (the "Show"), namely the 1995/96 television season ("Year 10").
The Year 10 episodes will be produced for initial telecast between September
1, 1995 and August 31, 1996, with the Term of the Agreement deemed extended
through August 31, 1996. HARPO may engage Harpo Productions, Inc. to produce
the Show and shall, in any event, enter into an agreement with a separate
personal services corporation which shall furnish the personal services of
Oprah Winfrey to HARPO to host 195 new episodes of same.
HARPO also agrees to allow King World to license (subject to the
qualifications set forth below) to domestic and international markets, in
accordance with paragraph 11 of this Amendment, an additional four years'
rights to the Show, namely for the 1996/97, 1997/98, 1998/99 and 1999/2000
television seasons ("Year 11", "Year 12", "Year 13" and "Year 14",
respectively), under the express condition that all licenses of such programs
for such Years shall be explicitly subject to the production of the Show for
such Years, which shall be at the election of HARPO. If HARPO does not
exercise its option for any of the 1996/97, 1997/98, 1998/99 or 1999/2000
television seasons any license of the Show for said years will be null and
void. Under no circumstances will King World procure from licensees advances
attributable to Years 11, 12, 13 and 14 prior to HARPO's written exercise of
its options for each of said Years. The decision to host and produce for the
1996/97 television season (Year 11) will be made on or before September 15,
1995, the decision to host and produce for the 1997/98 television season (Year
12) if the option was exercised for Year 11 will be made on or before
September 15, 1996, the decision to host and produce for the 1998/99
television season (Year 13) if the option was exercised for Year 12 will be
made on or before September 15, 1997 and the decision to host and produce for
the 1999/2000 television season (Year 14) if the option was exercised for Year
13 will be made on or before September 15, 1998. No decision by HARPO will
be final unless and until confirmed in writing. If HARPO exercises its option
for each such Year, it will produce episodes of the Show on the terms and
conditions set forth herein applicable to Year 10, except to the extent
Page 38 of 124 Pages<PAGE>
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otherwise set forth herein. Subject to consultation with King World, HARPO
will have, commencing with Year 8, final creative, financial and editorial
controls regarding the production of the Show, promos and HARPO's other
activities hereunder. Subject to consultation with HARPO, King World will
have final control regarding its distribution activities. HARPO represents
that the production values and format for new programs produced will be
consistent with Year 8 of the Show, provided that HARPO shall have the right
to continue to make evolutionary changes to the format in consultation with
King World. King World represents that its distribution efforts for Years
after Year 8 will be consistent with Year 8 of the Show. The terms of any
licenses between King World and WIVB and any other television stations owned
or controlled directly or indirectly by King World will be consistent with
terms of comparable transactions negotiated at arms' length.
For purposes of clarity, the term "Year" is defined herein and in the document
dated January 28, 1991 in a manner consistent with, and shall be interpreted
to be equivalent to, the term "Period" as defined in the documentation dated
as of January 30, 1987 and July 29, 1988 comprising the Agreement as amended
through July 29, 1988.
2. In each Year in which Oprah Winfrey performs the hosting duties set
forth above, HARPO agrees to deliver 195 newly produced episodes of the Show,
plus 5 best-of Oprah shows (consisting of clips from shows of the then-current
or prior seasons with newly produced wraparounds hosted by Oprah Winfrey).
3. Production Fee(s)
(a) King World shall advance HARPO the following amounts (herein, the
"Production Fee(s)") as and for HARPO's costs in connection with the
production of the Show in each of Years 8, 9, 10 and 11:
Season Production Fee
Year 8 $18.75 million
Year 9 $19.75 million
Year 10 $26.5 million
Year 11 $28.0 million
The applicable Production Fee for each such Year shall be payable 1/2 on
September 1 and 1/2 on January 3 of that Year.
(b) The Production Fee(s) are intended to cover the services of HARPO
in connection with producing the Show and, consistent with the "Harpo,
Inc./King World 1992/1993 Budget", with domestic affiliate relations, media
relations, promotion, and fan mail services for the Show. Please see Exhibit
A for additional detail and guidelines regarding what the Production Fee
includes and excludes. The parties acknowledge that Exhibit A is not a
complete enumeration of each party's rights and obligations but is accurate
insofar as it specifies what each of HARPO and King World must, respectively,
pay for.
(c) Notwithstanding the foregoing, if HARPO's production costs
hereunder prior to Year 12 increase as a result of newly imposed union
requirements (e.g., HARPO's affiliation with unions with which it presently
has no collective bargaining agreement or the modification to HARPO's
disadvantage of collective bargaining agreements with unions with which it
Page 39 of 124 Pages<PAGE>
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presently has more favorable arrangements) during the Term, the Production
Fee(s) shall be renegotiated to cover the attendant verifiable cost increases
sustained by HARPO.
(d) Consistent with past and current practice prior to the date of
execution hereof, King World shall continue to advance, in addition to the
Production Fee(s), any additional amounts specifically attributable to the
preparation of the Show for distribution outside of the United States,
including without limitation costs of format conversion and costs of acquiring
clip or other intellectual property rights for exploitation outside of the
United States. Said amounts shall be deemed Recoupable Distribution Costs of
King World and shall be recoupable as set forth below.
(e) The Production Fee(s) shall be recoupable by King World out of
revenues derived from distribution of the Show as set forth below; provided
that promptly after the execution hereof, the parties will negotiate in good
faith an arrangement with respect to the deferral of recoupment of the
Production Fee(s), after recoupment of the corresponding Guarantee, consistent
with the existing deferral arrangement with respect to the Advance.
4. Guarantees: King World shall pay to HARPO the following applicable
amounts (the "Guarantee(s)"):
(a) Years 8 and 9: King World shall remain obligated to pay the
aggregate guarantee of $50,000,000 for Years 8 and 9 and to lend the
$17,250,000 (which loan has been heretofore made by King World and is
repayable by HARPO) in accordance with the Existing Agreement.
(b) After Year 9: King World shall pay HARPO the following applicable
respective amounts (the "Guarantees") with respect to Year 10 and each
applicable Year, if any, after Year 10 for which HARPO exercises its option
to produce additional new programs hereunder:
Season Guarantee Payment Schedule
(i) Year 10 $60 million Payable in full upon execution hereof
(ii) Year 11 $65 million Payable upon HARPO's exercise of its
option for Year 11
(iii)Year 12 $95 million Payable (A) $65 million, upon HARPO's
exercise of its option for Year 12, (B)
$20 million, on September 1, 1997. and
(C) $10 million, on January 3, 1998.
(iv) Year 13 $95 million Payable (A) $65 million, upon HARPO's
exercise of its option for Year 13, (B)
$20 million, on September 1, 1998. and
(C) $10 million, on January 3,1999.
(v) Year 14 $95 million Payable (A) $65 million, upon HARPO's exercise
of its option for Year 14, (B) $20 million, on
September 1, 1999. and (C) $10 million, on
January 3, 2000.
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The Guarantee payable with respect to a given Year will constitute an advance
against HARPO's Share of Revenues (as defined below) for such Year; provided
that promptly after the execution hereof, the parties will negotiate in good
faith an arrangement with respect to the deferral of recoupment of the last
$30 million of the Guarantee payable with respect to each of Years 12, 13 and
14 consistent with the existing deferral arrangement with respect to the
Advance.
(c) In the event that King World terminates this Agreement as a result
of a Qualifying Breach (as defined below), HARPO thereupon shall immediately
repay the Retumable Portion (as defined below) of the Guarantee attributable
to the Year in which such Qualifying Breach occurs, to the extent that such
Returnable Portion of the Guarantee has not been named by HARPO, as well as
the Returnable Portion(s) of Guarantee(s) paid to HARPO attributable to any
Years that, at the time of such Qualifying Breach, have not yet commenced.
The aforesaid is without prejudice to the other rights and remedies of King
World in the event of any such Qualifying Breach. In order to secure
repayment of such Retumable Portion(s) of the Guarantee(s) in accordance with
this subparagraph (c), HARPO (and, to the extent applicable, Jacobs & Company
(the "Jacobs Company"), Oprah Winfrey and Jeffrey D. Jacobs) hereby grant to
King World a first priority security interest in the Specified Collateral (as
defined below), which security interest shall be limited, at any given time,
to the aggregate amount (the "Secured Amount") of the Retumable Portion(s) of
any Guarantee(s) paid to HARPO which would, in the event that a Qualifying
Breach occurred at such time, be repayable in accordance with this
subparagraph (c). HARPO, the Jacobs Company, Oprah Winfrey and Jeffrey D.
Jacobs shall promptly execute such documents as King World may reasonably
require (provided the terms of such documents shall be subject to prior good
faith negotiation by the parties) to enable King World to perfect the
aforesaid security interests under this paragraph 4.
(d) As used herein:
(i) The "Returnable Portion" of the Guarantee means the following
applicable respective portions of the Guarantee paid to HARPO with respect to
each Year:
Season Guarantee Returnable Portion
A. Year 10 $60 million $60 million
B. Year 11 $65 million $65 million
C. Year 12 $95 million The $65 million
installment payable
pursuant to subparagraph
4(b)(ii i) (A)
D. Year 13 $95 million The $65 million installment
payable pursuant to
subparagraph 4(b)(Iv)(A)
E. Year 14 $95 million The $65 million installment
payable pursuant to
subparagraph 4(b)(V)(A)
(ii) The "Specified Collateral" means either (at the sole
election of HARPO, which election may be made from time to time upon written
notice given to King World) (A) all revenues payable to HARPO or to the Jacobs
Company at any time under the Agreement, plus any unexercised stock options
and stock granted to Oprah Winfrey and Jeffrey D. Jacobs pursuant to paragraph
Page 41 of 124 Pages<PAGE>
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5 of this Amendment, provided that such security interests in and to such
stock options and stock shall be limited to any profit from the sale of such
stock, or (B) marketable securities the fair market value of which equals or
exceeds the Secured Amount, provided that (1) HARPO may withdraw "Specified
Collateral" to the extent that its value at any time is greater than the
Secured Amount at that time, and (2) shall augment the "Specified Collateral"
to the extent that its value at any time is less than the Secured Amount at
that time
(iii) A "Qualifying Breach" means a breach by HARPO of the Agreement,
which breach legally entitles King World to terminate the Agreement, resulting
from either (A) HARPO's nondelivery of episodes, or (B) HARPO's breach of the
provisions of paragraph 12 of this Amendment.
5. Stock Options
(a) King World has heretofore granted to Oprah Winfrey and Jeffrey D.
Jacobs options to purchase 1,000,000 shares of King World stock.
Notwithstanding any previous understanding between the parties to the
contrary, said options shall, in consideration of HARPO's agreement to produce
the Show for Year 10, be fully vested and exercisable now.
(b) In consideration of HARPO's agreement to produce the Show for Year
10, King World hereby grants to Oprah Winfrey options to purchase 450,000
shares of King World stock and hereby grants to Jeffrey D. Jacobs options to
purchase 50,000 shares of King World stock. Said options shall be exercisable
at the price of $33 5/8 (Thirty Three And Five-Eighths) per share and shall
vest and be exercisable immediately. Said options were granted at the closing
market price on March 8, 1994, the date on which the parties reached an
agreement in principle with respect to this transaction. In the event HARPO
exercises its option for Year 11, 12 13 and/or 14, King World will, in
consideration of HARPO's agreement to produce the Show for the Year in
question, grant an additional 250,000 options (225,000 to Oprah Winfrey and
25,000 to Jeffrey D. Jacobs) for each option year exercisable at closing
market price of said stock on the date that said exercise of option is
received by King World by fax or Federal Express. The options for each such
additional Year, if any, will be granted, will vest and will be fully
exercisable upon exercise of HARPO's option for that Year.
(c) Oprah Winfrey and Jeffrey Jacobs, as applicable, will have the
right to pay the exercise price in cash or in King World stock if permitted
by King World's stock option plan.
(d) The shares subject to the option will be publicly registered. The
final stock option agreements, which will definitively govern such options
(including without limitation the terms and conditions of the security
interest in and to the Specified Collateral referred to in subparagraph
4(d)(ii)(A), if applicable), will be presented promptly after the execution
hereof to Oprah Winfrey and Jeffrey Jacobs for signature and will, except as
set forth to the contrary in this Amendment, be consistent with the terms of
the stock option agreements governing the options referred to in subparagraph
5(a).
6. In accord and settlement of the current audit dispute between the
parties, King World agrees to refund to HARPO $561,938, as its share of
foreign commissions paid in addition to the distribution fee already paid to
King World. Said refund will be made consistent with the payment procedures
outlined in paragraph 16 of the July 29, 1988 amendment modifying paragraph
Page 42 of 124 Pages<PAGE>
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11 of the January 30, 1987 agreement. Interest on same will be waived. The
audit rights of HARPO will be closed through the 1990/91 broadcast season.
7. King World agrees to immediately repurchase the combined holdings of
preferred stock of Oprah Winfrey for the amount of $681,250 and Jeffrey D.
Jacobs for the amount of $68,124 in Buffalo Broadcasting.
8. HARPO agrees to immediately repay to King World the balance of the
development money previously advanced in the sum of $550,252.00 and will
prepare a summary of development activities, along with the allocation of
costs to specific projects, and furnish such summary to King World
Productions, as soon as possible. The project submission procedure, and all
submissions obligations of HARPO in connection therewith, are terminated,
prospectively and retroactively, except as set forth in this paragraph 8.
King World will continue to be obligated to distribute up to a total of four
MOWs produced by a HARPO entity (the first two of which, "Overexposed" and
"There Are No Children Here", have already been delivered to King World)
during the Term, as extended hereunder, in accordance with the terms
heretofore agreed upon by the parties. If HARPO produces or otherwise
exploits any production(s) developed with development fund payments heretofore
advanced by King World to HARPO, HARPO will reimburse King World, out of first
"non-pass through monies" received by HARPO, for the full amount of any such
payments made by King World which were used for development costs on the
production(s) in question per the summary. As used in the preceding sentence
"non-pass through monies" means all amounts received by HARPO from third
parties in respect of the development and/or exploitation of the production(s)
in question, excluding amounts which are paid to HARPO as reimbursement for
the costs of development (e.g., engagement of writers or extension of
options), provided such costs are incurred either (a) after receiving a
development commitment from such third parties or (b) in contemplation of
receiving such a commitment.
9. Security.
(a) HARPO and the Jacobs Company will have a first priority security
interest in their respective shares of all Show revenues, subject to the
provisions of this paragraph 9. King World, on the one hand, and HARPO and
the Jacobs Company, on the other hand, will immediately enter into further
documents to effectuate the aforesaid security interest.
(b) As soon as reasonably possible following the execution of this
Amendment, the parties shall enter into the following agreements:
(i) An agreement (the ~'Escrow Agreement") pursuant to which King
World shall establish an interest-bearing escrow account (the "Escrow
Account") with a bank or other financial institution, into which Escrow
Account King World shall deposit $20,000,000. Pursuant to the Escrow
Agreement, (A) HARPO and the Jacobs Company will have unconditional first
priority security interests in the Escrow Account, and (B) HARPO and the
Jacobs Company will be entitled, in the event that King World fails to pay any
amount due under an accounting rendered to HARPO (following the expiration of
the applicable cure period) and without limitation of HARPO's other rights and
remedies, to draw down on the funds in the Escrow Account in the amount of
such delinquent payment upon HARPO's certification of such failure to the
escrow agent thereunder. Any funds remaining in the Escrow Account (including
interest) following the rendering to HARPO of the accounting covering the
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fourth quarterly period following the end of the Term, as it may be extended
from time to time, shall be returned to King World. Except as provided herein
or in the Escrow Agreement, the Escrow Account will not be subject to
liquidation and the funds may not be used by either party.
(ii) One or more intercreditor agreements under which HARPO and the
Jacobs Company will subordinate their security interests pursuant to
subparagraph 9(a) to King World's present and future institutional lenders.
(c) Each party shall promptly execute such financing statements and
other documents as the other may reasonably require (provided the terms of
such documents shall be subject to prior good faith negotiation by the
parties) to perfect HARPO's and the Jacobs Company's security interests in
accordance with this paragraph 9 and otherwise effectuate the terms and
conditions of this paragraph 9. All agreements referred to in subparagraph
(b) and subparagraph 4(c) will be entered into simultaneously by the parties.
10. Participation In Revenues: King World and HARPO's respective share of
revenues attributable to the distribution of the Show in Years 8, 9 and 10 and
in each subsequent Year, if any, for which HARPO exercises its option to
produce the Show, shall be determined in accordance with the following:
(a) Years 8, 9, 10 and 11: For each such Year, King World shall pay
HARPO 50% of "Adjusted Profits".
(b) Years 12, 13 and 14: Gross Receipts attributable to the
distribution of the Show in each such Year shall be applied and paid as
follows:
(i) First, King World shall deduct and recoup as its
distribution fee (which fee shall be inclusive of all third party fees and
commissions) the following applicable percentage of Gross Receipts:
Season King World
Distribution Fee
Year 12 35%
Year 13 35%
Year 14 30%
(ii) Next, King World shall deduct and recoup out of the
remaining balance of Gross Receipts an amount equal to the Recoupable
Distribution Costs for such Year.
(iii) Finally, the remaining balance of Gross Receipts shall be
paid to HARPO.
(c) Payment provisions shall be the same as outlined in paragraph 16
of the July 29, 1988 amendment modifying paragraph 11 of the January 30, 1987
agreement except that, with respect to Years 9 and 10 and any subsequent
Years, payments shall be made to the Jacobs Company, rather than to Jeffrey
D. Jacobs. Neither Jeffrey D. Jacobs nor the Jacobs Company shall have any
independent audit rights. Simultaneously herewith, Jeffrey D. Jacobs, the
Jacobs Company and HARPO are executing the Payment Sideletter annexed hereto.
Page 44 of 124 Pages<PAGE>
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(d) Each Year's Guarantee shall constitute prepayment of, and a
recoupable advance against, HARPO's Share of Revenues (as defined below)
attributable to that Year.
(e) As used hereinabove:
(i) "Adjusted Profits" will be defined consistent with the
Existing Agreement, the parties acknowledging that, as previously agreed, (1)
there will be no deductions for distribution fees, general sales overhead or
indirect expenses (including without limitation NATPE) of King World or for
HARPO talent fees, (2) King World shall use reasonable efforts, consistent
with its reasonable business judgment, to repatriate foreign receipts to the
United States, (3) retransmission fees and like amounts received by King World
will be included in Gross Receipts, (4) to the extent that King World excludes
taxes from Gross Receipts, Gross Receipts shall include the equivalent value
of any corresponding tax savings realized by King World in connection with the
payment of such taxes, and (5) recoupment of distribution expenses will be
further qualified as set forth in Exhibit A.
(ii) "Gross Receipts" will be defined in accordance with the
Agreement, the parties acknowledging that, as previously agreed, (1) King
World shall use reasonable efforts, consistent with its reasonable business
judgment, to repatriate foreign receipts to the United States, (2)
retransmission fees and like amounts received by King World will be included
in Gross Receipts, and (3) to the extent that King World excludes taxes from
Gross Receipts, Gross Receipts shall include the equivalent value of any
corresponding tax savings realized by King World in connection with the
payment of such taxes.
(iii) "Recoupable Distribution Costs" shall mean those
distribution costs which, pursuant to the Agreement, King World is entitled
to recoup out of Gross Receipts. The parties acknowledge that (1) Recoupable
Distribution Costs will not include general sales overhead, indirect expenses
(including without limitation NATPE) of King World or HARPO talent fees, (2)
it is not their intention to expand or diminish the nature or definition of
those cost items which King World is entitled to recoup from revenues
attributable to the Show (as opposed to the individual or aggregate dollar
amount of such cost items, which may change with inflation and/or with a
change in suppliers of goods and services and/or in King World's distribution
activities) as a result of the agreed upon shift in Year 12 from an
arrangement pursuant to which the parties share Adjusted Profits to one
pursuant to which HARPO receives the balance of Show revenues after King World
takes a distribution fee and recoups expenses, as more fully set forth in this
Amendment).
(iv) "HARPO's Share of Revenues" means (A) with respect to Years
8, 9, 10 and 11, the 50% share of Adjusted Profits payable to HARPO pursuant
to subparagraph 10(a), and (B) with respect to Years 12, 13 and 14, the share
of Gross Receipts payable to HARPO pursuant to subparagraph 10(b)(iii).
(f) HARPO shall continue, with respect to all distribution by King
World hereunder, to have accounting and audit rights as set forth in the
Agreement.
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11. Distribution of Library and Related Matters
(a) King World agrees that, except as set forth in subparagraphs (i)
and (ii) below, it cannot distribute or license for exhibition any episodes
of the Show produced by either WLS or HARPO for initial distribution by King
World pursuant to the Agreement (herein, the "Library") in any medium without
the express written permission of HARPO:
(i) Selling Term:
A. Until August 31 of the last Year with respect to which
HARPO exercises its option to produce the Show hereunder, King World shall
have the exclusive right to distribute the Show for first-run syndication
within the United States and Canada.
B. Until August 31 of the last Year with respect to which
HARPO exercises its option to produce the Show hereunder (the "Foreign
Distribution Stop Date"), King World shall have the exclusive right to
distribute the Show on a first run basis in all television media (the parties
acknowledging that for purposes of this Amendment, home video is not a
television medium) throughout the world excluding the United States and
Canada.
(ii) Exhibition Term: All King World licenses for exhibition of
the Show in the United States and Canada shall end no later than the date (the
"End Date") constituting the September 15 following the last day of the last
Year with respect to which HARPO exercises its option to produce the Show
hereunder. All King World licenses for exhibition of the Show outside the
United States and Canada shall end no later than the date (the "Foreign End
Date") constituting the second anniversary of the End Date (provided that
licenses entered into after the Foreign Distribution Stop Date shall end no
later than the End Date).
(b) HARPO agrees that, except as set forth in subparagraphs (i), (ii)
and (iii) below, it cannot distribute or license for exhibition the Library
in any television media without the express written permission of King World:
(i) Selling Term: HARPO may exercise distribution rights in and
to the Library in all television media at any time after September 15 of the
last Year with respect to which HARPO exercises its option to produce the Show
hereunder; provided that neither HARPO nor any distributor or other third
party to whom HARPO or any distributor licenses any such distribution rights
will negotiate or enter into exhibition licenses with individual television
stations or station groups in the United States until the next following March
1.
(ii) Exhibition Term: HARPO may license the Library for
exhibition in the United States and Canada after the End Date, and for
exhibition outside of the United States and Canada after the Foreign End Date.
HARPO may additionally, following the Foreign Distribution Stop Date,
authorize the exhibition of the Library in all television media outside the
United States and Canada after the End Date.
(iii) Proceeds: HARPO's profits from the exploitation in
perpetuity of such rights in and to the Library, net of all residuals, reuse
and repackaging fees, as well as other direct, out-of-pocket, unreimbursed
distribution expenses, production expenses and other direct, out of pocket
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costs of HARPO incurred in connection with such exploitation (but not third
party distribution fees, which shall be borne by HARPO), shall be split on a
50/50 basis. In the event that HARPO undertakes such distribution itself, it
shall similarly not be entitled to take a distribution fee. If HARPO reedits
the programs or adds material to them, it shall be entitled to an additional
fee to be negotiated in good faith.
(c) King World hereby grants to HARPO, commencing immediately, the
unrestricted right to exploit home video rights in and to the Library.
HARPO's profits from the exploitation in perpetuity of home video rights in
and to the Library, net of all third party distribution fees, residuals and
reuse or repackaging fees, as well as other direct, out-of-pocket,
unreimbursed distribution expenses, production expenses and other direct, out
of pocket costs of HARPO incurred in connection with such exploitation, shall
be split on a 50/50 basis. In the event that HARPO undertakes such
distribution itself, it shall not be entitled to take a distribution fee. If
HARPO reedits the programs or adds material to them, it shall be entitled to
an additional fee to be negotiated in good faith.
(d) King World hereby grants to HARPO, commencing immediately, the
exclusive unrestricted right to exploit merchandising rights in and to the
Library and the Show. HARPO's profits from the exploitation of merchandising
rights accruing on or prior to the End Date specifically relating to the Show
(as opposed, by way of example, to Oprah Winfrey as a personality), net of all
third party distribution fees, residuals and reuse or repackaging fees, as
well as other direct, out-of-pocket, unreimbursed distribution expenses,
production expenses and other direct, out of pocket costs of HARPO incurred
in connection with such exploitation, shall be split on a 50/50 basis;
provided that HARPO shall not be required to share any profits that are
donated to charity. In the event that HARPO undertakes such distribution
itself, it shall not be entitled to take a distribution fee, but HARPO shall
be entitled to an additional fee to be negotiated in good faith if it performs
or furnishes substantial additional creative input in connection with the
development or preparation of merchandising items. All revenues from the
exploitation of such merchandising rights accruing after the End Date shall,
as between the parties, be owned and controlled solely by HARPO. Commercial
tie-in rights in and to the Library and the Show shall be vested in HARPO but
HARPO shall not authorize the exploitation of such rights until after the End
Date without the written consent of King World.
(e) King World hereby grants to HARPO, commencing immediately, the
unrestricted right to exploit Interactive Rights (as defined below) in and to
the Library. HARPO's profits from the exploitation in perpetuity of
Interactive Rights in and to the Library, net of all third party distribution
fees, residuals and reuse or repackaging fees, as well as other direct,
out-of-pocket, unreimbursed distribution expenses, production expenses and
other direct, out of pocket costs of HARPO incurred in connection with such
exploitation, shall be split on a 50/50 basis; provided that HARPO shall be
entitled to an additional fee to be negotiated in good faith if it performs
or furnishes substantial additional creative input, services or material in
connection with the development and exploitation of such Interactive Rights.
As used herein, "Interactive Rights" means the right to reproduce or store the
Library in whole or in part by means of interactive media (including without
limitation CD-ROM, CD-I, other optical discs or chips and/or similar or
dissimilar systems in whatever form, whether now known or hereafter devised).
Page 47 of 124 Pages<PAGE>
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(f) Any medium with respect to which King World is granted a financial
participation pursuant to this. paragraph 11 shall encompass such medium in
whatever form(s) whether now known or hereafter devised.
(g) King World will, upon presentation by HARPO, execute and file
standard guild assumption agreements, and execute and/or complete any other
additional forms or document(s) required by the applicable unions per their
standard practice, applicable to King World's distribution of the show;
provided, however, that HARPO shall furnish King World with residual
schedules.
(h) Except as set forth to the contrary hereinabove, all rights in all
media throughout the universe in and to the Library, the Show and Oprah
Winfrey's name, likeness and persona are hereby reserved (or, to the extent
applicable, granted) to HARPO.
(i) With respect to any financial participation of King World referred
to in this paragraph 11, King World shall have accounting and audit rights
coextensive and reciprocal with those of HARPO pursuant to the Agreement.
12. Exclusivity and Noncompetition
It is agreed between the parties as further consideration for entering into
this extension agreement that, from this date forward, neither HARPO nor Oprah
Winfrey shall have any exclusivity of any kind to King World, nor shall King
World have any options or rights of first look/first negotiation on any HARPO
product or on the service of Oprah Winfrey, except as set forth as follows
(a) While the Show is being distributed by King World on a first run
basis in the United States hereunder (i.e., until the End Date):
(i) Oprah Winfrey will not render on-camera services on a
regular basis on any television show whose regularly scheduled United States
telecast is at any time during the 2:00pm to 5:00pm (local time) time period;
and
(ii) Oprah Winfrey will not render on-camera services on any
regularly scheduled television series (including without limitation any free
television network, cable television network or syndicated talk show) with the
same format or a substantially similar format as the Show.
(b) After the Show is no longer being distributed by King World on a
first run basis hereunder (i.e., after the End Date):
(i) Prior to the end of Year 11:
A. Oprah Winfrey will not render on-camera services on
any regularly scheduled television series (including without limitation any
free television network, cable television network or syndicated talk show)
with the same format or a substantially similar format as the Show; provided
that this restriction shall not apply to any free network television show
intended for regular broadcast not more than once per week in prime time.
B. Except as otherwise provided in this paragraph 12,
Oprah Winfrey will have the unrestricted right to appear in television shows,
including without limitation shows which do not have same format or a
substantially similar format as the Show.
Page 48 of 124 Pages<PAGE>
<PAGE>
(ii) After the end of Year 11: Oprah Winfrey will have the
additional right to render on-camera services on a cable television talk show
with the same format or a substantially similar format as the Show so long as
the regularly scheduled United States telecast of such cable television talk
show is not at any time during the 2:00pm to 5:00pm (local time) time period.
(iii) After the end of Year 14, HARPO and Oprah Winfrey will have
the unrestricted right to produce and appear in television shows, including
without limitation shows with same format or a substantially similar format
as the Show.
(c) Subject to the other provisions of this paragraph 12, HARPO will
have the right, after the September 15 of the last Year with respect to which
HARPO exercises its option to produce the Show hereunder, to distribute,
license, and authorize the distribution and/or licensing of, the Show, or any
other television talk show with the same format or a substantially similar
format as the Show, for exhibition in the United States and Canada.
(d) Any and all disputes relating to what constitutes "the same format
or a substantially similar format as the Show" under the provisions of this
paragraph 12 shall be adjudicated by binding arbitration in accordance with
the provisions of Schedule C.
13. Change in Control:
(a) Upon any Change in Control (as defined below):
(i) All exclusivity and noncompetition restrictions set forth
in paragraph 12 shall end effective as of the end of the last Year for which
HARPO shall exercise the option to produce new episodes of the Show hereunder.
Without limiting the foregoing, HARPO and Oprah Winfrey shall, upon the End
Date, be free without restriction of any kind whatsoever to produce and render
services on television shows with the same format or a substantially similar
format as the Show.
(ii) All distribution and exploitation rights in and to the
Library outside of the United States and Canada shall immediately vest in
HARPO, provided that:
A. King World shall be entitled to its applicable
financial participation in connection with such rights specified in paragraph
11; and
B. HARPO will have the exclusive right to authorize the
exhibition of the Library in all television media outside the United States
and Canada, subject to any preexisting licenses theretofore entered into by
King World in accordance herewith; provided that any proceeds otherwise
payable to and retainable by HARPO (after accounting to King World for its
share in accordance with paragraph 11) in connection with HARPO's exploitation
of such foreign distribution rights which, in the absence of such Change In
Control (i.e., if such exploitation were effected by King World), would have
been applied toward recoupment of any unrecouped portion of any Guarantee in
accordance with the terms hereof (e.g., proceeds allocable to any exhibition
of the Library through the date after which King World would not have been
able to authorize foreign exhibition of the Library) shall be paid to King
World and applied toward recoupment of such Guarantee.
Page 49 of 124 Pages<PAGE>
<PAGE>
(iii) Any restrictions with respect to the volume of shares that
can be sold (herein, "volume restrictions") pursuant to the Stock Option
Agreement shall be reduced or eliminated to the extent that the volume
restrictions which then apply to Roger King and/or any other person who was
a King World executive prior to such Change in Control are more favorable than
those accorded to Oprah Winfrey and Jeffrey D. Jacobs.
(iv) In the event that HARPO (A) commits to produce the Show
hereunder for an additional Year after an agreement is reached to effect any
disposition, transfer or other transaction which, if consummated, would
constitute a Change in Control, and (B) said Change in Control occurs, King
World will pay HARPO the one-time sum of $25 million upon the date said Change
in Control is deemed to have occurred in accordance with Exhibit B annexed
hereto.
(b) As used herein, "Change in Control" shall be defined in accordance
with Exhibit B annexed hereto.
14. Signing Bonuses: In further consideration of HARPO's agreement to
produce the Show for the Year 10, King World will pay to HARPO the sum of $5
million, accruing and payable as follows:
(a) $2.5 million, upon the date of execution and delivery hereof by
HARPO; and
(b) $2.5 million, on the one year anniversary of the date of execution
and delivery hereof by HARPO.
The payments referred to in this paragraph 14 will not be recoupable by King
World out of Gross Receipts, Adjusted Profits, or other revenues attributable
to exploitation of the Show.
15. Personal Guarantee From Oprah Winfrey: The acknowledgment from Oprah
Winfrey dated January 30, 1987 comprising a part of the Existing Agreement is
hereby deemed null and void and replaced with the Guarantee attached hereto.
Except as expressly modified by this Amendment, the Agreement (including
without limitation the amendment to the Agreement dated September 5, 1992
relating to certain cash flow matters) constitutes the sole and entire
agreement between the parties and shall remain in full force and effect and
shall not be subject to modification or waiver except in a writing signed by
both parties. For purposes of construing this Amendment, this Amendment will
be deemed to have been jointly drafted by the parties.
This Amendment may be executed in one or more counterparts.
Page 50 of 124 Pages<PAGE>
<PAGE>
If the foregoing meets with your approval, please sign a copy of this document
and return it to me. This letter constitutes an offer which may, at the
election of HARPO, be withdrawn at any time prior to unconditional acceptance
and signature by King World.
Thank you for your cooperation in this matter.
Very truly yours,
HARPO, INC.
Jeffrey D. Jacobs
President
ACCEPTED AND APPROVED
KING WORLD PRODUCTIONS, INC.
By:_________________________
Page 51 of 124 Pages<PAGE>
<PAGE>
GUARANTEE
King World Productions, Inc.
1700 Broadway
New York, New York 10019
I refer to the agreement ("Amendment") dated March 17, 1993 between King World
Productions, Inc. ("King World") and HARPO, Inc. ("HARPO"). All capitalized
terms used herein shall have the respective meanings ascribed to them in the
Amendment.
As an inducement to King World to enter into the Amendment, I hereby guarantee
the full performance by HARPO of its past, current and prospective obligations
and agreements (including without limitation the representations, warranties
and agreements set forth in paragraphs 12 and 15 and the repayment of any
loans to HARPO and of any Guarantees and Production Fees which become
repayable to King World) under the Agreement. Insofar as this is a guarantee
of HARPO's monetary obligations, it constitutes a guarantee of payment and not
collection.
As an additional inducement to King World to enter into the Amendment, I
hereby represent, warrant and agree as follows:
(a) That I have heretofore looked and shall hereafter look solely to
HARPO for all compensation to be paid to me for all services and obligations
performed or to be performed by me and all rights, licenses and privileges
granted or to be granted by me,
(b) That I waive any claims against King World for wages, salary or
other compensation of any kind for any services which I have heretofore
rendered or may hereafter render pursuant to the Agreement.;
(c) That I am familiar with each and all of the terms, covenants and
conditions of the Agreement, and consent and agree to the execution and
delivery of the Agreement including the Amendment by HARPO; that I shall
render all services, grant all rights and perform all other obligations to be
performed by me as provided for in the Agreement;
(d) That I shall comply with all of the terms, covenants and
conditions of the Agreement on my part to be complied with; that I am under
no obligation or disability created by law or otherwise which would or might
prevent or restrict me from so doing;
(e) That I have heretofore looked and shall hereafter look solely to
HARPO for all compensation heretofore paid or to be paid to me for all
services and obligations performed by me and all rights, licenses and
privileges heretofore granted or to be granted by me, and that I waive any
claims against King World for wages, salary or other compensation of any kind
for any services which I have heretofore or may hereafter render pursuant to
the Agreement;
(f) That in no event shall any amendment or termination of the
agreement which I now have or any agreement which I may hereafter have with
HARPO or any breach of any such agreement by HARPO limit or affect any of the
obligations or any of the rights, privileges or remedies of King World
provided for in the Agreement and, in such event, I shall look solely to HARPO
for any remedies arising out of such breach or the failure to perform, and
Page 52 of 124 Pages<PAGE>
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that I shall continue to perform all services and obligations to be performed
by me under the Agreement and that King World shall continue to have all
rights, privileges and remedies specified therein; and
(g) That, in the event of a breach or threatened breach of the
Agreement by HARPO, King World shall be entitled to seek equitable relief by
way of injunction or otherwise or legal relief against HARPO, and equitable
relief by way of injunction or otherwise or legal relief against me under this
Guarantee without the necessity of first resorting to or exhausting any rights
or remedies which King World may have against HARPO. I acknowledge, for this
purpose only, that the rights I have granted to HARPO are of a special,
unique, unusual and extraordinary and intellectual character giving them
peculiar value, the loss of which cannot be reasonably or adequately
compensated in damages.
Dated:_____________
___________________________
OPRAH WINFREY
Page 53 of 124 Pages<PAGE>
<PAGE>
[Payment Sideletter]
Jeffrey D. Jacobs
Jacobs & Company
c/o HARPO, Inc.
110 North Carpenter
Chicago, IL 60607
King World Productions, Inc.
1700 Broadway, 35th Floor
New York, NY 10019
Attn: Mr. Stephen W. Palley
Executive Vice President and
Chief Operating Offficer
Dear Steve:
I am writing with reference to the amendment dated March 17, 1994 between
HARPO, Inc. and King World Productions, Inc. (the "Amendment").
As you know, the share of Harpo's Share of Revenues (as said term is defined
in the Amendment) that HARPO has directed to my benefit shall, effective as
of the commencement of the 1994/95 season, be paid to Jacobs & Company (an
entity of which I am the principal), rather than to me. I hereby confirm that
Jacobs & Company shall have rights under the Agreement (as said term is
defined in the Amendment) of a scope no greater than those that I have
personally under the Existing Agreement (as said term is defined in the
Amendment).
Very truly yours,
Jeffrey D. Jacobs
Personally, and on behalf of
Jacobs & Company
ACCEPTED AND APPROVED
HARPO, INC.
By:____________________
Oprah Winfrey
Page 54 of 124 Pages<PAGE>
<PAGE>
EXHIBIT A
I. The Production Fee for each Year Includes the following costs, which
shall be borne by HARPO to the extent generally consistent with current
practice applicable to Year 8 (the parties acknowledging that (1) the
Agreement shall not deemed to require HARPO to incur individual or aggregate
costs in any specific amount, and (2) notwithstanding that some of the cost
items listed below are, as of Year 8 (without giving effect to this
Amendment), being separately reimbursed by King World, solely for purposes of
determining whether HARPO bears such costs in Year 8 (after giving effect to
this Amendment) and in subsequent Years, during which no such separate payment
or reimbursement will be made, "current practice" shall be deemed to require
that such costs are borne by HARPO out of the Production Fee to the same
extent that, as of Year 8 (without giving effect to this Amendment), such
costs are borne by HARPO out of the Production Fee and/or such separate
reimbursements):
a. one hundred ninety five (195) Oprah Winfrey Show programs and five (5)
"best-of" programs
b. remotes, as determined by HARPO
c. "swat visits"
d. BPME
e. Christmas gifts to general managers and others
f. topical television and radio promo production
g. fall campaign production
h. CSSR reel
i. fall press kit
j. cost of attendance at Daytime Emmy Awards
k. news director visits
l. "back-up" feeds to affiliates
m. all music clearance costs in connection with the initial domestic run
of each program
n. all HARPO-supported services in the areas of affiliate relations,
promotion, fan mail and publicity
II. The Production Fee(s) do not include the following costs, which shall,
except as noted to the contrary below, be advanced by King World and, to the
extent generally consistent with current practice applicable to Year 8,
recouped:
a. media buy each fall (provided that, commencing with Year 12, the amount
expended by King World shall be subject to the prior approval of HARPO).
Page 55 of 124 Pages<PAGE>
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b. co-op buys - print and other media buys
c. NATPE costs (provided that such costs shall be bore solely by King World
and shall not be recouped as Recoupable Distribution Costs)
d. satellite charges
e. close captioning
f. extra swat visits requested by KWP
g. focus groups as agreed by KWP
h. special KWP-requested p.r.merchandise (provided that such costs shall
be borne solely by King World and shall not be recouped as Recoupable
Distribution Costs)
i. print and trade ad production
j. all amounts payable pursuant to any union or guild agreement in
connection with the retelecast or reuse of any program(s) or any
element(s) thereof, including, without limitation, residuals and re-use
fees (including fringes thereon), provided that HARPO will not incur
residual obligations in excess of scale except where reasonable or
consistent with industry practice.
k. all music clearance costs (excluding costs in connection with the
initial domestic run of any program(s))
l. all other distribution expenses
Page 56 of 124 Pages<PAGE>
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EXHIBIT B
"Change in Control" means, and shall be deemed to have occurred if:
(a) At any time during a period of two (2) years, at least a majority
of King World's Board of Directors shall not consist of Continuing Directors.
"Continuing Directors" shall mean Directors of King World at the beginning of
such two-year period and Directors who subsequently became such and whose
selection or nomination for election by King World's shareholders was approved
by a majority of the then Continuing Directors; or
(b) King World becomes a party to a merger, consolidation, share
exchange with another company or other transaction, in which either (i) King
World is not the surviving corporation or (ii) King World is the surviving
corporation and either (A) the persons who were owners of the voting
securities of King World before the transaction own less than 50% of the
voting securities of King World after the transaction, or (B) any outstanding
shares of its common stock are converted into shares or other securities of
any other company or cash or other property other than securities of King
World (excluding, in the case of either clause (i) or clause (ii), payments
made solely for fractional shares, dissenters' or similar rights and/or a
reincorporation or the establishment of a holding company involving no change
in ownership of King World); or
(c) King World's shareholders shall either (i) approve any plan or
proposal for the disposition or other transfer of all, or substantially all,
of the assets of King World (other than to a subsidiary of King World) or for
the complete liquidation or dissolution of King World (other than a
reincorporation or the establishment of a holding company involving no change
in ownership of King World) or (ii) dispose of more than 50% of the
outstanding voting stock of King World by tender offer or other transaction
requiring consideration by Company's Board of Directors to a Person or a group
of Persons other than King World or a subsidiary of King World (the terms
"Person" and "Group" being as determined for purposes of Regulation 13D
promulgated by the Securities Exchange Commission under the Securities
Exchange Act, or any successor regulation).
A "Change in Control" shall be deemed to have occurred upon the end of the
applicable 2-year period, in the case of (a) or, in the case of any
transaction, disposition or transfer described by (b) or (c), upon the date
that such transaction, disposition or transfer is consummated.
Page 57 of 124 Pages<PAGE>
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EXHIBIT C
Any and all disputes relating to what constitutes "the same format or a
substantially similar format as the Show" under the provisions of paragraph
12 of the Amendment shall be adjudicated by binding arbitration in Chicago,
illinois or New York, New York on an expedited basis in accordance with the
following procedures:
(a) Any demand for arbitration hereunder shall be delivered by hand
or by certified mail to King World at 1700 Broadway, New York, NY 10019,
attention of the Chief Operating Officer and to HARPO at 110 N. Carpenter
Street, Chicago, IL 60605, attention of the President or to such other
address or to the attention of such
other person as either party may specify by written notice of the other. Such
demand shall be in lieu of any formal complaint.
(b) The dispute shall be arbitrated by a panel of three (3)
arbitrators (the "Panel"), each of whom shall be either (i) a former Judge of
a United States District Court, (ii) a former Judge of a United States Court
of Appeals, or (iii) a law professor with acknowledged expertise in the area
of copyright and intellectual property law then tenured at one of the
following law schools: Harvard, Yale, NYU, UCLA, Columbia, University of
Chicago or Stanford ("Qualified Arbitrator"). Within 21 days of receipt by
either party of a demand for arbitration hereunder (the "Demand"), each of
King World and HARPO shall notify the other of its selection of one Qualified
Arbitrator to serve as an arbitrator. Within 21 days after designation of the
two party appointed arbitrators, those two arbitrators shall consult and shall
appoint another Qualified Arbitrator as an arbitrator to complete the Panel.
If HARPO or King World shall fail to appoint its respective arbitrator within
21 days after receipt of a Demand, then the other side shall have the right
to appoint the arbitrator on behalf of the non-appointing party.
(c) Within 40 days after receipt of a Demand, each party shall,
whether or not it receives any subpoena or request for documents or
information, deliver to the other party (i) a copy of all documents,
videotapes and tangible things in the possession, custody or control of the
producing party that relate in any way to the dispute to be arbitrated, and
(ii) a list of all persons, including experts, who may be called as witnesses
at the hearing on the merits of the arbitration (the "Hearing"). Either party
may make specific requests for documents, videotapes or tangible things. Any
such specific request must be delivered to the other party not more than 10
days after receipt of the Demand, and must be complied with fully by the other
party not more than 40 days after receipt of the Demand.
(d) Each party may take, upon reasonable notice, the deposition of any
person identified by the other party as a possible witness at the Hearing.
All depositions must be completed no later than 85 days after receipt of the
Demand. No deposition may be taken until at least 45 days have elapsed after
receipt of the Demand.
(e) The Hearing shall commence 110 days after receipt of the Demand,
and shall continue on each consecutive business day thereafter until fully
concluded, unless continued by the Panel for good cause shown. Each side
shall have not more than 5 business days to present its case. The oral
decision of the Panel shall be rendered within 10 days after the Hearing is
concluded, and the written decision within 30 days thereafter, but failure to
meet these deadlines shall not oust the Panel of jurisdiction.
Page 58 of 124 Pages<PAGE>
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(f) The parties acknowledge that the sole issue to be resolved by
means of arbitration shall be whether a given actual or proposed television
show has "the same format or a substantially similar format" as or to The
Oprah Winfrey Show.
(g) The parties expressly acknowledge that a breach of paragraph 12
of the Amendment may cause great and irreparable harm to King World or to
HARPO and that the extent of the damage caused by such a breach may be
difficult or impossible to determine. The parties therefore agree that the
Panel in any arbitration proceeding shall be empowered to enforce paragraph
12 of the Amendment through an award of injunctive relief to the full extent
to which a federal court would be authorized by law to award such relief, as
well as an award of such monetary or other relief as the Panel may deem just
and proper.
King World hereby waives the right to obtain injunctive or other equitable
relief to enforce its rights pursuant to paragraph 12 of the Amendment in
connection with any dispute relating to what constitutes "the same format or
a substantially similar format as the Show" under the provisions of paragraph
12 of the Amendment, unless and until such dispute has been finally determined
pursuant to this arbitration procedure, provided, however, that in any
arbitration proceeding commenced hereunder, (i) King World's waiver of its
right to obtain such preliminary injunctive relief shall be without prejudice
to King World's right to obtain an award of permanent injunctive relief to
enforce its rights under paragraph 12 of the Amendment, as provided for in
paragraph (g) above, and (ii) in connection with any application by King World
for such relief, HARPO shall not refer to, and the Panel shall not consider,
said waiver by King World and/or any equities, harm or hardship that might
otherwise be claimed to arise from the fact that HARPO is already distributing
the program that is claimed to violate King World's rights under paragraph 12
of the Amendment.
Page 59 of 124 Pages<PAGE>
<PAGE>
<PAGE>
EXHIBIT 99.5
THE TRANSFER OF THE OPTION EVIDENCED BY THIS AGREEMENT
IS SUBJECT TO RESTRICTIONS CONTAINED HEREIN. THE OPTION
HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF
THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THE OPTION NOR THE SHARES ISSUABLE UPON
THE EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
THIS OPTION, AND THE OPTION SHARES ISSUABLE UPON EXERCISE
IN ACCORDANCE WITH THE TERMS CONTAINED HEREIN, ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND A LIEN IN FAVOR OF KING WORLD
PRODUCTIONS, INC. (THE "COMPANY") TO SECURE CERTAIN OBLIGATIONS OF HARPO,
INC. ("HARPO") TO THE COMPANY PURSUANT TO AN AGREEMENT DATED AS OF JANUARY
30, 1987, AS AMENDED THROUGH MARCH 17, 1994 BETWEEN THE COMPANY AND HARPO.
KING WORLD PRODUCTIONS, INC.
1700 Broadway
New York, New York 10019
Ms. Oprah Winfrey As of March 17, 1994
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
Dear Ms. Winfrey:
This is the stock option agreement referred to in the amendment
(the "Harpo Amendment") dated as of March 17, 1994, to the Agreement dated
as of January 30, 1987 (the "Original Agreement"), as previously amended to
the date hereof (the Original Agreement, as amended to the date hereof and
by the Harpo Amendment, being herein called the "Harpo Agreement") between
Harpo, Inc. ("Harpo") and the undersigned (the "Company"). As partial
consideration for Harpo to enter into the Harpo Amendment, and as an
inducement for you to render services with respect to the production of the
Show (as such term is defined in the Harpo Amendment), the Company hereby
grants to you an option (the "Option") to purchase four hundred fifty
thousand (450,000) shares of the Company's Common Stock, $.01 par value
("Common Stock"; such shares of Common Stock, as the same may be adjusted
as described in Section 6 below, being herein referred to as the "Option
Shares"). The terms and conditions of the Option are set out below.
The Option will be treated as and shall constitute a "non-
qualified stock option" for Federal income tax purposes. The Option will
not constitute or be treated either by you or by the Company as an
"incentive stock option" as defined under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
1. Date of Grant. The Option is granted to you on the date
hereof.
Page 60 of 124 Pages<PAGE>
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2. Termination of the Option. Your right to exercise the
Option (and to purchase the Option Shares) shall expire and terminate in
all events on (i) March 18, 2004, or (ii) such earlier date provided in
Section 7 below.
3. Option Price. The purchase price to be paid upon the
exercise of the Option (the "Option Price") will be $33-5/8 per Option
Share, the closing price of the Common Stock on the New York Stock Exchange
on March 8, 1994, the date on which the parties reached an agreement in
principle with respect to the Harpo Amendment.
4. Vesting Provisions -- Entitlement to Exercise the Option
and Purchase Option Shares. The Option shall be exercisable by you, in
whole or part, at any time prior to expiration and termination pursuant to
Section 2 above.
5. Exercise of Option.
(a) To exercise the Option, you must deliver a completed copy
of the attached Option Exercise Form to the address indicated on the Form,
specifying the number of Option Shares being purchased as a result of such
exercise, together with payment of the full Option Price for the Option
Shares being purchased.
(b) Payment of the Option Price must be made in cash.
(c) In the event of any exercise of the Option, a certificate
or certificates representing the Option Shares so purchased, registered in
your name, shall be delivered to you within a reasonable time.
(d) You agree that Option Shares shall be held by you for
investment and may not be resold unless registered under the Securities Act
of 1933, as amended (the "Securities Act"), or an exemption from
registration is available, and that the Option Shares will bear a legend
referring to such limitation, to the restrictions on transfer of the Option
Shares referred to elsewhere in this Agreement and to any security
interests encumbering the Option Shares.
6. Adjustments. If the total outstanding shares of Common
Stock of the Company shall be increased or decreased or changed into or
exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation through reorganization,
merger or consolidation, recapitalization, stock split, combination or
exchange of shares or declaration of any dividends payable in stock or
other corporate transaction, then the number of Option Shares subject to
the unexercised portion of the Option (and the Option Price per share)
shall be appropriately adjusted (to the nearest possible full share) by the
Board of Directors of the Company.
7. Default under the Harpo Agreement.
(a) In the event that you die, or the term of the Harpo
Agreement terminates for any other reason except a material breach by
Harpo, then the Option may be exercised by you or your estate only within
the nine (9) month period following your death or the termination of the
term of the Harpo Agreement.
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(b) In the event that the term of the Harpo Agreement
terminates by reason of a material breach thereof by Harpo, then your right
to exercise the Option as to any and all Option Shares that have not
theretofore been issued shall terminate simultaneously with the termination
of such term.
(c) In the event that the Company exercises its rights
pursuant to paragraph 17 or 18 of the Original Agreement and the term of
the Harpo Agreement is suspended, then your right to exercise the Option
pursuant to Section 4 hereof shall be suspended during the period that the
term of the Harpo Agreement is suspended.
(d) Notwithstanding any provision contained herein to the
contrary, in no event may the Option be exercised to any extent after March
18, 2004.
8. Representations.
(a) You represent and warrant that you are acquiring the
Option and the Option Shares for investment purposes only and not with a
view towards the public distribution thereof.
(b) You understand that neither the Options nor the Option
Shares have been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements thereof
pursuant to Section 4(2) of the Securities Act.
(c) You represent and warrant that (i) you have the financial
ability to bear the economic risk of investment in the Option and the
Option Shares and (ii) you, together with the financial advisers who have
assisted you in acquiring the Option, have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of an investment in the Option and the Option Shares and have had
sufficient opportunity to obtain, and have obtained, all information
regarding the Company as you have deemed relevant in order to evaluate the
merits and risks of such investment.
(d) You represent and warrant that you understand the
Federal, state and local income tax consequences of the granting of the
Option to you, the exercise of the Option and purchase of Option Shares,
and the subsequent sale or other disposition of any Option Shares.
9. Covenants of the Company. The Company will at all times
reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of issue upon the exercise of the
Option, such number of shares of Common Stock as shall then be issuable
upon the exercise of the Option. The Company covenants that all Option
Shares, when issued in accordance with the terms hereof, shall be duly and
validly issued, fully paid and nonassessable. The Company will take all
such action as may be necessary to assure that all Option Shares may be so
issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common
Stock of the Company may then be listed. The Company will not take any
action which results in any adjustment of the Option Price if the total
number of Option Shares issued and issuable after such action would exceed
the total number of shares of Common Stock then authorized by the Company's
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Certificate of Incorporation. The Company has not granted and will not
grant any right of first refusal with respect to the Option Shares, and
there are no preemptive rights associated with such shares.
10. Required Registration.
(a) At any time you may by notice to the Company (the
"Registration Notice") request that it register for sale under the
Securities Act, in the manner specified in your Registration Notice,
all or any portion of the Option Shares and any other shares of
Common Stock that have been issued or are issuable to you and/or
Jeffrey D. Jacobs upon the exercise of stock options granted or to be
granted pursuant to the Harpo Agreement, including any prior or
subsequent amendment to that agreement (collectively, together with
the Option Shares, the "Agreement Shares"), and that have been pur-
chased, or will be purchased on or before the effective date of such
registration statement, or, provided that deferral of the date of
purchase to the closing date of sale of such shares in the manner
contemplated by the proposed registration will not disqualify the
offering from registration on Form S-3 (or any successor to such
form), then on such closing date pursuant to such exercise.
(b) Promptly following receipt of your Registration Notice,
the Company shall commence to prepare and, unless it elects to
purchase all of the Agreement Shares specified in such Registration
Notice through the procedures specified in Section 10(f) below, shall
file a registration statement under the Securities Act for the sale
of the Agreement Shares specified in such Registration Notice (less
any shares to be purchased pursuant to Section 10(f) below) and shall
use its best efforts to cause such registration statement to become
effective and remain in effect for the Required Effective Period for
public sale in accordance with the method of disposition specified by
you, provided, however, that the Company shall not be required to
file a "shelf" registration except on Form S-3 (or any successor to
such Form). The "Required Effective Period" shall be the greater of
(A) the 180-day period following the effective date of such
registration statement; and (B) unless the proposed plan of
distribution involves a firm commitment underwritten public offering,
the period required to dispose of all of the shares included in such
registration statement assuming the sale in each three-month period
of the maximum number of shares permitted to be sold under the
limitations of Section 14 of this Agreement. If such method of
disposition shall be an underwritten public offering, the Company may
designate the managing underwriter of such offering. If, in the good
faith opinion of the Board of Directors of the Company, registration
would materially interfere with pre-existing contractual obligations
to which the Company is then subject or financing arrangements or
other material transactions involving the Company or any of its
subsidiaries are pending at the time the Registration Notice is
given, or are under active consideration by the Company, the Company
may elect to defer registration for such period of time, in no event
in excess of one hundred twenty (120) days from the date on which the
Registration Notice was given, as in the good faith judgment of the
Board of Directors of the Company is necessary in order to preclude
adverse impact upon such financing or other transaction. In the
event of such deferral, if the shares to be registered are to be
acquired on exercise of this Option following the date of such
Registration Notice, the date on which the Option was exercised
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shall, for purposes of Section 2 and 7(d) hereof, be deemed to be the
date on which the Registration Notice was given. The obligation of
the Company under this Section 10 shall be deemed satisfied only when
a registration statement covering all Agreement Shares specified in
your Registration Notice and not purchased by the Company pursuant to
Section 10(f) below shall have become effective and, (X) if the
method of disposition you specify is a firm commitment underwritten
public offering, all such Agreement Shares shall have been sold
pursuant thereto; or (Y) if it is not such an offering, has remained
in effect for the Required Effective Period specified herein or until
the distribution of the Agreement Shares covered thereby is
completed, whichever is shorter.
(c) The Company shall not be obligated to register Agreement
Shares pursuant to this Section 10 (i) more than once; (ii) in any
period of twelve consecutive months in which any Agreement Shares
have been registered pursuant to the exercise of a demand regis-
tration right granted pursuant to any other agreement between the
Company and you or Jeffrey D. Jacobs; or (iii) at any time when the
registration, offering or sale of Option Shares would violate any
law, rule or regulation. For purposes of the foregoing sentence, (X)
a registration under this Option or the corresponding provisions of
the option agreement issued to Jeffrey D. Jacobs on the date hereof
shall be aggregated (so that a registration initiated by you pursuant
to this Section 10 shall decrease by one the number of demand
registrations available to each of you and Jeffrey D. Jacobs pursuant
said corresponding provisions, and vice versa) and (Y) any request
for registration given by Jeffrey D. Jacobs pursuant the correspond-
ing provisions of the option agreement issued to him shall, as a
condition to its effectiveness, be confirmed in writing by you (pro-
vided that you are then competent to give such confirmation). If any
Agreement Shares included in a registration statement filed pursuant
to this Section 10 were issued upon the exercise of any other stock
option granted to you or Jeffrey D. Jacobs pursuant to the Harpo
Agreement, the number of "demand" registration rights granted to you
and to Jeffrey D. Jacobs pursuant to such stock option or stock
options shall each be reduced by one.
(d) The Company shall be entitled to include in any
registration statement referred to in this Section 10, for sale in
accordance with the method of disposition you specify, shares of
Common Stock to be sold by the Company for its own account or by
other security holders of the Company for their accounts, or both,
except as and to the extent that, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten
public offering), such inclusion would adversely affect the marketing
of the Agreement Shares to be sold.
(e) The procedures for registration of Agreement Shares under
this Section 10 shall conform to the following:
(1) Obligations of the Company. If and whenever the
Company is required by the provisions of Section 10 or 11 to effect
the registration of Agreement Shares, the Company will:
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(i) Prepare and file with the Commission a
registration statement with respect to such securities and use its
best efforts to cause such registration statement to become and
remain effective for the Required Effective Period or until
thesecurities covered by such registration statement have been sold
in accordance with the method of disposition specified by you in your
Registration Notice, whichever is shorter, and prepare and file with
the Commission such amendments or supplements to such registration
statement and supplements to the prospectus contained therein as may
be necessary to keep such registration statement effective for the
Required Effective Period or until the shares covered by such regis-
tration statement have been sold in accordance with such method of
disposition, whichever is shorter;
(ii) If the offering is to be underwritten in
whole or in part, enter into a written underwriting agreement in form
and substance reasonably satisfactory to the managing underwriter or
underwriters of the public offering of such securities;
(iii) Furnish to the shareholders participating in
such registration and to the underwriters of the securities being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other
documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(iv) Use its best efforts to register or qualify
the shares covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as you may
reasonably request within 20 days following the original filing of
such registration statement, except that the Company shall not for
any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(v) Notify you promptly after it shall receive
notice thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
(vi) Notify you promptly of any request by the
Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(vii) Prepare and file with the Commission,
promptly upon your request, any amendments or supplements to such
registration statement or prospectus which, in the opinion of your
counsel, are required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of the
Option Shares by you;
(viii) Prepare and promptly file with the
Commission and promptly notify you of the filing of such amendment or
supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions if, at the time when
a prospectus relating to such shares is required to be delivered
under the Securities Act, any event shall have occurred as the result
of which any such prospectus or any other prospectus as then in
Page 65 of 124 Pages<PAGE>
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effect would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein,
in the light of the circumstances in which they were made, not
misleading;
(ix) In case you or any underwriters for you is
required to deliver a prospectus at a time when the prospectus then
in effect may no longer be used under the Securities Act, prepare
promptly upon request such amendment or amendments to such registra-
tion statement and such prospectus or prospectus as may be necessary
to permit compliance with the requirements of the Securities Act;
(x) Advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order
by the Commission suspending the effectiveness of such registration
statement; or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop
order should be issued;
(xi) If such registration is by way of an
underwritten public offering and if you so request, use its best
efforts to cause counsel and the independent certified public
accountants to the Company to furnish on the effective date of the
registration statement and at the closing provided for in the
underwriting agreement, (i) an opinion dated such date, of the
counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to you,
covering such matters with respect to the registration statement and
prospectus and each amendment or supplement thereto, proceedings
under state and federal securities laws and other matters relating to
the Company, the securities included in the registration statement
and the offer and sale of such securities as are customarily the
subject of opinions of issuer's counsel provided to underwriters at
or about the time such registration statement becomes effective and
the sale is closed; and (ii) a letter dated each such date, from the
independent certified public accountants of the Company, addressed to
the underwriters, if any, and to you, stating that they are
independent certified public accountants within the meaning of the
Securities Act and providing such assurances as are customarily
provided by the independent certified public accountants for an
issuer in connection with the registration of securities, including
information as to the period ending not more than five business days
prior to the date of such letter with respect to the registration
statement and prospectus, as the underwriters or you may reasonably
request. If the furnishing of such opinion and/or letter causes
Company to incur any additional cost or expense, you agree to
reimburse Company therefor at the closing provided for in the under-
writing agreement.
(2) Obligations of Option Holder. It shall be a
condition to the inclusion of any Agreement Shares in a registration
statement that the holder thereof shall cooperate in the execution
and filing of the registration statement and any necessary state
securities law filings, and if the offering is to be underwritten,
that such holder become a party to the underwriting agreement and, if
so requested by the managing underwriter, execute and deliver Powers
Page 66 of 124 Pages<PAGE>
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of Attorney and/or custodial agreements or other suitable
arrangements as the managing underwriter deems reasonably necessary
in order to insure orderly sale of the shares.
As among the holders of shares included in any registration
statement, decisions respecting the terms and conditions of any
underwriting agreements shall be made by the party initiating the
registration; so that in the case of a registration required pursuant
to a request by you under Section 10, determinations with respect to
the underwriting agreement shall be made by you, in your reasonable
judgment, after appropriate consultation with the Company and with
other persons whose shares are to be included in such offering; and
if you are party to a registration statement pursuant to Section 11,
you shall not have the right to make such determinations, but shall
be informed of them, and consulted with respect thereto.
(f) Within ten (10) business days following receipt of a
Registration Notice, the Company may elect, by written notice to you, to
purchase all or any portion of the Agreement Shares specified by you in
such Registration Notice for a purchase price equal to the closing price of
the Common Stock on the date such notice was given. In the event that the
Company elects to purchase any of the Agreement Shares specified by you in
such notice, the delivery of such Agreement Shares against payment therefor
shall take place on the fifth business day following receipt by you of the
Company's election notice. In the event that the Company does not elect to
purchase all of the Agreement Shares specified by you in such Registration
Notice, the Company shall register under the Securities Act all the
Agreement Shares not so purchased, in the manner provided above.
11. Incidental Registration. If the Company at any time
(other than pursuant to Section 10 hereof) proposes to register any of its
Common Stock under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both
(except with respect to registration statements on Forms S-4 or S-8 or
another form not available for registering the Option Shares for sale to
the public), it will give written notice at such time to you of its inten-
tion to do so. Upon your written request, given within 30 days after
receipt of any such notice by the Company, to register any of the Option
Shares that you have purchased, or will purchase on or before the effective
date of such registration statement, pursuant to the exercise of the Option
(which request shall state the intended method of disposition thereof), the
Company will use its best efforts to cause such Option Shares to be
included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent requisite to permit
the sale or other disposition by you of the Option Shares so registered.
In the event that any registration pursuant to this Section 11 shall be, in
whole or in part, an underwritten public offering of Common Stock, any
request by you pursuant to this Section 11 to register Option Shares shall
specify that either (i) such Option Shares are to be included in the
underwriting on the same terms and conditions as the shares of Common Stock
otherwise being sold through underwriters under such registration; or (ii)
such Option Shares are to be sold in the open market without any under-
writing, on terms and conditions comparable to those normally applicable to
offerings of common stock in reasonably similar circumstances. The number
of Option Shares to be included in such an underwriting may be reduced if
and to the extent that the managing underwriter shall be of the opinion
that such inclusion would adversely affect the marketing of the securities
to be sold therein by the Company or other security holders of the Company.
Page 67 of 124 Pages<PAGE>
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Notwithstanding anything to the contrary contained in this
Section 11, in the event that there is a firm commitment underwritten
public offering of securities of the Company pursuant to a registration
covering Option Shares and you do not elect to sell any Option Shares to
the underwriters of the Company's securities in connection with such
offering, you agree to refrain from selling any Option Shares during the
period of distribution of the Company's securities by such underwriters and
the period in which the underwriting syndicate participates in the after
market; provided, however, that you shall, in any event, be entitled to
sell Option Shares commencing on the 150th day after the effective date of
such registration statement.
12. Expenses.
(a) The expenses incurred by the Company in complying with
the registration pursuant to Section 10 and all registrations pursuant to
Section 11 hereof shall be paid as follows:
(i) all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for
the Company, fees of the National Association of Securities Dealers,
Inc. and/or the New York Stock Exchange, transfer taxes, fees of
transfer agents and registrars, costs of insurance and other costs
not described in (ii) below shall be paid by the Company; and
(ii) fees and expenses of your counsel, and all underwriting
discounts and selling commissions applicable to the sale of Agreement
Shares sold by you, and any additional cost or expense incurred by
the Company pursuant to your request under Section (10)(e)(1)(xi),
shall be paid by you.
13. Indemnification. In the event of a registration of
Agreement Shares under the Securities Act pursuant to Section 10 or 11
hereof, the Company will indemnify and hold you harmless against any
losses, claims, damages or liabilities, joint or several, to which you may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such Option Shares were registered under the Securities Act
pursuant to Section 10 or 11, any preliminary prospectus or final prospec-
tus contained therein, or any amendment or supplement thereof, or arise out
of or are based upon 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, and will reimburse you for any legal or
other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished in
writing by you for inclusion in such registration statement.
In the event of a registration of any of the Agreement Shares
under the Securities Act pursuant to Section 10 or 11 hereof, you will
indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of the Securities Act, each officer
Page 68 of 124 Pages<PAGE>
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of the Company who signs the registration statement, each director of the
Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or such
officer or director or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Agreement
Shares were registered under the Securities Act pursuant to Section 10 or
11, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
you will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished
to the Company by you in writing for inclusion in such registration
statement.
Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party other than under this
Section 13. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake
the defense thereof with counsel satisfactory to such indemnified party,
and, after notice from the indemnifying party to such indemnified party of
its election so to assume and undertake the defense thereof, the indemnify-
ing party shall not be liable to such indemnified party under this Sec-
tion 13 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; 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 there may be reasonable defenses available to it
which are different from or additional to those available to the
indemnifying party, or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
Notwithstanding the foregoing, any indemnified party shall have
the right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
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party unless (i) the indemnifying party shall have failed to retain counsel
for the indemnified person as aforesaid or (ii) the indemnifying party and
such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm
qualified in such jurisdiction to act as counsel for the indemnified party.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment.
If the indemnification provided for in the first two paragraphs
of this Section 13 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein,
then each indemnifying party shall in lieu of indemnifying such indemnified
party contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or actions in such
proportion as appropriate to reflect the relative fault of the Company, on
the one hand, and you, on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
actions as well as any other relevant equitable considerations, including
the failure to give any notice under the third paragraph of this
Section 13. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact relates to information supplied by the Company, on the one hand, or
you, on the other, and to the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and you agree that it would not be just and
equitable if contributions pursuant to this paragraph were determined by
pro rata allocation or by any other method of allocation which did not take
account of the equitable considerations referred to above in this
paragraph. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities or action in respect thereof,
referred to above in this paragraph, shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connec-
tion with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Sec-
tion 13 shall be on such other terms and conditions as are at the time
customary and reasonably required by such underwriters. Upon your reason-
able request, or upon the reasonable request of any underwriter of
Agreement Shares, the Company shall obtain, if reasonably available, an
insurance policy covering the risks described above in this Section 13 in
an amount and with a deductible reasonably requested by you or such
underwriter and naming you, any underwriter of such stock and any person
controlling you or such underwriter as beneficiaries. The costs of
obtaining and maintaining any such insurance shall be borne by the Company.
Page 70 of 124 Pages<PAGE>
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14. Sale of Option Shares.
(a) You hereby agree to limit your sales of Agreement Shares
so that, except for sales pursuant to underwritten, firm commitment public
offerings, your sales of Agreement Shares, aggregated with sales of
Agreement Shares by Jeffrey D. Jacobs, shall not exceed in any three-month
period the greater of (i) one percent of the outstanding shares of Common
Stock of the Company, as disclosed in its public report most recently filed
with the Securities and Exchange Commission before the date of any sale and
(ii) the average weekly reported volume of trading in Common Stock of the
Company on the New York Stock Exchange and all other national securities
exchanges during the four calendar weeks preceding the date of any sale;
provided however, that upon any "Change in Control" (as such term is
defined in Exhibit B of the Harpo Amendment) of the Company, the foregoing
restriction shall be reduced or eliminated to the extent that any volume
restrictions on resales of Common Stock that then apply to Roger King
and/or any other person who was an executive officer of the Company prior
to such Change in Control are more favorable than those afforded to you
pursuant to this Option. Notwithstanding anything to the contrary con-
tained in this Agreement, you shall not be entitled to register, sell or
dispose of any Agreement Shares that are subject to any liens, claims,
security interests and other encumbrances of any kind, unless and until the
same are removed (or will be removed in conjunction with their sale).
(b) In order to secure the repayment to the Company of the
Secured Amount (as defined in the Harpo Amendment) pursuant to the Harpo
Agreement, you hereby grant to the Company a first priority lien and
security interest (the "Security Interest") in (i) your rights under this
Option, (ii) all Option Shares now or hereafter issuable or issued pursuant
to the exercise of the Option and (iii) all proceeds thereof (collectively,
the "Stock Option Collateral"), provided that, unless and until the Company
notifies you that the amount of Harpo's Share of Revenues (as defined in
the Harpo Amendment) which the Company reasonably projects at the time of
such notice will be payable to Harpo would be inadequate to fully secure
the Secured Amount (an "Additional Security Notice"; such notice
specifying, in reasonable detail, the amount of such inadequacy (the
"Security Shortfall")), you may exercise the Option, sell the Option Shares
issued to you upon such exercise and retain the proceeds thereof without
restriction. The Security Interest shall, in any event, be limited to such
number of shares of Common Stock (and to the Option to the extent corre-
sponding to such shares) that, as of the date of such Additional Security
Notice, would, upon sale at a price per share equal to the closing price of
the Common Stock on the New York Stock Exchange, generate Net Realizable
Value equal to the projected amount of the Security Shortfall. The Net
Realizable Value of an Option Share at any time shall be the fair market
value of such share at such time less the sum of (i) the Option Price for
such Option Share, and (ii) a provision for taxes equal to the difference
between such fair market value and such Option Price (the "Option Gain")
multiplied by the highest rate of federal and state income tax to which the
Option Gain will be subject (with offset for deductibility of such state
taxes). At any time that any Stock Option Collateral is subject to the
Security Interest, you may obtain its release from the Security Interest by
substituting alternate collateral, as more fully set forth in the Security
and Pledge Agreement dated as of March 17, 1994 among you, the Company,
Harpo, Jacobs & Company and Jeffrey D. Jacobs (the "Security and Pledge
Agreement"). You hereby agree to take such steps as are reasonably
requested by the Company to perfect the Security Interest, including the
Page 71 of 124 Pages<PAGE>
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execution and filing of UCC-1 financing statements in such form as
reasonably requested by the Company, the delivery to the Company of the
certificates evidencing the Option Shares, the delivery to such third-party
financial intermediaries as may from time to time be requested by the
Company of written notice confirming the Security Interest and obtaining
the written confirmation and agreement of any such financial intermediaries
that such Option Shares and the proceeds thereof are subject to the Securi-
ty Interest, and that such financial intermediaries shall hold the Option
Shares and the proceeds thereof as agent for the Company, as pledgee,
subject to such written confirmation and agreement. Upon the occurrence of
an Event of Default (as such term is defined in the Security and Pledge
Agreement), the Company shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code in all relevant jurisdic-
tions with respect to the Stock Option Collateral.
15. Defaults. It shall constitute a breach of this
Agreement by either party if such party shall fail or refuse to fully
perform any of its obligations under this Agreement and shall not have
cured such failure or refusal within 30 days after receipt from the other
party of written notice advising it of such failure or refusal, or, in the
event that such failure or refusal is of a nature that cannot be cured
within 30 days, then if such party shall not begin to cure the same within
such 30-day period and thereafter diligently prosecute such cure to comple-
tion.
16. Successors; No Assignment. Each of the covenants, terms,
provisions and agreements contained herein shall be binding upon and inure
to the benefit of the parties' successors and assigns. Neither the Option,
nor any of the rights granted to you pursuant hereto, may be transferred or
assigned (including, without limitation, by operation of law), except by
will or the laws of descent and distribution.
17. Withholding Taxes. In the event that the Company is
required to withhold any Federal, state or local taxes in respect of the
grant of the Option or in respect of the acquisition of any Option Shares,
the Company may deduct from any payments of any kind otherwise due to you
under the Harpo Agreement the aggregate amount of such Federal, state or
local taxes required to be so withheld or, if such payments are insuffi-
cient to satisfy such Federal, state or local taxes or if no such payments
are due or to become due, then, you will be required to pay to the Company,
or to make other arrangements satisfactory to the Company regarding payment
to the Company of, the aggregate amount of any such taxes. All matters
with respect to the total amount of taxes to be withheld shall be
determined by the Company in its sole discretion.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. If any one
or more provisions of this Agreement shall be found to be illegal or
unenforceable in any respect, the validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
Page 72 of 124 Pages<PAGE>
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Please acknowledge receipt of this Option Agreement and
agreement with the terms hereof by signing the enclosed copy of this Option
Agreement in the space provided below.
KING WORLD PRODUCTIONS, INC.
By/s/ Stephen W. Palley
Accepted and Agreed:
/s/ Oprah Winfrey
Oprah Winfrey
Page 73 of 124 Pages<PAGE>
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King World Productions, Inc.
OPTION EXERCISE FORM
Oprah Winfrey hereby exercises her right to purchase ________
shares of Common Stock, $.01 par value, of King World Productions, Inc.
pursuant to the option granted to her on March 17, 1994, memorialized in
the Option Agreement, dated as of March 17, 1994, between her and King
World Productions, Inc.
Date:__________________ __________________________
Oprah Winfrey
Send a completed copy of this Option Exercise Form to:
Vice President - Finance
King World Productions, Inc.
c/o King World Corporation
830 Morris Turnpike
Short Hills, New Jersey 07078
Page 74 of 124 Pages<PAGE>
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EXHIBIT 99.6
THE TRANSFER OF THE OPTION EVIDENCED BY THIS AGREEMENT
IS SUBJECT TO RESTRICTIONS CONTAINED HEREIN. THE OPTION
HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF
THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THE OPTION NOR THE SHARES ISSUABLE UPON
THE EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
THIS OPTION, AND THE OPTION SHARES ISSUABLE UPON EXERCISE
IN ACCORDANCE WITH THE TERMS CONTAINED HEREIN, ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND A LIEN IN FAVOR OF KING WORLD
PRODUCTIONS, INC. (THE "COMPANY") TO SECURE CERTAIN OBLIGATIONS OF HARPO,
INC. ("HARPO") TO THE COMPANY PURSUANT TO AN AGREEMENT DATED AS OF JANUARY
30, 1987, AS AMENDED THROUGH MARCH 17, 1994 BETWEEN THE COMPANY AND HARPO.
KING WORLD PRODUCTIONS, INC.
1700 Broadway
New York, New York 10019
Mr. Jeffrey D. Jacobs As of March 17, 1994
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
Dear Mr. Jacobs:
This is the stock option agreement referred to in the amendment
(the "Harpo Amendment") dated as of March 17, 1994, to the Agreement dated
as of January 30, 1987 (the "Original Agreement"), as previously amended to
the date hereof (the Original Agreement, as amended to the date hereof and
by the Harpo Amendment, being herein called the "Harpo Agreement") between
Harpo, Inc. ("Harpo") and the undersigned (the "Company"). As partial
consideration for Harpo to enter into the Harpo Amendment, and as an
inducement for you to render services with respect to the production of the
Show (as such term is defined in the Harpo Amendment), the Company hereby
grants to you an option (the "Option") to purchase fifty thousand (50,000)
shares of the Company's Common Stock, $.01 par value ("Common Stock"; such
shares of Common Stock, as the same may be adjusted as described in Section
6 below, being herein referred to as the "Option Shares"). The terms and
conditions of the Option are set out below.
The Option will be treated as and shall constitute a "non-
qualified stock option" for Federal income tax purposes. The Option will
not constitute or be treated either by you or by the Company as an
"incentive stock option" as defined under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
1. Date of Grant. The Option is granted to you on the date
hereof.
Page 75 of 124 Pages<PAGE>
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2. Termination of the Option. Your right to exercise the
Option (and to purchase the Option Shares) shall expire and terminate in
all events on (i) March 18, 2004, or (ii) such earlier date provided in
Section 7 below.
3. Option Price. The purchase price to be paid upon the
exercise of the Option (the "Option Price") will be $33-5/8 per Option
Share, the closing price of the Common Stock on the New York Stock Exchange
on March 8, 1994, the date on which the parties reached an agreement in
principle with respect to the Harpo Amendment.
4. Vesting Provisions -- Entitlement to Exercise the Option
and Purchase Option Shares. The Option shall be exercisable by you, in
whole or part, at any time prior to expiration and termination pursuant to
Section 2 above.
5. Exercise of Option.
(a) To exercise the Option, you must deliver a completed copy
of the attached Option Exercise Form to the address indicated on the Form,
specifying the number of Option Shares being purchased as a result of such
exercise, together with payment of the full Option Price for the Option
Shares being purchased.
(b) Payment of the Option Price must be made in cash.
(c) In the event of any exercise of the Option, a certificate
or certificates representing the Option Shares so purchased, registered in
your name, shall be delivered to you within a reasonable time.
(d) You agree that Option Shares shall be held by you for
investment and may not be resold unless registered under the Securities Act
of 1933, as amended (the "Securities Act"), or an exemption from
registration is available, and that the Option Shares will bear a legend
referring to such limitation, to the restrictions on transfer of the Option
Shares referred to elsewhere in this Agreement and to any security
interests encumbering the Option Shares.
6. Adjustments. If the total outstanding shares of Common
Stock of the Company shall be increased or decreased or changed into or
exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation through reorganization,
merger or consolidation, recapitalization, stock split, combination or
exchange of shares or declaration of any dividends payable in stock or
other corporate transaction, then the number of Option Shares subject to
the unexercised portion of the Option (and the Option Price per share)
shall be appropriately adjusted (to the nearest possible full share) by the
Board of Directors of the Company.
7. Default under the Harpo Agreement.
(a) In the event that you die, or the term of the Harpo
Agreement terminates for any other reason except a material breach by
Harpo, then the Option may be exercised by you or your estate only within
the nine (9) month period following your death or the termination of the
term of the Harpo Agreement.
Page 76 of 124 Pages<PAGE>
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(b) In the event that the term of the Harpo Agreement
terminates by reason of a material breach thereof by Harpo, then your right
to exercise the Option as to any and all Option Shares that have not
theretofore been issued shall terminate simultaneously with the termination
of such term.
(c) In the event that the Company exercises its rights
pursuant to paragraph 17 or 18 of the Original Agreement and the term of
the Harpo Agreement is suspended, then your right to exercise the Option
pursuant to Section 4 hereof shall be suspended during the period that the
term of the Harpo Agreement is suspended.
(d) Notwithstanding any provision contained herein to the
contrary, in no event may the Option be exercised to any extent after March
18, 2004.
8. Representations.
(a) You represent and warrant that you are acquiring the
Option and the Option Shares for investment purposes only and not with a
view towards the public distribution thereof.
(b) You understand that neither the Options nor the Option
Shares have been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements thereof
pursuant to Section 4(2) of the Securities Act.
(c) You represent and warrant that (i) you have the financial
ability to bear the economic risk of investment in the Option and the
Option Shares and (ii) you, together with the financial advisers who
have assisted you in acquiring the Option, have such knowledge and experi-
ence in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Option and the Option Shares and
have had sufficient opportunity to obtain, and have obtained, all informa-
tion regarding the Company as you have deemed relevant in order to evaluate
the merits and risks of such investment.
(d) You represent and warrant that you understand the
Federal, state and local income tax consequences of the granting of the
Option to you, the exercise of the Option and purchase of Option Shares,
and the subsequent sale or other disposition of any Option Shares.
9. Covenants of the Company. The Company will at all times
reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of issue upon the exercise of the
Option, such number of shares of Common Stock as shall then be issuable
upon the exercise of the Option. The Company covenants that all Option
Shares, when issued in accordance with the terms hereof, shall be duly and
validly issued, fully paid and nonassessable. The Company will take all
such action as may be necessary to assure that all Option Shares may be so
issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common
Stock of the Company may then be listed. The Company will not take any
action which results in any adjustment of the Option Price if the total
number of Option Shares issued and issuable after such action would exceed
Page 77 of 124 Pages<PAGE>
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the total number of shares of Common Stock then authorized by the Company's
Certificate of Incorporation. The Company has not granted and will not
grant any right of first refusal with respect to the Option Shares, and
there are no preemptive rights associated with such shares.
10. Required Registration.
(a) At any time you may by notice to the Company (the
"Registration Notice") request that it register for sale under the
Securities Act, in the manner specified in your Registration Notice,
all or any portion of the Option Shares and any other shares of
Common Stock that have been issued or are issuable to you and/or
Oprah Winfrey upon the exercise of stock options granted or to be
granted pursuant to the Harpo Agreement, including any prior or
subsequent amendment to that agreement (collectively, together with
the Option Shares, the "Agreement Shares"), and that have been pur-
chased, or will be purchased on or before the effective date of such
registration statement, or, provided that deferral of the date of
purchase to the closing date of sale of such shares in the manner
contemplated by the proposed registration will not disqualify the
offering from registration on Form S-3 (or any successor to such
form), then on such closing date pursuant to such exercise.
(b) Promptly following receipt of your Registration Notice,
the Company shall commence to prepare and, unless it elects to
purchase all of the Agreement Shares specified in such Registration
Notice through the procedures specified in Section 10(f) below, shall
file a registration statement under the Securities Act for the sale
of the Agreement Shares specified in such Registration Notice (less
any shares to be purchased pursuant to Section 10(f) below) and shall
use its best efforts to cause such registration statement to become
effective and remain in effect for the Required Effective Period for
public sale in accordance with the method of disposition specified by
you, provided, however, that the Company shall not be required to
file a "shelf" registration except on Form S-3 (or any successor to
such Form). The "Required Effective Period" shall be the greater of
(A) the 180-day period following the effective date of such
registration statement; and (B) unless the proposed plan of
distribution involves a firm commitment underwritten public offering,
the period required to dispose of all of the shares included in such
registration statement assuming the sale in each three-month period
of the maximum number of shares permitted to be sold under the
limitations of Section 14 of this Agreement. If such method of
disposition shall be an underwritten public offering, the Company may
designate the managing underwriter of such offering. If, in the good
faith opinion of the Board of Directors of the Company, registration
would materially interfere with pre-existing contractual obligations
to which the Company is then subject or financing arrangements or
other material transactions involving the Company or any of its
subsidiaries are pending at the time the Registration Notice is
given, or are under active consideration by the Company, the Company
may elect to defer registration for such period of time, in no event
in excess of one hundred twenty (120) days from the date on which the
Registration Notice was given, as in the good faith judgment of the
Board of Directors of the Company is necessary in order to preclude
Page 78 of 124 Pages<PAGE>
<PAGE>
adverse impact upon such financing or other transaction. In the
event of such deferral, if the shares to be registered are to be
acquired on exercise of this Option following the date of such
Registration Notice, the date on which the Option was exercised
shall, for purposes of Section 2 and 7(d) hereof, be deemed to be the
date on which the Registration Notice was given. The obligation of
the Company under this Section 10 shall be deemed satisfied only when
a registration statement covering all Agreement Shares specified in
your Registration Notice and not purchased by the Company pursuant to
Section 10(f) below shall have become effective and, (X) if the
method of disposition you specify is a firm commitment underwritten
public offering, all such Agreement Shares shall have been sold
pursuant thereto; or (Y) if it is not such an offering, has remained
in effect for the Required Effective Period specified herein or until
the distribution of the Agreement Shares covered thereby is
completed, whichever is shorter.
(c) The Company shall not be obligated to register Agreement
Shares pursuant to this Section 10 (i) more than once; (ii) in any
period of twelve consecutive months in which any Agreement Shares
have been registered pursuant to the exercise of a demand regis-
tration right granted pursuant to any other agreement between the
Company and you or Oprah Winfrey; or (iii) at any time when the
registration, offering or sale of Option Shares would violate any
law, rule or regulation. For purposes of the foregoing sentence, (X)
a registration under this Option or the corresponding provisions of
the option agreement issued to Oprah Winfrey on the date hereof shall
be aggregated (so that a registration initiated by you pursuant to
this Section 10 shall decrease by one the number of demand
registrations available to each of you and Oprah Winfrey pursuant
said corresponding provisions, and vice versa) and (Y) any request
for registration given by you shall, as a condition to its effective-
ness, be confirmed in writing by Oprah Winfrey (provided that she is
then competent to give such confirmation). If any Agreement Shares
included in a registration statement filed pursuant to this Section
10 were issued upon the exercise of any other stock option granted to
you or Oprah Winfrey pursuant to the Harpo Agreement, the number of
"demand" registration rights granted to you and to Oprah Winfrey pur-
suant to such stock option or stock options shall each be reduced by
one.
(d) The Company shall be entitled to include in any
registration statement referred to in this Section 10, for sale in
accordance with the method of disposition you specify, shares of
Common Stock to be sold by the Company for its own account or by
other security holders of the Company for their accounts, or both,
except as and to the extent that, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten
public offering), such inclusion would adversely affect the marketing
of the Agreement Shares to be sold.
(e) The procedures for registration of Agreement Shares under
this Section 10 shall conform to the following:
(1) Obligations of the Company. If and whenever the
Company is required by the provisions of Section 10 or 11 to effect
the registration of Agreement Shares, the Company will:
Page 79 of 124 Pages<PAGE>
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(i) Prepare and file with the Commission a
registration statement with respect to such securities and use its
best efforts to cause such registration statement to become and
remain effective for the Required Effective Period or until the
securities covered by such registration statement have been sold in
accordance with the method of disposition specified by you in your
Registration Notice, whichever is shorter, and prepare and file with
the Commission such amendments or supplements to such registration
statement and supplements to the prospectus contained therein as may
be necessary to keep such registration statement effective for the
Required Effective Period or until the shares covered by such regis-
tration statement have been sold in accordance with such method of
disposition, whichever is shorter;
(ii) If the offering is to be underwritten in
whole or in part, enter into a written underwriting agreement in form
and substance reasonably satisfactory to the managing underwriter or
underwriters of the public offering of such securities;
(iii) Furnish to the shareholders participating in
such registration and to the underwriters of the securities being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other
documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(iv) Use its best efforts to register or qualify
the shares covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as you may
reasonably request within 20 days following the original filing of
such registration statement, except that the Company shall not for
any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(v) Notify you promptly after it shall receive
notice thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
(vi) Notify you promptly of any request by the
Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(vii) Prepare and file with the Commission,
promptly upon your request, any amendments or supplements to such
registration statement or prospectus which, in the opinion of your
counsel, are required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of the
Option Shares by you;
(viii) Prepare and promptly file with the
Commission and promptly notify you of the filing of such amendment or
supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions if, at the time when
a prospectus relating to such shares is required to be delivered
under the Securities Act, any event shall have occurred as the result
of which any such prospectus or any other prospectus as then in
Page 80 of 124 Pages<PAGE>
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effect would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein,
in the light of the circumstances in which they were made, not
misleading;
(ix) In case you or any underwriters for you is
required to deliver a prospectus at a time when the prospectus then
in effect may no longer be used under the Securities Act, prepare
promptly upon request such amendment or amendments to such registra-
tion statement and such prospectus or prospectus as may be necessary
to permit compliance with the requirements of the Securities Act;
(x) Advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order
by the Commission suspending the effectiveness of such registration
statement; or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop
order should be issued;
(xi) If such registration is by way of an
underwritten public offering and if you so request, use its best
efforts to cause counsel and the independent certified public
accountants to the Company to furnish on the effective date of the
registration statement and at the closing provided for in the
underwriting agreement, (i) an opinion dated such date, of the
counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to you,
covering such matters with respect to the registration statement and
prospectus and each amendment or supplement thereto, proceedings
under state and federal securities laws and other matters relating to
the Company, the securities included in the registration statement
and the offer and sale of such securities as are customarily the
subject of opinions of issuer's counsel provided to underwriters at
or about the time such registration statement becomes effective and
the sale is closed; and (ii) a letter dated each such date, from the
independent certified public accountants of the Company, addressed to
the underwriters, if any, and to you, stating that they are
independent certified public accountants within the meaning of the
Securities Act and providing such assurances as are customarily
provided by the independent certified public accountants for an
issuer in connection with the registration of securities, including
information as to the period ending not more than five business days
prior to the date of such letter with respect to the registration
statement and prospectus, as the underwriters or you may reasonably
request. If the furnishing of such opinion and/or letter causes
Company to incur any additional cost or expense, you agree to
reimburse Company therefor at the closing provided for in the under-
writing agreement.
(2) Obligations of Option Holder. It shall be a
condition to the inclusion of any Agreement Shares in a registration
statement that the holder thereof shall cooperate in the execution
and filing of the registration statement and any necessary state
securities law filings, and if the offering is to be underwritten,
that such holder become a party to the underwriting agreement and, if
Page 81 of 124 Pages<PAGE>
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so requested by the managing underwriter, execute and deliver Powers
of Attorney and/or custodial agreements or other suitable
arrangements as the managing underwriter deems reasonably necessary
in order to insure orderly sale of the shares.
As among the holders of shares included in any registration
statement, decisions respecting the terms and conditions of any
underwriting agreements shall be made by the party initiating the
registration; so that in the case of a registration required pursuant
to a request by you under Section 10, determinations with respect to
the underwriting agreement shall be made by you, in your reasonable
judgment, after appropriate consultation with the Company and with
other persons whose shares are to be included in such offering; and
if you are party to a registration statement pursuant to Section 11,
you shall not have the right to make such determinations, but shall
be informed of them, and consulted with respect thereto.
(f) Within ten (10) business days following receipt of a
Registration Notice, the Company may elect, by written notice to you,
to purchase all or any portion of the Agreement Shares specified by
you in such Registration Notice for a purchase price equal to the
closing price of the Common Stock on the date such notice was given.
In the event that the Company elects to purchase any of the Agreement
Shares specified by you in such notice, the delivery of such
Agreement Shares against payment therefor shall take place on the
fifth business day following receipt by you of the Company's election
notice. In the event that the Company does not elect to purchase all
of the Agreement Shares specified by you in such Registration Notice,
the Company shall register under the Securities Act all the Agreement
Shares not so purchased, in the manner provided above.
11. Incidental Registration. If the Company at any time
(other than pursuant to Section 10 hereof) proposes to register any of its
Common Stock under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both
(except with respect to registration statements on Forms S-4 or S-8 or
another form not available for registering the Option Shares for sale to
the public), it will give written notice at such time to you of its inten-
tion to do so. Upon your written request, given within 30 days after
receipt of any such notice by the Company, to register any of the Option
Shares that you have purchased, or will purchase on or before the effective
date of such registration statement, pursuant to the exercise of the Option
(which request shall state the intended method of disposition thereof), the
Company will use its best efforts to cause such Option Shares to be
included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent requisite to permit
the sale or other disposition by you of the Option Shares so registered.
In the event that any registration pursuant to this Section 11 shall be, in
whole or in part, an underwritten public offering of Common Stock, any
request by you pursuant to this Section 11 to register Option Shares shall
specify that either (i) such Option Shares are to be included in the
underwriting on the same terms and conditions as the shares of Common Stock
otherwise being sold through underwriters under such registration; or (ii)
such Option Shares are to be sold in the open market without any under-
writing, on terms and conditions comparable to those normally applicable to
offerings of common stock in reasonably similar circumstances. The number
of Option Shares to be included in such an underwriting may be reduced if
and to the extent that the managing underwriter shall be of the opinion
Page 82 of 124 Pages<PAGE>
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that such inclusion would adversely affect the marketing of the securities
to be sold therein by the Company or other security holders of the Company.
Notwithstanding anything to the contrary contained in this
Section 11, in the event that there is a firm commitment underwritten
public offering of securities of the Company pursuant to a registration
covering Option Shares and you do not elect to sell any Option Shares to
the underwriters of the Company's securities in connection with such
offering, you agree to refrain from selling any Option Shares during the
period of distribution of the Company's securities by such underwriters and
the period in which the underwriting syndicate participates in the after
market; provided, however, that you shall, in any event, be entitled to
sell Option Shares commencing on the 150th day after the effective date of
such registration statement.
12. Expenses.
(a) The expenses incurred by the Company in complying with
the registration pursuant to Section 10 and all registrations pursuant to
Section 11 hereof shall be paid as follows:
(i) all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for
the Company, fees of the National Association of Securities Dealers,
Inc. and/or the New York Stock Exchange, transfer taxes, fees of
transfer agents and registrars, costs of insurance and other costs
not described in (ii) below shall be paid by the Company; and
(ii) fees and expenses of your counsel, and all underwriting
discounts and selling commissions applicable to the sale of Agreement
Shares sold by you, and any additional cost or expense incurred by
the Company pursuant to your request under Section (10)(e)(1)(xi),
shall be paid by you.
13. Indemnification. In the event of a registration of
Agreement Shares under the Securities Act pursuant to Section 10 or 11
hereof, the Company will indemnify and hold you harmless against any
losses, claims, damages or liabilities, joint or several, to which you may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such Option Shares were registered under the Securities Act
pursuant to Section 10 or 11, any preliminary prospectus or final prospec-
tus contained therein, or any amendment or supplement thereof, or arise out
of or are based upon 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, and will reimburse you for any legal or
other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished in
writing by you for inclusion in such registration statement.
Page 83 of 124 Pages<PAGE>
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In the event of a registration of any of the Agreement Shares
under the Securities Act pursuant to Section 10 or 11 hereof, you will
indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of the Securities Act, each officer
of the Company who signs the registration statement, each director of the
Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or such
officer or director or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Agreement
Shares were registered under the Securities Act pursuant to Section 10 or
11, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
you will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished
to the Company by you in writing for inclusion in such registration
statement.
Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party other than under this
Section 13. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake
the defense thereof with counsel satisfactory to such indemnified party,
and, after notice from the indemnifying party to such indemnified party of
its election so to assume and undertake the defense thereof, the indemnify-
ing party shall not be liable to such indemnified party under this Sec-
tion 13 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; 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 there may be reasonable defenses available to it
which are different from or additional to those available to the
indemnifying party, or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of
Page 84 of 124 Pages<PAGE>
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such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
Notwithstanding the foregoing, any indemnified party shall have
the right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party shall have failed to retain counsel
for the indemnified person as aforesaid or (ii) the indemnifying party and
such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm
qualified in such jurisdiction to act as counsel for the indemnified party.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment.
If the indemnification provided for in the first two paragraphs
of this Section 13 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein,
then each indemnifying party shall in lieu of indemnifying such indemnified
party contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or actions in such
proportion as appropriate to reflect the relative fault of the Company, on
the one hand, and you, on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
actions as well as any other relevant equitable considerations, including
the failure to give any notice under the third paragraph of this
Section 13. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact relates to information supplied by the Company, on the one hand, or
you, on the other, and to the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and you agree that it would not be just and
equitable if contributions pursuant to this paragraph were determined by
pro rata allocation or by any other method of allocation which did not take
account of the equitable considerations referred to above in this
paragraph. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities or action in respect thereof,
referred to above in this paragraph, shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connec-
tion with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Sec-
tion 13 shall be on such other terms and conditions as are at the time
customary and reasonably required by such underwriters. Upon your reason-
able request, or upon the reasonable request of any underwriter of
Agreement Shares, the Company shall obtain, if reasonably available, an
insurance policy covering the risks described above in this Section 13 in
Page 85 of 124 Pages<PAGE>
<PAGE>
an amount and with a deductible reasonably requested by you or such
underwriter and naming you, any underwriter of such stock and any person
controlling you or such underwriter as beneficiaries. The costs of
obtaining and maintaining any such insurance shall be borne by the Company.
14. Sale of Option Shares.
(a) You hereby agree to limit your sales of Agreement Shares
so that, except for sales pursuant to underwritten, firm commitment public
offerings, your sales of Agreement Shares, aggregated with sales of
Agreement Shares by Oprah Winfrey, shall not exceed in any three-month
period the greater of (i) one percent of the outstanding shares of Common
Stock of the Company, as disclosed in its public report most recently filed
with the Securities and Exchange Commission before the date of any sale and
(ii) the average weekly reported volume of trading in Common Stock of the
Company on the New York Stock Exchange and all other national securities
exchanges during the four calendar weeks preceding the date of any sale;
provided however, that upon any "Change in Control" (as such term is
defined in Exhibit B of the Harpo Amendment) of the Company, the foregoing
restriction shall be reduced or eliminated to the extent that any volume
restrictions on resales of Common Stock that then apply to Roger King
and/or any other person who was an executive officer of the Company prior
to such Change in Control are more favorable than those afforded to you
pursuant to this Option. Notwithstanding anything to the contrary con-
tained in this Agreement, you shall not be entitled to register, sell or
dispose of any Agreement Shares that are subject to any liens, claims,
security interests and other encumbrances of any kind, unless and until the
same are removed (or will be removed in conjunction with their sale).
(b) In order to secure the repayment to the Company of the
Secured Amount (as defined in the Harpo Amendment) pursuant to the Harpo
Agreement, you hereby grant to the Company a first priority lien and
security interest (the "Security Interest") in (i) your rights under this
Option, (ii) all Option Shares now or hereafter issuable or issued pursuant
to the exercise of the Option and (iii) all proceeds thereof (collectively,
the "Stock Option Collateral"), provided that, unless and until the Company
notifies you that the amount of Harpo's Share of Revenues (as defined in
the Harpo Amendment) which the Company reasonably projects at the time of
such notice will be payable to Harpo would be inadequate to fully secure
the Secured Amount (an "Additional Security Notice"; such notice
specifying, in reasonable detail, the amount of such inadequacy (the
"Security Shortfall")), you may exercise the Option, sell the Option Shares
issued to you upon such exercise and retain the proceeds thereof without
restriction. The Security Interest shall, in any event, be limited to such
number of shares of Common Stock (and to the Option to the extent corre-
sponding to such shares) that, as of the date of such Additional Security
Notice, would, upon sale at a price per share equal to the closing price of
the Common Stock on the New York Stock Exchange, generate Net Realizable
Value equal to the projected amount of the Security Shortfall. The Net
Realizable Value of an Option Share at any time shall be the fair market
value of such share at such time less the sum of (i) the Option Price for
such Option Share, and (ii) a provision for taxes equal to the difference
between such fair market value and such Option Price (the "Option Gain")
multiplied by the highest rate of federal and state income tax to which the
Option Gain will be subject (with offset for deductibility of such state
taxes). At any time that any Stock Option Collateral is subject to the
Security Interest, you may obtain its release from the Security Interest by
Page 86 of 124 Pages<PAGE>
<PAGE>
substituting alternate collateral, as more fully set forth in the Security
and Pledge Agreement dated as of March 17, 1994 among you, the Company,
Harpo, Jacobs & Company and Jeffrey D. Jacobs (the "Security and Pledge
Agreement"). You hereby agree to take such steps as are reasonably
requested by the Company to perfect the Security Interest, including the
execution and filing of UCC-1 financing statements in such form as
reasonably requested by the Company, the delivery to the Company of the
certificates evidencing the Option Shares, the delivery to such third-party
financial intermediaries as may from time to time be requested by the
Company of written notice confirming the Security Interest and obtaining
the written confirmation and agreement of any such financial intermediaries
that such Option Shares and the proceeds thereof are subject to the Securi-
ty Interest, and that such financial intermediaries shall hold the Option
Shares and the proceeds thereof as agent for the Company, as pledgee,
subject to such written confirmation and agreement. Upon the occurrence of
an Event of Default (as such term is defined in the Security and Pledge
Agreement), the Company shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code in all relevant jurisdic-
tions with respect to the Stock Option Collateral.
15. Defaults. It shall constitute a breach of this
Agreement by either party if such party shall fail or refuse to fully
perform any of its obligations under this Agreement and shall not have
cured such failure or refusal within 30 days after receipt from the other
party of written notice advising it of such failure or refusal, or, in the
event that such failure or refusal is of a nature that cannot be cured
within 30 days, then if such party shall not begin to cure the same within
such 30-day period and thereafter diligently prosecute such cure to comple-
tion.
16. Successors; No Assignment. Each of the covenants, terms,
provisions and agreements contained herein shall be binding upon and inure
to the benefit of the parties' successors and assigns. Neither the Option,
nor any of the rights granted to you pursuant hereto, may be transferred or
assigned (including, without limitation, by operation of law), except by
will or the laws of descent and distribution.
17. Withholding Taxes. In the event that the Company is
required to withhold any Federal, state or local taxes in respect of the
grant of the Option or in respect of the acquisition of any Option Shares,
the Company may deduct from any payments of any kind otherwise due to you
under the Harpo Agreement the aggregate amount of such Federal, state or
local taxes required to be so withheld or, if such payments are insuffi-
cient to satisfy such Federal, state or local taxes or if no such payments
are due or to become due, then, you will be required to pay to the Company,
or to make other arrangements satisfactory to the Company regarding payment
to the Company of, the aggregate amount of any such taxes. All matters
with respect to the total amount of taxes to be withheld shall be
determined by the Company in its sole discretion.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. If any one
or more provisions of this Agreement shall be found to be illegal or
unenforceable in any respect, the validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
Page 87 of 124 Pages<PAGE>
<PAGE>
Please acknowledge receipt of this Option Agreement and
agreement with the terms hereof by signing the enclosed copy of this Option
Agreement in the space provided below.
KING WORLD PRODUCTIONS, INC.
By/s/ Stephen W. Palley
Accepted and Agreed:
/s/ Jeffrey D. Jacobs
Jeffrey D. Jacobs
Page 88 of 124 Pages<PAGE>
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King World Productions, Inc.
OPTION EXERCISE FORM
Jeffrey D. Jacobs hereby exercises his right to purchase
________ shares of Common Stock, $.01 par value, of King World Productions,
Inc. pursuant to the option granted to him on March 17, 1994, memorialized
in the Option Agreement, dated as of March 17, 1994, between him and King
World Productions, Inc.
Date:__________________ __________________________
Jeffrey D. Jacobs
Send a completed copy of this Option Exercise Form to:
Vice President - Finance
King World Productions, Inc.
c/o King World Corporation
830 Morris Turnpike
Short Hills, New Jersey 07078
Page 89 of 124 Pages<PAGE>
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EXHIBIT 99.7
THE TRANSFER OF THE OPTION EVIDENCED BY THIS AGREEMENT
IS SUBJECT TO RESTRICTIONS CONTAINED HEREIN. THE OPTION
HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF
THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THE OPTION NOR THE SHARES ISSUABLE UPON
THE EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
THIS OPTION, AND THE OPTION SHARES ISSUABLE UPON EXERCISE
IN ACCORDANCE WITH THE TERMS CONTAINED HEREIN, ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND A LIEN IN FAVOR OF KING WORLD
PRODUCTIONS, INC. (THE "COMPANY") TO SECURE CERTAIN OBLIGATIONS OF HARPO,
INC. ("HARPO") TO THE COMPANY PURSUANT TO AN AGREEMENT DATED AS OF JANUARY
30, 1987, AS AMENDED THROUGH OCTOBER 6, 1995 BETWEEN THE COMPANY AND HARPO.
KING WORLD PRODUCTIONS, INC.
1700 Broadway
New York, New York 10019
Ms. Oprah Winfrey As of October 6, 1995
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
Dear Ms. Winfrey:
This is the stock option agreement referred to in the amendment
(the "Harpo Amendment") dated as of March 17, 1994, to the Agreement dated
as of January 30, 1987 (the "Original Agreement"), as previously amended to
the date hereof (the Original Agreement, as amended to the date hereof and
by the Harpo Amendment, being herein called the "Harpo Agreement") between
Harpo, Inc. ("Harpo") and the undersigned (the "Company"). As partial
consideration for Harpo to enter into the Harpo Amendment, and as an
inducement for you to render services with respect to the production of the
Show (as such term is defined in the Harpo Amendment), the Company hereby
grants to you an option (the "Option") to purchase four hundred fifty
thousand (450,000) shares of the Company's Common Stock, $.01 par value
("Common Stock"; such shares of Common Stock, as the same may be adjusted
as described in Section 6 below, being herein referred to as the "Option
Shares"). The terms and conditions of the Option are set out below.
The Option will be treated as and shall constitute a "non-
qualified stock option" for Federal income tax purposes. The Option will
not constitute or be treated either by you or by the Company as an
"incentive stock option" as defined under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
Page 90 of 124 Pages<PAGE>
<PAGE>
1. Date of Grant. The Option is granted to you on the date
hereof.
2. Termination of the Option. Your right to exercise the
Option (and to purchase the Option Shares) shall expire and terminate in
all events on (i) October 6, 2005, or (ii) such earlier date provided in
Section 7 below.
3. Option Price. The purchase price to be paid upon the
exercise of the Option (the "Option Price") will be $36.00 per Option
Share.
4. Vesting Provisions -- Entitlement to Exercise the Option
and Purchase Option Shares. The Option shall be exercisable by you, in
whole or part, at any time prior to expiration and termination pursuant to
Section 2 above.
5. Exercise of Option.
(a) To exercise the Option, you must deliver a completed copy
of the attached Option Exercise Form to the address indicated on the Form,
specifying the number of Option Shares being purchased as a result of such
exercise, together with payment of the full Option Price for the Option
Shares being purchased.
(b) Payment of the Option Price must be made in cash.
(c) In the event of any exercise of the Option, a certificate
or certificates representing the Option Shares so purchased, registered in
your name, shall be delivered to you within a reasonable time.
(d) You agree that Option Shares shall be held by you for
investment and may not be resold unless registered under the Securities Act
of 1933, as amended (the "Securities Act"), or an exemption from
registration is available, and that the Option Shares will bear a legend
referring to such limitation, to the restrictions on transfer of the Option
Shares referred to elsewhere in this Agreement and to any security
interests encumbering the Option Shares.
6. Adjustments. If the total outstanding shares of Common
Stock of the Company shall be increased or decreased or changed into or
exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation through reorganization,
merger or consolidation, recapitalization, stock split, combination or
exchange of shares or declaration of any dividends payable in stock or
other corporate transaction, then the number of Option Shares subject to
the unexercised portion of the Option (and the Option Price per share)
shall be appropriately adjusted (to the nearest possible full share) by the
Board of Directors of the Company.
Page 91 of 124 Pages<PAGE>
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7. Default under the Harpo Agreement.
(a) In the event that you die, or the term of the Harpo
Agreement terminates for any other reason except a material breach by
Harpo, then the Option may be exercised by you or your estate only within
the nine (9) month period following your death or the termination of the
term of the Harpo Agreement.
(b) In the event that the term of the Harpo Agreement
terminates by reason of a material breach thereof by Harpo, then your right
to exercise the Option as to any and all Option Shares that have not
theretofore been issued shall terminate simultaneously with the termination
of such term.
(c) In the event that the Company exercises its rights
pursuant to paragraph 17 or 18 of the Original Agreement and the term of
the Harpo Agreement is suspended, then your right to exercise the Option
pursuant to Section 4 hereof shall be suspended during the period that the
term of the Harpo Agreement is suspended.
(d) Notwithstanding any provision contained herein to the
contrary, in no event may the Option be exercised to any extent after
October 6, 2005.
8. Representations.
(a) You represent and warrant that you are acquiring the
Option and the Option Shares for investment purposes only and not with a
view towards the public distribution thereof.
(b) You understand that neither the Options nor the Option
Shares have been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements thereof
pursuant to Section 4(2) of the Securities Act.
(c) You represent and warrant that (i) you have the financial
ability to bear the economic risk of investment in the Option and the
Option Shares and (ii) you, together with the financial advisers who have
assisted you in acquiring the Option, have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of an investment in the Option and the Option Shares and have had
sufficient opportunity to obtain, and have obtained, all information
regarding the Company as you have deemed relevant in order to evaluate the
merits and risks of such investment.
(d) You represent and warrant that you understand the
Federal, state and local income tax consequences of the granting of the
Option to you, the exercise of the Option and purchase of Option Shares,
and the subsequent sale or other disposition of any Option Shares.
Page 92 of 124 Pages<PAGE>
<PAGE>
9. Covenants of the Company. The Company will at all times
reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of issue upon the exercise of the
Option, such number of shares of Common Stock as shall then be issuable
upon the exercise of the Option. The Company covenants that all Option
Shares, when issued in accordance with the terms hereof, shall be duly and
validly issued, fully paid and nonassessable. The Company will take all
such action as may be necessary to assure that all Option Shares may be so
issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common
Stock of the Company may then be listed. The Company will not take any
action which results in any adjustment of the Option Price if the total
number of Option Shares issued and issuable after such action would exceed
the total number of shares of Common Stock then authorized by the Company's
Certificate of Incorporation. The Company has not granted and will not
grant any right of first refusal with respect to the Option Shares, and
there are no preemptive rights associated with such shares.
10. Required Registration.
(a) At any time you may by notice to the Company (the
"Registration Notice") request that it register for sale under the
Securities Act, in the manner specified in your Registration Notice,
all or any portion of the Option Shares and any other shares of
Common Stock that have been issued or are issuable to you and/or
Jeffrey D. Jacobs upon the exercise of stock options granted or to be
granted pursuant to the Harpo Agreement, including any prior or
subsequent amendment to that agreement (collectively, together with
the Option Shares, the "Agreement Shares"), and that have been pur-
chased, or will be purchased on or before the effective date of such
registration statement, or, provided that deferral of the date of
purchase to the closing date of sale of such shares in the manner
contemplated by the proposed registration will not disqualify the
offering from registration on Form S-3 (or any successor to such
form), then on such closing date pursuant to such exercise.
(b) Promptly following receipt of your Registration Notice,
the Company shall commence to prepare and, unless it elects to
purchase all of the Agreement Shares specified in such Registration
Notice through the procedures specified in Section 10(f) below, shall
file a registration statement under the Securities Act for the sale
of the Agreement Shares specified in such Registration Notice (less
any shares to be purchased pursuant to Section 10(f) below) and shall
use its best efforts to cause such registration statement to become
effective and remain in effect for the Required Effective Period for
public sale in accordance with the method of disposition specified by
you, provided, however, that the Company shall not be required to
file a "shelf" registration except on Form S-3 (or any successor to
such Form). The "Required Effective Period" shall be the greater of
(A) the 180-day period following the effective date of such
registration statement; and (B) unless the proposed plan of
Page 93 of 124 Pages<PAGE>
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distribution involves a firm commitment underwritten public offering,
the period required to dispose of all of the shares included in such
registration statement assuming the sale in each three-month period
of the maximum number of shares permitted to be sold under the
limitations of Section 14 of this Agreement. If such method of
disposition shall be an underwritten public offering, the Company may
designate the managing underwriter of such offering. If, in the good
faith opinion of the Board of Directors of the Company, registration
would materially interfere with pre-existing contractual obligations
to which the Company is then subject or financing arrangements or
other material transactions involving the Company or any of its
subsidiaries are pending at the time the Registration Notice is
given, or are under active consideration by the Company, the Company
may elect to defer registration for such period of time, in no event
in excess of one hundred twenty (120) days from the date on which the
Registration Notice was given, as in the good faith judgment of the
Board of Directors of the Company is necessary in order to preclude
adverse impact upon such financing or other transaction. In the
event of such deferral, if the shares to be registered are to be
acquired on exercise of this Option following the date of such
Registration Notice, the date on which the Option was exercised
shall, for purposes of Section 2 and 7(d) hereof, be deemed to be the
date on which the Registration Notice was given. The obligation of
the Company under this Section 10 shall be deemed satisfied only when
a registration statement covering all Agreement Shares specified in
your Registration Notice and not purchased by the Company pursuant to
Section 10(f) below shall have become effective and, (X) if the
method of disposition you specify is a firm commitment underwritten
public offering, all such Agreement Shares shall have been sold
pursuant thereto; or (Y) if it is not such an offering, has remained
in effect for the Required Effective Period specified herein or until
the distribution of the Agreement Shares covered thereby is
completed, whichever is shorter.
(c) The Company shall not be obligated to register Agreement
Shares pursuant to this Section 10 (i) more than once; (ii) in any
period of twelve consecutive months in which any Agreement Shares
have been registered pursuant to the exercise of a demand regis-
tration right granted pursuant to any other agreement between the
Company and you or Jeffrey D. Jacobs; or (iii) at any time when the
registration, offering or sale of Option Shares would violate any
law, rule or regulation. For purposes of the foregoing sentence, (X)
a registration under this Option or the corresponding provisions of
the option agreement issued to Jeffrey D. Jacobs on the date hereof
shall be aggregated (so that a registration initiated by you pursuant
to this Section 10 shall decrease by one the number of demand
registrations available to each of you and Jeffrey D. Jacobs pursuant
said corresponding provisions, and vice versa) and (Y) any request
for registration given by Jeffrey D. Jacobs pursuant the correspond-
ing provisions of the option agreement issued to him shall, as a
condition to its effectiveness, be confirmed in writing by you (pro-
vided that you are then competent to give such confirmation). If any
Agreement Shares included in a registration statement filed pursuant
to this Section 10 were issued upon the exercise of any other stock
Page 94 of 124 Pages<PAGE>
<PAGE>
option granted to you or Jeffrey D. Jacobs pursuant to the Harpo
Agreement, the number of "demand" registration rights granted to you
and to Jeffrey D. Jacobs pursuant to such stock option or stock
options shall each be reduced by one.
(d) The Company shall be entitled to include in any
registration statement referred to in this Section 10, for sale in
accordance with the method of disposition you specify, shares of
Common Stock to be sold by the Company for its own account or by
other security holders of the Company for their accounts, or both,
except as and to the extent that, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten
public offering), such inclusion would adversely affect the marketing
of the Agreement Shares to be sold.
(e) The procedures for registration of Agreement Shares under
this Section 10 shall conform to the following:
(1) Obligations of the Company. If and whenever the
Company is required by the provisions of Section 10 or 11 to effect
the registration of Agreement Shares, the Company will:
(i) Prepare and file with the Commission a
registration statement with respect to such securities and use its
best efforts to cause such registration statement to become and
remain effective for the Required Effective Period or until the
securities covered by such registration statement have been sold in
accordance with the method of disposition specified by you in your
Registration Notice, whichever is shorter, and prepare and file with
the Commission such amendments or supplements to such registration
statement and supplements to the prospectus contained therein as may
be necessary to keep such registration statement effective for the
Required Effective Period or until the shares covered by such regis-
tration statement have been sold in accordance with such method of
disposition, whichever is shorter;
(ii) If the offering is to be underwritten in
whole or in part, enter into a written underwriting agreement in form
and substance reasonably satisfactory to the managing underwriter or
underwriters of the public offering of such securities;
(iii) Furnish to the shareholders participating in
such registration and to the underwriters of the securities being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other
documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(iv) Use its best efforts to register or qualify
the shares covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as you may
Page 95 of 124 Pages<PAGE>
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reasonably request within 20 days following the original filing of
such registration statement, except that the Company shall not for
any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(v) Notify you promptly after it shall receive
notice thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
(vi) Notify you promptly of any request by the
Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(vii) Prepare and file with the Commission,
promptly upon your request, any amendments or supplements to such
registration statement or prospectus which, in the opinion of your
counsel, are required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of the
Option Shares by you;
(viii) Prepare and promptly file with the
Commission and promptly notify you of the filing of such amendment or
supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions if, at the time when
a prospectus relating to such shares is required to be delivered
under the Securities Act, any event shall have occurred as the result
of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein,
in the light of the circumstances in which they were made, not
misleading;
(ix) In case you or any underwriters for you is
required to deliver a prospectus at a time when the prospectus then
in effect may no longer be used under the Securities Act, prepare
promptly upon request such amendment or amendments to such registra-
tion statement and such prospectus or prospectus as may be necessary
to permit compliance with the requirements of the Securities Act;
(x) Advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order
by the Commission suspending the effectiveness of such registration
statement; or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop
order should be issued;
(xi) If such registration is by way of an
underwritten public offering and if you so request, use its best
Page 96 of 124 Pages<PAGE>
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efforts to cause counsel and the independent certified public
accountants to the Company to furnish on the effective date of the
registration statement and at the closing provided for in the
underwriting agreement, (i) an opinion dated such date, of the
counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to you,
covering such matters with respect to the registration statement and
prospectus and each amendment or supplement thereto, proceedings
under state and federal securities laws and other matters relating to
the Company, the securities included in the registration statement
and the offer and sale of such securities as are customarily the
subject of opinions of issuer's counsel provided to underwriters at
or about the time such registration statement becomes effective and
the sale is closed; and (ii) a letter dated each such date, from the
independent certified public accountants of the Company, addressed to
the underwriters, if any, and to you, stating that they are
independent certified public accountants within the meaning of the
Securities Act and providing such assurances as are customarily
provided by the independent certified public accountants for an
issuer in connection with the registration of securities, including
information as to the period ending not more than five business days
prior to the date of such letter with respect to the registration
statement and prospectus, as the underwriters or you may reasonably
request. If the furnishing of such opinion and/or letter causes
Company to incur any additional cost or expense, you agree to
reimburse Company therefor at the closing provided for in the under-
writing agreement.
(2) Obligations of Option Holder. It shall be a
condition to the inclusion of any Agreement Shares in a registration
statement that the holder thereof shall cooperate in the execution
and filing of the registration statement and any necessary state
securities law filings, and if the offering is to be underwritten,
that such holder become a party to the underwriting agreement and, if
so requested by the managing underwriter, execute and deliver Powers
of Attorney and/or custodial agreements or other suitable
arrangements as the managing underwriter deems reasonably necessary
in order to insure orderly sale of the shares.
As among the holders of shares included in any registration
statement, decisions respecting the terms and conditions of any
underwriting agreements shall be made by the party initiating the
registration; so that in the case of a registration required pursuant
to a request by you under Section 10, determinations with respect to
the underwriting agreement shall be made by you, in your reasonable
judgment, after appropriate consultation with the Company and with
other persons whose shares are to be included in such offering; and
if you are party to a registration statement pursuant to Section 11,
you shall not have the right to make such determinations, but shall
be informed of them, and consulted with respect thereto.
Page 97 of 124 Pages<PAGE>
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(f) Within ten (10) business days following receipt of a
Registration Notice, the Company may elect, by written notice to you,
to purchase all or any portion of the Agreement Shares specified by
you in such Registration Notice for a purchase price equal to the
closing price of the Common Stock on the date such notice was given.
In the event that the Company elects to purchase any of the Agreement
Shares specified by you in such notice, the delivery of such
Agreement Shares against payment therefor shall take place on the
fifth business day following receipt by you of the Company's election
notice. In the event that the Company does not elect to purchase all
of the Agreement Shares specified by you in such Registration Notice,
the Company shall register under the Securities Act all the Agreement
Shares not so purchased, in the manner provided above.
11. Incidental Registration. If the Company at any time
(other than pursuant to Section 10 hereof) proposes to register any of its
Common Stock under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both
(except with respect to registration statements on Forms S-4 or S-8 or
another form not available for registering the Option Shares for sale to
the public), it will give written notice at such time to you of its inten-
tion to do so. Upon your written request, given within 30 days after
receipt of any such notice by the Company, to register any of the Option
Shares that you have purchased, or will purchase on or before the effective
date of such registration statement, pursuant to the exercise of the Option
(which request shall state the intended method of disposition thereof), the
Company will use its best efforts to cause such Option Shares to be
included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent requisite to permit
the sale or other disposition by you of the Option Shares so registered.
In the event that any registration pursuant to this Section 11 shall be, in
whole or in part, an underwritten public offering of Common Stock, any
request by you pursuant to this Section 11 to register Option Shares shall
specify that either (i) such Option Shares are to be included in the
underwriting on the same terms and conditions as the shares of Common Stock
otherwise being sold through underwriters under such registration; or (ii)
such Option Shares are to be sold in the open market without any under-
writing, on terms and conditions comparable to those normally applicable to
offerings of common stock in reasonably similar circumstances. The number
of Option Shares to be included in such an underwriting may be reduced if
and to the extent that the managing underwriter shall be of the opinion
that such inclusion would adversely affect the marketing of the securities
to be sold therein by the Company or other security holders of the Company.
Notwithstanding anything to the contrary contained in this
Section 11, in the event that there is a firm commitment underwritten
public offering of securities of the Company pursuant to a registration
covering Option Shares and you do not elect to sell any Option Shares to
the underwriters of the Company's securities in connection with such
offering, you agree to refrain from selling any Option Shares during the
period of distribution of the Company's securities by such underwriters and
Page 98 of 124 Pages<PAGE>
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the period in which the underwriting syndicate participates in the after
market; provided, however, that you shall, in any event, be entitled to
sell Option Shares commencing on the 150th day after the effective date of
such registration statement.
12. Expenses.
(a) The expenses incurred by the Company in complying with
the registration pursuant to Section 10 and all registrations pursuant to
Section 11 hereof shall be paid as follows:
(i) all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for
the Company, fees of the National Association of Securities Dealers,
Inc. and/or the New York Stock Exchange, transfer taxes, fees of
transfer agents and registrars, costs of insurance and other costs
not described in (ii) below shall be paid by the Company; and
(ii) fees and expenses of your counsel, and all underwriting
discounts and selling commissions applicable to the sale of Agreement
Shares sold by you, and any additional cost or expense incurred by
the Company pursuant to your request under Section (10)(e)(1)(xi),
shall be paid by you.
13. Indemnification. In the event of a registration of
Agreement Shares under the Securities Act pursuant to Section 10 or 11
hereof, the Company will indemnify and hold you harmless against any
losses, claims, damages or liabilities, joint or several, to which you may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such Option Shares were registered under the Securities Act
pursuant to Section 10 or 11, any preliminary prospectus or final prospec-
tus contained therein, or any amendment or supplement thereof, or arise out
of or are based upon 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, and will reimburse you for any legal or
other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished in
writing by you for inclusion in such registration statement.
In the event of a registration of any of the Agreement Shares
under the Securities Act pursuant to Section 10 or 11 hereof, you will
indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of the Securities Act, each officer
Page 99 of 124 Pages<PAGE>
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of the Company who signs the registration statement, each director of the
Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or such
officer or director or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Agreement
Shares were registered under the Securities Act pursuant to Section 10 or
11, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
you will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished
to the Company by you in writing for inclusion in such registration
statement.
Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party other than under this
Section 13. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake
the defense thereof with counsel satisfactory to such indemnified party,
and, after notice from the indemnifying party to such indemnified party of
its election so to assume and undertake the defense thereof, the indemnify-
ing party shall not be liable to such indemnified party under this Sec-
tion 13 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; 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 there may be reasonable defenses available to it
which are different from or additional to those available to the
indemnifying party, or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of
Page 100 of 124 Pages<PAGE>
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such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
Notwithstanding the foregoing, any indemnified party shall have
the right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party shall have failed to retain counsel
for the indemnified person as aforesaid or (ii) the indemnifying party and
such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm
qualified in such jurisdiction to act as counsel for the indemnified party.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment.
If the indemnification provided for in the first two paragraphs
of this Section 13 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein,
then each indemnifying party shall in lieu of indemnifying such indemnified
party contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or actions in such
proportion as appropriate to reflect the relative fault of the Company, on
the one hand, and you, on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
actions as well as any other relevant equitable considerations, including
the failure to give any notice under the third paragraph of this
Section 13. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact relates to information supplied by the Company, on the one hand, or
you, on the other, and to the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and you agree that it would not be just and
equitable if contributions pursuant to this paragraph were determined by
pro rata allocation or by any other method of allocation which did not take
account of the equitable considerations referred to above in this
paragraph. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities or action in respect thereof,
referred to above in this paragraph, shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connec-
tion with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation.
Page 101 of 124 Pages<PAGE>
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The indemnification of underwriters provided for in this Sec-
tion 13 shall be on such other terms and conditions as are at the time
customary and reasonably required by such underwriters. Upon your reason-
able request, or upon the reasonable request of any underwriter of
Agreement Shares, the Company shall obtain, if reasonably available, an
insurance policy covering the risks described above in this Section 13 in
an amount and with a deductible reasonably requested by you or such
underwriter and naming you, any underwriter of such stock and any person
controlling you or such underwriter as beneficiaries. The costs of
obtaining and maintaining any such insurance shall be borne by the Company.
14. Sale of Option Shares.
(a) You hereby agree to limit your sales of Agreement Shares
so that, except for sales pursuant to underwritten, firm commitment public
offerings, your sales of Agreement Shares, aggregated with sales of
Agreement Shares by Jeffrey D. Jacobs, shall not exceed in any three-month
period the greater of (i) one percent of the outstanding shares of Common
Stock of the Company, as disclosed in its public report most recently filed
with the Securities and Exchange Commission before the date of any sale and
(ii) the average weekly reported volume of trading in Common Stock of the
Company on the New York Stock Exchange and all other national securities
exchanges during the four calendar weeks preceding the date of any sale;
provided however, that upon any "Change in Control" (as such term is
defined in Exhibit B of the Harpo Amendment) of the Company, the foregoing
restriction shall be reduced or eliminated to the extent that any volume
restrictions on resales of Common Stock that then apply to Roger King
and/or any other person who was an executive officer of the Company prior
to such Change in Control are more favorable than those afforded to you
pursuant to this Option. Notwithstanding anything to the contrary con-
tained in this Agreement, you shall not be entitled to register, sell or
dispose of any Agreement Shares that are subject to any liens, claims,
security interests and other encumbrances of any kind, unless and until the
same are removed (or will be removed in conjunction with their sale).
(b) In order to secure the repayment to the Company of the
Secured Amount (as defined in the Harpo Amendment) pursuant to the Harpo
Agreement, you hereby grant to the Company a first priority lien and
security interest (the "Security Interest") in (i) your rights under this
Option, (ii) all Option Shares now or hereafter issuable or issued pursuant
to the exercise of the Option and (iii) all proceeds thereof (collectively,
the "Stock Option Collateral"), provided that, unless and until the Company
notifies you that the amount of Harpo's Share of Revenues (as defined in
the Harpo Amendment) which the Company reasonably projects at the time of
such notice will be payable to Harpo would be inadequate to fully secure
the Secured Amount (an "Additional Security Notice"; such notice
specifying, in reasonable detail, the amount of such inadequacy (the
"Security Shortfall")), you may exercise the Option, sell the Option Shares
issued to you upon such exercise and retain the proceeds thereof without
restriction. The Security Interest shall, in any event, be limited to such
Page 102 of 124 Pages<PAGE>
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number of shares of Common Stock (and to the Option to the extent corre-
sponding to such shares) that, as of the date of such Additional Security
Notice, would, upon sale at a price per share equal to the closing price of
the Common Stock on the New York Stock Exchange, generate Net Realizable
Value equal to the projected amount of the Security Shortfall. The Net
Realizable Value of an Option Share at any time shall be the fair market
value of such share at such time less the sum of (i) the Option Price for
such Option Share, and (ii) a provision for taxes equal to the difference
between such fair market value and such Option Price (the "Option Gain")
multiplied by the highest rate of federal and state income tax to which the
Option Gain will be subject (with offset for deductibility of such state
taxes). At any time that any Stock Option Collateral is subject to the
Security Interest, you may obtain its release from the Security Interest by
substituting alternate collateral, as more fully set forth in the Security
and Pledge Agreement dated as of March 17, 1994 among you, the Company,
Harpo, Jacobs & Company and Jeffrey D. Jacobs (the "Security and Pledge
Agreement"). You hereby agree to take such steps as are reasonably
requested by the Company to perfect the Security Interest, including the
execution and filing of UCC-1 financing statements in such form as
reasonably requested by the Company, the delivery to the Company of the
certificates evidencing the Option Shares, the delivery to such third-party
financial intermediaries as may from time to time be requested by the
Company of written notice confirming the Security Interest and obtaining
the written confirmation and agreement of any such financial intermediaries
that such Option Shares and the proceeds thereof are subject to the Securi-
ty Interest, and that such financial intermediaries shall hold the Option
Shares and the proceeds thereof as agent for the Company, as pledgee,
subject to such written confirmation and agreement. Upon the occurrence of
an Event of Default (as such term is defined in the Security and Pledge
Agreement), the Company shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code in all relevant jurisdic-
tions with respect to the Stock Option Collateral.
15. Defaults. It shall constitute a breach of this
Agreement by either party if such party shall fail or refuse to fully
perform any of its obligations under this Agreement and shall not have
cured such failure or refusal within 30 days after receipt from the other
party of written notice advising it of such failure or refusal, or, in the
event that such failure or refusal is of a nature that cannot be cured
within 30 days, then if such party shall not begin to cure the same within
such 30-day period and thereafter diligently prosecute such cure to comple-
tion.
16. Successors; No Assignment. Each of the covenants, terms,
provisions and agreements contained herein shall be binding upon and inure
to the benefit of the parties' successors and assigns. Neither the Option,
nor any of the rights granted to you pursuant hereto, may be transferred or
assigned (including, without limitation, by operation of law), except by
will or the laws of descent and distribution.
Page 103 of 124 Pages<PAGE>
<PAGE>
17. Withholding Taxes. In the event that the Company is
required to withhold any Federal, state or local taxes in respect of the
grant of the Option or in respect of the acquisition of any Option Shares,
the Company may deduct from any payments of any kind otherwise due to you
under the Harpo Agreement the aggregate amount of such Federal, state or
local taxes required to be so withheld or, if such payments are insuffi-
cient to satisfy such Federal, state or local taxes or if no such payments
are due or to become due, then, you will be required to pay to the Company,
or to make other arrangements satisfactory to the Company regarding payment
to the Company of, the aggregate amount of any such taxes. All matters
with respect to the total amount of taxes to be withheld shall be
determined by the Company in its sole discretion.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. If any one
or more provisions of this Agreement shall be found to be illegal or
unenforceable in any respect, the validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
Page 104 of 124 Pages<PAGE>
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Please acknowledge receipt of this Option Agreement and
agreement with the terms hereof by signing the enclosed copy of this Option
Agreement in the space provided below.
KING WORLD PRODUCTIONS, INC.
By
Accepted and Agreed:
Oprah Winfrey
Page 105 of 124 Pages<PAGE>
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King World Productions, Inc.
OPTION EXERCISE FORM
Oprah Winfrey hereby exercises her right to purchase ________
shares of Common Stock, $.01 par value, of King World Productions, Inc.
pursuant to the option granted to her on March 17, 1994, memorialized in
the Option Agreement, dated as of October 6, 1995, between her and King
World Productions, Inc.
Date:__________________ __________________________
Oprah Winfrey
Send a completed copy of this Option Exercise Form to:
Vice President - Finance
King World Productions, Inc.
c/o King World Corporation
830 Morris Turnpike
Short Hills, New Jersey 07078
Page 106 of 124 Pages<PAGE>
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EXHIBIT 99.8
THE TRANSFER OF THE OPTION EVIDENCED BY THIS AGREEMENT
IS SUBJECT TO RESTRICTIONS CONTAINED HEREIN. THE OPTION
HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF
THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THE OPTION NOR THE SHARES ISSUABLE UPON
THE EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
THIS OPTION, AND THE OPTION SHARES ISSUABLE UPON EXERCISE
IN ACCORDANCE WITH THE TERMS CONTAINED HEREIN, ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND A LIEN IN FAVOR OF KING WORLD
PRODUCTIONS, INC. (THE "COMPANY") TO SECURE CERTAIN OBLIGATIONS OF HARPO,
INC. ("HARPO") TO THE COMPANY PURSUANT TO AN AGREEMENT DATED AS OF JANUARY
30, 1987, AS AMENDED THROUGH OCTOBER 6, 1995 BETWEEN THE COMPANY AND HARPO.
KING WORLD PRODUCTIONS, INC.
1700 Broadway
New York, New York 10019
Mr. Jeffrey D. Jacobs As of October 6, 1995
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
Dear Mr. Jacobs:
This is the stock option agreement referred to in the amendment
(the "Harpo Amendment") dated as of March 17, 1994, to the Agreement dated
as of January 30, 1987 (the "Original Agreement"), as previously amended to
the date hereof (the Original Agreement, as amended to the date hereof and
by the Harpo Amendment, being herein called the "Harpo Agreement") between
Harpo, Inc. ("Harpo") and the undersigned (the "Company"). As partial
consideration for Harpo to enter into the Harpo Amendment, and as an
inducement for you to render services with respect to the production of the
Show (as such term is defined in the Harpo Amendment), the Company hereby
grants to you an option (the "Option") to purchase fifty thousand (50,000)
shares of the Company's Common Stock, $.01 par value ("Common Stock"; such
shares of Common Stock, as the same may be adjusted as described in Section
6 below, being herein referred to as the "Option Shares"). The terms and
conditions of the Option are set out below.
Page 107 of 124 Pages<PAGE>
<PAGE>
The Option will be treated as and shall constitute a "non-
qualified stock option" for Federal income tax purposes. The Option will
not constitute or be treated either by you or by the Company as an
"incentive stock option" as defined under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
1. Date of Grant. The Option is granted to you on the date
hereof.
2. Termination of the Option. Your right to exercise the
Option (and to purchase the Option Shares) shall expire and terminate in
all events on (i) October 6, 2005, or (ii) such earlier date provided in
Section 7 below.
3. Option Price. The purchase price to be paid upon the
exercise of the Option (the "Option Price") will be $36.00 per Option
Share.
4. Vesting Provisions -- Entitlement to Exercise the Option
and Purchase Option Shares. The Option shall be exercisable by you, in
whole or part, at any time prior to expiration and termination pursuant to
Section 2 above.
5. Exercise of Option.
(a) To exercise the Option, you must deliver a completed copy
of the attached Option Exercise Form to the address indicated on the Form,
specifying the number of Option Shares being purchased as a result of such
exercise, together with payment of the full Option Price for the Option
Shares being purchased.
(b) Payment of the Option Price must be made in cash.
(c) In the event of any exercise of the Option, a certificate
or certificates representing the Option Shares so purchased, registered in
your name, shall be delivered to you within a reasonable time.
(d) You agree that Option Shares shall be held by you for
investment and may not be resold unless registered under the Securities Act
of 1933, as amended (the "Securities Act"), or an exemption from
registration is available, and that the Option Shares will bear a legend
referring to such limitation, to the restrictions on transfer of the Option
Shares referred to elsewhere in this Agreement and to any security
interests encumbering the Option Shares.
6. Adjustments. If the total outstanding shares of Common
Stock of the Company shall be increased or decreased or changed into or
exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation through reorganization,
merger or consolidation, recapitalization, stock split, combination or
exchange of shares or declaration of any dividends payable in stock or
other corporate transaction, then the number of Option Shares subject to
the unexercised portion of the Option (and the Option Price per share)
shall be appropriately adjusted (to the nearest possible full share) by the
Board of Directors of the Company.
Page 108 of 124 Pages<PAGE>
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7. Default under the Harpo Agreement.
(a) In the event that you die, or the term of the Harpo
Agreement terminates for any other reason except a material breach by
Harpo, then the Option may be exercised by you or your estate only within
the nine (9) month period following your death or the termination of the
term of the Harpo Agreement.
(b) In the event that the term of the Harpo Agreement
terminates by reason of a material breach thereof by Harpo, then your right
to exercise the Option as to any and all Option Shares that have not
theretofore been issued shall terminate simultaneously with the termination
of such term.
(c) In the event that the Company exercises its rights
pursuant to paragraph 17 or 18 of the Original Agreement and the term of
the Harpo Agreement is suspended, then your right to exercise the Option
pursuant to Section 4 hereof shall be suspended during the period that the
term of the Harpo Agreement is suspended.
(d) Notwithstanding any provision contained herein to the
contrary, in no event may the Option be exercised to any extent after
October 6, 2005.
8. Representations.
(a) You represent and warrant that you are acquiring the
Option and the Option Shares for investment purposes only and not with a
view towards the public distribution thereof.
(b) You understand that neither the Options nor the Option
Shares have been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements thereof
pursuant to Section 4(2) of the Securities Act.
(c) You represent and warrant that (i) you have the financial
ability to bear the economic risk of investment in the Option and the
Option Shares and (ii) you, together with the financial advisers who
have assisted you in acquiring the Option, have such knowledge and experi-
ence in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Option and the Option Shares and
have had sufficient opportunity to obtain, and have obtained, all informa-
tion regarding the Company as you have deemed relevant in order to evaluate
the merits and risks of such investment.
(d) You represent and warrant that you understand the
Federal, state and local income tax consequences of the granting of the
Option to you, the exercise of the Option and purchase of Option Shares,
and the subsequent sale or other disposition of any Option Shares.
Page 109 of 124 Pages<PAGE>
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9. Covenants of the Company. The Company will at all times
reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of issue upon the exercise of the
Option, such number of shares of Common Stock as shall then be issuable
upon the exercise of the Option. The Company covenants that all Option
Shares, when issued in accordance with the terms hereof, shall be duly and
validly issued, fully paid and nonassessable. The Company will take all
such action as may be necessary to assure that all Option Shares may be so
issued without violation of any applicable law or regulation, or of any
requirements of any national securities exchange upon which the Common
Stock of the Company may then be listed. The Company will not take any
action which results in any adjustment of the Option Price if the total
number of Option Shares issued and issuable after such action would exceed
the total number of shares of Common Stock then authorized by the Company's
Certificate of Incorporation. The Company has not granted and will not
grant any right of first refusal with respect to the Option Shares, and
there are no preemptive rights associated with such shares.
10. Required Registration.
(a) At any time you may by notice to the Company (the
"Registration Notice") request that it register for sale under the
Securities Act, in the manner specified in your Registration Notice,
all or any portion of the Option Shares and any other shares of
Common Stock that have been issued or are issuable to you and/or
Oprah Winfrey upon the exercise of stock options granted or to be
granted pursuant to the Harpo Agreement, including any prior or
subsequent amendment to that agreement (collectively, together with
the Option Shares, the "Agreement Shares"), and that have been pur-
chased, or will be purchased on or before the effective date of such
registration statement, or, provided that deferral of the date of
purchase to the closing date of sale of such shares in the manner
contemplated by the proposed registration will not disqualify the
offering from registration on Form S-3 (or any successor to such
form), then on such closing date pursuant to such exercise.
(b) Promptly following receipt of your Registration Notice,
the Company shall commence to prepare and, unless it elects to
purchase all of the Agreement Shares specified in such Registration
Notice through the procedures specified in Section 10(f) below, shall
file a registration statement under the Securities Act for the sale
of the Agreement Shares specified in such Registration Notice (less
any shares to be purchased pursuant to Section 10(f) below) and shall
use its best efforts to cause such registration statement to become
effective and remain in effect for the Required Effective Period for
public sale in accordance with the method of disposition specified by
you, provided, however, that the Company shall not be required to
file a "shelf" registration except on Form S-3 (or any successor to
such Form). The "Required Effective Period" shall be the greater of
(A) the 180-day period following the effective date of such
registration statement; and (B) unless the proposed plan of
distribution involves a firm commitment underwritten public offering,
Page 110 of 124 Pages<PAGE>
<PAGE>
the period required to dispose of all of the shares included in such
registration statement assuming the sale in each three-month period
of the maximum number of shares permitted to be sold under the
limitations of Section 14 of this Agreement. If such method of
disposition shall be an underwritten public offering, the Company may
designate the managing underwriter of such offering. If, in the good
faith opinion of the Board of Directors of the Company, registration
would materially interfere with pre-existing contractual obligations
to which the Company is then subject or financing arrangements or
other material transactions involving the Company or any of its
subsidiaries are pending at the time the Registration Notice is
given, or are under active consideration by the Company, the Company
may elect to defer registration for such period of time, in no event
in excess of one hundred twenty (120) days from the date on which the
Registration Notice was given, as in the good faith judgment of the
Board of Directors of the Company is necessary in order to preclude
adverse impact upon such financing or other transaction. In the
event of such deferral, if the shares to be registered are to be
acquired on exercise of this Option following the date of such
Registration Notice, the date on which the Option was exercised
shall, for purposes of Section 2 and 7(d) hereof, be deemed to be the
date on which the Registration Notice was given. The obligation of
the Company under this Section 10 shall be deemed satisfied only when
a registration statement covering all Agreement Shares specified in
your Registration Notice and not purchased by the Company pursuant to
Section 10(f) below shall have become effective and, (X) if the
method of disposition you specify is a firm commitment underwritten
public offering, all such Agreement Shares shall have been sold
pursuant thereto; or (Y) if it is not such an offering, has remained
in effect for the Required Effective Period specified herein or until
the distribution of the Agreement Shares covered thereby is
completed, whichever is shorter.
(c) The Company shall not be obligated to register Agreement
Shares pursuant to this Section 10 (i) more than once; (ii) in any
period of twelve consecutive months in which any Agreement Shares
have been registered pursuant to the exercise of a demand regis-
tration right granted pursuant to any other agreement between the
Company and you or Oprah Winfrey; or (iii) at any time when the
registration, offering or sale of Option Shares would violate any
law, rule or regulation. For purposes of the foregoing sentence, (X)
a registration under this Option or the corresponding provisions of
the option agreement issued to Oprah Winfrey on the date hereof shall
be aggregated (so that a registration initiated by you pursuant to
this Section 10 shall decrease by one the number of demand
registrations available to each of you and Oprah Winfrey pursuant
said corresponding provisions, and vice versa) and (Y) any request
for registration given by you shall, as a condition to its effective-
ness, be confirmed in writing by Oprah Winfrey (provided that she is
then competent to give such confirmation). If any Agreement Shares
included in a registration statement filed pursuant to this Section
10 were issued upon the exercise of any other stock option granted to
Page 111 of 124 Pages<PAGE>
<PAGE>
you or Oprah Winfrey pursuant to the Harpo Agreement, the number of
"demand" registration rights granted to you and to Oprah Winfrey pur-
suant to such stock option or stock options shall each be reduced by
one.
(d) The Company shall be entitled to include in any
registration statement referred to in this Section 10, for sale in
accordance with the method of disposition you specify, shares of
Common Stock to be sold by the Company for its own account or by
other security holders of the Company for their accounts, or both,
except as and to the extent that, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten
public offering), such inclusion would adversely affect the marketing
of the Agreement Shares to be sold.
(e) The procedures for registration of Agreement Shares under
this Section 10 shall conform to the following:
(1) Obligations of the Company. If and whenever the
Company is required by the provisions of Section 10 or 11 to effect
the registration of Agreement Shares, the Company will:
(i) Prepare and file with the Commission a
registration statement with respect to such securities and use its
best efforts to cause such registration statement to become and
remain effective for the Required Effective Period or until the
securities covered by such registration statement have been sold in
accordance with the method of disposition specified by you in your
Registration Notice, whichever is shorter, and prepare and file with
the Commission such amendments or supplements to such registration
statement and supplements to the prospectus contained therein as may
be necessary to keep such registration statement effective for the
Required Effective Period or until the shares covered by such regis-
tration statement have been sold in accordance with such method of
disposition, whichever is shorter;
(ii) If the offering is to be underwritten in
whole or in part, enter into a written underwriting agreement in form
and substance reasonably satisfactory to the managing underwriter or
underwriters of the public offering of such securities;
(iii) Furnish to the shareholders participating in
such registration and to the underwriters of the securities being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other
documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(iv) Use its best efforts to register or qualify
the shares covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as you may
reasonably request within 20 days following the original filing of
Page 112 of 124 Pages<PAGE>
<PAGE>
such registration statement, except that the Company shall not for
any purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified;
(v) Notify you promptly after it shall receive
notice thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming a part of
such registration statement has been filed;
(vi) Notify you promptly of any request by the
Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(vii) Prepare and file with the Commission,
promptly upon your request, any amendments or supplements to such
registration statement or prospectus which, in the opinion of your
counsel, are required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of the
Option Shares by you;
(viii) Prepare and promptly file with the
Commission and promptly notify you of the filing of such amendment or
supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions if, at the time when
a prospectus relating to such shares is required to be delivered
under the Securities Act, any event shall have occurred as the result
of which any such prospectus or any other prospectus as then in
effect would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein,
in the light of the circumstances in which they were made, not
misleading;
(ix) In case you or any underwriters for you is
required to deliver a prospectus at a time when the prospectus then
in effect may no longer be used under the Securities Act, prepare
promptly upon request such amendment or amendments to such registra-
tion statement and such prospectus or prospectus as may be necessary
to permit compliance with the requirements of the Securities Act;
(x) Advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance of any stop order
by the Commission suspending the effectiveness of such registration
statement; or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop
order should be issued;
(xi) If such registration is by way of an
underwritten public offering and if you so request, use its best
efforts to cause counsel and the independent certified public
accountants to the Company to furnish on the effective date of the
Page 113 of 124 Pages<PAGE>
<PAGE>
registration statement and at the closing provided for in the
underwriting agreement, (i) an opinion dated such date, of the
counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to you,
covering such matters with respect to the registration statement and
prospectus and each amendment or supplement thereto, proceedings
under state and federal securities laws and other matters relating to
the Company, the securities included in the registration statement
and the offer and sale of such securities as are customarily the
subject of opinions of issuer's counsel provided to underwriters at
or about the time such registration statement becomes effective and
the sale is closed; and (ii) a letter dated each such date, from the
independent certified public accountants of the Company, addressed to
the underwriters, if any, and to you, stating that they are
independent certified public accountants within the meaning of the
Securities Act and providing such assurances as are customarily
provided by the independent certified public accountants for an
issuer in connection with the registration of securities, including
information as to the period ending not more than five business days
prior to the date of such letter with respect to the registration
statement and prospectus, as the underwriters or you may reasonably
request. If the furnishing of such opinion and/or letter causes
Company to incur any additional cost or expense, you agree to
reimburse Company therefor at the closing provided for in the under-
writing agreement.
(2) Obligations of Option Holder. It shall be a
condition to the inclusion of any Agreement Shares in a registration
statement that the holder thereof shall cooperate in the execution
and filing of the registration statement and any necessary state
securities law filings, and if the offering is to be underwritten,
that such holder become a party to the underwriting agreement and, if
so requested by the managing underwriter, execute and deliver Powers
of Attorney and/or custodial agreements or other suitable
arrangements as the managing underwriter deems reasonably necessary
in order to insure orderly sale of the shares.
As among the holders of shares included in any registration
statement, decisions respecting the terms and conditions of any
underwriting agreements shall be made by the party initiating the
registration; so that in the case of a registration required pursuant
to a request by you under Section 10, determinations with respect to
the underwriting agreement shall be made by you, in your reasonable
judgment, after appropriate consultation with the Company and with
other persons whose shares are to be included in such offering; and
if you are party to a registration statement pursuant to Section 11,
you shall not have the right to make such determinations, but shall
be informed of them, and consulted with respect thereto.
(f) Within ten (10) business days following receipt of a
Registration Notice, the Company may elect, by written notice to you,
to purchase all or any portion of the Agreement Shares specified by
you in such Registration Notice for a purchase price equal to the
Page 114 of 124 Pages<PAGE>
<PAGE>
closing price of the Common Stock on the date such notice was given.
In the event that the Company elects to purchase any of the Agreement
Shares specified by you in such notice, the delivery of such
Agreement Shares against payment therefor shall take place on the
fifth business day following receipt by you of the Company's election
notice. In the event that the Company does not elect to purchase all
of the Agreement Shares specified by you in such Registration Notice,
the Company shall register under the Securities Act all the Agreement
Shares not so purchased, in the manner provided above.
11. Incidental Registration. If the Company at any time
(other than pursuant to Section 10 hereof) proposes to register any of its
Common Stock under the Securities Act for sale to the public, whether for
its own account or for the account of other security holders or both
(except with respect to registration statements on Forms S-4 or S-8 or
another form not available for registering the Option Shares for sale to
the public), it will give written notice at such time to you of its inten-
tion to do so. Upon your written request, given within 30 days after
receipt of any such notice by the Company, to register any of the Option
Shares that you have purchased, or will purchase on or before the effective
date of such registration statement, pursuant to the exercise of the Option
(which request shall state the intended method of disposition thereof), the
Company will use its best efforts to cause such Option Shares to be
included in the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent requisite to permit
the sale or other disposition by you of the Option Shares so registered.
In the event that any registration pursuant to this Section 11 shall be, in
whole or in part, an underwritten public offering of Common Stock, any
request by you pursuant to this Section 11 to register Option Shares shall
specify that either (i) such Option Shares are to be included in the
underwriting on the same terms and conditions as the shares of Common Stock
otherwise being sold through underwriters under such registration; or (ii)
such Option Shares are to be sold in the open market without any under-
writing, on terms and conditions comparable to those normally applicable to
offerings of common stock in reasonably similar circumstances. The number
of Option Shares to be included in such an underwriting may be reduced if
and to the extent that the managing underwriter shall be of the opinion
that such inclusion would adversely affect the marketing of the securities
to be sold therein by the Company or other security holders of the Company.
Notwithstanding anything to the contrary contained in this
Section 11, in the event that there is a firm commitment underwritten
public offering of securities of the Company pursuant to a registration
covering Option Shares and you do not elect to sell any Option Shares to
the underwriters of the Company's securities in connection with such
offering, you agree to refrain from selling any Option Shares during the
period of distribution of the Company's securities by such underwriters and
Page 115 of 124 Pages<PAGE>
<PAGE>
the period in which the underwriting syndicate participates in the after
market; provided, however, that you shall, in any event, be entitled to
sell Option Shares commencing on the 150th day after the effective date of
such registration statement.
12. Expenses.
(a) The expenses incurred by the Company in complying with
the registration pursuant to Section 10 and all registrations pursuant to
Section 11 hereof shall be paid as follows:
(i) all registration and filing fees, printing expenses, fees
and disbursements of counsel and independent public accountants for
the Company, fees of the National Association of Securities Dealers,
Inc. and/or the New York Stock Exchange, transfer taxes, fees of
transfer agents and registrars, costs of insurance and other costs
not described in (ii) below shall be paid by the Company; and
(ii) fees and expenses of your counsel, and all underwriting
discounts and selling commissions applicable to the sale of Agreement
Shares sold by you, and any additional cost or expense incurred by
the Company pursuant to your request under Section (10)(e)(1)(xi),
shall be paid by you.
13. Indemnification. In the event of a registration of
Agreement Shares under the Securities Act pursuant to Section 10 or 11
hereof, the Company will indemnify and hold you harmless against any
losses, claims, damages or liabilities, joint or several, to which you may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such Option Shares were registered under the Securities Act
pursuant to Section 10 or 11, any preliminary prospectus or final prospec-
tus contained therein, or any amendment or supplement thereof, or arise out
of or are based upon 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, and will reimburse you for any legal or
other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case if and to the
extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished in
writing by you for inclusion in such registration statement.
In the event of a registration of any of the Agreement Shares
under the Securities Act pursuant to Section 10 or 11 hereof, you will
indemnify and hold harmless the Company and each person, if any, who
controls the Company within the meaning of the Securities Act, each officer
Page 116 of 124 Pages<PAGE>
<PAGE>
of the Company who signs the registration statement, each director of the
Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or such
officer or director or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Agreement
Shares were registered under the Securities Act pursuant to Section 10 or
11, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon 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, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that
you will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished
to the Company by you in writing for inclusion in such registration
statement.
Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if
a claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to any indemnified party other than under this
Section 13. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake
the defense thereof with counsel satisfactory to such indemnified party,
and, after notice from the indemnifying party to such indemnified party of
its election so to assume and undertake the defense thereof, the indemnify-
ing party shall not be liable to such indemnified party under this Sec-
tion 13 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; 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 there may be reasonable defenses available to it
which are different from or additional to those available to the
indemnifying party, or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
Page 117 of 124 Pages<PAGE>
<PAGE>
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of
such action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
Notwithstanding the foregoing, any indemnified party shall have
the right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party shall have failed to retain counsel
for the indemnified person as aforesaid or (ii) the indemnifying party and
such indemnified party shall have mutually agreed to the retention of such
counsel. It is understood that the indemnifying party shall not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm
qualified in such jurisdiction to act as counsel for the indemnified party.
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss
or liability by reason of such settlement or judgment.
If the indemnification provided for in the first two paragraphs
of this Section 13 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein,
then each indemnifying party shall in lieu of indemnifying such indemnified
party contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or actions in such
proportion as appropriate to reflect the relative fault of the Company, on
the one hand, and you, on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
actions as well as any other relevant equitable considerations, including
the failure to give any notice under the third paragraph of this
Section 13. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact relates to information supplied by the Company, on the one hand, or
you, on the other, and to the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company and you agree that it would not be just and
equitable if contributions pursuant to this paragraph were determined by
pro rata allocation or by any other method of allocation which did not take
account of the equitable considerations referred to above in this
paragraph. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities or action in respect thereof,
referred to above in this paragraph, shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connec-
tion with investigating or defending any such action or claim. No person
Page 118 of 124 Pages<PAGE>
<PAGE>
guilty of fraudulent misrepresentations (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Sec-
tion 13 shall be on such other terms and conditions as are at the time
customary and reasonably required by such underwriters. Upon your reason-
able request, or upon the reasonable request of any underwriter of
Agreement Shares, the Company shall obtain, if reasonably available, an
insurance policy covering the risks described above in this Section 13 in
an amount and with a deductible reasonably requested by you or such
underwriter and naming you, any underwriter of such stock and any person
controlling you or such underwriter as beneficiaries. The costs of
obtaining and maintaining any such insurance shall be borne by the Company.
14. Sale of Option Shares.
(a) You hereby agree to limit your sales of Agreement Shares
so that, except for sales pursuant to underwritten, firm commitment public
offerings, your sales of Agreement Shares, aggregated with sales of
Agreement Shares by Oprah Winfrey, shall not exceed in any three-month
period the greater of (i) one percent of the outstanding shares of Common
Stock of the Company, as disclosed in its public report most recently filed
with the Securities and Exchange Commission before the date of any sale and
(ii) the average weekly reported volume of trading in Common Stock of the
Company on the New York Stock Exchange and all other national securities
exchanges during the four calendar weeks preceding the date of any sale;
provided however, that upon any "Change in Control" (as such term is
defined in Exhibit B of the Harpo Amendment) of the Company, the foregoing
restriction shall be reduced or eliminated to the extent that any volume
restrictions on resales of Common Stock that then apply to Roger King
and/or any other person who was an executive officer of the Company prior
to such Change in Control are more favorable than those afforded to you
pursuant to this Option. Notwithstanding anything to the contrary con-
tained in this Agreement, you shall not be entitled to register, sell or
dispose of any Agreement Shares that are subject to any liens, claims,
security interests and other encumbrances of any kind, unless and until the
same are removed (or will be removed in conjunction with their sale).
(b) In order to secure the repayment to the Company of the
Secured Amount (as defined in the Harpo Amendment) pursuant to the Harpo
Agreement, you hereby grant to the Company a first priority lien and
security interest (the "Security Interest") in (i) your rights under this
Option, (ii) all Option Shares now or hereafter issuable or issued pursuant
to the exercise of the Option and (iii) all proceeds thereof (collectively,
the "Stock Option Collateral"), provided that, unless and until the Company
notifies you that the amount of Harpo's Share of Revenues (as defined in
the Harpo Amendment) which the Company reasonably projects at the time of
Page 119 of 124 Pages<PAGE>
<PAGE>
such notice will be payable to Harpo would be inadequate to fully secure
the Secured Amount (an "Additional Security Notice"; such notice
specifying, in reasonable detail, the amount of such inadequacy (the
"Security Shortfall")), you may exercise the Option, sell the Option Shares
issued to you upon such exercise and retain the proceeds thereof without
restriction. The Security Interest shall, in any event, be limited to such
number of shares of Common Stock (and to the Option to the extent corre-
sponding to such shares) that, as of the date of such Additional Security
Notice, would, upon sale at a price per share equal to the closing price of
the Common Stock on the New York Stock Exchange, generate Net Realizable
Value equal to the projected amount of the Security Shortfall. The Net
Realizable Value of an Option Share at any time shall be the fair market
value of such share at such time less the sum of (i) the Option Price for
such Option Share, and (ii) a provision for taxes equal to the difference
between such fair market value and such Option Price (the "Option Gain")
multiplied by the highest rate of federal and state income tax to which the
Option Gain will be subject (with offset for deductibility of such state
taxes). At any time that any Stock Option Collateral is subject to the
Security Interest, you may obtain its release from the Security Interest by
substituting alternate collateral, as more fully set forth in the Security
and Pledge Agreement dated as of March 17, 1994 among you, the Company,
Harpo, Jacobs & Company and Oprah Winfrey (the "Security and Pledge Agree-
ment"). You hereby agree to take such steps as are reasonably requested by
the Company to perfect the Security Interest, including the execution and
filing of UCC-1 financing statements in such form as reasonably requested
by the Company, the delivery to the Company of the certificates evidencing
the Option Shares, the delivery to such third-party financial inter-
mediaries as may from time to time be requested by the Company of written
notice confirming the Security Interest and obtaining the written confirma-
tion and agreement of any such financial intermediaries that such Option
Shares and the proceeds thereof are subject to the Security Interest, and
that such financial intermediaries shall hold the Option Shares and the
proceeds thereof as agent for the Company, as pledgee, subject to such
written confirmation and agreement. Upon the occurrence of an Event of
Default (as such term is defined in the Security and Pledge Agreement), the
Company shall have all of the rights and remedies of a secured party under
the Uniform Commercial Code in all relevant jurisdictions with respect to
the Stock Option Collateral.
15. Defaults. It shall constitute a breach of this
Agreement by either party if such party shall fail or refuse to fully
perform any of its obligations under this Agreement and shall not have
cured such failure or refusal within 30 days after receipt from the other
party of written notice advising it of such failure or refusal, or, in the
event that such failure or refusal is of a nature that cannot be cured
within 30 days, then if such party shall not begin to cure the same within
such 30-day period and thereafter diligently prosecute such cure to comple-
tion.
Page 120 of 124 Pages<PAGE>
<PAGE>
16. Successors; No Assignment. Each of the covenants, terms,
provisions and agreements contained herein shall be binding upon and inure
to the benefit of the parties' successors and assigns. Neither the Option,
nor any of the rights granted to you pursuant hereto, may be transferred or
assigned (including, without limitation, by operation of law), except by
will or the laws of descent and distribution.
17. Withholding Taxes. In the event that the Company is
required to withhold any Federal, state or local taxes in respect of the
grant of the Option or in respect of the acquisition of any Option Shares,
the Company may deduct from any payments of any kind otherwise due to you
under the Harpo Agreement the aggregate amount of such Federal, state or
local taxes required to be so withheld or, if such payments are insuffi-
cient to satisfy such Federal, state or local taxes or if no such payments
are due or to become due, then, you will be required to pay to the Company,
or to make other arrangements satisfactory to the Company regarding payment
to the Company of, the aggregate amount of any such taxes. All matters
with respect to the total amount of taxes to be withheld shall be
determined by the Company in its sole discretion.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. If any one
or more provisions of this Agreement shall be found to be illegal or
unenforceable in any respect, the validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
Page 121 of 124 Pages<PAGE>
<PAGE>
Please acknowledge receipt of this Option Agreement and
agreement with the terms hereof by signing the enclosed copy of this Option
Agreement in the space provided below.
KING WORLD PRODUCTIONS, INC.
By
Accepted and Agreed:
Jeffrey D. Jacobs
Page 122 of 124 Pages<PAGE>
<PAGE>
King World Productions, Inc.
OPTION EXERCISE FORM
Jeffrey D. Jacobs hereby exercises his right to purchase
________ shares of Common Stock, $.01 par value, of King World Productions,
Inc. pursuant to the option granted to him on March 17, 1994, memorialized
in the Option Agreement, dated as of October 6, 1995, between him and King
World Productions, Inc.
Date:__________________ __________________________
Jeffrey D. Jacobs
Send a completed copy of this Option Exercise Form to:
Vice President - Finance
King World Productions, Inc.
c/o King World Corporation
830 Morris Turnpike
Short Hills, New Jersey 07078
Page 123 of 124 Pages<PAGE>
