Exhibit 10.2
KING WORLD PRODUCTIONS, INC.
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June 6, 1997
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c/o ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Hansen, Jacobson, Teller & Hoberman
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Dear Jules:
This letter, when accepted by you, shall constitute an agreement
between you and King World Productions, Inc. (the "Company") with respect
to your employment by the Company for the Employment Period (as hereinafter
defined).
1. (a) The Company hereby agrees to employ you as President and
Chief Operating Officer for the period commencing on June 23, 1997 and
terminating on August 31, 2000 or such earlier date on which the term of
this Agreement terminates pursuant to the provisions hereof (the "Employ-
ment Period"). You hereby agree to accept such employment, to diligently,
faithfully and competently perform such services consistent with your
positions as shall from time to time be reasonably assigned to you by the
Company's Board of Directors or its Chief Executive Officer or Chairman of
the Board, and to diligently, faithfully and competently devote your entire
business time, skill and attention to the performance of your duties and
responsibilities to the Company; provided, however, that the Company
acknowledges that your continuing service as a director of and/or consul-
tant to each of Diva Systems Corporation ("Diva") and Sundance Holdings or
Sundance-associated entities in which Sundance Holdings has an ownership
interest or with which it is otherwise affiliated (collectively,
"Sundance") will not be inconsistent with the foregoing obligations so long
as no such directorship or consultancy materially interferes with your
performance, or otherwise constitutes a breach, of your obligations to the
Company under this Agreement; provided further, however, that (i) you shall
notify the Company promptly in each instance when you become aware that you
will be providing services in excess of an aggregate of two (2) business
hours on any day to Diva and/or Sundance and (ii) the amount of time
devoted by you to Diva and Sundance collectively shall not exceed an
aggregate of twenty-four (24) business hours during any consecutive three-
month period. You shall report to the Company's Chief Executive Officer and
its Chairman of the Board. Your base of operations shall be located at the
Company's offices in the Los Angeles, California metropolitan area,
although you acknowledge that your services under this Agreement will
require such travel as the Company may reasonably require. As a condition
of your employment by the Company, you hereby affirm and represent that you
are under no obligation to any current or former employer or other party
that is in any way inconsistent with, or that imposes any restriction upon,
your acceptance of employment hereunder with the Company, the employment of
you by the Company, or your undertakings under this Agreement.
(b) You hereby grant to the Company an option (the "Op-
tion") to extend the Employment Period for one additional twenty-four-month
period to commence on September 1, 2000 and to end on August 31, 2002. The
Company may exercise the Option only by giving you written notice to such
effect not later than February 28, 1999. In the event that the Company
elects to exercise the Option, (i) the terms and provisions of this Agree-
ment shall remain in effect and shall apply during the Employment Period as
so extended and (ii) you shall be appointed to the Board of Directors of
the Company on or before February 28, 1999 and shall be nominated by the
Company for re-election thereto at each Annual Meeting of Stockholders of
the Company at which the class of directors to which you are assigned is
subject to re-election.
(c) Provided the Option has not theretofore been exercised,
the Company shall, notwithstanding any other provision of this Agreement to
the contrary, have the right, exercisable by written notice to you on or
before February 28, 1999, to terminate the Employment Period without cause
as of any date (the "Early Termination Date") on or before February 28,
1999. In the event the Company elects to so terminate the Employment
Period, the Company shall pay to you, within ten business days following
the Early Termination Date, $1,500,000 (the "Termination Amount") in
complete termination and settlement of all of its obligations to you under
this Agreement, except for any bonus payment thereafter becoming payable to
you pursuant to Section 3 and except for your entitlement to any other
compensation earned by you prior to the Early Termination Date and your
vested entitlement under any employee benefit plan. The Company acknowl-
edges that, if the Company elects to terminate the Employment Period
pursuant to this Section 1(c), you shall not be required to mitigate the
Company's obligation to pay to you the Termination Amount and that it shall
not be entitled to offset against the Termination Amount any compensation
earned by you after the Early Termination Date.
(d) If the Company does not exercise the Option, you shall
have the right, exercisable by written notice to the Company only during
the thirty-day period commencing March 1, 1999, to terminate the Employment
Period without cause effective as of the thirtieth day after the date of
such notice. If you elect to so terminate the Employment Period, you shall
have no right to receive any compensation under this Agreement after such
effective date, except for any bonus payment thereafter becoming payable to
you pursuant to Section 3 and except for your entitlement to any other
compensation earned by you prior to such termination and your vested
entitlement under any employee benefit plan.
2. (a) The Company shall pay to you, and you shall accept, for
your services performed for the Company and its subsidiaries and affili-
ates during the Employment Period, salary compensation at the annual rate
of (i) $1,000,000 for the period commencing June 23, 1997 and ending August
31, 1998; (ii) $1,050,000 for the period commencing September 1, 1998 and
ending August 31, 1999; (iii) $1,100,000 for the period commencing Septem-
ber 1, 1999 and ending August 31, 2000; and (iv) subject to the exercise of
the Option by the Company, (A) $1,150,000 for the period commencing
September 1, 2000 and ending August 31, 2001 and (B) $1,200,000 for the
period commencing September 1, 2001 and ending August 31, 2002. Any
compensation payable pursuant to this Section 2(a) shall be paid in
accordance with the Company's normal payroll policy at the time in effect.
(b) Subject to the provisions of this Section 2(b), the
Company hereby grants to you a "non-qualified stock option" under the
Company's 1996 Amended and Restated Stock Option and Restricted Stock
Purchase Plan (the "Plan") to purchase 250,000 shares of the Company's
Common Stock, $.01 par value (the "Common Stock"), at an exercise price per
share equal to the closing price of the Common Stock on the New York Stock
Exchange on the date hereof. You understand and agree with respect to such
stock option that:
(i) your right to exercise such option shall vest over a five
year period as follows: 40% on June 14, 1999; 20% on June 14, 2000; 20% on
June 14, 2001; and 20% on June 14, 2002; and
(ii) if you should cease to be a full-time employee of the
Company and any of its subsidiaries or affiliates, then you shall only have
the right to exercise the unexercised portion of such option within one
month after the date on which you ceased to be so employed and then only to
the extent that such portion was vested (pursuant to the foregoing vesting
schedule) on the date you ceased to be so employed, and you shall forfeit
all other rights to and under such option, PROVIDED, HOWEVER, that if your
full-time employment ceases by reason of your death or "disability" (within
the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended), then such one month period shall instead be a one-year period
following the cessation of your employment.
The foregoing, as well as such other terms and conditions as the
Company shall deem appropriate, shall be set forth in a definitive stock
option agreement substantially in the form previously furnished to you.
Your rights as an optionee shall be governed by the terms and conditions of
such agreement and the Plan.
If the Company terminates the Employment Period without cause at
any time after February 28, 1999, your expectation damages in connection
with any remedy to which you may be entitled as a result of such termina-
tion shall include, insofar as the option granted under this Section 2 is
concerned, the value of the portion of such option that would have vested
during the portion of the Employment Period following such termination if
the Employment Period had not been so terminated.
(c) If, following a Change of Control (as hereinafter defined),
the vesting of Plan options granted to any other officer of the Company is
accelerated, the Plan option granted to you pursuant to this Agreement
shall also be accelerated on the same basis as the most favorable provi-
sions granted to any such other officer of the Company. In addition, if,
following a Change of Control that occurs after February 28, 1999, the
Company terminates the Employment Period without cause, you shall not be
required to mitigate the Company's obligation to pay to you any amounts
owed to you pursuant to this Agreement and the Company shall not be enti-
tled to offset against such amounts any compensation earned by you after
such termination. For the purposes of this Agreement, "Change of Control"
shall mean an event constituting a Change of Control under the current
employment agreement between the Company and its Chairman of the Board.
3. (a) With respect to each full fiscal year of the Company
entirely within the Employment Period beginning with the fiscal year
commencing on September 1, 1997 and ending within (or upon the termination
of) the Employment Period, you shall be entitled to a bonus equal to 1.0%
of the Consolidated Net Income of the Company in excess of $150,000,000 for
such fiscal year. "Consolidated Net Income" shall mean, for the purposes
of this Section 3(a), the net income, after taxes but before all extraor-
dinary items, of the Company and its consolidated subsidiaries, as reported
in its audited financial statements for such fiscal year filed with the
Securities and Exchange Commission (the "SEC"). Payment of any bonus
payable to you in accordance with the provisions of this Section 3(a) shall
be made within thirty (30) days of delivery to the Company of the determi-
nation thereof by the Company's independent public accountants.
(b) With respect to any fiscal year of the Company that
contains the date upon which the Employment Period terminates (the "Employ-
ment Termination Date"), you shall be entitled to bonus compensation if the
Consolidated Net Income for the period (the "Last Period") commencing on
the September 1st of such fiscal year and ending on the last day of the
Company's most recent full fiscal quarter, if any, within such fiscal year
that falls upon or precedes the Employment Termination Date exceeds the
product of (A) $150,000,000 and (B) a fraction, the numerator of which is
the number of full fiscal quarters in the Last Period and the denominator
of which is four (4). In such event, the Company shall pay to you 1% of
such excess within thirty (30) days of the filing by the Company of its
Form 10-Q for such most recent fiscal quarter with the SEC. "Consolidated
Net Income" shall mean, for the purposes of this Section 3(b), the net
income, after taxes but before all extraordinary items, of the Company and
its consolidated subsidiaries, as reported in the Company's unaudited
financial statements for such most recent fiscal quarter filed with the
SEC.
4. Notwithstanding anything to the contrary contained herein,
the bonus described in Section 3 hereof is subject to approval of the
stockholders of the Company and any additional approvals or consents that
may, in the reasonable opinion of counsel to the Company, be necessary or
desirable for the Company to obtain. In the event that such approvals are
not obtained on or prior to March 1, 1998, then you and the Company shall
negotiate in good faith for the purpose of agreeing upon a mutually
acceptable cash substitute of equivalent value for the bonus (which may
also be subject to stockholder and other approvals). If, after good-faith
negotiation, you and the Company cannot so agree, then you may, in your
sole discretion, terminate the Employment Period.
5. (a) You shall be entitled to participate, on the same basis
as the other executive officers of the Company, in any and all benefit
plans, including without limitation pension, 401(k) or other retirement,
life insurance, health insurance, hospitalization or disability insurance
plans, generally in effect with respect to all such executive officers.
You shall be entitled to reimbursement of expenses reasonably incurred by
you in connection with the performance of your duties hereunder, provided
that you promptly furnish documentation therefor reasonably satisfactory to
the Company.
(b) The Company shall furnish you with executive office
space commensurate with your title and responsibilities, which you agree is
satisfied by the corner office adjacent to the office currently occupied by
the Company's Chief Executive Officer, and with a secretary mutually
designated by you and the Company, consistent with the Company's customary
hiring and compensation practices.
(c) The Company shall provide computer, fax and other
equipment in your home reasonably necessary to facilitate your performance
of your duties under this Agreement. At the end of the Employment Period,
you shall return to the Company all such equipment.
(d) You shall be entitled to stay in first-class hotel
accommodations and to utilize first-class air travel (if available and if
used) in connection with your performance of services under this Agreement.
(e) You shall be entitled to four (4) weeks of vacation
during each year of the Employment Period.
6. (a) In the event of your death, the Employment Period shall
automatically terminate, effective upon the date of your death.
(b) In the event that you are unable to perform the
material duties required of you pursuant to this Agreement, for (i) ninety
(90) days during any consecutive twelve months during the Employment Period
(whether or not such ninety (90) days are consecutive) or (ii) any sixty
(60) consecutive days during the Employment Period, by reason of illness or
other physical incapacity, the Company may, after the expiration of such
ninety (90) or sixty (60) days, terminate the Employment Period, it being
understood that you shall not thereby be deprived of your rights under any
disability severance plan of the Company then in effect.
7. Except as required in connection with the performance of
your services for the Company, you shall not, during or after the termina-
tion of the Employment Period, use or disclose to any person, firm,
partnership or corporation any confidential or proprietary information or
trade secrets of the Company or any of its subsidiaries or affiliates
obtained or learned by you during the Employment Period, including, without
limitation, to the extent not public information, the type and nature of
the contracts entered into by the Company or any of its subsidiaries or
affiliates in connection with the acquisition of television programming or
the acquisition of distribution rights with respect to any such programming
(including, without limitation, the acquisition of advertising time within
any television programming or acting as sales agent for any such advertis-
ing time, irrespective of whether the Company or any of its subsidiaries or
affiliates distributes such programming to television stations ("Advertis-
ing Time")), the sale or other distribution of television programming
(including, without limitation, Advertising Time), or the basis upon which
the Company or any of its subsidiaries or affiliates elects to acquire
television programming or distribution rights with respect to any such
programming (including, without limitation, Advertising Time) for sale or
other distribution.
8. You hereby agree that during and for a period of (a) two (2)
years following the termination of the Employment Period, you shall not
induce, directly or indirectly, any person, firm, partnership, corporation
or other entity from whom or from which the Company or any of its subsid-
iaries or affiliates acquired television programming or distribution
(including, without limitation, sales agency) rights with respect thereto
(including, without limitation, Advertising Time) during the Employment
Period to terminate its agreement with the Company or such subsidiary or
affiliate with respect to such programming or distribution rights (includ-
ing any such Advertising Time), or (b) one (1) year following the termina-
tion of the Employment Period, you shall not induce, directly or indirect-
ly, any employee of the Company (excluding the secretary assigned to you)
or any of its subsidiaries or affiliates to terminate his or her employment
with the Company or any such subsidiary or affiliate.
9. You hereby agree that all ideas, creations, improvements and
other works of authorship created, developed, written or conceived by you
within the scope of your employment at any time during the Employment
Period are works for hire within the scope of your employment and shall be
the property of the Company free of any claim whatever by you or any person
claiming any rights or interests through you. Notwithstanding any other
provision of this Agreement that may be to the contrary, nothing contained
in this Agreement shall require the Company to utilize your services under
this Agreement, the Company's only obligation to you being payment of your
compensation and reimbursable expenses under this Agreement earned by you
during the Employment Period.
10. (a) You hereby agree to indemnify and hold the Company
harmless from and against any and all loss, damage, liability, cost and
expense, including reasonable outside attorneys' fees, incurred by the
Company as a result of, arising out of or in connection with a violation of
any term or condition of this Agreement required to be performed or
observed by you.
(b) The Company hereby agrees to indemnify and hold you
harmless from and against any and all loss, damage, liability, cost and
expense, including reasonable attorneys' fees, incurred by you as a result
of, arising out of or in connection with (i) any action taken by you in
accordance with Delaware law and your performance of your obligations under
this Agreement and (ii) a violation of any term or condition of this
Agreement required to be performed or observed by the Company.
(c) The Company agrees that you shall be covered under any
directors' and officers' liability insurance maintained by the Company on
the same basis as the other officers of the Company.
11. (a) If you shall breach any of the material terms of this
Agreement, including but not limited to a failure or refusal by you to
perform services assigned by the Company to you pursuant to this Agreement,
the Company shall have the right, upon written notice to you, to suspend
the Employment Period and all the Company's obligations to you under this
Agreement, until you resume performance of your services in a satisfactory
manner. In addition to the Company's foregoing rights, the Company shall
have the right to terminate the Employment Period and the Company's
obligations to you hereunder following the occurrence of such breach if you
have not cured such breach within ten (10) days following the Company's
written notice of same to you, provided, however, that if by the nature of
such breach, such breach is incurable, the Company shall not be required to
accord you any cure period prior to the Company's exercise of its right to
terminate. Such actions by the Company shall be without prejudice to any
and all remedies the Company may have, in law or equity, for breach of this
Agreement.
(b) If the Company shall breach any of the material terms
of this Agreement, you shall have the right to terminate the Employment
Period and your obligations to the Company hereunder following the occur-
rence of such breach if the Company has not cured such breach within ten
(10) days following your written notice of same to the Company; provided,
however, that if by the nature of such breach, such breach is incurable,
you shall not be required to accord the Company any cure period prior to
your exercise of your right to terminate. Such actions by you shall be
without prejudice to any and all remedies you may have, in law or equity,
for breach of this Agreement.
12. The Company and you shall mutually approve the press release
announcing your hiring by the Company.
13. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of California. This Agreement
constitutes the entire agreement between the parties hereto with respect to
the subject matter hereof. The failure of a party to insist upon strict
compliance with any provision of this Agreement shall not be deemed to be a
waiver of such provision or of any other provision of this Agreement. No
waiver or modification of the terms or conditions hereof shall be valid
unless in writing signed by the party to be charged and only to the extent
therein set forth. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors, assigns, heirs,
administrators and executors.
(b) Any legal suit, action or proceeding arising out of or
based upon this Agreement may be instituted in the federal courts of the
United States of America, or the courts of the State of California, in each
case located in the City and County of Los Angeles (collectively, the
"Specified Courts"), and each party irrevocably submits to the exclusive
jurisdiction (except for proceedings instituted in regard to the enforce-
ment of a judgment of any such court, as to which such jurisdiction is non-
exclusive) of such courts in any such suit, action or proceeding. The
parties irrevocably and unconditionally waive any objection to the laying
of venue of any suit, action or other proceeding in the Specified Courts
and irrevocably and unconditionally waive and agree not to plead or claim
in any such court that any such suit, action or other proceeding brought in
any such court has been brought in an inconvenient forum.
Yours very truly,
KING WORLD PRODUCTIONS, INC.
By:_______________________________
ACCEPTED:
_________________________
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