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EXHIBIT 10.20
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 OBLIGA-
TIONS OF HARPO, INC. ("HARPO") TO THE COMPANY PURSUANT TO AN AGREEMENT DATED AS
OF JANUARY 30, 1987, AS AMENDED THROUGH
_______________ BETWEEN THE COMPANY AND HARPO.
KING WORLD PRODUCTIONS, INC.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xx. Xxxxxxx X. Xxxxxx As of _______________
c/o Harpo, Inc.
000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxx:
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 _____ thousand (__,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) _______________, 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 $_____ per Option Share.
4. Vesting Provisions -- Entitlement to Exercise the
Option and Purchase Option Shares.The Option shall be exercisable by you, in
whole or part, at any time prior to expiration and termination pursuant to
Section 2 above.
5. Exercise of Option.
(a) To exercise the Option, you must deliver a completed
copy of the attached Option Exercise Form to the address indicated on the Form,
specifying the number of Option Shares being purchased as a result of such
exercise, together with payment of the full Option Price for the Option Shares
being purchased.
(b) Payment of the Option Price must be made in cash.
(c) In the event of any exercise of the Option, a
certificate or certificates representing the Option Shares so purchased,
registered in your name, shall be delivered to you within a reasonable time.
(d) You agree that Option Shares shall be held by you for
investment and may not be resold unless registered under the Securities Act of
1933, as amended (the "Securities Act"), or an exemption from registration is
available, and that the Option Shares will bear a legend referring to such
limitation, to the restrictions on transfer of the Option Shares referred to
elsewhere in this Agreement and to any security interests encumbering the Option
Shares.
6. Adjustments. If the total outstanding shares of
Common Stock of the Company shall be increased or decreased or changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corpora-
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tion 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
_______________.
8. Representations.
(a) You represent and warrant that you are acquiring the
Option and the Option Shares for investment purposes only and not with a view
towards the public distribution thereof.
(b) You understand that neither the Options nor the
Option Shares have been registered under the Securities Act by reason of their
issuance in a transaction exempt from the registration requirements thereof
pursuant to Section 4(2) of the Securities Act.
(c) You represent and warrant that (i) you have the
financial ability to bear the economic risk of investment in the Option and the
Option Shares and (ii) you, together with the financial advisers who have
assisted you in acquiring the Option,
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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 Xxxxx
Xxxxxxx 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 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
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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, 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
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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 Xxxxx Xxxxxxx; 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 Xxxxx Xxxxxxx 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 Xxxxx Xxxxxxx 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 Xxxxx Xxxxxxx (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 Xxxxx
Xxxxxxx pursuant to the Harpo Agreement, the number of "demand"
registration rights granted to you and to Xxxxx Xxxxxxx pursuant to
such stock option or stock options shall each be reduced by one.
(d) The Company shall be entitled to include in any
registration statement referred to in this Section 10, for sale in
accordance with the method of disposition you specify, shares of
Common Stock to be sold by the Company for its own account or by other
security holders of the Company for their accounts, or both, except as
and to the extent that, in the opinion of the managing underwriter (if
such method of disposition shall be an underwritten public offering),
such inclusion would adversely affect the marketing of the Agreement
Shares to be sold.
(e) The procedures for registration of Agreement Shares
under this Section 10 shall conform to the following:
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(1) Obligations of the Company. If and whenever
the Company is required by the provisions of Section 10 or 11 to
effect the registration of 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 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;
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(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 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 regis-
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tration 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.
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.
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(f) Within ten (10) business days following receipt of a
Registration Notice, the Company may elect, by written notice to you,
to purchase all or any portion of the Agreement Shares specified by you
in such Registration Notice for a purchase price equal to the closing
price of the Common Stock on the date such notice was given. In the
event that the Company elects to purchase any of the Agreement Shares
specified by you in such notice, the delivery of such Agreement Shares
against payment therefor shall take place on the fifth business day
following receipt by you of the Company's election notice. In the
event that the Company does not elect to purchase all of the Agreement
Shares specified by you in such Registration Notice, the Company shall
register under the Securities Act all the Agreement Shares not so
purchased, in the manner provided above.
11. Incidental Registration. If the Company at any time
(other than pursuant to Section 10 hereof) proposes to register any of
its Common Stock under the Securities Act for sale to the public,
whether for its own account or for the account of other security
holders or both (except with respect to registration statements on
Forms S-4 or S-8 or another form not available for registering the
Option Shares for sale to the public), it will give written notice at
such time to you of its intention to do so. Upon your written request,
given within 30 days after receipt of any such notice by the Company,
to register any of the Option Shares that you have purchased, or will
purchase on or before the effective date of such registration
statement, pursuant to the exercise of the Option (which request shall
state the intended method of disposition thereof), the Company will use
its best efforts to cause such Option Shares to be included in the
securities to be covered by the registration statement proposed to be
filed by the Company, all to the extent requisite to permit the sale or
other disposition by you of the Option Shares so registered. In the
event that any registration pursuant to this Section 11 shall be, in
whole or in part, an underwritten public offering of Common Stock, any
request by you pursuant to this Section 11 to register Option Shares
shall specify that either (i) such Option Shares are to be included in
the underwriting on the same terms and conditions as the shares of
Common Stock otherwise being sold through underwriters under such
registration; or (ii) such Option Shares are to be sold in the open
market without any underwriting, on terms and conditions comparable to
those normally applicable to offerings of common stock in reasonably
similar circumstances. The number of Option Shares to be included in
such an underwriting may be reduced if and to the extent that the
managing underwriter shall be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold therein by
the Company or other security holders of the Company.
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Notwithstanding anything to the contrary contained in this
Section 11, in the event that there is a firm commitment underwritten public
offering of securities of the Company pursuant to a registration covering
Option Shares and you do not elect to sell any Option Shares to the
underwriters of the Company's securities in connection with such offering, you
agree to refrain from selling any Option Shares during the period of
distribution of the Company's securities by such underwriters and the period in
which the underwriting syndicate participates in the after market; provided,
however, that you shall, in any event, be entitled to sell Option Shares
commencing on the 150th day after the effective date of such registration
statement.
12. Expenses.
(a) The expenses incurred by the Company in complying
with the registration pursuant to Section 10 and all registrations pursuant to
Section 11 hereof shall be paid as follows:
(i) all registration and filing fees, printing expenses,
fees and disbursements of counsel and independent public accountants
for the Company, fees of the National Association of Securities
Dealers, Inc. and/or the New York Stock Exchange, transfer taxes, fees
of transfer agents and registrars, costs of insurance and other costs
not described in (ii) below shall be paid by the Company; and
(ii) fees and expenses of your counsel, and all
underwriting discounts and selling commissions applicable to the sale
of Agreement Shares sold by you, and any additional cost or expense
incurred by the Company pursuant to your request under Section
(10)(e)(1)(xi), shall be paid by you.
13. Indemnification. In the event of a registration of
Agreement Shares under the Securities Act pursuant to Section 10 or 11 hereof,
the Company will indemnify and hold you harmless against any losses, claims,
damages or liabilities, joint or several, to which you may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Option Shares were registered under
the Securities Act pursuant to Section 10 or 11, any preliminary prospectus or
final 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
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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 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,
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the indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 13 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party, or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
Notwithstanding the foregoing, any indemnified party shall have
the right to retain its own counsel in any such action, but the fees and
disbursements of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party shall have failed to retain counsel for the
indemnified person as aforesaid or (ii) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such counsel.
It is understood that the indemnifying party shall not, in connection with any
action or related actions in the same jurisdiction, be liable for the fees and
disbursements of more than one separate firm qualified in such jurisdiction to
act as counsel for the indemnified party. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
If the indemnification provided for in the first two paragraphs
of this Section 13 is unavailable or insufficient to hold harmless an
indemnified party under such paragraphs in respect of any losses, claims,
damages or liabilities or actions in respect thereof referred to therein, then
each indemnifying party shall in lieu of indemnifying such indemnified party
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or actions in such
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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 underwriters. 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 Xxxxx Xxxxxxx, 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
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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 Xxxxx Xxxx 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 "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
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______________ among you, the Company, Harpo, Xxxxxx & Company and Xxxxx
Xxxxxxx (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 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
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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__________________________
Accepted and Agreed:
___________________________
Xxxxxxx X. Xxxxxx
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King World Productions, Inc.
OPTION EXERCISE FORM
Xxxxxxx X. Xxxxxx 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 _______________, between him and King World
Productions, Inc.
Date:__________________ __________________________
Xxxxxxx X. Xxxxxx
Send a completed copy of this Option Exercise Form to:
Vice President - Finance
King World Productions, Inc.
c/o King World Corporation
000 Xxxxxx Xxxxxxxx
Xxxxx Xxxxx, Xxx Xxxxxx 00000
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