EXHIBIT 10(h)
September 26, 2003
Xx. Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Dear Xx. Xxxxxx:
This letter confirms the terms of your employment by The Xxxx Disney Company
("Company").
1. Term
(a) Subject to your signing and delivering this letter agreement (the
"Agreement") to Company as hereinafter provided in paragraph 1(b)
hereof, the term of your employment hereunder commences as of April 1,
2003 and expires on March 31, 2008, unless earlier terminated as
hereinafter provided (the "term").
(b) This Agreement constitutes an irrevocable offer of employment to
you upon the terms set forth herein only until September 23, 2003; if
this Agreement is not executed by you and delivered to Company on or
before such date, Company may revoke this offer by written notification
to you and will incur no liability whatsoever with respect to such
offer and/or revocation thereof. Company's failure to so notify you
shall not constitute a waiver of its right to do so at any time prior
to your execution of this Agreement.
2. Salary
In full consideration for all rights and services provided by you
hereunder, you shall receive an annualized salary of $875,000 through
December 31, 2003, an annual salary in the amount of $950,000 for
calendar year 2004, $1,000,000 for calendar year 2005, $1,050,000 for
calendar year 2006, and $1,125,000 for the period of January 1, 2007
through March 31, 2008. Salary payments shall be made in equal
installments in accordance with Company's then prevailing payroll
policy.
3. Bonus
Bonus compensation, if any, shall be governed by the provisions of
Company's 2002 Executive Performance Plan or any successor to such plan
established to comply with the provisions of Section 162(m) of the
Internal Revenue Code and shall, except as otherwise provided in
paragraphs 12 and 14 hereof, be at the sole discretion of Company,
except to the extent required in order to comply with Section 162(m) of
the Internal Revenue Code (or any successor thereto).
4. Long-Term Stock-Based Awards
(a) You are eligible to be considered in the future for awards of stock
options or other stock-based compensation of Company. However,
notwithstanding any other term or provision hereof, there is no
assurance that any future award will be made and the granting of any
such award, and the amount thereof, is at the sole discretion of
Company.
(b) In the event that any stock option or stock-based award or awards
may be made from time to time consistent with and subject to paragraph
4(a) above, they shall be in addition to any and all stock options
previously granted to you by Company, which shall continue to be in
effect according to their terms and the provisions of the applicable
plans pursuant to which they were granted.
5. Title
You are being employed hereunder in the position of Senior Executive
Vice President and Chief Financial Officer of Company. In such capacity
you shall report to the Chief Executive Officer of Company; provided,
however, that Company may require at any time, in its sole discretion,
that you also report to the Chief Operating Officer of Company.
6. Duties
You shall personally and diligently perform, on a full-time and
exclusive basis, such services as Company or any of its divisions may
reasonably require, which are not inconsistent with your position as
Senior Executive Vice President and Chief Financial Officer of Company.
You shall observe all reasonable rules and regulations adopted by
Company in connection with the operation of its business, including but
not limited to the standards and policies set forth in "The Xxxx Disney
Company and Associated Companies Standards of Business Conduct"
booklet, and carry out to the best of your ability all lawful
instructions of Company.
7. Expenses
To the extent you incur reasonable business expenses customarily
incurred by senior executives of Company (including, without
limitation, travel and
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entertainment) in the course of your employment, you shall be
reimbursed for such expenses, subject to Company's then current
policies regarding reimbursement of such business expenses for senior
executives of Company.
8. Automobile
Company will provide an automobile for your use (or an allowance
therefor) pursuant to Company's standard policy for senior executives
of Company.
9. Other Benefits
You shall be entitled to those benefits (including, without limitation,
participation in all employee welfare benefit plans and all other
perquisites) that are generally made available to the highest levels of
senior executives of Company.
10. Protection of Company's Interests
(a) During the term of your employment by Company you will not compete
in any manner, directly or indirectly, whether as a principal,
employee, agent or owner, with Company or any affiliate thereof, except
that the foregoing will not prevent you from holding at any time less
than 5% of the outstanding capital stock of any company whose stock is
publicly traded.
(b) To the extent permitted by law, all rights worldwide with respect
to any and all intellectual or other property of any nature produced,
created or suggested by you during the term of your employment or
resulting from your services shall be deemed to be a work made for hire
and shall be the sole and exclusive property of Company. You agree to
execute, acknowledge and deliver to Company at Company's request, such
further documents as Company finds appropriate to evidence Company's
rights in such property. Any confidential and/or proprietary
information of Company or any affiliate thereof shall not be used by
you or disclosed or made available by you to any person except (i) as
required in the course of your employment, or (ii) as required by law
or by any administrative equivalent to the judicial subpoena or legal
power of compulsion, to respond to any demand for any such confidential
and/or proprietary information from any court, governmental entity or
governmental agency, provided that if you are so required to respond,
you agree to provide Company with prompt notice thereof so that Company
may seek a protective order or other appropriate remedy. Upon the
expiration or earlier termination of the term of your employment, you
shall return to Company all such information that exists in written or
other physical form (and all copies thereof) under your control.
Without limiting the generality of the foregoing, you acknowledge
signing and delivering to Company "The Xxxx Disney Company and
Associated Companies Confidentiality Agreement" and "The Xxxx Disney
Company and Associated Companies Statement of Policy Regarding
Conflicts of Interest and Business Ethics and Questionnaire Regarding
Compliance," and you agree that all terms and conditions contained
therein, and all of your obligations
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and commitments provided for therein, shall be deemed, and hereby are,
incorporated into this Agreement as if set forth in full herein. The
provisions of this paragraph shall survive the expiration or earlier
termination of this Agreement.
11. Services Unique
You recognize that your services hereunder are of a special, unique,
unusual, extraordinary and intellectual character giving them a
peculiar value, the loss of which cannot be reasonably or adequately
compensated for in damages, and in the event of a breach of this
Agreement by you (particularly, but without limitation, with respect to
the provisions hereof relating to the exclusivity of your services and
the provisions of paragraph 10 hereof), Company shall, in addition to
all other remedies available to it, be entitled to equitable relief by
way of injunction and any other legal or equitable remedies.
12. Termination by Company
(a) Company may terminate your employment hereunder for gross
negligence, gross misconduct, willful gross neglect or malfeasance, or,
except as permitted by paragraph 13, your unilateral resignation as an
employee of Company without the prior written consent of Company, and
in any such event all obligations of Company hereunder shall
immediately terminate, except for the Company's obligations to pay you
all earned but unpaid salary and unconditionally accrued benefits
(including, without limitation, outstanding reimbursement for business
expenses).
(b) In the event of your death during the term hereof, this Agreement
shall terminate and Company shall, in addition to any other rights or
benefits unconditionally vested and accrued on such date, only be
obligated to pay your estate or legal representative the amounts
specified below in this paragraph 12(b). In the event you are unable to
perform the services required of you hereunder as a result of any
disability and such disability continues for a period of 180 or more
consecutive days or an aggregate of 270 or more days during any
12-month period during the term hereof, then at any time thereafter
Company shall have the right, at its option, to terminate your
employment hereunder. If this Agreement is terminated by reason of your
death or disability pursuant to this paragraph 12(b):
(i) you or your estate shall be entitled to receive one hundred
percent (100%) of your then annual salary (including deferred
salary) for an additional 12 months, seventy-five percent
(75%) of such salary for 12 months thereafter, and fifty
percent (50%) of such salary for the next 12 months (it being
understood that the benefits provided by this subparagraph
12(e)(i) are equivalent to, and are being provided in lieu of,
any and all benefits under Disney's Family Income Assurance
Plan but that, notwithstanding the foregoing, your rights
under this subparagraph 12(e)(i) shall be not limited,
modified or otherwise affected in any way by any subsequent
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amendment or other modification of such plan or the
termination or elimination thereof);
(ii) in the event of your death or disability after the completion
of a fiscal year of Company but before the payment of bonus
awards by Company for such year, you or your estate shall
receive a bonus for such completed year equal to the Last
Completed Year Bonus (as defined below in paragraph 14(a)(v)
hereof and determined as provided therein); and
(iii) you or your estate shall receive a pro rata bonus for the year
in which death or termination for disability occurs, based on
an assumed bonus for the full year equal to the Average Prior
Two Years Bonus (as defined below in paragraph 14(a) hereof);
provided, however, that in the event that your death or
termination for disability shall occur at a time when the
annual bonuses for the prior completed fiscal year of Company
have not been paid, then the assumed full-year bonus upon
which your pro rata bonus shall be based shall be the Last
Completed Year Bonus.
You or your estate shall also be entitled to other employee welfare
benefits in accordance with and subject to the terms of the relevant
plans and programs of Company applicable to you at the time of your
death or disability. Unless and until so terminated, during any period
of disability during which you are unable to perform the services
required of you hereunder, your salary hereunder shall be payable to
the extent of, and subject to, Company's policies and practices then in
effect with regard to sick leave and disability benefits.
(c) You acknowledge that you have been provided by Company with a copy
of Section 508 of the Federal Communications Act of 1934, as amended,
relating in part to receiving or paying consideration for product
identification in television programs, that you are familiar with the
provisions thereof and that you will fully comply therewith during the
term of this Agreement. Without limiting the foregoing, however, and
whether or not Section 508 is applicable to your activities, you agree
that you will not, without Company's prior written consent, accept any
compensation or gift, from any person, firm or corporation (other than
Company) where such compensation or gift is, or may appear to be, in
consideration of your acting in a particular manner in relation to the
business of such person, firm or corporation.
13. Termination by You
You shall have the right to terminate this Agreement, including your
employment under this Agreement, upon at least thirty (30) days' notice
to Company given within sixty (60) days following the occurrence of any
of the following events without your consent, provided that Company
shall have twenty (20) days after the date such notice has been given
to Company in which to cure the conduct specified in such notice:
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(i) a failure to provide you with the compensation and benefits to
which you are entitled under this Agreement;
(ii) any failure to continue you in your position as provided in
paragraph 5 hereof or removal of you from such position;
(iii) a material diminution in your duties and/or responsibilities
under paragraph 6 hereof, the assignment to you of duties
and/or responsibilities which are materially inconsistent with
such duties and/or responsibilities, or a change in your
reporting relationship so that you no longer report as
provided in paragraph 5 above; or
(iv) the relocation of your principal office to a location more
than 50 miles from Los Angeles.
With respect to subparagraph (iii) above, your duties and
responsibilities shall not be deemed materially reduced for purposes
hereof solely by virtue of the fact that Company is (or substantially
all of its assets are) sold to, or is combined with, another entity,
provided that (a) you continue to have the same duties and
responsibilities and authority with respect to all of the same
businesses and operations of Company that you had immediately prior to
the time of such sale or combination and (b) you shall continue to
report directly to the Chief Executive Officer (and Chief Operating
Officer, if applicable) of the entity that manages all such businesses
and operations of Company.
14. Consequences of Breach by Company
(a) If this Agreement is terminated pursuant to paragraph 13 hereof, or
if Company shall terminate your employment under this Agreement in any
way that is a breach of this Agreement, you shall be entitled, subject
to the provisions of paragraph 14(b) below, to the following, which you
acknowledge to be fair and reasonable, as your sole and exclusive
remedy, in lieu of all other remedies at law or in equity, for any such
termination:
(i) salary through the date of termination;
(ii) salary for the balance of the originally scheduled term of
this Agreement payable in accordance with the original
schedule therefor and at the salary rates in effect for the
applicable periods;
(iii) the right to exercise all stock options, whether vested or
unvested, in full for the period provided in the relevant
stock option agreement (which period is three months for all
stock options granted to you to the date hereof), but in all
cases not beyond the originally scheduled term of the relevant
option;
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(iv) the immediate and full vesting of all then outstanding
tranches (i.e., outstanding portions of any stock unit award
which are scheduled to vest on a particular date) of all stock
unit awards granted to you by Company (the "Outstanding Stock
Unit Award Tranches"), which shall be paid to you promptly in
accordance with the terms thereof;
(v) in the event of termination of employment after the completion
of a fiscal year of Company but before the payment of bonus
awards by Company for such year, a bonus for such completed
year, equal to the average of the annual bonuses received by
you for the last two fiscal years of Company for which you
received a bonus prior to such completed year (the "Last
Completed Year Bonus"), payable in a single lump sum promptly
after your termination, provided that, notwithstanding the
foregoing, in the event that (i) Company shall fail to meet
the performance target(s) established for such year by Company
pursuant to Section 162(m) of the Internal Revenue Code and
Company's 2002 Executive Performance Plan and (ii) no bonuses
in respect of such year are paid to the executives of Company
then subject to Section 162(m) of the Internal Revenue Code,
then the Last Completed Year Bonus shall be deemed to be zero
and no amount shall be payable to you pursuant to this
subparagraph 14(a)(v).
(vi) a pro rata annual bonus for the year in which termination
occurs based on an assumed bonus for the full year equal to
the average of the annual bonuses received by you for the last
two fiscal years of Company for which you received a bonus
(the "Average Prior Two Years Bonus"), payable in a single
installment promptly after your termination; provided,
however, that, notwithstanding the foregoing, if your
employment is terminated at a time before the payment of bonus
awards for the prior fiscal year of Company have been made,
then the pro rata bonus for the year in which termination
occurs shall be based on an assumed bonus equal to the Last
Completed Year Bonus rather than the Average Prior Two Years
Bonus;
(vii) any amounts earned, unconditionally accrued or owing to you
but not yet paid; and
(viii) other employee welfare benefits in accordance with applicable
plans and programs of Company applicable to you at the time of
termination of your employment with Company, it being
understood that for the purposes of such plans and programs,
all benefits shall be determined on the basis of the actual
date of termination of your employment with Company.
(b) If this Agreement is terminated pursuant to paragraph 13 hereof, or if
Company terminates your employment hereunder in any way that is a breach of this
Agreement,
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then you shall have no duty under any circumstances to seek other employment
(whether or not comparable to your current employment) to obtain compensation
that would or could offset any rights conferred upon you or payments made to you
pursuant to this paragraph 14 or that would or could be available to Company as
an offset against its obligations in respect of such rights or payments.
Notwithstanding the foregoing, however, Company shall be entitled to make
offset(s) against any of its obligation(s) to you under paragraph 14(a) hereof
(except as otherwise specified below in this paragraph 14(b)) with respect to
any and all income derived by you from the rendering of any services (whether as
an employee, consultant or otherwise) at any time after the termination of your
employment hereunder through March 31, 2008, whether or not such services are
comparable to, or in a form comparable to, your employment hereunder (excluding,
however, nominal amounts received by you for serving as executor or trustee for
family members or close personal friends); provided, however, that
notwithstanding the foregoing, such offset shall not apply to: (i) salary paid
and/or payable by Company to you pursuant to subparagraph (a)(ii) of this
paragraph 14 for periods prior to the later of (x) the end of the fiscal year of
Company in which termination of employment has occurred or (y) the end of the
six-month period commencing on the date of such termination; (ii) any bonuses
paid or payable to you pursuant to subparagraphs (a)(v) or (a)(vi) of this
paragraph 14; (iii) income recognized from (x) the exercise of any stock options
or portions thereof which are already vested on the date of termination of your
employment hereunder or which are scheduled to vest within 90 days of such date
or (y) the sale or other disposition of any shares of common stock of Company
received upon any exercise of stock options which is covered by the immediately
preceding subclause (x) of this clause (iii); (iv) the sum of all Deemed-Earned
Stock Unit Amounts (as hereinafter defined); and/or (v) any payments made by
Company to you pursuant to subparagraphs a(vii) or a(viii) of this paragraph 14
(any obligations of Company to you arising pursuant to paragraph 14(a) hereof
other than those specifically excluded pursuant to the foregoing proviso being
hereinafter referred to as "Offsetable Obligations"). For purposes of the
foregoing, a "Deemed-Earned Stock Unit Amount" shall mean the amount determined,
with respect to each Outstanding Stock Unit Award Tranche, by multiplying such
Outstanding Stock Unit Amount Tranche by a fraction, (A)) the numerator of which
is the number of days elapsed from the date of grant of the stock unit award of
which such Outstanding Stock Unit Award Tranche is a part (the "Award Date")
through the date of termination of your employment hereunder and (B) the
denominator of which is the total number of days from the Award Date through the
originally scheduled vesting date of such Outstanding Stock Unit Award Tranche.
All compensation arrangements made by you during the period available for offset
by Company hereunder with respect to services provided or to be provided by you
during such period of offset shall be generally consistent with industry
practices and shall not have the effect of deferring the payment of compensation
to you until after the period of offset contemplated hereunder. In order to
facilitate any offset by Company pursuant to the foregoing, you agree to provide
Company with copies of such tax returns, W-2's or other documentation as Company
may reasonably request in writing from time to time so as to calculate the
amount of any offsets available to it hereunder and to promptly notify Company
of any employment, consulting or other work obtained by you during the offset
period and the
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amount of compensation received or to be received therefor. In the event that
any payments are received by you in respect of Offsetable Obligations as to
which an amount that is or could be offsetable by Company has not been so
offset, either because the availability of such offset was not known at the time
of payment (because the offset arose subsequently in respect of income earned by
you after the date of such payment (but during the period available for offset))
or because such offset was not taken for any other reason, you shall promptly
reimburse Company the amount of such offset upon receipt of written demand
therefor by Company.
15. Assignment
Company may assign this Agreement or all or any part of its rights
hereunder to any entity that succeeds to a substantial portion of
Company's assets, and this Agreement shall inure to the benefit of such
assignee, provided that such successor assumes all of the liabilities
and obligations of Company hereunder, either contractually or as matter
of law.
16. Post-Termination Obligations
After the termination of your employment hereunder for any reason
whatsoever you shall not either alone or jointly, with or on behalf of
others, either directly or indirectly, whether as principal, partner,
agent, shareholder, director, employee, consultant or otherwise, at any
time during a period of two years following such termination, offer
employment to, or solicit the employment or engagement of, or otherwise
entice away from the employment of Company or any affiliated entity,
either for your own account or for any other person, firm or company,
any person (other than your personal assistant) who is employed by
Company or any such affiliated entity, whether or not such person would
commit any breach of his or her contract of employment by reason of
leaving the service of Company or any affiliated entity.
17. Arbitration
The parties agree that any and all disputes, claims or controversies
arising out of or relating to this Agreement that are not resolved by
their mutual agreement shall be submitted to final, binding and
confidential arbitration before the Judicial Arbitration and Mediation
Service ("JAMS"), or its successor, pursuant to the United States
Arbitration Act, 9 U.S.C. Sec. 1 et seq. Either party may commence the
arbitration process called for in this Agreement by filing a written
demand for arbitration with JAMS, with a copy to the other party. The
arbitration will be conducted in accordance with the provisions of
JAMS' Streamlined Arbitration Rules and Procedures in effect at the
time of filing of the demand for arbitration. The parties will
cooperate with JAMS and with one another in selecting an arbitrator
from a JAMS' panel of neutrals and in scheduling the arbitration
proceedings. The parties covenant that they will participate in the
arbitration in good faith, and that they will share equally in its
costs. The
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provisions of this paragraph 17 may be enforced by any court of
competent jurisdiction, and the party seeking enforcement shall be
entitled to an award of all costs, fees and expenses, including
attorneys' fees, to be paid by the party against whom enforcement is
ordered.
NOTICE: By signing this Agreement you are agreeing to have all
disputes, claims or controversies arising out of or relating to this
Agreement decided by neutral arbitration, and you are giving up any
rights you might possess to have those matters litigated in a court or
jury trial. By signing this Agreement you are giving up your judicial
rights to discovery and appeal except to the extent that they are
specifically provided for under this Agreement. If you refuse to submit
to arbitration after agreeing to this provision, you may be compelled
to arbitrate under federal or state law. Your agreement to this
arbitration provision is voluntary. You acknowledge and agree that you
have read and understand the foregoing.
18. Certain Payments
The parties believe that the payments to you hereunder do not
constitute "Excess Parachute Payments" under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"). Notwithstanding
such belief, if any payment or benefit under this Agreement is
determined to be an "Excess Parachute Payment" Company shall pay you an
additional amount (a "Gross-Up Payment") that is, after the imposition
of all income, employment, excise and other taxes, penalties and
interest thereon, equal to the sum of (a) the excise tax imposed on
such Excess Parachute Payments under Section 4999 of the Code (the
"Excise Tax") plus (b) any penalty and interest assessments associated
with such Excise Tax. Notwithstanding anything to the contrary set
forth herein, in no event shall the aggregate amount of any payments
made pursuant to this paragraph 18 exceed $4 million.
19. Entire Agreement; Amendments; Waiver, Etc.
(a) This Agreement supersedes all prior or contemporaneous agreements
and statements of any nature, whether written or oral, concerning the
terms of your employment (including, without limitation, any terms
relating to the termination of such employment and the consequences
thereof and any and all rights conferred upon you pursuant to Section
11 of the Company's 1995 Amended and Restated Stock Incentive Plan,
which rights are hereby expressly waived by you), and no amendment or
modification of this Agreement shall be binding against Company or you
unless set forth in a writing signed by Company and you. No waiver by
either party of any breach by the other party of any provision or
condition of this Agreement shall be deemed a waiver of any similar or
dissimilar provision or condition at the same or any prior or
subsequent time.
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(b) Nothing herein contained shall be construed so as to require the
commission of any act contrary to law, and wherever there is any
conflict between any provision of this Agreement and any present or
future statute, law, ordinance or regulation, the latter shall prevail,
but in such event the provision of this Agreement affected shall be
curtailed and limited only to the extent necessary to bring it within
legal requirements. Without limiting the generality of the foregoing,
in the event any compensation or other monies payable hereunder shall
be in excess of the amount permitted by any statute, law, ordinance,
regulation or wage guideline which may be in effect at any time or from
time to time, payment of the maximum amount then allowed thereby shall
constitute full compliance by Company with the payment requirements of
this Agreement.
(c) Company shall have the right but not the obligation to use your
name or likeness for any publicity or advertising purpose, subject to
your reasonable approval of any biographical material or photographs.
(d) This Agreement does not constitute a commitment of Company with
regard to your employment, express or implied, other than to the extent
expressly provided for herein. Upon termination of this Agreement, it
is the contemplation of both parties that your employment with Company
shall cease, and that neither Company nor you shall have any obligation
to the other with respect to continued employment. In the event that
your employment continues for any period of time following the stated
expiration date of this Agreement, unless and until agreed to in a new
subscribed written document, such employment or any continuation
thereof is "at will," and may be terminated without obligation at any
time by either party's giving notice to the other. In the event of such
termination by Company (i.e., after being continued "at will" following
a normal expiration of this Agreement), you shall be entitled to
severance benefits consistent with Company's policies for an employee
of Company of your seniority and tenure.
(e) This Agreement shall be governed by and construed in accordance
with the laws of the State of California. Employment hereunder is
conditioned upon satisfactory proof of your identity and legal ability
to work in the United States in accordance with the Immigration Reform
and Control Act of 1986.
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20. Notices
All notices that either party is required or may desire to give the
other shall be in writing and given either personally or by depositing
the same in the United States mail addressed to the party to be given
notice as follows:
To Company: 000 Xxxxx Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn.: President
To you: at the address shown for you on the first page
hereof.
Either party may by written notice designate a different address for
giving of notices. The date of mailing of any such notices shall be
deemed to be the date on which such notice is given.
21. Indemnification
Indemnification shall be provided to you pursuant to an agreement
substantially equivalent to Company's standard form of indemnification
for senior officers, as and when made available to such senior officers
in accordance with Company's policies regarding same.
22. Headings
The headings set forth herein are included solely for the purpose of
identification and shall not be used for the purpose of construing the
meaning of the provisions of this Agreement.
If the foregoing accurately reflects our mutual agreement, please sign where
indicated.
THE XXXX DISNEY COMPANY
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxx
--------------------------------- ---------------------------------
Xxxxxx X. Xxxxxx
Title: President and Chief
Operating Officer
------------------------------
Date: Sept. 26, 2003
-------------------------- Date: Sept. 26, 2003
-------------------------------
