EXHIBIT 99.4
March 17, 1994
Xx. Xxxxxxx X. Xxxxxx
Xxxx World
0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Dear Xxxxx:
Pursuant to our conversations, may the following (sometimes herein referred
to as the "Amendment") serve as a deal memorandum and an amendment to the
existing agreement as amended to date (sometimes referred to as the "Existing
Agreement") between the parties King World Productions, Inc. ("King World")
and HARPO, Inc. ("HARPO"). As used herein, the term "Agreement" refers to the
Existing Agreement as modified by this Amendment.
For good and valuable consideration as set forth herein, the parties agree as
follows:
1. HARPO agrees to produce an additional television season of The Xxxxx
Xxxxxxx Show (the "Show"), namely the 1995/96 television season ("Year 10").
The Year 10 episodes will be produced for initial telecast between September
1, 1995 and August 31, 1996, with the Term of the Agreement deemed extended
through August 31, 1996. HARPO may engage Harpo Productions, Inc. to produce
the Show and shall, in any event, enter into an agreement with a separate
personal services corporation which shall furnish the personal services of
Xxxxx Xxxxxxx to HARPO to host 195 new episodes of same.
HARPO also agrees to allow King World to license (subject to the
qualifications set forth below) to domestic and international markets, in
accordance with paragraph 11 of this Amendment, an additional four years'
rights to the Show, namely for the 1996/97, 1997/98, 1998/99 and 1999/2000
television seasons ("Year 11", "Year 12", "Year 13" and "Year 14",
respectively), under the express condition that all licenses of such programs
for such Years shall be explicitly subject to the production of the Show for
such Years, which shall be at the election of HARPO. If HARPO does not
exercise its option for any of the 1996/97, 1997/98, 1998/99 or 1999/2000
television seasons any license of the Show for said years will be null and
void. Under no circumstances xxxx Xxxx World procure from licensees advances
attributable to Years 11, 12, 13 and 14 prior to HARPO's written exercise of
its options for each of said Years. The decision to host and produce for the
1996/97 television season (Year 11) will be made on or before September 15,
1995, the decision to host and produce for the 1997/98 television season (Year
12) if the option was exercised for Year 11 will be made on or before
September 15, 1996, the decision to host and produce for the 1998/99
television season (Year 13) if the option was exercised for Year 12 will be
made on or before September 15, 1997 and the decision to host and produce for
the 1999/2000 television season (Year 14) if the option was exercised for Year
13 will be made on or before September 15, 1998. No decision by HARPO will
be final unless and until confirmed in writing. If HARPO exercises its option
for each such Year, it will produce episodes of the Show on the terms and
conditions set forth herein applicable to Year 10, except to the extent
Page 38 of 124 Pages
otherwise set forth herein. Subject to consultation with King World, HARPO
will have, commencing with Year 8, final creative, financial and editorial
controls regarding the production of the Show, promos and HARPO's other
activities hereunder. Subject to consultation with HARPO, King World will
have final control regarding its distribution activities. HARPO represents
that the production values and format for new programs produced will be
consistent with Year 8 of the Show, provided that HARPO shall have the right
to continue to make evolutionary changes to the format in consultation with
King World. King World represents that its distribution efforts for Years
after Year 8 will be consistent with Year 8 of the Show. The terms of any
licenses between King World and WIVB and any other television stations owned
or controlled directly or indirectly by King World will be consistent with
terms of comparable transactions negotiated at arms' length.
For purposes of clarity, the term "Year" is defined herein and in the document
dated January 28, 1991 in a manner consistent with, and shall be interpreted
to be equivalent to, the term "Period" as defined in the documentation dated
as of January 30, 1987 and July 29, 1988 comprising the Agreement as amended
through July 29, 1988.
2. In each Year in which Xxxxx Xxxxxxx performs the hosting duties set
forth above, HARPO agrees to deliver 195 newly produced episodes of the Show,
plus 5 best-of Oprah shows (consisting of clips from shows of the then-current
or prior seasons with newly produced wraparounds hosted by Xxxxx Xxxxxxx).
3. Production Fee(s)
(a) King World shall advance HARPO the following amounts (herein, the
"Production Fee(s)") as and for HARPO's costs in connection with the
production of the Show in each of Years 8, 9, 10 and 11:
Season Production Fee
Year 8 $18.75 million
Year 9 $19.75 million
Year 10 $26.5 million
Year 11 $28.0 million
The applicable Production Fee for each such Year shall be payable 1/2 on
September 1 and 1/2 on January 3 of that Year.
(b) The Production Fee(s) are intended to cover the services of HARPO
in connection with producing the Show and, consistent with the "Harpo,
Inc./King World 1992/1993 Budget", with domestic affiliate relations, media
relations, promotion, and fan mail services for the Show. Please see Exhibit
A for additional detail and guidelines regarding what the Production Fee
includes and excludes. The parties acknowledge that Exhibit A is not a
complete enumeration of each party's rights and obligations but is accurate
insofar as it specifies what each of HARPO and King World must, respectively,
pay for.
(c) Notwithstanding the foregoing, if HARPO's production costs
hereunder prior to Year 12 increase as a result of newly imposed union
requirements (e.g., HARPO's affiliation with unions with which it presently
has no collective bargaining agreement or the modification to HARPO's
disadvantage of collective bargaining agreements with unions with which it
Page 39 of 124 Pages
presently has more favorable arrangements) during the Term, the Production
Fee(s) shall be renegotiated to cover the attendant verifiable cost increases
sustained by HARPO.
(d) Consistent with past and current practice prior to the date of
execution hereof, King World shall continue to advance, in addition to the
Production Fee(s), any additional amounts specifically attributable to the
preparation of the Show for distribution outside of the United States,
including without limitation costs of format conversion and costs of acquiring
clip or other intellectual property rights for exploitation outside of the
United States. Said amounts shall be deemed Recoupable Distribution Costs of
King World and shall be recoupable as set forth below.
(e) The Production Fee(s) shall be recoupable by King World out of
revenues derived from distribution of the Show as set forth below; provided
that promptly after the execution hereof, the parties will negotiate in good
faith an arrangement with respect to the deferral of recoupment of the
Production Fee(s), after recoupment of the corresponding Guarantee, consistent
with the existing deferral arrangement with respect to the Advance.
4. Guarantees: King World shall pay to HARPO the following applicable
amounts (the "Guarantee(s)"):
(a) Years 8 and 9: King World shall remain obligated to pay the
aggregate guarantee of $50,000,000 for Years 8 and 9 and to lend the
$17,250,000 (which loan has been heretofore made by King World and is
repayable by HARPO) in accordance with the Existing Agreement.
(b) After Year 9: King World shall pay HARPO the following applicable
respective amounts (the "Guarantees") with respect to Year 10 and each
applicable Year, if any, after Year 10 for which HARPO exercises its option
to produce additional new programs hereunder:
Season Guarantee Payment Schedule
(i) Year 10 $60 million Payable in full upon execution hereof
(ii) Year 11 $65 million Payable upon HARPO's exercise of its
option for Year 11
(iii)Year 12 $95 million Payable (A) $65 million, upon HARPO's
exercise of its option for Year 12, (B)
$20 million, on September 1, 1997. and
(C) $10 million, on January 3, 1998.
(iv) Year 13 $95 million Payable (A) $65 million, upon HARPO's
exercise of its option for Year 13, (B)
$20 million, on September 1, 1998. and
(C) $10 million, on January 3,1999.
(v) Year 14 $95 million Payable (A) $65 million, upon HARPO's exercise
of its option for Year 14, (B) $20 million, on
September 1, 1999. and (C) $10 million, on
January 3, 2000.
Page 40 of 124 Pages
The Guarantee payable with respect to a given Year will constitute an advance
against HARPO's Share of Revenues (as defined below) for such Year; provided
that promptly after the execution hereof, the parties will negotiate in good
faith an arrangement with respect to the deferral of recoupment of the last
$30 million of the Guarantee payable with respect to each of Years 12, 13 and
14 consistent with the existing deferral arrangement with respect to the
Advance.
(c) In the event that King World terminates this Agreement as a result
of a Qualifying Breach (as defined below), HARPO thereupon shall immediately
repay the Retumable Portion (as defined below) of the Guarantee attributable
to the Year in which such Qualifying Breach occurs, to the extent that such
Returnable Portion of the Guarantee has not been named by HARPO, as well as
the Returnable Portion(s) of Guarantee(s) paid to HARPO attributable to any
Years that, at the time of such Qualifying Breach, have not yet commenced.
The aforesaid is without prejudice to the other rights and remedies of King
World in the event of any such Qualifying Breach. In order to secure
repayment of such Retumable Portion(s) of the Guarantee(s) in accordance with
this subparagraph (c), HARPO (and, to the extent applicable, Xxxxxx & Company
(the "Xxxxxx Company"), Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxxx) hereby grant to
King World a first priority security interest in the Specified Collateral (as
defined below), which security interest shall be limited, at any given time,
to the aggregate amount (the "Secured Amount") of the Retumable Portion(s) of
any Guarantee(s) paid to HARPO which would, in the event that a Qualifying
Breach occurred at such time, be repayable in accordance with this
subparagraph (c). HARPO, the Xxxxxx Company, Xxxxx Xxxxxxx and Xxxxxxx X.
Xxxxxx shall promptly execute such documents as King World may reasonably
require (provided the terms of such documents shall be subject to prior good
faith negotiation by the parties) to enable King World to perfect the
aforesaid security interests under this paragraph 4.
(d) As used herein:
(i) The "Returnable Portion" of the Guarantee means the following
applicable respective portions of the Guarantee paid to HARPO with respect to
each Year:
Season Guarantee Returnable Portion
A. Year 10 $60 million $60 million
B. Year 11 $65 million $65 million
C. Year 12 $95 million The $65 million
installment payable
pursuant to subparagraph
4(b)(ii i) (A)
D. Year 13 $95 million The $65 million installment
payable pursuant to
subparagraph 4(b)(Iv)(A)
E. Year 14 $95 million The $65 million installment
payable pursuant to
subparagraph 4(b)(V)(A)
(ii) The "Specified Collateral" means either (at the sole
election of HARPO, which election may be made from time to time upon written
notice given to King World) (A) all revenues payable to HARPO or to the Xxxxxx
Company at any time under the Agreement, plus any unexercised stock options
and stock granted to Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxxx pursuant to paragraph
Page 41 of 124 Pages
5 of this Amendment, provided that such security interests in and to such
stock options and stock shall be limited to any profit from the sale of such
stock, or (B) marketable securities the fair market value of which equals or
exceeds the Secured Amount, provided that (1) HARPO may withdraw "Specified
Collateral" to the extent that its value at any time is greater than the
Secured Amount at that time, and (2) shall augment the "Specified Collateral"
to the extent that its value at any time is less than the Secured Amount at
that time
(iii) A "Qualifying Breach" means a breach by HARPO of the Agreement,
which breach legally entitles King World to terminate the Agreement, resulting
from either (A) HARPO's nondelivery of episodes, or (B) HARPO's breach of the
provisions of paragraph 12 of this Amendment.
5. Stock Options
(a) King World has heretofore granted to Xxxxx Xxxxxxx and Xxxxxxx X.
Xxxxxx options to purchase 1,000,000 shares of King World stock.
Notwithstanding any previous understanding between the parties to the
contrary, said options shall, in consideration of HARPO's agreement to produce
the Show for Year 10, be fully vested and exercisable now.
(b) In consideration of HARPO's agreement to produce the Show for Year
10, King World hereby grants to Xxxxx Xxxxxxx options to purchase 450,000
shares of King World stock and hereby grants to Xxxxxxx X. Xxxxxx options to
purchase 50,000 shares of King World stock. Said options shall be exercisable
at the price of $33 5/8 (Thirty Three And Five-Eighths) per share and shall
vest and be exercisable immediately. Said options were granted at the closing
market price on March 8, 1994, the date on which the parties reached an
agreement in principle with respect to this transaction. In the event HARPO
exercises its option for Year 11, 12 13 and/or 14, King World will, in
consideration of HARPO's agreement to produce the Show for the Year in
question, grant an additional 250,000 options (225,000 to Xxxxx Xxxxxxx and
25,000 to Xxxxxxx X. Xxxxxx) for each option year exercisable at closing
market price of said stock on the date that said exercise of option is
received by King World by fax or Federal Express. The options for each such
additional Year, if any, will be granted, will vest and will be fully
exercisable upon exercise of HARPO's option for that Year.
(c) Xxxxx Xxxxxxx and Xxxxxxx Xxxxxx, as applicable, will have the
right to pay the exercise price in cash or in King World stock if permitted
by King World's stock option plan.
(d) The shares subject to the option will be publicly registered. The
final stock option agreements, which will definitively govern such options
(including without limitation the terms and conditions of the security
interest in and to the Specified Collateral referred to in subparagraph
4(d)(ii)(A), if applicable), will be presented promptly after the execution
hereof to Xxxxx Xxxxxxx and Xxxxxxx Xxxxxx for signature and will, except as
set forth to the contrary in this Amendment, be consistent with the terms of
the stock option agreements governing the options referred to in subparagraph
5(a).
6. In accord and settlement of the current audit dispute between the
parties, King World agrees to refund to HARPO $561,938, as its share of
foreign commissions paid in addition to the distribution fee already paid to
King World. Said refund will be made consistent with the payment procedures
outlined in paragraph 16 of the July 29, 1988 amendment modifying paragraph
Page 42 of 124 Pages
11 of the January 30, 1987 agreement. Interest on same will be waived. The
audit rights of HARPO will be closed through the 1990/91 broadcast season.
7. King World agrees to immediately repurchase the combined holdings of
preferred stock of Xxxxx Xxxxxxx for the amount of $681,250 and Xxxxxxx X.
Xxxxxx for the amount of $68,124 in Buffalo Broadcasting.
8. HARPO agrees to immediately repay to King World the balance of the
development money previously advanced in the sum of $550,252.00 and will
prepare a summary of development activities, along with the allocation of
costs to specific projects, and furnish such summary to King World
Productions, as soon as possible. The project submission procedure, and all
submissions obligations of HARPO in connection therewith, are terminated,
prospectively and retroactively, except as set forth in this paragraph 8.
King World will continue to be obligated to distribute up to a total of four
MOWs produced by a HARPO entity (the first two of which, "Overexposed" and
"There Are No Children Here", have already been delivered to King World)
during the Term, as extended hereunder, in accordance with the terms
heretofore agreed upon by the parties. If HARPO produces or otherwise
exploits any production(s) developed with development fund payments heretofore
advanced by King World to HARPO, HARPO will reimburse King World, out of first
"non-pass through monies" received by HARPO, for the full amount of any such
payments made by King World which were used for development costs on the
production(s) in question per the summary. As used in the preceding sentence
"non-pass through monies" means all amounts received by HARPO from third
parties in respect of the development and/or exploitation of the production(s)
in question, excluding amounts which are paid to HARPO as reimbursement for
the costs of development (e.g., engagement of writers or extension of
options), provided such costs are incurred either (a) after receiving a
development commitment from such third parties or (b) in contemplation of
receiving such a commitment.
9. Security.
(a) HARPO and the Xxxxxx Company will have a first priority security
interest in their respective shares of all Show revenues, subject to the
provisions of this paragraph 9. King World, on the one hand, and HARPO and
the Xxxxxx Company, on the other hand, will immediately enter into further
documents to effectuate the aforesaid security interest.
(b) As soon as reasonably possible following the execution of this
Amendment, the parties shall enter into the following agreements:
(i) An agreement (the ~'Escrow Agreement") pursuant to which King
World shall establish an interest-bearing escrow account (the "Escrow
Account") with a bank or other financial institution, into which Escrow
Account King World shall deposit $20,000,000. Pursuant to the Escrow
Agreement, (A) HARPO and the Xxxxxx Company will have unconditional first
priority security interests in the Escrow Account, and (B) HARPO and the
Xxxxxx Company will be entitled, in the event that King World fails to pay any
amount due under an accounting rendered to HARPO (following the expiration of
the applicable cure period) and without limitation of HARPO's other rights and
remedies, to draw down on the funds in the Escrow Account in the amount of
such delinquent payment upon HARPO's certification of such failure to the
escrow agent thereunder. Any funds remaining in the Escrow Account (including
interest) following the rendering to HARPO of the accounting covering the
Page 43 of 124 Pages
fourth quarterly period following the end of the Term, as it may be extended
from time to time, shall be returned to King World. Except as provided herein
or in the Escrow Agreement, the Escrow Account will not be subject to
liquidation and the funds may not be used by either party.
(ii) One or more intercreditor agreements under which HARPO and the
Xxxxxx Company will subordinate their security interests pursuant to
subparagraph 9(a) to King World's present and future institutional lenders.
(c) Each party shall promptly execute such financing statements and
other documents as the other may reasonably require (provided the terms of
such documents shall be subject to prior good faith negotiation by the
parties) to perfect HARPO's and the Xxxxxx Company's security interests in
accordance with this paragraph 9 and otherwise effectuate the terms and
conditions of this paragraph 9. All agreements referred to in subparagraph
(b) and subparagraph 4(c) will be entered into simultaneously by the parties.
10. Participation In Revenues: King World and HARPO's respective share of
revenues attributable to the distribution of the Show in Years 8, 9 and 10 and
in each subsequent Year, if any, for which HARPO exercises its option to
produce the Show, shall be determined in accordance with the following:
(a) Years 8, 9, 10 and 11: For each such Year, King World shall pay
HARPO 50% of "Adjusted Profits".
(b) Years 12, 13 and 14: Gross Receipts attributable to the
distribution of the Show in each such Year shall be applied and paid as
follows:
(i) First, King World shall deduct and recoup as its
distribution fee (which fee shall be inclusive of all third party fees and
commissions) the following applicable percentage of Gross Receipts:
Season King World
Distribution Fee
Year 12 35%
Year 13 35%
Year 14 30%
(ii) Next, King World shall deduct and recoup out of the
remaining balance of Gross Receipts an amount equal to the Recoupable
Distribution Costs for such Year.
(iii) Finally, the remaining balance of Gross Receipts shall be
paid to HARPO.
(c) Payment provisions shall be the same as outlined in paragraph 16
of the July 29, 1988 amendment modifying paragraph 11 of the January 30, 1987
agreement except that, with respect to Years 9 and 10 and any subsequent
Years, payments shall be made to the Xxxxxx Company, rather than to Xxxxxxx
X. Xxxxxx. Neither Xxxxxxx X. Xxxxxx nor the Xxxxxx Company shall have any
independent audit rights. Simultaneously herewith, Xxxxxxx X. Xxxxxx, the
Xxxxxx Company and HARPO are executing the Payment Sideletter annexed hereto.
Page 44 of 124 Pages
(d) Each Year's Guarantee shall constitute prepayment of, and a
recoupable advance against, HARPO's Share of Revenues (as defined below)
attributable to that Year.
(e) As used hereinabove:
(i) "Adjusted Profits" will be defined consistent with the
Existing Agreement, the parties acknowledging that, as previously agreed, (1)
there will be no deductions for distribution fees, general sales overhead or
indirect expenses (including without limitation NATPE) of King World or for
HARPO talent fees, (2) King World shall use reasonable efforts, consistent
with its reasonable business judgment, to repatriate foreign receipts to the
United States, (3) retransmission fees and like amounts received by King World
will be included in Gross Receipts, (4) to the extent that King World excludes
taxes from Gross Receipts, Gross Receipts shall include the equivalent value
of any corresponding tax savings realized by King World in connection with the
payment of such taxes, and (5) recoupment of distribution expenses will be
further qualified as set forth in Exhibit A.
(ii) "Gross Receipts" will be defined in accordance with the
Agreement, the parties acknowledging that, as previously agreed, (1) King
World shall use reasonable efforts, consistent with its reasonable business
judgment, to repatriate foreign receipts to the United States, (2)
retransmission fees and like amounts received by King World will be included
in Gross Receipts, and (3) to the extent that King World excludes taxes from
Gross Receipts, Gross Receipts shall include the equivalent value of any
corresponding tax savings realized by King World in connection with the
payment of such taxes.
(iii) "Recoupable Distribution Costs" shall mean those
distribution costs which, pursuant to the Agreement, King World is entitled
to recoup out of Gross Receipts. The parties acknowledge that (1) Recoupable
Distribution Costs will not include general sales overhead, indirect expenses
(including without limitation NATPE) of King World or HARPO talent fees, (2)
it is not their intention to expand or diminish the nature or definition of
those cost items which King World is entitled to recoup from revenues
attributable to the Show (as opposed to the individual or aggregate dollar
amount of such cost items, which may change with inflation and/or with a
change in suppliers of goods and services and/or in King World's distribution
activities) as a result of the agreed upon shift in Year 12 from an
arrangement pursuant to which the parties share Adjusted Profits to one
pursuant to which HARPO receives the balance of Show revenues after King World
takes a distribution fee and recoups expenses, as more fully set forth in this
Amendment).
(iv) "HARPO's Share of Revenues" means (A) with respect to Years
8, 9, 10 and 11, the 50% share of Adjusted Profits payable to HARPO pursuant
to subparagraph 10(a), and (B) with respect to Years 12, 13 and 14, the share
of Gross Receipts payable to HARPO pursuant to subparagraph 10(b)(iii).
(f) HARPO shall continue, with respect to all distribution by King
World hereunder, to have accounting and audit rights as set forth in the
Agreement.
Page 45 of 124 Pages
11. Distribution of Library and Related Matters
(a) King World agrees that, except as set forth in subparagraphs (i)
and (ii) below, it cannot distribute or license for exhibition any episodes
of the Show produced by either WLS or HARPO for initial distribution by King
World pursuant to the Agreement (herein, the "Library") in any medium without
the express written permission of HARPO:
(i) Selling Term:
A. Until August 31 of the last Year with respect to which
HARPO exercises its option to produce the Show hereunder, King World shall
have the exclusive right to distribute the Show for first-run syndication
within the United States and Canada.
B. Until August 31 of the last Year with respect to which
HARPO exercises its option to produce the Show hereunder (the "Foreign
Distribution Stop Date"), King World shall have the exclusive right to
distribute the Show on a first run basis in all television media (the parties
acknowledging that for purposes of this Amendment, home video is not a
television medium) throughout the world excluding the United States and
Canada.
(ii) Exhibition Term: All King World licenses for exhibition of
the Show in the United States and Canada shall end no later than the date (the
"End Date") constituting the September 15 following the last day of the last
Year with respect to which HARPO exercises its option to produce the Show
hereunder. All King World licenses for exhibition of the Show outside the
United States and Canada shall end no later than the date (the "Foreign End
Date") constituting the second anniversary of the End Date (provided that
licenses entered into after the Foreign Distribution Stop Date shall end no
later than the End Date).
(b) HARPO agrees that, except as set forth in subparagraphs (i), (ii)
and (iii) below, it cannot distribute or license for exhibition the Library
in any television media without the express written permission of King World:
(i) Selling Term: HARPO may exercise distribution rights in and
to the Library in all television media at any time after September 15 of the
last Year with respect to which HARPO exercises its option to produce the Show
hereunder; provided that neither HARPO nor any distributor or other third
party to whom HARPO or any distributor licenses any such distribution rights
will negotiate or enter into exhibition licenses with individual television
stations or station groups in the United States until the next following March
1.
(ii) Exhibition Term: HARPO may license the Library for
exhibition in the United States and Canada after the End Date, and for
exhibition outside of the United States and Canada after the Foreign End Date.
HARPO may additionally, following the Foreign Distribution Stop Date,
authorize the exhibition of the Library in all television media outside the
United States and Canada after the End Date.
(iii) Proceeds: HARPO's profits from the exploitation in
perpetuity of such rights in and to the Library, net of all residuals, reuse
and repackaging fees, as well as other direct, out-of-pocket, unreimbursed
distribution expenses, production expenses and other direct, out of pocket
Page 46 of 124 Pages
costs of HARPO incurred in connection with such exploitation (but not third
party distribution fees, which shall be borne by HARPO), shall be split on a
50/50 basis. In the event that HARPO undertakes such distribution itself, it
shall similarly not be entitled to take a distribution fee. If HARPO reedits
the programs or adds material to them, it shall be entitled to an additional
fee to be negotiated in good faith.
(c) King World hereby grants to HARPO, commencing immediately, the
unrestricted right to exploit home video rights in and to the Library.
HARPO's profits from the exploitation in perpetuity of home video rights in
and to the Library, net of all third party distribution fees, residuals and
reuse or repackaging fees, as well as other direct, out-of-pocket,
unreimbursed distribution expenses, production expenses and other direct, out
of pocket costs of HARPO incurred in connection with such exploitation, shall
be split on a 50/50 basis. In the event that HARPO undertakes such
distribution itself, it shall not be entitled to take a distribution fee. If
HARPO reedits the programs or adds material to them, it shall be entitled to
an additional fee to be negotiated in good faith.
(d) King World hereby grants to HARPO, commencing immediately, the
exclusive unrestricted right to exploit merchandising rights in and to the
Library and the Show. HARPO's profits from the exploitation of merchandising
rights accruing on or prior to the End Date specifically relating to the Show
(as opposed, by way of example, to Xxxxx Xxxxxxx as a personality), net of all
third party distribution fees, residuals and reuse or repackaging fees, as
well as other direct, out-of-pocket, unreimbursed distribution expenses,
production expenses and other direct, out of pocket costs of HARPO incurred
in connection with such exploitation, shall be split on a 50/50 basis;
provided that HARPO shall not be required to share any profits that are
donated to charity. In the event that HARPO undertakes such distribution
itself, it shall not be entitled to take a distribution fee, but HARPO shall
be entitled to an additional fee to be negotiated in good faith if it performs
or furnishes substantial additional creative input in connection with the
development or preparation of merchandising items. All revenues from the
exploitation of such merchandising rights accruing after the End Date shall,
as between the parties, be owned and controlled solely by HARPO. Commercial
tie-in rights in and to the Library and the Show shall be vested in HARPO but
HARPO shall not authorize the exploitation of such rights until after the End
Date without the written consent of King World.
(e) King World hereby grants to HARPO, commencing immediately, the
unrestricted right to exploit Interactive Rights (as defined below) in and to
the Library. HARPO's profits from the exploitation in perpetuity of
Interactive Rights in and to the Library, net of all third party distribution
fees, residuals and reuse or repackaging fees, as well as other direct,
out-of-pocket, unreimbursed distribution expenses, production expenses and
other direct, out of pocket costs of HARPO incurred in connection with such
exploitation, shall be split on a 50/50 basis; provided that HARPO shall be
entitled to an additional fee to be negotiated in good faith if it performs
or furnishes substantial additional creative input, services or material in
connection with the development and exploitation of such Interactive Rights.
As used herein, "Interactive Rights" means the right to reproduce or store the
Library in whole or in part by means of interactive media (including without
limitation CD-ROM, CD-I, other optical discs or chips and/or similar or
dissimilar systems in whatever form, whether now known or hereafter devised).
Page 47 of 124 Pages
(f) Any medium with respect to which King World is granted a financial
participation pursuant to this. paragraph 11 shall encompass such medium in
whatever form(s) whether now known or hereafter devised.
(g) King World will, upon presentation by HARPO, execute and file
standard guild assumption agreements, and execute and/or complete any other
additional forms or document(s) required by the applicable unions per their
standard practice, applicable to King World's distribution of the show;
provided, however, that HARPO shall furnish King World with residual
schedules.
(h) Except as set forth to the contrary hereinabove, all rights in all
media throughout the universe in and to the Library, the Show and Xxxxx
Xxxxxxx'x name, likeness and persona are hereby reserved (or, to the extent
applicable, granted) to HARPO.
(i) With respect to any financial participation of King World referred
to in this paragraph 11, King World shall have accounting and audit rights
coextensive and reciprocal with those of HARPO pursuant to the Agreement.
12. Exclusivity and Noncompetition
It is agreed between the parties as further consideration for entering into
this extension agreement that, from this date forward, neither HARPO nor Xxxxx
Xxxxxxx shall have any exclusivity of any kind to King World, nor shall King
World have any options or rights of first look/first negotiation on any HARPO
product or on the service of Xxxxx Xxxxxxx, except as set forth as follows
(a) While the Show is being distributed by King World on a first run
basis in the United States hereunder (i.e., until the End Date):
(i) Xxxxx Xxxxxxx will not render on-camera services on a
regular basis on any television show whose regularly scheduled United States
telecast is at any time during the 2:00pm to 5:00pm (local time) time period;
and
(ii) Xxxxx Xxxxxxx will not render on-camera services on any
regularly scheduled television series (including without limitation any free
television network, cable television network or syndicated talk show) with the
same format or a substantially similar format as the Show.
(b) After the Show is no longer being distributed by King World on a
first run basis hereunder (i.e., after the End Date):
(i) Prior to the end of Year 11:
A. Xxxxx Xxxxxxx will not render on-camera services on
any regularly scheduled television series (including without limitation any
free television network, cable television network or syndicated talk show)
with the same format or a substantially similar format as the Show; provided
that this restriction shall not apply to any free network television show
intended for regular broadcast not more than once per week in prime time.
B. Except as otherwise provided in this paragraph 12,
Xxxxx Xxxxxxx will have the unrestricted right to appear in television shows,
including without limitation shows which do not have same format or a
substantially similar format as the Show.
Page 48 of 124 Pages
(ii) After the end of Year 11: Xxxxx Xxxxxxx will have the
additional right to render on-camera services on a cable television talk show
with the same format or a substantially similar format as the Show so long as
the regularly scheduled United States telecast of such cable television talk
show is not at any time during the 2:00pm to 5:00pm (local time) time period.
(iii) After the end of Year 14, HARPO and Xxxxx Xxxxxxx will have
the unrestricted right to produce and appear in television shows, including
without limitation shows with same format or a substantially similar format
as the Show.
(c) Subject to the other provisions of this paragraph 12, HARPO will
have the right, after the September 15 of the last Year with respect to which
HARPO exercises its option to produce the Show hereunder, to distribute,
license, and authorize the distribution and/or licensing of, the Show, or any
other television talk show with the same format or a substantially similar
format as the Show, for exhibition in the United States and Canada.
(d) Any and all disputes relating to what constitutes "the same format
or a substantially similar format as the Show" under the provisions of this
paragraph 12 shall be adjudicated by binding arbitration in accordance with
the provisions of Schedule C.
13. Change in Control:
(a) Upon any Change in Control (as defined below):
(i) All exclusivity and noncompetition restrictions set forth
in paragraph 12 shall end effective as of the end of the last Year for which
HARPO shall exercise the option to produce new episodes of the Show hereunder.
Without limiting the foregoing, HARPO and Xxxxx Xxxxxxx shall, upon the End
Date, be free without restriction of any kind whatsoever to produce and render
services on television shows with the same format or a substantially similar
format as the Show.
(ii) All distribution and exploitation rights in and to the
Library outside of the United States and Canada shall immediately vest in
HARPO, provided that:
X. Xxxx World shall be entitled to its applicable
financial participation in connection with such rights specified in paragraph
11; and
B. HARPO will have the exclusive right to authorize the
exhibition of the Library in all television media outside the United States
and Canada, subject to any preexisting licenses theretofore entered into by
King World in accordance herewith; provided that any proceeds otherwise
payable to and retainable by HARPO (after accounting to King World for its
share in accordance with paragraph 11) in connection with HARPO's exploitation
of such foreign distribution rights which, in the absence of such Change In
Control (i.e., if such exploitation were effected by King World), would have
been applied toward recoupment of any unrecouped portion of any Guarantee in
accordance with the terms hereof (e.g., proceeds allocable to any exhibition
of the Library through the date after which King World would not have been
able to authorize foreign exhibition of the Library) shall be paid to King
World and applied toward recoupment of such Guarantee.
Page 49 of 124 Pages
(iii) Any restrictions with respect to the volume of shares that
can be sold (herein, "volume restrictions") pursuant to the Stock Option
Agreement shall be reduced or eliminated to the extent that the volume
restrictions which then apply to Xxxxx Xxxx and/or any other person who was
a King World executive prior to such Change in Control are more favorable than
those accorded to Xxxxx Xxxxxxx and Xxxxxxx X. Xxxxxx.
(iv) In the event that HARPO (A) commits to produce the Show
hereunder for an additional Year after an agreement is reached to effect any
disposition, transfer or other transaction which, if consummated, would
constitute a Change in Control, and (B) said Change in Control occurs, King
World will pay HARPO the one-time sum of $25 million upon the date said Change
in Control is deemed to have occurred in accordance with Exhibit B annexed
hereto.
(b) As used herein, "Change in Control" shall be defined in accordance
with Exhibit B annexed hereto.
14. Signing Bonuses: In further consideration of HARPO's agreement to
produce the Show for the Year 10, King World will pay to HARPO the sum of $5
million, accruing and payable as follows:
(a) $2.5 million, upon the date of execution and delivery hereof by
HARPO; and
(b) $2.5 million, on the one year anniversary of the date of execution
and delivery hereof by HARPO.
The payments referred to in this paragraph 14 will not be recoupable by King
World out of Gross Receipts, Adjusted Profits, or other revenues attributable
to exploitation of the Show.
15. Personal Guarantee From Xxxxx Xxxxxxx: The acknowledgment from Xxxxx
Xxxxxxx dated January 30, 1987 comprising a part of the Existing Agreement is
hereby deemed null and void and replaced with the Guarantee attached hereto.
Except as expressly modified by this Amendment, the Agreement (including
without limitation the amendment to the Agreement dated September 5, 1992
relating to certain cash flow matters) constitutes the sole and entire
agreement between the parties and shall remain in full force and effect and
shall not be subject to modification or waiver except in a writing signed by
both parties. For purposes of construing this Amendment, this Amendment will
be deemed to have been jointly drafted by the parties.
This Amendment may be executed in one or more counterparts.
Page 50 of 124 Pages
If the foregoing meets with your approval, please sign a copy of this document
and return it to me. This letter constitutes an offer which may, at the
election of HARPO, be withdrawn at any time prior to unconditional acceptance
and signature by King World.
Thank you for your cooperation in this matter.
Very truly yours,
HARPO, INC.
Xxxxxxx X. Xxxxxx
President
ACCEPTED AND APPROVED
KING WORLD PRODUCTIONS, INC.
By:_________________________
Page 51 of 124 Pages
GUARANTEE
King World Productions, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
I refer to the agreement ("Amendment") dated March 17, 1993 between King World
Productions, Inc. ("King World") and HARPO, Inc. ("HARPO"). All capitalized
terms used herein shall have the respective meanings ascribed to them in the
Amendment.
As an inducement to King World to enter into the Amendment, I hereby guarantee
the full performance by HARPO of its past, current and prospective obligations
and agreements (including without limitation the representations, warranties
and agreements set forth in paragraphs 12 and 15 and the repayment of any
loans to HARPO and of any Guarantees and Production Fees which become
repayable to King World) under the Agreement. Insofar as this is a guarantee
of HARPO's monetary obligations, it constitutes a guarantee of payment and not
collection.
As an additional inducement to King World to enter into the Amendment, I
hereby represent, warrant and agree as follows:
(a) That I have heretofore looked and shall hereafter look solely to
HARPO for all compensation to be paid to me for all services and obligations
performed or to be performed by me and all rights, licenses and privileges
granted or to be granted by me,
(b) That I waive any claims against King World for wages, salary or
other compensation of any kind for any services which I have heretofore
rendered or may hereafter render pursuant to the Agreement.;
(c) That I am familiar with each and all of the terms, covenants and
conditions of the Agreement, and consent and agree to the execution and
delivery of the Agreement including the Amendment by HARPO; that I shall
render all services, grant all rights and perform all other obligations to be
performed by me as provided for in the Agreement;
(d) That I shall comply with all of the terms, covenants and
conditions of the Agreement on my part to be complied with; that I am under
no obligation or disability created by law or otherwise which would or might
prevent or restrict me from so doing;
(e) That I have heretofore looked and shall hereafter look solely to
HARPO for all compensation heretofore paid or to be paid to me for all
services and obligations performed by me and all rights, licenses and
privileges heretofore granted or to be granted by me, and that I waive any
claims against King World for wages, salary or other compensation of any kind
for any services which I have heretofore or may hereafter render pursuant to
the Agreement;
(f) That in no event shall any amendment or termination of the
agreement which I now have or any agreement which I may hereafter have with
HARPO or any breach of any such agreement by HARPO limit or affect any of the
obligations or any of the rights, privileges or remedies of King World
provided for in the Agreement and, in such event, I shall look solely to HARPO
for any remedies arising out of such breach or the failure to perform, and
Page 52 of 124 Pages
that I shall continue to perform all services and obligations to be performed
by me under the Agreement and that King World shall continue to have all
rights, privileges and remedies specified therein; and
(g) That, in the event of a breach or threatened breach of the
Agreement by HARPO, King World shall be entitled to seek equitable relief by
way of injunction or otherwise or legal relief against HARPO, and equitable
relief by way of injunction or otherwise or legal relief against me under this
Guarantee without the necessity of first resorting to or exhausting any rights
or remedies which King World may have against HARPO. I acknowledge, for this
purpose only, that the rights I have granted to HARPO are of a special,
unique, unusual and extraordinary and intellectual character giving them
peculiar value, the loss of which cannot be reasonably or adequately
compensated in damages.
Dated:_____________
___________________________
XXXXX XXXXXXX
Page 53 of 124 Pages
[Payment Sideletter]
Xxxxxxx X. Xxxxxx
Xxxxxx & Company
c/o HARPO, Inc.
000 Xxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
King World Productions, Inc.
0000 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xx. Xxxxxxx X. Xxxxxx
Executive Vice President and
Chief Operating Offficer
Dear Xxxxx:
I am writing with reference to the amendment dated March 17, 1994 between
HARPO, Inc. and King World Productions, Inc. (the "Amendment").
As you know, the share of Harpo's Share of Revenues (as said term is defined
in the Amendment) that HARPO has directed to my benefit shall, effective as
of the commencement of the 1994/95 season, be paid to Xxxxxx & Company (an
entity of which I am the principal), rather than to me. I hereby confirm that
Xxxxxx & Company shall have rights under the Agreement (as said term is
defined in the Amendment) of a scope no greater than those that I have
personally under the Existing Agreement (as said term is defined in the
Amendment).
Very truly yours,
Xxxxxxx X. Xxxxxx
Personally, and on behalf of
Xxxxxx & Company
ACCEPTED AND APPROVED
HARPO, INC.
By:____________________
Xxxxx Xxxxxxx
Page 54 of 124 Pages
EXHIBIT A
I. The Production Fee for each Year Includes the following costs, which
shall be borne by HARPO to the extent generally consistent with current
practice applicable to Year 8 (the parties acknowledging that (1) the
Agreement shall not deemed to require HARPO to incur individual or aggregate
costs in any specific amount, and (2) notwithstanding that some of the cost
items listed below are, as of Year 8 (without giving effect to this
Amendment), being separately reimbursed by King World, solely for purposes of
determining whether HARPO bears such costs in Year 8 (after giving effect to
this Amendment) and in subsequent Years, during which no such separate payment
or reimbursement will be made, "current practice" shall be deemed to require
that such costs are borne by HARPO out of the Production Fee to the same
extent that, as of Year 8 (without giving effect to this Amendment), such
costs are borne by HARPO out of the Production Fee and/or such separate
reimbursements):
a. one hundred ninety five (195) Xxxxx Xxxxxxx Show programs and five (5)
"best-of" programs
b. remotes, as determined by HARPO
c. "swat visits"
d. BPME
e. Christmas gifts to general managers and others
f. topical television and radio promo production
g. fall campaign production
h. CSSR reel
i. fall press kit
j. cost of attendance at Daytime Emmy Awards
k. news director visits
l. "back-up" feeds to affiliates
m. all music clearance costs in connection with the initial domestic run
of each program
n. all HARPO-supported services in the areas of affiliate relations,
promotion, fan mail and publicity
II. The Production Fee(s) do not include the following costs, which shall,
except as noted to the contrary below, be advanced by King World and, to the
extent generally consistent with current practice applicable to Year 8,
recouped:
a. media buy each fall (provided that, commencing with Year 12, the amount
expended by King World shall be subject to the prior approval of HARPO).
Page 55 of 124 Pages
b. co-op buys - print and other media buys
c. NATPE costs (provided that such costs shall be bore solely by King World
and shall not be recouped as Recoupable Distribution Costs)
d. satellite charges
e. close captioning
f. extra swat visits requested by KWP
g. focus groups as agreed by KWP
h. special KWP-requested p.r.merchandise (provided that such costs shall
be borne solely by King World and shall not be recouped as Recoupable
Distribution Costs)
i. print and trade ad production
j. all amounts payable pursuant to any union or guild agreement in
connection with the retelecast or reuse of any program(s) or any
element(s) thereof, including, without limitation, residuals and re-use
fees (including fringes thereon), provided that HARPO will not incur
residual obligations in excess of scale except where reasonable or
consistent with industry practice.
k. all music clearance costs (excluding costs in connection with the
initial domestic run of any program(s))
l. all other distribution expenses
Page 56 of 124 Pages
EXHIBIT B
"Change in Control" means, and shall be deemed to have occurred if:
(a) At any time during a period of two (2) years, at least a majority
of King World's Board of Directors shall not consist of Continuing Directors.
"Continuing Directors" shall mean Directors of King World at the beginning of
such two-year period and Directors who subsequently became such and whose
selection or nomination for election by King World's shareholders was approved
by a majority of the then Continuing Directors; or
(b) King World becomes a party to a merger, consolidation, share
exchange with another company or other transaction, in which either (i) King
World is not the surviving corporation or (ii) King World is the surviving
corporation and either (A) the persons who were owners of the voting
securities of King World before the transaction own less than 50% of the
voting securities of King World after the transaction, or (B) any outstanding
shares of its common stock are converted into shares or other securities of
any other company or cash or other property other than securities of King
World (excluding, in the case of either clause (i) or clause (ii), payments
made solely for fractional shares, dissenters' or similar rights and/or a
reincorporation or the establishment of a holding company involving no change
in ownership of King World); or
(c) King World's shareholders shall either (i) approve any plan or
proposal for the disposition or other transfer of all, or substantially all,
of the assets of King World (other than to a subsidiary of King World) or for
the complete liquidation or dissolution of King World (other than a
reincorporation or the establishment of a holding company involving no change
in ownership of King World) or (ii) dispose of more than 50% of the
outstanding voting stock of King World by tender offer or other transaction
requiring consideration by Company's Board of Directors to a Person or a group
of Persons other than King World or a subsidiary of King World (the terms
"Person" and "Group" being as determined for purposes of Regulation 13D
promulgated by the Securities Exchange Commission under the Securities
Exchange Act, or any successor regulation).
A "Change in Control" shall be deemed to have occurred upon the end of the
applicable 2-year period, in the case of (a) or, in the case of any
transaction, disposition or transfer described by (b) or (c), upon the date
that such transaction, disposition or transfer is consummated.
Page 57 of 124 Pages
EXHIBIT C
Any and all disputes relating to what constitutes "the same format or a
substantially similar format as the Show" under the provisions of paragraph
12 of the Amendment shall be adjudicated by binding arbitration in Chicago,
illinois or New York, New York on an expedited basis in accordance with the
following procedures:
(a) Any demand for arbitration hereunder shall be delivered by hand
or by certified mail to King World at 0000 Xxxxxxxx, Xxx Xxxx, XX 00000,
attention of the Chief Operating Officer and to HARPO at 000 X. Xxxxxxxxx
Xxxxxx, Xxxxxxx, XX 00000, attention of the President or to such other
address or to the attention of such
other person as either party may specify by written notice of the other. Such
demand shall be in lieu of any formal complaint.
(b) The dispute shall be arbitrated by a panel of three (3)
arbitrators (the "Panel"), each of whom shall be either (i) a former Judge of
a United States District Court, (ii) a former Judge of a United States Court
of Appeals, or (iii) a law professor with acknowledged expertise in the area
of copyright and intellectual property law then tenured at one of the
following law schools: Harvard, Yale, NYU, UCLA, Columbia, University of
Chicago or Stanford ("Qualified Arbitrator"). Within 21 days of receipt by
either party of a demand for arbitration hereunder (the "Demand"), each of
King World and HARPO shall notify the other of its selection of one Qualified
Arbitrator to serve as an arbitrator. Within 21 days after designation of the
two party appointed arbitrators, those two arbitrators shall consult and shall
appoint another Qualified Arbitrator as an arbitrator to complete the Panel.
If HARPO or King World shall fail to appoint its respective arbitrator within
21 days after receipt of a Demand, then the other side shall have the right
to appoint the arbitrator on behalf of the non-appointing party.
(c) Within 40 days after receipt of a Demand, each party shall,
whether or not it receives any subpoena or request for documents or
information, deliver to the other party (i) a copy of all documents,
videotapes and tangible things in the possession, custody or control of the
producing party that relate in any way to the dispute to be arbitrated, and
(ii) a list of all persons, including experts, who may be called as witnesses
at the hearing on the merits of the arbitration (the "Hearing"). Either party
may make specific requests for documents, videotapes or tangible things. Any
such specific request must be delivered to the other party not more than 10
days after receipt of the Demand, and must be complied with fully by the other
party not more than 40 days after receipt of the Demand.
(d) Each party may take, upon reasonable notice, the deposition of any
person identified by the other party as a possible witness at the Hearing.
All depositions must be completed no later than 85 days after receipt of the
Demand. No deposition may be taken until at least 45 days have elapsed after
receipt of the Demand.
(e) The Hearing shall commence 110 days after receipt of the Demand,
and shall continue on each consecutive business day thereafter until fully
concluded, unless continued by the Panel for good cause shown. Each side
shall have not more than 5 business days to present its case. The oral
decision of the Panel shall be rendered within 10 days after the Hearing is
concluded, and the written decision within 30 days thereafter, but failure to
meet these deadlines shall not oust the Panel of jurisdiction.
Page 58 of 124 Pages
(f) The parties acknowledge that the sole issue to be resolved by
means of arbitration shall be whether a given actual or proposed television
show has "the same format or a substantially similar format" as or to The
Xxxxx Xxxxxxx Show.
(g) The parties expressly acknowledge that a breach of paragraph 12
of the Amendment may cause great and irreparable harm to King World or to
HARPO and that the extent of the damage caused by such a breach may be
difficult or impossible to determine. The parties therefore agree that the
Panel in any arbitration proceeding shall be empowered to enforce paragraph
12 of the Amendment through an award of injunctive relief to the full extent
to which a federal court would be authorized by law to award such relief, as
well as an award of such monetary or other relief as the Panel may deem just
and proper.
King World hereby waives the right to obtain injunctive or other equitable
relief to enforce its rights pursuant to paragraph 12 of the Amendment in
connection with any dispute relating to what constitutes "the same format or
a substantially similar format as the Show" under the provisions of paragraph
12 of the Amendment, unless and until such dispute has been finally determined
pursuant to this arbitration procedure, provided, however, that in any
arbitration proceeding commenced hereunder, (i) King World's waiver of its
right to obtain such preliminary injunctive relief shall be without prejudice
to King World's right to obtain an award of permanent injunctive relief to
enforce its rights under paragraph 12 of the Amendment, as provided for in
paragraph (g) above, and (ii) in connection with any application by King World
for such relief, HARPO shall not refer to, and the Panel shall not consider,
said waiver by King World and/or any equities, harm or hardship that might
otherwise be claimed to arise from the fact that HARPO is already distributing
the program that is claimed to violate King World's rights under paragraph 12
of the Amendment.
Page 59 of 124 Pages
