-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dw9C/NKPNSHxBjetNhm1vXzXPaPqH0Pfu6vJUwguY01YWzMtrS+xIqRaSbPM33e2 OwjQPPUV2xQwmiR4xRkZbQ== 0000904454-97-000070.txt : 19970627 0000904454-97-000070.hdr.sgml : 19970627 ACCESSION NUMBER: 0000904454-97-000070 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970626 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KING WORLD PRODUCTIONS INC CENTRAL INDEX KEY: 0000756764 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE DISTRIBUTION [7822] IRS NUMBER: 132565808 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09244 FILM NUMBER: 97629955 BUSINESS ADDRESS: STREET 1: 1700 BROADWAY CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2123154000 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended May 31, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from _______ to ________ Commission File Number 1-9244 _____________________________ KING WORLD PRODUCTIONS, INC. ____________________________________________________ (Exact name of registrant as specified in its charter) Delaware 13-2565808 _______________________________ ___________________________________ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1700 Broadway New York, New York 10019 _______________________________________ __________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 212 315-4000 ____________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ______ ____ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.01 par value, 36,758,817 shares outstanding as of June 23, 1997. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS (Dollars in thousands) May 31, August 31, 1997 1996 _________ __________ (Unaudited) CURRENT ASSETS: Cash and cash equivalents . . . . . . . . . $276,141 $344,766 Short-term investments. . . . . . . . . . . 233,634 153,969 Accounts receivable (net of allowance for doubtful accounts of $4,101 and $4,196 at May 31, 1997 and August 31, 1996, respectively) . . . . . . . . . . . 66,388 60,378 Producer advances and deferred costs. . . . . . . . . . . . . . 79,681 74,824 Other current assets. . . . . . . . . . . . 2,171 1,932 _______ _______ Total current assets . . . . . . . . . 658,015 635,869 _______ _______ LONG-TERM INVESTMENTS, at cost, which approximates market value . . . . . . . . 184,982 145,645 _______ _______ FIXED ASSETS, at cost . . . . . . . . . . . . 20,967 13,384 Less - accumulated depreciation and amortization. . . . . . . . . . . . . (11,750) (10,503) ______ ______ . . . . . . . . . . . . . . . . . . . . . . . 9,217 2,881 ______ ______ PRODUCER ADVANCES AND OTHER ASSETS. . . . . . . . . . . . . . 9,469 69,746 ______ ______ $861,683 $854,141 ________ ________ The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) LIABILITIES AND STOCKHOLDERS' EQUITY (Dollars in thousands) May 31, August 31, 1997 1996 _________ __________ (Unaudited) CURRENT LIABILITIES: Accounts payable and accrued liabilities . . . . . . . . . . $ 17,461 $ 15,237 Payable to producers and others . . . . . 65,273 71,920 Income taxes payable. . . . . . . . . . . 27,161 29,099 Total current liabilities . . . . 109,895 116,256 ________ ________ STOCKHOLDERS' EQUITY: Preferred stock, $.01 par value; 5,000,000 shares authorized, none issued . . . . . . . . . . . . . . -- -- Common stock, $.01 par value; 75,000,000 shares autho- rized, 50,864,211 shares and 50,734,739 shares issued at May 31, 1997 and August 31, 1996, respectively. . . . . . . . . . . 509 507 Paid-in capital . . . . . . . . . . . . . 116,800 110,666 Retained earnings . . . . . . . . . . . . 965,157 932,651 Treasury stock, at cost; 14,105,394 and 13,442,594 shares at May 31, 1997 and August 31, 1996, respectively . . . . . (330,678) (305,939) _______ _______ 751,788 737,885 _______ _______ $861,683 $854,141 _______ _______ The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Nine Months Ended May 31, May 31, __________________ _________________ 1997 1996 1997 1996 _____ ______ _____ ______ (Dollars in thousands except per share data) REVENUES....................... $166,751 $165,763 $506,207 $504,687 ________ ________ ________ ________ EXPENSES: Producers' fees, programming and other direct operating costs............ 97,745 98,648 300,315 304,779 Selling, general and administrative expenses.... 22,385 18,106 62,078 56,153 _______ _______ _______ _______ 120,130 116,754 362,393 360,932 _______ _______ _______ _______ Income from operations..... 46,621 49,009 143,814 143,755 INTEREST AND DIVIDEND INCOME.............. 8,269 6,218 22,184 19,124 NONRECURRING GAIN - Sale of Buffalo Broadcasting Co. Inc. -- -- -- 14,060 _______ _______ _______ _______ Income before provision for income taxes......... 54,890 55,227 165,998 176,939 PROVISION FOR INCOME TAXES..... 19,185 20,041 58,649 62,930 ________ ________ ________ ________ Net income................. $ 35,705 $ 35,186 $107,349 $114,009 ________ ________ ________ ________ PRIMARY EARNINGS PER SHARE........................ $ 0.95 $ 0.92 $ 2.85 $ 3.03 ________ ________ ________ ________ The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended May 31, ______________________ 1997 1996 ________ ________ (Dollars in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income. . . . . . . . . . . . . . . . . . . . $107,349 $114,009 Items not affecting cash: Gain on sale of Buffalo Broadcasting Co. Inc. . . . . . . . . . . -- (14,060) Depreciation and amortization . . . . . . . 1,247 592 Change in assets and liabilities: Accounts receivable . . . . . . . . . . . . (5,922) (15,552) Producer advances and deferred costs . . . . . . . . . . . . . . . . . . 55,143 (56,836) Accounts payable and accrued liabilities . . . . . . . . . . . . . . . 2,224 4,512 Payable to producers and others . . . . . . (6,647) 13,671 Income taxes payable. . . . . . . . . . . . (1,939) 5,240 Other, net. . . . . . . . . . . . . . . . . (50) (4,657) ________ ________ Net cash provided by operating activities . . . . . . . . . . . . . . . . . . 151,405 46,919 ________ ________ CASH FLOWS FROM INVESTING ACTIVITIES: Increase in investments. . . . . . . . . . . . . (119,002) (42,726) Proceeds from sale of Buffalo Broadcasting Co. Inc.. . . . . . . . . . . . . -- 9,802 Additions to fixed assets. . . . . . . . . . . . (7,584) (321) ________ ________ Net cash used in investing activities. . . . . . . . . . . . . . . . . . . (126,586) (33,245) ________ ________ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock . . . . . 6,138 22,547 Purchase of treasury stock . . . . . . . . . . . (24,739) -- Payment of special dividend. . . . . . . . . . . (74,843) -- ________ ________ Net cash (used in) provided by financing activities . . . . . . . . . . . . . (93,444) 22,547 ________ ________ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . . . . . (68,625) 36,221 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . 344,766 446,896 ________ ________ CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . $276,141 $483,117 ________ ________ The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. KING WORLD PRODUCTIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Summary of significant accounting policies Principles of consolidation ___________________________ The accompanying consolidated financial statements include the accounts of King World Productions, Inc. ("King World") and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. Unless the context suggests otherwise, the "Company", as used herein, means King World and its subsidiaries. The unaudited consolidated financial statements for the nine months and three months ended May 31, 1997 have been prepared in accordance with the instructions to Form 10-Q and include, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for such periods. They do not, however, include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. For further information, reference is made to the consolidated financial statements for the fiscal year ended August 31, 1996 and the footnotes related thereto included in the Company's Annual Report on Form 10-K from which the August 31, 1996 balances presented herein have been derived. The results of operations for the nine months and three months ended May 31, 1997 are not necessarily indicative of the results of operations for the full year. Revenue recognition ___________________ License fees from first-run syndicated television properties are recog- nized at the commencement of the license period pursuant to noncancelable agreements and as each show is made available to the licensee via satellite transmission. Because transmission to the satellite takes place, on the aver- age, no more than two to three days prior to the broadcast of the programming, revenues are recognized on or about the air date. The Company typically receives a portion of the fees derived from the licensing of syndicated television programming in the form of retained adver- tising time, which is sold to advertisers by Camelot Entertainment Sales, Inc. ("Camelot"), a wholly-owned subsidiary of the Company. Such revenues are recognized at the same time as the cash portion of the license fees derived from such programming is recog- nized, in amounts adjusted for expected ratings. (1) Summary of significant accounting policies (continued) License fees for non-first-run syndicated properties are recognized at the gross contract amount (net of discount to present value for license periods greater than one year) at the commencement of the license period. Principal properties ____________________ The Company's principal properties are licenses to distribute THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE and JEOPARDY!; and INSIDE EDITION, a first-run syndicated newsmagazine series produced and distributed by the Company. THE OPRAH WINFREY SHOW accounted for approximately 40% and 39% of revenues for the nine months ended May 31, 1997 and 1996, respectively; WHEEL OF FORTUNE accounted for approximately 20% and 19% of revenues for such periods, respec- tively; JEOPARDY! accounted for approximately 17% of revenues for each such period; and INSIDE EDITION accounted for approximately 8% of revenues for each such period. Producers' fees, programming and other direct operating costs _____________________________________________________________ Producers' fees, programming and other direct operating costs primarily include the producers' share of both cash license fees from the sale of programming to television stations and revenues derived from the sale of retained advertising time to advertisers with respect to programming dis- tributed by the Company; participation fees payable by the Company to producers and talent; production and distribution costs for first-run syndi- cated programming; and the direct operating costs of King World Direct. That portion of recognized revenue that is to be paid to producers and owners of programming is accrued as the license fees are earned. The share of license fees payable by the Company to such producers and others is generally paid as cash license fees and revenues derived from the sale of retained advertising time are received from television stations and advertisers. (1) Summary of significant accounting policies (continued) Stockholders' equity ____________________ Primary earnings per share has been computed using the weighted average number of common shares outstanding of 37,453,000 and 38,178,000, respec- tively, for the three months ended May 31, 1997 and 1996 and 37,660,000 and 37,646,000, respectively, for the nine months ended May 31, 1997 and 1996, which include the dilutive effect from the assumed exercise of vested and unvested stock options outstanding as of the end of each such period. The difference between primary and fully diluted earnings per share for all periods presented was not significant. (2) Nonrecurring gain - sale of Buffalo Broadcasting Co. Inc. In October 1995, the Company closed its agreement to sell WIVB-TV, the CBS-affiliated VHF television station in Buffalo, New York, to LIN Television Corporation for $95 million in cash. As a result of this transaction, the Company recorded a nonrecurring gain of approximately $14.1 million, of which approximately $9.8 million represents cash proceeds to the Company from the sale. The remaining $4.3 million of such gain represents the reversal of previously recognized accounting losses (with no associated income tax effect) in excess of the Company's original investment. (3) Producer advances On January 2, 1996, the Company paid Harpo, Inc. ("Harpo"), the producer of THE OPRAH WINFREY SHOW, a $65 million advance against its minimum participation payments for the 1996-1997 broadcast season. This advance was fully recouped as of May 31, 1997. In addition, on January 2, 1996, the Company made an advance to Harpo of $65 million against Harpo's minimum participation payments for the 1997-1998 broadcast season, none of which had been recouped as of May 31, 1997. Based on the license agreements in place for the 1997-1998 season, the Company believes that revenues from the series will be sufficient to enable the Company to recoup the advance for such season. Such advance is refundable to the Company by Harpo and Ms. Winfrey if King World terminates such license agreements with Harpo due to Harpo's failure to deliver episodes of THE OPRAH WINFREY SHOW. Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition _____________________________________________ RESULTS OF OPERATIONS Comparison of Nine Months and Three Months Ended May 31, 1997 and 1996 Revenues ________ Revenues for the first nine months of fiscal 1997 were comparable to revenues for the first nine months of the prior fiscal year, increasing by less than 1%. Such increase was primarily due to increased cash license fees from THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE and, to a lesser extent, JEOPAR- DY!. The increase in revenues was offset by lower revenues derived from the sale of retained advertising time on INSIDE EDITION, AMERICAN JOURNAL, another first-run syndicated newsmagazine produced and distributed by the Company, and ROLONDA, a first-run syndicated talk show produced and distributed by the Company, and by lower revenues from King World Direct Inc., the Company's wholly-owned direct response subsidiary. King World Direct's revenues for such period were derived primarily from telemarketing sales of the WILD AMERICA video series and from participation in the retail sales of certain Sears products, including the Craftsman Robogrip pliers. King World Direct operates in a seasonal business with revenues heavily reliant on the Christmas selling season. Consequently, King World Direct's revenues and earnings have historically been higher in the Company's second fiscal quarter than in the first, third and fourth fiscal quarters. The Company's revenues for the three months ended May 31, 1997 were comparable to revenues for the three months ended May 31, 1996, increasing by approximately 1% due primarily to the same factors discussed above for the nine month period (with the exception of King World Direct, which had com- parable revenues during both three month periods). THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE, JEOPARDY! and INSIDE EDITION accounted for approximately 40%, 20%, 17% and 8%, respectively, of the Compa- ny's revenues for the first nine months of fiscal 1997 compared to 39%, 19%, 17% and 8%, respectively, for the first nine months of fiscal 1996. AMERICAN JOURNAL accounted for approximately 4% of the Company's revenues for the first nine months in each of fiscal 1997 and fiscal 1996, and ROLONDA accounted for approximately 1% of the Company's revenues for the first nine months of fiscal 1997 and 2% for the first nine months of fiscal 1996. King World Direct accounted for approximately 4% of the Company's revenues for the nine months ended May 31, 1997, and 5% for the nine months ended May 31, 1996. For the three months ended May 31, 1997, THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE, JEOPARDY! and INSIDE EDITION accounted for approximately 41%, 21%, 17% and 8%, respectively, of the Company's revenues compared to 40%, 20%, 17% and 8%, respectively, for the three months ended May 31, 1996. AMERICAN JOURNAL accounted for approximately 4% of the Company's revenues for each of the three months ended May 31, 1997 and 1996, and ROLONDA accounted for approximately 1% of the Company's revenues for the three months ended May 31, 1997 and 2% for the three months ended May 31, 1996. King World Direct ac- counted for approximately 2% of the Company's revenues for each of the three months ended May 31, 1997 and 1996. Producers' fees, programming and other direct operating costs _____________________________________________________________ Producers' fees, programming and other direct operating costs decreased by approximately 1% in the first nine months of fiscal 1997 compared to the first nine months of fiscal 1996, primarily as a result of a significant decrease in operating costs of King World Direct, offset by a modest increase in revenues generated by THE OPRAH WINFREY SHOW, WHEEL OF FORTUNE and, to a lesser extent, JEOPARDY! (a portion of which revenues is payable to the producer of each such series). For the three months ended May 31, 1997, producers' fees, programming and other direct operating costs decreased by approximately 1% compared to the three months ended May 31, 1996, due primarily to the same factors as those discussed above for the nine month period (with the exception of King World Direct, which had comparable operat- ing costs during both three month periods). Selling, general and administrative expenses ____________________________________________ In December 1995, the Company entered into new employment agreements with Michael King and Roger King, its two principal executive officers. The agreements provide, among other things, for annual performance-based bonuses, including bonuses payable upon the introduction of new shows and bonuses which vary depending on the Company's net income and Common Stock price during preestablished measurement periods. As a result, the Company's compensation expense will increase if the Company introduces a new series in syndication, if the Company's net income increases or if the Common Stock price exceeds the specified levels during the applicable measurement periods. The Company has recognized the impact of certain of these bonuses in its operating results for the first, second and third quarters of fiscal 1997, which includes all amounts payable in accordance with the terms of such employment agreements. Selling, general and administrative expenses for the first nine months and the third quarter of fiscal 1997 increased by approximately 11% and 24%, respectively, from the corresponding periods of fiscal 1996. Such increases were primarily due to a general increase in advertising and promotion costs, particularly with respect to THE OPRAH WINFREY SHOW and AMERICAN JOURNAL, and an increase in compensation costs associated principally with the hiring of new executives and additional personnel. In addition, selling, general and administrative expenses for the third quarter of fiscal 1997 were impacted by increased activity with respect to programming under development. Net income and primary earnings per share _________________________________________ Due to the factors discussed above, the Company's operating income for the nine months ended May 31, 1997 was comparable to the corresponding period of the prior year, increasing by less than 1%, while operating income for the three month period decreased by approximately 5%. Reported net income for the nine month period decreased by approximately $6.7 million compared to the corresponding period of the prior year as a result of the Company recording a nonrecurring gain of approximately $14.1 million on the sale of Buffalo Broadcasting Co. Inc. ("Buffalo") to LIN Television Corporation during the first quarter of fiscal 1996. Reported primary earnings per share decreased for the nine months ended May 31, 1997, to $2.85 per share, from $ 3.03 per share for the nine months ended May 31, 1996 as a result of the nonrecurring gain from the sale of Buffalo. Absent the nonrecurring gain on the sale of Buffalo, net income in- creased by approximately $3.6 million, or 3%, for the nine months ended May 31, 1997 in comparison to the nine months ended May 31, 1996, reflecting the slight increase in operating income, higher interest income earned on the Company's cash and investments and a lower effective tax rate for the first nine months of fiscal 1997 compared with the first nine months of fiscal 1996. Absent the nonrecurring gain on the sale of Buffalo, primary earnings per share increased by $.09 per share, or approximately 3%, for the nine months ended May 31, 1997 compared to the corresponding period of fiscal 1996, as a result of the increase in net income. Net income for the three months ended May 31, 1997 increased by approximately $500,000, or 1%, compared to the corresponding period of fiscal 1996, as a result of greater interest income and a lower effective tax rate, offset by the decline in operating income. Primary earnings per share increased by $.03 per share, or 3%, for the three months ended May 31, 1997 compared to the three months ended May 31, 1996 due to the increase in net income and the smaller number of shares outstanding as a result of the Company's share repurchase program. The Company's results of operations are highly dependent upon the viewing preferences of television audiences and the Company's ability to acquire distribution rights to, or itself produce, television programming that achieves broad and enduring audience acceptance. The success of the Company's programming could be significantly affected by changes in viewer preferences or the unavailability of new programming or talent. Moreover, the amount of revenue derived from the sale of retained advertising time is dependent upon a large number of factors, such as household ratings, the demographic composition of the viewing audience and economic conditions in general and in the advertising business in particular. Due to the success of the shows distributed by the Company and in order to mitigate the influence of some of the factors referred to above, the Company has been obtaining multi-year licenses and license renewals from television stations for its principal distribution properties, extending as far into the future as the 2001-2002 broadcast season. In general, these licenses and renewals have been at rates as favorable or more favorable to the Company than the rates applicable to the 1996-1997 broadcast season. All such licenses and renewals are contingent upon the continued production of the series by their respective producers through the broadcast seasons for which the licenses run. The Company believes that the impact of inflation on its operations has not been significant. LIQUIDITY AND CAPITAL RESOURCES The Company requires capital resources to fund development, production and promotion costs of independently produced programming, including, in some instances, advances to producers and talent, to produce its own programs and to acquire distribution rights to new programming. In acquiring distribution rights from independent producers, King World has tried to avoid making significant capital commitments to such producers until it has obtained broadcast commitments from a substantial number of television stations. As a result of this strategy and the success of its existing syndication proper- ties, to date, King World has funded substantially all programming acqui- sition, development and production costs and advances from its operations. The distribution of television programming is highly competitive and the Company may be obliged to offer, among other things, guarantees and cash advances to acquire, renew or extend distribution rights. Under the terms of the Company's agreement with Harpo, the Company has the exclusive right, and has agreed, to distribute episodes of THE OPRAH WINFREY SHOW produced through the 1999-2000 television season, subject to Harpo's and Ms. Winfrey's right to decline to produce and host the show in any season after the 1995-1996 season. To date, Harpo and Ms. Winfrey have committed to produce and host the show through the 1997-1998 broadcast season. There can be no assurances that Harpo and Ms. Winfrey will elect to produce and host the show for seasons beyond the 1997-1998 season. Their failure to do so would have a material adverse effect on the Company's results of operations. Under the terms of its agreement with Harpo, the Company has agreed, among other things, to pay Harpo production fees and to guarantee participation payments to Harpo at levels which are substantially higher than those that were in effect prior to the 1995-1996 season. In addition, in the 1997-1998 season and thereafter, profit sharing arrangements between Harpo and the Company currently in effect will terminate and the Company will instead receive distribution fees based on a percentage of gross revenues derived from the series. These arrangements are less favorable to the Company than those contained in prior agreements between the Company and Harpo and, unless offset by significant increases in license fees paid by television stations for the series in forthcoming seasons, increased barter revenues from the series, and/or increased foreign revenues from the series, the Company's net profits and cash flow derived from THE OPRAH WINFREY SHOW will decline in the coming years even if Harpo and Ms. Winfrey elect to produce and host the show beyond the 1997-1998 season. On January 2, 1996, the Company paid Harpo, the producer of THE OPRAH WINFREY SHOW, a $65 million advance against its minimum participation payments for the 1996-1997 broadcast season. This advance was fully recouped as of May 31, 1997. In addition, on January 2, 1996, the Company made an advance to Harpo of $65 million against Harpo's minimum participation payments for the 1997-1998 broadcast season, none of which had been recouped as of May 31, 1997. Based on the license agreements in place for the 1997-1998 season, the Company believes that revenues from the series will be sufficient to enable the Company to recoup the advance for such season. Such advance is refundable to the Company by Harpo and Ms. Winfrey if King World terminates such license agreements with Harpo due to Harpo's failure to deliver episodes of THE OPRAH WINFREY SHOW. From time to time, the Company has used cash reserves and/or borrowed funds to make acquisitions of and investments in broadcast and related proper- ties in the entertainment field, to repurchase shares of its Common Stock and to fund development, production and promotion of new programming. The Company continues to evaluate opportunities in these areas, and may seek to raise capital in public or private securities markets to finance such activities if it considers it advantageous to do so. The Company recently formed a new division, King World Ventures, which has primary responsibility for the Company's investment and acqui- sition program including analysis of new business opportunities. On April 15, 1997, the Company announced that the Board of Directors had approved a program to repurchase up to 5,000,000 shares of its Common Stock from time to time in the open market and in privately negotiated transactions. Through May 31, 1997, 662,800 shares of Common Stock were repurchased in open market transactions for aggregate consideration of approximately $24.7 million or approximately $37.30 per share. Through June 23, 1997, 971,000 shares of Common Stock were repurchased in open market transactions for aggregate consideration of approximately $36.2 million or approximately $37.20 per share. The Company intends to continue to repurchase shares of Common Stock in the open market and in privately negotiated transactions if and when it deems it advantageous to do so. Purchases under the share repurchase program will be financed out of the Company's avail- able cash and liquid investments. On May 16, 1997, a special dividend distribution of $2.00 per share was paid to stockholders of record on April 25, 1997. The Company used approximately $74.8 million of its cash and liquid investments to pay the special dividend. The Company has no present plan to declare additional cash dividends in the forseeable future. PART II - OTHER INFORMATION Item 5. Other Information _________________ On June 16, 1997, the Company announced the appointment of Steven A. LoCascio as Senior Vice President and Chief Finan- cial Officer. On June 17, 1997, the Company announced the appointment of Jules Haimovitz as President and Chief Operating Officer, effec- tive June 23, 1997. Upon Mr. Haimovitz's appointment, Michael King assumed the position of Vice Chairman. Mr. King will continue to serve as the Chief Executive Officer of King World. On June 25, 1997, the Board of Directors adopted certain amendments to the Company's By-laws. Such amendments include the following: (i) Section 1.1 of Article I (Annual Meetings) was amended to provide that written notice of any pro- posal or other business to be brought before an annual meeting by a stockholder must be given to the Secretary of the Company not more than 120 days nor less than 90 days in advance of the anniversary date of the immediately preceding annual meeting, and to specify the contents of such a notice; (ii) a new Section 1.8 was added to Article I (Action By Written Consent), to specify the procedures by which action may be taken by the stockholders of the Company by written consent, including the manner in which the written consent procedure may be initiated and conducted and the results thereof determined; (iii) Section 1.8 of Article I was redesignated as Section 1.9 (Fixing Date for Determination of Stockholders of Record) and amended to provide, among other things, for the fixing of the record date in connection with a stockholder action by written consent; (iv) Section 1.9 of Article I was redesignated as Section 1.10; and (v) Section 2.3 of Article II (Notification of Nominations) was amended to provide that written notice of a nomination for election as a director by a stockholder must be given to the Secretary of the Company (a) with respect to an annual meeting, not more than 120 days nor less than 90 days in advance of the anniversary date of the immediately preceding annual meeting, and (b) with respect to an election held at a special meeting, not later than the close of business on the seventh day following the date on which notice of the meeting is given. The foregoing description of the amended By-law provi- sions does not purport to be complete and is qualified in its entirety by reference to applicable provisions of the By-laws of the Company (as amended and restated as of June 25, 1997) which are filed as Exhibit 3.1 to this Report and are incorporated herein by reference. Item 6. Exhibits and Reports on Form 8-K ________________________________ (a) Exhibits: ________ Exhibit Number Description ______ ___________ 3.1 By-laws of the Company (amended and restated as of June 25, 1997) 10.1 Employment Agreement, dated June 5, 1997, between the Compa- ny and Steven A. LoCascio 10.2 Employment Agreement, dated June 6, 1997, between the Compa- ny and Jules Haimovitz (b) Reports on Form 8-K ___________________ 1. The Company filed a Report on Form 8-K on April 15, 1997 in which it reported that the Board of Directors had declared the special dividend and had approved the stock repurchase plan. 2. The Company filed a Report on Form 8-K on May 13, 1997 in which it reported that on March 24, 1997, the Company filed an action in California Superior Court, Los Angeles County, against the two subsidiaries of Sony Pictures Enter- tainment that produce "WHEEL OF FORTUNE" and JEOPARDY!". The Company further reported that on May 8, 1997 the defen- dants filed an answer and countercomplaint. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly autho- rized. KING WORLD PRODUCTIONS, INC. By: /s/ Steven A. LoCascio ___________________________________ Steven A. LoCascio Senior Vice President and Chief Financial Officer and on behalf of the Registrant June 26, 1997 EXHIBIT INDEX _____________ Exhibit No. Description _______ ___________ 3.1 By-laws of the Company (amended and restated as of June 25, 1997) 10.1 Employment Agreement, dated June 5, 1997, between the Company and Steven A. LoCascio 10.2 Employment Agreement, dated June 6, 1997, between the Company and Jules Haimovitz EX-3.(II) 2 Exhibit 3.1 BY-LAWS OF KING WORLD PRODUCTIONS, INC. (Amended and Restated as of June 25, 1997) ARTICLE I Stockholders Section 1.1 ANNUAL MEETINGS. (a) An annual meeting of stock- holders shall be held for the election of directors at such date, time and place either within or without the State of Delaware as may be designated by the Board of Directors from time to time. At any such annual meeting any business properly brought before the meeting may be transacted. (b) To be properly brought before an annual meeting, business must be (i) specified in the notice of the meeting (or any supplement thereto) given by or at the direction of the chairman of the meeting or Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the chairman of the meeting or the Board of Direc- tors or (iii) otherwise properly brought before an the meeting by a stockholder. For business to be properly brought before an annual meeting by a stockholder, the stockholder must have given written notice thereof, either by personal delivery or by United States mail, postage prepaid, to the Secretary of the Corporation, not more than 120 days or less than 90 days, in advance of the anniversary date of the immediately preceding annual meeting. Any such notice shall set forth as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting and in the event that such business includes a proposal to amend either the Certificate of incorporation or By-laws of the Corporation, the language of the proposed amendment, (ii) the name and address of the stockholder proposing such business, (iii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by such meeting intends to appear in person or by proxy at the Meeting to propose such business, (iv) any material interest of the stockholder in such business and (v) if the stockholder intends to solicit proxies in support of such stockholder's proposal, a representation to that effect. No business shall be conducted at an annual meeting of stock- holders except in accordance with this Section 1.1(b), and chairman of the meeting may refuse to permit any business to be brought before an annual meeting without compliance with the foregoing procedures or if the stock- holder solicits proxies in support of such stockholder's proposal without such stockholder having made the required by clause (v) of the preceding sentence. Section 1.2 SPECIAL MEETINGS. Except as otherwise required by law and subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquida- tion, special meetings of the stockholders for any purpose or purposes may be called only by the Chairman of the Board, the President, or a majority of the entire Board of Directors. Only such business as is specified in the notice of any special meeting of the stockholders shall come before such meeting. Section 1.3 NOTICE OF MEETINGS. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the Corporation. Section 1.4 ADJOURNMENTS. Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 1.5 QUORUM. At each meeting of stockholders, except where otherwise provided by law or the certificate of incorporation or these By- laws, the holders of a majority of the outstanding shares of each class of stock entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum. For purposes of the foregoing, two or more classes or series of stock shall be considered a single class if the holders thereof are entitled to vote together as a single class at the meeting. In the absence of a quorum the stockholders so present may, by majority vote, adjourn the meeting from time to time in the manner provided by Section 1.4 of these By-laws until a quorum shall attend. Shares of its own capital stock belonging on the record date for the meeting to the Corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation to vote stock, including but not limited to its own stock, held by it in a fiduciary capacity. Section 1.6 ORGANIZATION. Meetings of stockholders shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the President, or in the absence of the President by a Vice President, or in the absence of the foregoing persons by a chairman designated by the Board of Directors, or in the absence of such designation by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 1.7 VOTING; PROXIES. Unless otherwise provided in the Certificate of Incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of stock held by such stockholder which has voting power upon the matter in question. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power. A stockholder may revoke any proxy which is not irrevocable by attending the meeting and voting in person or by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with the Secretary of the Corporation. Unless required by law or determined by the chairman of the meeting to be advis- able, the vote on any matter, including the election of directors, need not be by written ballot. In the case of a vote by written ballot, each ballot shall be signed by the stockholder voting, or by such stockholder's proxy, and shall state the number of shares voted. Either the Board of Directors or, in the absence of a designation of inspectors by the Board, the chairman of any meeting of stockholders may, in its or such person's discretion, appoint two or more inspectors to act at any meeting of stockholders. Such inspectors shall perform such duties as shall be specified by the Board or the chairman of the meeting. Inspectors need not be stockholders. No director or nominee for the office of director shall be appointed such inspector. At all meetings of stockholders for the election of directors a plurality of the votes cast shall be sufficient to elect. With respect to other matters, unless otherwise provided by law or by the Certificate of Incorporation or these By-laws, the affirmative vote of the holders of a majority of the shares of all classes of stock present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Where a separate vote by class is required, the affirmative vote of the holders of a majority of the shares of each class present in person or represented by proxy at the meeting shall be the act of such class, except as otherwise provided by law or by the Certificate of Incorporation or these By-laws. Section 1.8 ACTION BY WRITTEN CONSENT. (a) Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the Corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. (b) Consents to corporate action shall be valid for a maximum of 60 days after the date of the earliest dated consent delivered to the Corporation in the manner provided in Section 228(c), of the Delaware General Corporation Law. Consents may be revoked by written notice (i) to the Corporation, (ii) to stockholder or stockholder soliciting consents or soliciting revocations in opposition to action by consent (the "Soliciting Stockholders"), or (iii) to a proxy solicitor or other agent designated by the Corporation or the Soliciting Stockholders. (c) Within ten business days after receipt of the earliest dated consent delivered to the Corporation in the manner provided in Section 228(c) of the Delaware General Corporation Law or the determination by the Board of Directors of the Corporation that the Corporation should seek corporate action by written consent, as the case may be, the Secretary of the Corporation shall engage nationally recognized the purpose of perform- ing a ministerial review of the validity of the consents and revocations. The cost of retaining inspectors of elections shall be borne by the Corporation. (d) Following appointment of the inspectors, consents and revocations shall be delivered to the inspectors upon receipt by the Corporation, the Soliciting Stockholder or their proxy solicitors or other designated agents. As soon as practicable following the earlier of (i) the receipt by the inspectors, a copy of which shall be delivered to the Corporation, of any written demand by the Soliciting Stockholders, or (ii) 60 days after the date of the earliest dated consent delivered to the Corporation in the manner provided in Section 228(c) of the Delaware General Corporation Law, the inspectors shall issue a preliminary report to the Corporation and the preliminary report to the Corporation and the Soliciting Stockholders stating the number of valid and unrevoked consents has been obtained to authorize or take the action specified in the con- sents. (e) Unless the Corporation and the Soliciting Stockholders shall agree to a shorter or longer period, the Corporation and the Soliciting Stockholders shall have 48 hours to review the consents and revocations and to advise the inspectors and the opposing party in writing as to whether they intend to challenge the preliminary report of the inspectors. If no written notice of an intention to challenge the preliminary report is received within 48 hours after the inspectors' issuance of the preliminary report, the inspectors shall issue to the Corporation and the Soliciting Stockholders their final report containing the information from the inspectors' determination with respect to whether the requisite number of valid and unrevoked consents was obtained to authorize and take the action specified in the consents. If the Corporation or the Soliciting Stockhold- ers issue written notice of an intention to challenge the inspectors' preliminary report within 48 hours after the issuance of that report, a challenge session shall be scheduled by the inspectors as promptly as practicable. Following completion of the challenge session, the inspectors shall as promptly as practicable issue their final report to the Soliciting Stockholders and the Corporation, which report shall contain the informa- tion included in the preliminary report, plus any change in the vote total as a result of the challenge and a certification of whether the requisite number of valid and unrevoked consents was obtained to authorize or take the action specified in the consents. Section 1.9 FIXING DATE FOR DETERMINATION OF STOCKHOLDERS OF RECORD. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. If no record date is fixed, (1) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and (2) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. Notwithstanding any inconsistent provision which may be contained in these By-Laws, in order that the Corporation may determine the stock- holders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary of the Corporation, request the Board of Directors to fix a record date. The Board of Directors shall thereafter promptly, but in all events within ten days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten days of the date upon which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or any officer or agent of the Corporation having custody of the book in which proceedings of stockholders' meetings are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified a or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action in writing without a meeting shall be at the close of business on the date on which the Board of Directors is required by applicable law, the record date for determining stockholders entitle to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action." Section 1.10 LIST OF STOCKHOLDERS ENTITLED TO VOTE. The Secre- tary shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockhold- er, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. ARTICLE II Board of Directors Section 2.1 GENERAL POWERS. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by law or by the certificate of incorporation of the corporation directed or required to be exercised or done by the stockholders. Section 2.2 NUMBER, QUALIFICATION AND ELECTION. Except as otherwise fixed by or pursuant to the provisions of Article IV of the Certificate of Incorporation of the Corporation relating to the rights of the holders of any class or series of stock having preference over the Common Stock as to dividends or upon liquidation, the number of the directors of the Corporation shall be seven (7), but, by vote of a majority of the entire Board of Directors, the number thereof may be increased without limit, or decreased to not less than three (3), by amendment to this Section 2.2. The directors, other than those who may be elected by the holders of shares of any class or series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation pursuant to the terms of Article IV of the Certificate of Incorporation or any resolution or resolutions providing for the issuance of such stock adopted by the Board, shall be classified, with respect to the time for which they severally hold office, into three classes as follows: one class of two (2) directors shall be originally elected for a term expiring at the annual meeting of stockholders to be held in 1986, another class of two (2) directors shall be originally elected for a term expiring at the annual meeting of stockholders to be held in 1987 and another class of three (3) directors shall be originally elected for a term expiring at the annual meeting of stockholders to be held in 1988, with each class to hold office until its successors are elected and qualified. At each annual meeting of the stockholders of the Corporation, the successors of the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Each director shall be a least 21 years of age. Directors need not be stockholders of the Corporation. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation, at each annual meeting of the stockholders there shall be elected the directors of the class the term of office of which shall then expire. Section 2.3 NOTIFICATION OF NOMINATIONS. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, nominations for the election of directors may be made by the Board of Directors or by any stockholder entitled to vote for the election of directors. Any stockhold- er entitled to vote for the election of directors at a meeting may nominate persons for election as directors only if written notice of such stockholders' intent to make such nomination is given, either by personal delivery or by United States mail, Postage prepaid, to the Secretary of the Corporation not later than (i) with respect to an election to be held at an annual meeting of stockholders, not more than 120-days or less than 90 days in advance of the anniversary date of the immediately preceding annual meeting, and (ii) with respect to an election to be held at a special meeting of stockholders for the election of directors, the close of business an the seventh day following the date on which notice of such meeting is first given to stockholders. Each such notice shall set forth (a) the name and address of the stockholder who intends to make the nomination and of the person or, persons to be nominated, (b) a representa- tion that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder, (d) such other information regarding each nominee proposed by such stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had each nominee be nominated, or intended to be nominated, by the Board of Directors; (e) the consent of each nominee to serve as a director of the corporation if so elected and (f) if the stockholder intends to solicit proxies in support of such stockholder's nominee(s), a representation to that effect. The chairman of the meeting may refuse to acknowledge the nomination of any person which was not made in accordance with the foregoing procedure or if the stock- holder solicits proxies in support of such stockholder's nominee(s) without such stockholder having made the representation required by clause (f) of the preceding sentence. Section 2.4 REGULAR MEETINGS. Regular meetings of the Board of Directors may be held at such places within or without the State of Delaware and at such times as the Board may from time to time determine, and if so determined notice thereof need not be given. Section 2.5 SPECIAL MEETINGS. Special meetings of the Board of Directors may be held at any time or place within or without the State of Delaware whenever called by the Chairman of the Board, if any, by the Vice Chairman of the Board, if any, by the President or by a majority of the members of the Board. Reasonable notice thereof shall be given by the person or persons calling the meeting. Section 2.6 PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE PERMITTED. Unless otherwise restricted by the Certificate of Incorporation or these By-laws, members of the Board of Directors, or any committee designated by the Board, may participate in a meeting of the Board or of such committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participat- ing in the meeting can hear each other, and participation in a meeting pursuant to this By-law shall constitute presence in person at such meeting. Section 2.7 QUORUM; VOTE REQUIRED FOR ACTION. Except as other- wise provided by law, the Certificate of Incorporation or these By-laws, at any meeting of the Board of Directors a majority of the entire Board shall constitute a quorum for the transaction of business and, except as so provided, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. In case at any meeting of the Board a quorum shall not be present, the members of the Board present may adjourn the meeting from time to time until a quorum shall attend. At any adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting originally called. Section 2.8 ORGANIZATION. Meetings of the Board of Directors shall be presided over by the Chairman of the Board, if any, or in the absence of the Chairman of the Board by the Vice Chairman of the Board, if any, or in the absence of the Vice Chairman of the Board by the President, or in their absence by a chairman chosen at the meeting. The Secretary, or in the absence of the Secretary an Assistant Secretary, shall act as secretary of the meeting, but in the absence of the Secretary and any Assistant Secretary the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 2.9 ACTION BY DIRECTORS WITHOUT A MEETING. Any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceed- ings of the Board or committee. Section 2.10 RESIGNATIONS. Any director of the Company may at any time resign by giving written notice to the Board of Directors, the Chairman of the Board, the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein or, if the time be not specified, upon receipt thereof; and, unless otherwise speci- fied therein, the acceptance of such resignation shall not be necessary to make it effective. Section 2.11 VACANCIES. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation, any vacancies on the Board of Directors resulting from death, resignation, removal or other cause shall only be filled by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director, and newly created directorships resulting from any increase in the number of directors shall be filled by the Board, or if not so filled, by the stockholders at the next annual meeting thereof or at a special meeting called for that purpose in accordance with 1.2 of these By-laws. Any director elected in accor- dance with the preceding sentence shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director's successor shall have been elected and qualified. Section 2.12 COMPENSATION OF DIRECTORS. The Board of Directors shall have the authority to fix the compensation of directors. ARTICLE III Committees Section 3.1 COMMITTEES. The Board of Directors may, by resolu- tion passed by a majority of the whole Board, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alter- nate members of any Committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recom- mending to the stockholders the sale, lease or exchange of all or substan- tially all the Corporation's property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of dissolu- tion, removing or indemnifying directors or amending these By-laws; and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. The Board shall have power at any time to change the membership of any committee, to fill all vacancies in it and to discharge it, either with or without cause. Section 3.2 COMMITTEE RULES. Unless the Board of Directors otherwise provides, each committee designated by the Board may adopt, amend and repeal rules for the conduct of its business. In the absence of a provision by the Board or a provision in the rules of such committee to the contrary, a majority of the entire authorized number of members of such committee shall constitute a quorum for the transaction of business, the vote of a majority of the members present at a meeting at the time of such vote if a quorum is then present shall be the act of such committee, and in other respects each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these By-laws. ARTICLE IV Officers Section 4.1 OFFICERS; ELECTION. As soon as practicable after the annual meeting of stockholders in each year, the Board of Directors shall elect a President and a Secretary, and it may, if it so determines, elect from among its members a Chairman of the Board and a Vice Chairman of the Board. The Board may also elect one or more Vice Presidents, one or more Assistant Vice Presidents, one or more Assistant Secretaries, a Treasurer and one or more Assistant Treasurers and such other officers as the Board may deem desirable or appropriate and may give any of them such further designations or alternate titles as it considers desirable. Any number of offices may be held by the same person. Section 4.2 TERM OF OFFICE; RESIGNATION; REMOVAL; VACANCIES. Except as otherwise provided in the resolution of the Board of Directors electing any officer, each officer shall hold office until the first meeting of the Board after the annual meeting of stockholders next succeed- ing his or her election and until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any officer may resign at any time upon written notice to the Board or to the President or the Secretary of the Corporation. Such resignation shall take effect at the time specified therein, and unless otherwise specified therein no acceptance of such resignation shall be necessary to make it effective. The Board may remove any officer with or without cause at any time. Any such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation, but the election of an officer shall not of itself create contractual rights. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board at any regular or special meeting. Section 4.3 CHAIRMAN OF THE BOARD. The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present and shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board and as may be provided by law. Section 4.4 VICE CHAIRMAN OF THE BOARD. In the absence of the Chairman of the Board, the Vice Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present and shall have and may exercise such powers as may, from time to time, be assigned to him or her by the Board and as may be provided by law. Section 4.5 PRESIDENT. In the absence of the Chairman of the Board and Vice Chairman of the Board, the President shall preside at all meetings of the Board of Directors and of the stockholders at which he or she shall be present. The President shall be the chief executive officer and shall have general charge and supervision of the business of the Corporation and, in general, shall perform all duties incident to the office of president of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or as may be provided by law. Section 4.6 VICE PRESIDENTS. The Vice President or Vice Presi- dents, at the request or in the absence of the President or during the President's inability to act, shall perform the duties of the President, and when so acting shall have the powers of the President. If there be more than one Vice President, the Board of Directors may determine which one or more of the Vice Presidents shall perform any of such duties; or if such determination is not made by the Board, the President may make such determination; otherwise any of the Vice Presidents may perform any of such duties. The Vice President or Vice Presidents shall have such other powers and shall perform such other duties as may, from time to time, be assigned to him or her or them by the Board or the President or as may be provided by law. Section 4.7 SECRETARY. The Secretary shall have the duty to record the proceedings of the meetings of the stockholders, the Board of Directors and any committees in a book to be kept for that purpose, shall see that all notices are duly given in accordance with the provisions of these By-laws or as required by law, shall be custodian of the records of the Corporation, may affix the corporate seal to any document the execution of which, on behalf of the Corporation, is duly authorized, and when so affixed may attest the same, and, in general, shall perform all duties incident to the office of secretary of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or the President or as may be provided by law. Section 4.8 TREASURER. The Treasurer shall have charge of and be responsible for all funds, securities, receipts and disbursements of the Corporation and shall deposit or cause to be deposited, in the name of the Corporation, all moneys or other valuable effects in such banks, trust companies or other depositories as shall, from time to time, be selected by or under authority of the Board of Directors. If required by the Board, the Treasurer shall give a bond for the faithful discharge of his or her duties, with such surety or sureties as the Board may determine. The Treasurer shall keep or cause to be kept full and accurate records of all receipts and disbursements in books of the Corporation, shall render to the President and to the Board, whenever requested, an account of the financial condition of the Corporation, and, in general, shall perform all the duties incident to the office of treasurer of a corporation and such other duties as may, from time to time, be assigned to him or her by the Board or the President or as may be provided by law. Section 4.9 OTHER OFFICERS. The other officers, if any, of the Corporation shall have such powers and duties in the management of the Corporation as shall be stated in a resolution of the Board of Directors which is not inconsistent with these By-laws and, to the extent not so stated, as generally pertain to their respective offices, subject to the control of the Board. The Board may require any officer, agent or employee to give security for the faithful performance of his or her duties. ARTICLE V Stock Section 5.1 CERTIFICATES. Every holder of stock in the Corpora- tion shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman or Vice Chairman of the Board of Directors, if any, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, certifying the number of shares owned by such holder in the Corporation. Any of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. Section 5.2 LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW CERTIFICATES. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner's legal representative, to give the Corporation a bond in such sum and with such surety or sureties as the Corporation may direct sufficient to indemnify the Corporation and its transfer agents or registrars against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certifi- cate. Section 5.3 TRANSFER OF SHARES. Transfers of shares of stock of each class of the Corporation shall be made only on the books of the Corporation by the holder thereof, or by such holder's attorney thereunto authorized by a power of attorney duly executed and filed with the Secre- tary of the Corporation or a transfer agent for such stock, if any, and on surrender of the certificate or certificates for such shares properly endorsed or accompanied by a duly executed stock transfer power and the payment of all taxes thereon. The person in whose name shares stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation; provided, however, that whenever any transfer of shares shall be made for collateral security and not absolutely, and written notice thereof shall be given to the Secretary or to such transfer agent, such fact shall be stated in the entry of the transfer. No transfer of shares shall be valid as against the Corporation, its stockholders and creditors for any purpose, except to render the transferee liable for the debts of the Corporation to the extent provided by law, until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. ARTICLE VI Miscellaneous Section 6.1 FISCAL YEAR. The fiscal year of the Corporation shall be determined by the Board of Directors. Section 6.2 SEAL. The Corporation may have a corporate seal which shall have the name of the Corporation inscribed thereon and shall be in such form as may be approved from time to time by the Board of Direc- tors. The corporate seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced. Section 6.3 WAIVER OF NOTICE OF MEETINGS OF STOCKHOLDERS, DIRECTORS AND COMMITTEES. Whenever notice is required to be given by law or under any provision of the certificate of incorporation or these By- laws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors, or members of a committee of directors need be specified in any written waiver of notice unless so required by the certificate of incorporation or these By- laws. Section 6.4 INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES. The Corporation shall indemnify to the full extent authorized by law any person made or threatened to be made a party to any action, suit or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that such person or such person's testator or intestate is or was a director, officer or employee of the Corporation or serves or served at the request of the Corporation any other enterprise as a direc- tor, officer or employee. For purposes of this By-law, the term "Corpora- tion" shall include any predecessor of the Corporation and any constituent corporation (including any constituent of a constituent) absorbed by the Corporation in a consolidation or merger; the term "other enterprise" shall include any corporation, partnership, joint venture, trust or employee benefit plan; service "at the request of the Corporation" shall include service as a director, officer or employee of the Corporation which imposes duties on, or involves services by, such director, officer or employee with respect to an employee benefit plan, its participants or beneficiaries; any excise taxes assessed on a person with respect to an employee benefit plan shall be deemed to be indemnifiable expenses; and action by a person with respect to an employee benefit plan which such person reasonably believes to be in the interest of the participants and beneficiaries of such plan shall be deemed to be action not opposed to the best interests of the Corporation. Section 6.5 INTERESTED DIRECTORS; QUORUM. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partner- ship, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purpose, if: (1) the material facts as to his or her relationship or interest and as to the contract or transaction are dis- closed or are known to the Board or the committee, and the Board or commit- tee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the material facts as to his or her relationship or interest and as to the contract or transac- tion are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction. Section 6.6 FORM OF RECORDS. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on, or be in the form of, punch cards, magnetic tape, photographs, microphotographs or any other information storage device, provided that the records so kept can be converted into clearly legible form within a reasonable time. The Corpora- tion shall so convert any records so kept upon the request of any person entitled to inspect the same. Section 6.7 AMENDMENT OF BY-LAWS. These By-laws may be amended or repealed, and new By-laws adopted, by the Board of Directors at any meeting thereof, provided that such proposed action in respect thereof shall be stated in the notice of such meeting. The stockholders entitled to vote shall have the power to adopt additional By-laws and may amend or repeal any By-law, whether or not adopted by them, only to the extent and in the manner provided in the Certificate of Incorporation. EX-10.1 3 Exhibit 10.1 KING WORLD CORPORATION 830 Morris Turnpike Short Hills, New Jersey 07078 June 5, 1997 Mr. Steven LoCascio c/o King World Corporation 830 Morris Turnpike Short Hills, New Jersey 07078 Dear Steve: This letter, when accepted by you, shall constitute an agreement between you and King World Corporation (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 Senior Vice President and Chief Financial Officer of our affiliate King World Produc- tions, Inc. ("King World") for the period commencing on September 1, 1997 and terminating on August 31, 1998 (the "Employment Period"). You hereby agree to accept such employment, to diligently, faithfully and competently perform such services as shall from time to time be reasonably assigned to you by the Company's or King World's Board of Directors or King World's Chairman of the Board, Chief Executive Officer or Chief Operating Officer, and to diligently, faithfully and competently devote your entire business time, skill and attention to the performance of your duties and responsi- bilities to the Company. You shall report to King World's Chairman of the Board, Chief Executive Officer and/or Chief Operating Officer. Your base of operations shall be located at the Company's New Jersey offices, although you acknowledge that your services under this Agreement will require such travel as the Company may reasonable require. (b) You hereby grant to the Company options to extend the Employment Period for four additional twelve-month periods (the "Option Periods") to commence on September 1, 1998 and to end on August 31, 1999, in the case of the first Option Period, to commence on September 1, 1999 and to end on August 31, 2000, in the case of the second Option Period, to commence on September 1, 2000 and to end on August 31, 2001, in the case of the third Option Period, and to commence on September 1, 2001 and to end on August 31, 2002, in the case of the fourth Option Period. The Company may exercise such option with respect to any Option Period by giving you written notice to such effect not later than the June 1st preceding the commencement of such Option Period. In the event that the Company elects to exercise any of such options, the terms and provisions of this Agreement shall remain in effect and shall apply during the Employment Period as so extended. 2. (a) The Company shall pay to you, and you shall accept, for your services performed for the Company and its parent, subsidiaries and affiliates during the Employment Period, salary compensation at the annual rate of (i) $250,000 for the period commencing September 1, 1997 and ending August 31, 1998; (ii) subject to the Company's exercising the option for the first Option Period, $275,000 during such Option Period; (iii) subject to the Company's exercising the option for the second Option Period, $285,000 during such Option Period; (iv) subject to the Company's exercis- ing the option for the third Option Period, $300,000 during such Option Period; and (v) subject to the Company's exercising the option for the fourth Option Period, $315,000 during such Option Period. Any compensation payable pursuant to this paragraph 2(a) shall be paid in accordance with the Company's normal payroll policy at the time in effect. (b) During each year of the Employment Period you may also be entitled to a bonus if the Board of Directors of the Company, in its sole and absolute discretion, shall so determine. (c) Subject to the provisions of this paragraph (c), you are hereby granted a "non-qualified stock option" under the 1996 Amended and Restated Stock Option and Restricted Stock Purchase Plan (the "Plan") of King World to purchase 75,000 shares of King World's Common Stock, $.O1 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 June 5, 1997. 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: 20% on August 31, 1998; 20% on August 31, 1999; 20% on August 31, 2000; and 40% on August 31, 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 King World shall deem appropriate, shall be set forth in a definitive stock option agreement. Your rights as an optionee shall be governed by the terms and conditions of such agreement and the Plan. 3. You shall be entitled to participate, on the same basis as the other employees of the Company, in any pension, life insurance, health insurance or hospitalization plan generally in effect with respect to all such other employees. 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. 4. (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 duties required of you pursuant to this Agreement, for (i) ninety (90) days during the Employment Period (whether or not such ninety (90) days are consecu- tive) or (ii) any thirty (30) 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 thirty (30) days, terminate the Employment Period. 5. (a) Except as required in connection with the performance of your services for the Company, you shall not, during or after the termination 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, King World or any of their subsidiaries or affiliates obtained or learned by you during the Employment Period, includ- ing, without limitation, the type and nature of the contracts entered into by the Company, King World or any of their subsidiaries or affiliates in connection with the acquisition of television programming or the acquisi- tion of distribution rights with respect to any such programming (includ- ing, without limitation, the acquisition of advertising time within any television programming or acting as sales agent for any such advertising time, irrespective of whether the Company, King World or any of its subsidiaries or affiliates distributes such programming to television stations ("Advertising Time")), the sale or other distribution of televi- sion programming (including, without limitation, Advertising Time), or the basis upon which the Company, King World or any of their 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. (b) You also agree that during and for a period of two (2) years following the termination of the Employment Period, you will not work for, or render services to or for the benefit of, or otherwise be interest- ed in (whether as an employee, consultant, independent contractor, propri- etor, investor, lender or in any other manner), any business or portion of a business of any person, firm, partnership, corporation or other entity which supplied television programming (including, without limitation, Advertising Time) to, or which entered into a distribution (including, without limitation, sales agency) agreement for television programming with, the Company, King World or any of its subsidiaries or affiliates at any time within the two (2) year period preceding the termination of the Employment Period. 6. You hereby agree that during and for a period of two (2) years following the termination of the Employment Period, you shall not (a) induce, directly or indirectly, any person, firm, partnership, corporation or other entity from whom or from which the Company, King World or any of their subsidiaries 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, King World or such subsidiary or affiliate with respect to such programming or distribution rights (including any such Advertising Time), to elect not to renew any such agreement or not to furnish to the Company, King World or any such subsidiary or affiliate any other television programming or distribution rights (including, without limitation, Advertising Time) or (b) induce, directly or indirectly, any employee of the Company, King World or any of their subsidiaries or affiliates to terminate his or her employ- ment with the Company, King World or any such subsidiary or affiliate. 7. 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 hereunder 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. Notwithstand- ing 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 during the Employment Period. 8. (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 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 a violation of any term or condition of this Agreement required to be performed or observed by the Company. 9. (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey. 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 New York, in each case located in the City and County of New York (collectively, the "Speci- fied Courts"), and each party irrevocably submits to the exclusive juris- diction (except for proceedings instituted in regard to the enforcement of a judgment of any such court, as to which such jurisdiction is non-exclu- sive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party's address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. 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 CORPORATION By: __________________________ ACCEPTED: ________________ Steven LoCascio KING WORLD CORPORATION 830 Morris Turnpike Short Hills, New Jersey 07078 June 5, 1997 Mr. Steven LoCascio c/o King World Corporation 830 Morris Turnpike Short Hills, New Jersey 07078 Dear Steve: This letter, when accepted by you, shall constitute an amendment (the "Third Amendment") to the letter agreement, dated September 1, 1989, as amended May 20, 1991, between King World Productions, Inc. ("King World") and you, which letter agreement was assigned, as of January 1, 1992, by King World to its wholly-owned subsidiary, King World Corporation (the "Company"), and was further amended on January 4, 1994. Such letter agreement, as so amended and assigned, is hereinafter referred to as the "Letter Agreement." All of the definitions of the Letter Agreement shall govern this Amendment. The Company agrees that, effective as of the date hereof, the Company employs you as Senior Vice President and Chief Financial Officer of King World. Except as modified herein, all terms and provisions of the Letter Agreement shall continue in full force and effect. Very truly yours, KING WORLD CORPORATION By:_______________________ ACCEPTED: _____________________ Steven LoCascio EX-10.2 4 Exhibit 10.2 KING WORLD PRODUCTIONS, INC. 12400 Wilshire Boulevard Los Angeles, California 90025 June 6, 1997 Mr. Jules Haimovitz c/o Craig A. Jacobson, Esq. Hansen, Jacobson, Teller & Hoberman 450 North Roxbury Drive - 8th floor Beverly Hills, CA 90210-4222 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: _________________________ Jules Haimovitz EX-27.1 5 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE. EXHIBIT 27.1 FINANCIAL DATA SCHEDULE COMMERCIAL AND INDUSTRIAL COMPANIES ARTICLE 5 OF REGULATION S-X This schedule contains summary financial information extracted from the Consolidated Statements of Operations and Consolidated Balance Sheets of King World Productions, Inc. and its Subsidiaries and is quali- fied in its entirety by reference to such financial statements. 1,000 U.S. DOLLARS YEAR 08/31/97 03/01/97 05/31/97 1 $509,775 $0 $70,489 $4,101 $0 $658,015 $20,967 $(11,750) $861,683 $109,895 $0 $509 $0 $0 $751,788 $861,683 $0 $166,751 $0 $97,745 $22,385 $0 $0 $54,890 $19,185 $35,705 $0 $0 $0 $35,705 $0.95 $0.95
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