Employment Agreement - The Walt Disney Co. and Sanford M. Litvack
As of January 1, 2001
Mr. Sanford M. Litvack
c/o The Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521
Dear Sandy:
This letter confirms the terms of your employment by The Walt Disney Company
("Company") and amends and restates your letter agreement dated as of January 1,
2000.
1. Term. The term of your employment under this letter agreement (the
"Agreement") shall commence as of January 1, 2001, and expire on December
31, 2002, unless earlier terminated as hereinafter provided (the "term").
2. Salary. In full consideration for all rights and services to be provided by
you hereunder, you shall receive an annual salary of $400,000 for 2001 and
$200,000 for 2002. 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 at the discretion of Company.
4. Duties. (a) You shall report to the Chairman of the Company and Chief
Executive Officer. 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
Walt Disney Company and Associated Companies Standards of Business Conduct"
booklet, and carry out to the best of your ability all instructions of
Company.
(b) Your services shall be provided on a less-than-full-time basis, it being
the understanding of the parties that you shall "make yourself available as
needed"; provided, however, that it is anticipated that the overall amount
of time devoted by you to your duties hereunder shall be generally
proportional to the level of your salary at any given time as compared to
your salary hereunder prior to January 1, 2001. You shall be permitted to
provide less-than-full-time services to other persons or entities in any
capacity other than as employee or officer thereof (e.g., as consultant,
----
advisor, director or special counsel), or, with respect to charitable
activities and community affairs, as an officer of a not-for-profit entity,
provided that such services do not violate or conflict in any way with
Paragraph 7 hereof or materially interfere with the performance of your
duties hereunder. In addition, you may request, from time to time,
exceptions to the limitations in the foregoing sentence, which requests the
Company may accept or reject in its sole discretion. Effective January 1,
2001, you hereby resign, and shall no longer serve, as an officer of the
Company; provided, however, you shall continue to be subject
-------- -------
<PAGE>
to that Indemnification Agreement dated April 30, 1991 by and between you
and the Company during the term of this Agreement. Executive agrees that he
will not seek to be nominated or elected to be a director at the Company's
2001 annual meeting of stockholders.
5. Expenses; Other Benefits. To the extent you incur necessary and reasonable
business expenses (including, without limitation, travel and entertainment)
in the course of your employment, you shall be reimbursed for such expenses,
subject to Company's then current policies for the most senior executives
regarding reimbursement of such business expenses (which policies currently
include first-class air travel for you). Except as expressly modified herein
or as revised for all of the other most senior executives of the Company,
you shall be entitled to participate in the same benefits and perquisites
during the term hereof on the same basis as you were under the letter
agreement in effect immediately prior to this Agreement except that such
benefits and perquisites shall be based on your salary payable pursuant to
Paragraph 2 hereof.
6. Automobile. Company will provide for your use of an automobile pursuant to
Company's standard policy for its most senior executives.
7. 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, owner or otherwise, with the Company or any
affiliate thereof.
(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 (other than any
intellectual property resulting solely from any services provided by you to
third parties as permitted by Paragraph 4(b) hereof) 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 the Company or any affiliate
thereof shall not be used by you or disclosed or made available by you to
any person except as required in the course of your employment, and upon
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 but shall be
entitled to keep your rolodex and personal contact list. Without limiting
the generality of the foregoing, you acknowledge signing and delivering to
Company The Walt Disney Company and Associated Companies Confidentiality
Agreement and The Walt 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 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.
2
<PAGE>
8. 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 7 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.
9. Termination by Company. (a) Company may terminate your employment hereunder
for gross misconduct, willful and continuing nonfeasance or material breach
of this Agreement (A) immediately upon notice from Company if Company shall
reasonably determine that the conduct or cause specified in such notice is
not curable (it being understood that such notice shall describe in
reasonable detail the conduct or cause giving rise to such notice and shall
state the reason(s) why Company has determined that such conduct or cause is
not curable); or (B) upon twenty business days notice from Company, if
Company shall determine that the conduct or cause specified in such notice
is curable (it being understood that such notice shall describe in
reasonable detail the conduct or cause giving rise to such notice and shall
state the reason(s) why Company has determined that such conduct or cause is
curable), unless you have, within three business days after the date such
notice has been given to Executive, commenced in good faith to cure the
conduct or cause specified in such notice and have completed such cure
within 20 business days following the date of such notice. Upon any such
termination all obligations of Company hereunder shall immediately terminate
except for your rights to salary earned but unpaid through date of
termination and with respect to all unconditionally accrued benefits in
accordance with any employee welfare plans of Company or any affiliate
thereof.
(b) In the event of your death during the term hereof, this Agreement shall
terminate and Company shall only be obligated to pay your estate or legal
representative the salary provided for herein to the extent earned by you
prior to such event, any amounts earned, unconditionally accrued or owing to
you but not yet paid; and any other benefits in accordance with applicable
plans and programs of Company (including without limitation the Company's
Family Income Assurance Plan). 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 120 or more consecutive days or an
aggregate of 180 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 and shall only be obligated
to pay you all salary earned prior to such termination, any amounts earned,
unconditionally accrued or owing to you but not yet paid, and any other
benefits in accordance with applicable plans and programs of Company. 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
3
<PAGE>
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. Without limiting the generality of Paragraph 9(a) hereof, it is
agreed that any violation of this Paragraph 9(c) shall constitute a
violation of this Agreement upon which Company may forthwith terminate this
Agreement pursuant to Paragraph 9(a) hereof.
(d) Termination by Executive. You shall have the right to terminate this
Agreement, including your employment under this Agreement, upon at least 30
days' notice to Company given within 60 days following the occurrence of
any, of the following events without your consent, provided that Company
shall have 30 days after the date such notice has been given to it in which
to cure the conduct specified in such notice:
(i) a reduction in your compensation rights hereunder, other than as
permitted hereunder or, a reduction of any employee benefit or perquisite
provided by Company (other, than as part of an across-the-board reduction in
such employee benefit or perquisite generally applicable to all senior
executives of Disney, or any reduction resulting from your salary payable
pursuant to Paragraph 2 hereof); or
(ii) the relocation of your principal office to a location more than
50 miles outside of the greater Los Angeles area.
You will not assert that you have the right, and you waive any right, to
terminate the letter agreement in effect immediately prior to the effective
date of this Agreement, pursuant to Paragraph 13(iii) of that prior letter
agreement, for any actions or events occurring prior to January 1, 2001.
10. Consequences of Breach by Company. If this Agreement is terminated pursuant
to Paragraph 10 hereof, or if Company shall terminate your employment under
this Agreement in any other way that is a breach of this Agreement by
Company, you shall be entitled 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 at the rates provided herein;
(iii) the right to exercise all stock options heretofore granted to
you by the Company which are scheduled to vest on or prior to December 31,
2002 (all of which options scheduled to so vest shall vest and become
immediately exercisable upon the date
4
<PAGE>
of any termination pursuant to Paragraph 10 above) for eighteen months
following such termination date; and
(iv) other benefits in accordance with applicable plans and programs
of Company.
11. Use of Employee's Name. Company shall have the right but not the obligation
to use your name or likeness for any publicity or advertising purpose,
subject to your approval of any biographical material or photographs, which
approval shall not be unreasonably withheld. Company is under no obligation
to accord you credit for any production.
12. Assignment. This Agreement and all rights hereunder are personal to you and
shall not be assignable; provided, however, that all of your rights accrued
hereunder following your death shall inure to the benefit of your widow,
personal representatives or designees or other legal representatives, as
the case may be. Company may assign its rights under this Agreement to any
successor by merger, purchase, consolidation or otherwise, provided that
such successor assumes all of the liabilities, obligations and duties of
Company under this Agreement, either contractually or as a matter of law.
13. No Conflict with Prior Agreements. You represent to Company that neither
your commencement of employment hereunder nor the performance of your
duties hereunder conflicts with any contractual commitment on your part to
any third party or violates or interferes with any rights of any third
party.
14. 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 who is employed by Company or any such
affiliated entity, whether or not such person would commit any breach of
his contract of employment by reason of his leaving the service of Company
or any affiliated entity.
15. Entire Agreement; Amendments, Waiver, Etc. (a) This Agreement supersedes
all prior or contemporaneous agreements and statements, whether written or
oral, concerning the terms of your employment, 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.
Notwithstanding the foregoing, you and the Company shall enter into a
split-dollar insurance agreement in accordance with Paragraph 9(b) of the
letter agreement in effect immediately prior to this Agreement, which
Paragraph 9(b) is incorporated herein by reference, except that the
insurance policy shall have a face amount of approximately $4.75 million,
the Company shall not be required to pay any life insurance policy premiums
other than those attributable to your accrued benefit under the Amended and
Restated Key Plan and the definitive insurance agreement will be executed
on or before December 31, 2000.
5
<PAGE>
(b) You have given no indication, representation or commitment of any
nature to any broker, finder, agent or other third party to the effect that
any fees or commissions of any nature are, or under any circumstances might
be, payable by Company or any affiliate thereof in connection with your
employment hereunder.
(c) 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, but Company shall pay any amount
due hereunder to you in excess of such maximum amount if it shall at any
time thereafter become legally permissible to do so.
(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.
(e) This Agreement shall be governed by and construed in accordance with
the laws of the State of California. In accordance with the Immigration
Reform and Control Act of 1986, employment hereunder is conditioned upon
satisfactory proof of your identity and legal ability to work in the United
States.
16. 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: 500 South Buena Vista Street
Burbank, California 91521
Attn: Chairman and CEO
To you: at the address shown for you on the first page hereof.
17. 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 provisions of this Agreement.
If the foregoing accurately reflects our mutual agreement, please sign where
indicated.
6
<PAGE>
THE WALT DISNEY COMPANY
________________________ By:___________________________
Sanford M. Litvack Title:
Date:___________________ Date:_________________________
7
<PAGE>
Life Insurance Agreement
An Agreement is hereby entered into among THE WALT DISNEY COMPANY ("the
Company"), SANFORD M. LITVACK (the "Executive") and JUDITH E. LITVACK (the
"Owner"), to be effective December 21, 2000.
WHEREAS, the Executive is and has been a valued key employee of the Company;
WHEREAS, the Executive and the Company have entered into an Employment Agreement
dated as of January 1, 2000, and as amended and restated pursuant to the
agreement dated as of January 1, 2001 (the "Employment Agreement") under which
the Company has agreed to provide an insurance benefit to the Executive, and the
Executive has agreed to forego certain benefits under the Company's Amended and
Restated Key Plan in consideration thereof;
WHEREAS, to meet its obligations under the Employment Agreement, the Company
intends to pay premiums on a policy owned by the Owner insuring the lives of the
Executive and Judith E. Litvack (the "Policy"); and
WHEREAS, in exchange for the payment of Policy premiums by the Company, the
Owner intends to grant the Company certain interests in the Policy cash values
and death benefits.
NOW, THEREFORE, in consideration of the aforementioned promises, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Executive, the Company and the Owner hereby agree as follows,
intending to be legally bound.
1. Insurance Policy. Owner has purchased or will subsequently purchase the
----------------
Policy, as described in Exhibit A to this Agreement, to be issued by the
Travelers Life and Annuity Insurance Company (the "Insurer"). The parties
hereto have taken or will take all necessary action to cause the Insurer to
issue the Policy, and shall take any further action which may be necessary
to cause the Policy to conform to the provisions of this Agreement. The
parties hereto agree that their rights with respect to the Policy shall be
subject to the terms and conditions of this Agreement and the Collateral
Assignment filed with the Insurer relating to the Policy as provided in
Section 2 of this Agreement.
2. Collateral Assignment. As security to the Company for the payment to it of
---------------------
amounts due it under this Agreement, Owner shall execute a collateral
assignment agreement in the form attached hereto (the "Collateral
Assignment") of the Policy to the Company, which Collateral Assignment will
establish the rights of the Company in the Policy to payment of the amounts
due it under this Agreement. The Collateral Assignment shall not be
terminated, altered, or amended by Owner without the express written
consent of the Company.
3. Rights of Executive and Owner
-----------------------------
The parties agree that:
8
<PAGE>
(a) Any and all annual imputed income resulting from the insurance coverage
provided under the Policy shall be taxable to and be the separate property
of the Executive.
(b) The Policy and any other related rights and benefits provided under
this Agreement shall belong to and be the separate property of the Owner,
subject to the Collateral Assignment.
(c) The Executive and the Owner agree that the rights as provided herein
related to the Policy and the annual imputed income related thereto shall
attach immediately upon this Agreement becoming effective, and neither
shall be deemed to have or have had any interest in the rights of the other
related to this Agreement.
4. Ownership of Policy
-------------------
(a) The Owner shall be the sole and exclusive owner of the Policy.
However, except as otherwise provided in this Agreement, the Owner
shall not borrow from, hypothecate, withdraw cash value from,
surrender in whole or in part, cancel, or in any other manner encumber
the Policy without the prior written consent of the Company. Unless
the Company becomes owner of the Policy pursuant to Section 8, the
Owner shall maintain possession of the Policy. The Owner may elect to
reduce the Policy face amount, except that the Policy face amount
shall not be reduced to an amount less than the total of the Policy
premiums paid or to be paid by the Company pursuant to this Agreement.
If the Company has become the owner of the Policy pursuant to Section
8, then, subject to the limitations imposed by the preceding sentence,
within sixty (60) days of receipt of a written request from the Owner,
the Company shall complete and submit the necessary forms to the
Insurer to reduce the Policy face amount in accordance with the
Owner's request. The Owner's right to reduce the face amount of the
Policy (or to cause the Company to reduce the face amount, if it is
the owner of the Policy) shall be limited to a face amount reduction,
and shall not be deemed to permit the Owner to cause a cash withdrawal
from or partial surrender of the Policy in connection with any such
reduction of face amount, except with the consent of the Company.
(b) Except as provided in Section 8, the Company shall not have any
ownership rights in the Policy. The Company's rights shall be limited
to: (1) the right to receive a portion of the Policy death benefit in
the event the Policy death benefit becomes payable while the
Collateral Assignment is in effect with respect to the Policy; and (2)
the right to receive all of the proceeds of any surrender or
withdrawal processed while the Collateral Assignment is in effect.
5. Payment of Insurance Premiums by the Company. The Company shall pay a
--------------------------------------------
premium of $1,100,000 upon issue of the Policy. The Company shall not be
required to pay any additional premiums, even if it becomes necessary to do
so in order to keep the Policy in
9
<PAGE>
force, and even if the Company becomes the owner of the Policy pursuant to
an election made under Section 8 of this Agreement.
6. Payment of Insurance Premiums by the Executive or Owner. Neither the
-------------------------------------------------------
Executive nor the Owner shall be obligated to pay any Policy premiums.
However, either may decide to pay Policy premiums in addition to the
premiums to be paid by the Company.
7. Death Benefit. The Owner agrees to maintain the Policy in a form such that
-------------
the Policy death benefit payable will be equal to the Policy face amount
plus the cash accumulation account value when the death benefit becomes
payable. Upon the death of the last survivor of the Insureds, the Company
and Owner (or the Owner's legal representative) shall promptly take all
action necessary to obtain in a lump sum the death benefit provided under
the Policy. The Company shall have the unqualified right to receive a
portion of such death benefit equal to the greater of: (1) the Policy cash
account value calculated immediately prior to the death of the last survivor
of the Insureds, calculated without regard to any surrender charges; or (2)
the cumulative Policy premiums paid by the Company (without interest). The
balance of the death benefit provided under the Policy, if any, shall be
paid to the beneficiary(ies) of the Policy. In no event shall the amount
payable to the Company hereunder exceed the proceeds of the Policy payable
at such death. No amount shall be paid to the beneficiary(ies) of the Policy
designated by Owner until the amounts payable to the Company have been paid
to the Company. The parties hereto agree that the beneficiary designation
provision of the Policy shall conform to the provisions hereof.
8. Alternative Death Benefit Election. The person or entity designated as
----------------------------------
Elector in this Section may elect a death benefit payment from the Company
in lieu of the insurance benefit provided under this Agreement. The Elector
can make such an election (the "Election") in writing in a form acceptable
to the Company. At the time the Election is made, the Owner (or the Owner's
legal representative) shall transfer the ownership of the Policy to the
Company. Thereafter, notwithstanding any provisions of Section 7 to the
contrary, the entire Policy death benefit shall be payable to the Company,
and no portion of such Policy death benefit shall be payable to the Owner's
beneficiary(ies) designated under this Section 8.
Within thirty (30) days after it receives the Policy death benefit while
the Election is in effect, the Company shall pay an amount (the "Payment
Amount") to the Owner's designated beneficiary(ies) equal to:
(a) The additional Policy death benefit amount received by the Company
(i.e., the amount in excess of the amount that would have been received
by the Company if the Election was not in effect for the Policy),
reduced by any federal, state and local income taxes payable by the
Company as a result of receiving the additional Policy death benefit
amount; plus
(b) an amount equal to: [a / (1 - tax rate)] - a. For the purpose
of this formula: a shall equal the amount determined pursuant to
subparagraph (a) of this Section 8, or the portion thereof that is
deductible by the Company for income
10
<PAGE>
tax purposes if only a portion is deductible; and, tax rate shall equal
the Company's marginal federal, state and local income tax rate to
which a deduction of the payment amount (or portion thereof) made under
this Section 8 applies. Provided, if it is determined that no part of
the payment made pursuant to this Section 8 is deductible by the
Company for income tax purposes, then the amount determined pursuant to
this subparagraph (b) shall be zero.
The parties to this Agreement, on behalf of themselves and any beneficiary,
assignee or other party in interest claiming by or through them, understand
and agree that the Company shall not bear any additional cost under this
Agreement as a consequence of an election under this Section.
Notwithstanding any other provisions of this Section, the Payment Amount
shall be determined by the Company in a manner consistent with the purpose
stated in the immediately preceding sentence. Also, the Company may, in
its sole discretion, reduce the Payment Amount if it reasonably determines
that certain taxes or other costs might be payable by the Company (or that
certain tax deductions or benefits might not be realized by the Company) in
connection with the transaction; in such case, the Company shall pay any
additional amount, without interest, to the beneficiary(ies) as may be
appropriate once a final determination is made as to any such tax costs or
deductions or benefit. No payment shall be made under this Section 8
unless and until the Company receives payment of the Policy death benefit,
and no amount shall be payable if there is no Policy death benefit payable
due to Policy lapse or termination.
The Owner (or the Owner's legal representative) shall designate the
beneficiary(ies) to receive the payment provided under this Section using a
form provided by the Company. Any payment made by the Company to the
Owner's beneficiary(ies) pursuant to this Section shall be paid from the
general funds of the Company, and shall not be considered to be a payment
of a life insurance benefit. The Company's obligation to pay the Payment
Amount is in the nature of an unsecured and unfunded promise to pay.
An election under this Section shall be effective when any necessary
documentation is submitted to and accepted by the Insurer. The Owner and
the Company will promptly submit any required forms or documents to the
Insurer when an election is made. An election made pursuant to this
Section 8 shall be irrevocable.
If the Company becomes the owner of the Policy pursuant to this Section,
the Company shall not thereafter surrender in whole or in part, reduce the
face amount of, withdraw cash value from, borrow from, or otherwise
encumber the Policy without the written consent of the Owner. However, the
Company shall thereafter have the sole authority to determine the
allocation of the cash values among the available funds in the Policy, and
to change the allocation as it deems appropriate.
The Elector shall be Mark D. Litvack. If he is unable or unwilling to
serve, the Owner (or the Owner's assignee, if the Owner has assigned her
rights under Policy and this Agreement pursuant to Section 14) shall be the
Elector.
11
<PAGE>
Notwithstanding the other provisions of this Section, the Company can
refuse to accept an alternative death benefit election, or can unilaterally
revoke an election previously accepted by the Company, if the Company
reasonably determines that there would be an adverse financial result to
the Company if such election is accepted (or not revoked).
9. Company Default. A Company Default shall be deemed to have occurred with
---------------
respect to the Policy if the Company processes or attempts to process a
policy loan, or a complete or partial surrender, a face amount reduction,
or a cash value withdrawal without prior written approval from the Owner.
In the event of a Company Default, the Owner shall have the right to
require the Company to cure the Company Default by notifying the Company in
writing within sixty (60) days after the Company Default occurs, or if
later, within thirty (30) days after the Owner becomes aware of the Company
Default. If the Company fails to cure the Company Default within sixty
(60) days after being notified by the Owner of the Company Default, the
Owner shall have the right to require the Company to transfer its interest
in the Policy to the Owner. The Owner may exercise this right by notifying
the Company, in writing, within sixty (60) days after the end of the period
given to the Company to cure the Company Default pursuant to the preceding
sentence. Upon receipt of such notice, the Company shall immediately
transfer its rights in the Policy to the Owner, either by a release of the
Collateral Assignment, or by a transfer of ownership if the Company is the
owner of the Policy, and the Company shall thereafter have no rights with
respect to such Policy. The Owner's failure to exercise its rights under
this Section shall not be deemed to release the Company from any of its
obligations under this Agreement, and shall not preclude the Owner from
seeking other remedies with respect to the Company Default. Also, the
Owner's failure to exercise its rights under this Section will not preclude
the Owner from exercising such rights upon a later Company Default.
10. Death Benefit Claims Review and Procedure. At the death of the last
-----------------------------------------
surviving Insured, the Company and Owner (or the Owner's legal
representative) shall execute such forms and furnish such other documents
as are required to receive payment under the Policy. The Company shall also
furnish to Owner an affidavit specifying the amount of the death benefit
paid to the Company. All death benefits under this Agreement shall be paid
in accordance with the Policy and pursuant to the claims and review
procedure of the Insurer.
11. Determinations Concerning Benefits. The Company shall make all
----------------------------------
determinations concerning its rights to benefits under this Agreement. Any
decision by the Company denying a claim by the Owner or the beneficiary for
benefits under the Policy shall be stated in writing and delivered or
mailed to the Owner and such beneficiaries under the Policy. Such decisions
shall set forth the specific reasons for the denial, written to the best of
the Company's ability in a manner that may be understood without legal or
actuarial counsel. In addition, the Company shall afford a responsible
opportunity to the Owner or such beneficiary for a full and fair review of
the decision denying such claim.
12. Obligations of the Company. The Company shall have no other obligations
--------------------------
than those specifically enumerated in this Agreement and the Collateral
Assignment. The payment
12
<PAGE>
of any Policy death benefit shall be the sole responsibility of the Insurer
and nothing contained herein shall be construed as imposing upon the
Company any responsibility for such payment, the economic viability of the
Insurer, or to acquire or maintain additional coverage if the Insurer
becomes insolvent, bankrupt, or engages in rehabilitation.
13. Acknowledgement of Executive. The Executive hereby acknowledges that the
-----------------------------
insurance benefits provided hereunder are provided in complete satisfaction
of the Company's obligation to provide the insurance benefits provided for
in Section 9(b) of the Employment Agreement. Executive further acknowledges
that the benefits provided hereunder are provided in lieu of certain
benefits otherwise payable to the Executive under the Company's Amended and
Restated Key Plan, as provided in the Employment Agreement and in the
Agreement Relating to Benefits under The Walt Disney Company Amended and
Restated Key Plan executed by the Executive and the Company to be effective
December 21, 2000.
14. Amendment; Assignment. This Agreement may not be amended, altered, or
---------------------
modified, except by a written instrument signed by the Company, the
Executive and Owner. The Company and the Owner may assign their rights
under the Agreement, provided that any such assignee shall be subject to
the terms of this Agreement. An assignment of the Policy by the Owner
(except an assignment to the Company pursuant to Sections 2 and 8) shall
constitute an assignment to such assignee of all of the Owner's rights and
obligations under this Agreement and under the Collateral Assignment
executed by the Owner pursuant to Section 2 of this Agreement. Any action
to be taken by the Owner hereunder shall, in the event of the Owner's
death, be taken by the Owner's legal representative.
15. Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of the Company and its successors and assigns, the Owner and its
successors and assigns, and the Executive and his successors and assigns.
16. Notice. Any notice, consent, or demand required or permitted to be given
------
under the provisions of this Agreement shall be in writing, and shall be
signed by the party giving or making the same. If such notice, consent, or
demand is mailed to a party hereto, it shall be sent by United States
certified mail, postage prepaid, addressed to such party's last known
address. The date of such mailing shall be deemed the date of notice,
consent, or demand.
17. Governing Law. This Agreement, and the rights of the parties hereunder,
-------------
shall be governed by and construed in accordance with the laws of the state
of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of the
day and year first above written.
13
<PAGE>
The Walt Disney Company
By:
______________________________ __________________________
Judith E. Litvack
______________________________ _____________________________
Sanford M. Litvack Name and Title
EXHIBIT A -- DESCRIPTION OF INSURANCE POLICY
The following life insurance policy is subject or will become subject to the
attached Agreement:
Insureds: Sanford M. and Judith E. Litvack
<TABLE>
<CAPTION>
Insurer Policy Type Policy Number Face Amount
------------------------------- -------------------- ---------------- ----------------
<S> <C> <C> <C>
The Travelers Life and Annuity Variable 7383017 $4,750,000
Insurance Company Survivor
ship Life
</TABLE>
14
<PAGE>
Death Benefit Agreement
An Agreement is hereby entered into among THE WALT DISNEY COMPANY (the
"Company"), SANFORD M. LITVACK (the "Executive") and JUDITH E. LITVACK (the
"Executive's Spouse"), to be effective December 21, 2000.
WHEREAS, the Company is designated as beneficiary to receive a portion of an
insurance policy death benefit from a policy insuring the lives of the Executive
and the Executive's Spouse (the "Insureds"); and
WHEREAS, the Executive has been and continues to be a valued key employee of the
Company; and
WHEREAS, the Company desires to provide a death benefit to the beneficiaries
designated by the Insureds, in satisfaction of the Company's agreement to
provide such benefit in accordance with Section 9(b) of the Employment Agreement
between the Executive and the Company dated January 1, 2000, and as amended and
restated pursuant to the agreement dated as of January 1, 2001 (the "Employment
Agreement").
NOW, THEREFORE, in consideration of the promises and representations of the
parties as herein recited, and in recognition of other good and valuable
consideration, the receipt and sufficiency of which is acknowledged, the parties
hereby agree as follows:
The Company is designated as a beneficiary to receive a portion of the death
benefit in accordance with a Collateral Assignment executed in connection with
policy number 7383017 issued by The Travelers Life and Annuity Insurance Company
insuring the lives of the Insureds (the "Policy"). If the amount of Policy
death benefit received by the Company (the "Company Death Benefit") exceeds the
total amount of premiums paid by the Company for such Policy, then the Company
shall pay to the Insureds' beneficiary(ies) an amount equal to the excess of the
Company Death Benefit, if any, over the total amount of premiums paid by the
Company. Notwithstanding the foregoing, the amount paid under this Death
Benefit Agreement shall not exceed the excess of the Policy cash accumulation
value immediately prior to the death of the last survivor of the Insureds,
calculated without regard to any surrender charges, over the amount of premiums
paid by the Company. Any amount payable shall be paid in a single sum as soon
as is practicable following the Company's receipt of its portion of the Policy
death benefit. All amounts shall be reported by the Company as taxable and, if
applicable, subject to tax withholding.
Any amount payable under this Agreement shall be paid from the general funds of
the Company, and neither the Participant nor the Participant's beneficiary shall
have, as a result of this Agreement, any rights or interest in the Policy
referred to in this Agreement or any other assets of the Company.
The Insureds' beneficiary(ies) shall be The Litvack Family Foundation of The
Ayco Charitable Foundation.
15
<PAGE>
This designation of beneficiary may be changed by the Insureds completing and
submitting to the Company a Change of Beneficiary on a form provided by the
Company. After the death of either Insured, this designation of beneficiary may
be changed by the survivor completing and submitting to the Company a Change of
Beneficiary on a form provided by the Company, except that any beneficiary so
designated by the survivor after the death of an Insured must be a charitable
organization or educational institution eligible to receive tax deductible
donations under the Internal Revenue Code if the designated beneficiary at the
time of the death of the first Insured to die is an organization eligible to
receive tax deductible donations.
The Executive acknowledges that the benefit provided hereunder is in complete
satisfaction of the Company's obligation to provide a benefit under a Death
Benefit Agreement as provided for in Section 9(b) of the Employment Agreement.
The Walt Disney Company
By:
____________________________ ________________________________
Sanford M. Litvack Signature of Company Representative
____________________________
Judith E. Litvack
16
<PAGE>
Agreement Relating to Benefits Under
The Walt Disney Company Amended and Restated Key Plan
An Agreement is hereby entered into between THE WALT DISNEY COMPANY (the
"Company") and SANFORD M. LITVACK (the "Executive").
WHEREAS, the Company and the Executive are, simultaneously with the execution of
this Agreement, entering into a Life Insurance Agreement (the "LIA") in order to
meet the Company's obligations to the Executive under Section 9(b) of the
Employment Agreement between the Company and the Executive dated as of January
1, 2000, and as amended and restated pursuant to the agreement dated as of
January 1, 2001 (the "Employment Agreement");
WHEREAS, pursuant to the Employment Agreement and the LIA, the Executive is
being provided with certain life insurance benefits in lieu of benefits that
would otherwise be due the Executive under The Walt Disney Company Amended and
Restated Key Plan (the "Key Plan"); and
WHEREAS, the Executive and the Company desire to state their understanding as to
the impact of the Employment Agreement and LIA as to the benefits to be payable
to the Executive under the Key Plan at the time of his termination of employment
with the Company.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:
1. The Company shall pay a premium of $1,100,000 under the LIA (the "Premium
Amount").
2. Upon the Executive's termination of employment with the Company, his Key
Plan benefit shall be determined as follows:
(a) The Company shall first determine the lump-sum present value of the Key
Plan single life annuity benefit that would be payable without regard to
the LIA, with such value to be determined as of the time of the Executive's
termination of Employment with the Company.
(b) The Premium Amount shall be increased at the rate of 6% per annum,
compounded annually, from the date of the Company's premium payment under
the LIA to the date of the Executive's termination of employment with the
Company.
(c) The present value of the Executive's Key Plan benefit shall be equal the
amount determined pursuant to 2(a) reduced (but not below zero) by the
amount determined pursuant to 2(b).
(d) The amount of the payment payable to the Executive pursuant to the form of
payment elected by the Executive under the Key Plan shall be determined
based on the present value amount calculated pursuant to 2(c).
17
<PAGE>
Intending to be legally bound, the Company and the Executive hereby execute this
Agreement to be effective December 21, 2000.
By:
_____________________________ ________________________________
The Walt Disney Company Sanford M. Litvack
18