<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended February 29, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from _____ to _____
Commission File Number 1-9244
KING WORLD PRODUCTIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-2565808
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
1700 Broadway
New York, New York 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212 315-4000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock, $.01 par value,
37,490,595 shares outstanding as of April 4, 1996.
<PAGE> 2
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(Dollars in thousands)
<TABLE>
<CAPTION>
February 29, August 31,
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ............ $ 401,893 $ 446,896
Accounts receivable (net of
allowance for doubtful accounts of
$4,196 at February 29, 1996 and
August 31, 1995) ................. 75,027 51,356
Producer loans, advances and
deferred costs ..................... 82,550 90,085
Other current assets ................. 1,882 506
--------- ---------
Total current assets ........ 561,352 588,843
--------- ---------
LONG-TERM INVESTMENTS, at cost,
which approximates market ........ 126,830 82,129
--------- ---------
FIXED ASSETS, at cost .................... 13,180 12,955
Less - accumulated depreciation
and amortization ..................... (10,093) (9,703)
--------- ---------
3,087 3,252
--------- ---------
PRODUCER ADVANCES
AND OTHER ASSETS ..................... 96,346 12,562
--------- ---------
$ 787,615 $ 686,786
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these balance sheets.
2
<PAGE> 3
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
February 29, August 31,
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable and
accrued liabilities ............. $ 16,940 $ 11,070
Payable to producers and others ..... 78,523 74,349
Income taxes payable ................ 31,040 25,630
--------- ---------
Total current liabilities .... 126,503 111,049
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value;
5,000,000 shares authorized,
none issued ..................... -- --
Common stock, $.01 par value;
75,000,000 shares autho-
rized, 50,134,089 shares
and 49,893,745 shares issued
at February 29, 1996 and
August 31, 1995, respectively ... 501 499
Paid-in capital ..................... 94,177 87,628
Retained earnings ................... 861,475 782,651
Treasury stock, at cost; 13,141,394
shares at February 29, 1996 and
August 31, 1995 ................... (295,041) (295,041)
--------- ---------
661,112 575,737
--------- ---------
$ 787,615 $ 686,786
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these balance sheets.
3
<PAGE> 4
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
Feb. 29, Feb. 28, Feb. 29, Feb. 28,
1996 1995 1996 1995
---- ---- ---- ----
(Dollars in thousands except per share data)
<S> <C> <C> <C> <C>
REVENUES ........................ $176,784 $143,732 $338,923 $290,816
-------- -------- -------- --------
EXPENSES:
Producers' fees, programming
and other direct
operating costs ............. 108,040 85,334 206,131 173,772
Selling, general and
administrative expenses ..... 19,575 17,734 38,046 35,803
-------- -------- -------- --------
127,615 103,068 244,177 209,575
-------- -------- -------- --------
Income from operations ...... 49,169 40,664 94,746 81,241
INTEREST AND
DIVIDEND INCOME ............... 6,224 5,052 12,907 9,030
NONRECURRING GAIN - Sale of
Buffalo Broadcasting Co. Inc. -- -- 14,060 --
-------- -------- -------- --------
Income before provision
for income taxes .......... 55,393 45,716 121,713 90,271
PROVISION FOR INCOME TAXES ...... 20,231 15,825 42,889 32,512
-------- -------- -------- --------
Net income .................. $ 35,162 $ 29,891 $ 78,824 $ 57,759
======== ======== ======== ========
PRIMARY EARNINGS PER
SHARE ......................... $ .93 $ .80 $ 2.10 $ 1.55
======== ======== ======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
4
<PAGE> 5
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
----------------
Feb. 29, Feb. 28,
1996 1995
---- ----
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................... $ 78,824 $ 57,759
Items not affecting cash:
Gain on sale of Buffalo
Broadcasting Co. Inc. ......... (14,060) --
Depreciation and amortization ... 390 301
Change in assets and liabilities:
Accounts receivable ............. (23,645) (14,538)
Producer loans, advances and
deferred costs ................ (72,466) (4,434)
Accounts payable and accrued
liabilities ................... 5,870 (654)
Payable to producers and others . 8,431 6,612
Income taxes payable ............ 5,411 (2,801)
Other, net ...................... (5,185) (497)
--------- ---------
Net cash (used in) provided by
operating activities ............... (16,430) 41,748
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in investments ... (44,701) 20,347
Proceeds from sale of Buffalo
Broadcasting Co. Inc. .............. 9,802 --
Additions to fixed assets ............ (225) (1,088)
--------- ---------
Net cash (used in) provided by
investing activities ............... (35,124) 19,259
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 6,551 3,080
Purchase of treasury stock ........... -- (6,111)
--------- ---------
Net cash provided by (used in)
financing activities ............... 6,551 (3,031)
--------- ---------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS ..................... (45,003) 57,976
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD ............................ 446,896 341,857
--------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD ............................ $ 401,893 $ 399,833
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.
5
<PAGE> 6
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of significant accounting policies
Principles of consolidation
The accompanying consolidated financial statements include the
accounts of King World Productions, Inc. ("King World") and its wholly-owned
subsidiaries. All significant intercompany transactions have been eliminated.
Unless the context suggests otherwise, the "Company", as used herein, means King
World and its subsidiaries.
The unaudited consolidated financial statements for the six
months and three months ended February 29, 1996 have been prepared in accordance
with the instructions to Form 10-Q and include, in the opinion of management,
all adjustments (consisting only of normal recurring accruals) necessary for a
fair presentation of the results of operations for such periods. They do not,
however, include all of the information and disclosures required by generally
accepted accounting principles for complete financial statements. For further
information, reference is made to the consolidated financial statements for the
fiscal year ended August 31, 1995 and the footnotes related thereto included in
the Company's Annual Report on Form 10-K from which the August 31, 1995 balances
presented herein have been derived. The results of operations for the six months
and three months ended February 29, 1996 are not necessarily indicative of the
results of operations for the full year.
Revenue recognition
License fees from first-run syndicated television properties
are recognized at the commencement of the license period pursuant to
noncancelable agreements and as each show is made available to the licensee via
satellite transmission. Because transmission to the satellite takes place, on
the average, no more than two to three days prior to the broadcast of the
programming, revenues are recognized on or about the air date.
The Company typically receives a portion of the fees derived
from the licensing of syndicated television programming in the form of retained
advertising time, which is sold to advertisers by Camelot Entertainment Sales,
Inc. ("Camelot"), a wholly-owned subsidiary of the Company. Such revenues are
recognized at the same time as the cash portion of the license fees derived from
such programming is recognized, in amounts
6
<PAGE> 7
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of significant accounting policies (continued)
adjusted for expected ratings. That portion of recognized revenue that is to be
paid to the producers and owners of the licensed program material is accrued as
the license fees are earned.
License fees for non-first-run syndicated properties are
recognized at the gross contract amount (net of discount to present value for
license periods greater than one year) at the commencement of the license
period.
Principal properties
The Company's principal properties are licenses to distribute
The Oprah Winfrey Show, Wheel of Fortune and Jeopardy!; and Inside Edition, a
first-run syndicated series produced and distributed by the Company. The Oprah
Winfrey Show accounted for approximately 38% and 36% of revenues for the six
months ended February 29, 1996 and February 28, 1995, respectively; Wheel of
Fortune accounted for approximately 19% and 21% of revenues for such periods;
Jeopardy! accounted for approximately 16% and 18% of revenues for such periods;
and Inside Edition accounted for approximately 8% of revenues for each such
period.
Stockholders' equity
Primary earnings per share has been computed using the
weighted average number of common shares outstanding of 37,698,000 and
37,156,000, respectively, for the three months ended February 29, 1996 and
February 28, 1995 and 37,484,000 and 37,259,000, respectively, for the six
months ended February 29, 1996 and February 28, 1995, which include the dilutive
effect from the assumed exercise of vested and unvested stock options
outstanding as of the end of each such period. The difference between primary
and fully diluted earnings per share for all periods presented was not
significant.
7
<PAGE> 8
KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(2) Nonrecurring gain - sale of Buffalo Broadcasting Co. Inc.
In October 1995, the Company closed its agreement to sell
WIVB-TV, the CBS-affiliated VHF television station in Buffalo, New York, to LIN
Television Corporation for $95 million in cash. As a result of this transaction,
the Company recorded a nonrecurring gain of approximately $14.1 million, of
which approximately $9.8 million represents cash proceeds to the Company from
the sale. The remaining $4.3 million of such gain represents the reversal of
previously recognized accounting losses (with no associated income tax effect)
in excess of the Company's original investment.
(3) Producer advances
On January 2, 1996, the Company paid Harpo, Inc. ("Harpo"),
the producer of The Oprah Winfrey Show, two advances of $65 million each against
its aggregate minimum participation payments for the 1996-1997 and 1997-1998
broadcast seasons. Based on the license agreements in place for the seasons
covered by such advances, the Company believes that revenues from the series
will be sufficient to enable the Company to recoup such advances. Such advances
are refundable to the Company by Harpo and Ms. Winfrey if King World terminates
such license agreements with Harpo due to Harpo's failure to deliver episodes of
The Oprah Winfrey Show.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
RESULTS OF OPERATIONS
COMPARISON OF SIX MONTHS AND THREE MONTHS ENDED FEBRUARY 29, 1996
AND FEBRUARY 28, 1995
Revenues
Revenues for the first six months of fiscal 1996 increased by
approximately 17% compared to the first six months of the prior fiscal year.
Such increase was primarily due to increased cash license fees from The Oprah
Winfrey Show and an increase in revenues derived from the sale of retained
advertising time on The Oprah Winfrey Show, Inside Edition and American Journal,
as a result of a 50% increase in the number of 30-second advertising spots
retained by the Company in each such series commencing with the 1995-1996
television season. In addition, revenues from King World Direct, the Company's
direct response marketing subsidiary, increased substantially in the first six
months of fiscal 1996 compared with the first six months of fiscal 1995, due
primarily to the successful telemarketing campaigns for the Wild America video
series and the Sears Craftsman Robogrip pliers. King World Direct operates in a
seasonal business with revenues heavily reliant on the Christmas selling season.
Consequently, King World Direct's revenues and earnings have historically been
higher in the Company's second fiscal quarter than in the first, third and
fourth fiscal quarters. For the three months ended February 29, 1996, the
Company's revenues were approximately 23% higher than the three months ended
Febru- ary 28, 1995, due primarily to the same factors as those discussed above
for the six month period.
The Oprah Winfrey Show, Wheel of Fortune, Jeopardy! and Inside
Edition accounted for approximately 38%, 19%, 16% and 8%, respectively, of the
Company's revenues for the first six months of fiscal 1996 compared to 36%, 21%,
18% and 8%, respectively, for the first six months of fiscal 1995. American
Journal accounted for approximately 4% of the Company's revenues for the first
six months in each of fiscal 1996 and fiscal 1995, and Rolonda accounted for
approximately 2% of the Company's revenues for the first six months of fiscal
1996 and 3% for the first six months of fiscal 1995. King World Direct accounted
for approximately 7% of the Company's revenues for the first six months of
fiscal 1996 and 1% for the first six months of fiscal 1995.
For the three months ended February 29, 1996, The Oprah
Winfrey Show, Wheel of Fortune, Jeopardy! and Inside Edition accounted for
approximately 36%, 18%, 16% and 8%, respectively, of the Company's revenues
compared to 36%, 21%, 18% and 8%, respectively, for the three months ended
February 28, 1995. American Journal accounted for approximately 4% of the
Company's
9
<PAGE> 10
revenues for each of the three months ended February 29, 1996 and February 28,
1995, and Rolonda accounted for approximately 2% of the Company's revenues for
the three months ended February 29, 1996 and 3% for the three months ended
February 28, 1995. King World Direct accounted for approximately 10% of the
Company's revenues for the three months ended February 29, 1996 and 2% for the
three months ended February 28, 1995.
Producers' fees, programming and other direct operating costs
Producers' fees, programming and other direct operating costs
primarily include the producers' share of both cash license fees from the sale
of programming to television stations and revenues derived from the sale of
retained advertising time to advertisers with respect to programming distributed
by the Company; participation fees payable by the Company to producers and
talent; production and distribution costs for first-run syndicated programming;
and the direct operating costs of King World Direct. The share of license fees
payable by the Company to producers, talent and others is generally paid as cash
license fees and revenues derived from the sale of retained advertising time are
received from television stations and advertisers.
Producers' fees, programming and other direct operating costs
increased by approximately 19% in the first six months of fiscal 1996 compared
to the first six months of fiscal 1995, primarily as a result of the higher
level of revenues generated by The Oprah Winfrey Show (a portion of which is
payable to the producer), increased production fees associated with The Oprah
Winfrey Show in the 1995-1996 television season and increased operating expenses
for King World Direct. For the three months ended February 29, 1996, producers'
fees, programming and other direct operating costs increased by approximately
27% compared to the three months ended February 28, 1995, due primarily to the
same factors as those discussed above for the six month period.
Selling, general and administrative expenses
In December 1995, the Company entered into new employment
agreements with its President and Chief Executive Officer and its Chairman of
the Board. The agreements provide, among other things, for annual
performance-based bonuses, including bonuses payable upon the introduction of
new shows and bonuses which vary depending on the Company's net income and
Common Stock price during preestablished measurement periods. As a result, the
Company's compensation expense will increase if the Company introduces a new
series in syndication, if the Company's net income increases or if the Common
Stock price exceeds the specified levels during the applicable measurement
periods. The Company has recognized the proportionate share of certain of these
bonuses in its operating results for the first and second quarters of fiscal
1996.
10
<PAGE> 11
Selling, general and administrative expenses for the first six
months and second quarter of fiscal 1996 increased by approximately 6% and 10%,
respectively, from the corresponding periods of fiscal 1995. Such increases were
primarily due to an increase in executive compensation costs, as discussed
above, and development and promotional costs associated with Off the Hook, a
first-run strip series possibly to be produced and distributed by the Company
for debut in the 1996-1997 television season.
Net income and primary earnings per share
Due to the factors discussed above, the Company's operating
income for the six months and three months ended February 29, 1996 increased by
approximately 17% and 21%, respectively, compared to the corresponding period of
the prior year. In addition, during the first quarter of fiscal 1996, the
Company recorded a nonrecurring gain of approximately $14.1 million on the sale
of Buffalo Broadcasting Co. Inc. ("Buffalo") to LIN Television Corporation.
Net income increased by approximately $21.1 million, or 36%,
for the six months ended February 29, 1996, reflecting the increase in operating
income, the nonrecurring gain on the sale of Buffalo and higher interest income
earned on the Company's cash and investments. In addition, the Company's
effective tax rate for the first six months of fiscal 1996 was lower than in the
first six months of fiscal 1995, due principally to the nontaxability of a
portion of the Buffalo gain. Primary earnings per share increased by $.55 per
share, or approximately 35%, to $2.10 per share in the six months ended February
29, 1996 as a result of the increase in net income. Excluding the nonrecurring
gain on the sale of Buffalo, net income increased by approximately $10.8
million, or 19%, for the six months ended February 29, 1996, and primary
earnings per share increased by $.28 per share, or approximately 18%, for such
period to $1.83 per share.
For the three months ended February 29, 1996, net income
increased by approximately $5.3 million, or 18%, reflecting the increase in
operating income and higher interest income earned on the Company's cash and
investments, offset by a slightly higher effective tax rate for the fiscal 1996
second quarter as compared to the fiscal 1995 second quarter. Primary earnings
per share increased by $.13 per share, or approximately 16%, to $.93 in the
three months ended February 29, 1996 as a result of the increase in net income.
The Company's results of operations are highly dependent upon
the viewing preferences of television audiences and the Company's ability to
acquire distribution rights to, or itself produce, television programming that
achieves broad and enduring audience acceptance. The success of the Company's
programming could be significantly affected by changes in viewer preferences
11
<PAGE> 12
or the unavailability of new programming or talent. Moreover, the amount of
revenue derived from the sale of retained advertising time is dependent upon a
large number of factors, such as household ratings, the demographic composition
of the viewing audience and economic conditions in general and in the
advertising business in particular.
Due to the success of the shows distributed by the Company and
in order to mitigate the influence of some of the factors referred to above, the
Company has been obtaining multi-year licenses and license renewals from
television stations for its principal distribution properties, extending as far
into the future as the 1999-2000 broadcast season. In general, these licenses
and renewals have been at rates as favorable or more favorable to the Company
than the rates applicable to the 1994- 1995 broadcast season. All such licenses
and renewals are contingent upon the continued production of the series by their
respective producers through the broadcast seasons for which the licenses run.
The Company believes that the impact of inflation on its
operations has not been significant.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires capital resources to fund development,
production and promotion costs of independently produced programming, including,
in some instances, advances to producers and talent, to produce its own programs
and to acquire distribution rights to new programming. In acquiring distribution
rights from independent producers, King World has tried to avoid making
significant capital commitments to such producers until it has obtained
broadcast commitments from a substantial number of television stations. As a
result of this strategy and the success of its existing syndication properties,
to date, King World has funded substantially all programming acquisition,
development and production costs and advances from its operations.
As King World has developed and produced its own programming
for syndication, it has assumed a greater portion of the risk associated with
the introduction of new series. The introductions of American Journal and The
Les Brown Show at the commencement of the 1993-1994 broadcast season, and
Rolonda, which premiered in January 1994, have necessitated the expenditure by
King World of substantial amounts to fund development, production and promotion
costs. The Company has funded and intends to continue to fund such costs out of
its internal cash resources.
12
<PAGE> 13
The distribution of television programming is highly
competitive and the Company may be obliged to offer, among other things,
guarantees and cash advances to acquire, renew or extend distribution rights.
Under the terms of the Company's agreement with Harpo, the Company has the
exclusive right, and has agreed, to distribute episodes of The Oprah Winfrey
Show produced through the 1999-2000 television season, subject to Harpo's and
Ms. Winfrey's right to decline to produce and host the show in any season after
the 1995-1996 season. To date, Harpo and Ms. Winfr- ey have committed to produce
and host the show through the 1997- 1998 broadcast season. Under the agreement,
the Company has, among other things, agreed to pay Harpo production fees and to
guarantee participation payments to Harpo at levels which, commencing with the
1995-1996 season, are substantially higher than those previously in effect. In
addition, in the 1997-1998 season and thereafter, the profit sharing
arrangements between Harpo and the Company currently in effect will terminate
and the Company will instead receive distribution fees based on a percentage of
gross revenues derived from the series. The Company has paid Harpo a $60 million
advance against its minimum participation payments for the 1995-1996 broadcast
season. As of February 29, 1996, approximately $6.5 million of such advance has
yet to be recouped. In addition, on January 2, 1996, the Company paid Harpo two
advances of $65 million each against its aggregate minimum participation
payments for the 1996-1997 and 1997-1998 broadcast seasons. Based on the license
agreements in place for the seasons covered by such advances, the Company
believes that revenues from the series will be sufficient to enable the Company
to recoup such advances. Such advances are refundable to the Company by Harpo
and Ms. Winfrey if King World terminates the agreement due to Harpo's failure to
deliver episodes of the series.
From time to time, the Company has used cash reserves and/or
borrowed funds to make acquisitions of and investments in broadcast and related
properties in the entertainment field, to repurchase shares of its Common Stock
and to fund development and production of new programming. The Company continues
to evaluate opportunities in these areas, and may seek to raise capital in
public or private securities markets to finance such activities if it considers
it advantageous to do so.
In December 1992, the Company announced that the Board of
Directors had approved a program to repurchase up to 2,000,000 shares of its
Common Stock from time to time in the open market and in privately negotiated
transactions. Through April 4, 1996, 1,698,800 shares of Common Stock were
repurchased in open market transactions, for aggregate consideration of
approximately $59.8 million (or approximately $35.20 per share), leaving 301,200
shares available for repurchase under such program. The Company intends to
continue to repurchase shares of Common Stock in the
13
<PAGE> 14
open market and in privately negotiated transactions if and when
it deems it advantageous to do so.
In October 1995, the Company closed its agreement to sell
WIVB-TV, the CBS-affiliated VHF television station in Buffalo, New York, to LIN
Television Corporation for $95 million in cash. As a result of this transaction,
the Company recorded a nonrecurring gain of approximately $14.1 million, of
which approximately $9.8 million represents cash proceeds to the Company from
the sale. The remaining $4.3 million of such gain represents the reversal of
previously recognized accounting losses (with no associated income tax effect)
in excess of the Company's original investment.
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
At the Company's 1996 annual meeting of stockholders, held on
January 19, 1996, an aggregate 29,352,312 shares of Common Stock were present in
person or by proxy. Votes cast for and against, abstentions and broker non-votes
for the matters submitted to a vote of security-holders were as follows:
(i) ELECTION OF DIRECTORS:
<TABLE>
<CAPTION>
Authority
Votes to Vote
Nominee For Withheld
- ------- --- --------
<S> <C> <C>
Diana King 31,005,872 576,240
Stephen W. Palley 31,144,170 437,942
Joel Chaseman 31,200,346 381,766
</TABLE>
(ii) ADOPTION OF KING WORLD PRODUCTIONS, INC. AMENDED
AND RESTATED STOCK OPTION AND RESTRICTED STOCK PURCHASE
PLAN:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Non-Votes
--- ------- ----------- ---------
<S> <C> <C> <C>
14,508,137 11,360,232 104,607 5,609,136
</TABLE>
(iii) APPROVAL OF PERFORMANCE BASED COMPENSATION ARRANGEMENTS
WITH THE COMPANY'S FIVE HIGHEST-PAID EXECUTIVE OFFICERS:
(a) Net Income Bonuses of Messrs. Michael King and
Roger King:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Non-Votes
--- ------- ----------- ---------
<S> <C> <C> <C>
21,482,876 4,149,780 340,322 5,609,136
</TABLE>
15
<PAGE> 16
(b) New Series Bonuses of Messrs. Michael King and
Roger King:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Non-Votes
--- ------- ----------- ---------
<S> <C> <C> <C>
21,288,164 4,334,676 350,136 5,609,136
</TABLE>
(c) New Show Profits Bonuses of Messrs. Michael King
and Roger King:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Non-Votes
--- ------- ----------- ---------
<S> <C> <C> <C>
21,267,683 4,360,628 344,665 5,609,136
</TABLE>
(d) Supplemental Bonuses of Messrs. Michael King and
Roger King:
<TABLE>
<CAPTION>
Votes Votes Broker
For Against Abstentions Non-Votes
--- ------- ----------- ---------
<S> <C> <C> <C>
21,403,194 4,222,826 346,956 5,609,136
</TABLE>
(iv) APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS FOR THE
FISCAL YEAR ENDING AUGUST 31, 1996:
<TABLE>
<CAPTION>
Votes Votes
For Against Abstentions
--- ------- -----------
<S> <C> <C>
31,339,019 99,056 144,037
</TABLE>
16
<PAGE> 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number Description
10.1. Employment Agreement, dated December 20, 1995, between
Mr. Roger King and the Registrant.
10.2. Employment Agreement, dated December 20, 1995, between
Mr. Michael King and the Registrant.
10.3* Agreement dated as of October 6, 1995 between the
Registrant and Harpo, Inc.
- --------------------------
* Certain information in this exhibit is deleted pursuant to a request to
the Securities and Exchange Commission for confidential treatment.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
KING WORLD PRODUCTIONS, INC.
By: /s/ Steven A. LoCascio
------------------------------------
Steven A. LoCascio
As Interim Chief Financial Officer
and on behalf of the Registrant
April 11, 1996
17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
- --- ----------- ----
<S> <C>
10.1. Employment Agreement, dated December 20, 19
1995, between Mr. Roger King and Registrant.
10.2. Employment Agreement, dated December 20, 32
1995, between Mr. Michael King and Registrant.
10.3* Agreement dated as of October 6, 1995 between 45
the Registrant and Harpo, Inc.
</TABLE>
- --------------------------
* Certain information in this exhibit is deleted pursuant to a request to
the Securities and Exchange Commission for confidential treatment.
<PAGE> 1
KING WORLD PRODUCTIONS, INC. EXHIBIT 10.1
1700 Broadway
New York, New York 10019
December 20, 1995
Roger King
1301 Spanish River Road
Boca Raton, Florida 33432
Dear Roger:
This letter, when accepted by you, shall constitute an
agreement as of December 1, 1995 between you and King World Productions, Inc.
("King World" or the "Company") with respect to the terms upon which you will be
employed by King World during the Employment Period (as hereinafter defined).
1. During the Employment Period, King World shall employ you,
and you hereby accept employment by King World, in the capacity of Chairman of
the Board and head of the Company's sales department, on the terms and subject
to the conditions set forth in this Agreement. The "Employment Period" shall
mean the period commencing on December 1, 1995 and ending on August 31, 2000 or
such earlier date on which this Agreement is terminated pursuant to the
provisions of Section 13 hereof. During the Employment Period, you shall
diligently perform the duties of your office and such other services as shall
from time to time be reasonably assigned to you by, or pursuant to resolution
of, King World's Board of Directors, and shall devote your entire business time,
skill and attention to the performance of such duties and services and your
other obligations hereunder.
2. As consideration for the services rendered by you
hereunder, during the Employment Period, you shall be entitled to base salary
compensation at the annual rate of $1,100,000 for the Company's fiscal year
ending August 31, 1996, such annual rate to be increased by $100,000 for each
subsequent fiscal year during the Employment Period in which you perform
services for King World hereunder. Your salary compensation shall be payable in
accordance with King World's standard payroll policy from time to time in
effect.
3. In order to induce you to accept employment with King World
and perform your obligations hereunder on the terms and conditions set forth
herein, King World will pay to you a lump-sum bonus of $2,000,000, in cash
within ten days after your acceptance of this Agreement; provided that if, prior
to September 1, 1998, your employment is terminated on your own initia-
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<PAGE> 2
tive, you shall promptly repay to the Company the unvested portion of such
bonus, which shall be determined by multiplying the amount of such bonus by the
number of months prior to September 1, 1998 following such termination
(including the month in which such termination occurred), and dividing the
result by thirty-six (36).
4. (a) For an initial period commencing on December 1, 1995
and ending August 31, 1996, and for each full fiscal year of the Company
thereafter ending within (or upon the termination of) the Employment Period, you
shall be entitled to a bonus (herein called the "Net Income Bonus") equal to the
sum of following amounts: (i) 1.5% of the first $50,000,000 of Modified
Consolidated Net Income; (ii) 2.0% of the next $50,000,000 of Modified
Consolidated Net Income; and (iii) 2.5% of the Modified Consolidated Net Income
in excess of $100,000,000, in each case for such initial period and full fiscal
year. For this purpose, "Modified Consolidated Net Income" shall mean the net
income of King World and its consolidated subsidiaries after taxes but before
extraordinary items, but only to the extent derived from sources other than New
Shows (as defined in Section 5(b)). The Modified Consolidated Net Income shall
be determined in accordance with generally accepted accounting principles
consistently applied, based on the books and records of the Company and its
consolidated subsidiaries on which the audited financial statements of the
Company and its consolidated subsidiaries are based; except that, to the extent
that any revenues and expenses are includable (as provided in Section 5(b)
below) in the New Show Profits for purposes of determining the New Show Profits
Bonus for any fiscal period, they shall be excluded in the determination of the
Net Income Bonus for such fiscal period (whether or not a New Show Profits Bonus
is in fact payable with respect to such fiscal period).
(b) At the end of each fiscal quarter of each fiscal year
during the Employment Period, the Compensation Committee of the Company's Board
of Directors (the "Compensation Committee") shall cause the Modified
Consolidated Net Income and the Net Income Bonus payable through the end of such
fiscal quarter to be determined. To the extent that the amount of the Net Income
Bonus payable through the end of such fiscal quarter exceeds the sum of all Net
Income Bonus payments theretofore made to you in respect of prior fiscal
quarters of the fiscal year to which such Net Income Bonus relates, the excess
shall be paid to you as soon as practicable after such determination is made;
and to the extent that the amount of all payments theretofore made to you in
respect of prior fiscal quarters of the fiscal year to which such Net Income
Bonus relates exceeds the amount of the Net Income Bonus payable to you through
the end of such fiscal quarter, you shall repay such excess to the Company
promptly after such determination is made.
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<PAGE> 3
(c) Notwithstanding the foregoing, if the Compensation
Committee in its sole judgment determines that, due to reasonably anticipated
losses or expenditures or for any other reason, it is more likely than not that,
upon the ultimate determination of your entitlement to a Net Income Bonus for a
given fiscal year, you will not be entitled to retain any amount that would
otherwise be payable to you on a quarterly basis pursuant to paragraph (b)
above, then the Compensation Committee shall defer the payment of such amount
until such time as the Compensation Committee determines that you are, or it is
more likely than not that you will be, entitled to receive and retain such
quarterly payment of the Net Income Bonus on a full fiscal year basis.
5. (a) The Company shall also pay you a bonus of $750,000 (a
"New Series Bonus") for each new first-run "strip" (i.e., Monday-Friday)
syndicated series that (i) is developed, or the distribution rights to which are
acquired, by King World during the Employment Period, (ii) premieres in a
television season that commences after the 1995-1996 television season but
before eighteen months after the termination of the Employment Period, (iii) is
produced, co-produced or distributed by King World and (iv) is cleared over the
course of any such season in domestic television markets covering at least 70%
of the domestic television viewing households, based on Nielsen ratings (each of
which series is hereinafter referred to as a "New Series"). The New Series Bonus
shall be paid to you promptly after the latest to occur of conditions (i)
through (iv) above. The New Series Bonus shall be a one-time payment bonus,
payable, if at all, one time with respect to each New Series, no matter during
how many television seasons such new Series is aired. A New Series Bonus shall
be payable hereunder if the criteria set forth above are satisfied, even if the
New Series is canceled during the television season in which it has been cleared
in 70% of the domestic television viewing households.
(b) The Company shall also pay you a New Show Profits Bonus
("New Show Profits Bonus") for each new show (including but not limited to each
New Series, if any) that is developed, or the distribution rights to which are
acquired, by King World during the Employment Period, premieres before eighteen
months after the termination of the Employment Period, and is produced, co-pro-
duced or distributed by King World (a "New Show"). The "New Show Profits Bonus"
with respect to each New Show for any fiscal year of the Company shall equal the
excess, if any, of (i) 5% of the excess of the cumulative (from inception)
revenues derived by King World from such New Show (and from any and all
ancillary rights deriving from such New Show, including merchandising,
theatrical and other commercial rights) through the end of the fiscal year for
which the determination is being made over the cumulative production and
development costs, including producers' fees, direct selling, marketing,
promotional expenses and other distribution expenses, all third-party
participations and other
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<PAGE> 4
payments, and all other direct out-of-pocket costs, in all cases to the extent
attributable to the New Show; over (ii) all payments of the New Show Profit
Bonus made with respect to such New Show for all prior fiscal years, provided
that payments made pursuant to Section 5(a) with respect to such New Show shall
be treated as an expense of such New Show but shall not be an offset against the
New Show Profits Bonus. Any New Show Profits Bonus owed to you for any fiscal
year shall be determined based on the books and records of the Company on which
the audited financial statements of the Company and its consolidated
subsidiaries are based, and shall be paid as soon as practicable after such
audited financial statements for such fiscal year become available. Any payment
of a New Show Profits Bonus shall be accompanied by a statement setting forth in
reasonable detail the calculation of the amounts owing and paid to you. The New
Show Profits Bonus shall be payable with respect to any New Show only for so
long as King World or any of its consolidated subsidiaries derives any revenues
from the New Show, provided that profits realized by the Company from any direct
or indirect disposition of any New Show by the Company shall be subject to the
rights granted pursuant to this Section 5(b). The amount of such profits shall
be determined by the Company's independent public accountants.
6. (a) With respect to each fiscal year of the Company ending
within (or upon the termination of) the Employment Period, you shall be entitled
to a supplemental bonus as described in this Section 6, provided that the
Compensation Committee determines that the average daily closing price of the
Common Stock for such year (the "Average Yearly Price") exceeded $38 per share.
(b) If the Average Yearly Price for any such fiscal year
equals or exceeds $39.50, the fair market value of the Common Stock on the date
hereof, the supplemental bonus for such year shall be equal to 1.0% of the
Modified Consolidated Net Income for such year. If such Average Yearly Price
exceeds $38, but is less than $39.50, the supplemental bonus for such year shall
be equal to 1.0% of the Modified Consolidated Net Income for such year
multiplied by a fraction, the numerator of which is the excess of such Average
Yearly Price over $38, and the denominator of which is $1.50.
(c) The full amount by which any supplemental bonus payment
was reduced below 1.0% of Modified Consolidated Net Income for any year pursuant
to the second sentence of paragraph 6(b) shall be payable to you if the Average
Yearly Price for any subsequent fiscal year within the term of this Agreement
equals or exceeds $39.50. A portion of the amount by which any supplemental
bonus payment was reduced pursuant to the second sentence of paragraph 6(b)
above (and was not previously recouped by you pursuant to this paragraph (c))
shall be payable to you if
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<PAGE> 5
the Average Yearly Price for any subsequent fiscal year or years during the term
of this Agreement is less than $39.50 but greater than the Average Yearly Price
for the year in which such reduction was made, and the portion of such reduction
that shall be payable to you shall be equal to the full amount of such reduction
(or the portion thereof that was not previously recouped by you pursuant to this
paragraph (c)), multiplied by a fraction, the numerator of which is the excess
of the Average Yearly Price for such subsequent year over the Average Yearly
Price for the year in which such reduction was made and the denominator of which
is the excess of $39.50 over the Average Yearly Price for the year in which such
reduction was made. To the extent that a partial recoupment is made in a
subsequent fiscal year, any amounts not recouped under the foregoing formula
shall remain available for recoupment in subsequent years during the term of
this Agreement. Any amounts not recouped by you pursuant to this paragraph (c)
on or prior to the making of the supplemental bonus payment in respect of the
August 31, 2000 fiscal year shall no longer be subject to recoupment and shall
not be paid to you.
(d) Notwithstanding the foregoing, in no event shall aggregate
supplemental bonus payments payable pursuant to this Section 6 exceed $2.55
million.
(e) Payments of the supplemental bonus pursuant to this
Section 6 shall be made annually, in arrears, as soon as practicable after the
end of each fiscal year in which you are eligible for a bonus hereunder.
7. (a) The Compensation Committee will be responsible for
determining whether performance criteria for the payment of the bonuses set
forth in Sections 4, 5 and 6 have been satisfied or not, and for making all
determinations with respect to eligibility and computation of the amounts
thereof. The Compensation Committee shall have the power to interpret and apply
the standards set forth herein and to cure any ambiguities therein. The
determination of the Compensation Committee with respect to all such matters in
the reasonable exercise of its discretion will be binding on the parties hereto,
provided, however, that in no event will the individual members of the
Compensation Committee have any personal liability hereunder for the exercise of
their discretion.
(b) To the extent that you are required to repay any amount to
the Company pursuant to Section 3, paragraph (a) of Section 4 or elsewhere in
this Agreement, and you do not do so promptly, you hereby agree that the Company
may set off or deduct such amount from any sum owed to you by the Company
hereunder, including but not limited to any amounts payable pursuant to Sections
2, 4, 5, 6 or 8 hereof. The fact that the Company cannot or does not make such
set-offs or deductions shall not
5
<PAGE> 6
relieve you of any liability for the repayment of any amounts owed by you to the
Company.
8. (a) As further consideration for the services rendered by
you pursuant to this Agreement, and in order to induce you to continue
employment with King World on the terms and conditions set forth herein, the
Compensation Committee shall grant you, subject to your acceptance of this
Agreement and the conditions set forth below, a stock option (herein called the
"Option") under the Company's Amended and Restated Stock Option and Restricted
Stock Purchase Plan (the "Plan") to purchase 1,500,000 shares of Common Stock,
$.01 par value, of the Company ("Common Stock"), at an option exercise price
equal to $39.50 per share, the fair market value of the Common Stock on the date
hereof, subject to vesting as provided in paragraph (b) below. The Option shall
be subject to any approvals or consents that may, in the reasonable opinion of
counsel to the Company, be necessary or desirable for the Company to obtain,
including, without limitation, stockholder approval of amendments to the Plan
increasing by 3 million the number of shares of Common Stock available for
grants and awards thereunder and increasing to 1.5 million the number of shares
of Common Stock that may be subject to grants or awards to any individual in any
five year period.
(b) The Option shall have a term of ten years and shall become
exercisable with respect to 20% of the total number of shares subject thereto on
August 31, 1996 and each of the four immediately succeeding anniversaries of
that date, provided that if you should cease to be a full-time employee of King
World or any of its subsidiaries or affiliates, you will have the right to
exercise the unexercised portion of the option only within the one month period
following the date on which you ceased to be a full-time employee, and then only
to the extent that such unexercised portion of the option was vested on the date
your full-time employment ceased, except that (i) if your full-time employment
ceased by reason of your death or disability (within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), such
one-month period will instead be the one-year period following the cessation of
your full-time employment and (ii) in the event of the termination of your
employment with the Company after a "Change in Control", all shares subject to
the Option that are not then vested shall automatically, without any further
action, immediately vest, and such one-month period will instead be the one-year
period following the cessation of your full-time employment.
For this purpose, a "Change in Control" shall mean the
occurrence of any one of the following events: (i) a majority of the Board of
Directors of the Company consists of individuals other than "Incumbent
Directors", which term means the members of the Board of Directors on the date
of this Agreement; provided, that any person becoming a director subsequent to
such date whose
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<PAGE> 7
election or nomination for election was approved by at least two-thirds of the
directors who then comprised the Incumbent Directors shall be considered to be
an Incumbent Director; (ii) the Company, without your approval, adopts any plan
of liquidation providing for the distribution of all or substantially all of its
assets; or (iii) all or substantially all of the assets or business of the
Company and its consolidated subsidiaries are disposed of pursuant to a merger,
consolidation, reorganization, share exchange or other transaction (unless the
stockholders of the Company, immediately prior to such merger, consolidation,
reorganization, share exchange or other transaction, beneficially own, directly
or indirectly, more than 50% of all the voting stock or other ownership
interests of the entity or entities, if any, that succeed to the business of the
Company).
(c) The terms of the Option shall be more fully set forth in a
definitive stock option agreement under the Plan. Such stock option agreement
and the Plan shall govern your rights as an optionee. The Company shall cause
the shares of Common Stock issuable upon the exercise of the Option to be
registered on Form S-8 and/or Form S-3 (or any successor form) under the
Securities Act of 1933, as amended, and listed on the New York Stock Exchange.
9. Notwithstanding anything to the contrary contained herein,
the Net Income Bonus described in Section 4 hereof, the New Series Bonus and the
New Show Profits Bonus described in Section 5 hereof, and the supplemental bonus
described in Section 6 hereof, shall be subject to approval of the stockholders
of the Company and any additional approvals or consents as may, in the
reasonable opinion of counsel to the Company, be necessary or desirable for the
Company to obtain. In addition, the Option shall be subject to stockholder
approval of amendments to the Plan increasing the number of shares of Common
Stock available for grants and awards thereunder by at least 3 million and
increasing to 1.5 million the number of shares of Common Stock that may be
subject to grants or awards thereunder to any individual in any five year
period. In the event that all such approvals are not obtained on or prior to
August 31, 1996, then you and the Company shall negotiate in good faith for the
purpose of agreeing upon mutually acceptable economic equivalents for the Net
Income Bonus, the New Series Bonus, the New Show Profits Bonus, the supplemental
bonus provided in Section 6 and the Option (all of which economic equivalents
may be made subject to stockholder approval). If, after good-faith negotiation,
you and the Company cannot so agree, then you may, in your sole discretion,
terminate this Agreement.
10. During the Employment Period, the Company shall
provide you with second-to-die life insurance on the lives of you
and your wife, in the face amount of $15,000,000, on terms to be
7
<PAGE> 8
agreed upon by you and the Company, subject to the availability of such coverage
at standard rates subsequent to the completion of a medical examination, and
increased disability insurance coverage the limits and terms of which shall be
agreed upon by you and the Company. You shall be entitled to participate, on the
same basis and subject to the same qualifications as King World's other
executive officers, in any pension, health insurance or hospitalization plan,
disability or other similar plans from time to time in effect with respect to
King World's executive officers or employees generally.
11. The Company shall, during the Employment Period, reimburse
you for such expenses as shall be incurred by you in connection with the
performance of your duties hereunder, provided that you furnish to us evidence
of such expenses reasonably satisfactory to us.
12. In the event that the Company is required to withhold any
Federal, state or local taxes in respect of any compensation income realized by
you in respect of any of the benefits granted to you hereunder or pursuant
hereto or in respect of the Option or any shares acquired upon exercise of the
Option, the Company shall deduct 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, 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 such taxes.
13. (a) The Employment Period shall terminate (i) upon your
death, (ii) thirty (30) days' after written notice to you from King World's
Board of Directors in the event that you have been unable to perform the duties
required of you pursuant to this Agreement for ninety (90) consecutive days by
reason of disability ("Disability"), and King World's Board of Directors
determines to terminate the Employment Period for such reason or (iii)
immediately upon written notice to you in the event that King World's Board of
Directors determines to terminate the Employment Period for Cause. For the
purposes of this Agreement, "Cause" shall mean (1) the habitual failure or
habitual neglect by you to substantially perform your duties under this
Agreement, other than any such failure or neglect resulting from your
Disability, or (2) the engaging by you in an act or acts of dishonesty intended
to result directly or indirectly in your gain or personal enrichment at the
expense of the Company.
(b) Except to the extent otherwise provided in paragraph (c)
below, termination of the Employment Period shall terminate all of your rights
hereunder from and after the effective date of termination except for:
8
<PAGE> 9
(i) any salary compensation or Net Income Bonus which has been
earned prior to the effective date of termination but has not been
paid;
(ii) your rights under the Option, which shall remain exercisable
for the periods provided in Section 8 hereof;
(iii) your right to receive a New Series Bonus in accordance with
the terms of Section 5(a); and
(iv) your right to receive New Show Profits Bonuses with respect to
New Shows, provided, that such rights shall survive the termination of
your employment only (a) with respect to shows that are developed or
produced solely or primarily by King World; (b) only for so long as
King World retains the production or distribution rights to such New
Shows or any ancillary rights thereto and continues to derive revenues
therefrom, subject to your entitlement to share in the Company's
profits resulting from any disposition of such New Shows; and (c) if
you have not engaged in any business described in Section 13(c) below.
In no event shall the termination of this Agreement for any reason relieve or
release the Company or you from any liability for breach of this Agreement or
terminate any of your obligations under Sections 13(c), 14, 15, 16, 17 or 18.
(c) In the event that you terminate your employment on your
own initiative prior to August 31, 2000, in addition to the remedies provided to
the Company herein, including those set forth in Section 18 below, the Company
shall cease to be obligated to provide you any salary or Net Income Bonus for
the period after such termination. In addition, in the event of such termination
you agree, until August 31, 2000, not to work for, render services to or for the
benefit of, lend your name (or any part or variant thereof) to, or become
financially interested in (whether as an employee, consultant, independent
contractor, proprietor, investor, lender or in any other manner), any business,
howsoever and in whatsoever form conducted, in the entertainment industry that
directly or indirectly involves the development, production or distribution of
shows of any kind in any medium, provided that the acquisition of less than 1%
of the outstanding shares of capital stock of any corporation with one or more
classes of capital stock listed on a national securities exchange or traded in
the over-the-counter market shall not itself constitute a violation of this
covenant.
14. Except as required in connection with the performance of
services hereunder, you shall not, during or after the termination of the
Employment Period, use or disclose to any person any confidential business
information or trade secrets of King World or any of its affiliates or business
associates that
9
<PAGE> 10
you obtained or learned during the Employment Period or in the course of your
employment by the Company, including, but not limited to, confidential business
information regarding the type and nature of the contracts entered into by the
Company or its affiliates for the acquisition or distribution of television
programming.
15. You hereby agree that you shall not, during the Employment
Period and for a period of two (2) years following the termination of the
Employment Period, (i) induce, directly or indirectly, any person from whom or
from which King World or any of its affiliates acquired television programming
to terminate his or its agreement with King World or such affiliate with respect
to such programming, to refuse to renew any such agreement or to refuse to
furnish to King World or its affiliates with any other television programming or
(ii) induce, directly or indirectly, any employee of King World or any affiliate
thereof to terminate his or her employment with King World or such affiliate.
16. You hereby agree that all ideas, creations, improvements
and other works of authorship created, developed, written or conceived,
individually or jointly by you, at any time during the Employment Period are
works for hire within the scope of your employment and shall be the Company's
property free of any claim whatever by you or any person claiming any rights or
interests through you, except to the extent otherwise expressly provided herein.
17. Each of you and King World (the "Indemnitor"), agrees to
indemnify and hold harmless the other from and against any and all loss, damage,
claim, liability, cost and expense, including reasonable attorneys' fees,
incurred by the other as a result of, or arising out of or in connection with, a
violation by the Indemnitor of any term, covenant or condition required by this
Agreement to be performed or observed by the Indemnitor.
18. You acknowledge and admit that in the event that you
breach any of your covenants or agreements contained in Section 13(c), 14, 15 or
16 hereof, the Company will suffer irreparable harm and will have no adequate
remedy at law. Accordingly, you agree that the Company shall be entitled to
immediate relief enjoining the violation of such covenants and/or agreements in
any court or judicial forum having jurisdiction over such a claim, without the
necessity of proving actual damages or posting any bond. You further agree that
the courts of the State of New York and the United States District Court for the
Southern District shall have exclusive jurisdiction of any and all suits or
judicial proceedings relating to or arising out of a breach or alleged breach of
the covenants and/or agreements contained in Sections 13(c), 14, 15 or 16
hereof, and, by your acceptance of employment hereunder, you consent to the
personal jurisdiction of
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<PAGE> 11
any and all courts of the State of New York and the United States District Court
for the Southern and District with respect to any judicial proceedings arising
out of or in connection with the enforcement of such covenants and/or agreements
by the Company, and agree that service of process or other court papers made by
certified or registered mail to your address set forth at the beginning of this
letter, with a copy to your designated agent, if any, shall constitute good,
proper and effective personal service of process upon you and shall be deemed to
confer the personal jurisdiction of the court upon you. To the extent that the
Company is successful in obtaining injunctive relief to enforce such covenants
and/or agreements, it hereby waives its right to obtain monetary damages against
you for your breach of such covenants and/or agreements.
19. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York and constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof. No waiver or modification of any terms hereof shall be valid unless in
writing signed by the party against whom such waiver is sought to be enforced,
and then only to the extent set forth in such writing. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
successors, assigns, heirs, administrators and executors.
20. In the event that any provision of this Agreement would be
held invalid, prohibited or unenforceable in any jurisdiction for any reason
(including but not limited to the provisions of Section 13(c), which may be held
to be unenforceable because of the scope, duration or area of its
applicability), unless narrowed by construction, this Agreement shall, as to
such jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable, and the court making any such determination shall have the power
to modify the scope, duration or area, or all of them, of such provision and
such provision shall be applicable in such modified form. If, notwithstanding
the foregoing, any provision of this Agreement would be held to be invalid,
prohibited or enforceable in any jurisdiction for any reason, as to such
jurisdiction, such provision shall be ineffective to the extent of such
invalidity, prohibition or unenforceability, without invalidating the remaining
11
<PAGE> 12
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
Yours very truly,
KING WORLD PRODUCTIONS, INC.
/s/ Stephen W. Palley
----------------------------------
Stephen W. Palley
Executive Vice President and
Chief Operating Officer
Accepted as of the date
first above written:
/s/ Roger King
- ------------------------
Roger King
12
<PAGE> 1
KING WORLD PRODUCTIONS, INC. EXHIBIT 10.2
1700 Broadway
New York, New York 10019
December 20, 1995
Michael King
c/o King World Productions, Inc.
12400 Wilshire Boulevard
Los Angeles, California 90025
Dear Michael:
This letter, when accepted by you, shall constitute an
agreement as of December 1, 1995 between you and King World Productions, Inc.
("King World" or the "Company") with respect to the terms upon which you will be
employed by King World during the Employment Period (as hereinafter defined).
1. During the Employment Period, King World shall employ you,
and you hereby accept employment by King World, in the capacity of President and
Chief Executive Officer, on the terms and subject to the conditions set forth in
this Agreement. The "Employment Period" shall mean the period commencing on
December 1, 1995 and ending on August 31, 2000 or such earlier date on which
this Agreement is terminated pursuant to the provisions of Section 13 hereof.
During the Employment Period, you shall diligently perform the duties of your
office and such other services as shall from time to time be reasonably assigned
to you by, or pursuant to resolution of, King World's Board of Directors, and
shall devote your entire business time, skill and attention to the performance
of such duties and services and your other obligations hereunder.
2. As consideration for the services rendered by you
hereunder, during the Employment Period, you shall be entitled to base salary
compensation at the annual rate of $1,100,000 for the Company's fiscal year
ending August 31, 1996, such annual rate to be increased by $100,000 for each
subsequent fiscal year during the Employment Period in which you perform
services for King World hereunder. Your salary compensation shall be payable in
accordance with King World's standard payroll policy from time to time in
effect.
3. In order to induce you to accept employment with King World
and perform your obligations hereunder on the terms and conditions set forth
herein, King World will pay to you a lump-sum bonus of $2,000,000, in cash
within ten days after your acceptance of this Agreement; provided that if, prior
to Septem-
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ber 1, 1998, your employment is terminated on your own initiative, you shall
promptly repay to the Company the unvested portion of such bonus, which shall be
determined by multiplying the amount of such bonus by the number of months prior
to September 1, 1998 following such termination (including the month in which
such termination occurred), and dividing the result by thirty-six (36).
4. (a) For an initial period commencing on December 1, 1995
and ending August 31, 1996, and for each full fiscal year of the Company
thereafter ending within (or upon the termination of) the Employment Period, you
shall be entitled to a bonus (herein called the "Net Income Bonus") equal to the
sum of following amounts: (i) 1.5% of the first $50,000,000 of Modified
Consolidated Net Income; (ii) 2.0% of the next $50,000,000 of Modified
Consolidated Net Income; and (iii) 2.5% of the Modified Consolidated Net Income
in excess of $100,000,000, in each case for such initial period and full fiscal
year. For this purpose, "Modified Consolidated Net Income" shall mean the net
income of King World and its consolidated subsidiaries after taxes but before
extraordinary items, but only to the extent derived from sources other than New
Shows (as defined in Section 5(b)). The Modified Consolidated Net Income shall
be determined in accordance with generally accepted accounting principles
consistently applied, based on the books and records of the Company and its
consolidated subsidiaries on which the audited financial statements of the
Company and its consolidated subsidiaries are based; except that, to the extent
that any revenues and expenses are includable (as provided in Section 5(b)
below) in the New Show Profits for purposes of determining the New Show Profits
Bonus for any fiscal period, they shall be excluded in the determination of the
Net Income Bonus for such fiscal period (whether or not a New Show Profits Bonus
is in fact payable with respect to such fiscal period).
(b) At the end of each fiscal quarter of each fiscal year
during the Employment Period, the Compensation Committee of the Company's Board
of Directors (the "Compensation Committee") shall cause the Modified
Consolidated Net Income and the Net Income Bonus payable through the end of such
fiscal quarter to be determined. To the extent that the amount of the Net Income
Bonus payable through the end of such fiscal quarter exceeds the sum of all Net
Income Bonus payments theretofore made to you in respect of prior fiscal
quarters of the fiscal year to which such Net Income Bonus relates, the excess
shall be paid to you as soon as practicable after such determination is made;
and to the extent that the amount of all payments theretofore made to you in
respect of prior fiscal quarters of the fiscal year to which such Net Income
Bonus relates exceeds the amount of the Net Income Bonus payable to you through
the end of such fiscal quarter, you shall repay such excess to the Company
promptly after such determination is made.
2
<PAGE> 3
(c) Notwithstanding the foregoing, if the Compensation
Committee in its sole judgment determines that, due to reasonably anticipated
losses or expenditures or for any other reason, it is more likely than not that,
upon the ultimate determination of your entitlement to a Net Income Bonus for a
given fiscal year, you will not be entitled to retain any amount that would
otherwise be payable to you on a quarterly basis pursuant to paragraph (b)
above, then the Compensation Committee shall defer the payment of such amount
until such time as the Compensation Committee determines that you are, or it is
more likely than not that you will be, entitled to receive and retain such
quarterly payment of the Net Income Bonus on a full fiscal year basis.
5. (a) The Company shall also pay you a bonus of $750,000 (a
"New Series Bonus") for each new first-run "strip" (i.e., Monday-Friday)
syndicated series that (i) is developed, or the distribution rights to which are
acquired, by King World during the Employment Period, (ii) premieres in a
television season that commences after the 1995-1996 television season but
before eighteen months after the termination of the Employment Period, (iii) is
produced, co-produced or distributed by King World and (iv) is cleared over the
course of any such season in domestic television markets covering at least 70%
of the domestic television viewing households, based on Nielsen ratings (each of
which series is hereinafter referred to as a "New Series"). The New Series Bonus
shall be paid to you promptly after the latest to occur of conditions (i)
through (iv) above. The New Series Bonus shall be a one-time payment bonus,
payable, if at all, one time with respect to each New Series, no matter during
how many television seasons such new Series is aired. A New Series Bonus shall
be payable hereunder if the criteria set forth above are satisfied, even if the
New Series is canceled during the television season in which it has been cleared
in 70% of the domestic television viewing households.
(b) The Company shall also pay you a New Show Profits Bonus
("New Show Profits Bonus") for each new show (including but not limited to each
New Series, if any) that is developed, or the distribution rights to which are
acquired, by King World during the Employment Period, premieres before eighteen
months after the termination of the Employment Period, and is produced,
co-produced or distributed by King World (a "New Show"). The "New Show Profits
Bonus" with respect to each New Show for any fiscal year of the Company shall
equal the excess, if any, of (i) 5% of the excess of the cumulative (from
inception) revenues derived by King World from such New Show (and from any and
all ancillary rights deriving from such New Show, including merchandising,
theatrical and other commercial rights) through the end of the fiscal year for
which the determination is being made over the cumulative production and
development costs, including producers' fees, direct selling, marketing,
promotional expenses and other distribution expenses, all third-party
participations and other
3
<PAGE> 4
payments, and all other direct out-of-pocket costs, in all cases to the extent
attributable to the New Show; over (ii) all payments of the New Show Profit
Bonus made with respect to such New Show for all prior fiscal years, provided
that payments made pursuant to Section 5(a) with respect to such New Show shall
be treated as an expense of such New Show but shall not be an offset against the
New Show Profits Bonus. Any New Show Profits Bonus owed to you for any fiscal
year shall be determined based on the books and records of the Company on which
the audited financial statements of the Company and its consolidated
subsidiaries are based, and shall be paid as soon as practicable after such
audited financial statements for such fiscal year become available. Any payment
of a New Show Profits Bonus shall be accompanied by a statement setting forth in
reasonable detail the calculation of the amounts owing and paid to you. The New
Show Profits Bonus shall be payable with respect to any New Show only for so
long as King World or any of its consolidated subsidiaries derives any revenues
from the New Show, provided that profits realized by the Company from any direct
or indirect disposition of any New Show by the Company shall be subject to the
rights granted pursuant to this Section 5(b). The amount of such profits shall
be determined by the Company's independent public accountants.
6. (a) With respect to each fiscal year of the Company ending
within (or upon the termination of) the Employment Period, you shall be entitled
to a supplemental bonus as described in this Section 6, provided that the
Compensation Committee determines that the average daily closing price of the
Common Stock for such year (the "Average Yearly Price") exceeded $38 per share.
(b) If the Average Yearly Price for any such fiscal year
equals or exceeds $39.50, the fair market value of the Common Stock on the date
hereof, the supplemental bonus for such year shall be equal to 1.0% of the
Modified Consolidated Net Income for such year. If such Average Yearly Price
exceeds $38, but is less than $39.50, the supplemental bonus for such year shall
be equal to 1.0% of the Modified Consolidated Net Income for such year
multiplied by a fraction, the numerator of which is the excess of such Average
Yearly Price over $38, and the denominator of which is $1.50.
(c) The full amount by which any supplemental bonus payment
was reduced below 1.0% of Modified Consolidated Net Income for any year pursuant
to the second sentence of paragraph 6(b) shall be payable to you if the Average
Yearly Price for any subsequent fiscal year within the term of this Agreement
equals or exceeds $39.50. A portion of the amount by which any supplemental
bonus payment was reduced pursuant to the second sentence of paragraph 6(b)
above (and was not previously recouped by you pursuant to this paragraph (c))
shall be payable to you if
4
<PAGE> 5
the Average Yearly Price for any subsequent fiscal year or years during the term
of this Agreement is less than $39.50 but greater than the Average Yearly Price
for the year in which such reduction was made, and the portion of such reduction
that shall be payable to you shall be equal to the full amount of such reduction
(or the portion thereof that was not previously recouped by you pursuant to this
paragraph (c)), multiplied by a fraction, the numerator of which is the excess
of the Average Yearly Price for such subsequent year over the Average Yearly
Price for the year in which such reduction was made and the denominator of which
is the excess of $39.50 over the Average Yearly Price for the year in which such
reduction was made. To the extent that a partial recoupment is made in a
subsequent fiscal year, any amounts not recouped under the foregoing formula
shall remain available for recoupment in subsequent years during the term of
this Agreement. Any amounts not recouped by you pursuant to this paragraph (c)
on or prior to the making of the supplemental bonus payment in respect of the
August 31, 2000 fiscal year shall no longer be subject to recoupment and shall
not be paid to you.
(d) Notwithstanding the foregoing, in no event shall aggregate
supplemental bonus payments payable pursuant to this Section 6 exceed $2.55
million.
(e) Payments of the supplemental bonus pursuant to this
Section 6 shall be made annually, in arrears, as soon as practicable after the
end of each fiscal year in which you are eligible for a bonus hereunder.
7. (a) The Compensation Committee will be responsible for
determining whether performance criteria for the payment of the bonuses set
forth in Sections 4, 5 and 6 have been satisfied or not, and for making all
determinations with respect to eligibility and computation of the amounts
thereof. The Compensation Committee shall have the power to interpret and apply
the standards set forth herein and to cure any ambiguities therein. The
determination of the Compensation Committee with respect to all such matters in
the reasonable exercise of its discretion will be binding on the parties hereto,
provided, however, that in no event will the individual members of the
Compensation Committee have any personal liability hereunder for the exercise of
their discretion.
(b) To the extent that you are required to repay any amount to
the Company pursuant to Section 3, paragraph (a) of Section 4 or elsewhere in
this Agreement, and you do not do so promptly, you hereby agree that the Company
may set off or deduct such amount from any sum owed to you by the Company
hereunder, including but not limited to any amounts payable pursuant to Sections
2, 4, 5, 6 or 8 hereof. The fact that the Company cannot or does not make such
set-offs or deductions shall not
5
<PAGE> 6
relieve you of any liability for the repayment of any amounts owed by you to the
Company.
8. (a) As further consideration for the services rendered by
you pursuant to this Agreement, and in order to induce you to continue
employment with King World on the terms and conditions set forth herein, the
Compensation Committee shall grant you, subject to your acceptance of this
Agreement and the conditions set forth below, a stock option (herein called the
"Option") under the Company's Amended and Restated Stock Option and Restricted
Stock Purchase Plan (the "Plan") to purchase 1,500,000 shares of Common Stock,
$.01 par value, of the Company ("Common Stock"), at an option exercise price
equal to $39.50 per share, the fair market value of the Common Stock on the date
hereof, subject to vesting as provided in paragraph (b) below. The Option shall
be subject to any approvals or consents that may, in the reasonable opinion of
counsel to the Company, be necessary or desirable for the Company to obtain,
including, without limitation, stockholder approval of amendments to the Plan
increasing by 3 million the number of shares of Common Stock available for
grants and awards thereunder and increasing to 1.5 million the number of shares
of Common Stock that may be subject to grants or awards to any individual in any
five year period.
(b) The Option shall have a term of ten years and shall become
exercisable with respect to 20% of the total number of shares subject thereto on
August 31, 1996 and each of the four immediately succeeding anniversaries of
that date, provided that if you should cease to be a full-time employee of King
World or any of its subsidiaries or affiliates, you will have the right to
exercise the unexercised portion of the option only within the one month period
following the date on which you ceased to be a full-time employee, and then only
to the extent that such unexercised portion of the option was vested on the date
your full-time employment ceased, except that (i) if your full-time employment
ceased by reason of your death or disability (within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), such
one-month period will instead be the one-year period following the cessation of
your full-time employment and (ii) in the event of the termination of your
employment with the Company after a "Change in Control", all shares subject to
the Option that are not then vested shall automatically, without any further
action, immediately vest, and such one-month period will instead be the one-year
period following the cessation of your full-time employment.
For this purpose, a "Change in Control" shall mean the
occurrence of any one of the following events: (i) a majority of the Board of
Directors of the Company consists of individuals other than "Incumbent
Directors", which term means the members of the Board of Directors on the date
of this Agreement; provided, that any person becoming a director subsequent to
such date whose
6
<PAGE> 7
election or nomination for election was approved by at least two-thirds of the
directors who then comprised the Incumbent Directors shall be considered to be
an Incumbent Director; (ii) the Company, without your approval, adopts any plan
of liquidation providing for the distribution of all or substantially all of its
assets; or (iii) all or substantially all of the assets or business of the
Company and its consolidated subsidiaries are disposed of pursuant to a merger,
consolidation, reorganization, share exchange or other transaction (unless the
stockholders of the Company, immediately prior to such merger, consolidation,
reorganization, share exchange or other transaction, beneficially own, directly
or indirectly, more than 50% of all the voting stock or other ownership
interests of the entity or entities, if any, that succeed to the business of the
Company).
(c) The terms of the Option shall be more fully set forth in a
definitive stock option agreement under the Plan. Such stock option agreement
and the Plan shall govern your rights as an optionee. The Company shall cause
the shares of Common Stock issuable upon the exercise of the Option to be
registered on Form S-8 and/or Form S-3 (or any successor form) under the
Securities Act of 1933, as amended, and listed on the New York Stock Exchange.
9. Notwithstanding anything to the contrary contained herein,
the Net Income Bonus described in Section 4 hereof, the New Series Bonus and the
New Show Profits Bonus described in Section 5 hereof, and the supplemental bonus
described in Section 6 hereof, shall be subject to approval of the stockholders
of the Company and any additional approvals or consents as may, in the
reasonable opinion of counsel to the Company, be necessary or desirable for the
Company to obtain. In addition, the Option shall be subject to stockholder
approval of amendments to the Plan increasing the number of shares of Common
Stock available for grants and awards thereunder by at least 3 million and
increasing to 1.5 million the number of shares of Common Stock that may be
subject to grants or awards thereunder to any individual in any five year
period. In the event that all such approvals are not obtained on or prior to
August 31, 1996, then you and the Company shall negotiate in good faith for the
purpose of agreeing upon mutually acceptable economic equivalents for the Net
Income Bonus, the New Series Bonus, the New Show Profits Bonus, the supplemental
bonus provided in Section 6 and the Option (all of which economic equivalents
may be made subject to stockholder approval). If, after good-faith negotiation,
you and the Company cannot so agree, then you may, in your sole discretion,
terminate this Agreement.
10. During the Employment Period, the Company shall provide
you with life insurance on your life in the face amount of $15,000,000, on terms
to be agreed upon by you and the Compa-
7
<PAGE> 8
ny, subject to the availability of such coverage at standard rates subsequent to
the completion of a medical examination, and increased disability insurance
coverage the limits and terms of which shall be agreed upon by you and the
Company. You shall be entitled to participate, on the same basis and subject to
the same qualifications as King World's other executive officers, in any
pension, health insurance or hospitalization plan, disability or other similar
plans from time to time in effect with respect to King World's executive
officers or employees generally.
11. The Company shall, during the Employment Period, reimburse
you for such expenses as shall be incurred by you in connection with the
performance of your duties hereunder, provided that you furnish to us evidence
of such expenses reasonably satisfactory to us.
12. In the event that the Company is required to withhold any
Federal, state or local taxes in respect of any compensation income realized by
you in respect of any of the benefits granted to you hereunder or pursuant
hereto or in respect of the Option or any shares acquired upon exercise of the
Option, the Company shall deduct 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, 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 such taxes.
13. (a) The Employment Period shall terminate (i) upon your
death, (ii) thirty (30) days' after written notice to you from King World's
Board of Directors in the event that you have been unable to perform the duties
required of you pursuant to this Agreement for ninety (90) consecutive days by
reason of disability ("Disability"), and King World's Board of Directors
determines to terminate the Employment Period for such reason or (iii)
immediately upon written notice to you in the event that King World's Board of
Directors determines to terminate the Employment Period for Cause. For the
purposes of this Agreement, "Cause" shall mean (1) the habitual failure or
habitual neglect by you to substantially perform your duties under this
Agreement, other than any such failure or neglect resulting from your
Disability, or (2) the engaging by you in an act or acts of dishonesty intended
to result directly or indirectly in your gain or personal enrichment at the
expense of the Company.
(b) Except to the extent otherwise provided in paragraph (c)
below, termination of the Employment Period shall terminate all of your rights
hereunder from and after the effective date of termination except for:
8
<PAGE> 9
(i) any salary compensation or Net Income Bonus which has been
earned prior to the effective date of termination but has not been
paid;
(ii) your rights under the Option, which shall remain
exercisable for the periods provided in Section 8 hereof;
(iii) your right to receive a New Series Bonus in accor- dance
with the terms of Section 5(a); and
(iv) your right to receive New Show Profits Bonuses with
respect to New Shows, provided, that such rights shall survive the
termination of your employment only (a) with respect to shows that are
developed or produced solely or primarily by King World; (b) only for
so long as King World retains the production or distribution rights to
such New Shows or any ancillary rights thereto and continues to derive
revenues therefrom, subject to your entitlement to share in the
Company's profits resulting from any disposition of such New Shows; and
(c) if you have not engaged in any business described in Section 13(c)
below.
In no event shall the termination of this Agreement for any reason relieve or
release the Company or you from any liability for breach of this Agreement or
terminate any of your obligations under Sections 13(c), 14, 15, 16, 17 or 18.
(c) In the event that you terminate your employment on your
own initiative prior to August 31, 2000, in addition to the remedies provided to
the Company herein, including those set forth in Section 18 below, the Company
shall cease to be obligated to provide you any salary or Net Income Bonus for
the period after such termination. In addition, in the event of such termination
you agree, until August 31, 2000, not to work for, render services to or for the
benefit of, lend your name (or any part or variant thereof) to, or become
financially interested in (whether as an employee, consultant, independent
contractor, proprietor, investor, lender or in any other manner), any business,
howsoever and in whatsoever form conducted, in the entertainment industry that
directly or indirectly involves the development, production or distribution of
shows of any kind in any medium, provided that the acquisition of less than 1%
of the outstanding shares of capital stock of any corporation with one or more
classes of capital stock listed on a national securities exchange or traded in
the over-the-counter market shall not itself constitute a violation of this
covenant.
14. Except as required in connection with the performance of
services hereunder, you shall not, during or after the termination of the
Employment Period, use or disclose to any person any confidential business
information or trade secrets of King World or any of its affiliates or business
associates that
9
<PAGE> 10
you obtained or learned during the Employment Period or in the course of your
employment by the Company, including, but not limited to, confidential business
information regarding the type and nature of the contracts entered into by the
Company or its affiliates for the acquisition or distribution of television
programming.
15. You hereby agree that you shall not, during the Employment
Period and for a period of two (2) years following the termination of the
Employment Period, (i) induce, directly or indirectly, any person from whom or
from which King World or any of its affiliates acquired television programming
to terminate his or its agreement with King World or such affiliate with respect
to such programming, to refuse to renew any such agreement or to refuse to
furnish to King World or its affiliates with any other television programming or
(ii) induce, directly or indirectly, any employee of King World or any affiliate
thereof to terminate his or her employment with King World or such affiliate.
16. You hereby agree that all ideas, creations, improvements
and other works of authorship created, developed, written or conceived,
individually or jointly by you, at any time during the Employment Period are
works for hire within the scope of your employment and shall be the Company's
property free of any claim whatever by you or any person claiming any rights or
interests through you, except to the extent otherwise expressly provided herein.
17. Each of you and King World (the "Indemnitor"), agrees to
indemnify and hold harmless the other from and against any and all loss, damage,
claim, liability, cost and expense, including reasonable attorneys' fees,
incurred by the other as a result of, or arising out of or in connection with, a
violation by the Indemnitor of any term, covenant or condition required by this
Agreement to be performed or observed by the Indemnitor.
18. You acknowledge and admit that in the event that you
breach any of your covenants or agreements contained in Section 13(c), 14, 15 or
16 hereof, the Company will suffer irreparable harm and will have no adequate
remedy at law. Accordingly, you agree that the Company shall be entitled to
immediate relief enjoining the violation of such covenants and/or agreements in
any court or judicial forum having jurisdiction over such a claim, without the
necessity of proving actual damages or posting any bond. You further agree that
the courts of the State of New York and the United States District Court for the
Southern District shall have exclusive jurisdiction of any and all suits or
judicial proceedings relating to or arising out of a breach or alleged breach of
the covenants and/or agreements contained in Sections 13(c), 14, 15 or 16
hereof, and, by your acceptance of employment hereunder, you consent to the
personal
10
<PAGE> 11
jurisdiction of any and all courts of the State of New York and the United
States District Court for the Southern and District with respect to any judicial
proceedings arising out of or in connection with the enforcement of such
covenants and/or agreements by the Company, and agree that service of process or
other court papers made by certified or registered mail to your address set
forth at the beginning of this letter, with a copy to your designated agent, if
any, shall constitute good, proper and effective personal service of process
upon you and shall be deemed to confer the personal jurisdiction of the court
upon you. To the extent that the Company is successful in obtaining injunctive
relief to enforce such covenants and/or agreements, it hereby waives its right
to obtain monetary damages against you for your breach of such covenants and/or
agreements.
19. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York and constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof. No waiver or modification of any terms hereof shall be valid unless in
writing signed by the party against whom such waiver is sought to be enforced,
and then only to the extent set forth in such writing. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
successors, assigns, heirs, administrators and executors.
20. In the event that any provision of this Agreement would be
held invalid, prohibited or unenforceable in any jurisdiction for any reason
(including but not limited to the provisions of Section 13(c), which may be held
to be unenforceable because of the scope, duration or area of its
applicability), unless narrowed by construction, this Agreement shall, as to
such jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable, and the court making any such determination shall have the power
to modify the scope, duration or area, or all of them, of such provision and
such provision shall be applicable in such modified form. If, notwithstanding
the foregoing, any provision of this Agreement would be held to be invalid,
prohibited or enforceable in any jurisdiction for any reason, as to such
jurisdiction, such provision shall be ineffective to the extent of such
invalidity, prohibition or unenforceability, without invalidating the remaining
11
<PAGE> 12
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
Yours very truly,
KING WORLD PRODUCTIONS, INC.
/s/ Stephen W. Palley
---------------------------------
Stephen W. Palley
Executive Vice President and
Chief Operating Officer
Accepted as of the date
first above written:
/s/ Michael King
- ----------------------
Michael King
12
<PAGE> 1
EXHIBIT 10.3
[HARPO LETTERHEAD]
As of October 6, 1995
Mr. Stephen W. Palley
King World Productions, Inc.
1700 Broadway
New York, New York 10019
Dear Steve:
Reference is made to the existing agreement between King World Productions,
Inc. ("King World") and HARPO, Inc. ("HARPO") (which agreement, as amended to
date, is herein referred to as the ("Existing Agreement").
For good and valuable consideration as set forth herein, the parties hereby
confirm their further agreement as follows:
1. HARPO hereby exercises its option pursuant to the Existing Agreement, as
modified hereby, to produce and have Oprah Winfrey host episodes of the Show
for Year 11 and Year 12.
2. Notwithstanding any provision set forth in the Existing Agreement to the
contrary:
(a) The Production Fee for Year 10 shall be
[This is struck out text.]
(b) The Production Fee for Year 11 shall, subject to clause (iii) below,
be
[This is struck out text.]
<PAGE> 2
[HARPO LOGO]
Mr. Stephen W. Palley
As of October 6, 1995
Page 2
[This is struck out text.]
(c) The Guarantee for Year 11 shall be payable on and not before
January 2, 1996.
(d) The initial installment of the Guarantee for Year 12, as
contemplated by paragraph 4(b)(iii)(A) of the agreement dated March 17,
1994 constituting a part of the Existing Agreement, shall be payable on
and not before January 2, 1996.
3. The price of King World stock for the purpose of the options to which Oprah
Winfrey and Jeffrey D. Jacobs are entitled pursuant to the option exercise
contemplated by this amendment shall be $36.00 per share, which represents the
closing market price of King World stock on October 6, 1995.
4. All capitalized terms not otherwise defined herein shall be defined in
accordance with the Existing Agreement.
5. The parties hereby confirm their agreement that, inasmuch as the letter
dated October 6, 1995 from HARPO to you did not fully or accurately reflect the
intention or understanding of the parties at that time, such letter is hereby
mutually rescinded ab initio.
6. Except as expressly modified by this amendment, the Existing Agreement
shall remain in full force and effect. Moreover, HARPO shall indemnify King
World and hold it harmless from any liability or other costs or expenses
(including any fines, penalties and reasonable attorneys' fees) that are
incurred by King World arising out of the entering into of this amendment in
lieu of the letter referred to in paragraph 5. Each of HARPO and King World
shall keep the other party informed of any action
<PAGE> 3
[HARPO LOGO]
Mr. Stephen W. Palley
As of October 6, 1995
Page 3
by any third party that might give rise to any indemnification pursuant to the
terms of the preceding sentence, and King World shall allow HARPO to
participate in the defense of any such action.
Very truly yours,
HARPO, INC.
By: /s/ Oprah Winfrey Dec. 22, '95
------------------------------------
Oprah Winfrey
Chairman of the Board
ACKNOWLEDGED AND AGREED:
KING WORLD PRODUCTIONS, INC.
By: /s/ Jonathan Birkhahn 12/28/95
------------------------------------
Jonathan Birkhahn
Senior Vice President,
Business Affairs and General Counsel
I hereby confirm that all of the representations, warranties and agreements
made by me in the Guarantee dated March 17, 1994 apply to the foregoing letter
agreement.
/s/ Oprah Winfrey Dec. 22, '95
------------------------------------
Oprah Winfrey
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<CHANGES> 0
<NET-INCOME> 35,162
<EPS-PRIMARY> .93
<EPS-DILUTED> .93
</TABLE>
