<PAGE> 1
Filed pursuant to Rule 424(b)(3)
Registration No. 33-71696
PROSPECTUS
450,000 SHARES
KING WORLD PRODUCTIONS, INC.
COMMON STOCK
($.01 par value)
This Prospectus relates to the offer and sale of 450,000
shares (the "Shares") of the Common Stock, par value $.01 per share (the
"Common Stock"), of King World Productions, Inc., a Delaware corporation (the
"Company"), which are issuable upon the exercise of certain stock options
granted to the Selling Stockholders in connection with the grant of
distribution rights to the Company for The Oprah Winfrey Show. See "Selling
Stockholders." The Selling Stockholders, directly or through agents, dealers
or underwriters to be designated from time to time, may sell the Shares from
time to time on the New York Stock Exchange (the "NYSE") or on any other
securities exchange on which the Common Stock is then listed, in the over the
counter market, in negotiated transactions or otherwise, at prices and on terms
to be determined at the time of sale. The aggregate proceeds to the Selling
Stockholders from the sale of the Shares will be the purchase price of the
Shares sold less the aggregate agents' commissions and underwriters' discounts,
if any, and other expenses of issuance and distribution not borne by the
Company. See "Plan of Distribution."
The Company will not receive any of the proceeds from the sale
of the Shares by the Selling Stockholders. The expense of preparing and filing
the Registration Statement and the listing of the Shares on the NYSE are being
paid by the Company, but the Selling Stockholders will bear any brokerage
commissions or other sales expenses incurred in effecting any sales of the
Shares. See "Selling Stockholders" and "Plan of Distribution."
The Selling Stockholders and any brokers, dealers, agents or
underwriters that participate with the Selling Stockholders in the distribution
of any Shares may be deemed an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any commissions
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act. Under applicable rules and regulations promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), any person engaged in a
distribution of securities may not simultaneously bid for or purchase
securities
219289.3
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of the same class for two business days prior to the commencement of the
distribution. In addition, without limiting the foregoing, the Selling
Stockholders will be subject to the applicable provisions of the Exchange Act
and the rules and regulations thereunder and may be subject, without
limitation, to Rules 10b-5, 10b-6 and 10b-7 thereunder in connection with
transactions in shares of the Common Stock during the effectiveness of the
Registration Statement of which this Prospectus is a part.
The Common Stock of the Company is listed on the NYSE under
the symbol "KWP". On March 26, 1996, the last reported sale price of the
Common Stock as reported on the NYSE was $41.375 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is March 27, 1996.
219289.3 2
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TABLE OF CONTENTS
Available Information . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . . . . . . . . . . . . . 4
King World Productions, Inc. . . . . . . . . . . . . . . . . . . . . . . 5
Investment Considerations . . . . . . . . . . . . . . . . . . . . . . . . 5
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
____________________________
No person has been authorized to give any information or to
make any representations other than those contained or incorporated by
reference in this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized. This
Prospectus does not constitute an offer to sell or the solicitation of an offer
to buy any securities other than the securities described in this Prospectus or
an offer to sell or the solicitation of an offer to buy such securities in any
circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder or thereunder shall,
under any circumstances, create any implication that the information contained
herein or therein is correct as of any time subsequent to the date of such
information.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company can be inspected and
copied at the public reference facilities of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: 7 World Trade Center, 13th Floor, New York, New
York 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can also be obtained
from the Public Reference Section of the Commission, at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, such material may
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005, on which the Company's Common Stock is
listed.
This Prospectus constitutes part of a registration statement
on Form S-3 (together with all amendments and exhibits,
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the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Reference is made to such Registration
Statement for further information with respect to the Shares offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with
the Commission are hereby incorporated by reference:
1. The Company's Annual Report on Form 10-K for the twelve
months ended August 31, 1995.
2. The Company's Quarterly Report on Form 10-Q for the
quarterly period ended November 30, 1995.
3. "Description of Registrant's Securities to be Registered"
contained in the Registration Statement on Form 8-A filed with the Commission
on August 22, 1986 pursuant to Section 12 of the Exchange Act, and
"Description of Capital Stock" contained in the Registration Statement of the
Company on Form S-1 (No. 33-8357).
All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the offering of the Shares shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
The Company will provide without charge to each person to whom
a copy of this Prospectus is delivered, upon written or oral request, a copy of
any or all of the documents incorporated by reference herein, excluding
exhibits to such documents unless such exhibits are specifically incorporated
by reference into such documents. Any such requests may be directed to Steven
A. LoCascio, King World Productions, Inc., c/o King World Corporation, 830
Morris Turnpike, Short Hills, New Jersey 07078.
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KING WORLD PRODUCTIONS, INC.
The Company was incorporated in October 1984 under the laws of
the State of Delaware and is the successor to a corporation incorporated in
1964 under the laws of the State of New Jersey to distribute or syndicate
feature length films and television programs to television stations. The
Company currently distributes first-run syndicated television programming to
television stations throughout the United States, in Canada and in a number of
other foreign countries.
The Company's revenues are currently derived primarily from
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 Company distributes The Oprah Winfrey Show pursuant to an
agreement with Harpo, Inc. ("Harpo"), the producer of the series. The Company
introduced The Oprah Winfrey Show in national television syndication in the
1986-1987 television season and has served as the exclusive distributor of the
series since such time. The Company distributes Wheel of Fortune and Jeopardy!
pursuant to agreements with Columbia TriStar Television (formerly Merv Griffin
Enterprises).
The Company's corporate headquarters are located at 1700
Broadway, New York, New York 10019 ((212) 315-4000). Except as otherwise
indicated or as implied by the context, references to the "Company" include
King World Productions, Inc., its consolidated subsidiaries and its predecessor
corporation.
INVESTMENT CONSIDERATIONS
Investors should carefully consider the factors set forth
below as well as the other information set forth in this Prospectus, including
the information contained in the documents incorporated herein by reference,
before purchasing the Shares offered hereby.
ANTI-TAKEOVER PROVISIONS. The Company's Restated Certificate
of Incorporation and By-laws contain certain provisions that could discourage
potential takeover attempts and make more difficult attempts by stockholders to
change the management of the Company. The restated Certificate of
Incorporation and By-laws provide for a Board of Directors classified in three
classes and permit the Board to create new directorships and to elect new
directors therefor to serve for the full term of the class of directors in
which the new directorship was created. The Board (or its remaining members,
even though less than a quorum) is also empowered to fill vacancies on the
Board occurring for any reason for the remainder of the term of the class of
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directors in which the vacancy occurred. In addition, the By-laws provide that
nominations for directors may not be made by stockholders at any annual or
special meeting thereof unless the stockholder intending to make a nomination
notifies the Company of its intention in advance of the meeting and furnishes
to the Company certain information regarding itself and the intended nominee.
The By-laws also provide that special meetings of the stockholders of the
Company may be called only by the Chairman of the Board, the President or a
majority of the directors.
The Company's Restated Certificate of Incorporation provides
that, in addition to the requirements of the Delaware General Corporation law,
any "Business Combination" (defined in the Restated Certificate of
Incorporation to include, among other things, a merger or consolidation or
sale, lease exchange or other disposition of more than 75% of the assets of the
Company and its consolidated subsidiaries) requires the affirmative vote of the
holders of 66 2/3% of the Company's then outstanding Common Stock and voting
Preferred Stock, voting as a class, unless not less than 66 2/3% of the members
of the Board of Directors approve the transaction.
The foregoing provisions of the Company's Restated Certificate
of Incorporation can be changed or amended only by an affirmative vote of at
least 66 2/3% of the Company's then outstanding voting stock. Provisions of
the Company's By-laws can be changed only by majority vote of the Board of
Directors or by the holders of 66 2/3% of the Company's outstanding voting
stock.
The Company is also authorized to issue 5,000,000 shares of
Preferred Stock, $.01 par value, in one or more series and with such powers,
preferences and special rights, including voting rights, dividend rights, terms
of redemption, liquidation preferences and conversion rights, as the Board of
Directors determines without further stockholder approval. The issuance of
Preferred Stock could be used, under certain circumstances, as a method of
preventing a takeover.
The foregoing is a summary and is qualified in its entirety by
the provisions of the Company's Restated Certificate of Incorporation and
By-laws, copies of which have been filed with the Commission and are
incorporated by reference in the Registration Statement.
DIVIDENDS. The Company has not paid any cash dividends on the
Common Stock since 1979, and has no present intention of doing so. The Company
requires substantial amounts to fund development, production and promotion
costs for its programming and intends to use its cash reserves and future
earnings to finance such expenses and the development and expansion of its
business.
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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.
SELLING STOCKHOLDERS
The Shares may be acquired by the Selling Stockholders from
time to time upon exercise of stock options granted to them in connection with
the execution and delivery of an Agreement dated as of January 28, 1991 (the
"Harpo Agreement") between the Company and Harpo, which granted the Company the
exclusive right to distribute and exploit episodes of The Oprah Winfrey Show
("The Oprah Winfrey Show" or the "Series") produced during the 1993-1994 and
the 1994-1995 broadcast seasons. The Selling Stockholders are the principal
executive officers of Harpo and Oprah Winfrey is the principal performer in the
Series.
Pursuant to the Harpo Agreement, a portion of the
consideration paid by the Company for the right to distribute The Oprah Winfrey
Show in the above-referenced two seasons was payable in the form of an option
to purchase shares of the Company's Common Stock. In accordance with the Harpo
Agreement and at the direction of Harpo, the Company entered into a stock
option agreement with Jeffrey D. Jacobs dated as of January 25, 1991 (the
"Jacobs 1991 Stock Option Agreement") and a stock option agreement with Ms.
Winfrey dated as of January 28, 1991 (the "Winfrey 1991 Stock Option Agreement,
and together with the Jacobs 1991 Stock Option Agreement, the "1991 Stock
Option Agreements"). The 1991 Stock Option Agreements granted the Selling
Stockholders options (the "1991 Options") to purchase an aggregate 1,000,000
shares of Common Stock (the "1991 Option Shares") at a purchase price of $25.50
per share (subject to adjustment in certain events), subject to vesting
requirements. The 450,000 Shares offered hereby are a portion of the 1991
Option Shares that were granted pursuant to the 1991 Stock Option Agreements.
On March 17, 1994, the Company and Harpo entered into an
extension and modification of the Harpo Agreement (the "Modified Agreement")
relating to the distribution of the Series in the 1995-1996 through the
1999-2000 television seasons. Under the terms of the Modified Agreement, the
Company was granted the exclusive right and has agreed to distribute episodes
of The Oprah Winfrey Show produced through the 1999-2000 broadcast season,
subject to Harpo's and Ms. Winfrey's right to decline to produce and host the
Series in any season after the 1995-1996
219289.3 7
<PAGE> 8
season. After the 1999-2000 television season, Harpo will not be obligated to
distribute the Series through the Company.
Pursuant to the Modified Agreement and in consideration of
Harpo's agreement to produce the Series in the 1995-1996 season, all 1991
Option Shares vested and became exercisable upon the execution of the Modified
Agreement. In addition, the Company granted options (the "1994 Options") to
Ms. Winfrey and Mr. Jacobs for an additional 450,000 shares of Common Stock and
an additional 50,000 shares of Common Stock, respectively (the "1994 Option
Shares"). Such options are exercisable at $33 5/8 per share and vested and
became exercisable upon the execution of the Modified Agreement. In accordance
with the Modified Agreement, the Company entered into a stock option agreement
with Mr. Jacobs dated as of March 17, 1994 (the "Jacobs 1994 Stock Option
Agreement") and into a stock option agreement with Ms. Winfrey dated as of
March 17, 1994 (the "Winfrey 1994 Stock Option Agreement", and together with
the Jacobs 1994 Stock Option Agreement, the "1994 Stock Option Agreements").
The Company also agreed to grant such individuals additional options to
purchase an aggregate 250,000 shares for each season after the 1995-1996 season
in which the Series is produced, at an exercise price equal to the closing
price of the Common Stock on the date Harpo elects to produce the Series for
such season.
On October 6, 1995, in connection with Harpo's and Ms.
Winfrey's commitment to continue to produce and host the Series for the
1996-1997 and 1997-1998 broadcast seasons, the Company and Harpo entered into
an agreement (the "1995 Agreement") granting options to Ms. Winfrey and Mr.
Jacobs (the "1995 Options") to purchase an aggregate 500,000 shares of Common
Stock (the "1995 Option Shares"), which options are exercisable at a price of
$36.00 per share. In accordance with the 1995 Agreement, the Company entered
into a stock option agreement with Mr. Jacobs dated as of October 6, 1995 (the
"Jacobs 1995 Stock Option Agreement") and into a stock option agreement with
Ms. Winfrey dated as of October 6, 1995 (the "Winfrey 1995 Stock Option
Agreement", and together with the Jacobs 1995 Stock Option Agreement, the "1995
Stock Option Agreements").
Pursuant to the Modified Agreement, the Company from time to
time advances funds to Harpo against Harpo's profit participation in the
Series. The Selling Stockholders' rights in the 1994 Option Shares and the
1995 Option Shares and Harpo's profits from sales thereof may serve as
additional collateral security for any required repayment of such advances if
the Company determines, and notifies the Selling Stockholders, that Harpo's
share of the projected revenues from the Series is inadequate to fully secure
any such repayment. As of the date of this Prospectus, no such determination
has been made by the Company. In connection with the extension of Harpo's
commitment to produce the Series for the 1995-1996 broadcast season, the
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Company advanced Harpo $60 million against its minimum participation payments
for such season. In addition, on January 2, 1996, the Company advanced Harpo
$65 million against its minimum participation payments for each of the
1996-1997 and 1997-1998 broadcast seasons (for a total advance of $130
million). The Shares offered hereby are not subject to any lien of the Company
and may be sold by the Selling Stockholders without restriction by the
foregoing provisions.
The following table sets forth the names and addresses of the
Selling Stockholders and the number of Shares to be offered for the account of
such Selling Stockholder. Any and all of such Shares may be offered for sale
and sold by the Selling Stockholders from time to time by means of this
Prospectus. Except as described in this Prospectus, within the past three
years, none of the Selling Stockholders has held any position or office with
the Company or any of its affiliates or had any other material relationship
with the Company.
<TABLE>
<CAPTION>
Shares Bene-
ficially Shares Shares Bene-
Owned Prior Being ficially Owned Percent
Name and Address to Offering Offered After Offering(1) After Offering
- ---------------- ----------- ------- ----------------- --------------
<S> <C> <C> <C> <C>
Jeffrey D. Jacobs 201,686(2)(3)(4) 45,000(2) 156,686(3)(4) *
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
Oprah Winfrey 1,800,000(5)(6) 405,000(5) 1,395,000(6) 3.6%
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
<FN>
______________________
* Less than 1%.
(1) Assumes the sale of all of the Shares being offered by the Selling
Stockholders pursuant to this Prospectus.
(2) Includes 45,000 Shares not currently outstanding but issuable upon the
exercise of options granted pursuant to the Jacobs 1991 Stock Option Agreement
that are vested and exercisable on the date of this Prospectus.
(3) Includes (i) 55,000 Shares not currently outstanding but issuable upon
the exercise of options granted pursuant to the Jacobs 1991 Stock Option
Agreement that are vested and exercisable on the date of this Prospectus, (ii)
50,000 shares of Common Stock not currently outstanding but issuable upon the
exercise of options granted pursuant to the Jacobs 1994 Stock Option Agreement
that are vested and exercisable on the date of this Prospectus and
(iii) 50,000 additional shares of Common Stock not currently outstanding but
issuable upon the exercise of options granted pursuant to the Jacobs 1995
Stock Option Agree-
</TABLE>
219289.3 9
<PAGE> 10
ment that are vested and exercisable on the date of this Prospectus.
(4) Includes an aggregate 1,686 shares of Common Stock held in individual
retirement accounts for the benefit of Mr. Jacobs and his wife. Jeffrey D.
Jacobs disclaims beneficial ownership of 843 of such shares of Common Stock as
are held in an individual retirement account for the benefit of his wife.
(5) Includes 405,000 Shares not currently outstanding but issuable upon
the exercise of the options granted pursuant to the Winfrey 1991 Stock Option
Agreement that are vested and exercisable on the date of this Prospectus.
(6) Includes (i) 495,000 Shares not currently outstanding but issuable
upon the exercise of the options granted pursuant to the Winfrey 1991 Stock
Option Agreement that are vested and exercisable on the date of this
Prospectus, (ii) 450,000 shares of Common Stock not currently outstanding but
issuable upon the exercise of options granted pursuant to the Winfrey 1994
Stock Option Agreement that are vested and exercisable on the date of this
Prospectus and (iii) 450,000 additional shares of Common Stock not currently
outstanding but issuable upon the exercise of options granted pursuant to the
Winfrey 1995 Stock Option Agreement that are vested and exercisable on the date
of this Prospectus.
USE OF PROCEEDS
The Shares offered hereby will be sold by the Selling
Stockholders. The Company will not receive any of the proceeds from the sale
of the Shares by the Selling Stockholders, except that the Company will receive
the proceeds of the exercise of options in respect of the Shares. The Company
intends to use the proceeds from such option exercises for general working
capital purposes. See "Selling Stockholders."
PLAN OF DISTRIBUTION
The Company will not receive any proceeds from this offering.
The Selling Stockholders, directly or through agents, dealers or underwriters
to be designated from time to time, may sell the Shares from time to time on
the NYSE or on any other securities exchange on which the Common Stock is then
listed, in the over the counter market, in negotiated transactions or
otherwise, at prices and on terms to be determined at the time of sale. The
Selling Stockholders and any underwriters, dealers or agents that participate
in the distribution of the Shares may be deemed to be "underwriters" under the
Securities Act, and any profit on the sale of the Shares by them and any
discounts, commissions or concessions received by any such underwriters,
219289.3 10
<PAGE> 11
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act.
The Shares offered hereby may be sold from time to time in one
or more transactions at a fixed offering price, which may be changed, at
varying prices determined at the time of sale, or at negotiated prices. Such
prices will be determined by the Selling Stockholders or by agreement between
the Selling Stockholders and any underwriters or dealers and the criteria used
by them to establish price are likely to include subjective factors.
Under applicable rules and regulations promulgated under the
Exchange Act, any person engaged in the distribution of securities may not
simultaneously bid for or purchase securities of the same class for a period of
two business days prior to the commencement of such distribution. In addition
and without limiting the foregoing, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation Rules 10b-5, 10b-6 and 10b-7
thereunder, in connection with transactions in shares of Common Stock during
the effectiveness of the Registration Statement of which this Prospectus is a
part.
The expenses of preparing and filing the Registration
Statement and listing the Shares with the NYSE were paid by the Company. Such
expenses were approximately $25,400.
Pursuant to the terms of the 1991, 1994 and 1995 Stock Option
Agreements, the Selling Stockholders have agreed not to sell, in any three
month period, more than the greater of (i) one percent of the outstanding
shares of Common Stock, as disclosed in the Company's public report most
recently filed with the Securities and Exchange Commission before the date of
any sale and (ii) the average weekly reported trading volume of the Common
Stock on the New York Stock Exchange and all other national securities
exchanges on which the Common Stock is listed during the four calendar weeks
preceding the date of any sale. The foregoing limitation does not apply in the
case of a firm commitment registered public offering by the Selling
Stockholders.
Pursuant to the terms of the 1991, 1994 and 1995 Stock Option
Agreements, the Company has, among other things, agreed to (i) register the
1991 Option Shares, the 1994 Option Shares and the 1995 Option Shares and bear
all costs related to such registration, other than underwriting and brokerage
commissions and discounts and the fees and expenses of the Selling
Stockholders' attorneys; (ii) indemnify the Selling Stockholders from any and
all liabilities under federal and state securities laws with respect to the
Registration Statement, except as to information therein provided in writing by
the Selling Stockholders; (iii) use its best efforts to keep the Registration
Statement effective for a period of one hundred eighty (180) days from the
effective
219289.3 11
<PAGE> 12
date of the Registration Statement, or such longer period as may be necessary
to dispose of all the 1991 Option Shares, 1994 Option Shares and 1995 Option
Shares under the resale limitations referred to the immediately preceding
paragraph; and (iv) cause the 1991 Option Shares, the 1994 Option Shares and
the 1995 Option Shares to be listed on each securities exchange on which the
Common Stock is listed at the time the Shares are issued.
LEGAL MATTERS
The validity of the Shares being offered hereby were passed
upon for the Company by the law firm of Reboul, MacMurray, Hewitt, Maynard &
Kristol, 45 Rockefeller Plaza, New York, New York 10111.
EXPERTS
The consolidated financial statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1995,
incorporated by reference in this Prospectus and elsewhere in the Registration
Statement, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of such firm as
experts in accounting and auditing in giving said report.
INDEMNIFICATION
The Company's Restated Certificate of Incorporation limits the
personal liability of directors to the Company or its stockholders for monetary
damages for breaches of fiduciary duty, as directors, except for liability for
any breach of directors' duty of loyalty to the Company or its stockholders, or
acts or omissions not in good faith or which involve intentional misconduct or
violation of law under Section 174 of the Delaware General Corporation Law, or
any transaction from which a director derived an improper personal benefit.
This provision of the Company's Restated Certificate of Incorporation is
consistent with the Delaware General Corporation Law, which permits Delaware
corporations to include in their certificates of incorporation a provision
limiting directors' liability for monetary damages for certain breaches of
their fiduciary duties as directors.
The Company's By-laws provide for indemnification of officers,
directors and employees of the Company to the fullest extent permitted by the
Delaware General Corporation Law. Under the Delaware General Corporation Law,
directors and officers as well as other employees and individuals may be
indemnified against expenses (including attorneys' fees), judgments, fines
219289.3 12
<PAGE> 13
and amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation -- a "derivative action")
if they acted in good faith and in a manner they reasonably believed to be in
or not opposed to the best interests of the Company and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard of care is applicable in the case of
derivative actions, except that indemnification extends only to expenses
(including attorneys' fees) incurred in connection with defense or settlement
of such an action and that the Delaware General Corporation Law requires court
approval before there can be any indemnification of expenses where the person
seeking indemnification has been found liable to the Company.
The Company also maintains agreements with each of its
directors requiring the Company to maintain in effect policies of directors'
and officers' liability insurance in specified minimum amounts, or, in lieu
thereof, to hold harmless and indemnify the director to the full extent of the
coverage that would otherwise have been required to be provided pursuant to the
agreement. In addition, the agreements require the Company to hold harmless
and indemnify the director, to the full extent permitted by the Delaware
General Corporation Law or any other statutory provisions authorizing or
permitting indemnification of directors, from and against any losses suffered
or incurred by the director in excess of the amounts reimbursed under the
Company's directors' and officers liability insurance policy or the indemnity
provided in lieu thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the Company's By-laws, the Delaware General
Corporation Law or agreements between the Company and its officers, directors
and controlling persons, the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
219289.3 13
