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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
King World Productions, Inc.
(Name of Issuer)
Common Stock, $0.01 par value per share
(Title of Class of Securities)
495667107
(CUSIP Number)
Marshall E. Eisenberg
Neal, Gerber & Eisenberg
2 North LaSalle Street
Suite 2200
Chicago, Illinois 60602
(312) 269-8000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 15, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder on this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(continued on following pages)
Page 1 of 10 Pages
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1. NAME OF REPORTING PERSON
Oprah Winfrey
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ X ] Each reporting person specifically disclaims
membership in a "group". See Item 4 for more details.
3. SEC USE ONLY
4. SOURCE OF FUNDS
OO (See Item 3)
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER 7. SOLE VOTING POWER
OF 1,845,000
SHARES
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY -0-
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 1,845,000
WITH
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,845,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[ ]
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.78%, based upon the number of shares of the issuer's common
stock outstanding on June 23, 1997 as disclosed in the
issuer's Quarterly Report on Form 10-Q for the quarter ended
May 31, 1997.
14. TYPE OF REPORTING PERSON
IN
Page 2 of 10 Pages
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1. NAME OF REPORTING PERSON
Jeffrey D. Jacobs
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ X ] Each reporting person specifically disclaims
membership in a "group". See Item 4 for more details.
3. SEC USE ONLY
4. SOURCE OF FUNDS
OO (See Item 3)
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [ ]
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER 7. SOLE VOTING POWER
OF 205,843
SHARES
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY -0-
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 205,843
WITH
10. SHARED DISPOSITIVE POWER
-0-
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
205,843
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[X]
The aggregate amount set forth in row 11 excludes 843 shares
of Common Stock owned by an individual retirement account for
the benefit of Mr. Jacobs' wife. See Items 3 and 5.
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.56%, based upon the number of shares of the issuer's common
stock outstanding on June 23, 1997 as disclosed in the
issuer's Quarterly Report on Form 10-Q for the quarter ended
May 31, 1997.
14. TYPE OF REPORTING PERSON
IN
Page 3 of 10 Pages
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Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock, $0.01 par value per
share (the "Common Stock"), of King World Productions, Inc., a Delaware
corporation (the "Issuer"). The principal executive offices of the Issuer are
located at 1700 Broadway, New York, New York 10019.
Item 2. Identity and Background
This Amendment No. 2 to Schedule 13D is being filed by each of Oprah
Winfrey and Jeffrey D. Jacobs. Information with respect to each of the
Reporting Persons is as follows:
(a) Name: Oprah Winfrey
(b) Business Address: 110 North Carpenter Street
Chicago, Illinois 60607
(c) Principal Occupation: Talk Show Hostess; Actress
(d) Criminal Convictions: none
(e) Judgments Against: none
(f) Citizenship: United States of America
(a) Name: Jeffrey D. Jacobs
(b) Business Address: 110 North Carpenter Street
Chicago, Illinois 60607
(c) Principal Occupation: President of Harpo, Inc. ("Harpo"), the
producer of The Oprah Winfrey Show (the
"Show")
(d) Criminal Convictions: none
(e) Judgments Against: none
(f) Citizenship: United States of America
Item 3. Source and Amount of Funds
All of the Options (as hereinafter defined) were acquired pursuant to the
Stock Option Agreements (as hereinafter defined) and the March 1994 Agreement
(as hereinafter defined). An aggregate of 843 shares of Common Stock
beneficially owned by Jeffrey D. Jacobs were acquired with funds of an
individual retirement account for the benefit of Mr. Jacobs.
Page 4 of 10 Pages
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In addition, an aggregate of 843 shares of Common Stock were acquired
with funds of an individual retirement account for the benefit of Jeffrey D.
Jacobs' wife. Mr. Jacobs disclaims beneficial ownership of the shares of
Common Stock owned of record by the individual retirement account for the
benefit of Mr. Jacobs' wife and Mr. Jacobs' wife disclaims beneficial ownership
of the shares of Common Stock owned of record by the individual retirement
account for the benefit of Mr. Jacobs.
Item 4. Purpose of Transaction
The Reporting Persons are the principals of Harpo. As partial
consideration for each Reporting Person causing Harpo to amend certain of its
contractual agreements with the Issuer pursuant to an Agreement dated as of
January 30, 1991, as amended (the "Harpo Agreement"), between the Issuer and
Harpo relating to Harpo's grant to the Issuer of a license to distribute the
Show, pursuant to Stock Option Agreements dated as of January 28, 1991 (the
"1991 Stock Option Agreements") between the Issuer and each of the Reporting
Persons, Ms. Winfrey and Mr. Jacobs, respectively, acquired options (the "1991
Options") to purchase an aggregate of 900,000 and 100,000 shares of Common
Stock at an exercise price of $25.50 per share. The 1991 Options expire upon
the earlier to occur of (i) January 28, 2001; (ii) nine months after the death
of a Reporting Person or the termination of the Harpo Agreement other than as a
result of a material breach thereof by Harpo; or (iii) concurrently with the
termination of the Harpo Agreement as a result of a material breach thereof by
Harpo. On March 28, 1996, (i) Ms. Winfrey and Mr. Jacobs entered into
negotiated transactions relating to the sale of 405,000 shares of Common Stock
and 45,000 shares of Common Stock, respectively, for a sales price of $39.00
per share and (ii) concurrently therewith Ms. Winfrey exercised her 1991
Options in part and acquired 405,000 shares of Common Stock and Mr. Jacobs
exercised his 1991 Options in part and acquired 45,000 shares of Common Stock.
The settlement of each of the transactions described in the preceding sentence
occurred on April 2, 1996.
In consideration for each Reporting Person causing Harpo to produce the
Show during the 1995/1996 television season, pursuant to an Agreement dated
March 17, 1994 (the "March 1994 Agreement") between the Issuer and Harpo, and
Stock Option Agreements dated as of March 17, 1994 (the "1994 Stock Option
Agreements") between the Issuer and each of the Reporting Persons, Ms. Winfrey
and Mr. Jacobs, respectively, acquired options (the "1994 Options") to purchase
an aggregate of 450,000 and 50,000 shares of Common Stock at an exercise price
of $33.625 per share. The 1994 Options expire upon the earlier to occur of (i)
March 18, 2004; (ii) nine months after the death of a Reporting Person or the
termination of the Harpo Agreement other than as a result of a material breach
thereof by Harpo; or (iii) concurrently with the termination of the Harpo
Agreement as a result of a material breach thereof by Harpo.
In addition, pursuant to the March 1994 Agreement, the Issuer agreed that
in the event that Harpo elects to produce the Show during the 1996/1997,
1997/1998, 1998/1999 or 1999/2000 television seasons, the Issuer would grant to
Ms. Winfrey and Mr. Jacobs, respectively, options to
Page 5 of 10 Pages
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purchase an aggregate of 225,000 and 25,000 shares of Common Stock for each
such television year at an exercise price per share equal to the closing price
of the Common Stock on the date such election by Harpo is received by the
Issuer. On October 6, 1995, Harpo elected to produce the Show during the
1996/1997 and 1997/1998 televisions seasons. Accordingly, on such date Ms.
Winfrey and Mr. Jacobs, respectively, pursuant to Stock Option Agreements dated
as of October 6, 1995 (the "1995 Stock Option Agreements"), acquired options
(the "1995 Options") to purchase an aggregate of 450,000 and 50,000 shares of
Common Stock at an exercise price of $36.00 per share. The 1995 Options expire
upon the earlier to occur of (i) October 6, 2005; (ii) nine months after the
death of a Reporting Person or the termination of the Harpo Agreement other
than as a result of a material breach thereof by Harpo; or (iii) concurrently
with the termination of the Harpo Agreement as a result of a material breach
thereof by Harpo.
On September 15, 1997, Harpo elected to produce the Show during the
1998/1999 and 1999/2000 televisions seasons. Accordingly, on such date, Ms.
Winfrey and Mr. Jacobs, respectively, pursuant to Stock Option Agreements dated
as of September 15, 1997, (the "1997 Stock Option Agreements;" and together
with the 1991 Stock Option Agreements, the 1994 Stock Option Agreements and the
1995 Stock Option Agreements, the "Stock Option Agreements"), acquired options
(the "1997 Options" and together with the 1991 Options, the 1994 Options and
the 1995 Options, the "Options") to purchase an aggregate of 450,000 and 50,000
shares of Common Stock at an exercise price of $39.3125 per share. The 1997
Options expire upon the earlier to occur of (i) September 15, 2007; (ii) nine
months after the death of a Reporting Person or the termination of the Harpo
Agreement other than as a result of a material breach thereof by Harpo; or
(iii) concurrently with the termination of the Harpo Agreement as a result of a
material breach thereof by Harpo.
The Options were acquired by the Reporting Persons for investment
purposes. Neither of the Reporting Persons has any current intention to
purchase any shares of Common Stock, except for the shares of Common Stock
which may be acquired upon exercise of the Options. However, depending on
market conditions and other factors, one or both of the Reporting Persons may
sell any or all of their Options, hold or sell any or all of the shares of
Common Stock acquired upon exercise of their Options, or purchase additional
shares of Common Stock, all on such terms and conditions and at such times as
either of them consider desirable.
Except as described above, none of the Reporting Persons has any plans
or proposals which relate to or would result in any of the actions listed in
paragraphs (a) through (j) of Item 4 of Schedule 13D.
The Reporting Persons are filing this Statement on Schedule 13D with
the Securities and Exchange Commission because they may be deemed to be a
"group" by virtue of Rule 13d-5(b) as promulgated pursuant to the Act.
However, each Reporting Person specifically disclaims beneficial ownership of
the shares of Common Stock held by the other Reporting Person and specifically
disclaims membership in a "group" for purposes of Section 13(d) of the Act.
Page 6 of 10 Pages
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Item 5. Interest in Securities of the Issuer
As of the date hereof, Ms. Winfrey beneficially owns 1,845,000 shares
of Common Stock, constituting approximately 4.78% of the total number of
outstanding shares of Common Stock, and Mr. Jacobs beneficially owns 205,843
shares of Common Stock, constituting approximately 0.56% of the total number of
outstanding shares of Common Stock. The shares of Common Stock beneficially
owned by Mr. Jacobs excludes 843 shares of Common Stock owned by an individual
retirement account for the benefit of Mr. Jacobs' wife.
Upon exercise of the Options, each Reporting Person will have sole
voting and dispositive power with respect to the shares of Common Stock
beneficially owned by such Reporting Person. During the past 60 days, neither
of the Reporting Persons has effected any transactions in Common Stock except
as otherwise described herein.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
With respect to Common Stock acquired pursuant to an exercise of the 1991
Options, each of Ms. Winfrey and Mr. Jacobs have agreed to limit their
respective sales of shares of such Common Stock, other than sales pursuant to
an underwritten, firm commitment public offering, in any three month period to
a number of shares of Common Stock not to exceed the greater of (i) one percent
of the outstanding shares of Common Stock and (ii) the average weekly reported
volume of trading in the Common Stock on The New York Stock Exchange and all
other national securities exchanges during the four calendar weeks preceding
the date of any sale. With respect to Common Stock acquired pursuant to an
exercise of any of the 1994 Options, the 1995 Options or the 1997 Options, Ms.
Winfrey and Mr. Jacobs have agreed to limit their aggregate sales of shares of
such Common Stock, other than sales pursuant to an underwritten, firm
commitment public offering, in any three month period to a number of shares of
Common Stock not to exceed the greater of (i) one percent of the outstanding
shares of Common Stock and (ii) the average weekly reported volume of trading
in the Common Stock on The New York Stock Exchange and all other national
securities exchanges during the four calendar weeks preceding the date of any
sale. Except as set forth herein, the terms of the Options are substantially
similar. Upon a Change in Control (as defined in Exhibit B to the March 1994
Agreement), the restrictions described in this paragraph will be reduced or
eliminated to the extent that any volume of sale restrictions which then apply
to the sale of Common Stock by Roger King, the Chairman of the Board of the
Issuer, and/or any other person who was an executive officer of the Issuer
prior to such Change in Control, are less restrictive than the restrictions set
forth in the preceding sentence.
Page 7 of 10 Pages
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As security for certain indebtedness of Harpo to the Issuer (the "Harpo
Indebtedness"), the Reporting Persons have pledged to the Issuer (i) all of
their respective rights under the Options, (ii) all shares of Common Stock
which are issued pursuant to an exercise of the Options and (iii) all proceeds
thereof; provided, however, that (i) unless and until the Issuer notifies the
Reporting Persons that the share of the adjusted gross profits (determined
under the Harpo Agreement) which the Issuer reasonably projects will be payable
to Harpo would be inadequate to fully secure Harpo's obligations with respect
to the Harpo Indebtedness, the Reporting Persons may exercise the Options, sell
the shares of Common Stock issued to them upon exercise of the Options and
retain the proceeds thereof without restriction and (ii) the number of shares
of Common Stock (and the portions of the Options corresponding thereto) subject
to such pledge is limited to the number of shares of Common Stock having an
aggregate value equal to the amount of the inadequacy described above.
Pursuant to the Stock Option Agreements, the Issuer granted to each of
the Reporting Persons certain rights to register the shares of Common Stock
owned by each of the Reporting Persons under the Securities Act of 1933, as
amended. In the event that there is a firm commitment public offering of the
Issuer's securities pursuant to a registration covering shares of Common Stock
held by the Reporting Persons and the Reporting Persons do not elect to sell
any shares of Common Stock to the underwriters of the Issuer's securities in
connection with such offering, each of the Reporting Persons has agreed to
refrain from selling any shares of Common Stock during the period of
distribution of the Issuer's securities by such underwriters and the period in
which the underwriting syndicate participates in the after market therefor, in
either case, not to exceed 150 days after the effective date of the
registration statement with respect to such offering.
Pursuant to the March 1994 Agreement, upon a Change in Control, in the
event that (i) Harpo commits to produce the Show for an additional television
season after an agreement is reached to effect any transaction constituting a
Change in control and (ii) such Change in Control occurs, the Issuer has agreed
pay Harpo $25,000,000 upon the date of such Change in Control.
Page 8 of 10 Pages
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Item 7. Material to be Filed as Exhibits
Exhibit 99.1: Agreement to File Statement on Schedule 13D pursuant
to Rule 13d-1(f).*
Exhibit 99.2: Stock Option Agreement dated as of January 28, 1991
between the Issuer and Oprah Winfrey.*
Exhibit 99.3: Stock Option Agreement dated as of January 28, 1991
between the Issuer and Jeffrey D. Jacobs.*
Exhibit 99.4: Agreement dated March 17, 1994 among the Issuer,
Oprah Winfrey and Jeffrey D. Jacobs.*
Exhibit 99.5: Stock Option Agreement dated as of March 17, 1994
between the Issuer and Oprah Winfrey.*
Exhibit 99.6: Stock Option Agreement dated as of March 17, 1994
between the Issuer and Jeffrey D. Jacobs.*
Exhibit 99.7: Stock Option Agreement dated as of October 6, 1995
between the Issuer and Oprah Winfrey.*
Exhibit 99.8: Stock Option Agreement dated as of October 6, 1995
between the Issuer and Jeffrey D. Jacobs.*
Exhibit 99.9: Stock Option Agreement dated as of September 15, 1997
between the Issuer and Oprah Winfrey.
Exhibit 99.10: Stock Option Agreement dated as of September 15
between the Issuer and Jeffrey D. Jacobs.
* Incorporated by reference to the Schedule 13D filed by Reporting Persons on
December 21, 1995.
Page 9 of 10 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 27, 1997
/s/ Oprah Winfrey
------------------------------
Oprah Winfrey
/s/ Jeffrey D. Jacobs
------------------------------
Jeffrey D. Jacobs
Page 10 of 10 Pages
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Ex.99.9
THE TRANSFER OF THE OPTION EVIDENCED BY THIS AGREEMENT
IS SUBJECT TO RESTRICTIONS CONTAINED HEREIN. THE OPTION
HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF
THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THE OPTION NOR THE SHARES ISSUABLE UPON
THE EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
THIS OPTION, AND THE OPTION SHARES ISSUABLE UPON EXERCISE
IN ACCORDANCE WITH THE TERMS CONTAINED HEREIN, ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND A LIEN IN FAVOR OF KING WORLD
PRODUCTIONS, INC. (THE "COMPANY") TO SECURE CERTAIN OBLIGATIONS OF HARPO, INC.
("HARPO") TO THE COMPANY PURSUANT TO AN AGREEMENT DATED AS OF JANUARY 30, 1987,
AS AMENDED THROUGH SEPTEMBER 15, 1997 BETWEEN THE COMPANY AND HARPO.
KING WORLD PRODUCTIONS, INC.
1700 Broadway
New York, New York 10019
Ms. Oprah Winfrey As of September 15, 1997
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
Dear Ms. Winfrey:
This is the stock option agreement referred to in the amendment (the
"Harpo Amendment") dated as of March 17, 1994, to the Agreement dated as of
January 30, 1987 (the "Original Agreement"), as previously amended to the date
hereof (the Original Agreement, as amended to the date hereof and by the Harpo
Amendment, being herein called the "Harpo Agreement") between Harpo, Inc.
("Harpo") and the undersigned (the "Company"). As partial consideration for
Harpo to enter into the Harpo Amendment, and as an inducement for you to render
services with respect to the production of the Show (as such term is defined in
the Harpo Amendment), the Company hereby grants to you an option (the "Option")
to purchase four hundred fifty thousand (450,000) shares of the Company's
Common Stock, $.01 par value ("Common Stock"; such shares of Common Stock, as
the same may be adjusted as described in Section 6 below, being herein referred
to as the "Option Shares"). The terms and conditions of the Option are set out
below.
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The Option will be treated as and shall constitute a "non-qualified
stock option" for Federal income tax purposes. The Option will not constitute
or be treated either by you or by the Company as an "incentive stock option" as
defined under Section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code").
1. Date of Grant. The Option is granted to you on the date hereof.
2. Termination of the Option. Your right to exercise the Option
(and to purchase the Option Shares) shall expire and terminate in all events on
(i) September 15, 2007, or (ii) such earlier date provided in Section 7 below.
3. Option Price. The purchase price to be paid upon the exercise
of the Option (the "Option Price") will be $39 5/16 per Option Share.
4. Vesting Provisions -- Entitlement to Exercise the Option and
Purchase Option Shares. The Option shall be exercisable by you, in whole or
part, at any time prior to expiration and termination pursuant to Section 2
above.
5. Exercise of Option.
(a) To exercise the Option, you must deliver a completed copy of the
attached Option Exercise Form to the address indicated on the Form, specifying
the number of Option Shares being purchased as a result of such exercise,
together with payment of the full Option Price for the Option Shares being
purchased.
(b) Payment of the Option Price must be made in cash.
(c) In the event of any exercise of the Option, a certificate or
certificates representing the Option Shares so purchased, registered in your
name, shall be delivered to you within a reasonable time.
(d) You agree that Option Shares shall be held by you for
investment and may not be resold unless registered under the Securities Act of
1933, as amended (the "Securities Act"), or an exemption from registration is
available, and that the Option Shares will bear a legend referring to such
limitation, to the restrictions on transfer of the Option Shares referred to
elsewhere in this Agreement and to any security interests encumbering the
Option Shares.
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6. Adjustments. If the total outstanding shares of Common Stock of
the Company shall be increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation through reorganization, merger or consolidation,
recapitalization, stock split, combination or exchange of shares or declaration
of any dividends payable in stock or other corporate transaction, then the
number of Option Shares subject to the unexercised portion of the Option (and
the Option Price per share) shall be appropriately adjusted (to the nearest
possible full share) by the Board of Directors of the Company.
7. Default under the Harpo Agreement.
(a) In the event that you die, or the term of the Harpo Agreement
terminates for any other reason except a material breach by Harpo, then the
Option may be exercised by you or your estate only within the nine (9) month
period following your death or the termination of the term of the Harpo
Agreement.
(b) In the event that the term of the Harpo Agreement terminates by
reason of a material breach thereof by Harpo, then your right to exercise the
Option as to any and all Option Shares that have not theretofore been issued
shall terminate simultaneously with the termination of such term.
(c) In the event that the Company exercises its rights pursuant to
paragraph 17 or 18 of the Original Agreement and the term of the Harpo
Agreement is suspended, then your right to exercise the Option pursuant to
Section 4 hereof shall be suspended during the period that the term of the
Harpo Agreement is suspended.
(d) Notwithstanding any provision contained herein to the contrary,
in no event may the Option be exercised to any extent after September 15, 2007.
8. Representations.
(a) You represent and warrant that you are acquiring the Option and
the Option Shares for investment purposes only and not with a view towards the
public distribution thereof.
(b) You understand that neither the Options nor the Option Shares
have been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration requirements thereof pursuant to
Section 4(2) of the Securities Act.
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(c) You represent and warrant that (i) you have the financial
ability to bear the economic risk of investment in the Option and the Option
Shares and (ii) you, together with the financial advisers who have assisted
you in acquiring the Option, have such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of an
investment in the Option and the Option Shares and have had sufficient
opportunity to obtain, and have obtained, all information regarding the Company
as you have deemed relevant in order to evaluate the merits and risks of such
investment.
(d) You represent and warrant that you understand the Federal, state
and local income tax consequences of the granting of the Option to you, the
exercise of the Option and purchase of Option Shares, and the subsequent sale
or other disposition of any Option Shares.
9. Covenants of the Company. The Company will at all times reserve
and keep available out of its authorized and unissued shares of Common Stock,
solely for the purpose of issue upon the exercise of the Option, such number of
shares of Common Stock as shall then be issuable upon the exercise of the
Option. The Company covenants that all Option Shares, when issued in accordance
with the terms hereof, shall be duly and validly issued, fully paid and
nonassessable. The Company will take all such action as may be necessary to
assure that all Option Shares may be so issued without violation of any
applicable law or regulation, or of any requirements of any national securities
exchange upon which the Common Stock of the Company may then be listed. The
Company will not take any action which results in any adjustment of the Option
Price if the total number of Option Shares issued and issuable after such
action would exceed the total number of shares of Common Stock then authorized
by the Company's Certificate of Incorporation. The Company has not granted
and will not grant any right of first refusal with respect to the Option
Shares, and there are no preemptive rights associated with such shares.
10. Required Registration.
(a) At any time you may by notice to the Company (the "Registration
Notice") request that it register for sale under the Securities Act, in
the manner specified in your Registration Notice, all or any portion of
the Option Shares and any other shares of Common Stock that have been
issued or are issuable to you and/or Jeffrey D. Jacobs upon the exercise
of stock options granted or to be granted pursuant to the Harpo
Agreement, including any prior or subsequent amendment to that agreement
(collectively, together with the
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Option Shares, the "Agreement Shares"), and that have been purchased, or
will be purchased on or before the effective date of such registration
statement, or, provided that deferral of the date of purchase to the
closing date of sale of such shares in the manner contemplated by the
proposed registration will not disqualify the offering from registration
on Form S-3 (or any successor to such form), then on such closing
date pursuant to such exercise.
(b) Promptly following receipt of your Registration Notice, the
Company shall commence to prepare and, unless it elects to purchase all of
the Agreement Shares specified in such Registration Notice through the
procedures specified in Section 10(f) below, shall file a registration
statement under the Securities Act for the sale of the Agreement Shares
specified in such Registration Notice (less any shares to be purchased
pursuant to Section 10(f) below) and shall use its best efforts to cause
such registration statement to become effective and remain in effect for
the Required Effective Period for public sale in accordance with the
method of disposition specified by you, provided, however, that the
Company shall not be required to file a "shelf" registration except on
Form S-3 (or any successor to such Form). The "Required Effective Period"
shall be the greater of (A) the 180-day period following the effective
date of such registration statement; and (B) unless the proposed plan of
distribution involves a firm commitment underwritten public offering, the
period required to dispose of all of the shares included in such
registration statement assuming the sale in each three-month period of the
maximum number of shares permitted to be sold under the limitations of
Section 14 of this Agreement. If such method of disposition shall be an
underwritten public offering, the Company may designate the managing
underwriter of such offering. If, in the good faith opinion of the Board
of Directors of the Company, registration would materially interfere with
pre-existing contractual obligations to which the Company is then subject
or financing arrangements or other material transactions involving the
Company or any of its subsidiaries are pending at the time the
Registration Notice is given, or are under active consideration by the
Company, the Company may elect to defer registration for such period of
time, in no event in excess of one hundred twenty (120) days from the date
on which the Registration Notice was given, as in the good faith judgment
of the Board of Directors of the Company is necessary in order to preclude
adverse impact upon such financing or other transaction. In the event of
such deferral, if the shares to be registered are to be acquired on
exercise of this Option following the date of
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such Registration Notice, the date on which the Option was exercised
shall, for purposes of Section 2 and 7(d) hereof, be deemed to be the date
on which the Registration Notice was given. The obligation of the Company
under this Section 10 shall be deemed satisfied only when a registration
statement covering all Agreement Shares specified in your Registration
Notice and not purchased by the Company pursuant to Section 10(f) below
shall have become effective and, (X) if the method of disposition you
specify is a firm commitment underwritten public offering, all such
Agreement Shares shall have been sold pursuant thereto; or (Y) if it is
not such an offering, has remained in effect for the Required Effective
Period specified herein or until the distribution of the Agreement Shares
covered thereby is completed, whichever is shorter.
(c) The Company shall not be obligated to register Agreement Shares
pursuant to this Section 10 (i) more than once; (ii) in any period of
twelve consecutive months in which any Agreement Shares have been
registered pursuant to the exercise of a demand registration right granted
pursuant to any other agreement between the Company and you or Jeffrey D.
Jacobs; or (iii) at any time when the registration, offering or sale of
Option Shares would violate any law, rule or regulation. For purposes of
the foregoing sentence, (X) a registration under this Option or the
corresponding provisions of the option agreement issued to Jeffrey D.
Jacobs on the date hereof shall be aggregated (so that a registration
initiated by you pursuant to this Section 10 shall decrease by one the
number of demand registrations available to each of you and Jeffrey D.
Jacobs pursuant said corresponding provisions, and vice versa) and (Y) any
request for registration given by Jeffrey D. Jacobs pursuant the
corresponding provisions of the option agreement issued to him shall, as a
condition to its effectiveness, be confirmed in writing by you (provided
that you are then competent to give such confirmation). If any Agreement
Shares included in a registration statement filed pursuant to this Section
10 were issued upon the exercise of any other stock option granted to you
or Jeffrey D. Jacobs pursuant to the Harpo Agreement, the number of
"demand" registration rights granted to you and to Jeffrey D. Jacobs
pursuant to such stock option or stock options shall each be reduced by
one.
(d) The Company shall be entitled to include in any registration
statement referred to in this Section 10, for sale in accordance with the
method of disposition you specify, shares of Common Stock to be sold by
the Company for its own account or by other security holders of the
Company for
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<PAGE> 7
their accounts, or both, except as and to the extent that, in the opinion
of the managing underwriter (if such method of disposition shall be an
underwritten public offering), such inclusion would adversely affect the
marketing of the Agreement Shares to be sold.
(e) The procedures for registration of Agreement Shares under this
Section 10 shall conform to the following:
(1) Obligations of the Company. If and whenever the Company
is required by the provisions of Section 10 or 11 to effect the
registration of Agreement Shares, the Company will:
(i) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective for the
Required Effective Period or until the securities covered by such
registration statement have been sold in accordance with the method of
disposition specified by you in your Registration Notice, whichever is
shorter, and prepare and file with the Commission such amendments or
supplements to such registration statement and supplements to the
prospectus contained therein as may be necessary to keep such registration
statement effective for the Required Effective Period or until the shares
covered by such registration statement have been sold in accordance
with such method of disposition, whichever is shorter;
(ii) If the offering is to be underwritten in whole or in
part, enter into a written underwriting agreement in form and substance
reasonably satisfactory to the managing underwriter or underwriters of the
public offering of such securities;
(iii) Furnish to the shareholders participating in such
registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
underwriters may reasonably request in order to facilitate the public
offering of such securities;
(iv) Use its best efforts to register or qualify the
shares covered by such registration statement under such state securities
or blue sky laws of such jurisdictions as you may reasonably request
within 20 days following the original filing of such registration
statement,
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<PAGE> 8
except that the Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as
a foreign corporation in any jurisdiction wherein it is not so qualified;
(v) Notify you promptly after it shall receive notice
thereof, of the time when such registration statement has become effective
or a supplement to any prospectus forming a part of such registration
statement has been filed;
(vi) Notify you promptly of any request by the Commission
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(vii) Prepare and file with the Commission, promptly upon
your request, any amendments or supplements to such registration statement
or prospectus which, in the opinion of your counsel, are required under
the Securities Act or the rules and regulations thereunder in connection
with the distribution of the Option Shares by you;
(viii) Prepare and promptly file with the Commission and
promptly notify you of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
shares is required to be delivered under the Securities Act, any event
shall have occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading;
(ix) In case you or any underwriters for you is required
to deliver a prospectus at a time when the prospectus then in effect may
no longer be used under the Securities Act, prepare promptly upon request
such amendment or amendments to such registration statement and such
prospectus or prospectus as may be necessary to permit compliance with the
requirements of the Securities Act;
(x) Advise you, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement; or
the initiation or threatening of any proceeding for that purpose and promp-
8
<PAGE> 9
tly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued;
(xi) If such registration is by way of an underwritten
public offering and if you so request, use its best efforts to cause
counsel and the independent certified public accountants to the Company to
furnish on the effective date of the registration statement and at the
closing provided for in the underwriting agreement, (i) an opinion dated
such date, of the counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and to you,
covering such matters with respect to the registration statement and
prospectus and each amendment or supplement thereto, proceedings under
state and federal securities laws and other matters relating to the
Company, the securities included in the registration statement and the
offer and sale of such securities as are customarily the subject of
opinions of issuer's counsel provided to underwriters at or about the time
such registration statement becomes effective and the sale is closed; and
(ii) a letter dated each such date, from the independent certified public
accountants of the Company, addressed to the underwriters, if any, and to
you, stating that they are independent certified public accountants within
the meaning of the Securities Act and providing such assurances as are
customarily provided by the independent certified public accountants for
an issuer in connection with the registration of securities, including
information as to the period ending not more than five business days prior
to the date of such letter with respect to the registration statement and
prospectus, as the underwriters or you may reasonably request. If the
furnishing of such opinion and/or letter causes Company to incur any
additional cost or expense, you agree to reimburse Company therefor at the
closing provided for in the underwriting agreement.
(2) Obligations of Option Holder. It shall be a condition to the
inclusion of any Agreement Shares in a registration statement that the
holder thereof shall cooperate in the execution and filing of the
registration statement and any necessary state securities law filings, and
if the offering is to be underwritten, that such holder become a party to
the underwriting agreement and, if so requested by the managing
underwriter, execute and deliver Powers of Attorney and/or custodial
agreements or other suitable arrangements as the managing underwriter
deems reasonably necessary in order to insure orderly sale of the shares.
9
<PAGE> 10
As among the holders of shares included in any registration
statement, decisions respecting the terms and conditions of any
underwriting agreements shall be made by the party initiating the
registration; so that in the case of a registration required pursuant to a
request by you under Section 10, determinations with respect to the
underwriting agreement shall be made by you, in your reasonable judgment,
after appropriate consultation with the Company and with other persons
whose shares are to be included in such offering; and if you are party to
a registration statement pursuant to Section 11, you shall not have the
right to make such determinations, but shall be informed of them, and
consulted with respect thereto.
(f) Within ten (10) business days following receipt of a Registration
Notice, the Company may elect, by written notice to you, to purchase all or any
portion of the Agreement Shares specified by you in such Registration Notice
for a purchase price equal to the closing price of the Common Stock on the date
such notice was given. In the event that the Company elects to purchase any of
the Agreement Shares specified by you in such notice, the delivery of such
Agreement Shares against payment therefor shall take place on the fifth
business day following receipt by you of the Company's election notice. In the
event that the Company does not elect to purchase all of the Agreement Shares
specified by you in such Registration Notice, the Company shall register under
the Securities Act all the Agreement Shares not so purchased, in the manner
provided above.
11. Incidental Registration. If the Company at any time (other
than pursuant to Section 10 hereof) proposes to register any of its Common
Stock under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Forms S-4 or S-8 or another form not
available for registering the Option Shares for sale to the public), it will
give written notice at such time to you of its intention to do so. Upon your
written request, given within 30 days after receipt of any such notice by the
Company, to register any of the Option Shares that you have purchased, or will
purchase on or before the effective date of such registration statement,
pursuant to the exercise of the Option (which request shall state the intended
method of disposition thereof), the Company will use its best efforts to cause
such Option Shares to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by you of the Option Shares
so registered. In the event that any registration pursuant to this Section 11
shall be, in whole or in part, an
10
<PAGE> 11
underwritten public offering of Common Stock, any request by you pursuant to
this Section 11 to register Option Shares shall specify that either (i) such
Option Shares are to be included in the underwriting on the same terms and
conditions as the shares of Common Stock otherwise being sold through
underwriters under such registration; or (ii) such Option Shares are to be sold
in the open market without any underwriting, on terms and conditions comparable
to those normally applicable to offerings of common stock in reasonably similar
circumstances. The number of Option Shares to be included in such an
underwriting may be reduced if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would adversely affect the
marketing of the securities to be sold therein by the Company or other security
holders of the Company.
Notwithstanding anything to the contrary contained in this Section
11, in the event that there is a firm commitment underwritten public offering of
securities of the Company pursuant to a registration covering Option Shares and
you do not elect to sell any Option Shares to the underwriters of the Company's
securities in connection with such offering, you agree to refrain from selling
any Option Shares during the period of distribution of the Company's securities
by such underwriters and the period in which the underwriting syndicate
participates in the after market; provided, however, that you shall, in any
event, be entitled to sell Option Shares commencing on the 150th day after the
effective date of such registration statement.
12. Expenses.
(a) The expenses incurred by the Company in complying with the
registration pursuant to Section 10 and all registrations pursuant to Section
11 hereof shall be paid as follows:
(i) all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the
Company, fees of the National Association of Securities Dealers, Inc.
and/or the New York Stock Exchange, transfer taxes, fees of transfer
agents and registrars, costs of insurance and other costs not described
in (ii) below shall be paid by the Company; and
(ii) fees and expenses of your counsel, and all underwriting
discounts and selling commissions applicable to the sale of Agreement
Shares sold by you, and any additional cost or expense incurred by the
Company pursuant to your request under Section (10)(e)(1)(xi), shall be
paid by you.
11
<PAGE> 12
13. Indemnification. In the event of a registration of Agreement
Shares under the Securities Act pursuant to Section 10 or 11 hereof, the
Company will indemnify and hold you harmless against any losses, claims,
damages or liabilities, joint or several, to which you may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Option Shares were registered under
the Securities Act pursuant to Section 10 or 11, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse you for any legal or
other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished in writing by you for inclusion
in such registration statement.
In the event of a registration of any of the Agreement Shares under
the Securities Act pursuant to Section 10 or 11 hereof, you will indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who signs
the registration statement, each director of the Company, each underwriter and
each person who controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint or several, to
which the Company or such officer or director or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the registration statement under which such
Agreement Shares were registered under the Securities Act pursuant to Section
10 or 11, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or
12
<PAGE> 13
defending any such loss, claim, damage, liability or action; provided,
however, that you will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished
to the Company by you in writing for inclusion in such registration statement.
Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party other than under this Section 13. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 13 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; provided, however, that,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party, or if the interests
of the indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have the right
to select a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party shall have failed to retain counsel for the
indemnified person as aforesaid or (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of
13
<PAGE> 14
such counsel. It is understood that the indemnifying party shall not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm qualified
in such jurisdiction to act as counsel for the indemnified party. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
If the indemnification provided for in the first two paragraphs of
this Section 13 is unavailable or insufficient to hold harmless an indemnified
party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions in respect thereof referred to therein, then each
indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
you, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or actions as well as any
other relevant equitable considerations, including the failure to give any
notice under the third paragraph of this Section 13. The relative fault shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact relates to information supplied by
the Company, on the one hand, or you, on the other, and to the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and you agree that it would
not be just and equitable if contributions pursuant to this paragraph were
determined by pro rata allocation or by any other method of allocation which
did not take account of the equitable considerations referred to above in this
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or action in respect thereof, referred
to above in this paragraph, shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Section 13
shall be on such other terms and conditions as are at the time customary and
reasonably required by such under-
14
<PAGE> 15
writers. Upon your reasonable request, or upon the reasonable request of any
underwriter of Agreement Shares, the Company shall obtain, if reasonably
available, an insurance policy covering the risks described above in this
Section 13 in an amount and with a deductible reasonably requested by you or
such underwriter and naming you, any underwriter of such stock and any person
controlling you or such underwriter as beneficiaries. The costs of obtaining
and maintaining any such insurance shall be borne by the Company.
14. Sale of Option Shares.
(a) You hereby agree to limit your sales of Agreement Shares so
that, except for sales pursuant to underwritten, firm commitment public
offerings, your sales of Agreement Shares, aggregated with sales of Agreement
Shares by Jeffrey D. Jacobs, shall not exceed in any three-month period the
greater of (i) one percent of the outstanding shares of Common Stock of the
Company, as disclosed in its public report most recently filed with the
Securities and Exchange Commission before the date of any sale and (ii) the
average weekly reported volume of trading in Common Stock of the Company on the
New York Stock Exchange and all other national securities exchanges during the
four calendar weeks preceding the date of any sale; provided however, that upon
any "Change in Control" (as such term is defined in Exhibit B of the Harpo
Amendment) of the Company, the foregoing restriction shall be reduced or
eliminated to the extent that any volume restrictions on resales of Common
Stock that then apply to Roger King and/or any other person who was an
executive officer of the Company prior to such Change in Control are more
favorable than those afforded to you pursuant to this Option. Notwithstanding
anything to the contrary contained in this Agreement, you shall not be entitled
to register, sell or dispose of any Agreement Shares that are subject to any
liens, claims, security interests and other encumbrances of any kind, unless
and until the same are removed (or will be removed in conjunction with their
sale).
(b) In order to secure the repayment to the Company of the Secured
Amount (as defined in the Harpo Amendment) pursuant to the Harpo Agreement, you
hereby grant to the Company a first priority lien and security interest (the
"Security Interest") in (i) your rights under this Option, (ii) all Option
Shares now or hereafter issuable or issued pursuant to the exercise of the
Option and (iii) all proceeds thereof (collectively, the "Stock Option
Collateral"), provided that, unless and until the Company notifies you that the
amount of Harpo's Share of Revenues (as defined in the Harpo Amendment) which
the Company reasonably projects at the time of such notice will be payable
to Harpo would be inadequate to fully secure the Secured Amount (an
15
<PAGE> 16
"Additional Security Notice"; such notice specifying, in reasonable detail, the
amount of such inadequacy (the "Security Shortfall")), you may exercise the
Option, sell the Option Shares issued to you upon such exercise and retain the
proceeds thereof without restriction. The Security Interest shall, in any
event, be limited to such number of shares of Common Stock (and to the Option
to the extent corresponding to such shares) that, as of the date of such
Additional Security Notice, would, upon sale at a price per share equal to the
closing price of the Common Stock on the New York Stock Exchange, generate Net
Realizable Value equal to the projected amount of the Security Shortfall. The
Net Realizable Value of an Option Share at any time shall be the fair market
value of such share at such time less the sum of (i) the Option Price for such
Option Share, and (ii) a provision for taxes equal to the difference between
such fair market value and such Option Price (the "Option Gain") multiplied by
the highest rate of federal and state income tax to which the Option Gain will
be subject (with offset for deductibility of such state taxes). At any time
that any Stock Option Collateral is subject to the Security Interest, you may
obtain its release from the Security Interest by substituting alternate
collateral, as more fully set forth in the Security and Pledge Agreement dated
as of March 17, 1994 among you, the Company, Harpo, Jacobs & Company and
Jeffrey D. Jacobs (the "Security and Pledge Agreement"). You hereby agree to
take such steps as are reasonably requested by the Company to perfect the
Security Interest, including the execution and filing of UCC-1 financing
statements in such form as reasonably requested by the Company, the delivery to
the Company of the certificates evidencing the Option Shares, the delivery to
such third-party financial intermediaries as may from time to time be requested
by the Company of written notice confirming the Security Interest and obtaining
the written confirmation and agreement of any such financial intermediaries
that such Option Shares and the proceeds thereof are subject to the Security
Interest, and that such financial intermediaries shall hold the Option Shares
and the proceeds thereof as agent for the Company, as pledgee, subject to such
written confirmation and agreement. Upon the occurrence of an Event of Default
(as such term is defined in the Security and Pledge Agreement), the Company
shall have all of the rights and remedies of a secured party under the
Uniform Commercial Code in all relevant jurisdictions with respect to the Stock
Option Collateral.
15. Defaults. It shall constitute a breach of this Agreement by
either party if such party shall fail or refuse to fully perform any of its
obligations under this Agreement and shall not have cured such failure or
refusal within 30 days after receipt from the other party of written notice
advising it of such failure or refusal, or, in the event that such failure or
16
<PAGE> 17
refusal is of a nature that cannot be cured within 30 days, then if such
party shall not begin to cure the same within such 30-day period and thereafter
diligently prosecute such cure to completion.
16. Successors; No Assignment. Each of the covenants, terms,
provisions and agreements contained herein shall be binding upon and inure to
the benefit of the parties' successors and assigns. Neither the Option, nor
any of the rights granted to you pursuant hereto, may be transferred or
assigned (including, without limitation, by operation of law), except by
will or the laws of descent and distribution.
17. Withholding Taxes. In the event that the Company is required to
withhold any Federal, state or local taxes in respect of the grant of the
Option or in respect of the acquisition of any Option Shares, the Company may
deduct from any payments of any kind otherwise due to you under the Harpo
Agreement the aggregate amount of such Federal, state or local taxes required
to be so withheld or, if such payments are insufficient to satisfy such
Federal, state or local taxes or if no such payments are due or to become due,
then, you will be required to pay to the Company, or to make other arrangements
satisfactory to the Company regarding payment to the Company of, the aggregate
amount of any such taxes. All matters with respect to the total amount of
taxes to be withheld shall be determined by the Company in its sole discretion.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. If any one or
more provisions of this Agreement shall be found to be illegal or unenforceable
in any respect, the validity and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
17
<PAGE> 18
Please acknowledge receipt of this Option Agreement and agreement with the
terms hereof by signing the enclosed copy of this Option Agreement in the space
provided below.
KING WORLD PRODUCTIONS, INC.
By /s/ Steven A. LoCascio
---------------------------
Accepted and Agreed: Name: Steven A. LoCascio
Title: Senior Vice President and
/s/ Oprah Winfrey Chief Financial Officer
- ------------------------------
Oprah Winfrey
18
<PAGE> 19
King World Productions, Inc.
OPTION EXERCISE FORM
Oprah Winfrey hereby exercises her right to purchase ________ shares of
Common Stock, $.01 par value, of King World Productions, Inc. pursuant to the
option granted to her on March 17, 1994, memorialized in the Option Agreement,
dated as of October 6, 1995, between her and King World Productions, Inc.
Date:__________________ __________________________
Oprah Winfrey
Send a completed copy of this Option Exercise Form to:
Vice President - Finance
King World Productions, Inc.
c/o King World Corporation
830 Morris Turnpike
Short Hills, New Jersey 07078
<PAGE> 1
Ex. 99.10
THE TRANSFER OF THE OPTION EVIDENCED BY THIS AGREEMENT
IS SUBJECT TO RESTRICTIONS CONTAINED HEREIN. THE OPTION
HAS BEEN ISSUED IN RELIANCE UPON THE REPRESENTATION OF
THE HOLDER THAT IT HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TOWARDS THE RESALE OR OTHER DISTRIBUTION
THEREOF. NEITHER THE OPTION NOR THE SHARES ISSUABLE UPON
THE EXERCISE OF THE OPTION HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
THIS OPTION, AND THE OPTION SHARES ISSUABLE UPON EXERCISE
IN ACCORDANCE WITH THE TERMS CONTAINED HEREIN, ARE SUBJECT
TO CERTAIN RESTRICTIONS ON TRANSFER AND A LIEN IN FAVOR OF KING WORLD
PRODUCTIONS, INC. (THE "COMPANY") TO SECURE CERTAIN OBLIGATIONS OF HARPO, INC.
("HARPO") TO THE COMPANY PURSUANT TO AN AGREEMENT DATED AS OF JANUARY 30, 1987,
AS AMENDED THROUGH SEPTEMBER 15, 1997 BETWEEN THE COMPANY AND HARPO.
KING WORLD PRODUCTIONS, INC.
1700 Broadway
New York, New York 10019
Mr. Jeffrey D. Jacobs As of September 15, 1997
c/o Harpo, Inc.
110 North Carpenter Street
Chicago, Illinois 60607
Dear Mr. Jacobs:
This is the stock option agreement referred to in the amendment (the
"Harpo Amendment") dated as of March 17, 1994, to the Agreement dated as of
January 30, 1987 (the "Original Agreement"), as previously amended to the date
hereof (the Original Agreement, as amended to the date hereof and by the Harpo
Amendment, being herein called the "Harpo Agreement") between Harpo, Inc.
("Harpo") and the undersigned (the "Company"). As partial consideration for
Harpo to enter into the Harpo Amendment, and as an inducement for you to render
services with respect to the production of the Show (as such term is defined in
the Harpo Amendment), the Company hereby grants to you an option (the "Option")
to purchase fifty thousand (50,000) shares of the Company's Common Stock, $.01
par value ("Common Stock"; such shares of Common Stock, as the same may be
adjusted as described in Section 6 below, being herein referred to as the
"Option Shares"). The terms and conditions of the Option are set out below.
The Option will be treated as and shall constitute a "non-qualified stock
option" for Federal income tax purposes.
<PAGE> 2
The Option will not constitute or be treated either by you or by the Company as
an "incentive stock option" as defined under Section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
1. Date of Grant. The Option is granted to you on the date hereof.
2. Termination of the Option. Your right to exercise the Option
(and to purchase the Option Shares) shall expire and terminate in all events on
(i) September 15, 2007, or (ii) such earlier date provided in Section 7 below.
3. Option Price. The purchase price to be paid upon the exercise of
the Option (the "Option Price") will be $39 5/16 per Option Share.
4. Vesting Provisions -- Entitlement to Exercise the Option and
Purchase Option Shares. The Option shall be exercisable by you, in whole or
part, at any time prior to expiration and termination pursuant to Section 2
above.
5. Exercise of Option.
(a) To exercise the Option, you must deliver a completed copy of the
attached Option Exercise Form to the address indicated on the Form, specifying
the number of Option Shares being purchased as a result of such exercise,
together with payment of the full Option Price for the Option Shares being
purchased.
(b) Payment of the Option Price must be made in cash.
(c) In the event of any exercise of the Option, a certificate or
certificates representing the Option Shares so purchased, registered in your
name, shall be delivered to you within a reasonable time.
(d) You agree that Option Shares shall be held by you for
investment and may not be resold unless registered under the Securities Act of
1933, as amended (the "Securities Act"), or an exemption from registration is
available, and that the Option Shares will bear a legend referring to such
limitation, to the restrictions on transfer of the Option Shares referred to
elsewhere in this Agreement and to any security interests encumbering the
Option Shares.
6. Adjustments. If the total outstanding shares of Common Stock of
the Company shall be increased or decreased or
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changed into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation through
reorganization, merger or consolidation, recapitalization, stock split,
combination or exchange of shares or declaration of any dividends payable in
stock or other corporate transaction, then the number of Option Shares subject
to the unexercised portion of the Option (and the Option Price per share)
shall be appropriately adjusted (to the nearest possible full share) by the
Board of Directors of the Company.
7. Default under the Harpo Agreement.
(a) In the event that you die, or the term of the Harpo Agreement
terminates for any other reason except a material breach by Harpo, then the
Option may be exercised by you or your estate only within the nine (9) month
period following your death or the termination of the term of the Harpo
Agreement.
(b) In the event that the term of the Harpo Agreement terminates by
reason of a material breach thereof by Harpo, then your right to exercise the
Option as to any and all Option Shares that have not theretofore been issued
shall terminate simultaneously with the termination of such term.
(c) In the event that the Company exercises its rights pursuant to
paragraph 17 or 18 of the Original Agreement and the term of the Harpo
Agreement is suspended, then your right to exercise the Option pursuant to
Section 4 hereof shall be suspended during the period that the term of the
Harpo Agreement is suspended.
(d) Notwithstanding any provision contained herein to the contrary,
in no event may the Option be exercised to any extent after September 15, 2007.
9. Representations.
(a) You represent and warrant that you are acquiring the Option and
the Option Shares for investment purposes only and not with a view towards the
public distribution thereof.
(b) You understand that neither the Options nor the Option Shares
have been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration requirements thereof pursuant to
Section 4(2) of the Securities Act.
(c) You represent and warrant that (i) you have the financial
ability to bear the economic risk of investment in the
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<PAGE> 4
Option and the Option Shares and (ii) you, together with the financial advisers
who have assisted you in acquiring the Option, have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Option and the Option Shares and have
had sufficient opportunity to obtain, and have obtained, all information
regarding the Company as you have deemed relevant in order to evaluate the
merits and risks of such investment.
(d) You represent and warrant that you understand the Federal,
state and local income tax consequences of the granting of the Option to you,
the exercise of the Option and purchase of Option Shares, and the subsequent
sale or other disposition of any Option Shares.
9. Covenants of the Company. The Company will at all times
reserve and keep available out of its authorized and unissued shares of Common
Stock, solely for the purpose of issue upon the exercise of the Option, such
number of shares of Common Stock as shall then be issuable upon the exercise of
the Option. The Company covenants that all Option Shares, when issued in
accordance with the terms hereof, shall be duly and validly issued, fully paid
and nonassessable. The Company will take all such action as may be necessary to
assure that all Option Shares may be so issued without violation of any
applicable law or regulation, or of any requirements of any national securities
exchange upon which the Common Stock of the Company may then be listed. The
Company will not take any action which results in any adjustment of the Option
Price if the total number of Option Shares issued and issuable after such
action would exceed the total number of shares of Common Stock then authorized
by the Company's Certificate of Incorporation. The Company has not granted
and will not grant any right of first refusal with respect to the Option
Shares, and there are no preemptive rights associated with such shares.
10. Required Registration.
(a) At any time you may by notice to the Company (the "Registration
Notice") request that it register for sale under the Securities Act, in
the manner specified in your Registration Notice, all or any portion of
the Option Shares and any other shares of Common Stock that have been
issued or are issuable to you and/or Oprah Winfrey upon the exercise of
stock options granted or to be granted pursuant to the Harpo Agreement,
including any prior or subsequent amendment to that agreement
(collectively, together with the Option Shares, the "Agreement Shares"),
and that have been purchased, or will be purchased on or before the
effective
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<PAGE> 5
date of such registration statement, or, provided that deferral of the
date of purchase to the closing date of sale of such shares in the
manner contemplated by the proposed registration will not disqualify the
offering from registration on Form S-3 (or any successor to such form),
then on such closing date pursuant to such exercise.
(b) Promptly following receipt of your Registration Notice, the
Company shall commence to prepare and, unless it elects to purchase all
of the Agreement Shares specified in such Registration Notice through the
procedures specified in Section 10(f) below, shall file a registration
statement under the Securities Act for the sale of the Agreement Shares
specified in such Registration Notice (less any shares to be purchased
pursuant to Section 10(f) below) and shall use its best efforts to cause
such registration statement to become effective and remain in effect for
the Required Effective Period for public sale in accordance with the
method of disposition specified by you, provided, however, that the
Company shall not be required to file a "shelf" registration except on
Form S-3 (or any successor to such Form). The "Required Effective
Period" shall be the greater of (A) the 180-day period following the
effective date of such registration statement; and (B) unless the
proposed plan of distribution involves a firm commitment underwritten
public offering, the period required to dispose of all of the shares
included in such registration statement assuming the sale in each
three-month period of the maximum number of shares permitted to be sold
under the limitations of Section 14 of this Agreement. If such method of
disposition shall be an underwritten public offering, the Company may
designate the managing underwriter of such offering. If, in the good
faith opinion of the Board of Directors of the Company, registration
would materially interfere with pre-existing contractual obligations to
which the Company is then subject or financing arrangements or other
material transactions involving the Company or any of its subsidiaries
are pending at the time the Registration Notice is given, or are under
active consideration by the Company, the Company may elect to defer
registration for such period of time, in no event in excess of one
hundred twenty (120) days from the date on which the Registration Notice
was given, as in the good faith judgment of the Board of Directors of the
Company is necessary in order to preclude adverse impact upon such
financing or other transaction. In the event of such deferral, if the
shares to be registered are to be acquired on exercise of this Option
following the date of such Registration Notice, the date on which the
Option was exercised shall, for purposes of Section 2 and 7(d) hereof,
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<PAGE> 6
be deemed to be the date on which the Registration Notice was given. The
obligation of the Company under this Section 10 shall be deemed satisfied
only when a registration statement covering all Agreement Shares
specified in your Registration Notice and not purchased by the Company
pursuant to Section 10(f) below shall have become effective and, (X) if
the method of disposition you specify is a firm commitment underwritten
public offering, all such Agreement Shares shall have been sold pursuant
thereto; or (Y) if it is not such an offering, has remained in effect for
the Required Effective Period specified herein or until the distribution
of the Agreement Shares covered thereby is completed, whichever is
shorter.
(c) The Company shall not be obligated to register Agreement Shares
pursuant to this Section 10 (i) more than once; (ii) in any period of
twelve consecutive months in which any Agreement Shares have been
registered pursuant to the exercise of a demand registration right
granted pursuant to any other agreement between the Company and you or
Oprah Winfrey; or (iii) at any time when the registration, offering or
sale of Option Shares would violate any law, rule or regulation. For
purposes of the foregoing sentence, (X) a registration under this Option
or the corresponding provisions of the option agreement issued to Oprah
Winfrey on the date hereof shall be aggregated (so that a registration
initiated by you pursuant to this Section 10 shall decrease by one the
number of demand registrations available to each of you and Oprah Winfrey
pursuant said corresponding provisions, and vice versa) and (Y) any
request for registration given by you shall, as a condition to its
effectiveness, be confirmed in writing by Oprah Winfrey (provided that
she is then competent to give such confirmation). If any Agreement
Shares included in a registration statement filed pursuant to this
Section 10 were issued upon the exercise of any other stock option
granted to you or Oprah Winfrey pursuant to the Harpo Agreement, the
number of "demand" registration rights granted to you and to Oprah
Winfrey pursuant to such stock option or stock options shall each be
reduced by one.
(d) The Company shall be entitled to include in any registration
statement referred to in this Section 10, for sale in accordance with the
method of disposition you specify, shares of Common Stock to be sold by
the Company for its own account or by other security holders of the
Company for their accounts, or both, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition
shall be an underwritten public offering),
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<PAGE> 7
such inclusion would adversely affect the marketing of the Agreement
Shares to be sold.
(e) The procedures for registration of Agreement Shares under this
Section 10 shall conform to the following:
(1) Obligations of the Company. If and whenever the Company is
required by the provisions of Section 10 or 11 to effect the registration
of Agreement Shares, the Company will:
(i) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective for the
Required Effective Period or until the securities covered by such
registration statement have been sold in accordance with the method of
disposition specified by you in your Registration Notice, whichever is
shorter, and prepare and file with the Commission such amendments or
supplements to such registration statement and supplements to the
prospectus contained therein as may be necessary to keep such
registration statement effective for the Required Effective Period or
until the shares covered by such registration statement have been sold
in accordance with such method of disposition, whichever is shorter;
(ii) If the offering is to be underwritten in whole or in
part, enter into a written underwriting agreement in form and substance
reasonably satisfactory to the managing underwriter or underwriters of
the public offering of such securities;
(iii) Furnish to the shareholders participating in such
registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
underwriters may reasonably request in order to facilitate the public
offering of such securities;
(iv) Use its best efforts to register or qualify the shares
covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as you may reasonably request within
20 days following the original filing of such registration statement,
except that the Company shall not for any purpose be required to execute
a general consent to service of process or
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<PAGE> 8
to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified;
(v) Notify you promptly after it shall receive notice
thereof, of the time when such registration statement has become
effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(vi) Notify you promptly of any request by the Commission
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(vii) Prepare and file with the Commission, promptly upon
your request, any amendments or supplements to such registration
statement or prospectus which, in the opinion of your counsel, are
required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Option Shares by
you;
(viii) Prepare and promptly file with the Commission and
promptly notify you of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to
such shares is required to be delivered under the Securities Act, any
event shall have occurred as the result of which any such prospectus or
any other prospectus as then in effect would include an untrue statement
of a material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances in which
they were made, not misleading;
(ix) In case you or any underwriters for you is required to
deliver a prospectus at a time when the prospectus then in effect may no
longer be used under the Securities Act, prepare promptly upon request
such amendment or amendments to such registration statement and such
prospectus or prospectus as may be necessary to permit compliance with
the requirements of the Securities Act;
(x) Advise you, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement;
or the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop
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<PAGE> 9
order or to obtain its withdrawal if such stop order should be issued;
(xi) If such registration is by way of an underwritten
public offering and if you so request, use its best efforts to cause
counsel and the independent certified public accountants to the Company
to furnish on the effective date of the registration statement and at the
closing provided for in the underwriting agreement, (i) an opinion dated
such date, of the counsel representing the Company for the purposes of
such registration, addressed to the underwriters, if any, and to you,
covering such matters with respect to the registration statement and
prospectus and each amendment or supplement thereto, proceedings under
state and federal securities laws and other matters relating to the
Company, the securities included in the registration statement and the
offer and sale of such securities as are customarily the subject of
opinions of issuer's counsel provided to underwriters at or about the
time such registration statement becomes effective and the sale is
closed; and (ii) a letter dated each such date, from the independent
certified public accountants of the Company, addressed to the
underwriters, if any, and to you, stating that they are independent
certified public accountants within the meaning of the Securities Act and
providing such assurances as are customarily provided by the independent
certified public accountants for an issuer in connection with the
registration of securities, including information as to the period ending
not more than five business days prior to the date of such letter with
respect to the registration statement and prospectus, as the underwriters
or you may reasonably request. If the furnishing of such opinion and/or
letter causes Company to incur any additional cost or expense, you
agree to reimburse Company therefor at the closing provided for in the
underwriting agreement.
(2) Obligations of Option Holder. It shall be a condition to the
inclusion of any Agreement Shares in a registration statement that the
holder thereof shall cooperate in the execution and filing of the
registration statement and any necessary state securities law filings,
and if the offering is to be underwritten, that such holder become a
party to the underwriting agreement and, if so requested by the managing
underwriter, execute and deliver Powers of Attorney and/or custodial
agreements or other suitable arrangements as the managing underwriter
deems reasonably necessary in order to insure orderly sale of the shares.
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<PAGE> 10
As among the holders of shares included in any registration
statement, decisions respecting the terms and conditions of any
underwriting agreements shall be made by the party initiating the
registration; so that in the case of a registration required pursuant to
a request by you under Section 10, determinations with respect to the
underwriting agreement shall be made by you, in your reasonable judgment,
after appropriate consultation with the Company and with other persons
whose shares are to be included in such offering; and if you are party to
a registration statement pursuant to Section 11, you shall not have the
right to make such determinations, but shall be informed of them, and
consulted with respect thereto.
(f) Within ten (10) business days following receipt of a Registration
Notice, the Company may elect, by written notice to you, to purchase all or any
portion of the Agreement Shares specified by you in such Registration Notice
for a purchase price equal to the closing price of the Common Stock on the date
such notice was given. In the event that the Company elects to purchase any of
the Agreement Shares specified by you in such notice, the delivery of such
Agreement Shares against payment therefor shall take place on the fifth
business day following receipt by you of the Company's election notice. In the
event that the Company does not elect to purchase all of the Agreement Shares
specified by you in such Registration Notice, the Company shall register under
the Securities Act all the Agreement Shares not so purchased, in the manner
provided above.
11. Incidental Registration. If the Company at any time (other than
pursuant to Section 10 hereof) proposes to register any of its Common Stock
under the Securities Act for sale to the public, whether for its own account or
for the account of other security holders or both (except with respect to
registration statements on Forms S-4 or S-8 or another form not available for
registering the Option Shares for sale to the public), it will give written
notice at such time to you of its intention to do so. Upon your written
request, given within 30 days after receipt of any such notice by the Company,
to register any of the Option Shares that you have purchased, or will purchase
on or before the effective date of such registration statement, pursuant to the
exercise of the Option (which request shall state the intended method of
disposition thereof), the Company will use its best efforts to cause such
Option Shares to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by you of the Option Shares
so registered. In the event that any registration pursuant to this Section 11
shall be, in whole or in part, an
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<PAGE> 11
underwritten public offering of Common Stock, any request by you pursuant to
this Section 11 to register Option Shares shall specify that either (i) such
Option Shares are to be included in the underwriting on the same terms and
conditions as the shares of Common Stock otherwise being sold through
underwriters under such registration; or (ii) such Option Shares are to be sold
in the open market without any underwriting, on terms and conditions comparable
to those normally applicable to offerings of common stock in reasonably similar
circumstances. The number of Option Shares to be included in such an
underwriting may be reduced if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would adversely affect the
marketing of the securities to be sold therein by the Company or other security
holders of the Company.
Notwithstanding anything to the contrary contained in this Section
11, in the event that there is a firm commitment underwritten public offering of
securities of the Company pursuant to a registration covering Option Shares and
you do not elect to sell any Option Shares to the underwriters of the Company's
securities in connection with such offering, you agree to refrain from selling
any Option Shares during the period of distribution of the Company's securities
by such underwriters and the period in which the underwriting syndicate
participates in the after market; provided, however, that you shall, in any
event, be entitled to sell Option Shares commencing on the 150th day after the
effective date of such registration statement.
12. Expenses.
(a) The expenses incurred by the Company in complying with the
registration pursuant to Section 10 and all registrations pursuant to Section
11 hereof shall be paid as follows:
(i) all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the
Company, fees of the National Association of Securities Dealers, Inc.
and/or the New York Stock Exchange, transfer taxes, fees of transfer
agents and registrars, costs of insurance and other costs not described
in (ii) below shall be paid by the Company; and
(ii) fees and expenses of your counsel, and all underwriting
discounts and selling commissions applicable to the sale of Agreement
Shares sold by you, and any additional cost or expense incurred by the
Company pursuant to your request under Section (10)(e)(1)(xi), shall be
paid by you.
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<PAGE> 12
13. Indemnification. In the event of a registration of Agreement
Shares under the Securities Act pursuant to Section 10 or 11 hereof, the
Company will indemnify and hold you harmless against any losses, claims,
damages or liabilities, joint or several, to which you may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Option Shares were registered under
the Securities Act pursuant to Section 10 or 11, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse you for any legal or
other expenses reasonably incurred in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished in writing by you for inclusion
in such registration statement.
In the event of a registration of any of the Agreement Shares under
the Securities Act pursuant to Section 10 or 11 hereof, you will indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who signs
the registration statement, each director of the Company, each underwriter and
each person who controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint or several, to
which the Company or such officer or director or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the registration statement under which such
Agreement Shares were registered under the Securities Act pursuant to Section
10 or 11, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or
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<PAGE> 13
defending any such loss, claim, damage, liability or action; provided, however,
that you will be liable hereunder in any such case if and only to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished
to the Company by you in writing for inclusion in such registration statement.
Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party other than under this Section 13. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such indemnified
party, and, after notice from the indemnifying party to such indemnified party
of its election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 13 for any legal expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; provided, however, that,
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party, or if the interests
of the indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, the indemnified party shall have the right
to select a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have the
right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party shall have failed to retain counsel for the
indemnified person as aforesaid or (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of
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<PAGE> 14
such counsel. It is understood that the indemnifying party shall not, in
connection with any action or related actions in the same jurisdiction, be
liable for the fees and disbursements of more than one separate firm qualified
in such jurisdiction to act as counsel for the indemnified party. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment.
If the indemnification provided for in the first two paragraphs of
this Section 13 is unavailable or insufficient to hold harmless an indemnified
party under such paragraphs in respect of any losses, claims, damages or
liabilities or actions in respect thereof referred to therein, then each
indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such proportion as
appropriate to reflect the relative fault of the Company, on the one hand, and
you, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or actions as well as any
other relevant equitable considerations, including the failure to give any
notice under the third paragraph of this Section 13. The relative fault shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact relates to information supplied by
the Company, on the one hand, or you, on the other, and to the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and you agree that it would
not be just and equitable if contributions pursuant to this paragraph were
determined by pro rata allocation or by any other method of allocation which
did not take account of the equitable considerations referred to above in this
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or action in respect thereof, referred
to above in this paragraph, shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.
The indemnification of underwriters provided for in this Section 13
shall be on such other terms and conditions as are at the time customary and
reasonably required by such under-
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<PAGE> 15
writers. Upon your reasonable request, or upon the reasonable request of any
underwriter of Agreement Shares, the Company shall obtain, if reasonably
available, an insurance policy covering the risks described above in this
Section 13 in an amount and with a deductible reasonably requested by you or
such underwriter and naming you, any underwriter of such stock and any person
controlling you or such underwriter as beneficiaries. The costs of obtaining
and maintaining any such insurance shall be borne by the Company.
14. Sale of Option Shares.
(a) You hereby agree to limit your sales of Agreement Shares so
that, except for sales pursuant to underwritten, firm commitment public
offerings, your sales of Agreement Shares, aggregated with sales of Agreement
Shares by Oprah Winfrey, shall not exceed in any three-month period the greater
of (i) one percent of the outstanding shares of Common Stock of the Company, as
disclosed in its public report most recently filed with the Securities and
Exchange Commission before the date of any sale and (ii) the average weekly
reported volume of trading in Common Stock of the Company on the New York Stock
Exchange and all other national securities exchanges during the four calendar
weeks preceding the date of any sale; provided however, that upon any "Change
in Control" (as such term is defined in Exhibit B of the Harpo Amendment) of
the Company, the foregoing restriction shall be reduced or eliminated to the
extent that any volume restrictions on resales of Common Stock that then apply
to Roger King and/or any other person who was an executive officer of the
Company prior to such Change in Control are more favorable than those afforded
to you pursuant to this Option. Notwithstanding anything to the contrary
contained in this Agreement, you shall not be entitled to register, sell or
dispose of any Agreement Shares that are subject to any liens, claims,
security interests and other encumbrances of any kind, unless and until the
same are removed (or will be removed in conjunction with their sale).
In order to secure the repayment to the Company of the Secured
Amount (as defined in the Harpo Amendment) pursuant to the Harpo Agreement, you
hereby grant to the Company a first priority lien and security interest (the
"Security Interest") in (i) your rights under this Option, (ii) all Option
Shares now or hereafter issuable or issued pursuant to the exercise of the
Option and (iii) all proceeds thereof (collectively, the "Stock Option
Collateral"), provided that, unless and until the Company notifies you that the
amount of Harpo's Share of Revenues (as defined in the Harpo Amendment) which
the Company reasonably projects at the time of such notice will be payable
to Harpo would be inadequate to fully secure the Secured Amount (an
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<PAGE> 16
"Additional Security Notice"; such notice specifying, in reasonable detail, the
amount of such inadequacy (the "Security Shortfall")), you may exercise the
Option, sell the Option Shares issued to you upon such exercise and retain the
proceeds thereof without restriction. The Security Interest shall, in any
event, be limited to such number of shares of Common Stock (and to the Option
to the extent corresponding to such shares) that, as of the date of such
Additional Security Notice, would, upon sale at a price per share equal to the
closing price of the Common Stock on the New York Stock Exchange, generate Net
Realizable Value equal to the projected amount of the Security Shortfall. The
Net Realizable Value of an Option Share at any time shall be the fair market
value of such share at such time less the sum of (i) the Option Price for such
Option Share, and (ii) a provision for taxes equal to the difference between
such fair market value and such Option Price (the "Option Gain") multiplied by
the highest rate of federal and state income tax to which the Option Gain will
be subject (with offset for deductibility of such state taxes). At any time
that any Stock Option Collateral is subject to the Security Interest, you may
obtain its release from the Security Interest by substituting alternate
collateral, as more fully set forth in the Security and Pledge Agreement dated
as of March 17, 1994 among you, the Company, Harpo, Jacobs & Company and Oprah
Winfrey (the "Security and Pledge Agreement"). You hereby agree to take such
steps as are reasonably requested by the Company to perfect the Security
Interest, including the execution and filing of UCC-1 financing statements in
such form as reasonably requested by the Company, the delivery to the Company
of the certificates evidencing the Option Shares, the delivery to such
third-party financial intermediaries as may from time to time be requested by
the Company of written notice confirming the Security Interest and obtaining
the written confirmation and agreement of any such financial intermediaries
that such Option Shares and the proceeds thereof are subject to the Security
Interest, and that such financial intermediaries shall hold the Option Shares
and the proceeds thereof as agent for the Company, as pledgee, subject to such
written confirmation and agreement. Upon the occurrence of an Event of Default
(as such term is defined in the Security and Pledge Agreement), the Company
shall have all of the rights and remedies of a secured party under the Uniform
Commercial Code in all relevant jurisdictions with respect to the Stock Option
Collateral.
15. Defaults. It shall constitute a breach of this Agreement by
either party if such party shall fail or refuse to fully perform any of its
obligations under this Agreement and shall not have cured such failure or
refusal within 30 days after receipt from the other party of written notice
advising it of such failure or refusal, or, in the event that such failure or
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refusal is of a nature that cannot be cured within 30 days, then if such party
shall not begin to cure the same within such 30-day period and thereafter
diligently prosecute such cure to completion.
16. Successors; No Assignment. Each of the covenants, terms,
provisions and agreements contained herein shall be binding upon and inure to
the benefit of the parties' successors and assigns. Neither the Option, nor
any of the rights granted to you pursuant hereto, may be transferred or
assigned (including, without limitation, by operation of law), except by
will or the laws of descent and distribution.
17. Withholding Taxes. In the event that the Company is required to
withhold any Federal, state or local taxes in respect of the grant of the
Option or in respect of the acquisition of any Option Shares, the Company may
deduct from any payments of any kind otherwise due to you under the Harpo
Agreement the aggregate amount of such Federal, state or local taxes required
to be so withheld or, if such payments are insufficient to satisfy such
Federal, state or local taxes or if no such payments are due or to become due,
then, you will be required to pay to the Company, or to make other arrangements
satisfactory to the Company regarding payment to the Company of, the aggregate
amount of any such taxes. All matters with respect to the total amount of
taxes to be withheld shall be determined by the Company in its sole discretion.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York. If any one or
more provisions of this Agreement shall be found to be illegal or unenforceable
in any respect, the validity and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby.
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Please acknowledge receipt of this Option Agreement and agreement with the
terms hereof by signing the enclosed copy of this Option Agreement in the space
provided below.
KING WORLD PRODUCTIONS, INC.
By /s/ Steven A. LoCascio
------------------------------------
Name: Steven A. LoCascio
Title: Chief Financial Officer
Accepted and Agreed:
/s/ Jeffrey D. Jacobs
- --------------------------------
Jeffrey D. Jacobs
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King World Productions, Inc.
OPTION EXERCISE FORM
Jeffrey D. Jacobs hereby exercises his right to purchase ________ shares
of Common Stock, $.01 par value, of King World Productions, Inc. pursuant to
the option granted to him on March 17, 1994, memorialized in the Option
Agreement, dated as of October 6, 1995, between him and King World Productions,
Inc.
Date:__________________ __________________________
Jeffrey D. Jacobs
Send a completed copy of this Option Exercise Form to:
Vice President - Finance
King World Productions, Inc.
c/o King World Corporation
830 Morris Turnpike
Short Hills, New Jersey 07078
