10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended March 31, 2004	Commission File Number 1-11605
Incorporated in Delaware	I.R.S. Employer Identification
	No. 95-4545390

500 South Buena Vista Street, Burbank, California 91521

(818) 560-1000

Securities Registered Pursuant to Section 12(b) of the Act:

	Name of Exchange
Title of class	on Which Registered
Common Stock, $.01 par value	New York Stock Exchange
	Pacific Stock Exchange

     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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

     YES [X]    NO [   ]

There were 2,052,188,813 shares of common stock outstanding as of May 5, 2004.

1

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONDENSED CONSOLIDATED STATEMENTS OF INCOME
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART I. FINANCIAL INFORMATION
	Item 3. Quantitative and Qualitative Disclosures about Market Risk.
	Item 4. Controls and Procedures
PART II. OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 2. Changes on Securities and Use of Proceeds
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURE
INDEX OF EXHIBITS
EXHIBIT 3.A
EXHIBIT 10.A
EXHIBIT 10.B
EXHIBIT 10.C
EXHIBIT 31.A
EXHIBIT 31.B
EXHIBIT 32.A
EXHIBIT 32.B

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited; in millions, except per share data)

	Three Months Ended						Six Months Ended
	March 31,						March 31,
	2004			2003			2004			2003
Revenues	$	7,189		$	6,500		$	15,738		$	13,670
Costs and expenses		(6,153	)		(5,786	)		(13,537	)		(12,581	)
Restructuring and impairment charges		(3	)		—			(3	)		—
Net interest expense		(147	)		(178	)		(295	)		(474	)
Equity in the income of investees		77			51			174			141
Income before income taxes, minority interests and the cumulative effect of accounting change		963			587			2,077			756
Income taxes		(357	)		(219	)		(767	)		(296	)
Minority interests		(69	)		(54	)		(85	)		(39	)
Income before the cumulative effect of accounting change		537			314			1,225			421
Cumulative effect of accounting change		—			—			—			(71	)
Net income	$	537		$	314		$	1,225		$	350
Earnings per share before the cumulative effect of accounting change:
Diluted	$	0.26		$	0.15		$	0.59		$	0.21
Basic	$	0.26		$	0.15		$	0.60		$	0.21
Earnings per share:
Diluted	$	0.26		$	0.15		$	0.59		$	0.17
Basic	$	0.26		$	0.15		$	0.60		$	0.17
Average number of common and common equivalent shares outstanding:
Diluted		2,110			2,043			2,104			2,043
Basic		2,048			2,042			2,047			2,042

See Notes to Condensed Consolidated Financial Statements

2

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share data)

	March 31,			September 30,
	2004			2003
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	3,148		$	1,583
Receivables		4,612			4,238
Inventories		742			703
Television costs		754			568
Deferred income taxes		675			674
Other current assets		817			548
Total current assets		10,748			8,314
Film and television costs		6,022			6,205
Investments		1,256			1,849
Parks, resorts and other properties, at cost
Attractions, buildings and equipment		24,785			19,499
Accumulated depreciation		(11,516	)		(8,794	)
		13,269			10,705
Projects in progress		1,871			1,076
Land		1,138			897
		16,278			12,678
Intangible assets, net		2,775			2,786
Goodwill		16,966			16,966
Other assets		1,051			1,190
	$	55,096		$	49,988
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable and other accrued liabilities	$	5,738		$	5,044
Current portion of borrowings		5,354			2,457
Unearned royalties and other advances		1,684			1,168
Total current liabilities		12,776			8,669
Borrowings		9,961			10,643
Deferred income taxes		2,894			2,712
Other long term liabilities		3,972			3,745
Minority interests		733			428
Commitments and contingencies (Note 12)
Shareholders’ equity
Preferred stock, $.01 par value
Authorized – 100 million shares, Issued – none		—			—
Common stock Issued – none
Common stock – Disney, $.01 par value
Authorized – 3.6 billion shares, Issued – 2.1 billion shares		12,327			12,154
Common stock – Internet Group, $.01 par value		—			—
Authorized – 1.0 billion shares, Issued – none
Retained earnings		14,612			13,817
Accumulated other comprehensive loss		(653	)		(653	)
		26,286			25,318
Treasury stock, at cost, 86.7 million shares		(1,526	)		(1,527	)
		24,760			23,791
	$	55,096		$	49,988

See Notes to Condensed Consolidated Financial Statements

3

THE WALT DISNEY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)

	Six Months Ended
	March 31,
	2004			2003
OPERATING ACTIVITIES
Net income	$	1,225		$	350
Depreciation		552			530
Amortization of intangible assets		5			12
Deferred income taxes		199			141
Equity in the income of investees		(174	)		(141	)
Cash distributions received from equity investees		175			168
Write-off of aircraft leveraged lease		—			114
Minority interests		85			39
Change in film and television costs		243			(165	)
Changes in noncurrent assets and liabilities and other		245			36
		1,330			734
Changes in working capital		(51	)		(155	)
Cash provided by operations		2,504			929
INVESTING ACTIVITIES
Investments in parks, resorts and other properties		(468	)		(448	)
Other		39			(22	)
Cash used by investing activities		(429	)		(470	)
FINANCING ACTIVITIES
Borrowings		—			300
Reduction of borrowings		(1,117	)		(1,072	)
Commercial paper borrowings, net		622			1,226
Dividends		(430	)		(429	)
Exercise of stock options and other		141			29
Cash (used by) provided by financing activities		(784	)		54
Increase in cash and cash equivalents		1,291			513
Increase in cash and cash equivalents due to the consolidation of Euro Disney and Hong Kong Disneyland		274			—
Cash and cash equivalents, beginning of period		1,583			1,239
Cash and cash equivalents, end of period	$	3,148		$	1,752

See Notes to Condensed Consolidated Financial Statements

4

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

1. Principles of Consolidation

     These Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and the instructions to Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been reflected in these Condensed Consolidated Financial Statements. Operating results for the six months ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending September 30, 2004. Certain reclassifications have been made in the fiscal 2003 consolidated financial statements to conform to the fiscal 2004 presentation. Additionally, the fiscal 2003 financial statements have been adjusted to reflect EITF 00-21 Revenue Arrangements with Multiple Deliverables (EITF 00-21). The Company adopted EITF 00-21 in the fourth quarter of fiscal 2003, effective as of the beginning of fiscal 2003, and the adoption resulted in a charge for the cumulative effect of the accounting change totaling $71 million, which is reflected in the six months ended March 31, 2003. In addition, the Company adopted new accounting guidance that required us to consolidate the balance sheets of Euro Disney and Hong Kong Disneyland as of March 31, 2004. The income and cash flow statements will be consolidated commencing April 1, 2004. See Note 3 to the Condensed Consolidated Financial Statements.

     For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2003 (the 2003 Annual Report).

     In December 1999, DVD Financing, Inc. (DFI), a subsidiary of Disney Vacation Development, Inc. and an indirect subsidiary of the Company, completed a receivables sale transaction. In connection with this sale, DFI prepares separate financial statements, although its separate assets and liabilities are also consolidated in these financial statements.

     The terms “Company”, “we” and “our” are used in this report to refer collectively to the parent company and the subsidiaries through which our various businesses are actually conducted.

5

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

2. Segment Information

     The operating segments reported below are the segments of the Company for which separate financial information is available and for which segment results are evaluated regularly by the Chief Executive Officer in deciding how to allocate resources and in assessing performance.

	Three Months						Six Months
	Ended March 31,						Ended March 31,
	2004			2003(1)			2004			2003(1)
Revenues:
Media Networks	$	2,846		$	2,653		$	5,960		$	5,597
Parks and Resorts		1,669			1,485			3,300			3,033
Studio Entertainment
Third parties		2,132			1,844			5,081			3,724
Intersegment		30			18			45			29
		2,162			1,862			5,126			3,753
Consumer Products
Third parties		542			518			1,397			1,316
Intersegment		(30	)		(18	)		(45	)		(29	)
		512			500			1,352			1,287
	$	7,189		$	6,500		$	15,738		$	13,670
Segment operating income:
Media Networks	$	704		$	400		$	1,048		$	329
Parks and Resorts		188			155			420			380
Studio Entertainment		153			206			611			344
Consumer Products		75			53			312			243
	$	1,120		$	814		$	2,391		$	1,296

⁽¹⁾ Amounts reflect the adoption of EITF 00-21 effective October 1, 2003

     The Company evaluates the performance of its operating segments based on segment operating income. A reconciliation of segment operating income to income before income taxes, minority interests and the cumulative effect of accounting change is as follows:

	Three Months						Six Months
	Ended March 31,						Ended March 31,
	2004			2003(1)			2004			2003(1)
Segment operating income	$	1,120		$	814		$	2,391		$	1,296
Corporate and unallocated shared expenses		(82	)		(93	)		(185	)		(195	)
Amortization of intangible assets		(2	)		(7	)		(5	)		(12	)
Restructuring and impairment charges		(3	)		—			(3	)		—
Net interest expense		(147	)		(178	)		(295	)		(474	)
Equity in the income of investees		77			51			174			141
Income before income taxes, minority interests and the cumulative effect of accounting change	$	963		$	587		$	2,077		$	756

     ⁽¹⁾ Amounts reflect the adoption of EITF 00-21 effective October 1, 2003

6

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

3. Accounting Changes

     FIN 46

     In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46) and amended it by issuing FIN 46R in December 2003. Among other things, FIN 46R generally deferred the effective date of FIN 46 to the quarter ended March 31, 2004. Variable interest entities (VIEs) are primarily entities that lack sufficient equity to finance their activities without additional financial support from other parties or whose equity holders lack adequate decision making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIE for financial reporting purposes.

     The Company has minority equity interests in certain entities, including Euro Disney S.C.A. (Euro Disney) and Hongkong International Theme Parks Limited (Hong Kong Disneyland). In connection with the adoption of FIN 46R, the Company concluded that Euro Disney and Hong Kong Disneyland are VIEs and that we are the primary beneficiary. Pursuant to the provisions of FIN 46R, the Company consolidated the balance sheets of Euro Disney and Hong Kong Disneyland as of March 31, 2004 and will consolidate the income and cash flow statements effective April 1, 2004. Accordingly, Euro Disney and Hong Kong Disneyland’s operating results continue to be accounted for on the equity method of accounting for the three and six month periods ended March 31, 2004.

     We have concluded that the rest of our equity investments do not require consolidation as either they are not VIEs or in the event that they are VIEs, we are not the primary beneficiary. The Company also has variable interests in certain other VIEs that will not be consolidated because the Company is not the primary beneficiary. These VIEs do not involve any material exposure to the Company.

     The following table presents the condensed consolidating balance sheet for the Company as of March 31, 2004.

			Euro Disney,
	TWDC before		Hong Kong
	Euro Disney		Disneyland and
	and Hong Kong		Consolidating
	Disneyland		Adjustments			TWDC
Cash and cash equivalents	$	2,874	$	274		$	3,148
Other current assets		7,418		182			7,600
Total current assets		10,292		456			10,748
Investments		1,880		(624	)		1,256
Fixed assets		12,500		3,778			16,278
Intangible assets		2,775		—			2,775
Goodwill		16,966		—			16,966
Other assets		7,002		71			7,073
Total assets	$	51,415	$	3,681		$	55,096
Current portion of borrowings(1)	$	3,092	$	2,262		$	5,354
Other current liabilities		6,742		680			7,422
Total current liabilities		9,834		2,942			12,776
Borrowings		9,577		384			9,961
Deferred income taxes		2,894		—			2,894
Other long-term liabilities		3,836		136			3,972
Minority interest		514		219			733
Shareholders’ equity		24,760		—			24,760
Total liabilities and shareholders’ equity	$	51,415	$	3,681		$	55,096

⁽¹⁾ All of Euro Disney’s borrowings are classified as current as they are subject to acceleration if an agreement with Euro Disney’s lenders and the Company is not achieved by May 31, 2004 (See Notes 6 and 7 to the Condensed Consolidated Financial Statements)

7

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

     Management believes that recognition of additional liabilities as a result of consolidating Euro Disney and Hong Kong Disneyland does not result in any incremental increase in the level of claims on the general assets of the Company and its other subsidiaries, rather, the additional liabilities represent claims against the additional assets recognized by the Company as a result of the consolidations. Conversely, the additional assets recognized as a result of consolidating Euro Disney and Hong Kong Disneyland do not represent additional assets of the Company that could be used to satisfy claims by the creditors of the Company and its other subsidiaries.

FSP 106-1

     In January 2004, the FASB issued FASB Staff Position No. 106-1, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (FSP 106-1) in response to a new law regarding prescription drug benefits under Medicare as well as a federal subsidy to sponsors of retiree health care benefit plans. Currently, SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions, (SFAS No.106) requires that changes in relevant law be considered in current measurement of postretirement benefit costs. The Company is evaluating the impact of the new law and will defer recognition, as permitted by FSP 106-1, until further implementation guidance is issued.

4. Investment in Leveraged Leases

     During the first quarter of fiscal 2003, the Company wrote off its aircraft leveraged lease investment with United Airlines, which filed for bankruptcy protection, resulting in a pre-tax charge of $114 million, or $0.04 per share. Based on the bankruptcy filing, we believe it is unlikely that the Company will recover this investment. The pre-tax charge of $114 million for the write-off is reported in “Net interest expense” in the Condensed Consolidated Statements of Income. As of March 31, 2004, our remaining aircraft leveraged lease investment totaled approximately $174 million, consisting of $119 million and $55 million, with Delta Air Lines (Delta) and FedEx, respectively. We continue to monitor the recoverability of these investments, particularly the Delta leases. Delta has indicated in its March 31, 2004 Form 10-Q that if it cannot achieve a competitive cost structure, regain sustained profitability and access the capital markets on acceptable terms, it will need to pursue alternative courses of action intended to make it viable for the long term including the possibility of seeking to restructure its costs under Chapter 11 of the U.S. Bankruptcy code. The inability of Delta to make their lease payments, or the termination of our lease through a bankruptcy proceeding, could result in a write-off of our $119 million investment and could accelerate certain income tax payments.

5. Restructuring and Impairment Charges

     The Company operates 434 Disney Stores in North America and Europe. During fiscal 2003, the Company announced that it was evaluating strategic options for The Disney Store, including the possible sale of stores in North America and Europe under a licensing arrangement. In connection with this evaluation, the Company also announced that it expects to close a certain number of under performing stores in North America.

     The Company recorded restructuring and impairment charges totaling $3 million in the current quarter and $16 million in the second half of fiscal 2003. These charges were principally for fixed asset write-downs related to the stores it expects to close (and certain related facilities) and the cost of certain administrative headcount reductions. Fixed assets associated with the stores identified for closure have been written down to their fair value, determined on the basis of estimated future discounted cash flows through the expected date of the closures. These charges were reported in “Restructuring and impairment charges” in the Condensed Consolidated Statements of Income.

8

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

     The Company continues to evaluate its options with respect to the stores in North America and Europe. These options include operating a smaller chain of the better performing stores, the sale of certain stores, or closing the entire chain. The Company’s investment in the fixed assets of the entire chain totaled $89 million at March 31, 2004. Certain of the options that are being considered, including a possible sale, would result in an impairment of some or all of this amount. Additionally, a sale transaction may involve working capital adjustments that could impact the gain or loss on sale.

     In addition, total future base rent commitments for The Disney Store in North America and Europe totaled approximately $409 million as of March 31, 2004, including $25 million related to the stores identified for closure. Should the Company complete a sale, it is expected that a buyer would assume the lease obligations associated with stores that the buyer intends to operate. The Company or the buyer will undertake negotiations with lessors to seek favorable lease termination terms for stores that will be closed, but the Company will likely incur charges related to all or a portion of the lease terminations in the latter part of fiscal 2004 or the early part of fiscal 2005. It is not possible at this time to determine what amount will ultimately be paid to terminate these leases. In the event that the Company decides to close the entire chain, it will likely incur charges in connection with terminating all of the chain’s leases, as well as disposing of the remaining fixed assets.

6. Borrowings

     During the six months ended March 31, 2004, the Company increased its commercial paper borrowings by $622 million and repaid approximately $817 million of U.S. medium-term notes and other U.S. dollar denominated debt and $300 million of European medium-term notes. Additionally, borrowings increased by $2.6 billion due to the consolidation of Euro Disney and Hong Kong Disneyland under the provisions of FIN 46R as of March 31, 2004.

     The Company’s borrowings (including Euro Disney and Hong Kong Disneyland) at March 31, 2004, including interest rate swaps designated as hedges, are summarized below.

					March 31, 2004
								Interest rate and Cross-
					Stated			Currency Swaps				Effective
	March 31,		Sept. 30,		Interest			Pay				Interest			Swap
	2004		2003		Rate			Variable		Pay Fixed		Rate			Maturities
Commercial paper	$	622	$	—		1.11	%	$	—	$	600		4.69	%		2004-2005
U.S. medium-term notes		7,341		8,114		6.16	%		910		—		5.29	%		2006-2022
Convertible senior notes		1,323		1,323		2.13	%		—		—		2.57	%		—
Other U.S. dollar denominated debt		597		597		5.74	%		—		—		5.74	%		—
Privately placed debt		299		343		7.02	%		299		—		3.05	%		2007
European medium-term notes		1,219		1,519		2.44	%		1,099		—		2.84	%		2004-2007
Preferred stock		480		485		7.64	%		102		—		4.19	%		2004
Capital Cities/ABC and ABC Family debt		191		191		9.08	%		—		—		9.08	%		—
Other		597		528					—		—					—
		12,669		13,100					2,410		600		4.48	%		—
Euro Disney (ED) and Hong Kong
Disneyland (HKDL):
ED – CDC loans		1,124		—		5.15	%		—		—		5.15	%		—
ED – Credit facilities & other		643		—		2.82	%		—		549		4.00	%		2004
ED – Partners’ advances		495				3.00	%		—		—		3.00	%		—
HKDL – Senior and subordinated loans		384		—		2.74	%		—		98		3.01	%		2005
		2,646		—					—		647		4.16	%		—
Total borrowings		15,315		13,100					2,410		1,247		4.42	%
Less current portion1		5,354		2,457					933		1,049
Total long-term borrowings	$	9,961	$	10,643				$	1,477	$	198

¹ All of Euro Disney’s borrowings totaling $2.3 billion are classified as current as they are subject to acceleration if an agreement with its lenders and the Company is not achieved by May 31, 2004

9

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

     The following is a summary of the key terms of Euro Disney and Hong Kong Disneyland borrowings which have been included in our consolidated balance sheet as a result of the implementation of FIN 46R (see Note 3 to the Condensed Consolidated Financial Statements).

Euro Disney-CDC loans. Pursuant to Euro Disney’s original financing and the terms of a 1994 financial restructuring, Euro Disney borrowed from the Caisse des Dépôts et Consignations (“CDC”) approximately €128 million ($157 million at March 31, 2004 exchange rates) senior debt and €403 million ($497 million at March 31, 2004 exchange rates) subordinated debt. The senior debt is secured by certain fixed assets of Disneyland Resort Paris and the underlying land, whereas the subordinated debt is unsecured. The loans originally bore interest at a fixed rate of 7.85%; however, effective as of September 30, 1999, the terms of these loans were modified so as to reduce the fixed interest rate to 5.15%, defer principal repayments and extend the final maturity date from fiscal year 2015 to fiscal year 2024.

     Euro Disney also executed a credit agreement with the CDC to provide approximately €381 million ($470 million at March 31, 2004 exchange rates) of subordinated loans to finance a portion of the construction costs of Walt Disney Studios Park. The loans bear interest at a fixed rate of 5.15% per annum, unless interest or principal payments were to be deferred under the provisions of the loans, during which time the interest rate on the deferred amounts is 5.15% or EURIBOR plus 2.0% whichever is greater. The loans will mature between fiscal years 2015 and 2028.

Euro Disney - Credit facilities and other. Pursuant to Euro Disney’s original financing with a syndicate of international banks and the terms of a 1994 financial restructuring, Euro Disney borrowed funds which are secured by certain fixed assets of Disneyland Resort Paris and the underlying land thereof. The loans bear interest at EURIBOR plus a margin (for a total rate ranging from 2.36% to 4.24% at March 31, 2004). The loans will mature between fiscal years 2009 and 2012.

Euro Disney – Partner advances. The advances are comprised of secured and unsecured borrowings. €383 million ($472 million at March 31, 2004 rates) of the borrowings bear interest at a fixed rate of 3.0%. The remaining advances of €19 million ($23 million at March 31, 2004 exchange rates) bear interest at EURIBOR plus 1.46% (3.08% at March 31, 2004). The loans will mature between fiscal years 2014 and 2017.

Euro Disney – Debt covenants. Certain of Euro Disney’s borrowing agreements include covenants, which primarily consist of restrictions on additional indebtedness and capital expenditures, the provision of certain financial information and compliance with certain financial ratio thresholds. In November 2003, the lenders agreed to waive, effective through March 31, 2004, the financial ratio and certain other covenants. In March 2004, this waiver was extended to May 31, 2004.

     Management believes that recognition of additional liabilities as a result of consolidating Euro Disney and Hong Kong Disneyland does not result in any incremental increase in the level of claims on the general assets of the Company and its other subsidiaries; rather the additional liabilities represent claims against the additional assets recognized by the Company as a result of the consolidations. Conversely, the additional assets recognized as a result of consolidating Euro Disney and Hong Kong Disneyland do not represent additional assets of the Company that could be used to satisfy claims by the creditors of the Company and its other subsidiaries.

     Certain of Euro Disney’s borrowings arose in connection with a lease arrangement that was entered into in connection with a financial restructuring of Euro Disney in 1994. See Note 7 to the Condensed Consolidated Financial Statements for further discussion of this lease arrangement.

10

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

Hong Kong Disneyland – Senior loans. Hong Kong Disneyland’s senior loans are borrowings pursuant to a term loan facility of HK$2.3 billion ($295 million at March 31, 2004 exchange rates) and a revolving credit facility of HK$1.0 billion ($128 million at March 31, 2004 exchange rates). The balance of the senior loans as of March 31, 2004 was HK $787 million ($101 million at March 31, 2004 exchange rates). The term loan facility can be drawn down until 6 months after the theme park opening day (scheduled for late fiscal year 2005 or early fiscal year 2006) with re-payments to begin approximately three years after the theme park opening day. Up to 25% of the revolving credit facility is available to be drawn down. The remaining 75% is unavailable until the earlier of i) the theme park opening or ii) all other senior and subordinated debt facilities and equity funding has been fully utilized and there is sufficient liquidity available to accommodate its working capital requirements. Both facilities are secured by the assets of the Hong Kong Disneyland theme park and currently carry a rate of 3 month HIBOR + 1.0% and are scheduled to mature in fiscal 2016. The spread above HIBOR is 1.0% through November 15, 2005 (1.17% at March 31, 2004), 1.25% for the next five years and 1.375% for the last five years of the facilities.

Hong Kong Disneyland – Subordinated loans. Hong Kong Disneyland has a subordinated unsecured loan facility of HK$5.6 billion ($721 million at March 31, 2004 exchange rates) that is scheduled to mature 25 years after the theme park opening day (in late fiscal 2030 or early fiscal 2031 based on the scheduled theme park opening). The balance drawn on the subordinated unsecured loan facility as of March 31, 2004 was HK $2.2 billion ($283 million at March 31, 2004 exchange rates). Interest rates under this loan are subject to biannual revisions (up or down) under certain conditions, but capped at an annual rate of 6.75% (for the first eight and one half years), 7.625% (for the next eight years) and 8.50% (over the last eight and one half years).

     As previously stated, all of Euro Disney’s borrowings totaling $2.3 billion are classified as current on the balance sheet as they are subject to acceleration if an agreement with its lenders and the Company is not achieved by May 31, 2004. Based on contractual agreements, Euro Disney’s $2.3 billion and Hong Kong Disneyland’s $384 million borrowings have the following scheduled maturities:

2004	$	33
2005		102
2006		95
2007		117
2008		134
Thereafter		2,165
	$	2,646

7. Euro Disney

     The Company has a 39% interest in Euro Disney S.C.A., which operates the Disneyland Resort Paris. As of March 31, 2004, the Company began accounting for its investment in Euro Disney as a consolidated subsidiary pursuant to FIN 46R. As of March 31, 2004, the Company consolidated the balance sheet of Euro Disney and will consolidate the income and cash flow statements beginning April 1, 2004.

     The slowdown in the European travel and tourism industry has negatively affected Euro Disney’s results of operations and cash flows. In response to this situation, Euro Disney initiated discussions with its lenders and the Company to obtain waivers of its fiscal 2003 loan covenants and to obtain supplemental financing to address Euro Disney’s cash requirements.

     As a result of an agreement entered into on March 28, 2003, the Company did not charge Euro Disney royalties and management fees for the period from January 1, 2003 to September 30, 2003. Additionally, the Company agreed to allow Euro Disney to pay its royalties and management fees annually in arrears for fiscal 2004, instead of quarterly.

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THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

     On November 3, 2003, Euro Disney obtained waivers from its lenders, effective through March 31, 2004, with respect to covenants for fiscal 2003. On March 22, 2004, Euro Disney obtained an extension of these waivers through May 31, 2004. The waivers are expected to give Euro Disney, its lenders and the Company time to find a resolution to Euro Disney’s financial situation. In conjunction with the extension, the Company has agreed to replace its supplemental €45 million subordinated credit facility, which expired on March 31, 2004, with a €25 million subordinated credit facility ($31 million at March 31, 2004 exchange rates), which will expire on May 31, 2004. Euro Disney agreed not to allow the outstanding balance of Euro Disney’s €168 million ($207 million at March 31, 2004 exchange rates) line of credit with the Company to fall below €110 million during the extension period. As of March 31, 2004, Euro Disney had borrowed €110 million ($136 million at March 31, 2004 exchange rates) on the existing credit line, which is excluded from the Company’s balance sheet as it is eliminated when consolidating the balance sheet of Euro Disney. As of May 7, 2004, Euro Disney had not borrowed any amounts under the €25 million subordinated credit facility and the balance of the €168 million credit facility was €125 million ($149 million as of May 7, 2004 exchange rates).

     Euro Disney is currently engaged in discussions with its lenders and the Company to obtain supplemental financing to address its cash requirements. Such financing may include an extension or change in the terms associated with the Company’s credit line or additional commitments from the Company. If a resolution to Euro Disney’s future financing needs is not obtained by May 31, 2004 and assuming the waiver period is not extended again, the waivers would expire and Euro Disney’s lenders could accelerate the maturity of Euro Disney’s debt. Should that occur, Euro Disney would be unable to meet all of its debt obligations. The Company believes that Euro Disney will ultimately obtain the requisite loan modifications and additional financing; however, there can be no assurance that this will be the case. Should Euro Disney be unable to obtain loan modifications and/or additional financing, the assets of Euro Disney could potentially become impaired, resulting in corresponding charges in our consolidated financial statements.

     In connection with a financial restructuring of Euro Disney in 1994, Euro Disney Associés S.N.C. (Disney SNC), a wholly owned affiliate of the Company, entered into a lease arrangement with a financing company with a noncancelable term of 12 years related to substantially all of the Disneyland Park assets, and then entered into a 12-year sublease agreement with Euro Disney on substantially the same payment terms. Remaining lease rentals at March 31, 2004 of approximately $487 million receivable from Euro Disney under the sublease approximate the amounts payable by Disney SNC under the lease. These lease transactions have been eliminated in consolidation. At the conclusion of the sublease term, Euro Disney will have the option of assuming Disney SNC’s rights and obligations under the lease for a payment of $97 million over the ensuing 15 months. If Euro Disney does not exercise its option, Disney SNC may purchase the assets, continue to lease the assets or elect to terminate the lease. In the event the lease is terminated, Disney SNC would be obligated to make a termination payment to the lessor equal to 75% of the lessor’s then outstanding debt related to the Disneyland Park assets, which payment would be approximately $1.4 billion. Disney SNC would then have the right to sell or lease the assets on behalf of the lessor to satisfy the remaining debt, with any excess proceeds payable to Disney SNC. Notwithstanding Euro Disney’s financial difficulties, the Company believes it is unlikely that Disney SNC would be required to pay the 75% lease termination payment as the Company currently expects that either (i) Euro Disney will exercise its assumption option in 2006, (ii) one of the alternative resolutions available under the current contractual relationships among Disney SNC, Euro Disney and the lenders will be implemented or (iii) one of any additional alternatives that may be developed in connection with the discussions referred to above will be implemented.

     See Note 4 to the Consolidated Financial Statements in the 2003 Annual Report and Note 3 to the Condensed Consolidated Financial Statements for additional information related to Euro Disney’s financial position. See Note 6 to the Condensed Consolidated Financial Statements for the terms of Euro Disney’s borrowings.

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THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

8. Pension and Other Benefit Programs

     The components of net periodic benefit cost are as follows:

													Post-retirement
	Pension Plans												Medical Plans
	Three Months						Six Months Ended						Three Months						Six Months Ended
	Ended March 31,						March 31,						Ended March 31,						March 31,
	2004			2003			2004			2003			2004			2003			2004			2003
Service costs	$	37		$	29		$	75		$	57		$	9		$	6		$	18		$	12
Interest costs		54			51			108			101			15			12			30			24
Expected return on plan assets		(54	)		(66	)		(108	)		(131	)		(4	)		(5	)		(8	)		(10	)
Amortization of prior service cost		1			1			1			1			—			—			(1	)		(1	)
Recognized net actuarial loss		20			—			39			—			16			6			33			12
Net periodic benefit cost	$	58		$	15		$	115		$	28		$	36		$	19		$	72		$	37

							Post-retirement
	Pension Plans						Medical Plans
	2003			2002			2003			2002
Assumptions:
Discount rate		5.85	%		7.20	%		5.85	%		7.20	%
Rate of return on plans’ assets		7.50	%		8.50	%		7.50	%		8.50	%
Salary increases		3.75	%		4.65	%		n/a			n/a
Annual increase in cost of benefits		n/a			n/a			10.00	%		10.00	%

     During the quarter ended March 31, 2004, contributions of $145 million were made into the Company’s pension and post-retirement medical plans. The Company presently anticipates no additional contributions to its pension and postretirement plans during fiscal 2004.

9. Earnings Per Share

     Diluted earnings per share amounts are based upon the weighted average number of common and common equivalent shares outstanding during the period and are calculated using the treasury stock method for stock options and assuming conversion of the Company’s convertible senior notes. For the three months ended March 31, 2004 and 2003, options for 100 million and 223 million shares, respectively, were excluded from the diluted earnings per share calculation as they were anti-dilutive. For the six months ended March 31, 2004 and 2003, options for 104 million and 211 million shares, respectively, were excluded.

     A reconciliation of net income and weighted average number of common and common equivalent shares outstanding for calculating diluted earnings per share is as follows:

	Three Months				Six Months
	Ended March 31,				Ended March 31,
	2004		2003		2004		2003
Net income	$	537	$	314	$	1,225	$	350
Interest expense on convertible senior notes (net of tax)		5		—		10		—
	$	542	$	314	$	1,235	$	350
Weighted average number of common shares outstanding (basic)		2,048		2,042		2,047		2,042
Weighted average dilutive stock options		17		1		12		1
Assumed conversion of convertible senior notes		45		—		45		—
Weighted average number of common and common equivalent shares outstanding (diluted)		2,110		2,043		2,104		2,043

13

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

10. Shareholders’ Equity

     The Company declared a $430 million dividend ($0.21 per share) on December 2, 2003 related to fiscal 2003, which was paid on January 6, 2004 to shareholders of record on December 12, 2003. The Company paid a $429 million dividend ($0.21 per share) during the second quarter of fiscal 2003 related to fiscal 2002.

11. Comprehensive Income

     Comprehensive income is as follows:

	Three Months					Six Months
	Ended March 31,					Ended March 31,
	2004		2003			2004			2003
Net income	$	537	$	314		$	1,225		$	350
Market value adjustments for investments and hedges, net of tax		45		(15	)		(32	)		(33	)
Foreign currency translation, net of tax		2		(9	)		32			3
Comprehensive income	$	584	$	290		$	1,225		$	320

     Accumulated other comprehensive loss, net of tax is as follows:

	March 31,			September 30,
	2004			2003
Market value adjustments for investments and hedges	$	(140	)	$	(108	)
Foreign currency translation		95			63
Additional minimum pension liability adjustment		(608	)		(608	)
Accumulated other comprehensive loss	$	(653	)	$	(653	)

12. Stock Incentive Plans

     The following table reflects pro forma net income and earnings per share had the Company elected to record employee stock option expense based on the fair value methodology:

	Three Months						Six Months
	Ended March 31,						Ended March 31,
	2004			2003			2004			2003
Net income:
As reported	$	537		$	314		$	1,225		$	350
Less stock option expense		(102	)		(112	)		(193	)		(223	)
Tax effect		38			42			72			83
Pro forma after stock option expense	$	473		$	244		$	1,104		$	210
Diluted earnings per share:
As reported	$	0.26		$	0.15		$	0.59		$	0.17
Pro forma after option expense	$	0.23		$	0.12		$	0.53		$	0.10
Basic earnings per share
As reported	$	0.26		$	0.15		$	0.60		$	0.17
Pro forma after option expense	$	0.23		$	0.12		$	0.54		$	0.10

14

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

     These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period, and additional options may be granted in future years.

     The Company grants restricted stock units to certain executives. Certain restricted stock units vest upon the achievement of defined performance conditions. The remaining restricted stock units generally vest one half in two years and one half in four years from the grant date. Restricted stock units are generally forfeited if the grantee terminates employment prior to vesting. During the six months ended March 31, 2004, the Company granted approximately 4,708,000 restricted stock units and as of March 31, 2004, approximately 8,025,000 restricted stock units were outstanding. During the six months ended March 31, 2004 and 2003, the Company recorded compensation expense totaling $22.4 million and $7.5 million, respectively. Unearned stock compensation expense totaled approximately $140 million as of March 31, 2004.

13. Commitments and Contingencies

     The Company has exposure to various legal and other contingencies arising from the conduct of its businesses.

Litigation

     Stephen Slesinger, Inc. v. The Walt Disney Company. In this lawsuit, filed on February 27, 1991 in the Los Angeles County Superior Court, the plaintiff claims that a Company subsidiary defrauded it and breached a 1983 licensing agreement with respect to certain Winnie the Pooh properties, by failing to account for and pay royalties on revenues earned from the sale of Winnie the Pooh movies on videocassette and from the exploitation of Winnie the Pooh merchandising rights. The plaintiff seeks damages for the licensee’s alleged breaches as well as confirmation of the plaintiff’s interpretation of the licensing agreement with respect to future activities. The plaintiff also seeks the right to terminate the agreement on the basis of the alleged breaches. If each of the plaintiff’s claims were to be confirmed in a final judgment, damages as argued by the plaintiff could total as much as several hundred million dollars and adversely impact the value to the Company of any future exploitation of the licensed rights. The Company disputes that the plaintiff is entitled to any damages or other relief of any kind, including termination of the licensing agreement. On April 24, 2003, the matter was removed to the United States District Court for the Central District of California, which, on May 19, 2003, dismissed certain claims and remanded the matter to the Los Angeles Superior Court. The Company appealed from the District Court’s order to the Court of Appeals for the Ninth Circuit. On March 29, 2004, the Superior Court granted the Company’s motion for terminating sanctions against the plaintiff for a host of discovery abuses, including the withholding, alteration, and theft of documents and other information, and, on April 5, 2004, dismissed plaintiff’s case with prejudice. On April 13, 2004, the plaintiff gave notice of its intention to move to set aside the dismissal and to seek a new trial, and on May 6, 2004, the plaintiff moved to disqualify the judge who issued the March 29, 2004 decision.

     Milne and Disney Enterprises, Inc. v. Stephen Slesinger, Inc. On November 5, 2002, Clare Milne, the granddaughter of A. A. Milne, author of the Winnie the Pooh books, and the Company’s subsidiary Disney Enterprises, Inc. filed a complaint against Stephen Slesinger, Inc. (“SSI”) in the United States District Court for the Central District of California. On November 4, 2002, Ms. Milne served notices to SSI and the Company’s subsidiary terminating A. A. Milne’s prior grant of rights to Winnie the Pooh, effective November 5, 2004, and granted all of those rights to the Company’s subsidiary. In their lawsuit, Ms. Milne and the Company’s subsidiary seek a declaratory judgment, under United States copyright law, that Ms. Milne’s termination notices were valid; that SSI’s rights to Winnie the Pooh in the United States will terminate effective November 5, 2004; that upon termination of SSI’s rights in the United States, the 1983 licensing agreement that is the subject of the Stephen

15

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

Slesinger, Inc. v. The Walt Disney Company lawsuit will terminate by operation of law; and that, as of November 5, 2004, SSI will be entitled to no further royalties for uses of Winnie the Pooh. In January 2003, SSI filed (a) an answer denying the material allegations of the complaint and (b) counterclaims seeking a declaration (i) that Ms. Milne’s grant of rights to Disney Enterprises, Inc. is void and unenforceable and (ii) that Disney Enterprises, Inc. remains obligated to pay SSI royalties under the 1983 licensing agreement. SSI also filed a motion to dismiss the complaint or, in the alternative, for summary judgment. On May 8, 2003, the Court ruled that Milne’s termination notices are invalid and dismissed SSI’s counterclaims as moot. Following further motions, on August 1, 2003, SSI filed an amended answer and counterclaims and a third-party complaint against Harriet Hunt (heir to E. H. Shepard, illustrator of the original Winnie the Pooh stories), who had served a notice of termination and a grant of rights similar to Ms. Milne’s. By order dated October 27, 2003, the Court certified an interlocutory appeal from its May 8 order to the Court of Appeals for the Ninth Circuit, but on January 15, 2004, the Court of Appeals denied the Company’s and Milne’s petition for an interlocutory appeal.

     Management believe that it is not currently possible to estimate the impact if any, that the ultimate resolution of these matters will have on the Company’s results of operations, financial position or cash flows.

     The Company, together with, in some instances, certain of its directors and officers, is a defendant or co-defendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not expect the Company to suffer any material liability by reason of such actions.

Contractual Guarantees

     The Company has guaranteed certain special assessment and water/sewer revenue bond series issued by the Celebration Community Development District and the Enterprise Community Development District (collectively, the Districts). The bond proceeds were used by the Districts to finance the construction of infrastructure improvements and the water and sewer system in the mixed-use, residential community of Celebration, Florida. As of March 31, 2004, the remaining debt service obligation guaranteed by the Company was $100 million, of which $61 million was principal. The Company is responsible to satisfy any shortfalls in debt service payments, debt service and maintenance reserve funds, and to ensure compliance with specified rate covenants. To the extent that the Company has to fund payments under its guarantees, the Districts have an obligation to reimburse the Company from District revenues.

     The Company has also guaranteed certain bond issuances by the Anaheim Public Authority that were used by the City of Anaheim to finance construction of infrastructure and a public parking facility adjacent to the Disneyland Resort. Revenues from sales, occupancy and property taxes from the Disneyland Resort and non-Disney hotels are used by the City of Anaheim to repay the bonds. In the event of a debt service shortfall, the Company will be responsible to fund the shortfall. As of March 31, 2004, the remaining debt service obligation guaranteed by the Company was $404 million, of which $109 million was principal. To the extent that subsequent tax revenues exceed the debt service payments in subsequent periods, the Company would be reimbursed for any previously funded shortfalls.

     To date, tax revenues have exceeded the debt service payments for both the Celebration and Anaheim bonds.

16

THE WALT DISNEY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited; tabular dollars in millions, except per share data)

     The Company has guaranteed payment of certain facility and equipment leases on behalf of a third-party service provider that supplies the Company with broadcasting transmission, post production, studio and administrative services in the U.K. If the third-party service provider defaults on the leases, the Company would be responsible for the remaining obligation unless the Company finds another service provider to take over the leases. As of March 31, 2004, the remaining facility and equipment lease obligation was $96 million. These leases expire in March 2014.

14. Income Taxes

     As a matter of course, the Company is regularly audited by federal, state and foreign tax authorities. From time to time, these audits result in proposed assessments. The Internal Revenue Service (IRS) has completed its examination of the Company’s federal income tax returns for 1993 through 1995 and has proposed assessments that challenge certain of the Company’s tax positions. The Company has negotiated the settlement of a number of these proposed assessments, and is pursuing an administrative appeal before the IRS with regard to the remainder. If the remaining proposed assessments are upheld through the administrative and legal process, they could have a material impact on the Company’s earnings and cash flow. However, the Company believes that its tax positions comply with applicable tax law and intends to defend its positions vigorously. The Company believes it has adequately provided for any reasonably foreseeable outcome related to these matters. Accordingly, although their ultimate resolution may require additional cash tax payments, the Company does not anticipate any material earnings impact from these matters.

17

THE WALT DISNEY COMPANY
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ORGANIZATION OF INFORMATION

     Management’s Discussion and Analysis provides a narrative of the Company’s financial performance and condition that should be read in conjunction with the accompanying financial statements. It includes the following sections:

Overview for the Quarter Ended March 31, 2004
Seasonality
Summary Consolidated Results
     Three Month Results
     Six Month Results
Business Segment Results
     Three Month Results
     Six Month Results
Corporate Items
Stock Option Accounting
Financial Condition
Commitments and Contingencies
Other Matters
Market Risk
Forward Looking Statements

OVERVIEW FOR THE QUARTER ENDED MARCH 31, 2004

     In our Media Networks segment, operating income increased primarily due to revenue gains due to scheduled rate increases in affiliate fees. The segment also benefited from the bankruptcy settlement of our major cable distributor in Latin America. Continued strength in the advertising market (including the ongoing effects of last year’s strong upfront market) contributed to revenue in our broadcast operations, but these effects were offset by the fact that we did not have revenue from the Super Bowl this year and by the effect of ratings declines at the ABC Television Network. We also saw reduced costs in this segment, in particular because of the absence of the Super Bowl.

     Our Parks and Resorts segment benefited from continued gradual improvement in the travel and tourism industry, which resulted in increased attendance and occupancy at our theme parks and resorts. These improvements led to increased operating income in this segment, despite continued cost pressures in the area of employee benefits and cost increases associated with the increased volume.

     Operating income fell in the Studio Entertainment segment, where continued strength in the sale of DVDs in both the domestic and international market was offset by the negative effects of disappointing box office results for some of our films released during the quarter and early in the June quarter.

     Although licensing results were flat for the quarter, we saw improvement in operating income in our Consumer Products segment, due to reductions in the losses at The Disney Store. As we discuss below, we continue to evaluate options with respect to The Disney Store, including operating a chain of fewer stores, the sale of our North American and European operations, or closing the entire chain.

18

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     Cash flow from operations has allowed us to continue to make necessary capital investments in our properties and to reduce our borrowings, which in turn is reducing our interest expense. During the quarter, we had net repayment of borrowings of $495 million. As a result of our adoption of FIN 46R, we have consolidated Euro Disney and Hong Kong Disneyland into our balance sheet as of March 31, 2004 (results of operations of these entities will be consolidated into our income statements beginning April 1, 2004). As a result, we have added the borrowings of these two entities ($2.3 billion for Euro Disney and $384 million for Hong Kong Disneyland as of March 31, 2004) to our balance sheet, as well as the associated assets and other liabilities. Accordingly, our total borrowings as reflected in the condensed consolidated balance sheet increased to $15.3 billion.

SEASONALITY

     The Company’s businesses are subject to the effects of seasonality. Consequently, the operating results for the three and six months ended March 31, 2004 for each business segment, and for the Company as a whole, are not necessarily indicative of results to be expected for the full year.

     Media Networks revenues are influenced by advertiser demand and the seasonal nature of programming, and generally peak in the spring and fall.

     Studio Entertainment revenues fluctuate based upon the timing of theatrical motion picture, home video (DVD and VHS) and television releases. Release dates for theatrical, home video and television products are determined by several factors, including timing of vacation and holiday periods and competition in the market.

     Parks and Resorts revenues fluctuate with changes in theme park attendance and resort occupancy resulting from the seasonal nature of vacation travel. Peak attendance and resort occupancy generally occur during the summer months, when school vacations occur and during early-winter and spring holiday periods.

     Consumer Products revenues are influenced by seasonal consumer purchasing behavior and the timing of animated theatrical releases.

SUMMARY CONSOLIDATED RESULTS

	Three Months Ended									Six Months Ended
	March 31,									March 31,
	2004			2003(1)			Change			2004			2003(1)			Change
Revenues	$	7,189		$	6,500			11	%	$	15,738		$	13,670			15	%
Costs and expenses		(6,156	)		(5,786	)		(6	)%		(13,540	)		(12,581	)		(8	)%
Net interest expense		(147	)		(178	)		17	%		(295	)		(474	)		38	%
Equity in the income of investees		77			51			51	%		174			141			23	%
Income before income taxes, minority interests and the cumulative effect of accounting change		963			587			64	%		2,077			756			175	%
Income taxes		(357	)		(219	)		(63	)%		(767	)		(296	)		(159	)%
Minority interests		(69	)		(54	)		(28	)%		(85	)		(39	)		(118	)%
Income before the cumulative effect of accounting change		537			314			71	%		1,225			421			191	%
Cumulative effect of accounting change		—			—			n/m			—			(71	)		n/m
Net income	$	537		$	314			71	%	$	1,225		$	350			250	%
Diluted earnings per share before the cumulative effect of accounting change	$	0.26		$	0.15			73	%	$	0.59		$	0.21			181	%
Diluted earnings per share	$	0.26		$	0.15			73	%	$	0.59		$	0.17			247	%

     ⁽¹⁾ Amounts reflect the adoption of EITF 00-21 effective October 1, 2003

19

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Three Month Results

     Net income for the quarter was $537 million, which was $223 million higher than the prior-year quarter. Diluted earnings per share were $0.26, which was $0.11 higher than the prior-year quarter. The increase in net income for the current quarter was primarily due to increased segment operating income at Media Networks, Parks and Resorts and Consumer Products, decreased net interest expense and increased equity in the income of cable investees, partially offset by decreased segment operating income at Studio Entertainment. Changes in segment operating income are discussed in detail in the separate sections below.

Six Month Results

     Income before the cumulative effect of an accounting change for the six months was $1.2 billion, which was $804 million higher than the prior-year six months. Diluted earnings per share before the cumulative effect of accounting change was $0.59, which was $0.38 higher than the prior-year period. Results for the prior-year six months included a $114 million write-off of an aircraft leveraged lease investment with United Airlines ($0.04 per share). Additionally, we made an accounting change effective as of the beginning of fiscal 2003 to adopt a new accounting rule for multiple element revenue accounting (EITF 00-21, see Note 2 to the Consolidated Financial Statements in the 2003 Annual Report), which impacted the timing of revenue recognition related to NFL football programming at ESPN. This change resulted in a $71 million cumulative effect charge. Diluted earnings per share including the cumulative effect of this accounting change were $0.17 for the prior-year period.

     Excluding the aforementioned items, the increase in net income for the current six-month period was primarily due to increased segment operating income from all of the operating segments, decreased net interest expense and increased equity in the income of cable investees. Changes in segment operating income are discussed in detail in the separate sections below.

BUSINESS SEGMENT RESULTS

	Three Months Ended March 31,							Six Months Ended March 31,
(unaudited, in millions)	2004		2003(1)		% Change			2004		2003(1)		% Change
Revenues:
Media Networks	$	2,846	$	2,653		7	%	$	5,960	$	5,597		6	%
Parks and Resorts		1,669		1,485		12	%		3,300		3,033		9	%
Studio Entertainment		2,162		1,862		16	%		5,126		3,753		37	%
Consumer Products		512		500		2	%		1,352		1,287		5	%
	$	7,189	$	6,500		11	%	$	15,738	$	13,670		15	%
Segment operating income:
Media Networks	$	704	$	400		76	%	$	1,048	$	329		219	%
Parks and Resorts		188		155		21	%		420		380		11	%
Studio Entertainment		153		206		(26	)%		611		344		78	%
Consumer Products		75		53		42	%		312		243		28	%
	$	1,120	$	814		38	%	$	2,391	$	1,296		84	%

     ⁽¹⁾ Amounts reflect the adoption of EITF 00-21 effective October 1, 2003

20

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     The Company evaluates the performance of its operating segments based on segment operating income. The following table reconciles segment operating income to income before income taxes, minority interests and the cumulative effect of accounting change.

	Three Months Ended March 31,									Six Months Ended March 31,
(unaudited, in millions)	2004			2003(1)			% Change			2004			2003(1)			% Change
Segment operating income	$	1,120		$	814			38	%	$	2,391		$	1,296			84	%
Corporate and unallocated shared expenses		(82	)		(93	)		12	%		(185	)		(195	)		5	%
Amortization of intangible assets		(2	)		(7	)		71	%		(5	)		(12	)		58	%
Restructuring and impairment charges		(3	)		—			n/m			(3	)		—			n/m
Net interest expense		(147	)		(178	)		17	%		(295	)		(474	)		38	%
Equity in the income of investees		77			51			51	%		174			141			23	%
Income before income taxes, minority interests and the cumulative effect of accounting change	$	963		$	587			64	%	$	2,077		$	756			175	%

⁽¹⁾ Amounts reflect the adoption of EITF 00-21 effective October 1, 2003

     Depreciation expense is as follows:

	Three Months Ended				Six Months Ended
	March 31,				March 31,
(unaudited, in millions)	2004		2003		2004		2003
Media Networks	$	42	$	43	$	84	$	85
Parks and Resorts		181		170		358		340
Studio Entertainment		6		10		10		19
Consumer Products		13		18		26		33
Segment depreciation expense		242		241		478		477
Corporate		37		28		74		53
Total depreciation expense	$	279	$	269	$	552	$	530

     Segment depreciation expense is included in segment operating income and corporate depreciation expense is included in corporate and unallocated shared expenses.

21

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Business Segment Results – Three Month Results

Media Networks

     The following table provides supplemental revenue and segment operating income detail for the Media Networks segment:

	Three Months Ended March 31,								Six Months Ended March 31,
(unaudited, in millions)	2004		2003(1)			% Change			2004		2003(1)			% Change
Revenues:
Broadcasting	$	1,338	$	1,407			(5	)%	$	2,892	$	2,971			(3	)%
Cable Networks		1,508		1,246			21	%		3,068		2,626			17	%
	$	2,846	$	2,653			7	%	$	5,960	$	5,597			6	%
Segment operating income (loss):
Broadcasting	$	28	$	(105	)		n/m		$	176	$	(67	)		n/m
Cable Networks		676		505			34	%		872		396			120	%
	$	704	$	400			76	%	$	1,048	$	329			219	%

⁽¹⁾ Amounts reflect the adoption of EITF 00-21 effective October 1, 2003

Revenues

     Media Networks revenues increased 7%, or $193 million, to $2.8 billion driven by an increase of 21%, or $262 million at the Cable Networks, partially offset by a decrease of 5% or $69 million at Broadcasting.

     Decreased Broadcasting revenues were driven primarily by a decrease of $80 million at the ABC Television Network, partially offset by increases at the internet group, the radio networks and stations and the Company’s owned and operated television stations totaling $16 million. The decrease in the ABC Television Network revenues was primarily due to the absence of advertising revenue related to the Super Bowl, which aired in the prior-year quarter, and the impact of lower ratings, partially offset by higher advertising rates received in the upfront sales market. The increases at the radio networks and stations and at the owned television stations were primarily driven by higher advertising revenues, reflecting higher rates due to an improved advertising marketplace.

     Increased Cable Networks revenues were driven by increases of $195 million in revenues from cable and satellite operators and $76 million in advertising revenues. Revenues from cable and satellite operators are largely derived from fees charged on a per subscriber basis, and the increase in the current quarter primarily reflected contractual rate adjustments at ESPN. The increase in affiliate revenue also reflected the favorable impact of the bankruptcy settlement with a cable operator in Latin America as discussed below.

     The Company reached a settlement agreement during the quarter with DirecTV Latin America, the Company’s major distributor in that region, which had declared bankruptcy in fiscal 2003. As a result of the settlement, the Company received a payment which included $21 million related to receivables that had been reserved in the second quarter of the prior year and $18 million for prior revenues that had not been billed as we ceased recognizing revenue in the second quarter of the prior year. As a result, cable operating income growth benefited by $60 million.

22

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     The Company’s contractual arrangements with cable and satellite operators are renewed or renegotiated from time to time in the ordinary course of business. A significant number of these arrangements will be up for renewal in the next 12 months. Consolidation in the cable and satellite distribution industry and other factors may adversely affect the Company’s ability to obtain and maintain contractual terms for the distribution of its various cable and satellite programming services that are as favorable as those currently in place. If this were to occur, revenues from Cable Networks could increase at slower rates than in the past or could be stable or decline.

Costs and Expenses

     Costs and expenses, which consist primarily of programming rights costs, production costs, distribution and selling expenses and labor costs, decreased 5%, or $111 million, to $2.1 billion. The decrease was primarily due to lower broadcast programming costs and lower bad debt expense at the Cable Networks, partially offset by increased programming costs at the Cable Networks. Lower broadcast programming costs were due primarily to the absence of programming costs for the Super Bowl, which aired in the prior-year quarter. Additionally, the prior-year quarter included higher news production costs due to coverage of the military conflict in Iraq. The decrease in bad debt expense at Cable Networks reflected the favorable impact of the bankruptcy settlement with a cable operator in Latin America as discussed above. Higher programming costs at the Cable Networks were primarily due to increases in original and acquired programs.

Segment Operating Income

     Segment operating income increased 76%, or $304 million, to $704 million for the quarter due to increases of $171 million at the Cable Networks and $133 million at Broadcasting. Growth at the Cable Networks reflected higher affiliate revenue at ESPN, and the favorable impact of the DirecTV Latin America bankruptcy settlement, partially offset by higher costs. Increased segment operating income at Broadcasting primarily reflected lower programming and production costs due principally to the absence of the Super Bowl and Iraq War coverage.

Sports Programming Costs

     The initial five-year period of the Company’s contract to televise NFL games was non-cancelable and ended with the telecast of the 2003 Pro Bowl. In February 2003, the NFL did not exercise its renegotiation option and as a result, the Company’s NFL contract was extended for an additional three years ending with the telecast of the 2006 Pro Bowl. The aggregate fee for the three-year period is $3.7 billion. ESPN recognized its portion of the costs of the initial five-year term of the contract at levels that increased each year commensurate with expected increases in NFL revenues. As a result, ESPN experienced its highest level of NFL programming costs during fiscal 2003. The implementation of the contract extension resulted in a $132 million reduction in NFL programming costs at ESPN for the six months ended March 31, 2004. The majority of this decrease was in the first quarter. For the full year, we expect NFL costs to be approximately $170 million lower than in fiscal 2003 at ESPN, and such costs are expected to be relatively level over the remaining two years of the contract extension.

     Cost recognition for NFL programming at the ABC Television Network in fiscal 2004 is expected to decrease by approximately $300 million compared to fiscal 2003. The decrease at the ABC Television Network is primarily due to the absence in fiscal 2004 of the Super Bowl, which was aired by the ABC Television Network in fiscal 2003 as well as fewer games in fiscal 2004. The absence of the Super Bowl and the lower number of games at the ABC Television Network will also result in lower revenue from NFL broadcasts in fiscal 2004.

     Due to the payment terms in the NFL contract, cash payments under the contract in fiscal 2004 will total $1.2 billion as compared to $1.3 billion in fiscal 2003.

23

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     The Company has various contractual commitments for the purchase of television rights for sports and other programming, including the NFL, NBA, MLB, NHL and various college football conference and bowl games. The costs of these contracts have increased significantly in recent years. We enter into these contractual commitments with the expectation that, over the life of the contracts, revenue from advertising during the programming and fees from cable and satellite operators will exceed the costs of the programming. While contract costs may initially exceed incremental revenues and negatively impact operating income, it is our expectation that the combined value to our sports networks from all of these contracts will result in long-term benefits. The actual impact of these contracts on the Company’s results over the term of the contracts is dependent upon a number of factors, including the strength of advertising markets, effectiveness of marketing efforts and the size of viewer audiences.

MovieBeam

     The Company launched MovieBeam, an on-demand electronic movie rental service in three domestic cities in October 2003. As of March 31, 2004, the Company’s recorded investment in MovieBeam and Dotcast, Inc., the third party licensor of the principal underlying technology, totaled $54 million. The Company has licensing arrangements under which it would pay an additional $70 million over the next three and one half years if the Company continues to pursue this business over that time frame. In April 2004, $15 million of this amount was paid. The Company anticipates launching the service in three additional domestic cities later this year. The success of the venture in the original markets and potential additional markets will determine the strategic direction of the business, its future rollout plans, and the ultimate recoverability of the investment.

Parks and Resorts

Revenues

     Revenues at Parks and Resorts increased 12%, or $184 million, to $1.7 billion, driven by increases of $161 million at the Walt Disney World Resort and $31 million at the Disneyland Resort.

     At the Walt Disney World Resort, increased revenues were primarily driven by higher theme park attendance and hotel occupancy as resident, international, and domestic guest visitation increased reflecting the continued success of “Mission: SPACE”, Mickey’s PhilharMagic and Disney’s Pop Century Resort and improvements in travel and tourism and the impact of promotional programs.

     At the Disneyland Resort, increased revenues reflected higher theme park attendance, hotel occupancy, and guest spending at the theme parks and hotel properties.

     Across our domestic theme parks, attendance increased 15% and theme park per capita guest spending increased 2% during the second quarter of fiscal 2004 compared to the second quarter of the prior year. Attendance and theme park per capita guest spending at the Walt Disney World Resort increased by 18% and 1%, respectively and at the Disneyland Resort by 8% and 4%, respectively. Operating statistics for our hotel properties are as follows:

	East Coast Resorts						West Coast Resorts						Total Domestic Resorts
	Three Months Ended						Three Months Ended						Three Months Ended
	March 31,						March 31,						March 31,
	2004			2003			2004			2003			2004			2003
Occupancy		77	%		73	%		81	%		72	%		77	%		73	%
Available
Room Nights (in thousands)		2,175			1,926			204			204			2,379			2,130
Per Room Guest Spending	$	209		$	214		$	245		$	239		$	212		$	216

24

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     The increase in available room nights for the second quarter of fiscal 2004 reflected the opening of Disney’s Pop Century Resort. Per room guest spending consists principally of the average daily hotel room rate as well as guest spending on food, beverages, and merchandise at the hotels. The decline in per room guest spending reflects the impact of certain promotional offers in the period.

Costs and expenses

     Costs and expenses, which consist principally of labor, cost of merchandise, food and beverages sold, depreciation, repairs and maintenance, entertainment, marketing and sales expense, increased 11%, or $151 million compared to the prior-year quarter. The increase in costs and expenses was primarily due to increased volume-related operating costs at both domestic resorts, employee benefit costs, and fixed asset retirements.

     Higher employee benefits costs at both Walt Disney World and Disneyland reflected increased pension and post-retirement medical costs, which grew by $34 million across the entire segment. On a full year basis we expect that these costs will increase by approximately $137 million versus the prior year.

Segment operating income

     Segment operating income increased 21%, or $33 million, to $188 million, due to growth at the Walt Disney World Resort.

Studio Entertainment

Revenues

     Revenues increased 16%, or $300 million, to $2.2 billion, primarily driven by an increase of $345 million in worldwide home entertainment (DVD/VHS).

     Higher worldwide home entertainment revenues reflected higher DVD unit sales, which included The Lion King 1½, Disney/Pixar’s Finding Nemo, Pirates of the Caribbean and Brother Bear as compared to the prior-year quarter, which included Signs, Sweet Home Alabama and 101 Dalmatians II: Patch’s London Adventure.

     In January 2004, Pixar announced that it will not renew its current feature film agreement with the Company. Under the agreement, the Company and Pixar have produced four original computer animated feature films and two more are in production. All of the Disney/Pixar films have been very successful and the most recent animated feature, Finding Nemo made a significant contribution to the current period results. The Company retains all sequel and character rights to the films developed under the current agreement.

Costs and Expenses

     Costs and expenses, which consist primarily of production cost amortization, distribution and selling expenses, product costs and participation costs, increased 21%, or $353 million. Higher costs and expenses reflected increases in worldwide home entertainment and worldwide theatrical motion picture distribution. Increased costs in worldwide home entertainment reflected higher distribution costs primarily due to increased volume of units sold and higher product cost amortization due to both increased units sold and higher amortization rates for current quarter titles, which included Brother Bear and Spy Kids 3-D: Game Over. In addition, participation expense was higher in the current quarter because of the equal share of profits (after distribution fees) Pixar receives as co-producer of Finding Nemo and because of participation arrangements for Open Range. Increased costs in worldwide theatrical motion picture distribution reflected higher film write-downs associated with films released after quarter-end, as well as higher distribution costs both for films being released in the third quarter and for current quarter titles, which included Cold Mountain, Hidalgo and Miracle.

25

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     We recorded charges of approximately $11 million in the current quarter related to the closure of the feature animation facility located in Orlando, Florida, primarily for severance costs. The closure was part of the consolidation of feature animation operations in Burbank.

Segment Operating Income

     Segment operating income decreased 26%, or $53 million, to $153 million, due to declines in worldwide theatrical motion picture distribution, partially offset by higher sales in worldwide home entertainment.

Consumer Products

Revenues

     Revenues increased 2%, or $12 million, to $512 million, reflecting increases of $20 million at merchandise licensing and $17 million at publishing, partially offset by decreases of $14 million at The Disney Store and $7 million at Buena Vista Games.

     The increase at merchandise licensing primarily reflected higher revenue from toy, home furnishing, infant and stationery licensees, primarily in North America and Europe. Higher publishing revenues reflected strong performance of Finding Nemo products and W.i.t.c.h. magazine sales in Europe. Decreased revenues at The Disney Store were due to lower comparable store sales and fewer stores due to closures of underperforming stores. Lower revenues at Buena Vista Games were due to a contract termination payment received in the prior-year quarter.

Costs and Expenses

     Costs and expenses, which consist primarily of labor, product costs, (including product development costs) distribution, selling expenses and occupancy expenses, decreased 2%, or $10 million. The decrease was primarily driven by lower costs at The Disney Store due to cost reduction measures and fewer stores due to the closure of underperforming stores. The decrease was partially offset by volume increases at publishing and higher operating expenses at merchandise licensing.

Segment Operating Income

     Segment operating income increased 42%, or $22 million, to $75 million, primarily driven by increases at The Disney Store due to cost reductions and strong performance at publishing, partially offset by lower revenues at Buena Vista Games.

The Disney Store

     The Company operates 434 Disney Stores in North America and Europe. During fiscal 2003, the Company announced that it was evaluating strategic options for The Disney Store, including the possible sale of stores in North America and Europe under a licensing arrangement. In connection with this evaluation, the Company also announced that it expects to close a certain number of under performing stores in North America.

     The Company recorded restructuring and impairment charges totaling $3 million in the current quarter and $16 million in the second half of fiscal 2003. These charges were principally for fixed asset write-downs related to the stores we expect to close (and certain related facilities) and the cost of certain administrative headcount reductions. Fixed assets associated with the stores identified for closure have been written down to their fair value, determined on the basis of estimated future discounted cash flows through the expected date of the closures. These charges were reported in “restructuring and impairment charges” in the Condensed Consolidated Statements of Income.

26

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     The Company continues to evaluate its options with respect to the stores in North America and Europe. These options include operating a smaller chain of the best performing stores, the sale of certain stores, or closing the entire chain. The Company’s investment in the fixed assets of the entire chain totaled $89 million at March 31, 2004. Certain of the options that are being considered, including a possible sale, would result in an impairment of some or all of this amount. Additionally, a sale transaction could involve working capital adjustments that could impact the gain or loss on sale.

     In addition, total future base rent commitments for The Disney Store in North America and Europe totaled approximately $409 million as of March 31, 2004, including $25 million related to the stores identified for closure. Should the Company complete a sale, it is expected that a buyer would assume the lease obligations associated with stores that the buyer intends to operate. The Company or the buyer will undertake negotiations with lessors to seek favorable lease termination terms for stores that will be closed, but the Company will likely incur charges related to all or a portion of the lease terminations in the latter part of fiscal 2004 or the early part of fiscal 2005. It is not possible at this time to determine what amount will ultimately be paid to terminate these leases. In the event that the Company decides to close the entire chain, it will likely incur charges in connection with terminating all of the chain’s leases, as well as disposing of the remaining fixed assets.

     The following table provides supplemental revenues and operating income detail for The Disney Store in North America and Europe, which includes the results of stores we currently expect to close:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
(unaudited, in millions)	2004			2003			2004		2003
Revenues	$	171		$	184		$	547	$	556
Operating income		(26	)		(49	)		29		(13	)

Business Segment Results – Six Month Results

Media Networks

Revenues

     Media Networks revenues increased 6%, or $363 million, to $6.0 billion driven by an increase of 17%, or $442 million at the Cable Networks, partially offset by a decrease of 3% or $79 million at Broadcasting.

     Decreased Broadcasting revenues were driven primarily by a decrease of $81 million at the television production and distribution businesses and $38 million at the ABC Television Network, partially offset by increases at the internet group, the radio networks and stations and the Company’s owned and operated television stations totaling $40 million. The decrease in television production and distribution revenues was primarily due to lower syndication revenue and license fees. The decrease in the ABC Television Network revenues was primarily due to the absence of advertising revenue from the Super Bowl, which aired in the prior-year, fewer NFL broadcasts in the current year and the impact of lower ratings, partially offset by higher advertising rates received in the upfront sales market. The increases at the radio networks and stations and owned television stations were primarily driven by higher advertising revenues reflecting higher rates due to an improved advertising marketplace, partially offset at the owned television stations due to the absence of political advertising which was included in the prior-year period.

     Increased Cable Networks revenues were driven by increases of $331 million in revenues from cable and satellite operators and $123 million in advertising revenues. Revenues from cable and satellite operators are largely derived from fees charged on a per subscriber basis, and the increase in the current year primarily reflected contractual rate adjustments at ESPN.

27

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Costs and Expenses

     Costs and expenses decreased 7%, or $356 million, to $4.9 billion. The decrease was primarily due to lower programming costs at both Broadcasting and the Cable Networks and lower bad debt expense at the Cable Networks, partially offset by higher pension and employee benefit costs and start up costs for the launch of the Company’s MovieBeam venture.

     Lower programming costs at Broadcasting were driven by lower NFL programming costs, including the absence of the Super Bowl, which aired in the prior year, the impact of fewer NFL broadcasts in the current year, less expensive prime time series and lower program amortization at the television production and distribution businesses. Additionally, the prior year included higher news production costs due to coverage of the military conflict in Iraq.

     Lower programming costs at the Cable Networks were primarily due to lower cost amortization for the NFL contract due to commencing the three year option period as described under “Sports Programming Costs,” above, partially offset by increases in original and acquired programs. The decrease in bad debt expense at the Cable Networks reflected the favorable impact of the bankruptcy settlement with a cable operator in Latin America as discussed above.

Segment Operating Income

     Segment operating income increased by $719 million to $1.0 billion, driven by increases of $476 million at the Cable Networks, primarily due to higher affiliate and advertising revenues. Broadcasting operating income increased by $243 million primarily due to lower programming and production costs principally due to the absence of the Super Bowl and Iraq War coverage.

Parks and Resorts

Revenues

     Revenues at Parks and Resorts increased 9%, or $267 million, to $3.3 billion. The increase was driven by increases of $239 million at the Walt Disney World Resort and $47 million at the Disneyland Resort, partially offset by a decrease of $10 million due to the sale of the Anaheim Angels baseball team during the third quarter of fiscal 2003.

     At the Walt Disney World Resort, increased revenues were primarily driven by higher theme park attendance and hotel occupancy, partially offset by lower guest spending at both the parks and the hotels. Higher theme park attendance and hotel occupancy were driven by increased resident, domestic, and international guest visitation, reflecting the continued success of “Mission: SPACE”, Mickey’s PhilharMagic and Disney’s Pop Century Resort and improvements in travel and tourism and the impact of promotional programs. Guest spending decreases reflected the impact of promotional programs offered during the six months as well as a higher mix of hotel guest visitation at the lower priced value resorts.

     At the Disneyland Resort, increased revenues reflected higher theme park attendance, hotel occupancy, and guest spending at the theme parks and hotel properties.

     Across our domestic theme parks, attendance increased 11% and theme park per capita guest spending increased 1% during the first six months of fiscal 2004 compared to the first six months of fiscal 2003. Attendance at the Walt Disney World Resort increased by 14% and per capita guest spending remained flat. At the Disneyland Resort, attendance and theme park per capita guest spending increased by 5% and 2%, respectively. Operating statistics for our hotel properties are as follows:

28

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

	East Coast Resorts						West Coast Resorts						Total Domestic Resorts
	Six Months Ended						Six Months Ended						Six Months Ended
	March 31,						March 31,						March 31,
	2004			2003			2004			2003			2004			2003
Occupancy		78	%		77	%		84	%		75	%		78	%		77	%
Available
Room Nights (in thousands)		4,120			3,676			407			408			4,527			4,084
Per Room Guest Spending	$	202		$	207		$	242		$	241		$	206		$	210

     The increase in available room nights for the six months ended fiscal 2004 reflected the opening of Disney’s Pop Century Resort and the completion of room refurbishment at certain other Walt Disney World Resort properties. Per room guest spending consists principally of the average daily hotel room rate as well as guest spending on food, beverages, and merchandise at the hotels. The decline in per room guest spending reflects the impact of certain promotional offers in the period.

Costs and expenses

     Costs and expenses increased 9%, or $227 million compared to the prior-year. The increase in costs and expenses was primarily due to increased volume-related operating costs at both domestic resorts, employee benefit costs, marketing expenses, as well as higher depreciation. Higher marketing cost at the Walt Disney World Resort were driven by the opening of “Mission: Space” at Epcot and Disney’s Pop Century Resort. Higher depreciation reflects investments in new resort properties and theme park attractions including Disney’s Pop Century Resort, Mission: SPACE and Mickey’s PhilharMagic and information technology systems. Higher employee benefits costs at both Walt Disney World and Disneyland reflected increased pension and post-retirement medical costs, which grew by $68 million across the entire segment.

Segment operating income

     Segment operating income increased 11%, or $40 million, to $420 million, due to growth at the Walt Disney World Resort.

Studio Entertainment

Revenues

     Revenues increased 37%, or $1.4 billion, to $5.1 billion, primarily driven by an increase of $1.3 billion in worldwide home entertainment.

     Higher worldwide home entertainment revenues reflected higher DVD unit sales, which included Finding Nemo and Pirates of the Caribbean, The Lion King and The Lion King 1½ compared to the prior-year period, which included Lilo & Stitch, Beauty & the Beast, Signs and Sweet Home Alabama.

Costs and Expenses

     Costs and expenses increased 32%, or $1.1 billion driven by increases in worldwide home entertainment and worldwide theatrical motion picture distribution. Increased costs in worldwide home entertainment reflected higher distribution costs and product cost amortization for current-period titles, primarily due to the increased volume of units sold. In addition, participation costs increased due to costs related to Finding Nemo and Pirates of the Caribbean. Cost increases in worldwide theatrical motion picture distribution reflected increased distribution costs and product cost amortization for current-period titles, which included Brother Bear, Cold Mountain, Haunted Mansion and Finding Nemo, increased distribution costs for films being released after quarter-end and higher film write-downs for films released after quarter-end.

29

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Segment Operating Income

     Segment operating income increased 78%, or $267 million, to $611 million, due to higher worldwide home entertainment sales, partially offset by increased costs in worldwide theatrical motion picture distribution.

Consumer Products

Revenues

     Revenues increased 5%, or $65 million, to $1.4 billion, reflecting increases of $44 million at publishing and $43 million at merchandise licensing, partially offset by a decrease of $15 million at The Disney Store.

     Higher publishing revenues were driven by increases in Europe, reflecting strong performance of Finding Nemo products and Topolino, W.i.t.c.h. and Art Attack magazine titles. The increase at merchandise licensing primarily reflected higher revenue from toy, stationery, home furnishing and infant licensees, primarily in Europe and Japan and strong performance from direct-to-retail apparel licensees in Europe. Decreased revenues at The Disney Store were due to fewer stores due to closures of underperforming stores.

Costs and Expenses

     Costs and expenses were essentially flat at $1 billion. Lower costs at The Disney Store due to cost reduction measures and fewer stores due to the closure of underperforming stores were offset by volume increases at publishing and higher operating expenses at merchandise licensing.

Segment Operating Income

     Segment operating income increased 28%, or $69 million, to $312 million, primarily driven by increases at The Disney Store due to cost reductions along with strong performance in merchandise licensing and publishing.

CORPORATE ITEMS

Corporate and Unallocated Shared Expenses

     Corporate and unallocated shared expenses decreased 12% to $82 million for the quarter and 5% to $185 million for the six months. The decrease for the quarter and the six months reflected adjustments to litigation reserves, partially offset by administrative cost increases.

Net Interest Expense

     Net interest expense is detailed below:

	Three Months						Six Months
	Ended March 31,						Ended March 31,
(unaudited, in millions)	2004			2003			2004			2003
Interest expense	$	(140	)	$	(172	)	$	(288	)	$	(359	)
Interest and investment income (loss)		(7	)		(6	)		(7	)		(115	)
Net interest expense	$	(147	)	$	(178	)	$	(295	)	$	(474	)

     The $32 million decrease in interest expense for the quarter ended March 31, 2004 was due to lower average debt balances.

     The $71 million decrease in interest expense for the six months ended March 31, 2004 is due to lower average debt balances and interest rates. Interest and investment income (loss) in the prior-year quarter included the $114 million write-off of our leveraged lease investment with United Airlines.

30

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Equity in the Income of Investees

     The increase in equity in the income of investees for the quarter ended March 31, 2004 reflected higher affiliate and advertising revenues at Lifetime Television, A&E Television, E! Entertainment and the History Channel, partially offset by a decline at Euro Disney due to higher costs.

     The increase in equity in the income of investees for the six months ended March 31, 2004 reflected higher affiliate and advertising revenue at Lifetime Television, A&E Television, E! Entertainment Television and the History Channel. These increases were partially offset by a decline at Euro Disney driven by higher costs.

Pension and Benefit Costs

     Increasing pension and postretirement medical benefit plan costs have affected results in all of our segments, with the majority of these costs being borne by the Parks and Resorts segment. Pension and postretirement medical costs will increase in fiscal 2004 to $375 million from $131 million in fiscal 2003. The increase is due primarily to a decrease in the discount rate assumption and, to a lesser extent, a reduction in the expected return on plan assets. For fiscal 2004 expense, the discount rate assumption was decreased from 7.20% to 5.85%, reflecting the decline in prevailing market interest rates. Our long-term expected rate of return on plan assets was reduced from 8.50% for fiscal 2003 to 7.50% for fiscal 2004.

     Cash contributions to the pension plans increased in fiscal 2004 to $145 million from $25 million in fiscal 2003.

STOCK OPTION ACCOUNTING

     The following table reflects pro forma net income and earnings per share had the Company elected to record stock option expense based on the fair value methodology:

	Three Months Ended						Six Months Ended
	March 31,						March 31,
(unaudited, in millions, except per share data)	2004			2003			2004			2003
Net income:
As reported	$	537		$	314		$	1,225		$	350
Less stock option expense		(102	)		(112	)		(193	)		(223	)
Tax effect		38			42			72			83
Pro forma after stock option expense	$	473		$	244		$	1,104		$	210
Diluted earnings per share:
As reported	$	0.26		$	0.15		$	0.59		$	0.17
Pro forma after stock option expense	$	0.23		$	0.12		$	0.53		$	0.10

     These pro forma amounts may not be representative of future disclosures since the estimated fair value of stock options is amortized to expense over the vesting period and additional options may be granted in future years.

     Fully diluted shares outstanding and diluted earnings per share include the effect of in-the-money stock options calculated based on the average share price for the period and assumes conversion of the convertible senior notes. The dilution from employee options increases as the Company’s share price increases, as shown below:

31

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Average	Total	Incremental			Percentage of			Hypothetical
Disney	In-the-Money	Diluted Shares			Average Shares			Q2 2004
Share Price	Options	(1)			Outstanding			EPS Impact (3)
$25.18	138 million		—	(2)		—		$	0.000
30.00	165 million	14 million				0.64	%		(0.002	)
40.00	228 million	41 million				1.92	%		(0.005	)
50.00	236 million	60 million				2.82	%		(0.007	)

(1)	Represents the incremental impact on fully diluted shares outstanding assuming the average share prices indicated, using the treasury stock method. Under the treasury stock method, the proceeds that would be received from the exercise of all in-the-money options are assumed to be used to repurchase shares.
(2)	Fully diluted shares outstanding for the quarter ended March 31, 2004 total 2,110 million and include the dilutive impact of in-the-money options at the average share price for the period of $25.18 and assumes conversion of the convertible senior notes. At the average share price of $25.18, the dilutive impact of in-the-money options was 17 million shares for the quarter.
(3)	Based upon Q2 2004 earnings of $537 million, or $0.26 per share.

FINANCIAL CONDITION

     As previously discussed, the Company adopted FIN 46R and as a result, consolidated the balance sheets of Euro Disney and Hong Kong Disneyland as of March 31, 2004. The Company will consolidate the income and cash flow statements of Euro Disney and Hong Kong Disneyland as of April 1, 2004. As a result, the current six month period cash flow statement was not impacted by Euro Disney and Hong Kong Disneyland. Cash and cash equivalents increased by $1.6 billion during the six months ended March 31, 2004. The change in cash and cash equivalents is as follows:

	Six Months Ended
	March 31,
(unaudited, in millions)	2004			2003
Cash provided by operations	$	2,504		$	929
Cash used by investing activities		(429	)		(470	)
Cash (used) provided by financing activities		(784	)		54
Increase in cash and cash equivalents		1,291			513
Consolidation of Euro Disney and Hong Kong
Disneyland cash and cash equivalents		274			—
	$	1,565		$	513

Operating Activities

     For the six months ended March 31, 2004, cash flow from operations increased by $1.6 billion to $2.5 billion, reflecting increased net income adjusted for non-cash impacts, lower film and television spending and reduced line of credit funding to Euro Disney.

Investing Activities

     During the six months ended March 31, 2004, the Company invested $468 million in parks, resorts and other properties. Investments in parks, resorts and other properties by segment are as follows:

32

\

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

	Six Months Ended
	March 31,
(unaudited, in millions)	2004		2003
Media Networks	$	75	$	60
Parks and Resorts		301		255
Studio Entertainment		16		24
Consumer Products		6		15
Corporate and unallocated shared expenditures		70		94
	$	468	$	448

     Media Networks’ capital expenditures consist principally of investments in facilities and equipment. Parks and Resorts’ capital expenditures are primarily for new rides and attractions, capital improvements and equipment. Corporate’s capital expenditures are primarily for information technology hardware and software.

Financing Activities

     During the six months ended March 31, 2004, the Company’s borrowing activity was as follows:

(unaudited, in millions)	Additions		Payments			Total
Commercial paper borrowings (net change)	$	622	$	—		$	622
US medium term notes and other USD denominated debt		—		(817	)		(817	)
European medium term notes		—		(300	)		(300	)
Total	$	622	$	(1,117	)	$	(495	)

     As discussed in Note 3 to the Condensed Consolidated Financial Statements, the Company adopted FIN 46R and consolidated the balance sheets of Euro Disney and Hong Kong Disneyland as of March 31, 2004. The consolidation of Euro Disney and Hong Kong Disneyland resulted in a $2.6 billion increase in our borrowings balance. Of this amount, all of Euro Disney’s borrowings totaling $2.3 billion are classified as current. See Note 6 to the Condensed Consolidated Financial Statements for further detail on Euro Disney and Hong Kong Disneyland’s borrowings.

     During the six months ended March 31, 2004, the Company increased its commercial paper borrowings by approximately $622 million and repaid approximately $194 million of U.S. medium-term notes, $579 million of Global Bonds, $44 million of privately placed debt and $300 million of European medium-term notes. As of March 31, 2004, total commercial paper borrowings were approximately $622 million. The Company’s commercial paper program is supported by the following bank facilities.

	Committed		Capacity		Unused
	Capacity		Used		Capacity
Bank facilities expiring 2005(1)	$	2,250	$	—	$	2,250
Bank facilities expiring 2009(1)(2)		2,250		195		2,055
Total	$	4,500	$	195	$	4,305

⁽¹⁾ These bank facilities allow for borrowings at LIBOR-based rates plus a spread, which depends on the Company’s public debt rating and can range from 0.175% to 0.575%. As of March 31, 2004, the Company had not borrowed under these bank facilities. Our bank facilities were renewed on February 25, 2004 on substantially the same terms as our previous facilities.

33

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

⁽²⁾ The Company also has the ability to issue up to $500 million of letters of credit under this facility, which if utilized, reduces available borrowing. As of March 31, 2004, $195 million of letters of credit had been issued under this facility.

     The Company expects to use commercial paper borrowings up to the amount of its above unused bank facilities, and in conjunction with term debt issuance and operating cash flow, to retire or refinance other borrowings before or as they come due.

     The Company has filed a U.S. shelf registration statement which allows the Company to borrow up to $7.5 billion of which $1.8 billion was available at March 31, 2004. The Company also has a Euro medium-term note program, which permits issuance of up to approximately $4 billion of debt instruments, of which $2.8 billion is available at March 31, 2004.

     The Company declared a $430 million dividend ($0.21 per share) on December 2, 2003 related to fiscal 2003, which was paid on January 6, 2004 to shareholders of record on December 12, 2003. The Company paid a $429 million dividend ($0.21 per share) during the second quarter of fiscal 2003 related to fiscal 2002.

     We believe that the Company’s financial condition is strong and that its cash balances, other liquid assets, operating cash flows, access to debt and equity capital markets and borrowing capacity, taken together, provide adequate resources to fund ongoing operating requirements and future capital expenditures related to the expansion of existing businesses and development of new projects. However, the Company’s operating cash flow and access to the capital markets can be impacted by macroeconomic factors outside of its control. In addition to macroeconomic factors, the Company’s borrowing costs can be impacted by short and long-term debt ratings assigned by independent rating agencies, which are based, in significant part, on the Company’s performance as measured by certain credit measures such as interest coverage and leverage ratios. On February 11, 2004, following the announcement of an unsolicited merger proposal by Comcast Corp. (Comcast), Moody’s Investor Services placed the Company’s Baa1 long-term and P-2 short-term ratings on review for possible downgrade. On April 28, 2004, upon Comcast’s withdrawal of its merger proposal, Moody’s affirmed the Company’s Baa1 and P-2 ratings and returned the outlook to stable. On February 11, 2004, also following Comcast’s announcement, Standard & Poor’s placed the Company’s BBB+ long-term and A-2 short-term ratings on CreditWatch with negative implications. Also, upon Comcast’s withdrawal, Standard & Poor’s removed the Company’s ratings from CreditWatch and affirmed its BBB+ and A-2 ratings with negative outlook. The Company’s bank facilities contain only one financial covenant, relating to interest coverage, which the Company met on March 31, 2004, by a significant margin.

COMMITMENTS AND CONTINGENCIES

Broadcast Programming Commitments

     At March 31, 2004, contractual commitments to purchase broadcast programming rights totaled $10.0 billion, including $0.9 billion for available programming and $7.2 billion for sports programming rights, primarily NFL, NBA, college football, MLB and NHL.

34

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     Contractual commitments relating to broadcast programming rights are payable as follows (in billions):

2004	$	1.9
2005		3.2
2006		2.2
2007		1.2
2008		1.0
Thereafter		0.5
	$	10.0

     We expect that the ABC Television Network, ESPN, ABC Family, The Disney Channels and the Company’s television and radio stations will continue to enter into programming commitments to purchase broadcast rights for sports and other programming and various feature films.

     Other contractual obligations are set forth in our 2003 Annual Report. Changes in the other obligations since September 30, 2003 have not been material.

Legal and Tax Matters

     As disclosed in the Notes 13 and 14 to the Condensed Consolidated Financial Statements the Company has exposure for certain legal and tax matters.

Aircraft leveraged lease investment

     As disclosed in Note 4 to the Condensed Consolidated Financial Statements, the Company’s $174 million aircraft leveraged lease investments are exposed to the credit risk of the carriers. If the airlines with which we have investments are unable to make the lease payments or terminate the leases through a bankruptcy proceeding, these investments could become partially or fully impaired.

Contractual guarantees

     See Note 13 to the Condensed Consolidated Financial Statements for information regarding the Company’s contractual guarantees.

OTHER MATTERS

Accounting Policies and Estimates

     We believe that the application of the following accounting policies, which are important to our financial position and results of operations, requires significant judgments and estimates on the part of management. For a summary of our significant accounting policies, including the accounting policies discussed below, see Note 2 of the Consolidated Financial Statements in the 2003 Annual Report.

Film and Television Revenues and Costs

     We expense the cost of film and television production and participations as well as certain multi-year sports rights over the applicable product life cycle based upon the ratio of the current period’s gross revenues to the estimated remaining total gross revenues or on a straight-line basis, as appropriate. These estimates are calculated on an individual production basis for film and television and on an individual contract basis for sports rights. Estimates of total gross revenues can change due to a variety of factors, including the level of market acceptance of the production and advertising rates.

35

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

     For film productions, estimated remaining gross revenue from all sources includes revenue that will be earned within ten years of the date of the initial theatrical release. For television series, we include revenues that will be earned within 10 years of the delivery of the first episode, or if still in production, five years from the date of delivery of the most recent episode. For acquired film libraries, remaining revenues include amounts to be earned for up to 20 years from the date of acquisition.

     Television network and station rights for theatrical movies, series and other programs are charged to expense based on the number of times the program is expected to be shown. Estimates of usage of television network and station programming can change based on competition and audience acceptance. Accordingly, revenue estimates and planned usage are reviewed periodically and are revised if necessary. A change in revenue projections or planned usage could have an impact on our results of operations.

     Costs of film and television productions and programming costs for our television and cable networks are subject to valuation adjustments pursuant to applicable accounting rules. The net realizable value of the television broadcast program licenses and rights are reviewed using a daypart methodology. The Company’s dayparts are: early morning, daytime, late night, prime time, news, children and sports (includes network and cable). A daypart is defined as an aggregation of programs broadcast during a particular time of day or programs of a similar type. The net realizable values of other cable programming are reviewed on an aggregated basis for each cable channel. Estimated values are based upon assumptions about future demand and market conditions. If actual demand or market conditions are less favorable than our projections, film, television and programming cost write-downs may be required.

Revenue Recognition

     The Company has revenue recognition policies for its various operating segments, which are appropriate to the circumstances of each business. See Note 2 to the Consolidated Financial Statements in the 2003 Annual Report for a summary of these revenue recognition policies.

     We record reductions to revenues for estimated future returns of merchandise, primarily home video, DVD and software products, and for customer programs and sales incentives. These estimates are based upon historical return experience, current economic trends and projections of customer demand for and acceptance of our products. The amount and timing of our revenue may differ if actual performance varies from our estimates.

Pension and Postretirement Benefit Plan Actuarial Assumptions

     The Company’s pension benefit and postretirement medical benefit obligations and related costs are calculated using actuarial concepts, within the framework of Statement of Financial Accounting Standards No. 87 Employer’s Accounting for Pensions (SFAS 87) and Statement of Financial Accounting Standards No. 106, Employers’ Accounting for Postretirement Benefit Other than Pension (SFAS 106), respectively. Two critical assumptions, the discount rate and the expected return on plan assets, are important elements of expense and/or liability measurement. We evaluate these critical assumptions annually. Refer to the 2003 Annual Report for estimated impacts of changes in these assumptions. Other assumptions involve demographic factors such as retirement, mortality, turnover and rate of compensation increases.

     The discount rate enables us to state expected future cash flow as a present value on the measurement date. The guideline for setting this rate is a high-quality long-term corporate bond rate. A lower discount rate increases the present value of benefit obligations and increases pension expense.

     To determine the expected long-term rate of return on the plan assets, we consider the current and expected asset allocation, as well as historical and expected returns on each plan asset class. A lower expected rate of return on pension plan assets will increase pension expense.

36

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Goodwill, Intangible Assets, Long-lived Assets and Investments

     Goodwill and other intangible assets must be tested for impairment on an annual basis. We completed our impairment testing as of September 30, 2003 and determined that there were no impairment losses related to goodwill and other intangible assets. In assessing the recoverability of goodwill and other intangible assets, market values and projections regarding estimated future cash flows and other factors are used to determine the fair value of the respective assets. If these estimates or related projections change in the future, we may be required to record impairment charges for these assets.

     For purposes of performing the impairment test for goodwill and other intangible assets as required by SFAS 142 we established the following reporting units: Cable Networks, Television Broadcasting, Radio, Studio Entertainment, Consumer Products and Parks and Resorts.

     To determine the fair value of our reporting units, we used a present value technique (discounted cash flow) to determine fair value for all of the reporting units except for Television Broadcasting. The Television Broadcasting reporting unit groups together the ABC Television Network and our owned and operated television stations because their respective cash flows are dependent on one another. We used a present value technique to value the owned and operated television stations and a revenue multiple to value the television network. We did not use a present value technique or a market multiple approach to value the television network as a present value technique would not capture the full fair value of the television network and there have been no recent comparable sale transactions for a television network. We applied what we believe to be the most appropriate valuation methodology for each of the reporting units. If we had established different reporting units or utilized different valuation methodologies, the impairment test results could differ.

     Long-lived assets include certain long-term investments. The fair value of the long-term investments is dependent on the performance of the investee companies, as well as volatility inherent in the external markets for these investments. In assessing potential impairment for these investments, we consider these factors as well as forecasted financial performance of our investees. If these forecasts are not met, impairment charges may be required.

Contingencies and Litigation

     We are currently involved in certain legal proceedings and, as required, have accrued estimates of the probable costs for the resolution of these claims. These estimates have been developed in consultation with outside counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future results of operations for any particular quarterly or annual period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings.

Income Tax Audits

     As a matter of course, the Company is regularly audited by federal, state and foreign tax authorities. From time to time, these audits result in proposed assessments. The Internal Revenue Service (IRS) has completed its examination of the Company’s federal income tax returns for 1993 through 1995 and has proposed assessments that challenge certain of the Company’s tax positions. The Company has negotiated the settlement of a number of these assessments, and is pursuing an administrative appeal before the IRS with regard to the remainder. If the remaining proposed assessments are upheld through the administrative and legal process, they could have a material impact on the Company’s earnings and cash flow. However, the Company believes that its tax positions comply with applicable tax law and intends to defend its positions vigorously. The Company believes it has adequately provided for any reasonably foreseeable outcome related to these matters. Accordingly, although their ultimate resolution may require additional cash tax payments, the Company does not anticipate any material earnings impact from these matters.

37

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Accounting Changes

     See Note 3 to the Condensed Consolidation Financial Statements for the impact that certain accounting changes have or will have on the Company’s results.

MARKET RISK

Interest Rate Risk Management

     The Company is exposed to the impact of interest rate changes. Our objective is to manage the impact of interest rate changes on earnings and cash flows and on the market value of the Company’s investments and borrowings. We maintain fixed-rate debt as a percentage of our net debt between minimum and maximum percentages, which are set by policy.

     We use interest rate swaps and other derivative instruments to manage net exposure to interest rate changes related to our borrowings and investments and to lower the Company’s overall borrowing costs. We do not enter into interest rate swaps for speculative purposes. Significant interest rate risk management instruments held by the Company during the quarter included receive-fixed and pay-fixed swaps and interest rate caps. Receive-fixed swaps, which expire in one to 18 years, effectively convert medium- and long-term fixed rate obligations to LIBOR-indexed variable rate instruments. Pay-fixed swaps, which expire in one to two years, effectively convert floating-rate obligations to fixed-rate instruments. Interest rate caps, which expire in two years, establish a ceiling on the rate paid on borrowings.

Foreign Exchange Risk Management

     The Company transacts business in virtually every part of the world and is subject to risks associated with changing foreign exchange rates. Our objective is to reduce earnings and cash flow volatility associated with foreign exchange rate changes to allow management to focus its attention on our core business issues and challenges. Accordingly, the Company enters into various contracts that change in value as foreign exchange rates change to protect the value of its existing foreign currency denominated assets and liabilities, commitments and anticipated revenues. By policy, we maintain hedge coverage between minimum and maximum percentages of anticipated foreign exchange exposures for periods of up to five years. In certain circumstances, management may provide approval for hedging beyond the five-year policy period for strategic purposes. Currently, the Company has strategic hedges with a notional amount totaling $420 million that exceed the five year maturity period, but extend no longer than ten years. The notional amount for all hedges, adjusted for currency sensitivity on option contracts, totaled $4.7 billion at March 31, 2004 (of which $145 million relates to Hong Kong Disneyland and $74 million relates to Euro Disney). The gains and losses on these contracts offset changes in the value of the related exposures. The Company does not enter into foreign currency transactions for speculative purposes.

     We use forward and option strategies that provide for the sale of foreign currencies to hedge probable, but not firmly committed, revenues. We also use forward contracts to hedge foreign currency assets and liabilities. These forward and option contracts mature in 2004 to 2013. While these hedging instruments are subject to fluctuations in value, such fluctuations should offset changes in the value of the underlying exposures being hedged. The principal currencies hedged are the European euro, Japanese yen, British pound and Canadian dollar. Cross-currency swaps are used to hedge foreign currency-denominated borrowings.

38

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

Other Derivatives

     The Company holds warrants in both public and private companies. These warrants, although not designated as hedging instruments, are deemed derivatives if they contain a net-share settlement clause or satisfy other relevant criteria. During the quarter, the Company recorded the change in fair value of certain of these instruments to current earnings.

Value at Risk

     Value-at-Risk (VAR) on a combined basis decreased from $51 million at September 30, 2003 to $39 million at March 31, 2004. The majority of the decrease is due to increased correlation benefits and lower market value of interest rate instruments.

     The Company utilizes a VAR model to estimate the maximum potential one-day loss in the fair value of its interest rate, foreign exchange and qualifying equity sensitive financial instruments. The VAR model estimates were made assuming normal market conditions and a 95% confidence level. Various modeling techniques can be used in a VAR computation. The Company’s computations are based on the interrelationships between movements in various interest rates, currencies and equity prices (a “variance/co-variance” technique). These interrelationships were determined by observing interest rate, foreign currency and equity market changes over the preceding quarter for the calculation of VAR amounts at March 31, 2004. The model includes all of the Company’s debt as well as all interest rate and foreign exchange derivative contracts and qualifying equity investments. The values of foreign exchange options do not change on a one-to-one basis with the underlying currencies, as exchange rates vary. Therefore, the hedge coverage assumed to be obtained from each option has been adjusted to reflect its respective sensitivity to changes in currency values. Forecasted transactions, firm commitments and receivables and accounts payable denominated in foreign currencies, which certain of these instruments are intended to hedge, were excluded from the model.

     The VAR model is a risk analysis tool and does not purport to represent actual losses in fair value that will be incurred by the Company, nor does it consider the potential effect of favorable changes in market factors.

     The estimated maximum potential one-day loss in fair value, calculated using the VAR model, is as follows (unaudited, in millions):

	Interest Rate		Currency Sensitive		Equity Sensitive
	Sensitive Financial		Financial		Financial		Combined
	Instruments		Instruments		Instruments		Portfolio
VAR as of March 31, 2004	$	40	$	27	$	1	$	39
VAR as of September 30, 2003	$	57	$	18	$	1	$	51

     The VAR for Euro Disney and Hong Kong Disneyland was immaterial as of March 31, 2004. In calculating the VAR it was determined that credit risk is the primary driver for changes in the value of Euro Disney’s debt rather than interest rate risk. Accordingly, we have excluded Euro Disney’s borrowings from the VAR calculation.

39

THE WALT DISNEY COMPANY
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS—(continued)

FORWARD LOOKING STATEMENTS

     The Private Securities Litigation Reform Act of 1995 (the Act) provides a safe harbor for “forward-looking statements” made by or on behalf of the Company. We may from time to time make written or oral statements that are “forward-looking” including statements contained in this report and other filings with the Securities and Exchange Commission and in reports to our shareholders. All statements that express expectations and projections with respect to future matters may be affected by changes in the Company’s strategic direction, as well as by developments beyond the Company’s control. For an enterprise as large and complex as the Company, a wide range of factors could materially affect future developments and performance. These factors may include international, political, health concern and military developments that may affect travel and leisure businesses generally; changes in domestic and global economic conditions that may, among other things, affect the international performance of the Company’s theatrical and home video releases, television programming and consumer products; regulatory and other uncertainties associated with the Internet and other technological developments; and the launching or prospective development of new business initiatives. Additional factors are set forth in the 2003 Annual Report under the heading “Factors that may affect forward-looking statements.” All forward-looking statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that our expectations will necessarily come to pass. The Company does not undertake any duty to update its disclosure relating to forward looking matters.

40

PART I. FINANCIAL INFORMATION

Item 3. Quantitative and Qualitative Disclosures about Market Risk. See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 4. Controls and Procedures

     (a) Evaluation of Disclosure Controls and Procedures. We have established disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to the officers who verify the Company’s financial reports and to other members of senior management and the Board of Directors.

     Based on their evaluation as of March 31, 2004, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

     (b) Changes in Internal Controls. In fiscal 2002, the Company initiated a company-wide implementation of new integrated finance and human resources applications software, related information technology systems, and enterprise wide shared services (the new systems). As of September 30, 2003, a substantial number of the Company’s business units were using the new systems. As of March 31, 2004, the majority of the Company’s businesses are using the new systems. The implementation has involved changes in systems that included internal controls, and accordingly, these changes have required changes to our system of internal controls. We have reviewed each system as it is being implemented and the controls affected by the implementation of the new systems and made appropriate changes to affected internal controls as we implemented the new systems. We believe that the controls as modified are appropriate and functioning effectively.

41

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     Since our most recent periodic report, developments identified below occurred in the following legal proceedings. For information on certain other proceedings, see Note 13 to the Condensed Consolidated Financial Statements included in this report.

     In re The Walt Disney Company Derivative Litigation. William and Geraldine Brehm and thirteen other individuals filed an amended and consolidated complaint on May 28, 1997 in the Delaware Court of Chancery seeking, among other things, a declaratory judgment against each of the Company’s directors as of December 1996 that the Company’s 1995 employment agreement with its former president Michael S. Ovitz, was void, or alternatively that Mr. Ovitz’s termination should be deemed a termination “for cause” and any severance payments to him forfeited. On October 8, 1998, the Delaware Court of Chancery dismissed all counts of the amended complaint. Plaintiffs appealed, and on February 9, 2000, the Supreme Court of Delaware affirmed the dismissal but ruled also that plaintiffs should be permitted to file an amended complaint in accordance with the Court’s opinion. The plaintiffs filed their amended complaint on January 3, 2002. On February 6, 2003, the Company’s directors’ motion to dismiss the amended complaint was converted by the Court to a motion for summary judgment and the plaintiffs were permitted to take discovery. The Company and its directors answered the amended complaint on April 1, 2003. On May 28, 2003, the Court (treating as a motion to dismiss the motion for summary judgment into which it had converted the original motion on February 6, 2003) denied the directors’ motion to dismiss the amended complaint. The parties are conducting discovery, and a trial date of October 18, 2004 has been set.

     Similar or identical claims have also been filed by the same plaintiffs (other than William and Geraldine Brehm) in the Superior Court of the State of California, Los Angeles County, beginning with a claim filed by Richard and David Kaplan on January 3, 1997. On May 18, 1998, an additional claim was filed in the same California court by Dorothy L. Greenfield. On September 25, 2001, Ms. Greenfield sought leave to amend her claim, but withdrew her request to amend on January 3, 2002. All of the California claims have been consolidated and stayed pending final resolution of the Delaware proceedings.

     Stephen Slesinger, Inc. v. The Walt Disney Company. In this lawsuit, filed on February 27, 1991 in the Los Angeles County Superior Court, the plaintiff claims that a Company subsidiary defrauded it and breached a 1983 licensing agreement with respect to certain Winnie the Pooh properties, by failing to account for and pay royalties on revenues earned from the sale of Winnie the Pooh movies on videocassette and from the exploitation of Winnie the Pooh merchandising rights. The plaintiff seeks damages for the licensee’s alleged breaches as well as confirmation of the plaintiff’s interpretation of the licensing agreement with respect to future activities. The plaintiff also seeks the right to terminate the agreement on the basis of the alleged breaches. If each of the plaintiff’s claims were to be confirmed in a final judgement, damages as argued by the plaintiff could total as much as several hundred million dollars and adversely impact the value to the Company of any future exploitation of the licensed rights. The Company disputes that the plaintiff is entitled to any damages or other relief of any kind, including termination of the licensing agreement. On April 24, 2003, the matter was removed to the United States District Court for the Central District of California, which, on May 19, 2003, dismissed certain claims and remanded the matter to the Los Angeles Superior Court. The Company appealed from the District Court’s order to the Court of Appeals for the Ninth Circuit. On March 29, 2004, the Superior Court granted the Company’s motion for terminating sanctions against the plaintiff for a host of discovery abuses, including the withholding, alteration, and theft of documents and other information, and, on April 5, 2004, dismissed plaintiff’s case with prejudice. On April 13, 2004, the plaintiff gave notice of its intention to move to set aside the dismissal and to seek a new trial, and on May 6, 2004, the plaintiff moved to disqualify the judge who issued the March 29, 2004 decision.

     Management believe that it is not currently possible to estimate the impact, if any, that the ultimate resolution of these matters will have on the Company’s results of operations, financial position or cash flows.

42

PART II. OTHER INFORMATION (continued)

     Item 1. Legal Proceedings – (continued)

     The Company, together with, in some instances, certain of its directors and officers, is a defendant or co-defendant in various other legal actions involving copyright, breach of contract and various other claims incident to the conduct of its businesses. Management does not expect the Company to suffer any material liability by reason of such actions.

43

PART II. OTHER INFORMATION (continued)

ITEM 2. Changes on Securities and Use of Proceeds

     The following table provides information about purchases by The Walt Disney Company during the quarter ended March 31, 2004 of equity securities that are registered by The Walt Disney Company pursuant to Section 12 of the Exchange Act:

ISSUER PURCHASES OF EQUITY SECURITIES

					(c)
					Total		(d)
					Number of		Maximum
					Shares		Number of
					Purchased as		Shares that
	(a)				Part of		May Yet Be
	Total		(b)		Publicly		Purchased
	Number of		Average		Announced		Under the
	Shares		Price Paid		Plans or		Plans or
Period	Purchased (1)		per Share		Programs		Programs(2)
01/01/04 - 01/31/04		512,068	$	24.36		—	330 million
02/01/04 - 02/29/04		146,781	$	25.77		—	330 million
03/01/04 - 03/31/04		158,066	$	25.78		—	330 million
Total		816,915	$	24.89		—	330 million

(1)	816,915 shares were purchased on the open market to provide shares to participants in the Walt Disney Investment Plan (WDIP) and Employee Stock Purchase Plan (ESPP).
(2)	Under a share repurchase program most recently reaffirmed by the Company’s Board of Directors on April 21, 1998, and implemented effective June 10, 1998, the Company was authorized to repurchase up to 400 million shares of its common stock. The repurchase program does not have an expiration date.

44

PART II. OTHER INFORMATION (continued)

ITEM 4. Submission of Matters to a Vote of Security Holders

     The following matters were submitted to a vote of security holders during the Company’s annual meeting of shareholders held on March 3, 2004:

	Votes		Authority
	Cast For		Withheld
1. Election of Directors:
John E. Bryson		1,377,891,395		432,797,238
John S. Chen		1,548,741,823		261,946,810
Michael D. Eisner		991,814,195		818,874,438
Judith L. Estrin		1,370,482,320		440,206,313
Robert A. Iger		1,512,761,314		297,927,319
Aylwin B. Lewis		1,571,286,300		239,402,333
Monica C. Lozano		1,504,528,074		306,160,559
Robert W. Matschullat		1,505,865,414		304,823,219
George J. Mitchell		1,346,674,386		464,014,247
Leo J. O’Donovan, S.J.		1,502,951,299		307,737,334
Gary L. Wilson		1,512,502,252		298,186,381

								Broker
		For		Against		Abstentions		Non-Votes
2.	Ratification of PricewaterhouseCoopers LLP as independent accountants		1,672,637,927		107,905,423		30,333,390		—
3.	Harrington Investments proposal relating to labor standards for China		108,195,423		1,196,183,174		206,038,614		300,271,422
4.	New York City Retirement System and Pension Fund relating to labor Standards for China		388,790,736		951,005,661		170,620,725		300,271,511
5.	Stockholder proposal relating to theme park safety reporting		140,720,175		1,199,403,361		170,299,567		300,265,530

45

PART II. OTHER INFORMATION (continued)

ITEM 6. Exhibits and Reports on Form 8-K

(a)	Exhibits
	See Index of Exhibits.
(b)	Reports on Form 8-K
	The following current report on Form 8-K was filed by the Company during the Company’s second fiscal quarter:

(1) Current report on Form 8-K dated February 11, 2004, setting forth (a) the earnings release for the quarter ended December 31, 2003.

46

SIGNATURE

     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 authorized.

	THE WALT DISNEY COMPANY
	(Registrant)
By:
	THOMAS O. STAGGS
	(Thomas O. Staggs, Senior Executive Vice President and Chief Financial Officer)

May 13, 2004
Burbank, California

47

INDEX OF EXHIBITS

		Document Incorporated by Reference
Number and Description of Exhibit		from a Previous Filing or Filed
(Numbers Coincide with Item 601 of Regulation S-K)		Herewith, as Indicated below
3(a)	Amended and Restated Bylaws of the Company	Filed Herewith
10(a)	Five-year credit agreement dated as of February 25, 2004	Filed Herewith
10(b)	364-day credit agreement dated as of February 25, 2004	Filed Herewith
10(c)	First Amendment to Amended and Restated Employment Agreement dated June 29, 2000 between the Company and Michael D. Eisner	Filed Herewith
31(a)	Rule 13a-14(a) Certification of Chief Executive Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
31(b)	Rule 13a-14(a) Certification of Chief Financial Officer of the Company in accordance with Section 302 of the Sarbanes-Oxley Act of 2002	Filed Herewith
32(a)	Section 1350 Certification of Chief Executive Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002*	Furnished
32(b)	Section 1350 Certification of Chief Financial Officer of the Company in accordance with Section 906 of the Sarbanes-Oxley Act of 2002*	Furnished

*    A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

48

EX-3.A

                                                                    EXHIBIT 3(a)



                           AMENDED AND RESTATED BYLAWS

                                       OF

                             THE WALT DISNEY COMPANY

                     (hereinafter called the "Corporation")

                                    ARTICLE I

                                     OFFICES

      Section 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, Delaware.

      Section 2. Principal Place of Business. The principal place of business of
the Corporation is hereby fixed and located at 500 South Buena Vista Street,
Burbank, California 91521.

      Section 3. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.

                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

      Section 1. Place of Meetings. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware, as shall be designated
from time to time by the Board of Directors (and in the case of a special
meeting, by the Board of Directors or the person calling the special meeting as
authorized by Section 3 of this Article II) and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.

      Section 2. Annual Meetings. The Annual Meetings of Stockholders shall be
held on such date and at such time and place as may be fixed by the Board of
Directors and stated in the notice of the meeting, for the purpose of electing
directors and for the transaction of such other business as is properly brought
before the meeting in accordance with these Bylaws.

      Section 3. Special Meetings. Special meetings of stockholders, for any
purpose or purposes, may be called by the Board of Directors, the Chairman of
the Board of Directors, or the President. Special meetings of stockholders may
not be called by any



other person or persons. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called shall be given not less than 10 nor more than 60 days before the date
of the meeting to each stockholder entitled to vote at such meeting, and only
such business as is stated in such notice shall be acted upon thereat.

      Section 4. Quorum. Except as may be otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority in voting power of the
capital stock issued and outstanding and entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, a minority of the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than 30 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
entitled to vote at the meeting.

      Section 5. Voting. Unless otherwise required by law, the Certificate of
Incorporation or these Bylaws, (i) at all meetings of stockholders for the
election of directors, a plurality of votes cast shall be sufficient to elect,
and (ii) any other question brought before any meeting of stockholders shall be
decided by the vote of the holders of a majority in voting power of the stock
represented and entitled to vote thereon. Unless otherwise provided in the
Certificate of Incorporation, each stockholder represented at a meeting of
stockholders shall be entitled to cast one vote for each share of the capital
stock entitled to vote thereat held by such stockholder. The Board of Directors,
in its discretion, or the officer of the Corporation presiding at a meeting of
stockholders, in his discretion, may require that any votes cast at such meeting
shall be cast by written ballot.

      Section 6. Organization.

      (a)   All meetings of the stockholders shall be presided over by the
Chairman of the Board of Directors and, if he is not present, by such officer or
director as is designated by the Board of Directors. The Secretary of the
Corporation or, if he is not present, any Assistant Secretary or other person
designated by the presiding officer shall act as secretary of the meeting.

      (b)   The date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be
announced at the meeting by the person presiding over the meeting. The Board of
Directors may adopt by resolution such rules and regulations for the conduct of
the meeting of stockholders as it shall deem appropriate. Except to the extent
inconsistent with such rules and regulations as adopted by the Board of
Directors, the chairman of any meeting of stockholders shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgment of such chairman, are appropriate for the proper
conduct of the meeting. Such rules, regulations or procedures, whether adopted
by the Board of

                                       2


Directors or prescribed by the chairman of the meeting, may include, without
limitation, the following (i) the establishment of an agenda or order of
business for the meeting; (ii) rules and procedures for maintaining order at the
meeting and the safety of those present; (iii) limitations on attendance at or
participation in the meeting to stockholders of record of the Corporation, their
duly authorized and constituted proxies or such other persons as the chairman of
the meeting shall determine; (iv) restrictions on entry to the meeting after the
time fixed for the commencement thereof; and (v) limitations on the time
allotted to questions or comments by participants. Unless and to the extent
determined by the Board of Directors or the chairman of the meeting, meetings of
stockholders shall not be required to be held in accordance with the rules of
parliamentary procedure.

      Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least 10 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 stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least 10 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 of the Corporation who is present.

      Section 8. Stock Ledger. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 7 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.

      Section 9. Inspectors of Election. Before any meeting of stockholders, the
Board of Directors shall appoint one or more inspectors to act at the meeting
and make a written report thereof. The Board of Directors may designate one or
more persons as alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at a meeting of stockholders, the
person presiding at the meeting shall appoint one or more inspectors to act at
the meeting. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability.

      The inspectors shall:

            (a) ascertain the number of shares outstanding and the voting power
      of each,

            (b) determine the shares represented at the meeting and the validity
      of proxies and ballots,

            (c) count all votes and ballots,

                                       3


            (d) determine and retain for a reasonable period a record of the
      disposition of any challenges made to any determination made by the
      inspectors, and

            (e) certify their determination of the number of shares represented
      at the meeting, and their count of all votes and ballots.

The inspectors may appoint or retain other persons or entities to assist the
inspectors in the performance of the duties of the inspectors. In determining
the validity and counting of proxies and ballots, the inspectors shall act in
accordance with applicable law.

      Section 10. Notice of Stockholder Business and Nominations.

      (a)   Annual Meetings of Stockholders.

      (1)   Nominations of persons for election to the Board of Directors of the
Corporation and the proposal of business to be considered by the stockholders
may be made at an annual meeting of stockholders only (a) pursuant to the
Corporation's notice of meeting (or any supplement thereto), (b) by or at the
direction of the Board of Directors or (c) by any stockholder of the Corporation
who was a stockholder of record of the Corporation at the time the notice
provided for in this Section 10 is delivered to the Secretary of the
Corporation, who is entitled to vote at the meeting and who complies with the
notice procedures set forth in this Section 10.

      (2)   For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (c) of paragraph (a)(1) of
this Section 10, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation and any such proposed business other
than the nomination of persons for election to the Board of Directors must
constitute a proper matter for stockholder action. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not later than the close of business on the ninetieth day nor
earlier than the close of business on the one hundred twentieth day prior to the
first anniversary of the preceding year's annual meeting (provided, however,
that in the event that the date of the annual meeting is more than thirty days
before or more than seventy days after such anniversary date, notice by the
stockholder must be so delivered not earlier than the close of business on the
one hundred twentieth day prior to such annual meeting or the tenth day
following the day on which public announcement of the date of such meeting is
first made by the Corporation). In no event shall the public announcement of an
adjournment or postponement of an annual meeting commence a new time period (or
extend any time period) for the giving of a stockholder's notice as described
above. Such stockholder's notice shall set forth: (a) as to each person whom the
stockholder proposes to nominate for election as a director all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors in an election contest, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and Rule 14a-11 thereunder (and
such person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of

                                       4


the business desired to be brought before the meeting, the text of the proposal
or business (including the text of any resolutions proposed for consideration
and in the event that such business includes a proposal to amend the Bylaws of
the Corporation, the language of the proposed amendment), the reasons for
conducting such business at the meeting and any material interest in such
business of such stockholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (c) as to the stockholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made (i)
the name and address of such stockholder, as they appear on the Corporation's
books, and of such beneficial owner, (ii) the class and number of shares of
capital stock of the Corporation which are owned beneficially and of record by
such stockholder and such beneficial owner, (iii) a representation that the
stockholder is a holder of record of stock of the Corporation entitled to vote
at such meeting and or by proxy at the meeting to propose such business or
nomination, and (iv) a representation whether the stockholder or the beneficial
owner, if any, intends or is part of a group which intends (a) to deliver a
proxy statement and/or form of proxy to holders of at least the percentage of
the Corporation's outstanding capital stock required to approve or adopt the
proposal or elect the nominee and/or (b) otherwise to solicit proxies from
stockholders in support of such proposal or nomination. The Corporation may
require any proposed nominee to furnish such other information as it may
reasonably require to determine the eligibility of such proposed nominee to
serve as a director of the Corporation.

      (3)   Notwithstanding anything in the second sentence of paragraph (a)(2)
of this Section 10 to the contrary, in the event that the number of directors to
be elected to the Board of Directors of the Corporation at an annual meeting is
increased and there is no public announcement by the Corporation naming the
nominees for the additional directorships at least one hundred days prior to the
first anniversary of the preceding year's annual meeting, a stockholder's notice
required by this Section 10 shall also be considered timely, but only with
respect to nominees for the additional directorships, if it shall be delivered
to the Secretary at the principal executive offices of the Corporation not later
than the close of business on the tenth day following the day on which such
public announcement is first made by the Corporation.

      (b)   Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (1) by or at the direction of the Board of
Directors of (2) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time the notice provided for
in this Section 10 is delivered to the Secretary of the Corporation, who is
entitled to vote at the meeting and upon such election and who complies with the
notice procedures set forth in this Section 10. In the event the Corporation
calls a special meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder entitled to vote in
such election of directors may nominate a person or persons (as the case may be)
for election to such position(s) as specified in the Corporation's notice of
meeting, if the stockholder's notice required by paragraph (a)(2) of this
Section 10

                                       5


shall be delivered to the Secretary at the principal executive offices of the
Corporation not earlier than the close of business on the one hundred twentieth
day prior to such special meeting and not later than the close of business on
the later of the ninetieth day prior to such special meeting or the tenth day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting. In no event shall the public announcement of an
adjournment or postponement of a special meeting commence a new time period (or
extend any time period) for the giving of a stockholder's notice as described
above.

      (c)   General.

      (1)   Only such persons who are nominated in accordance with the
procedures set forth in this Section 10 shall be eligible to be elected at an
annual or special meeting of stockholders of the Corporation to serve as
directors and only such business shall be conducted at a meeting of stockholders
as shall have been brought before the meeting in accordance with the procedures
set forth in this Section 10. Except as otherwise provided by law, the chairman
of the meeting shall have the power and duty (a) to determine whether a
nomination or any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth in
this Section 10 (including whether the stockholder or beneficial owner, if any,
on whose behalf the nomination or proposal is made solicited (or is part of a
group which solicited) or did not so solicit, as the case may be, proxies in
support of such stockholder's nominee or proposal in compliance with such
stockholder's representation as required by clause (a)(2)(c)(iv) of this Section
10) and (b) if any proposed nomination or business was not so made or proposed
in compliance with this Section 10 to declare that such nomination shall be
disregarded or that such proposed business shall not be transacted.

      (2)   For purposes of this Section 10, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.

      (3)   Notwithstanding the foregoing provisions of this Section 10, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this Section 10. Nothing in this Section 10 shall be deemed to affect
any rights (a) of stockholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act or
(b) of the holders of any series of Preferred Stock to elect directors pursuant
to any applicable provisions of the Certificate of Incorporation.

                                       6



                                   ARTICLE III

                                    DIRECTORS

      Section 1. Number and Election of Directors. Subject to the rights, if
any, of holders of preferred stock of the Corporation to elect directors of the
Corporation, the Board of Directors shall consist of not less than nine nor more
than 21 members with the exact number of directors to be determined from time to
time solely by resolution duly adopted by the Board of Directors. Directors
shall be elected by a plurality of the votes cast at Annual Meetings of
stockholders, and each director so elected shall hold office as provided by
Article FIFTH of the Certificate of Incorporation. Directors need not be
stockholders.

      Section 2. Resignation of Directors. Any director may resign at any time
effective upon giving written notice to the Corporation, unless the notice
specifies a later time for the effectiveness of such resignation.

      Section 3. Vacancies. Any vacancy on the Board of Directors, howsoever
resulting, may be filled by a majority of the directors then in office, even if
less than a quorum, or by a sole remaining director. Any director elected to
fill a vacancy shall hold office for a term as specified in Article FIFTH of the
Certificate of Incorporation.

      Section 4. Duties and Powers. The business 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 statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.

      Section 5. Chairman of the Board. The Board of Directors shall annually
elect one of its members to be Chairman of the Board and shall fill any vacancy
in the position of Chairman of the Board at such time and in such manner as the
Board of Directors shall determine. The Chairman of the Board shall preside at
all meetings of the Board of Directors and of stockholders. The Chairman shall
perform such other duties and services as shall be assigned to or required of
the Chairman by the Board of Directors.

      Section 6. Meetings. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman of the Board of Directors, the Chief Executive Officer, the
President or by a majority of the Board of Directors. Notice thereof, stating
the place, date and hour of the meeting, shall be given to each director either
by mail not less than four days before the date of the meeting, or personally or
by telephone, telegram, telex or similar means of communication on 12 hours'
notice, or on such shorter notice as the person or persons calling such meeting
may deem necessary or appropriate in the circumstances.

      Section 7. Quorum; Action of Board of Directors. Except as may be
otherwise specifically provided by law, the Certificate of Incorporation or
these Bylaws, at all

                                       7


meetings of the Board of Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.

      Section 8. Action by Written Consent. 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 the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.

      Section 9. Meetings by Means of Conference Telephone. Members of the Board
of Directors of the Corporation, or any committee designated by the Board of
Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 8 shall constitute
presence in person at such meeting.

      Section 10. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of any such committee. In the absence or disqualification of a member of
a committee, and in the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent allowed by law and provided in
the resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. The Board of Directors shall have the power to
prescribe the manner in which proceedings of any such committee shall be
conducted. In the absence of any such prescription, such committee shall have
the power to prescribe the manner in which its proceedings shall be conducted.
Unless the Board of Directors or such committee shall otherwise provide, regular
and special meetings and other actions of any such committee shall be governed
by the provisions of this Article III applicable to meetings and actions of the
Board of Directors. Each committee shall keep regular minutes and report to the
Board of Directors when required.

      Section 11. Fees and Compensation. Directors and members of committees may
receive such compensation, if any, for their services, and such reimbursement
for expenses, as may be fixed or determined by the Board of Directors.

                                       8


                                   ARTICLE IV

                                    OFFICERS

      Section 1. General. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a Chief Executive Officer, a President, a
Secretary and a Treasurer. The Board of Directors, in its sole discretion, may
also choose one or more Executive Vice Presidents, Senior Vice Presidents, Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any
number of offices may be held by the same person, unless otherwise prohibited by
law, the Certificate of Incorporation or these Bylaws.

      Section 2. Election. The Board of Directors at its first meeting held
after each Annual Meeting of stockholders shall elect the officers of the
Corporation who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time solely
by the Board of Directors, which determination may be by resolution of the Board
of Directors or in any bylaw provision duly adopted or approved by the Board of
Directors; and all officers of the Corporation shall hold office until their
successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the Board of Directors with or without cause. Any vacancy occurring in
any office of the Corporation may be filled only by the Board of Directors.

      Section 3. Chief Executive Officer. The Chief Executive Officer of the
Corporation shall, subject to the provisions of these Bylaws and the control of
the Board of Directors, have general and active management, direction, and
supervision over the business of the Corporation and over its officers. He shall
perform all duties incident to the office of chief executive and such other
duties as from time to time may be assigned to him by the Board of Directors.
The Chief Executive Officer shall report directly to the Board of Directors and
shall have the right to delegate any of his powers to any other officer or
employee.

      Section 4. President. The President shall report and be responsible to the
Chief Executive Officer. The President shall have such powers and perform such
duties as from time to time may be assigned or delegated to him by the Board of
Directors or the Chief Executive Officer or are incident to the office of
President.

      Section 5. Executive Vice Presidents. The Executive Vice Presidents shall
have such powers and perform such duties as from time to time may be prescribed
for them respectively by the Board of Directors or are incident to the office of
Executive Vice President.

      Section 6. Senior Vice Presidents. The Senior Vice Presidents shall have
such powers and perform such duties as from time to time may be prescribed for
them respectively by the Board of Directors or are incident to the office of
Senior Vice President.

                                       9


      Section 7. Vice Presidents. The Vice Presidents shall have such powers and
perform such duties as from time to time may be prescribed for them respectively
by the Board of Directors or are incident to the office of Vice President.

      Section 8. Secretary. The Secretary shall keep or cause to be kept, at the
principal executive office or such other place as the Board of Directors may
order, a book of minutes of all meetings of stockholders, the Board of Directors
and its committees, with the time and place of holding, whether regular or
special, and if special, how authorized, the notice thereof given, the names of
those present at Board of Directors and committee meetings, the number of shares
present or represented at stockholders' meetings, and the proceedings thereof.
The Secretary shall keep, or cause to be kept, a copy of the Bylaws of the
Corporation at the principal executive office or business office of the
Corporation.

      The Secretary shall keep, or cause to be kept, at the principal executive
office or at the office of the Corporation's transfer agent or registrar, if one
be appointed, a stock register, or a duplicate stock register, showing the names
of the stockholders and their addresses, the number and classes of shares held
by each, the number and date of certificates issued for the same, and the number
and date of cancellation of every certificate surrendered for cancellation.

      The Secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the Board of Directors and any committees thereof
required by these Bylaws or by law to be given, shall keep the seal of the
Corporation in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors.

      Section 9. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities of the Corporation and shall keep and maintain,
or cause to be kept and maintained, adequate and correct accounts of the
properties and business transactions of the Corporation, and shall send or cause
to be sent to the stockholders of the Corporation such financial statements and
reports as are by law or these Bylaws required to be sent to them.

      The Treasurer shall deposit all moneys and valuables in the name and to
the credit of the Corporation with such depositaries as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of the Corporation as
may be ordered by the Board of Directors, shall render to the Chief Executive
Officer, the President and directors, whenever they request it, an account of
all transactions and of the financial condition of the Corporation, and shall
have such other powers and perform such other duties as may be prescribed by the
Board of Directors.

      Section 10. Other Officers. Such other officers or assistant officers as
the Board of Directors may choose shall perform such duties and have such powers
as from time to time may be assigned to them by the Board of Directors. The
Board of Directors may delegate to any other officer of the Corporation the
power to choose such other officers and to prescribe their respective duties and
powers.

                                       10


      Section 11. Execution of Contracts and Other Documents. Each officer of
the Corporation may execute, affix the corporate seal and/or deliver, in the
name and on behalf of the Corporation, deeds, mortgages, notes, bonds,
contracts, agreements, powers of attorney, guarantees, settlements, releases,
evidences of indebtedness, conveyances, or any other document or instrument
which is authorized by the Board of Directors or is required to be executed in
the ordinary course of business, except in cases where the execution, affixation
of the corporate seal and/or delivery thereof shall be expressly and exclusively
delegated by the Board of Directors to some other officer or agent of the
Corporation.

                                    ARTICLE V

                                      STOCK

      Section 1. Form of Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed, in the name of the Corporation
(i) by the Chairman of the Board of Directors, the Chief Executive Officer, the
President or any Executive Vice President, Senior Vice President or Vice
President and (ii) by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Corporation, certifying the number of shares
owned by him in the Corporation.

      Section 2. Signatures. Where a certificate is countersigned by (i) a
transfer agent or (ii) a registrar, any other signature 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 he
were such officer, transfer agent or registrar at the date of issue.

      Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.

      Section 4. Transfers. Transfers of shares of capital stock of the
Corporation shall be made only on the stock record of the Corporation by the
holder of record thereof or by his attorney thereunto authorized by the power of
attorney duly executed and filed with the Secretary of the Corporation or the
transfer agent thereof, and only on surrender of the certificate or certificates
representing such shares, properly endorsed or accompanied by a duly executed
stock transfer power. The Board of Directors may make

                                       11


such additional rules and regulations as it may deem expedient concerning the
issue and transfer of certificates representing shares of the capital stock of
the Corporation.

      Section 5. Record Date.

      (a)   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 60 days nor less than 10 days before the date
of such meeting, nor more than 60 days prior to any other action. 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 of Directors may fix a new record date for the adjourned
meeting.

      (b)   Notwithstanding Section 5(a) of Article V of these Bylaws, the
record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting shall be as fixed by the Board of
Directors or as otherwise established under this Section 5(b). Any person
seeking to have the stockholders authorize or take corporate action by written
consent without a meeting shall, by written notice addressed to the Secretary
and delivered to the Corporation, request that a record date be fixed for such
purpose. The Board of Directors may fix a record date for such purpose which
shall be no more than 10 days after the date upon which the resolution fixing
the record date is adopted by the Board and shall not precede the date such
resolution is adopted. If the Board of Directors fails within 10 days after the
Corporation receives such notice to fix a record date for such purpose, the
record date shall be the day on which the first written consent is delivered to
the Corporation in the manner described in Section 5(c) below unless prior
action by the Board of Directors is required under the General Corporation Law
of the State of Delaware, in which event the record date shall be at the close
of business on the day on which the Board of Directors adopts the resolution
taking such prior action.

      (c)   Every written consent purporting to take or authorizing the taking
of corporate action and/or related revocations (each such written consent and
related revocation is referred to in this Section 5(c) of Article V of the
Bylaws as a "Consent") shall bear the date of signature of each stockholder who
signs the Consent, and no Consent shall be effective to take the corporate
action referred to therein unless, within 60 days of the earliest dated Consent
delivered in the manner required by this Section 5(c), Consents signed by a
sufficient number of stockholders to take such action are so delivered to the
Corporation.

      A Consent shall be delivered to the Corporation by delivery to its
registered office in the State of Delaware, its principal place of business, or
an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery to the
Corporation's registered office shall be made by hand or by certified or
registered mail, return receipt requested.

                                       12


      In the event of the delivery to the Corporation of a Consent, the
Secretary of the Corporation shall provide for the safe-keeping of such Consent
and shall promptly conduct such ministerial review of the sufficiency of the
Consents and of the validity of the action to be taken by stockholder consent as
he deems necessary or appropriate, including, without limitation, whether the
holders of a number of shares having the requisite voting power to authorize or
take the action specified in the Consent have given consent; provided, however,
that if the corporate action to which the Consent relates is the removal or
replacement of one or more members of the Board of Directors, the Secretary of
the Corporation shall promptly designate two persons, who shall not be members
of the Board of Directors, to serve as inspectors with respect to such Consent
and such inspectors shall discharge the functions of the Secretary of the
Corporation under this Section 5(c). If after such investigation the Secretary
or the inspectors (as the case may be) shall determine that the Consent is valid
and that the action therein specified has been validly authorized, that fact
shall forthwith be certified on the records of the Corporation kept for the
purpose of recording the proceedings of meetings of stockholders, and the
Consent shall be filed in such records, at which time the Consent shall become
effective as stockholder action. In conducting the investigation required by
this Section 5(c), the Secretary or the inspectors (as the case may be) may, at
the expense of the Corporation, retain special legal counsel and any other
necessary or appropriate professional advisors, and such other personnel as they
may deem necessary or appropriate to assist them, and shall be fully protected
in relying in good faith upon the opinion of such counsel or advisors.

      Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.

                                   ARTICLE VI

                                     NOTICES

      Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director or
stockholder, such notice may be given by mail, addressed to such director or
stockholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written notice
may also be given personally or by telegram, telex, cable or facsimile
transmission followed, if required by law, by deposit in the United States mail,
with postage prepaid.

      Section 2. Waivers of Notice. Whenever any notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director or
stockholder, a

                                       13


waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.

                                   ARTICLE VII

                               GENERAL PROVISIONS

      Section 1. Disbursements. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.

      Section 2. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.

      Section 3. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chairman of the Board of Directors, the Chief
Executive Officer or the President or any other officer or officers authorized
by the Board of Directors, the Chairman of the Board of Directors, the Chief
Executive Officer or the President, and any such officer may, in the name of and
on behalf of the Corporation, vote, represent and exercise on behalf of the
Corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of the Corporation and take all such action
as any such officer may deem advisable to vote in person or by proxy at any
meeting of security holders of any corporation in which the Corporation may own
securities and at any such meeting shall possess and may exercise any and all
rights and power incident to the ownership of such securities and which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.

                                  ARTICLE VIII

                                 INDEMNIFICATION

      Section 1. General. The Corporation shall indemnify to the full extent
authorized or permitted by law (as now or hereafter in effect) any person made,
or threatened to be made, a defendant or witness to any action, suit or
proceeding (whether civil or criminal or otherwise) by reason of the fact that
he, his testator or intestate, is or was a director or officer of the
Corporation or by reason of the fact that such director or officer, at the
request of the Corporation, is or was serving any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, in
any capacity. Nothing contained herein shall affect any rights to
indemnification to which employees other than directors and officers may be
entitled by law. No amendment or repeal of this Section 1 shall apply to or have
any effect on any right to indemnification

                                       14


provided hereunder with respect to any acts or omissions occurring prior to such
amendment or repeal.

      Section 2. Further Assurance. In furtherance and not in limitation of the
powers conferred by statute:

      (a)   the Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Corporation,
or is serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of law; and

      (b)   the Corporation may create a trust fund, grant a security interest
and/or use other means (including, without limitation, letters of credit, surety
bonds and/or other similar arrangements), as well as enter into contracts
providing indemnification to the full extent authorized or permitted by law and
including as part thereof provisions with respect to any or all of the foregoing
to ensure the payment of such amounts as may become necessary to effect
indemnification as provided therein, or elsewhere.

                                   ARTICLE IX

                                   AMENDMENTS

      Section 1. General. These Bylaws may be altered, amended or repealed, in
whole or in part, or new Bylaws may be adopted by either the holders of 66-2/3%
of the outstanding capital stock entitled to vote thereon or by the Board of
Directors.

                                    ARTICLE X

                              EMERGENCY PROVISIONS

      Section 1. General. The provisions of this Article X shall be operative
only during a national emergency declared by the President of the United States
or the person performing the President's functions, or in the event of a
nuclear, atomic or other attack on the United States or a disaster making it
impossible or impracticable for the Corporation to conduct its business without
recourse to the provisions of this Article X. Said provisions in such event
shall override all other Bylaws of the Corporation in conflict with any
provisions of this Article X, and shall remain operative so long as it remains
impossible or impracticable to continue the business of the Corporation
otherwise, but thereafter shall be inoperative; provided that all actions taken
in good faith pursuant to such provisions shall thereafter remain in full force
and effect unless and until revoked by action taken pursuant to the provisions
of the Bylaws other than those contained in this Article X.

                                       15


      Section 2. Unavailable Directors. All directors of the Corporation who are
not available to perform their duties as directors by reason of physical or
mental incapacity or for any other reason or who are unwilling to perform their
duties or whose whereabouts are unknown shall automatically cease to be
directors, with like effect as if such persons had resigned as directors, so
long as such unavailability continues.

      Section 3. Authorized Number of Directors. The authorized number of
directors shall be the number of directors remaining after eliminating those who
have ceased to be directors pursuant to Section 2 of this Article X, or the
minimum number required by law, whichever number is greater.

      Section 4. Quorum. The number of directors necessary to constitute a
quorum shall be one-third of the authorized number of directors as specified in
Section 3 of this Article X, or such other minimum number as, pursuant to the
law or lawful decree then in force, it is possible for the Bylaws of a
Corporation to specify.

      Section 5. Creation of Emergency Committee. In the event the number of
directors remaining after eliminating those who have ceased to be directors
pursuant to Section 2 of this Article X is less than the minimum number of
authorized directors required by law, then until the appointment of additional
directors to make up such required minimum, all the powers and authorities which
the Board of Directors could by law delegate including all powers and
authorities which the Board of Directors could delegate to a committee, shall be
automatically vested in an emergency committee, and the emergency committee
shall thereafter manage the affairs of the Corporation pursuant to such powers
and authorities and shall have all other powers and authorities as may by law or
lawful decree be conferred on any person or body of persons during a period of
emergency.

      Section 6. Constitution of Emergency Committee. The emergency committee
shall consist of all the directors remaining after eliminating those who have
ceased to be directors pursuant to Section 2 of this Article X, provided that
such remaining directors are not less than three in number. In the event such
remaining directors are less than three in number, the emergency committee shall
consist of three persons, who shall be the remaining director or directors and
either one or two officers or employees of the Corporation, as the remaining
director or directors may in writing designate. If there is no remaining
director, the emergency committee shall consist of the three most senior
officers of the Corporation who are available to serve, and if and to the extent
that officers are not available, the most senior employees of the Corporation.
Seniority shall be determined in accordance with any designation of seniority in
the minutes of the proceedings of the Board, and in the absence of such
designation, shall be determined by rate of remuneration. In the event that
there are no remaining directors and no officers or employees of the Corporation
available, the emergency committee shall consist of three persons designated in
writing by the stockholder owning the largest number of shares of record as of
the date of the last record date.

      Section 7. Powers of Emergency Committee. The emergency committee, once
appointed, shall govern its own procedures and shall have power to increase the
number of members thereof beyond the original number, and in the event of a
vacancy or

                                       16



vacancies therein, arising at any time, the remaining member or members of the
emergency committee shall have the power to fill such vacancy or vacancies. In
the event at any time after its appointment all members of the emergency
committee shall die or resign or become unavailable to act for any reason
whatsoever, a new emergency committee shall be appointed in accordance with the
foregoing provisions of this Article X.

      Section 8. Directors Becoming Available. Any person who has ceased to be a
director pursuant to the provisions of Section 2 of this Article X and who
thereafter becomes available to serve as a director shall automatically become a
member of the emergency committee.

      Section 9. Election of Board of Directors. The emergency committee shall,
as soon after its appointment as is practicable, take all requisite action to
secure the election of a board of directors, and upon such election all the
powers and authorities of the emergency committee shall cease.

      Section 10. Termination of Emergency Committee. In the event, after the
appointment of an emergency committee, a sufficient number of persons who ceased
to be directors pursuant to Section 2 of this Article X become available to
serve as directors, so that if they had not ceased to be directors as aforesaid,
there would be enough directors to constitute the minimum number of directors
required by law, then all such persons shall automatically be deemed to be
reappointed as directors and the powers and authorities of the emergency
committee shall be at an end.

                                       17

EX-10.A

                                                                   EXHIBIT 10(a)



                           FIVE-YEAR CREDIT AGREEMENT

                          Dated as of February 25, 2004

                                      Among

                             THE WALT DISNEY COMPANY

                                   as Borrower

                                       and

                     THE FINANCIAL INSTITUTIONS NAMED HEREIN

                                   as Lenders

                                       and

        BANC OF AMERICA SECURITIES LLC and CITIGROUP GLOBAL MARKETS, INC.

                 as Joint Lead Arrangers and Joint Book Managers

                                       and

                               CITICORP USA, INC.

                             as Administrative Agent

                                       and

                              BANK OF AMERICA, N.A.

                              as Syndication Agent

                                       and

                               BARCLAYS BANK, PLC,
                        BNP PARIBAS SA, HSBC BANK USA and
                               JPMORGAN CHASE BANK

                           as Co-Documentation Agents




                                TABLE OF CONTENTS



                                                                                                                    Page
                                                                                                                    ----
                                                                                                                 
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS........................................................................    1

         SECTION 1.01 Certain Defined Terms.......................................................................    1
         SECTION 1.02 Computation of Time Periods.................................................................   12
         SECTION 1.03 Accounting Terms............................................................................   13

ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES......................................................................   13

         SECTION 2.01 The Advances................................................................................   13
         SECTION 2.02 Making the Advances.........................................................................   13
         SECTION 2.03 Fees........................................................................................   15
         SECTION 2.04 Reduction of the Commitments................................................................   15
         SECTION 2.05 Repayment of Advances.......................................................................   15
         SECTION 2.06 Interest on Advances........................................................................   15
         SECTION 2.07 Additional Interest on Eurocurrency Rate Advances...........................................   16
         SECTION 2.08 Interest Rate Determination.................................................................   16
         SECTION 2.09 Optional Conversion of Advances.............................................................   17
         SECTION 2.10 Prepayments of Advances.....................................................................   18
         SECTION 2.11 Increased Costs.............................................................................   19
         SECTION 2.12 Illegality..................................................................................   20
         SECTION 2.13 Payments and Computations...................................................................   20
         SECTION 2.14 Taxes.......................................................................................   22
         SECTION 2.15 Sharing of Payments, Etc....................................................................   24
         SECTION 2.16 Mandatory Assignment by a Lender; Mitigation................................................   25
         SECTION 2.17 Evidence of Debt............................................................................   25
         SECTION 2.18 Use of Proceeds.............................................................................   26
         SECTION 2.19 Increase in the Aggregate Commitments.......................................................   26
         SECTION 2.20 Extension of Termination Date...............................................................   27

ARTICLE III AMOUNT AND TERMS OF LETTERS OF CREDIT AND PARTICIPATIONS THEREIN......................................   29

         SECTION 3.01 Letters of Credit...........................................................................   29
         SECTION 3.02 Limitation on the Issuance of Letters of Credit Denominated in Committed Currencies.........   31
         SECTION 3.03 Issuing the Letters of Credit...............................................................   31
         SECTION 3.04 Reimbursement Obligations...................................................................   31
         SECTION 3.05 Participations Purchased by the Lenders.....................................................   32
         SECTION 3.06 Letter of Credit Fees.......................................................................   32
         SECTION 3.07 Indemnification; Nature of the Issuing Banks' Duties........................................   33
         SECTION 3.08 Uniform Customs and Practice................................................................   34
         SECTION 3.09 Additional Issuing Banks....................................................................   34
         SECTION 3.10 Dollar Payment Obligation...................................................................   34
         SECTION 3.11 Survival of Provisions; Cash Collateral.....................................................   34

ARTICLE IV CONDITIONS OF EFFECTIVENESS AND LENDING................................................................   35

         SECTION 4.01 Conditions Precedent to Effectiveness of Section 2.01.......................................   35
         SECTION 4.02 Conditions Precedent to Each Borrowing/Issuance.............................................   35
         SECTION 4.03 Determinations Under Section 4.01...........................................................   36


                                        i


                                                                                                                   
ARTICLE V REPRESENTATIONS AND WARRANTIES..........................................................................    36

         SECTION 5.01 Representations and Warranties of the Borrower..............................................    36
         SECTION 5.02 Additional Representations and Warranties of the Borrower as of Each Increase Date and
                  Each Extension Date.............................................................................    37

ARTICLE VI COVENANTS OF THE BORROWER..............................................................................    38

         SECTION 6.01 Affirmative Covenants.......................................................................    38
         SECTION 6.02 Negative Covenants..........................................................................    39

ARTICLE VII EVENTS OF DEFAULT.....................................................................................    40

         SECTION 7.01 Events of Default...........................................................................    40

ARTICLE VIII THE ADMINISTRATIVE AGENT.............................................................................    41

         SECTION 8.01 Authorization and Action....................................................................    41
         SECTION 8.02 Administrative Agent's Reliance, Etc........................................................    42
         SECTION 8.03 CUSA and Affiliates.........................................................................    42
         SECTION 8.04 Lender Credit Decision......................................................................    43
         SECTION 8.05 Indemnification.............................................................................    43
         SECTION 8.06 Successor Administrative Agent..............................................................    43
         SECTION 8.07 Sub-Agent...................................................................................    44

ARTICLE IX MISCELLANEOUS..........................................................................................    44

         SECTION 9.01 Amendments, Etc.............................................................................    44
         SECTION 9.02 Notices, Etc................................................................................    44
         SECTION 9.03 No Waiver; Remedies.........................................................................    46
         SECTION 9.04 Costs and Expenses..........................................................................    46
         SECTION 9.05 Right of Set-off............................................................................    46
         SECTION 9.06 Binding Effect..............................................................................    47
         SECTION 9.07 Assignments and Participations..............................................................    47
         SECTION 9.08 Indemnification.............................................................................    49
         SECTION 9.09 Confidentiality.............................................................................    50
         SECTION 9.10 Patriot Act.................................................................................    50
         SECTION 9.11 Judgment....................................................................................    50
         SECTION 9.12 Consent to Jurisdiction and Service of Process..............................................    51
         SECTION 9.13 Substitution of Currency....................................................................    51
         SECTION 9.14 Governing Law...............................................................................    52
         SECTION 9.15 Execution in Counterparts...................................................................    52
         SECTION 9.16 Severability................................................................................    52



                                       ii


SCHEDULE

Schedule I    -        List of Applicable Lending Offices

Schedule II   -        LC Commitments

Schedule III  -        Existing LCs

EXHIBITS

Exhibit A-1   -        Form of Notice of Borrowing

Exhibit A-2   -        Form of Notice of Letter of Credit Request

Exhibit B     -        Form of Assignment and Acceptance

Exhibit C     -        Form of Opinion of Deputy General Counsel of the Borrower

Exhibit D-1   -        Form of Foreign Lender Certificate

Exhibit D-2   -        Form of Foreign Lender Certificate

                                       iii



                           FIVE-YEAR CREDIT AGREEMENT

                          DATED AS OF FEBRUARY 25, 2004

            THE WALT DISNEY COMPANY, a Delaware corporation (the "BORROWER"),
the banks, financial institutions and other institutional lenders (the "INITIAL
LENDERS") listed on the signature pages hereof under the heading "The Initial
Lenders", the Issuing Banks (as defined herein), CITICORP USA, INC., a Delaware
corporation ("CUSA"), as administrative agent (together with any successor
administrative agent appointed pursuant to Article VIII, the "ADMINISTRATIVE
AGENT") for the Lenders (as hereinafter defined) and the Issuing Banks
hereunder, BANK OF AMERICA, N.A., as syndication agent (the "SYNDICATION
AGENT"), BANC OF AMERICA SECURITIES LLC and CITIGROUP GLOBAL MARKETS, INC., as
Joint Lead Arrangers and Joint Book Managers (the "ARRANGERS"), and BARCLAYS
BANK PLC, BNP PARIBAS SA, HSBC BANK USA and JPMORGAN CHASE BANK, as
co-documentation agents (the "CO-DOCUMENTATION AGENTS") for the Lenders
hereunder, hereby agree as follows:

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

            SECTION 1.01 Certain Defined Terms.

            As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):

            "ABC" means ABC, Inc., a New York corporation and a wholly owned
      Subsidiary of the Borrower, or any successor thereto.

            "ADMINISTRATIVE AGENT" has the meaning specified in the recital of
      parties to this Agreement.

            "ADMINISTRATIVE AGENT'S ACCOUNT" means (a) in the case of Advances
      denominated in Dollars, the account of the Administrative Agent maintained
      by the Administrative Agent at the office of Citibank at 399 Park Avenue,
      New York, New York 10043, (b) in the case of Advances denominated in any
      Committed Currency, the account of the Sub-Agent, as the Administrative
      Agent shall notify in writing the Borrower and the Lenders from time to
      time, and (c) in any such case, such other account of the Administrative
      Agent or the Sub-Agent, as the case may be, as the Administrative Agent or
      the Sub-Agent shall notify in writing the Borrower and the Lenders from
      time to time.

            "ADVANCE" means an advance by a Lender to the Borrower as part of a
      Borrowing and refers to a Base Rate Advance or a Eurocurrency Rate
      Advance, each of which shall be a "Type" of Advance.

            "AFFILIATE" means, as to any Person, any other Person that, directly
      or indirectly, controls, is controlled by or is under common control with
      such Person or is a director or officer of such Person.

            "AGREEMENT" means this Five-Year Credit Agreement, as it may be
      amended, supplemented or otherwise modified from time to time in
      accordance with Section 9.01.

            "ANNIVERSARY DATE" means February 25, 2005 and February 25 in each
      succeeding calendar year occurring during the term of this Agreement.



            "APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
      Lender's Domestic Lending Office in the case of a Base Rate Advance and
      such Lender's Eurocurrency Lending Office in the case of a Eurocurrency
      Rate Advance.

            "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
      entered into by a Lender and an Eligible Assignee, and accepted by the
      Administrative Agent and the Borrower, in substantially the form of
      Exhibit B hereto.

            "ASSUMING LENDER" has the meaning specified in Section 2.19(d).

            "ASSUMPTION AGREEMENT" has the meaning specified in Section
      2.19(d)(ii).

            AUTO-RENEWAL LETTER OF CREDIT" has the meaning specified in Section
      3.01(d).

            "AVAILABLE AMOUNT" of any Letter of Credit means, at any time, the
      maximum amount available to be drawn under such Letter of Credit at such
      time (assuming compliance at such time with all conditions to drawing).

            "BASE RATE" means, for each day in any period, a fluctuating
      interest rate per annum as shall be in effect from time to time, which
      rate per annum shall at all times for such day during such period be equal
      to the higher of:

                  (a)   the rate of interest announced publicly by Citibank in
      New York, New York, from time to time, as Citibank's base rate in effect
      for such day; and

                  (b)   0.50% per annum above the Federal Funds Rate for such
      day.

            "BASE RATE ADVANCE" means an Advance which bears interest as
      provided in Section 2.06(a)(i).

            "BORROWING" means a borrowing consisting of simultaneous Advances of
      the same Type made by each of the Lenders pursuant to Section 2.01.

            "BUSINESS DAY" means a day of the year on which banks are not
      required or authorized to close in Los Angeles, California, or New York
      City, New York, or San Francisco, California, or, if the applicable
      Business Day relates to any Eurocurrency Rate Advances, on which dealings
      are carried on in the London interbank market.

            "CITIBANK" means Citibank, N.A., a national banking association.

            "CO-DOCUMENTATION AGENTS" has the meaning specified in the recital
      of parties to this Agreement.

            "COMMITMENT" has the meaning specified in Section 2.01.

            "COMMITMENT DATE" has the meaning specified in Section 2.19(b).

            "COMMITMENT INCREASE" has the meaning specified in Section 2.19(a).

            "COMMITTED CURRENCIES" means lawful currency of the United Kingdom
      of Great Britain and Northern Ireland, lawful currency of Japan and lawful
      currency of the European Economic and Monetary Union.

                                       2


            "CONSOLIDATED EBITDA" means, for any period, (a) net income or net
      loss, as the case may be, of the Borrower and its Subsidiaries on a
      consolidated basis for such period, as determined in accordance with GAAP
      for such period, plus (b) the sum of all amounts which, in the
      determination of such consolidated net income or net loss, as the case may
      be, for such period, have been deducted for (i) Consolidated Interest
      Expense, (ii) consolidated income tax expense, (iii) consolidated
      depreciation expense, and (iv) consolidated amortization expense, in each
      case determined in accordance with GAAP for such period.

            "CONSOLIDATED INTEREST EXPENSE" means, for any period, total
      interest expense of the Borrower and its Subsidiaries with respect to all
      outstanding Debt of the Borrower and its Subsidiaries during such period,
      all as determined on a consolidated basis for such period and in
      accordance with GAAP for such period.

            "CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion
      of Advances of one Type into Advances of another Type pursuant to Section
      2.08 or 2.09.

            "CUSA" has the meaning specified in the recital of parties to this
      Agreement.

            "DEBT" means, with respect to any Person: (a) indebtedness for
      borrowed money, (b) obligations evidenced by bonds, debentures, notes or
      other similar instruments, (c) obligations to pay the deferred purchase
      price of property or services (other than trade payables incurred in the
      ordinary course of business), (d) obligations as lessee under leases which
      shall have been or should be, in accordance with GAAP, recorded as capital
      leases and (e) obligations under direct or indirect guaranties in respect
      of, and obligations (contingent or otherwise) to purchase or otherwise
      acquire, or otherwise to assure a creditor against loss in respect of,
      indebtedness or obligations of any other Person of the kinds referred to
      in clauses (a) through (d) above.

            "DECLINING LENDER" has the meaning specified in Section 2.20(b).

            "DISNEY" means Disney Enterprises, Inc., a Delaware corporation and
      a wholly owned Subsidiary of the Borrower, or any successor thereto.

            "DOLLARS" and the "$" sign each means lawful currency of the United
      States.

            "DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
      office of such Lender specified as its "Domestic Lending Office" opposite
      its name on Schedule I hereto or in the Assumption Agreement or the
      Assignment and Acceptance, as the case may be, pursuant to which it became
      a Lender, or such other office of such Lender as such Lender may from time
      to time specify to the Borrower and the Administrative Agent for such
      purpose.

            "EFFECTIVE DATE" has the meaning specified in Section 3.01.

            "ELIGIBLE ASSIGNEE" means (a) a Lender or any Affiliate of a Lender
      or (b) any bank or other financial institution, or any other Person, which
      has been approved in writing by the Borrower, the Administrative Agent and
      each Issuing Bank as an Eligible Assignee for purposes of this Agreement;
      provided, however, that none of the Borrower's approval, the
      Administrative Agent's approval or any Issuing Bank's approval shall be
      unreasonably withheld; and provided further, however, that the Borrower
      may withhold its approval if the Borrower reasonably believes that an
      assignment to such Eligible Assignee pursuant to Section 9.07 will result
      in the incurrence of increased costs payable by the Borrower pursuant to
      Section 2.11 or 2.14.

                                       3


            "ENVIRONMENTAL CLAIM" means any administrative, regulatory or
      judicial action, suit, demand, claim, lien, notice or proceeding relating
      to any Environmental Law or any Environmental Permit.

            "ENVIRONMENTAL LAW" means any federal, state or local statute, law,
      rule, regulation, ordinance, code or duly promulgated policy or rule of
      common law, now or hereafter in effect, and in each case as amended, and
      any judicial or administrative interpretation thereof, including any
      order, consent decree or judgment, relating to the environment, health,
      safety or any Hazardous Material.

            "ENVIRONMENTAL PERMIT" means any permit, approval, identification
      number, license or other authorization required under any applicable
      Environmental Law.

            "EQUIVALENT" in Dollars of any Committed Currency on any date means
      the equivalent in Dollars of such Committed Currency determined by using
      the quoted spot rate at which the Sub-Agent's principal office in London
      offers to exchange Dollars for such Committed Currency in London at or
      about 4:00 P.M. (London time) (unless otherwise indicated by the terms of
      this Agreement) on such date as is required pursuant to the terms of this
      Agreement, and the "Equivalent" in any Committed Currency of Dollars means
      the equivalent in such Committed Currency of Dollars determined by using
      the quoted spot rate at which the Sub-Agent's principal office in London
      offers to exchange such Committed Currency for Dollars in London at or
      about 4:00 P.M. (London time) (unless otherwise indicated by the terms of
      this Agreement) on such date as is required pursuant to the terms of this
      Agreement.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
      as amended from time to time, and the regulations promulgated and the
      rulings issued thereunder.

            "ERISA AFFILIATE" means any Person that for purposes of Title IV of
      ERISA is a member of the Borrower's controlled group, or under common
      control with the Borrower, within the meaning of Section 414 of the
      Internal Revenue Code of 1986, as amended.

            "ERISA EVENT" means: (a) (i) the occurrence with respect to a Plan
      of a reportable event, within the meaning of Section 4043 of ERISA, unless
      the 30-day notice requirement with respect thereto has been waived by the
      Pension Benefit Guaranty Corporation or (ii) the provisions of paragraph
      (1) of Section 4043(b) of ERISA (without regard to paragraph (2) of such
      Section) are applicable with respect to a contributing sponsor, as defined
      in Section 4001(a)(13) of ERISA, of a Plan, and an event described in
      paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA could
      reasonably be expected to occur with respect to such Plan within the
      following 30 days; (b) the provision by the administrator of any Plan of a
      notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of
      ERISA (including any such notice with respect to a plan amendment referred
      to in Section 4041(e) of ERISA); (c) the cessation of operations by the
      Borrower or any ERISA Affiliate at a facility in the circumstances
      described in Section 4062(e) of ERISA; (d) the withdrawal by the Borrower
      or any ERISA Affiliate from a Multiple Employer Plan during a plan year
      for which it was a substantial employer, as defined in Section 4001(a)(2)
      of ERISA; (e) the failure by the Borrower or any ERISA Affiliate to make a
      payment to a Plan described in Section 302(f)(1)(A) of ERISA; (f) the
      adoption of an amendment to a Plan requiring the provision of security to
      such Plan, pursuant to Section 307 of ERISA; or (g) the institution by the
      Pension Benefit Guaranty Corporation of proceedings to terminate a Plan,
      pursuant to Section 4042 of ERISA, or the occurrence of any event or
      condition which is reasonably likely to constitute grounds under Section
      4042 of ERISA for the termination of, or the appointment of a trustee to
      administer, a Plan.

                                       4


            "EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
      Regulation D of the Board of Governors of the Federal Reserve System, as
      in effect from time to time.

            "EUROCURRENCY LENDING OFFICE" means, with respect to any Lender, the
      office of such Lender specified as its "Eurocurrency Lending Office"
      opposite its name on Schedule I hereto or in the Assumption Agreement or
      the Assignment and Acceptance, as the case may be, pursuant to which it
      became a Lender (or, if no such office is specified, its Domestic Lending
      Office), or such other office of such Lender as such Lender may from time
      to time specify to the Borrower and the Administrative Agent for such
      purpose.

            "EUROCURRENCY RATE" means, for any Interest Period for each
      Eurocurrency Rate Advance comprising part of the same Borrowing, (a) the
      rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
      appearing on Telerate Page 3750 (or any successor page) as the London
      interbank offered rate for deposits in Dollars or the applicable Committed
      Currency, as the case may be, at 11:00 A.M. (London time) two Business
      Days before the first day of such Interest Period for a period equal to
      such Interest Period divided by (b) a percentage equal to 100% minus the
      Eurocurrency Rate Reserve Percentage for such Interest Period (provided,
      that, if for any reason such rate is not available, the term "Eurocurrency
      Rate" shall mean, for any Interest Period for each Eurocurrency Rate
      Advance comprising part of the same Borrowing, (a) an interest rate per
      annum equal to the average (rounded upward to the nearest whole multiple
      of 1/16 of 1% per annum, if such average is not such a multiple) of the
      rate per annum at which deposits in Dollars or the applicable Committed
      Currency, as the case may be, are offered by the principal office of each
      of the Reference Banks in London, England to prime banks in the London
      interbank market at 11:00 A.M. (London time) two Business Days before the
      first day of such Interest Period for a period equal to such Interest
      Period and in an amount substantially equal to such Reference Bank's (or,
      in the case of Citibank, CUSA's) Eurocurrency Rate Advance comprising part
      of such Borrowing divided by (b) a percentage equal to 100% minus the
      Eurocurrency Rate Reserve Percentage for such Interest Period). In the
      event that the Eurocurrency Rate is to be determined by the Reference
      Banks, the Eurocurrency Rate for any Interest Period for each Eurocurrency
      Rate Advance comprising part of the same Borrowing shall be determined by
      the Administrative Agent on the basis of applicable rates furnished to and
      received by the Administrative Agent from the Reference Banks two Business
      Days before the first day of such Interest Period, subject, however, to
      the provisions of Section 2.08.

            "EUROCURRENCY RATE ADVANCE" means an Advance denominated in Dollars
      or a Committed Currency which bears interest as provided in Section
      2.06(a)(ii).

            "EUROCURRENCY RATE MARGIN" means, as of any date, a percentage per
      annum determined by reference to the Public Debt Rating in effect on such
      date as set forth below:



   PUBLIC DEBT RATING
      S&P/MOODY'S                                         APPLICABLE MARGIN
- -------------------------                                 -----------------
                                                       
Level 1
AA-/Aa3 or above                                                0.115%
Level 2
Lower than AA-/Aa3 but                                          0.130%
at least A/A2
Level 3
Lower than A/A2 but                                             0.140%
at least A-/A3


                                       5


                                                             
Level 4
Lower than A-/A3 but                                            0.165%
at least BBB+/Baa1
Level 5
Lower than BBB+/Baa1 or no                                      0.300%
Public Debt Rating in effect



            "EUROCURRENCY RATE RESERVE PERCENTAGE" means, with respect to any
      Lender for any Interest Period for any Eurocurrency Rate Advance, the
      reserve percentage applicable during such Interest Period (or, if more
      than one such percentage shall be so applicable, the daily average of such
      percentages for those days in such Interest Period during which any such
      percentage shall be so applicable) under regulations issued from time to
      time by the Board of Governors of the Federal Reserve System (or any
      successor thereto) for determining the maximum reserve requirement
      (including, without limitation, any emergency, supplemental or other
      marginal reserve requirement) for such Lender with respect to liabilities
      or assets consisting of or including Eurocurrency Liabilities (or with
      respect to any other category of liabilities that includes deposits by
      reference to which the interest rate on Eurocurrency Rate Advances is
      determined) having a term equal to such Interest Period.

            "EURO DISNEY ENTITY" means any Subsidiary of the Borrower and any
      other Person whose equity securities or interests are owned, directly or
      indirectly, in whole or in part, by the Borrower or any of its
      Subsidiaries, the primary business of which is the direct or indirect
      ownership, management, operation, design, construction and/or financing of
      the recreational, commercial and residential facilities and complex, or
      any part thereof or any addition thereto, commonly known as `Euro Disney',
      `Euro Disneyland' or `Disneyland Resort Paris', located in
      Marne-la-Vallee, France, which Subsidiaries and other Persons include,
      without limitation, as of the date hereof, Euro Disney Investments, Inc.,
      EDL S.N.C. Corporation, Euro Disney Associes S.N.C., Euro Disneyland SNC,
      Euro Disney SCA, Euro Disneyland Participations S.A.., Euro Disney S.A..,
      EDL Holding Company, EDL Participations S.A.., Centre de Congres Newport
      S.A.S., Euro Disneyland Imagineering S.a.r.l. and Societe de Gerance
      d'Euro Disneyland SA.

            "EVENTS OF DEFAULT" has the meaning specified in Section 7.01.

            "EXCLUDED ENTITY" means each of the Euro Disney Entities, the Hong
      Kong Disneyland Entities and the Specified Project Entities.

            "EXISTING LETTERS OF CREDIT" means the outstanding letters of credit
      originally issued under the Replaced Loan Agreements and identified on
      Schedule III hereto.

            "EXTENSION DATE" has the meaning specified in Section 2.20(b).

            "EXTENDING LENDER" has the meaning specified in Section 2.20(b).

            "FACILITY FEE PERCENTAGE" means, as of any date, a percentage per
      annum determined by reference to the Public Debt Rating in effect on such
      date as set forth below:



      PUBLIC DEBT RATING
          S&P/MOODY'S                                         PERCENTAGE
- ------------------------------                                ----------
                                                           
Level 1
AA-/Aa3 or above                                                0.060%


                                       6




      PUBLIC DEBT RATING
          S&P/MOODY'S                                         PERCENTAGE
- ------------------------------                                ----------
                                                           
Level 2
Lower than AA-/Aa3 but                                          0.070%
at least A/A2
Level 3
Lower than A/A2 but                                             0.085%
at least A-/A3
Level 4
Lower than A-/A3 but                                            0.110%
at least BBB+/Baa1
Level 5
Lower than BBB+/Baa1 or                                         0.150%
no Public Debt Rating in effect


            "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
      rate per annum equal for each day during such period to the weighted
      average of the rates on overnight federal funds transactions with members
      of the Federal Reserve System arranged by federal funds brokers, as
      published for such day (or, if such day is not a Business Day, for the
      immediately preceding Business Day) by the Federal Reserve Bank of New
      York, or, if such rate is not so published for any day which is a Business
      Day, the average of the quotations for such day on such transactions
      received by the Administrative Agent from three federal funds brokers of
      recognized standing selected by the Administrative Agent.

            "GAAP" means generally accepted accounting principles consistent
      with those applied in the preparation of the audited financial statements
      referred to in Section 5.01(c) dated September 30, 2003, subject, however,
      to the provisions of Section 1.03.

            "HAZARDOUS MATERIAL" means (a) any petroleum or petroleum product,
      natural or synthetic gas, asbestos in any form that is or could become
      friable, urea formaldehyde foam insulation, or radon gas, (b) any
      substance defined as or included in the definition of "hazardous
      substances", "hazardous wastes", "hazardous materials", "toxic
      substances", "contaminants" or "pollutants", or words of similar import,
      under any applicable Environmental Law or (c) any other substance exposure
      to which is regulated by any governmental or regulatory authority.

            "HONG KONG DISNEYLAND ENTITY" means any Subsidiary of the Borrower
      and any other Person whose equity securities or interests are owned,
      directly or indirectly, in whole or in part, by the Borrower or any of its
      Subsidiaries, the primary business of which is the direct or indirect
      ownership, management, operation, design, construction and/or financing of
      the recreational and commercial facilities and complex, or any part
      thereof or any addition thereto, commonly known as `Hong Kong Disney',
      `Hong Kong Disneyland' or `Disneyland Resort Hong Kong' located at Penny's
      Bay on Lantau Island, Hong Kong, which Subsidiaries and other Persons
      include, without limitation, as of the date hereof, Hongkong International
      Theme Parks Limited, Hong Kong Disneyland Management Limited, and Walt
      Disney Holdings (Hong Kong) Limited.

            "INCREASE DATE" has the meaning specified in Section 2.19(a).

            "INCREASING LENDER" has the meaning specified in Section 2.19(b).

            "INDEMNIFIED MATTERS" has the meaning specified in Section 9.08.

                                       7


            "INDEMNIFIED PARTY" has the meaning specified in Section 9.08.

            "INITIAL LENDERS" has the meaning specified in the recital of
      parties to this Agreement.

            "INTEREST PERIOD" means, for each Eurocurrency Rate Advance
      comprising part of the same Borrowing, the period commencing on the date
      of such Eurocurrency Rate Advance or on the date of the Conversion of any
      Base Rate Advance into such Eurocurrency Rate Advance and ending on the
      last day of the period selected by the Borrower pursuant to the provisions
      below and, thereafter, each subsequent period commencing on the last day
      of the immediately preceding Interest Period and ending on the last day of
      the period selected by the Borrower pursuant to the provisions below. The
      duration of each such Interest Period shall be one, two, three, six or, if
      generally available to all of the Lenders, nine or twelve months as the
      Borrower may, upon notice received by the Administrative Agent not later
      than (x) 11:00 A.M. (New York City time) on the third Business Day prior
      to the first day of such Interest Period for each Eurocurrency Rate
      Advance denominated in any Committed Currency, or (y) 1:00 P.M. (New York
      City time) on the third Business Day prior to the first day of such
      Interest Period for each Eurocurrency Rate Advance denominated in Dollars,
      select; provided, however, that:

                  (i)   Interest Periods commencing on the same date for
            Eurocurrency Rate Advances comprising part of the same Borrowing
            shall be of the same duration;

                  (ii)  whenever the last day of any Interest Period would
            otherwise occur on a day other than a Business Day, the last day of
            such Interest Period shall be extended to occur on the next
            succeeding Business Day, provided, however, that if such extension
            would cause the last day of such Interest Period to occur in the
            next succeeding calendar month, the last day of such Interest Period
            shall occur on the immediately preceding Business Day;

                  (iii) whenever the first day of any Interest Period occurs on
            a day of an initial calendar month for which there is no numerically
            corresponding day in the calendar month that succeeds such initial
            calendar month by the number of months equal to the number of months
            in such Interest Period, such Interest Period shall end on the last
            Business Day of such succeeding calendar month; and

                  (iv)  the Borrower may not select for any Advance any Interest
            Period which ends after the scheduled Termination Date then in
            effect.

            "IRS" has the meaning specified in Section 2.14(e).

            "ISSUE" means, with respect to any Letter of Credit, either to
      issue, or to increase the amount of, such Letter of Credit, and the term
      "Issued" or "Issuance" shall have corresponding meanings. For the
      avoidance of doubt, the renewal of an Auto Renewal Letter of Credit shall
      not be deemed to be an Issuance.

            "ISSUING BANK" means Standard Chartered Bank, BNP Paribas or any
      other Lender which agrees to become, and is designated as an Issuing Bank
      under Section 3.09(a) or any Affiliate thereof as agreed to from time to
      time by the Borrower and such Issuing Bank, that may from time to time
      Issue Letters of Credit for the account of the Borrower.

            "ISSUING COMMITMENT" means, as to any Issuing Bank, the amount set
      forth opposite such Issuing Bank's name on Schedule II hereto under the
      caption "Issuing Commitment," as it may change pursuant to Section
      3.09(b).

                                       8


            "LC COLLATERAL ACCOUNT" means a deposit account to be designated by
      the Administrative Agent from time to time.

            "LC COMMITMENT" means, as to any Lender, the amount set forth
      opposite such Lender's name on Schedule II hereto under the caption "LC
      Commitment" or, if such Lender has entered into one or more Assignment and
      Acceptances, the amount set forth for such Lender with respect thereto in
      the Register maintained by the Administrative Agent pursuant to Section
      9.07(c) hereof.

            "LC COMMITMENT PERCENTAGE" means, with respect to each Lender, the
      percentage which the then existing LC Commitment of such Lender is of the
      LC Commitments of all Lenders; provided, however, that when used with
      respect to Letters of Credit which expire after the Termination Date has
      occurred, the LC Commitment Percentage of each Lender shall be the
      percentage, immediately prior to the Termination Date, that such Lender's
      LC Commitment is of the LC Commitment of all Lenders.

            "LENDERS" means, collectively, each Initial Lender, to the extent
      applicable, each Issuing Bank, each Assuming Lender that shall become a
      party hereto pursuant to Section 2.19 or 2.20 and each Eligible Assignee
      that shall become a party hereto pursuant to Section 9.07; provided,
      however, that for purposes of any determination to be made under Section
      2.07, 2.11, 2.12 or 9.04(b) with respect to CUSA, in its capacity as
      Lender, the term "Lenders" shall be deemed to include Citibank.

            "LETTER OF CREDIT" means a letter of credit or other credit support
      instrument issued as credit support for the obligations of, or for the
      account of, the Borrower or any of its Subsidiaries.

            "LETTER OF CREDIT LIABILITY" means, as of any date of determination,
      all then existing liabilities of the Borrower to the Issuing Banks in
      respect of the Letters of Credit, whether such liability is contingent or
      fixed, and shall, in each case, consist of the sum of (i) the aggregate
      maximum amount (the determination of such maximum amount to assume
      compliance with all conditions for drawing) then available to be drawn
      under such Letters of Credit (including without limitation, amounts
      available under such Letters of Credit for which a draft has been
      presented but not yet honored) and (ii) the aggregate amount which has
      then been paid by and not been reimbursed to, the Issuing Banks under such
      Letters of Credit. For the purposes of determining the Letter of Credit
      Liability, the face amount of Letters of Credit outstanding in any
      Committed Currency shall be expressed as the Equivalent in Dollars of such
      Committed Currency.

            "LIEN" means any lien, security interest or other charge or
      encumbrance of any kind, or any other type of preferential arrangement
      which has the same effect as a lien or security interest.

            "MAJORITY LENDERS" means, at any time, Lenders owed at least a
      majority in interest of the aggregate unpaid principal amount of the
      Advances owing to the Lenders at such time, or, if no such principal
      amount is outstanding at such time, Lenders having at least a majority in
      interest of the Commitments at such time; provided, however, that neither
      the Borrower nor any of its Affiliates, if a Lender, shall be included in
      the determination of the Majority Lenders at any time. For the purposes of
      this definition, the aggregate principal amount of Letter of Credit
      Liability owing to each Issuing Bank shall be considered Advances to be
      owed to the Lenders ratably in accordance with their respective
      Commitments.

            "MATERIAL SUBSIDIARY" means, at any date of determination, a
      Subsidiary of the Borrower that, either individually or together with its
      Subsidiaries, taken as a whole, has total assets exceeding $100,000,000 on
      such date.

                                       9


            "MEASUREMENT PERIOD" means, at any date of determination, the most
      recently completed four consecutive fiscal quarters of the Borrower on or
      immediately prior to such date.

            "MOODY'S" means Moody's Investors Service, Inc. or any successor
      thereto.

            "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
      Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
      is making or accruing an obligation to make contributions, or has within
      any of the preceding five plan years made or accrued an obligation to make
      contributions.

            "MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
      Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
      Borrower or any ERISA Affiliate and at least one Person other than the
      Borrower and the ERISA Affiliates or (ii) was so maintained and in respect
      of which the Borrower or an ERISA Affiliate could have liability under
      Section 4064 or 4069 of ERISA in the event such plan has been or were to
      be terminated.

            "NOTE" has the meaning specified in Section 2.17.

            "NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).

            "NOTICE OF LETTER OF CREDIT REQUEST" has the meaning set forth in
      Section 3.03.

            "OTHER TAXES" has the meaning specified in Section 2.14(b).

            "PATRIOT ACT" means the Uniting and Strengthening America by
      Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
      Act of 2001, Pub. L. 107-56 and all other laws and regulations relating to
      money-laundering and terrorist activities.

            "PAYMENT OFFICE" means, for any Committed Currency, such office of
      Citibank as shall be from time to time selected by the Administrative
      Agent and notified by the Administrative Agent to the Borrower and the
      Lenders.

            "PERSON" means an individual, partnership, corporation (including a
      business trust), joint stock company, trust, unincorporated association,
      joint venture or other entity, or a government or any political
      subdivision or agency thereof.

            "PLAN" means a Single Employer Plan or a Multiple Employer Plan.

            "PUBLIC DEBT RATING" means, as of any date of determination, the
      higher rating that has been most recently announced by either S&P or
      Moody's, as the case may be, for any class of non-credit enhanced
      long-term senior unsecured public debt issued by the Borrower. For
      purposes of the foregoing, (a) if only one of S&P and Moody's shall have
      in effect a Public Debt Rating, the Eurocurrency Rate Margin and the
      Facility Fee Percentage shall be determined by reference to the available
      rating; (b) if neither S&P nor Moody's shall have in effect a Public Debt
      Rating, the Eurocurrency Rate Margin and the Facility Fee Percentage will
      be set in accordance with Level 5 under the definition of "Eurocurrency
      Rate Margin" or "Facility Fee Percentage", as the case may be; (c) if the
      ratings established by S&P and Moody's shall fall within different levels,
      the Eurocurrency Rate Margin and the Facility Fee Percentage shall be
      based upon the higher rating; (d) if any rating established by S&P or
      Moody's shall be changed, such change shall be effective as of the date on
      which such change is first announced publicly by the rating agency making
      such change; and (e) if S&P or Moody's shall change the basis on which
      ratings are established, each reference to

                                       10


      the Public Debt Rating announced by S&P or Moody's, as the case may be,
      shall refer to the then equivalent rating by S&P or Moody's, as the case
      may be.

            "REFERENCE BANKS" means Citibank, Bank of America, N.A., Barclays
      Bank Plc and BNP Paribas, or, in the event that fewer than two of such
      banks remain Lenders hereunder at any time, any other commercial bank
      designated by the Borrower and approved by the Majority Lenders as
      constituting a "Reference Bank" hereunder.

            "REGISTER" has the meaning specified in Section 9.07(c).

            "REPLACED LOAN AGREEMENTS" means, collectively, (a) the Amended and
      Restated 364-Day Credit Agreement dated as of February 26, 2003, as
      amended, among the Borrower, the lenders party thereto and Citicorp USA,
      Inc., as administrative agent, and (b) the Five-Year Credit Agreement,
      dated as of March 8, 2000, as amended, among the Borrower, the lenders
      party thereto and Citicorp USA, Inc., as administrative agent.

            "S&P" means Standard & Poor's, a division of The McGraw-Hill
      Companies, Inc., or any successor thereto.

            "SEC" has the meaning specified in Section 6.01(e)(i).

            "SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
      Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
      Borrower or an ERISA Affiliate and no Person other than the Borrower and
      the ERISA Affiliates or (ii) was so maintained and in respect of which the
      Borrower or an ERISA Affiliate could have liability under Section 4069 of
      ERISA in the event such plan has been or were to be terminated.

            "SPECIFIED PROJECT ENTITY" means:

            (a)   DVD Financing, Inc.;

            (b)   each Affiliate of the Borrower organized after the Closing
      Date (or whose business commenced after the Closing Date) and any other
      Person organized after the Closing Date (or whose business commenced after
      the Closing Date) whose equity securities or interests are owned, directly
      or indirectly, in whole or in part, by the Borrower or any of its
      Subsidiaries, in each case, if:

                  (i)   such Affiliate or other Person has incurred Debt for the
            purpose of financing all or a part of the costs of the acquisition,
            construction, development or operation of a particular project
            ("PROJECT DEBT");

                  (ii)  except for customary guaranties, keep-well agreements
            and similar credit and equity support arrangements in respect of
            Project Debt incurred by such Affiliate or other Person from the
            Borrower or any of its Subsidiaries not in excess of $150,000,000 or
            from third parties, the source of repayment of such Project Debt is
            limited to the assets and revenues of such particular project (or,
            if such particular project comprises all or substantially all of the
            assets of such Affiliate or other Person, the assets and revenues of
            such Affiliate or other Person); and

                  (iii) the property over which Liens are granted to secure such
            Project Debt, if any, consists solely of the assets and revenues of
            such particular project or the equity securities or

                                       11


            interests of such Affiliate or other Person or a Subsidiary of the
            Borrower referred to in clause (c) below; and

            (c)   each Affiliate of the Borrower organized after the Closing
      Date (or whose business commenced after the Closing Date) whose equity
      securities or interests are owned, directly or indirectly, in whole or in
      part, by the Borrower or any of its Subsidiaries, the primary business of
      which is the direct or indirect ownership, management or operation of, or
      provision of services to, any Affiliate or other Person referred to in
      clause (b) above.

            "SUB-AGENT" means Citibank International plc.

            "SUBSIDIARY" means with respect to any Person, any (a) corporation
      (or foreign equivalent) other than an Excluded Entity or (b) general
      partnership, limited partnership or limited liability company (or foreign
      equivalent) other than an Excluded Entity (each, a "NON-CORPORATE
      ENTITY"), in either case, of which more than 50% of the outstanding
      capital stock (or comparable interest) having ordinary voting power
      (irrespective of whether at the time capital stock (or comparable
      interest) of any other class or classes of such corporation or
      Non-Corporate Entity shall or might have voting power upon the occurrence
      of any contingency) is at the time directly or indirectly (through one or
      more Subsidiaries) owned by such Person. In the case of a Non-Corporate
      Entity, a Person shall be deemed to have more than 50% of interests having
      ordinary voting power only if such Person's vote in respect of such
      interests comprises more than 50% of the total voting power of all such
      interests in such Non-Corporate Entity. For purposes of this definition,
      any managerial powers or rights comparable to managerial powers afforded
      to a Person solely by reason of such Person's ownership of general partner
      or comparable interests (or foreign equivalent) shall not be deemed to be
      `interests having ordinary voting power'.

            "TAXES" has the meaning specified in Section 2.14(a).

            "TERMINATION DATE" means the earlier of (a) February 24, 2009,
      subject to the extension thereof pursuant to Section 2.20, and (b) the
      date of termination in whole of the aggregate Commitments and LC
      Commitments pursuant to Section 2.04 or 7.01; provided, however, that the
      Termination Date of any Lender that is a Declining Lender in connection
      with any requested extension pursuant to Section 2.20 shall be the
      Termination Date in effect immediately prior to the applicable Extension
      Date for all purposes of this Agreement.

            "364-DAY CREDIT AGREEMENT" means the 364-Day Credit Agreement dated
      as of February 25, 2004 among the Borrower, the banks, financial
      institutions and other institutional lenders party thereto, CUSA, as
      administrative agent thereunder, Bank of America, N.A., as syndication
      agent, and Barclays Bank Plc, BNP Paribas SA, HSBC Bank USA and JPMorgan
      Chase Bank, as co-documentation agents thereunder, as such agreement may
      be amended, supplemented or otherwise modified hereafter from time to
      time.

            "TYPE" has the meaning specified in the definition of "Advance".

            "UNITED STATES" and "U.S." each means the United States of America.

            "UTILIZATION FEE" has the meaning specified in Section 2.03(b).

            SECTION 1.02 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "FROM" means "from and including" and the words "TO" and "until" each
means "to but excluding".

                                       12


            SECTION 1.03 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP; provided, however,
that if any changes in accounting principles from those used in the preparation
of the financial statements referred to in Section 4.01(c) dated September 30,
2003 hereafter occur by reason of the promulgation of rules, regulations,
pronouncements, opinions or other requirements of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and result in a change in
the method of calculation of financial covenants or the terms related thereto
contained in this Agreement, the Borrower shall, at its option, (i) furnish to
the Administrative Agent, together with each delivery of the consolidated
financial statements of the Borrower and its subsidiaries required to be
delivered pursuant to Section 6.01(e), a written reconciliation setting forth
the differences that would have resulted if such financial statements had been
prepared utilizing accounting principles and policies in conformity with those
used to prepare the financial statements referred to in Section 4.01(c) dated
September 30, 2003 or (ii) enter into negotiations with the Administrative Agent
and the Lenders to amend such financial covenants or terms equitably to reflect
such changes so that the criteria for evaluating the financial condition of the
Borrower and its subsidiaries shall be the same after such changes as if such
changes had not been made; provided, however, that at all times in the case of
clause (i) above, and in the case of clause (ii) above until the amendment
referred to in such clause (ii) becomes effective, all covenants and related
calculations under this Agreement shall be performed, observed and determined as
though no such changes in accounting principles had been made.

                                   ARTICLE II
                        AMOUNTS AND TERMS OF THE ADVANCES

            SECTION 2.01 The Advances. Each Lender severally agrees, on the
terms and conditions hereinafter set forth, to make Advances to the Borrower
from time to time on any Business Day during the period from the Effective Date
until the Termination Date in an aggregate amount (based in respect of any
Advances denominated in a Committed Currency on the Equivalent in Dollars
determined on the date of delivery of the applicable Notice of Borrowing) not to
exceed at any time outstanding the Dollar amount set forth opposite such
Lender's name on the signature pages hereof or, if such Lender has become a
Lender hereunder pursuant to an Assumption Agreement, the Dollar amount set
forth as the Commitment of such Lender in such Assumption Agreement or, if such
Lender has entered into an Assignment and Acceptance the Dollar amount set forth
for such Lender in the Register maintained by the Administrative Agent pursuant
to Section 9.07(c), as such amount may be reduced pursuant to Section 2.04 or
increased pursuant to Section 2.19 (such Lender's "COMMITMENT"), provided, that,
the Lenders shall not be obligated to, and shall not, make any Advances as part
of a Borrowing if after giving effect to such Borrowing the sum of the then
outstanding aggregate amount of all Borrowings, and the then outstanding
aggregate amount of all Letter of Credit Liability shall exceed the aggregate
amount of the Commitments then in effect. Each Borrowing shall be in an
aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof (or the Equivalent thereof in any Committed Currency determined on the
date of delivery of the applicable Notice of Borrowing); provided, that, in the
case of any Borrowing made for the purpose of reimbursing a drawing under any
Letter of Credit, (A) the aggregate amount of such Borrowing shall be not less
than $1,000,000 and (B) if the aggregate amount of such Borrowing is less than
$20,000,000, such Borrowing shall consist solely of Base Rate Advances. Except
as set forth in clause (B) of the preceding sentence, each Borrowing shall
consist of Advances of the same Type made on the same day by the Lenders ratably
according to their respective Commitments. Within the limits of each Lender's
Commitment, the Borrower from time to time may borrow under this Section 2.01,
prepay pursuant to Section 2.10 and reborrow under this Section 2.01.

            SECTION 2.02 Making the Advances. (a) Each Borrowing shall be made
on notice, given not later than (x) 11:00 A.M. (New York City time) on the same
Business Day as the date of a proposed Borrowing comprised of Base Rate
Advances, (y) 11:00 A.M. (New York City time) on the third Business Day prior to
the date of a proposed Borrowing comprised of Eurocurrency Rate Advances
denominated in any

                                       13


Committed Currency, or (z) 1:00 P.M. (New York City time) on the third Business
Day prior to the date of a proposed Borrowing comprised of Eurocurrency Rate
Advances denominated in Dollars, by the Borrower to the Administrative Agent
(and, in the case of a Borrowing consisting in Eurocurrency Rate Advances
denominated in any Committed Currency, simultaneously to the Sub-Agent), which
shall give to each Lender prompt notice thereof by telecopier. Each such notice
of a Borrowing (a "NOTICE OF BORROWING") shall be by telecopier, or by
telephone, confirmed immediately by telecopier, in substantially the form of
Exhibit A hereto, specifying therein the requested (i) date of such Borrowing
(which shall be a Business Day), (ii) Type of Advances comprising such
Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a
Borrowing comprised of Eurocurrency Rate Advances, initial Interest Period and
currency for each such Advance. Each Lender shall, before (A) 1:00 P.M. (New
York City time) on the date of such Borrowing consisting of Advances denominated
in Dollars or (B) 1:00 P.M. (London time) on the date of such Borrowing
consisting of Advances denominated in any Committed Currency, make available for
the account of its Applicable Lending Office to the Administrative Agent at the
Administrative Agent's (or the Sub-Agent's, as the case may be) Account, in same
day funds, such Lender's ratable portion of such Borrowing. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article IV, the Administrative Agent will
make such funds available to the Borrower at the office where the Administrative
Agent's (or the Sub-Agent's, as the case may be) Account is maintained.

            (b)   Anything in subsection (a) above or Section 2.01 to the
contrary notwithstanding, the Borrower may not select Eurocurrency Rate Advances
for any Borrowing if the aggregate amount of such Borrowing is less than
$20,000,000 (or the Equivalent thereof in any Committed Currency determined on
the date of delivery of the applicable Notice of Borrowing) or if the obligation
of the Lenders to make Eurocurrency Rate Advances shall be suspended at such
time pursuant to Section 2.08.

            (c)   Each Notice of Borrowing shall be irrevocable and binding on
the Borrower. In the case of any Borrowing which the related Notice of Borrowing
specifies as to be comprised of Eurocurrency Rate Advances, the Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such Lender
as a result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such Borrowing the applicable conditions set forth in
Article IV, including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or redeployment of deposits or other funds acquired by
such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.

            (d)   Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that any Lender shall not have
so made such ratable portion available to the Administrative Agent, such Lender
agrees to pay to the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is paid to the
Administrative Agent, at (A) the Federal Funds Rate in the case of Advances
denominated in Dollars or (B) the cost of funds incurred by the Administrative
Agent in respect of such amount in the case of Advances denominated in Committed
Currencies; provided, however, that (i) within two Business Days after any
Lender shall fail to make such ratable portion available to the Administrative
Agent, the Administrative Agent shall notify the Borrower of such failure and
(ii) if such Lender shall not have paid such corresponding amount to the
Administrative Agent within two Business Days after such demand is made of such
Lender by the Administrative Agent, the Borrower agrees to repay to the
Administrative Agent forthwith, upon demand by the Administrative Agent to the
Borrower, such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to

                                       14


the Administrative Agent, at the interest rate applicable at the time to
Advances comprising such Borrowing. If and to the extent such corresponding
amount shall be paid by such Lender to the Administrative Agent in accordance
with this Section 2.02(d), such amount so paid shall constitute such Lender's
Advance as part of such Borrowing for all purposes of this Agreement.

            (e)   The failure of any Lender to make the Advance to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.

            SECTION 2.03 Fees. (a) Facility Fee. The Borrower agrees to pay to
each Lender a facility fee on the average daily amount (whether used or unused)
of such Lender's Commitment from the Effective Date, in the case of each Initial
Lender, and from the later of (a) the Effective Date and (b) the effective date
specified in the Assumption Agreement or the Assignment and Acceptance pursuant
to which it became a Lender, in the case of each other Lender, until, in each
case, the Termination Date, payable quarterly in arrears on the first Business
Day of each January, April, July and October during the term of such Lender's
Commitment, commencing April 1, 2004, and on the Termination Date, at the rate
per annum equal to the Facility Fee Percentage in effect from time to time.

            (b)   Utilization Fee. For each day on which the sum of (i) the
outstanding Advances and (ii) the Letter of Credit Liability exceeds 50% of the
Commitments, the Borrower agrees to pay to the Agent for the account of each
Lender, a utilization fee equal to the quotient obtained by dividing (A) the
product of (1)the sum of (a) the Letter of Credit Liability on such day and (b)
the difference between the aggregate outstanding Advances on such day and the
outstanding Base Rate Advances on such day and (2) 0.125% by (B) 365 (or, for
any such day in a leap year, 366). This Utilization Fee shall be paid quarterly
in arrears on the first Business Day of each January, April, July and October of
each year, and on the Termination Date.

            SECTION 2.04 Reduction of the Commitments. The Borrower shall have
the right, upon at least three Business Days' notice to the Administrative
Agent, to terminate in whole or reduce ratably in part the unused portions of
the respective Commitments of the Lenders; provided that each partial reduction
shall be in the aggregate amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and; provided, further, that after giving effect to
any such partial reduction, the total Commitments shall not be less than the sum
of (i) the then outstanding aggregate amount of Advances and (ii) the greater of
(x) Letter of Credit Liability or (y) aggregate amount of LC Commitments. Once
terminated, such Commitments may not be reinstated.

            SECTION 2.05 Repayment of Advances. The Borrower shall repay to each
Lender on the Termination Date the aggregate principal amount of the Advances
owing to such Lender on such date.

            SECTION 2.06 Interest on Advances. (a) Scheduled Interest. The
Borrower shall pay to each Lender interest on the unpaid principal amount of
each Advance owing to such Lender from the date of such Advance until such
principal amount shall be paid in full, at the following rates per annum:

                  (i)   Base Rate Advances. During such periods as such Advance
is a Base Rate Advance, a rate per annum equal at all times to the Base Rate in
effect from time to time, payable quarterly in arrears on the first Business Day
of each January, April, July and October during such periods and on the date
such Base Rate Advance shall be Converted or paid in full and, for the avoidance
of doubt, a Utilization Fee shall not be payable during such periods as such
Advance is a Base Rate Advance.

                  (ii)  Eurocurrency Rate Advances. During such periods as such
Advance is a Eurocurrency Rate Advance, a rate per annum equal at all times
during each Interest Period for such Advance

                                       15


to the sum of (A) the Eurocurrency Rate for such Interest Period for such
Advance and (B) the Eurocurrency Rate Margin in effect from time to time,
payable in arrears on the last day of such Interest Period and, if such Interest
Period has a duration of more than three months, on the date which occurs three
months and, if applicable, six months, nine months and twelve months after the
first day of such Interest Period and on the date such Eurocurrency Rate Advance
shall be Converted or paid in full .

            (b)   Default Interest. The Borrower shall pay interest on the
unpaid principal amount of each Advance that is not paid when due and on the
unpaid amount of all interest, fees and other amounts payable hereunder that is
not paid when due, payable on demand, at a rate per annum equal at all times to
(i) in the case of any amount of principal, the greater of (x) 2% per annum
above the rate per annum required to be paid on such Advance immediately prior
to the date on which such amount became due and (y) 2% per annum above the Base
Rate in effect from time to time and (ii) to the fullest extent permitted by
law, in the case of all other amounts, 2% per annum above the Base Rate in
effect from time to time.

            SECTION 2.07 Additional Interest on Eurocurrency Rate Advances. The
Borrower shall pay to each Lender, so long as such Lender shall be required
under regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid principal
amount of each Eurocurrency Rate Advance of such Lender, from the date of such
Advance until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (i) the
Eurocurrency Rate for the applicable Interest Period for such Advance from (ii)
the rate obtained by dividing such Eurocurrency Rate by a percentage equal to
100% minus the Eurocurrency Rate Reserve Percentage of such Lender for such
Interest Period, payable on each date on which interest is payable on such
Advance. Such additional interest shall be determined by such Lender and
notified in reasonable detail to the Borrower through the Administrative Agent.

            SECTION 2.08 Interest Rate Determination. (a) To the extent
required, each Reference Bank agrees to furnish to the Administrative Agent
timely information for the purpose of determining each Eurocurrency Rate. If any
one or more of the Reference Banks shall not furnish such timely information to
the Administrative Agent for the purpose of determining such interest rate, the
Administrative Agent shall determine such interest rate on the basis of timely
information furnished by the remaining Reference Banks.

            (b)   The Administrative Agent shall give prompt notice to the
Borrower and the Lenders of the applicable interest rate determined by the
Administrative Agent for purposes of Section 2.06(a)(i) or (a)(ii), and, if
applicable, the rate, if any, furnished by each Reference Bank for the purpose
of determining the applicable interest rate under Section 2.06(a)(ii).

            (c)   If fewer than two Reference Banks furnish timely information
to the Administrative Agent for purposes of determining the Eurocurrency Rate
for any Eurocurrency Rate Advances, (i) the Administrative Agent shall forthwith
notify the Borrower and the Lenders that the interest rate cannot be determined
for such Eurocurrency Rate Advances, (ii) each such Advance will automatically,
on the last day of the then existing Interest Period therefor, Convert into a
Base Rate Advance (or, if such Advance is then a Base Rate Advance, will
continue as a Base Rate Advance), and (iii) the obligation of the Lenders to
make, or to Convert Advances into, Eurocurrency Rate Advances shall be suspended
until the Administrative Agent shall notify the Borrower and the Lenders that
the circumstances causing such suspension no longer exist.

            (d)   If, with respect to any Eurocurrency Rate Advances, the
Majority Lenders notify the Administrative Agent that (i) they are unable to
obtain matching deposits in the London inter-bank market at or about 11:00 A.M.
(London time) on the second Business Day before the making of a Borrowing in
sufficient amounts to fund their respective Eurocurrency Rate Advances as a part
of such Borrowing during its Interest Period or (ii) the Eurocurrency Rate for
any Interest Period for such Advances will not adequately

                                       16


reflect the cost to such Majority Lenders (which cost each such Majority Lender
reasonably determines in good faith is material) of making, funding or
maintaining their respective Eurocurrency Rate Advances for such Interest
Period, the Administrative Agent shall forthwith so notify the Borrower and the
Lenders, whereupon, unless the Eurocurrency Rate Margin shall be increased to
reflect such costs as determined by such Majority Lenders and as agreed by the
Borrower, (A) the obligation of the Lenders to make, or to Convert Base Rate
Advances into, Eurocurrency Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist, and (B) the Borrower
will, on the last day of the then existing Interest Period therefor, (1) if such
Eurocurrency Rate Advances are denominated in Dollars, either (x) prepay such
Advances or (y) Convert such Advances into Base Rate Advances and (2) if such
Eurocurrency Rate Advances are denominated in any Committed Currency, either (x)
prepay such Advances or (y) redenominate such Advances into an Equivalent amount
of Dollars and Convert such Advances into Base Rate Advances. The Administrative
Agent shall use reasonable efforts to determine from time to time whether the
circumstances causing such suspension no longer exist and, promptly after the
Administrative Agent knows that the circumstances causing such suspension no
longer exist, the Administrative Agent shall so notify the Borrower and the
Lenders.

            (e)   If the Borrower shall fail to select the duration of any
Interest Period for any Eurocurrency Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Lenders and
such Advances will automatically, on the last day of the then existing Interest
Period therefor, (i) if such Eurocurrency Rate Advances are denominated in
Dollars, be Converted into Base Rate Advances and (ii) if such Eurocurrency Rate
Advances are denominated in a Committed Currency, be redenominated into an
Equivalent amount of Dollars and be Converted into Base Rate Advances.

            (f)   On the date on which the aggregate unpaid principal amount of
Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $20,000,000, such Eurocurrency Rate
Advances shall automatically Convert into Base Rate Advances and, on and after
such date, the right of the Borrower to Convert such Advances into Eurocurrency
Rate Advances shall terminate; provided, however, that if and so long as each
such Eurocurrency Rate Advance shall have the same Interest Period as
Eurocurrency Rate Advances comprising another Borrowing or Borrowings, and the
aggregate unpaid principal amount of all such Eurocurrency Rate Advances shall
equal or exceed $20,000,000, the Borrower shall have the right to continue all
such Eurocurrency Rate Advances as, or to Convert all such Advances into,
Eurocurrency Rate Advances having such Interest Period.

            (g)   Upon the occurrence and during the continuance of any Event of
Default under Section 7.01(a), (i) each Eurocurrency Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
(A) if such Eurocurrency Rate Advances are denominated in Dollars, be Converted
into Base Rate Advances and (B) if such Eurocurrency Rate Advances are
denominated in any Committed Currency, be redenominated into an Equivalent
amount of Dollars and be Converted into Base Rate Advances and (ii) the
obligation of the Lenders to make, or to Convert Advances into, Eurocurrency
Rate Advances shall be suspended.

            SECTION 2.09 Optional Conversion of Advances. The Borrower may on
any Business Day, upon notice given to the Administrative Agent not later than
(i) 11:00 A.M. (New York City time) on the same Business Day as the date of the
proposed Conversion in the case of a Conversion of Eurocurrency Rate Advances
into Base Rate Advances, and (ii) 1:00 P.M. (New York City time) on the third
Business Day prior to the date of the proposed Conversion in the case of a
Conversion of Base Rate Advances into Eurocurrency Rate Advances or of
Eurocurrency Rate Advances of one Interest Period into Eurocurrency Rate
Advances of another Interest Period, as the case may be, and subject to the
provisions of Sections 2.08, 2.09 and 2.12, Convert all Advances denominated in
Dollars of one Type comprising the same Borrowing into Advances denominated in
Dollars of the other Type; provided, however, that any Conversion of any

                                       17


Eurocurrency Rate Advances into Base Rate Advances or into Eurocurrency Rate
Advances of another Interest Period shall be made on, and only on, the last day
of an Interest Period for such Eurocurrency Rate Advances. Promptly upon receipt
from the Borrower of a notice of a proposed Conversion hereunder, the
Administrative Agent shall give notice of such proposed Conversion to each
Lender. Each such notice of a Conversion shall, within the restrictions set
forth above, specify (x) the date of such Conversion (which shall be a Business
Day), (y) the Advances to be Converted, and (z) if such Conversion is into
Eurocurrency Rate Advances, the duration of the initial Interest Period for each
such Advance. The Borrower may Convert all Eurocurrency Rate Advances of any one
Lender into Base Rate Advances of such Lender in accordance with the provisions
of Section 2.12 by complying with the procedures set forth therein and in this
Section 2.09 as though each reference in this Section 2.09 to Advances
denominated in Dollars of any Type was to such Advances of such Lender. Each
such notice of Conversion shall, subject to the provisions of Sections 2.08 and
2.12, be irrevocable and binding on the Borrower.

            SECTION 2.10 Prepayments of Advances. (a) Optional. The Borrower
may, upon not less than (i) the same Business Day's notice to the Administrative
Agent received not later than 11:00 A.M. (New York City time) in the case of
Borrowings consisting of Base Rate Advances, (ii) three Business Days' notice to
the Administrative Agent received not later than 11:00 A.M. (New York City time)
in the case of Borrowings consisting of Eurocurrency Rate Advances denominated
in any Committed Currency, or (iii) three Business Days' notice to the
Administrative Agent received not later than 1:00 P.M. (New York City time) in
the case of Borrowings consisting of Eurocurrency Rate Advances denominated in
Dollars, stating the proposed date and aggregate principal amount of the
prepayment, and if such notice is given the Borrower shall, prepay the
outstanding principal amounts of the Advances constituting part of the same
Borrowings in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid; provided, however, that
(x) each partial prepayment shall be in an aggregate principal amount of
$1,000,000 or an integral multiple of $1,000,000 in excess thereof (or the
Equivalent thereof in a Committed Currency determined on the date notice of
prepayment is given), and (y) in the case of any such prepayment of Eurocurrency
Rate Advances, the Borrower shall be obligated to reimburse the Lenders in
respect thereof pursuant to Section 9.04(b).

            (b)   Mandatory. (i) If, the Administrative Agent notifies the
Borrower in writing that, on any date, the sum of (A) the aggregate principal
amount of all Advances and Letter of Credit Liabilities denominated in Dollars
then outstanding and (B) the Equivalent in Dollars (determined on the third
Business Day prior to such date) of the aggregate principal amount of all
Advances and Letter of Credit Liabilities denominated in Committed Currencies
then outstanding exceeds 102% of the aggregate Commitments of the Lenders on
such date, the Borrower shall, within two Business Days after receipt of such
notice, prepay the outstanding principal amount of any Advances, and to the
extent necessary, deposit into the LC Collateral Account in Dollars, an amount
(which amount shall be held by the Administrative Agent, for the benefit of the
Lenders, as cash collateral for the Borrower's obligations with respect to
outstanding Letters of Credit) necessary so that, after giving effect to such
prepayment of Advances and such deposit, the sum of (A) and (B) above less the
amount deposited in the LC Collateral Account does not exceed 100% of the
aggregate Commitments of the Lenders on such date as set forth in the written
notice from the Administrative Agent to the Borrower pursuant to the terms
hereof. Any such amounts on deposit with the Administrative Agent as cash
collateral in the LC Collateral Account shall (so long as no Event of Default
has occurred and is continuing) be released to the Borrower on the date on which
the sum of (A) and (B) above does not exceed 100% of the sum of the aggregate
Commitments of the Lenders and the amount on deposit in the LC Collateral
Account (after giving effect to any proposed release) on such date. In
connection therewith, upon the request of the Administrative Agent the Borrower
shall open the LC Collateral Account with the Administrative Agent and enter
into such documents relating thereto as are reasonably requested by the
Administrative Agent.

                                       18


                  (ii)  Each prepayment made pursuant to this Section 2.10(b)
shall be made together with any interest accrued to the date of such prepayment
on the principal amounts prepaid and, in the case of any prepayment of a
Eurocurrency Rate Advance on a date other than the last day of an Interest
Period, with any additional amounts which the Borrower shall be obligated to
reimburse to the Lenders in respect thereof pursuant to Section 9.04(b). The
Administrative Agent shall give prompt notice of any prepayment required under
this Section 2.10(b) to the Borrower and the Lenders.

            SECTION 2.11 Increased Costs. (a) If after the date hereof, due to
either (i) the introduction of or any change (other than any change by way of
imposition or increase of reserve requirements included in the Eurocurrency Rate
Reserve Percentage) in or in the interpretation of any law or regulation or (ii)
the compliance with any hereafter promulgated guideline or request from any
central bank or other governmental authority, including, without limitation, any
agency of the European Union or similar monetary or multinational authority
(whether or not having the force of law), which guideline or request either (x)
imposes, modifies or deems applicable any reserve, special deposit or similar
requirement against letters of credit or guarantees issued by, or assets held by
or deposits in or for the account of, any Lender or (y) imposes on any Lender
any other condition regarding this Agreement or any collateral thereon, there
shall be any increase in the cost (excluding any allocation of corporate
overhead) to the Issuing Banks or any Lender (which cost such Issuing Bank or
such Lender reasonably determines in good faith is material) of agreeing to make
or making, funding or maintaining Eurocurrency Rate Advances or issuing, or
purchasing participations in, the Letters of Credit, then such Issuing Bank or
such Lender shall so notify the Borrower promptly after such Issuing Bank or
such Lender knows of such increased cost and determines that such cost is
material and the Borrower shall from time to time, upon demand by such Issuing
Bank or such Lender (with a copy of such demand to the Administrative Agent),
pay to the Administrative Agent for the account of such Issuing Bank or such
Lender additional amounts sufficient to compensate such Issuing Bank or such
Lender for such increased cost. A certificate of such Issuing Bank or such
Lender as to the amount of such increased cost in reasonable detail and stating
the basis upon which such amount has been calculated and certifying that such
Issuing Bank's or such Lender's method of allocating such costs is fair and
reasonable and that such Issuing Bank's or such Lender's demand for payment of
such costs hereunder is not inconsistent with its treatment of other borrowers
which, as a credit matter, are substantially similar to the Borrower and which
are subject to similar provisions, submitted to the Borrower and the
Administrative Agent by such Issuing Bank or such Lender, shall be conclusive
and binding for all purposes, absent manifest error.

            (b)   If, after the date hereof, either (i) the introduction of or
change in or in the interpretation of any law or regulation or (ii) the
compliance by any Issuing Bank or any Lender with any hereafter promulgated
guideline or request from any central bank or other governmental authority,
including, without limitation, any agency of the European Union or similar
monetary or multinational authority (whether or not having the force of law),
affects or would affect the amount of capital required or expected to be
maintained by such Issuing Bank or such Lender or any entity controlling such
Issuing Bank or such Lender and the amount of such capital is materially
increased by or based upon the existence of such Issuing Bank's or such Lender's
commitment to lend hereunder and other commitments of this type, then such
Issuing Bank or such Lender shall so notify the Borrower promptly after such
Issuing Bank or such Lender makes such determination and, upon demand by such
Issuing Bank or such Lender (with a copy of such demand to the Administrative
Agent), the Borrower shall pay to such Issuing Bank or such Lender within five
days from the date of such demand, from time to time as specified by such
Issuing Bank or such Lender, additional amounts sufficient to compensate such
Issuing Bank or such Lender or such corporation in the light of such
circumstances, to the extent that such Issuing Bank or such Lender reasonably
determines such increase in capital to be allocable to the existence of such
Issuing Bank's or such Lender's commitment to lend hereunder. A certificate of
such Issuing Bank or such Lender as to such amount in reasonable detail and
stating the basis upon which such amount has been calculated and certifying that
such Issuing Bank's or such Lender's method of allocating such increase of
capital is fair and reasonable and that such Issuing Bank's or Lender's demand
for payment of such increase of capital hereunder is not inconsistent with its
treatment of

                                       19


other borrowers which, as a credit matter, are substantially similar to the
Borrower and which are subject to similar provisions, submitted to the Borrower
and the Administrative Agent by such Issuing Bank or such Lender, shall be
conclusive and binding for all purposes, absent manifest error.

            (c)   The Borrower shall not be obligated to pay under this Section
2.11 any amounts which relate to costs or increases of capital incurred prior to
the 12 months immediately preceding the date of demand for payment of such
amounts, unless the applicable law, regulation, guideline or request resulting
in such costs or increases of capital is imposed retroactively. In the case of
any law, regulation, guideline or request which is imposed retroactively, the
Issuing Bank or Lender making demand for payment of any amount under this
Section 2.11 shall notify the Borrower not later than 12 months from the date
that such Issuing Bank or such Lender should reasonably have known of such law,
regulation, guideline or request and the Borrower's obligation to compensate
such Issuing Bank or such Lender for such amount is contingent upon such Issuing
Bank or such Lender so notifying the Borrower; provided, however, that any
failure by such Issuing Bank or such Lender to provide such notice shall not
affect the Borrower's obligations under this Section 2.11 with respect to
amounts resulting from costs or increases of capital incurred after the date
which occurs 12 months immediately preceding the date on which such Issuing Bank
or such Lender notified the Borrower of such law, regulation, guideline or
request.

            (d)   If any Issuing Bank or any Lender shall subsequently recoup
any costs (other than from the Borrower) for which such Issuing Bank or such
Lender has theretofore been compensated by the Borrower under this Section 2.11,
such Issuing Bank or such Lender shall remit to the Borrower an amount equal to
the amount of such recoupment. Amounts required to be paid by the Borrower
pursuant to this Section 2.11 shall be paid in addition to, and without
duplication of, any amounts required to be paid pursuant to Section 2.14.

            (e)   Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.11 shall survive the payment in full (after the Termination
Date) of all payment obligations of the Borrower in respect of Advances or
Letters of Credit hereunder.

            SECTION 2.12 Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Administrative Agent that the
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for any Lender or its
Eurocurrency Lending Office to perform its obligations hereunder to make
Eurocurrency Rate Advances in Dollars or any Committed Currency or to fund or
maintain Eurocurrency Rate Advances in Dollars or any Committed Currency, (a)
the obligation of such Lender to make, or to Convert Base Rate Advances into,
Eurocurrency Rate Advances shall be suspended until such Lender shall notify the
Administrative Agent, and the Administrative Agent shall notify the Borrower and
the other Lenders (which notice shall be given promptly after the Administrative
Agent knows that the circumstances causing such suspension no longer exist) that
the circumstances causing such suspension no longer exist, and (b) the Borrower
shall forthwith prepay in full all Eurocurrency Rate Advances of such Lender
then outstanding, together with interest accrued thereon, unless the Borrower,
within five Business Days of notice from the Administrative Agent or, if
permitted by law, on and as of the last day of the then existing Interest Period
for such Eurocurrency Rate Advances, (i) if such Eurocurrency Rate Advance is
denominated in Dollars, Converts it into a Base Rate Advance or an Advance that
bears interest at the rate set forth in Section 2.06(a)(i), and (ii) if such
Eurocurrency Rate Advance is denominated in any Committed Currency,
redenominates it into an Equivalent amount of Dollars and Converts it into a
Base Rate Advance or an Advance that bears interest at the rate set forth in
Section 2.06(a)(i).

            SECTION 2.13 Payments and Computations. (a) The Borrower shall make
each payment hereunder (and under the Notes, if any), irrespective of any right
of set-off or counterclaim, except with

                                       20


respect to principal of, interest on, and other amounts relating to, Advances
denominated in a Committed Currency, not later than 11:00 A.M. (New York City
time) on the day when due, in Dollars (i) to the Administrative Agent at the
Administrative Agent's (or Sub-Agent's) Account in same day funds, or (ii) to
the Issuing Bank at its address referred to in Section 9.02 in same day funds,
in respect of payments to reimburse the Issuing Banks for payments under Letters
of Credit and the payments under Section 3.06(b). The Borrower shall make each
payment hereunder with respect to principal of, interest on, and other amounts
relating to, Advances denominated in a Committed Currency, not later than 11:00
A.M. (at the Payment Office for such Committed Currency) on the day when due, in
such Committed Currency to the Administrative Agent, by deposit of such funds to
the Administrative Agent's (or Sub-Agent's) Account in same day funds. The
Borrower shall make each payment hereunder with respect to reimbursement of a
Letter of Credit denominated in a Committed Currency, (A) in such Committed
Currency, at the office designated therefor by the respective Issuing Bank so
long as such payment is made by the close of business on the Business Day when
due and (B) thereafter in Dollars (at the then Dollar Equivalent of the amount
due on such preceding Business Day), by 11:00 A.M. (New York City time) to the
respective Issuing Bank at its address referred to in Section 9.02 in same day
funds as provided in Section 3.10 below. The Administrative Agent or the
respective Issuing Bank, as the case may be, will promptly thereafter cause to
be distributed like funds relating to the payment of principal or interest or
fees ratably (other than amounts payable pursuant to Sections 2.07, 2.11, 2.14,
3.04, 9.04 and 9.08) to the Lenders for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other
amount payable to any Issuing Bank or Lender to such Issuing Bank or Lender for
the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon any Assuming Lender becoming a
Lender hereunder as a result of a Commitment Increase pursuant to Section 2.19
or an extension of the Termination Date pursuant to Section 2.20, and upon the
Administrative Agent's receipt of such Lender's Assumption Agreement and
recording of the information contained therein in the Register, from and after
the applicable Increase Date or Extension Date, or the respective Issuing Bank,
as the case may be, the Administrative Agent shall make all payments hereunder
and under any Notes issued in connection therewith in respect of the interest
assumed thereby to the Assuming Lender. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained therein in the Register
pursuant to Section 9.07(d), from and after the effective date specified in such
Assignment and Acceptance, the Administrative Agent or the respective Issuing
Bank, as the case may be, shall make all payments hereunder and under the Notes,
if any, issued in connection therewith in respect of the interest assigned
thereby to the Lender assignee thereunder, and the parties to such Assignment
and Acceptance shall make all appropriate adjustments in such payments for
periods prior to such effective date directly between themselves.

            (b)   All computations of interest based on clause (a) of the
definition of "Base Rate" shall be made by the Administrative Agent on the basis
of a year of 365 or 366 days, as the case may be, and all computations of
interest based on the Eurocurrency Rate or the Federal Funds Rate and of fees
shall be made by the Administrative Agent, and all computations of additional
interest pursuant to Section 2.07 shall be made by a Lender, on the basis of a
year of 360 days (or, in each case of Advances denominated in Committed
Currencies where market practice differs, in accordance with such market
practice after notification of the Borrower), in each case for the actual number
of days (including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable. Each determination by the
Administrative Agent (or, in the case of Section 2.07, by a Lender) of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

            (c)   Whenever any payment hereunder or under the Notes, if any,
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or fees, as the
case may be; provided, however, that if such extension would cause payment of
interest on or principal of Eurocurrency Rate Advances to be made in the next
following calendar month, such payment shall be made on the immediately
preceding Business Day.

                                       21


            (d)   Unless the Administrative Agent or the respective Issuing Bank
shall have received notice from the Borrower prior to the date on which any
payment is due to the Lenders or an Issuing Bank hereunder that the Borrower
will not make such payment in full, the Administrative Agent may assume that the
Borrower has made such payment in full to the Administrative Agent or the
respective Issuing Bank on such date and the Administrative Agent or the
respective Issuing Bank may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent that the Borrower shall not have so made
such payment in full to the Administrative Agent or the respective Issuing Bank,
each Lender shall repay to the Administrative Agent or the respective Issuing
Bank, forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative Agent
or the respective Issuing Bank, at (i) the Federal Funds Rate in the case of
Advances denominated in Dollars or (ii) the cost of funds incurred by the
Administrative Agent in respect of such amount in the case of Advances or
Letters of Credit denominated in Committed Currencies.

            SECTION 2.14 Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes, if any, shall be made, in accordance with Section
2.13, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of each Lender and the
Administrative Agent or any Issuing Bank (as the case may be), taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction under the
laws of which such Lender, the Administrative Agent or such Issuing Bank (as the
case may be) is organized or any political subdivision thereof and, in the case
of each Lender, taxes imposed on its income, and franchise taxes imposed on it
by the jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof or by any other jurisdiction in which such Lender, the
Administrative Agent or such Issuing Bank (as the case may be) is doing business
that is unrelated to this Agreement (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to any Lender, the
Administrative Agent or any Issuing Bank (as the case may be), (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.14) such Lender, the Administrative Agent or such Issuing Bank
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.

            (b)   In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Notes,
if any, or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or the Notes, if any (hereinafter referred to as
"OTHER TAXES").

            (c)   The Borrower will indemnify each Lender and the Administrative
Agent or each Issuing Bank (as the case may be) for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.14) paid by such
Lender, the Administrative Agent or such Issuing Bank (as the case may be) and
any liability (including penalties to the extent not imposed as a result of such
Lender's, the Administrative Agent's or such Issuing Bank's (as the case may be)
gross negligence or willful misconduct, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days from the
date such Lender, the Administrative Agent or such Issuing Bank (as the case may
be) makes written demand therefor.

                                       22


            (d)   Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent, at its address referred to in
Section 9.02 or the Issuing Bank at its address referred to in Schedule I (as
the case may be), the original or a certified copy of a receipt evidencing
payment thereof, to the extent that such a receipt is issued, or if such receipt
is not issued, other evidence of payment thereof that is reasonably satisfactory
to the Administrative Agent or such Issuing Bank (as the case may be).

            (e)   Each Lender that is not created or organized under the laws of
the United States or a political subdivision thereof shall deliver to the
Borrower and the Administrative Agent on or prior to the date of its execution
and delivery of this Agreement, and each such Lender that is not a party hereto
on the date hereof shall deliver to the Borrower and the Administrative Agent on
or prior to the date on which such Lender becomes a Lender pursuant to Section
2.19, 2.20 or 9.07 (as the case may be), a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender in
substantially the form set out in Exhibit D-1 or D-2 hereto, as applicable, to
the effect that such Lender is eligible under the provisions of an applicable
tax treaty concluded by the United States (in which case the certificate shall
be accompanied by two executed copies of Form W-8BEN (or any successor or
substitute form or forms) of the Internal Revenue Service of the United States
(the "IRS"), or under Section 1441(c) or 1442 of the Internal Revenue Code (in
which case the certificate shall be accompanied by two copies of IRS Form W-8ECI
(or any successor or substitute form or forms) of the IRS, to receive, as of the
date hereof or as of the date such party becomes a Lender hereto pursuant to
Section 2.19, 2.20 or 9.07 (as the case may be), as appropriate, payments
hereunder without deduction or withholding of United States federal income tax.
Each such Lender further agrees to deliver to the Borrower and the
Administrative Agent from time to time, as reasonably requested by the Borrower
or the Administrative Agent, and in any case before or promptly upon the
occurrence of any events requiring a change in the most recent certificate
previously delivered pursuant to this Section 2.14(e), a true and accurate
certificate executed in duplicate by a duly authorized officer of such Lender in
substantially the form set out in Exhibit D-1 or D-2 hereto, as applicable.
Further, each Lender that delivers a certificate in the form set out in Exhibit
D-1 hereto agrees, to the extent permitted by law, to deliver to the Borrower
and the Administrative Agent within 15 days prior to every third anniversary of
the date of delivery of the initial IRS Form W-8BEN by such Lender (or more
often if required by law) on which this Agreement is still in effect, two
accurate and complete original signed copies of IRS Form W-8BEN (or any
successor or substitute form or forms required under the Internal Revenue Code
or the applicable regulations promulgated thereunder) and a certificate in the
form set out in such Exhibit D-1, and each Lender that delivers a certificate in
the form set out in Exhibit D-2 hereto agrees to deliver to the Borrower and the
Administrative Agent, to the extent permitted by law, within 15 days prior to
every third anniversary of the date of delivery of the initial IRS Form W-8ECI
by such Lender (or more often if required by law) on which this Agreement is
still in effect, two accurate and complete original signed copies of IRS Form
W-8ECI (or any successor or substitute form or forms required under the Internal
Revenue Code or the applicable regulations promulgated thereunder) and a
certificate in the form of such Exhibit D-2. Each such certificate shall certify
as to one of the following:

                  (i)   that such Lender is eligible to receive payments
hereunder without deduction or withholding of United States federal income tax;

                  (ii)  that such Lender is not eligible to receive payments
hereunder without deduction or withholding of United States federal income tax
as specified therein but does not require additional payments therefor pursuant
to Section 2.14(a) or (c) because it is eligible and able to recover the full
amount of any such deduction or withholding from a source other than the
Borrower; or

                  (iii) that such Lender is not eligible to receive payments
hereunder without deduction or withholding of United States federal income tax
as specified therein and that it is not eligible and able to recover the full
amount of the same from a source other than the Borrower.

                                       23


If any form or document referred to in this subsection (e) requires the
disclosure of information, other than information necessary to compute the tax
payable and information required on the date hereof by IRS Forms W-8BEN or
W-8ECI, that any Lender reasonably considers to be confidential, such Lender
promptly shall give notice thereof to the Borrower and the Administrative Agent
and shall not be obligated to include in such form or document such confidential
information; provided that such Lender certifies to the Borrower that the
failure to disclose such confidential information does not increase the
obligations of the Borrower under this Section 2.14.

            (f)   For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form described in Section 2.14(e)
(other than if such failure is due to a change in law occurring subsequent to
the date on which a form originally was required to be provided, or if such form
otherwise is not required under the first two sentences of subsection (e)
above), such Lender shall not be entitled to indemnification under Section
2.14(c) with respect to Taxes imposed by any jurisdiction (including, without
limitation, the United States); provided, however, that should a Lender become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as the Lender shall reasonably request to
assist the Lender to recover such Taxes.

            (g)   Without affecting its rights under this Section 2.14 or any
provision of this Agreement, each Lender agrees that if any Taxes or Other Taxes
are imposed and required by law to be paid or to be withheld from any amount
payable to any Lender or its Applicable Lending Office with respect to which the
Borrower would be obligated pursuant to this Section 2.14 to increase any
amounts payable to such Lender or to pay any such Taxes or Other Taxes, such
Lender shall use reasonable efforts to select an alternative Applicable Lending
Office which would not result in the imposition of such Taxes or Other Taxes;
provided, however, that no Lender shall be obligated to select an alternative
Applicable Lending Office if such Lender determines that (i) as a result of such
selection such Lender would be in violation of an applicable law, regulation, or
treaty, or would incur unreasonable additional costs or expenses or (ii) such
selection would be inadvisable for regulatory reasons or inconsistent with the
interests of such Lender.

            (h)   Each Lender agrees with the Borrower that it will take all
reasonable actions by all usual means (i) to secure and maintain the benefit of
all benefits available to it under the provisions of any applicable double tax
treaty concluded by the United States of America to which it may be entitled by
reason of the location of such Lender's Applicable Lending Office or place of
incorporation or its status as an enterprise of any jurisdiction having any such
applicable double tax treaty, if such benefit would reduce the amount payable by
the Borrower in accordance with this Section 2.14 and (ii) otherwise to
cooperate with the Borrower to minimize the amount payable by the Borrower
pursuant to this Section 2.14; provided, however, that no Lender shall be
obliged to disclose to the Borrower any information regarding its tax affairs or
tax computations nor to reorder its tax affairs or tax planning pursuant hereto.

            (i)   Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.14 shall survive the payment in full of principal and interest
on all Advances and the termination of this Agreement until such date as all
applicable statutes of limitations (including any extensions thereof) have
expired with respect to such agreements and obligations of the Borrower
contained in this Section 2.14.

            SECTION 2.15 Sharing of Payments, Etc. If any Lender shall obtain
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of (i) the Advances made by it (other than
pursuant to Section 2.07, 2.11, 2.14, 9.04 or 9.08) in excess of its ratable
share of payments on account of the Advances obtained by all the Lenders or (ii)
any Letter of Credit Liability of the Borrower hereunder (other than pursuant to
Section 2.11, 2.14, 9.04 or 9.08) in excess of its LC Commitment Percentage of
any such payments on account of such Letter of Credit Liability obtained by all
the Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Advances

                                       24


made by them or the participations purchased pursuant to Section 3.05 as shall
be necessary to cause such purchasing Lender to share the excess payment ratably
with each of them, provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery, together with an
amount equal to such Lender's ratable share (according to the proportion of (i)
the amount of such Lender's required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
The Borrower agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section 2.15 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right of set-off) with
respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.

            SECTION 2.16 Mandatory Assignment by a Lender; Mitigation. If any
Lender requests from the Borrower either payment of additional interest on
Eurocurrency Rate Advances pursuant to Section 2.07, or reimbursement for
increased costs pursuant to Section 2.11, or payment of or reimbursement for
Taxes pursuant to Section 2.14, or if any Lender notifies the Administrative
Agent that it is unlawful for such Lender or its Eurocurrency Lending Office to
perform its obligations hereunder pursuant to Section 2.12, (i) such Lender
will, upon three Business Days' notice by the Borrower to such Lender and the
Administrative Agent, to the extent not inconsistent with such Lender's internal
policies and applicable legal and regulatory restrictions, use reasonable
efforts to make, fund or maintain its Eurocurrency Rate Advances through another
Eurocurrency Lending Office of such Lender if (A) as a result thereof the
additional amounts required to be paid pursuant to Section 2.07, 2.11 or 2.14,
as applicable, in respect of such Eurocurrency Rate Advances would be materially
reduced or the provisions of Section 2.12 would not apply to such Lender, as
applicable, and (B) as determined by such Lender in good faith but in its sole
discretion, the making or maintaining of such Eurocurrency Rate Advances through
such other Eurocurrency Lending Office would not otherwise materially and
adversely affect such Eurocurrency Rate Advances or such Lender and (ii) unless
such Lender has theretofore taken steps to remove or cure, and has removed or
cured, the conditions creating such obligation to pay such additional amounts or
the circumstances described in Section 2.12, the Borrower may designate an
Eligible Assignee to purchase for cash (pursuant to an Assignment and
Acceptance) all, but not less than all, of the Advances then owing to such
Lender and all, but not less than all, of such Lender's rights and obligations
hereunder, without recourse to or warranty by, or expense to, such Lender, for a
purchase price equal to the outstanding principal amount of each such Advance
then owing to such Lender plus any accrued but unpaid interest thereon and any
accrued but unpaid fees owing thereto and, in addition, (A) all additional cost
reimbursements, expense reimbursements and indemnities, if any, owing in respect
of such Lender's Commitment hereunder, and all other accrued and unpaid amounts
owing to such Lender hereunder, at such time shall be paid to such Lender and
(B) if such Eligible Assignee is not otherwise a Lender at such time, the
applicable processing and recordation fee under Section 9.07(a) for such
assignment shall have been paid.

            SECTION 2.17 Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower agrees
that upon notice by any Lender to the Borrower (with a copy of such notice to
the Administrative Agent) to the effect that a promissory note or other evidence
of indebtedness is required or appropriate in order for such Lender to evidence
(whether for purposes of pledge, enforcement or otherwise) the Advances owing
to, or to be made by, such Lender, the Borrower shall promptly execute and
deliver to such Lender a promissory note or other evidence of indebtedness, in
form and substance reasonably satisfactory to the Borrower and such Lender (each
a "NOTE"), payable to the order of such Lender in a principal amount equal to
the Commitment of such Lender; provided, however, that the execution and
delivery of such promissory note or other evidence of indebtedness shall not be
a condition precedent to the making of any Advance under this Agreement.

                                       25


            (b)   The Register maintained by the Administrative Agent pursuant
to Section 9.07(c) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, the Type of Advances and currencies
comprising such Borrowing and, if appropriate, the Interest Period applicable
thereto, (ii) the terms of each Assumption Agreement and each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder, and (iv) the amount of any sum received by the Administrative
Agent from the Borrower hereunder and each Lender's share thereof.

            (c)   Entries made in good faith by the Administrative Agent in the
Register pursuant to subsection (b) above, and by each Lender in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender and, in the case
of such account or accounts, such Lender, under this Agreement, absent manifest
error; provided, however, that the failure of the Administrative Agent or such
Lender to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
obligations of the Borrower under this Agreement.

            SECTION 2.18 Use of Proceeds.The proceeds of the Advances shall be
available and Letters of Credit shall be Issued (and the Borrower agrees that it
shall use such proceeds and such Letters of Credit) to support the obligations
of the Borrower in respect of commercial paper issued by the Borrower and/or for
other general corporate purposes of the Borrower and its Subsidiaries,
including, but not limited to, the payment in full on the Effective Date of all
amounts due under each of the Replaced Loan Agreements and the replacement on
the Effective Date of all the Existing Letters of Credit. Notwithstanding the
foregoing provisions of this Section 2.18, the Borrower will not use the
proceeds of any Advance to purchase the capital stock of any corporation in a
transaction, or as part of a series of transactions, (i) the purpose of which
is, at the time of any such purchase, to acquire control of such corporation or
(ii) the result of which is the ownership by the Borrower and its Subsidiaries
of 10% or more of the capital stock of such corporation, in either case if the
board of directors of such corporation has publicly announced its opposition to
such transaction.

            SECTION 2.19 Increase in the Aggregate Commitments. (a) The Borrower
may, at any time but in any event not more than once in any calendar year prior
to the Termination Date, by notice to the Administrative Agent, request that the
aggregate amount of the Commitments be increased by an amount of $100,000,000 or
an integral multiple of $5,000,000 in excess thereof (each a "COMMITMENT
INCREASE") to be effective as of a date that is at least 90 days prior to the
scheduled Termination Date then in effect (the "INCREASE DATE") as specified in
the related notice to the Administrative Agent; provided, however, that (i) in
no event shall the aggregate amount of the Commitments at any time exceed
$5,000,000,000, (ii) on the date of any request by the Borrower for a Commitment
Increase and at all times thereafter to and including the related Increase Date,
the Public Debt Rating shall be at least BBB+ by S&P and at least Baa1 by
Moody's and (iii) no Event of Default, or event that with the giving of notice
or passage of time or both would constitute an Event of Default, shall have
occurred and be continuing as of the date of such request or as of the
applicable Increase Date, or shall occur as a result thereof.

            (b)   The Administrative Agent shall promptly notify the Lenders of
a request by the Borrower for a Commitment Increase, which notice shall include
(i) the proposed amount of such requested Commitment Increase, (ii) the proposed
Increase Date and (iii) the date by which Lenders wishing to participate in the
Commitment Increase must commit to an increase in the amount of their respective
Commitments (the "COMMITMENT DATE"). Each Lender that is willing to participate
in such requested Commitment Increase (each an "INCREASING LENDER") shall give
written notice to the Administrative Agent on or prior to the Commitment Date of
the amount by which it is willing to increase its Commitment. If the

                                       26


Lenders notify the Administrative Agent that they are willing to increase the
amount of their respective Commitments by an aggregate amount that exceeds the
amount of the requested Commitment Increase, the requested Commitment Increase
shall be allocated among the Lenders willing to participate therein in such
amounts as are agreed between the Borrower and the Administrative Agent.

            (c)   Promptly following each Commitment Date, the Administrative
Agent shall notify the Borrower as to the amount, if any, by which the Lenders
are willing to participate in the requested Commitment Increase. If the
aggregate amount by which the Lenders are willing to participate in any
requested Commitment Increase on any such Commitment Date is less than the
requested Commitment Increase, then the Borrower may extend offers to one or
more Eligible Assignees to participate in any portion of the requested
Commitment Increase that has not been committed to by the Lenders as of the
applicable Commitment Date; provided, however, that the Commitment of each such
Eligible Assignee shall be in an amount of $25,000,000 or an integral multiple
of $1,000,000 in excess thereof.

            (d)   On each Increase Date, each Eligible Assignee that accepts an
offer to participate in a requested Commitment Increase in accordance with
Section 2.19(c) (each such Eligible Assignee and each Eligible Assignee that
agrees to an extension of the Termination Date in accordance with Section
2.20(c), an "ASSUMING LENDER") shall become a Lender party to this Agreement as
of such Increase Date and the Commitment of each Increasing Lender for such
requested Commitment Increase shall be so increased by such amount (or by the
amount allocated to such Lender pursuant to the last sentence of Section
2.19(b)) as of such Increase Date; provided, however, that the Administrative
Agent shall have received on or before such Increase Date the following, each
dated such date:

                  (i)   (A) certified copies of resolutions of the Board of
Directors of the Borrower or the Executive Committee of such Board approving the
Commitment Increase and the corresponding modifications to this Agreement and
(B) an opinion of counsel for the Borrower (which may be in-house counsel), in
substantially the form of Exhibit C hereto;

                  (ii)  an assumption agreement from each Assuming Lender, if
any, in form and substance satisfactory to the Borrower and the Administrative
Agent (each an "ASSUMPTION AGREEMENT"), duly executed by such Eligible Assignee,
the Administrative Agent and the Borrower; and

                  (iii) confirmation from each Increasing Lender of the increase
in the amount of its Commitment in a writing satisfactory to the Borrower and
the Administrative Agent.

            (e)   On each Increase Date, upon fulfillment of the conditions set
forth in the immediately preceding sentence of this Section 2.19(d), the
Administrative Agent shall notify the Lenders (including, without limitation,
each Assuming Lender) and the Borrower, on or before 1:00 P.M. (New York City
time), by telecopier, of the occurrence of the Commitment Increase to be
effected on such Increase Date and shall record in the Register the relevant
information with respect to each Increasing Lender and each Assuming Lender on
such date.

            SECTION 2.20 Extension of Termination Date. (a) At least 45 days but
not more than 60 days prior to the next Anniversary Date, the Borrower, by
written notice to the Administrative Agent, may request an extension of the
Termination Date in effect at such time by one calendar year from its then
scheduled expiration; provided, however, that, if the Borrower does not request
an extension of the Termination Date in a timely manner prior to any Anniversary
Date it may, but shall not be obligated to, request that the Termination Date be
extended for two consecutive calendar years from its then scheduled expiration
by making a request therefor in a timely manner prior to the next succeeding
Anniversary Date. The Administrative Agent shall promptly notify each Lender of
such request, and each Lender shall in turn, in its sole discretion, not later
than 30 days prior to such next Anniversary Date, notify the Borrower and the

                                       27


Administrative Agent in writing as to whether such Lender will consent to such
extension. If any Lender shall fail to notify the Administrative Agent and the
Borrower in writing of its consent to any such request for extension of the
Termination Date at least 30 days prior to the next Anniversary Date, such
Lender shall be deemed to be a Declining Lender with respect to such request.
The Administrative Agent shall notify the Borrower not later than 25 days prior
to such next Anniversary Date of the decision of the Lenders regarding the
Borrower's request for an extension of the Termination Date.

            (b)   If all of the Lenders consent in writing to any such request
in accordance with subsection (a) of this Section 2.20, the Termination Date in
effect at such time shall, effective as at such next Anniversary Date (the
"EXTENSION DATE"), be extended for one calendar year or two calendar years, as
properly requested; provided that on each Extension Date, no Event of Default,
or event that with the giving of notice or passage of time or both would
constitute an Event of Default, shall have occurred and be continuing, or shall
occur as a consequence thereof. If less than all of the Lenders consent in
writing to any such request in accordance with subsection (a) of this Section
2.20, the Termination Date in effect at such time shall, effective as at the
applicable Extension Date, be extended as to those Lenders that so consented
(each an "EXTENDING LENDER") but shall not be extended as to any other Lender
(each a "DECLINING LENDER"). To the extent that the Termination Date is not
extended as to any Lender pursuant to this Section 2.20 and the Commitment of
such Lender is not assumed in accordance with subsection (c) of this Section
2.20 on or prior to the applicable Extension Date, the Commitment of such
Declining Lender shall automatically terminate in whole on such unextended
Termination Date without any further notice or other action by the Borrower,
such Lender or any other Person; provided that such Declining Lender's rights
under Sections 2.11, 2.14, 9.04 and 9.08, and its obligations under Section
8.05, shall survive the Termination Date for such Lender as to matters occurring
prior to such date. It is understood and agreed that no Lender shall have any
obligation whatsoever to agree to any request made by the Borrower for any
requested extension of the Termination Date.

            (c)   If there are any Declining Lenders, the Borrower may arrange
for one or more Extending Lenders or other Eligible Assignees (each such
Eligible Assignee that accepts an offer to assume a Declining Lender's
Commitment as of the applicable Extension Date being an "ASSUMING LENDER") to
assume, effective as of the Extension Date, any Declining Lender's Commitment
and all of the obligations of such Declining Lender under this Agreement
thereafter arising, without recourse to or warranty by, or expense to, such
Declining Lender; provided, however, that the amount of the Commitment of any
such Assuming Lender as a result of such substitution shall in no event be less
than $25,000,000 unless the amount of the Commitment of such Declining Lender is
less than $25,000,000, in which case such Assuming Lender shall assume all of
such lesser amount; and provided further that:

                  (i)   any such Extending Lender or Assuming Lender shall have
paid to such Declining Lender (A) the aggregate principal amount of, and any
interest accrued and unpaid to the effective date of the assignment on, the
outstanding Advances, if any, of such Declining Lender plus (B) any accrued but
unpaid fees owing to such Declining Lender as of the effective date of such
assignment;

                  (ii)  all additional costs reimbursements, expense
reimbursements and indemnities payable to such Declining Lender, and all other
accrued and unpaid amounts owing to such Declining Lender hereunder, as of the
effective date of such assignment shall have been paid to such Declining Lender;
and

                  (iii) with respect to any such Assuming Lender, the applicable
processing and recordation fee required under Section 9.07(a) for such
assignment shall have been paid;

provided further that such Declining Lender's rights under Sections 2.11, 2.14,
9.04 and 9.08, and its obligations under Section 8.05, shall survive such
substitution as to matters occurring prior to the date of substitution. At least
three Business Days prior to any Extension Date, (A) each such Assuming Lender,
if

                                       28


any, shall have delivered to the Borrower and the Administrative Agent an
assumption agreement, in form and substance satisfactory to the Borrower and the
Administrative Agent (an "ASSUMPTION AGREEMENT"), duly executed by such Assuming
Lender, such Declining Lender, the Borrower and the Administrative Agent, (B)
any such Extending Lender shall have delivered confirmation in writing
satisfactory to the Borrower and the Administrative Agent as to the increase in
the amount of its Commitment and (C) each Declining Lender being replaced
pursuant to this Section 2.20 shall have delivered to the Administrative Agent
any Note or Notes held by such Declining Lender. Upon the payment or prepayment
of all amounts referred to in clauses (i), (ii) and (iii) of the immediately
preceding sentence, each such Extending Lender or Assuming Lender, as of the
Extension Date, will be substituted for such Declining Lender under this
Agreement and shall be a Lender for all purposes of this Agreement, without any
further acknowledgment by or the consent of the other Lenders, and the
obligations of each such Declining Lender hereunder shall, by the provisions
hereof, be released and discharged.

            (d)   If all of the Extending and Assuming Lenders (after giving
effect to any assignments and assumptions pursuant to subsection (c) of this
Section 2.20) consent in writing to a requested extension (whether by written
consent pursuant to subsection (a) of this Section 2.20, by execution and
delivery of an Assumption Agreement or otherwise) not later than one Business
Day prior to such Extension Date, the Administrative Agent shall so notify the
Borrower, and, so long as no Event of Default, or event that with the giving of
notice or passage of time or both would constitute an Event of Default, shall
have occurred and be continuing as of such Extension Date, or shall occur as a
consequence thereof, the Termination Date then in effect shall be extended for
the additional one-year period or two-year period, as the case may be, as
described in subsection (a) of this Section 2.20, and all references in this
Agreement, and in the Notes, if any, to the "Termination Date" shall, with
respect to each Extending Lender and each Assuming Lender for such Extension
Date, refer to the Termination Date as so extended. Promptly following each
Extension Date, the Administrative Agent shall notify the Lenders (including,
without limitation, each Assuming Lender) of the extension of the scheduled
Termination Date in effect immediately prior thereto and shall thereupon record
in the Register the relevant information with respect to each such Extending
Lender and each such Assuming Lender.

                                   ARTICLE III
                         AMOUNT AND TERMS OF LETTERS OF
                                     CREDIT
                           AND PARTICIPATIONS THEREIN

            SECTION 3.01 Letters of Credit. (a) As of the Effective Date,
without further action on the part of any Person, each Existing Letter of Credit
shall be automatically deemed to be a Letter of Credit issued hereunder for all
purposes of this Agreement in the amounts, upon the terms and in favor of the
beneficiaries specified on Schedule III hereto, and the original issuing bank of
each such Letter of Credit shall be the Issuing Bank thereof for all purposes
hereof.

            (b)   Each Issuing Bank agrees, on the terms and conditions
hereinafter set forth, to Issue for the account of the Borrower, one or more
Letters of Credit from time to time during the period from the date of this
Agreement until the Termination Date, each Letter of Credit to be in a minimum
amount of $1,000,000 (or the Equivalent thereof in any Committed Currency
determined on the date of delivery of the applicable Notice of Letter of Credit
Request) and each such Letter of Credit upon its Issuance to expire on or before
the date which occurs one year from the date of its Issuance but in any event
prior to the first anniversary of the Termination Date (except for Auto-Renewal
Letters of Credit as provided in Section 3.01(c) below); provided, however, that
an Issuing Bank shall not be obligated to, and shall not, Issue any Letter of
Credit if:

                                       29


            (i)   after giving effect to the Issuance of such Letter of Credit,
      the sum of the then outstanding aggregate amount of all Letter of Credit
      Liability and the then outstanding principal amount of all Advances, shall
      exceed the aggregate amount of the Commitments then in effect; provided,
      that, the respective Issuing Bank may assume that the aggregate amount of
      the Commitments then in effect shall not be so exceeded if it has not been
      so informed by the Administrative Agent within two Business Days after
      receiving the notice delivered by the Borrower pursuant to Section 3.03
      below;

            (ii)  after giving effect to the Issuance of such Letter of Credit,
      the then outstanding aggregate amount of Letter of Credit Liability in
      respect of all Letters of Credit shall exceed the aggregate amount of the
      LC Commitments then in effect; provided, that, the respective Issuing Bank
      may assume that the aggregate amount of the LC Commitments then in effect
      shall not be so exceeded if it has not been so informed by the
      Administrative Agent within two Business Days after receiving the notice
      delivered by the Borrower pursuant to Section 3.03 below;

            (iii) after giving effect to the Issuance of such Letter of Credit,
      the then outstanding aggregate amount of all Letter of Credit Liability in
      respect of Letters of Credit Issued by such Issuing Bank shall exceed the
      Issuing Commitment of such Issuing Bank; or

            (iv)  the Borrower is not able to meet any of the applicable
      conditions set forth in Article IV, and the Administrative Agent or the
      Majority Lenders shall have notified the Issuing Banks and the Borrower
      that no further Letters of Credit are to be Issued by the Issuing Banks
      due to such failure, and such notice has not been withdrawn.

            (c)   Each Issuing Bank shall provide to the Administrative Agent in
writing, on the last Business Day of each month, a report with respect to the
outstanding Letters of Credit issued by such Issuing Bank, which report shall
(i) set forth the undrawn amount and drawn but unreimbursed amount as of the end
of each day during that month of all such Letters of Credit and (ii) shall
calculate the Letter of Credit Liability in respect of such Letters of Credit on
such date (converting any amounts of the Letter of Credit Liability which are
denominated in a Committed Currency to Dollars for purposes of such
calculation). Promptly after receiving such reports, the Administrative Agent
shall forward copies thereof to each Lender and the Borrower and, if the Dollar
amount of all such Letter of Credit Liabilities exceeds the total of LC
Commitments, the Borrower shall promptly upon receipt thereof make the payments
provided for in Section 2.10 above, if applicable.

            (d)   If the Borrower so requests, an Issuing Bank may, in its sole
discretion, agree to issue a Letter of Credit that has automatic renewal
provisions (an "AUTO-RENEWAL LETTER OF CREDIT"); provided, that any such
Auto-Renewal Letter of Credit must permit the respective Issuing Bank to prevent
any such renewal at least once in each twelve-month period (commencing with its
date of Issuance) by giving prior notice to the beneficiary thereof not later
than a day (the "NON-RENEWAL NOTICE DATE") in each such twelve-month period to
be agreed upon at the time such Letter of Credit is issued. Once an Auto-Renewal
Letter of Credit has been issued, the Lenders shall be deemed to have authorized
(but may not require) the respective Issuing Bank to permit the renewal of such
Letter of Credit at any time, provided, however, that, in any event, the Issuing
Bank shall not permit any such renewal only if such Issuing Bank has received
notice on or before the day that is five Business Days before the Non-Renewal
Notice Date from the Administrative Agent that one or more of the applicable
conditions specified in Section 4.02 is not then satisfied. Notwithstanding the
above, nothing in this Section 3.01(c) shall limit the ability of the respective
Issuing Bank from exercising any of its rights with respect to any Auto-Renewal
Letter of Credit after the termination of this Agreement.

                                       30


            (e)   Each Issuing Bank shall notify the Administrative Agent in
writing upon the reduction or termination of any Letter of Credit Issued by it
within two Business Days after any such reduction or termination.

            (f)   Within the limits of the obligations of the Issuing Banks set
forth above and in Section 3.02, the Borrower may request the Issuing Banks to
Issue one or more Letters of Credit, reimburse the Issuing Banks for payments
made thereunder pursuant to Section 3.04(a) and request the Issuing Banks to
Issue one or more additional Letters of Credit under this Section 3.01.

            SECTION 3.02 Limitation on the Issuance of Letters of Credit
Denominated in Committed Currencies. The Issuing Banks shall not be obligated
to, and shall not, Issue any Letter of Credit denominated in a Committed
Currency if, after giving effect to the Issuance of any Letter of Credit
denominated in a Committed Currency, the then outstanding aggregate amount of
all Letter of Credit Liability with respect to all Letters of Credit denominated
in a Committed Currency equals or exceeds (on a Dollar Equivalent basis)
$500,000,000.

            SECTION 3.03 Issuing the Letters of Credit. Each Letter of Credit
shall be Issued on three Business Days' notice from the Borrower to the
respective Issuing Bank and the Administrative Agent as provided in a Notice of
Letter of Credit Request in the form of Exhibit A-2 hereto, accompanied by the
proposed form of such Letter of Credit in form and substance satisfactory to
such Issuing Bank. On the date specified by the Borrower in such notice and upon
fulfillment of the applicable conditions set forth in Section 4.02, such Issuing
Bank will Issue such Letter of Credit and shall promptly notify the
Administrative Agent thereof.

            SECTION 3.04 Reimbursement Obligations. (a) The Borrower shall:

            (i)   pay to the respective Issuing Bank an amount equal to, and in
      reimbursement for, each amount which such Issuing Bank pays under any
      Letter of Credit (such amount to be notified to the Borrower on or before
      the date of payment by such Issuing Bank) not later than the date which
      occurs three Business Days after payment of such amount by such Issuing
      Bank under such Letter of Credit; and

            (ii)  pay to such Issuing Bank interest on any amount paid by such
      Issuing Bank under any Letter of Credit from the date on which such
      Issuing Bank pays such amount under any Letter of Credit until such amount
      is reimbursed in full to such Issuing Bank pursuant to clause (i) above,
      payable on demand, at a rate per annum equal to the rate per annum
      required to be paid on Base Rate Advances; provided, that, if the Borrower
      shall not have reimbursed the respective Issuing Bank within three
      Business Days of payment by such Issuing Bank as provided in paragraph (i)
      above, the Borrower shall thereafter until such amount is reimbursed in
      full to such Issuing Bank pay interest, payable on demand, at a
      fluctuating rate per annum equal to 2% per annum above the rate per annum
      required to be paid on Base Rate Advances immediately prior to the date on
      which such Issuing Bank makes such payment under such Letter of Credit.

            (b)   All amounts to be reimbursed to an Issuing Bank in accordance
with subsection (a) above may, at the Borrower's option and subject to the
limitations set forth in Section 2.01 (inclusive of minimum borrowing
limitations), be paid from the proceeds of Advances.

            (c)   All payments in respect of Letters of Credit shall be made
free and clear of all claims, charges, offsets or deductions whatsoever.

                                       31


            SECTION 3.05 Participations Purchased by the Lenders. (a) On the
date of Issuance of each Letter of Credit the respective Issuing Bank shall be
deemed irrevocably and unconditionally to have sold and transferred to each
Lender without recourse or warranty, and each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from such Issuing Bank,
an undivided interest and participation, to the extent of such Lender's LC
Commitment Percentage in effect from time to time, in such Letter of Credit and
all Letter of Credit Liability relating to such Letter of Credit and all
documents securing, guaranteeing, supporting, or otherwise benefiting the
payment of such Letter of Credit Liability.

            (b)   In the event that any reimbursement obligation under Section
3.04(a) is not paid within three Business Days after the due date to the
respective Issuing Bank with respect to any Letter of Credit, such Issuing Bank
shall promptly notify the Administrative Agent who shall promptly notify the
Lenders of the amount of such reimbursement obligation (on a Dollar Equivalent
basis in the case of Letters of Credit denominated in an Committed Currency) and
each Lender shall pay to such Issuing Bank, in lawful money of the United States
and in same day funds, an amount equal to such Lender's LC Commitment Percentage
then in effect of the amount of such unpaid reimbursement obligation with such
payment to be made on the date of notification to such Lender, if such
notification is made prior to 11:00 A.M. (New York City time) on a Business Day
and if such notification is made after 11:00 A.M. (New York City time) on a
Business Day, such payment to be made on the immediately succeeding Business
Day, and in each case with interest at the Federal Funds Rate for each day after
such payment is due until such amount is paid to such Issuing Bank.

            (c)   Promptly after the respective Issuing Bank receives a payment
(including interest payments) on account of a reimbursement obligation with
respect to any Letter of Credit, such Issuing Bank shall promptly pay to each
Lender which funded its participation therein, in lawful money of the United
States, the Dollar Equivalent of funds so received, in an amount equal to such
Lender's LC Commitment Percentage thereof.

            (d)   Upon the request of any Lender, the Administrative Agent shall
furnish, or cause the respective Issuing Bank to furnish, to such Lender copies
of any outstanding Letter of Credit as may be reasonably requested by such
Lender.

            (e)   The obligation of each Lender to make payments under
subsection (b) above shall be unconditional and irrevocable and shall remain in
effect after the occurrence of the Termination Date with respect to any Letter
of Credit that was Issued by the respective Issuing Bank on behalf of the
Borrower on or before the Termination Date and such payments shall be made under
all circumstances, including, without limitation, any of the circumstances
referred to in Section 3.07 other than in connection with circumstances
involving any willful misconduct or gross negligence of such Issuing Bank in
Issuing a Letter of Credit or in determining whether documents presented under a
Letter of Credit comply with the terms thereof.

            (f)   If any payment received on account of any reimbursement
obligation with respect to a Letter of Credit and distributed to a Lender as a
participant under Section 3.05(c) is thereafter recovered from the respective
Issuing Bank in connection with any bankruptcy or insolvency proceeding relating
to the Borrower, each Lender which received such distribution shall, upon demand
by such Issuing Bank, repay to such Issuing Bank such Lender's ratable share of
the amount so recovered together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered) of any interest or other amount
paid or payable by such Issuing Bank in respect of the total amount so
recovered.

            SECTION 3.06 Letter of Credit Fees. (a) Letter of Credit Facility
Fees. The Borrower hereby agrees to pay to the Administrative Agent for the
account of each Lender (in accordance with its LC Commitment Percentage), a
letter of credit fee at a rate per annum equal to the Eurocurrency Rate Margin

                                       32


applicable to Eurocurrency Rate Advances in effect from time to time while a
Letter of Credit is outstanding, on the maximum amount available to be drawn
under each such Letter of Credit from time to time (the determination of such
maximum amount to give effect to the actual amount that can be drawn thereunder
during the relevant period for which such letter of credit fee is calculated and
to assume compliance with all conditions for drawing) from the date of Issuance
of each such Letter of Credit until the expiry date of each such Letter of
Credit, payable in arrears on the last day of each January, April, July and
October prior to the expiry date of each such Letter of Credit and on the expiry
date of each such Letter of Credit.

            (b)   Issuing Bank Fees. The Borrower hereby agrees to pay directly
to each Issuing Bank, for its own account, a fronting fee with respect to each
Issued Letter of Credit of 0.10% per annum. In addition, the Borrower shall pay
directly to each Issuing Bank for its own account such customary issuance,
presentation, amendment and other processing fees as are specifically agreed to
in a writing between the Borrower and such Issuing Bank. Such customary fees and
standard costs and charges are due and payable on demand and are non-refundable.

            SECTION 3.07 Indemnification; Nature of the Issuing Banks' Duties.
The obligations of the Borrower hereunder with respect to Letters of Credit
shall be unconditional and irrevocable, and shall be paid strictly in accordance
with the terms hereof under all circumstances, including, without limitation,
any of the following circumstances:

            (i)    any lack of validity or enforceability of any Letter of
Credit or this Agreement or any agreement or instrument relating thereto;

            (ii)   the existence of any claim, setoff, defense or other right
which the Borrower may have at any time against the beneficiary, or any
transferee, of any Letter of Credit, or the Issuing Banks, any Lender, or any
other Person;

            (iii)  any draft, certificate, or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;

            (iv)   any lack of validity, effectiveness, or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part;

            (v)    any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit or of
the proceeds thereof;

            (vi)   any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the obligations of the Borrower in respect of the
Letters of Credit;

            (vii)  any change in the time, manner or place of payment of, or in
any other terms of, all or any of the obligations of the Borrower in respect of
the Letters of Credit or any other amendment or waiver of or any consent to
departure from all or any of this Agreement;

            (viii) any failure of the beneficiary of a Letter of Credit to
strictly comply with the conditions required in order to draw upon any Letter of
Credit;

            (ix)   any misapplication by the beneficiary of any Letter of Credit
of the proceeds of any drawing under such Letter of Credit; or

                                       33


            (x)    any other circumstance or happening whatsoever, whether or
not similar to the foregoing;

provided, that, notwithstanding the foregoing, an Issuing Bank shall not be
relieved of any liability it may otherwise have as a result of its gross
negligence or willful misconduct.

            SECTION 3.08 Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as most recently published by the International
Chamber of Commerce ("UCP") shall in all respects be deemed a part of this
Article III as if incorporated herein and shall apply to the Letters of Credit.

            SECTION 3.09 Additional Issuing Banks.

            (a)   The Borrower may at any time, upon at least five Business
Days' prior written notice to the Administrative Agent and the Lenders,
designate as an Issuing Bank any Lender that has agreed in writing to act as an
Issuing Bank and the Issuing Commitment of such Lender. Thereupon any Lender so
designated as an Issuing Bank shall thenceforth issue Letters of Credit on the
terms and subject to the conditions herein, and the Administrative Agent shall
record all relevant information with respect to such Lender as such Issuing Bank
and its Issuing Commitment in the Register.

            (b)   The Borrower may at any time, upon at least 5 Business Days'
prior written notice to the respective Issuing Bank and the Administrative
Agent, increase the Issuing Commitment of an Issuing Bank and at the same time
reduce by an equivalent amount the Issuing Commitment of one or more of the
other Issuing Banks; provided, that such notice is consented to by each Issuing
Bank affected by such increase and decrease and provided, further, that the
Administrative Agent shall record each such increase and decrease of the Issuing
Commitment of the respective Issuing Bank in the Register.

            SECTION 3.10 Dollar Payment Obligation. Notwithstanding any other
term or provision hereof to the contrary, if the Borrower fails to reimburse the
respective Issuing Bank for any payment made by such Issuing Bank under a Letter
of Credit denominated in a Committed Currency by the close of business on the
Business Day when due at the office designated therefor by such Issuing Bank
specified for such reimbursement payment, then the payment made by such Issuing
Bank in such Committed Currency shall be converted into Dollars (the "DOLLAR
PAYMENT AMOUNT") by such Issuing Bank as provided for herein, and the Borrower
agrees that it shall be unconditionally obligated to, and shall immediately,
reimburse such Issuing Bank the Dollar Payment Amount at the office designated
therefor by such Issuing Bank.

            SECTION 3.11 Survival of Provisions; Cash Collateral. The provisions
in this Article shall survive the Termination Date in respect of all Letters of
Credit outstanding thereafter. On the Termination Date, the Borrower shall
deposit into the LC Collateral Account held by the Administrative Agent cash (in
Dollars) in an amount equal to the undrawn amount of all Letters of Credit as
security for the reimbursement of drawings thereunder which shall be used to
reimburse the respective Issuing Bank promptly upon a drawing under its
respective Letter of Credit, with the respective portion thereof to be returned
to the Borrower when the respective Letter of Credit expires or is returned to
the respective Issuing Bank, and in connection therewith the Borrower shall
execute all documents as reasonably requested by the Administrative Agent.

                                       34


                                   ARTICLE IV
                     CONDITIONS OF EFFECTIVENESS AND LENDING

            SECTION 4.01 Conditions Precedent to Effectiveness of Section 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date (the "EFFECTIVE DATE") on which all of the following conditions precedent
have been satisfied or waived in accordance with Section 9.01:

            (a)   the Administrative Agent shall have received on or before the
Effective Date the following, each dated as of the Effective Date, in form and
substance satisfactory to the Administrative Agent: (i) certified copies of the
resolutions of the Board of Directors of the Borrower or the Executive Committee
of such Board authorizing the execution and delivery of this Agreement, and
approving all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Agreement; (ii) a
certificate of the Secretary or an Assistant Secretary of the Borrower
certifying the name and true signature of the officer of the Borrower executing
this Agreement on its behalf; and (iii) an opinion of David K. Thompson, Esq.,
Senior Vice President, Deputy General Counsel-Corporate and Corporate Secretary
of the Borrower, in substantially the form of Exhibit C hereto;

            (b)   all consents and approvals of any governmental or regulatory
authority and any other third party necessary in connection with this Agreement
or the consummation of the transactions contemplated hereby shall have been
obtained and shall remain in effect;

            (c)   there shall have occurred no material adverse change in the
business, financial condition or operations of the Borrower and its
Subsidiaries, taken as a whole, since September 30, 2003, except as disclosed in
reports filed by the Borrower and its Subsidiaries, if any, during the period
from September 30, 2003 to the date of this Agreement pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended, copies of which have been
furnished to the Initial Lenders prior to the date of this Agreement;

            (d)   the Borrower shall have notified each Lender and the
Administrative Agent in writing as to the proposed Effective Date at least three
Business Days prior to the occurrence thereof;

            (e)   all of the representations and warranties contained in Section
5.01 shall be correct in all material respects on and as of the Effective Date,
before and after giving effect to such date, as though made on and as of the
Effective Date (except to the extent that such representations and warranties
relate to an earlier date, in which case such representations and warranties
shall have been correct in all material respects on and as of such earlier
date);

            (f)   no event shall have occurred and be continuing, or shall
result from the occurrence of the Effective Date, that constitutes an Event of
Default or would constitute an Event of Default but for the requirement that
notice be given or time elapse or both; and

            (g)   the Administrative Agent shall have received a letter from an
authorized officer of the administrative agent under each of the Replaced Loan
Agreements to the effect that upon the deemed issuance of Letters of Credit on
the Effective Date as set in Section 3.01(a), (i) all obligations under such
Replaced Loan Agreements will be paid and satisfied in full (other than any
obligations which, pursuant to the terms of each respective Replaced Loan
Agreement, shall survive the termination of such Agreement), and (ii) there will
be no commitments outstanding under such Replaced Loan Agreements

            SECTION 4.02 Conditions Precedent to Each Borrowing/Issuance. The
obligation of each Lender to make an Advance on the occasion of each Borrowing
(including the initial Borrowing) and the obligation of each Issuing Bank to
Issue each Letter of Credit (including the initial Letters of Credit) shall be

                                       35


subject to the further conditions precedent that the Effective Date shall have
occurred and on the date of such Borrowing or Issuance the following statements
shall be true (and each of the giving of the applicable Notice of Borrowing and
the acceptance by the Borrower of the proceeds of such Borrowing and the request
for Issuance by the Borrower shall constitute a representation and warranty by
the Borrower that on the date of such Borrowing or Issuance such statements are
true):

            (a)   the representations and warranties contained in Section 5.01
are true and correct in all material respects on and as of the date of such
Borrowing or Issuance, before and after giving effect to such Borrowing or
Issuance and to the application of the proceeds therefrom, as though made on and
as of such date (except to the extent that such representations and warranties
relate to an earlier date, in which case such representations and warranties
shall have been correct in all material respects on and as of such earlier
date); and

            (b)   no event has occurred and is continuing, or would result from
such Borrowing or Issuance or from the application of the proceeds therefrom,
which constitutes an Event of Default or would constitute an Event of Default
but for the requirement that notice be given or time elapse or both.

            SECTION 4.03 Determinations Under Section 4.01. For purposes of
determining compliance with the conditions specified in Section 4.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the Administrative Agent responsible for the transactions contemplated by
this Agreement shall have received notice from such Lender prior to the date
that the Borrower, by notice to the Lenders, designates as the proposed
Effective Date, specifying its objection thereto. The Administrative Agent shall
promptly notify the Lenders of the occurrence of the Effective Date.

                                    ARTICLE V
                         REPRESENTATIONS AND WARRANTIES

            SECTION 5.01 Representations and Warranties of the Borrower. The
Borrower represents and warrants as of the Effective Date and from time to time
thereafter as required under this Agreement as follows:

            (a)   The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. The Borrower,
Disney and ABC are duly qualified and in good standing as foreign corporations
authorized to do business in each jurisdiction (other than the respective
jurisdictions of their incorporation) in which the nature of their respective
activities or the character of the properties they own or lease make such
qualification necessary and in which the failure so to qualify would have a
material adverse effect on the financial condition or operations of the Borrower
and its Subsidiaries, taken as a whole.

            (b)   The execution, delivery and performance by the Borrower of
this Agreement and each of the Notes, if any, delivered hereunder are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene (i) the Borrower's charter or by-laws or
(ii) any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any material contractual restriction binding on or
affecting the Borrower, Disney or ABC; no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Borrower of this Agreement or the Notes, if any; and this Agreement is and
each of the Notes, when delivered hereunder, will be the legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with their respective terms, subject to

                                       36


applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and general principles of equity.

            (c)   The Borrower's most recent annual report on Form 10-K
containing the consolidated balance sheet of the Borrower and its Subsidiaries,
and the related consolidated statements of income and of cash flows of the
Borrower and its Subsidiaries, copies of which have been furnished to each
Lender pursuant to Section 6.01(e)(ii) or as otherwise furnished to the Lenders,
fairly present the consolidated financial condition of the Borrower and its
Subsidiaries as at the date of such balance sheet and the consolidated results
of operations of the Borrower and its Subsidiaries for the fiscal year ended on
such date, all in accordance with generally accepted accounting principles
consistently applied.

            (d)   There is no pending or, to the Borrower's knowledge,
threatened claim, action or proceeding affecting the Borrower or any of its
Subsidiaries which could reasonably be expected to have a material adverse
effect on the financial condition or operations of the Borrower and its
Subsidiaries, taken as a whole, or which could reasonably be expected to affect
the legality, validity or enforceability of this Agreement; and to the
Borrower's knowledge, the Borrower and each of its Subsidiaries have complied,
and are in compliance, with all applicable laws, rules, regulations, permits,
orders, consent decrees and judgments, except for any such matters which have
not had, and would not reasonably be expected to have, a material adverse effect
on the financial condition or operations of the Borrower and its Subsidiaries,
taken as a whole.

            (e)   The Borrower and the ERISA Affiliates have not incurred and
are not reasonably expected to incur any material liability in connection with
their Single Employer Plans or Multiple Employer Plans, other than ordinary
liabilities for benefits; neither the Borrower nor any ERISA Affiliate has
incurred or is reasonably expected to incur any material withdrawal liability
(as defined in Part I of Subtitle E of Title IV of ERISA) to any Multiemployer
Plan; and no Multiemployer Plan of the Borrower or any ERISA Affiliate is
reasonably expected to be in reorganization or to be terminated, within the
meaning of Title IV of ERISA.

            SECTION 5.02 Additional Representations and Warranties of the
Borrower as of Each Increase Date and Each Extension Date. The Borrower
represents and warrants on each Increase Date and each Extension Date (and at no
other time) that, as of each such date, the following statements shall be true:

            (a)   there has been no material adverse change in the business,
financial condition or operations of the Borrower and its Subsidiaries, taken as
a whole, since the date of the audited financial statements of the Borrower and
its Subsidiaries most recently delivered to the Lenders pursuant to Section
6.01(e)(ii) prior to the applicable Increase Date or Extension Date, as the case
may be (except as disclosed in periodic or other reports filed by the Borrower
and its Subsidiaries pursuant to Section 13 of the Securities Exchange Act of
1934, as amended, during the period from the date of the most recently delivered
audited financial statements of the Borrower and its Subsidiaries pursuant to
Section 6.01(e)(ii) to the date of the request for an increase in the aggregate
Commitments related to such Increase Date or for an extension of the Termination
Date then in effect related to such Extension Date, as the case may be); and

            (b)   the representations and warranties contained in Section 5.01
are correct in all material respects on and as of such date, as though made on
and as of such date (except to the extent that such representations and
warranties relate to an earlier date, in which case such representations and
warranties shall have been correct in all material respects on and as of such
earlier date).

                                       37


                                   ARTICLE VI
                            COVENANTS OF THE BORROWER

            SECTION 6.01 Affirmative Covenants. So long as any Advance shall
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will, unless the Majority Lenders shall otherwise consent in writing:

            (a)   Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable laws,
rules, regulations, permits, orders, consent decrees and judgments binding on
the Borrower and its Subsidiaries, including ERISA and the Patriot Act, the
failure with which to comply would have a material adverse effect on the
financial condition or operations of the Borrower and its Subsidiaries, taken as
a whole.

            (b)   Payment of Taxes, Etc. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, before the same shall become delinquent,
if the failure to so pay and discharge would have a material adverse effect on
the financial condition or operations of the Borrower and its Subsidiaries,
taken as a whole, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property, and (ii) all lawful claims which, if
unpaid, will by law become a Lien upon its property; provided, however, that
neither the Borrower nor any of its Subsidiaries shall be required to pay or
discharge any such tax, assessment, charge, levy or claim which is being
contested in good faith and by proper proceedings and as to which appropriate
reserves are being maintained in accordance with GAAP.

            (c)   Preservation of Corporate Existence, Etc. Subject to Section
6.02(a), preserve and maintain, and cause each of Disney and ABC to preserve and
maintain, its corporate existence, rights (charter and statutory) and
franchises; provided, however, that none of the Borrower, Disney or ABC shall be
required to preserve any right or franchise if the loss thereof would not have a
material adverse effect on the business, financial condition or operations of
the Borrower and its Subsidiaries, taken as a whole; and provided further,
however, that neither Disney nor ABC shall be required to preserve its corporate
existence if the loss thereof would not have a material adverse effect on the
business, financial condition or operations of the Borrower and its
Subsidiaries, taken as a whole.

            (d)   Maintenance of Interest Coverage Ratio. Maintain as of the
last day of each fiscal quarter of the Borrower, commencing with the first
fiscal quarter of the Borrower following the Effective Date, a ratio of (i)
Consolidated EBITDA for the Measurement Period ending on such day to (ii)
Consolidated Interest Expense for the Measurement Period ending on such day, of
not less than 3 to 1.

            (e)   Reporting Requirements. Furnish to the Administrative Agent,
on behalf of the Lenders and the Issuing Banks:

                  (i)    as soon as available and in any event within 50 days
after the end of each of the first three quarters of each fiscal year of the
Borrower, a copy of the Borrower's quarterly report to shareholders on Form 10-Q
as filed with the Securities and Exchange Commission (the "SEC"), in each case
containing a consolidated balance sheet of the Borrower and its Subsidiaries as
of the end of such quarter and consolidated statements of income and of cash
flows of the Borrower and its Subsidiaries for the period commencing at the end
of the previous fiscal year and ending with the end of such quarter, and a
certificate of any of the Borrower's Chairman of the Board of Directors,
President, Chief Financial Officer, Treasurer, Assistant Treasurer or Controller
(A) stating that no Event of Default, or event that with the giving of notice or
passage of time or both would constitute an Event of Default, has occurred and
is continuing and (B) containing a schedule which shall set forth the
computations used by the Borrower in determining compliance with the covenant
contained in Section 6.01(d);

                                       38


                  (ii)   as soon as available and in any event within 100 days
after the end of each fiscal year of the Borrower, a copy of the Borrower's
annual report to shareholders on Form 10-K as filed with the SEC, in each case
containing consolidated financial statements of the Borrower and its
Subsidiaries for such year and a certificate of any of the Borrower's Chairman
of the Board of Directors, President, Chief Financial Officer, Treasurer,
Assistant Treasurer or Controller (A) stating that no Event of Default, or event
that with the giving of notice or passage of time or both would constitute an
Event of Default, has occurred and is continuing and (B) containing a schedule
which shall set forth the computations used by the Borrower in determining
compliance with the covenant contained in Section 6.01(d);

                  (iii)  promptly after the Borrower obtains actual knowledge of
the occurrence of each Event of Default, and each event that with the giving of
notice or passage of time or both would constitute an Event of Default, a
statement of any of the Borrower's Chairman of the Board of Directors,
President, Chief Financial Officer, Treasurer, Assistant Treasurer or Controller
setting forth details of such Event of Default or event continuing on the date
of such statement, and the action which the Borrower has taken and proposes to
take with respect thereto;

                  (iv)   promptly after the commencement thereof, notice of any
actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting the Borrower or any of its Subsidiaries of the type described in
Section 5.01(d);

                  (v)    promptly after the Borrower obtains actual knowledge
thereof, written notice of any pending or threatened Environmental Claim against
the Borrower or any of its Subsidiaries or any of their respective properties
which could reasonably be expected to materially and adversely affect the
financial condition or operations of the Borrower and its Subsidiaries, taken as
a whole;

                  (vi)   promptly after the Borrower obtains actual knowledge of
the occurrence of any ERISA Event which could reasonably be expected to
materially and adversely affect the financial condition or operations of the
Borrower and its Subsidiaries, taken as a whole, a statement of any of the
Borrower's Chairman of the Board of Directors, President, Chief Financial
Officer, Treasurer, Assistant Treasurer or Controller describing such ERISA
Event and the action, if any, which the Borrower has taken and proposes to take
with respect thereto;

                  (vii)  promptly after receipt thereof by the Borrower or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by the Borrower or any ERISA Affiliate concerning (A) the imposition of
withdrawal liability (as defined in Part I of Subtitle E of Title IV of ERISA)
by a Multiemployer Plan, which withdrawal liability could reasonably be expected
to materially and adversely affect the financial condition or operations of the
Borrower and its Subsidiaries, taken as a whole, (B) the reorganization or
termination, within the meaning of Title IV of ERISA, of any Multiemployer Plan,
which reorganization or termination could reasonably be expected to materially
adversely affect the financial condition or operations of the Borrower and its
Subsidiaries, taken as a whole, or (C) the amount of liability incurred, or
which may be incurred, by the Borrower or any ERISA Affiliate in connection with
any event described in subclause (vii)(A) or (vii)(B) above; and

                  (viii) such other material information reasonably related to
any Lender's credit analysis of the Borrower or any of its Subsidiaries as any
Lender through the Administrative Agent may from time to time reasonably
request.

            SECTION 6.02 Negative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Commitment hereunder, the Borrower will not,
without the written consent of the Majority Lenders:

                                       39


            (a)   Mergers, Etc. Merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of the assets of the Borrower
and its Subsidiaries, taken as a whole (whether now owned or hereafter
acquired), to, any Person, or permit any of its Subsidiaries to do so, unless
(i) immediately after giving effect to such proposed transaction, no Event of
Default or event which, with the giving of notice or lapse of time, or both,
would constitute an Event of Default would exist and (ii) in the case of any
such merger to which the Borrower is a party, the Borrower is the surviving
corporation.

                                   ARTICLE VII
                                EVENTS OF DEFAULT

            SECTION 7.01 Events of Default. If any of the following events
("EVENTS OF DEFAULT") shall occur and be continuing:

            (a)   The Borrower shall fail to pay any principal of any Advance or
any reimbursement obligation under any Letter of Credit when the same becomes
due and payable; or the Borrower shall fail to pay any interest on any Advance,
or on any reimbursement obligation under any Letter of Credit or any fee or
other amount payable under this Agreement, in each case within three Business
Days after such interest, fee or other amount becomes due and payable; or

            (b)   Any representation or warranty made by the Borrower herein or
by the Borrower (or any of its officers) delivered in writing and identified as
delivered in connection with this Agreement shall prove to have been incorrect
in any material respect when made; or

            (c)   The Borrower shall fail to perform or observe any covenant
contained in Section 6.01(d), Section 6.01(e)(iii) or Section 6.02; or

            (d)   The Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed if the failure to perform or observe such other term, covenant or
agreement shall remain unremedied for 30 days after written notice thereof shall
have been given to the Borrower by the Administrative Agent or any Lender; or

            (e)   The Borrower or any of its Subsidiaries shall fail to pay any
principal of or premium or interest on any Debt of the Borrower or such
Subsidiary which is outstanding in a principal amount of at least $250,000,000
in the aggregate (but excluding Debt arising hereunder), when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure (i) shall continue after
the applicable grace period, if any, specified in the agreement or instrument
relating to such Debt and (ii) shall not have been cured or waived; or any other
event shall occur or condition shall exist under any agreement or instrument
relating to any such Debt and shall continue after the applicable grace period,
if any, specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the stated
maturity thereof; or

            (f)   The Borrower or any Material Subsidiary shall generally not
pay its Debts as such Debts become due, or shall admit in writing its inability
to pay its Debts generally, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against the Borrower
or any Material Subsidiary seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for

                                       40


relief or the appointment of a receiver, trustee, custodian or other similar
official for it or for substantially all of its property and, in the case of any
such proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or the Borrower or any Material Subsidiary shall take any
corporate action to authorize any of the actions set forth above in this
subsection (f); or

            (g)   Any money judgment, writ or warrant of attachment or similar
process against the Borrower, any Material Subsidiary or any of their respective
assets involving in any case an amount in excess of $100,000,000 is entered and
shall remain undischarged, unvacated, unbonded or unstayed for a period of 30
days or, in any case, within five days of any pending sale or disposition of any
asset pursuant to any such process;

then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Borrower, (A)
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, (B) declare the Advances, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower;
(C) declare the obligation of the Issuing Banks to issue further Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and/or
(D) demand from time to time that the Borrower pay to the Administrative Agent
for the benefit of the Issuing Banks, an amount in immediately available funds
(in Dollars) equal to the then outstanding Letter of Credit Liability which
shall be held by the Administrative Agent as cash collateral in the LC
Collateral Account under the exclusive control and dominion of the
Administrative Agent and applied to the reduction of such Letter of Credit
Liability as drawings are made on outstanding Letters of Credit; provided,
however, that in the event of an actual or deemed entry of an order for relief
with respect to the Borrower under the Federal Bankruptcy Code, (A) the
obligation of each Lender to make Advances shall automatically be terminated,
(B) the Advances, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Borrower, (C) all
obligations of the Issuing Banks to issue further Letters of Credit shall be
terminated, and/or (D) the Borrower shall pay to the Administrative Agent for
the benefit of the Issuing Banks, an amount in immediately available funds (in
Dollars) equal to the then outstanding Letter of Credit Liability which shall be
held by the Administrative Agent as cash collateral in the LC Collateral Account
under the exclusive control and dominion of the Administrative Agent and applied
to the reduction of such Letter of Credit Liability as drawings are made on
outstanding Letters of Credit. Promptly upon the expiration or cancellation of
any Letter of Credit with respect to which cash collateral is on deposit in the
LC Collateral Account, the Administrative Agent shall (i) return all cash
collateral related to such Letter of Credit to the Borrower by depositing such
amounts in the account identified by the Borrower at such time and (ii)
thereafter, upon the expiration or cancellation of the final Letter of Credit
with respect to which cash collateral is on deposit in the LC Collateral
Account, close the LC Collateral Account.

                                  ARTICLE VIII
                            THE ADMINISTRATIVE AGENT

            SECTION 8.01 Authorization and Action. (a) Each Lender and each
Issuing Bank hereby appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto. As to any
matters not expressly provided for by this Agreement (including, without
limitation, enforcement of this Agreement or collection of the Advances), the
Administrative Agent shall not be required to exercise any discretion or take
any action, but shall be required

                                       41


to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action which exposes the Administrative Agent to personal liability or which
is contrary to this Agreement or applicable law. The Administrative Agent agrees
to give to each Lender prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.

            Each Issuing Bank shall act on behalf of the Lenders with respect to
any Letters of Credit Issued by it and the documents associated therewith and
such Issuing Bank shall have all of the benefits and immunities (i) provided to
the Administrative Agent in this Article VIII with respect to any acts taken or
omissions suffered by such Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it as fully as if the term
"Administrative Agent," as used in this Article VIII, included such Issuing Bank
with respect to such acts or omissions, and (ii) as additionally provided in
this Agreement with respect to such Issuing Bank.

            (b)   The Syndication Agent, the Co-Documentation Agents and the
Arrangers shall have no duties under this Agreement other than those afforded to
them in their capacities as Lenders, and each Lender and each Issuing Bank
hereby acknowledges that the Syndication Agent, the Co-Documentation Agents and
the Arrangers have no liability under this Agreement other than those assumed by
them in their capacities as Lenders.

            SECTION 8.02 Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable to any Lender for any action taken or omitted to be taken by it
or them under or in connection with this Agreement, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Administrative Agent: (i) may treat the Lender which made any
Advance (or purchased or funded a participation with respect to a Letter of
Credit) as the holder of the Debt resulting therefrom until the Administrative
Agent receives and accepts an Assumption Agreement entered into by an Assuming
Lender as provided in Section 2.19 or 2.20, as the case may be, or an Assignment
and Acceptance entered into by such Lender, as assignor, and an Eligible
Assignee, as assignee, as provided in Section 9.07; (ii) may consult with legal
counsel (including counsel for the Borrower), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (iii) makes no warranty or representation to
any Lender and shall not be responsible to any Lender for any statements,
warranties or representations (whether written or oral) made in or in connection
with this Agreement; (iv) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement on the part of the Borrower or to inspect the property (including
the books and records) of the Borrower; (v) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any instrument or document furnished
pursuant hereto; and (vi) shall incur no liability under or in respect of this
Agreement by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier) believed by it to be genuine and signed or
sent by the proper party or parties.

            SECTION 8.03 CUSA and Affiliates. With respect to its Commitment and
the Advances made by it and any Note or Notes issued to it, CUSA shall have the
same rights and powers under this Agreement as any other Lender and may exercise
the same as though it were not the Administrative Agent; and the term "Lender"
or "Lenders" shall, unless otherwise expressly indicated, include CUSA in its
individual capacity. CUSA and its respective Affiliates may accept deposits
from, lend money to, act as trustee under indentures of, accept investment
banking engagements from, and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with or own

                                       42


securities of the Borrower or any such Subsidiary, all as if CUSA was not the
Administrative Agent and without any duty to account therefor to the Lenders.

            SECTION 8.04 Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Administrative Agent, any
Issuing Bank or any other Lender and based on the financial statements referred
to in Section 5.01(c) and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent, any Issuing Bank or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.

            SECTION 8.05 Indemnification. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower), ratably
according to the respective principal amounts of Advances then owing to each of
them (or, if no Advances are at the time outstanding or if any Advances are then
owing to Persons which are not Lenders, ratably according to the respective
amounts of their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Administrative Agent under this Agreement; provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Administrative
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal or
bankruptcy proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Administrative
Agent is not reimbursed for such expenses by the Borrower.

            (b)   Issuing Bank. The Lenders agree to indemnify each Issuing Bank
(to the extent not reimbursed by the Borrower), ratably according to their
respective LC Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against such Issuing Bank in any way relating to or
arising out of this Agreement and the Letters of Credit issued by it or any
action taken or omitted by such Issuing Bank under this Agreement or the Letters
of Credit Issued by it; provided, that, no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from such Issuing
Bank's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse such Issuing Bank promptly upon
demand for its ratable share of any out-of-pocket expenses (including reasonable
counsel fees) incurred by such Issuing Bank in connection with the preparation,
execution, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement or the Letters of
Credit Issued by it, to the extent that the Issuing Bank is not reimbursed for
such expenses by the Borrower. In the case of any investigation, litigation or
proceeding giving rise to any such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs expenses or disbursements, this
Section 8.05(b) applies whether any such investigation, litigation or proceeding
is brought by the Administrative Agent, any Issuing Bank any Lender or a third
party.

            SECTION 8.06 Successor Administrative Agent. The Administrative
Agent may resign at any time by giving written notice thereof to the Lenders and
the Borrower and such resignation shall be effective upon the appointment of a
successor Administrative Agent as provided herein. Upon any such resignation,
the Majority Lenders shall have the right to appoint a successor Administrative
Agent. If no

                                       43


successor Administrative Agent shall have been so appointed by the Majority
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent. Any successor Administrative Agent appointed hereunder
shall be a commercial bank organized or licensed under the laws of the United
States or of any State thereof, or an Affiliate of any such commercial bank,
having a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.

            SECTION 8.07 Sub-Agent. The Borrower and the Lenders hereby
acknowledge that the Administrative Agent may, in its sole discretion, delegate
any of its obligations hereunder to the Sub-Agent, provided that it has obtained
prior consent to such delegation from the Sub-Agent. The Borrower and the
Lenders further agree that the Sub-Agent shall be entitled to exercise each of
the rights and to enjoy each of the benefits of the Administrative Agent under
this Agreement as related to the performance of its obligations hereunder.

                                   ARTICLE IX
                                  MISCELLANEOUS

            SECTION 9.01 Amendments, Etc. (a) No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall, unless in
writing and signed by all the Lenders (other than the Borrower or any of its
Affiliates, if a Lender, at the time of any such amendment, waiver or consent),
do any of the following: (a) waive any of the conditions specified in Section
4.01 or 4.02, (b) increase the Commitments of the Lenders (other than as
provided in Section 2.19) or subject the Lenders to any additional obligations,
(c) reduce the principal of, or interest on, the Advances or any reimbursement
obligation in respect of any Letters of Credit or the fees payable hereunder,
(d) postpone any date fixed for any payment of principal of, or interest on, the
Advances (other than as provided in Section 2.20), any reimbursement obligation
in respect of any Letters of Credit or any fee, (e) change the percentage of the
Commitments, LC Commitments or of the aggregate unpaid principal amount of
Advances or Letter of Credit Liability, or the number of Lenders, which shall be
required for the Lenders or any of them to take any action hereunder or (f)
amend this Section 9.01; and provided further that no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent or each
Issuing Bank, as the case may be, in addition to the Lenders required above to
take such action, affect the rights or duties of the Administrative Agent or
such Issuing Bank, respectively, under this Agreement or any Note.

            (b)   Limitation of Scope. All waivers and consents granted under
this Section 9.01 shall be effective only in the specific instance and for the
specific purpose for which given.

            SECTION 9.02 Notices, Etc. (a) All notices and other communications
provided for hereunder shall, except as otherwise expressly provided for herein,
be in writing (including telecopier communication) and mailed, telecopied or
delivered, if to the Borrower, at its address at:

                  The Walt Disney Company
                  500 South Buena Vista Street

                                       44


                  Burbank, California  91521
                  Attention:  Jonathan S. Headley and Carlos A. Gomez
                  Telecopier Number:  (818) 563-1682;

with a copy to:

                  The Walt Disney Company
                  500 South Buena Vista Street
                  Burbank, California  91521
                  Attention:  Corporate Legal Department
                  Telecopier Number:  (818) 563-4160;

if to any Issuing Bank, at its  respective address at:

                  BNP Paribas SA
                  919 Third Avenue
                  New York, NY  10022
                  Attention:  James Broadus
                  Telecopier Number: ( 212) 471-6630

                  or

                  Standard Chartered Bank
                  One Evertrust Plaza
                  5th Floor
                  Jersey City, NJ
                  Attention:  Victoria Faltine
                  Telecopier Number: (212) 667-0287;

if to any Initial Lender, at its Domestic Lending Office specified opposite its
name on Schedule I hereto; if to any other Lender, at its Domestic Lending
Office specified in the Assumption Agreement or the Assignment and Acceptance
pursuant to which it became a Lender, as the case may be; and if to the
Administrative Agent, at its address at:

                  Citicorp USA, Inc.
                  Two Penns Way, Second Floor
                  New Castle, Delaware 19720
                  Attention:  Cristian Garcia
                  Phone Number:  (302) 894-6054
                  Telecopy Number:  (302) 894-6120;

with a copy to:

                  Citicorp USA, Inc.
                  787 West Fifth Street, 29th Floor
                  Los Angeles, California  90071
                  Attention:  Greg Davis
                  Phone Number:  (213) 239-1896
                  Telecopier Number:  (213) 239-1899;

                                       45


or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall, when mailed or telecopied, be effective when deposited in the mails or
telecopied, respectively, except that notices and communications to the
Administrative Agent pursuant to Article II or VIII and to an Issuing Bank
pursuant to Article III or VIII shall not be effective until received by the
Administrative Agent or such Issuing Bank, as the case may be. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or of any Exhibit hereto to be executed and
delivered hereunder shall be effective as delivery of an original executed
counterpart thereof.

            (b)   If any notice required under this Agreement is permitted to be
made, and is made, by telephone, actions taken or omitted to be taken in
reliance thereon by the Administrative Agent, any Issuing Bank or any Lender
shall be binding upon the Borrower notwithstanding any inconsistency between the
notice provided by telephone and any subsequent writing in confirmation thereof
provided to the Administrative Agent, such Issuing Bank or such Lender; provided
that any such action taken or omitted to be taken by the Administrative Agent,
such Issuing Bank or such Lender shall have been in good faith and in accordance
with the terms of this Agreement.

            SECTION 9.03 No Waiver; Remedies. No failure on the part of any
Lender, any Issuing Bank or the Administrative Agent to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

            SECTION 9.04 Costs and Expenses. (a) The Borrower agrees to pay,
within five Business Days of demand, all actual and reasonable costs and
expenses, if any (including, without limitation, actual and reasonable counsel
fees and expenses), of the Administrative Agent, each Issuing Bank and each
Lender in connection with the enforcement (whether through legal proceedings or
otherwise) of this Agreement, the Letters of Credit and the other instruments
and documents to be delivered hereunder, including, without limitation,
reasonable counsel fees and expenses in connection with the enforcement of
rights under this Section 9.04(a).

            (b)   If any payment of principal of, or Conversion of, any
Eurocurrency Rate Advance is made other than on the last day of the Interest
Period for such Advance, as a result of a payment or Conversion pursuant to
Section 2.08(f) or 2.10 or acceleration of the maturity of the Advances pursuant
to Section 7.01 or for any other reason (other than by reason of a payment
pursuant to Section 2.12), the Borrower shall, within five Business Days of
demand by any Lender (with a copy of such demand to the Administrative Agent),
pay to such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses which it may reasonably incur as a result
of such payment or Conversion, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or redeployment of deposits or
other funds acquired by such Lender to fund or maintain such Advance.

            SECTION 9.05 Right of Set-off. Upon (i) the occurrence and during
the continuance of any Event of Default and (ii) the making of the request or
the granting of the consent specified by Section 7.01 to authorize the
Administrative Agent to declare the Advances due and payable pursuant to the
provisions of Section 7.01, or to demand payment of (or cash collateralization
of) all then outstanding Letter of Credit Liability, each Lender (and, in the
case of CUSA, Citibank) is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, but
excluding trust accounts) at any time held and other indebtedness at any time
owing by such Lender (and, in the case of CUSA, Citibank) to or for the credit
or the account of the Borrower against any and all of the obligations of the
Borrower now or hereafter existing under this Agreement (including, to the
fullest extent permitted by law, obligations indirectly owed to such Lender by

                                       46


virtue of its purchase of a participation or sub-participation of the Letter of
Credit Liability pursuant to Section 3.05), whether or not such Lender shall
have made any demand under this Agreement. Each Lender agrees promptly to notify
the Borrower after any such setoff and application made by such Lender (and, in
the case of CUSA, Citibank); provided, that, the failure to give such notice
shall not affect the validity of such set-off and application. The rights of
each Lender (and, in the case of CUSA, Citibank) under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of setoff) which such Lender may have.

            SECTION 9.06 Binding Effect. This Agreement shall become effective
(other than Section 2.01, which shall only become effective upon satisfaction of
the conditions precedent set forth in Section 4.01) when it shall have been
executed by the Borrower, the Administrative Agent and each Co-Documentation
Agent and when the Administrative Agent shall have been notified by each Initial
Lender that such Initial Lender has executed it and, thereafter, shall be
binding upon and inure to the benefit of the Borrower, each Issuing Bank, the
Administrative Agent, each Co-Documentation Agent and each Lender and their
respective successors and permitted assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lenders.

            SECTION 9.07 Assignments and Participations. (a) Each Lender may
and, if requested by the Borrower upon notice by the Borrower delivered to such
Lender and the Administrative Agent pursuant to clause (ii) of Section 2.16,
will, assign to one or more Eligible Assignees all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or a
portion of its Commitment and the Advances owing to it and any Note or Notes
held by it, its LC Commitment and participations in Letter of Credit Liability);
provided, however, that (i) each such assignment shall be of a constant, and not
a varying, percentage of all rights and obligations under this Agreement, (ii)
the amount (without duplication) of the Commitment, pro-rata share of
outstanding Advances and pro-rata share of participations in Letter of Credit
Liability of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance) shall
not be less than $12,500,000 (unless such lesser amount is previously agreed
among such assigning Lender, the Administrative Agent and the Borrower) or an
integral multiple of $500,000 in excess thereof, (iii) the sum of (A) the amount
(without duplication) of the Commitment, pro-rata share of outstanding Advances
and pro-rata share of participations in Letter of Credit Liability of the
assigning Lender being assigned pursuant to each such assignment and (B) the
amount of the commitment and pro-rata share of outstanding advances of the
assigning Lender being contemporaneously assigned under the 364-Day Credit
Agreement by the Person that is such assigning Lender (in both cases determined
as of the date of the Assignment and Acceptance or similar agreement with
respect to such assignments) shall not be less than $25,000,000 in the aggregate
(unless such lesser amount is previously agreed among such assigning Lender, the
Administrative Agent and the Borrower) or an integral multiple of $1,000,000 in
excess thereof, provided, however, that if the aggregate amount of the
Commitment of such assigning Lender hereunder and its commitment under the
364-Day Credit Agreement is less than $25,000,000 on the date of such proposed
assignments, such assigning Lender may assign all, but not less than all, of its
remaining rights and obligations under this Agreement and the 364-Day Credit
Agreement (unless an assignment of a portion of such assigning Lender's
obligations hereunder and thereunder is otherwise previously agreed among such
assigning Lender, the Administrative Agent and the Borrower), (iv) each such
assignment shall be to an Eligible Assignee, and (v) the parties to each such
assignment (other than the Borrower) shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, together with a processing and recordation fee of
$3,500. Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than any rights such Lender assignor may have under
Sections 2.11, 2.14 and 9.08)

                                       47


and be released from its obligations under this Agreement (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto).

            (b)   By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any of
its Subsidiaries or the performance or observance by the Borrower of any of its
obligations under this Agreement or any instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 5.01(c) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Administrative Agent, any Issuing Bank, such assigning Lender
or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such assignee confirms that it is an
Eligible Assignee; (vi) such assignee appoints and authorizes the Administrative
Agent or the respective Issuing Bank to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.

            (c)   The Administrative Agent shall maintain at its address
referred to in Section 9.02 a copy of each Assignment and Acceptance and each
Assumption Agreement delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the Commitment and the
LC Commitment of, and principal amount of the Advances owing to, each Lender
from time to time (the "REGISTER"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

            (d)   Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee representing that it is an Eligible Assignee
and, if applicable, the Borrower, together with any Note subject to such
assignment, the Administrative Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit B hereto, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower and
each Issuing Bank.

            (e)   Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, LC Commitment and the Advances owing to it and any Note issued to it
hereunder); provided, however, that (i) such Lender's obligations under this
Agreement (including, without limitation, its Commitment and LC Commitment
hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and (iv) such Lender shall
not

                                       48


agree in any participation agreement with any participant or proposed
participant to obtain the consent of such participant before agreeing to the
amendment, modification or waiver of any of the terms of this Agreement or any
Note, before consenting to any action or failure to act by the Borrower or any
other party hereunder or under any Note, or before exercising any rights it may
have in respect thereof, unless such amendment, modification, waiver, consent or
exercise would (A) increase the amount of such participant's portion of such
Lender's Commitment, (B) reduce the principal amount of or rate of interest on
the Advances, any amount due hereunder with respect to the Letters of Credit or
any fee or other amounts payable hereunder to which such participant would be
entitled to receive a share under such participation agreement, or (C) postpone
any date fixed for any payment of principal of or interest on the Advances, for
amounts due with respect to Letters of Credit or any fee or other amounts
payable hereunder to which such participant would be entitled to receive a share
under such participation agreement.

            (f)   Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
9.07, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower furnished to such Lender by
or on behalf of the Borrower in writing and directly related to the transactions
contemplated hereunder; provided that, prior to any such disclosure, the
assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential information relating to the
Borrower received by it from such Lender in accordance with the terms of Section
9.09.

            (g)   No participation or assignment hereunder shall be made in
violation of the Securities Act of 1933, as amended from time to time, or any
applicable state securities laws, and each Lender hereby represents that it will
make any Advance for its own account in the ordinary course of its business and
not with a view to the public distribution or sale thereof.

            (h)   Anything in this Agreement to the contrary notwithstanding,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and any Note issued to it hereunder) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System (or any successor regulation thereto) and the applicable
operating circular of such Federal Reserve Bank.

            SECTION 9.08 Indemnification. The Borrower agrees to indemnify and
hold harmless the Administrative Agent, each Issuing Bank, each Co-Documentation
Agent and each Lender and each of their Affiliates and their respective
officers, directors, employees, agents and advisors (each an "INDEMNIFIED
PARTY") from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of
counsel) that may be incurred by or asserted against any Indemnified Party, in
each case arising out of or in connection with or by reason of, or in connection
with the preparation for a defense of, any investigation, litigation or
proceeding (whether or not an Indemnified Party is a party thereto) arising out
of, related to or in connection with the Commitments hereunder or the Advances
or Letter of Credit Issuances made pursuant hereto or any transactions done in
connection herewith, including, without limitation, any transaction in which any
proceeds of the Advances or any Letter of Credit Issuance are, or are proposed,
to be applied, or any action or proceeding relating to a court order, injunction
or other process or decree restraining or seeking to restrain any Issuing Bank
from paying any amount under any Letter of Credit (collectively, the
"INDEMNIFIED MATTERS"); provided that the Borrower shall have no obligation to
any Indemnified Party under this Section 9.08 with respect to (i) matters for
which such Indemnified Party has been reimbursed by or on behalf of the Borrower
pursuant to any other provision of this Agreement, but only to the extent of
such reimbursement, or (ii) Indemnified Matters found by a court of competent
jurisdiction to have resulted from the willful misconduct or gross negligence of
such Indemnified Party. If any action is brought against any Indemnified Party,
such Indemnified Party shall promptly notify the Borrower in writing of the
institution of such action and the Borrower shall thereupon have the right, at
its option, to elect to assume the defense of such action; provided, however,
that the Borrower shall not, in

                                       49


assuming the defense of any Indemnified Party in any Indemnified Matter, agree
to any dismissal or settlement of such Indemnified Matter without the prior
written consent of such Indemnified Party, which consent shall not be
unreasonably withheld, if such dismissal or settlement (A) would require any
admission or acknowledgment of culpability or wrongdoing by such Indemnified
Party or (B) would provide for any nonmonetary relief to any Person to be
performed by such Indemnified Party. If the Borrower so elects, it shall
promptly assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such Indemnified Party) and payment of expenses.
Such Indemnified Party shall have the right to employ its or their own counsel
in any such case, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (1) the employment of such counsel
shall have been authorized in writing by the Borrower in connection with the
defense of such action or (2) the Borrower shall not have properly employed
counsel reasonably satisfactory to such Indemnified Party to have charge of the
defense of such action, in which case such fees and expenses shall be paid by
the Borrower. If an Indemnified Party shall have reasonably concluded (based
upon the advice of counsel) that the representation by one counsel of such
Indemnified Party and the Borrower creates a conflict of interest for such
counsel, the reasonable fees and expenses of such counsel shall be borne by the
Borrower and the Borrower shall not have the right to direct the defense of such
action on behalf of such Indemnified Party (but shall retain the right to direct
the defense of such action on behalf of the Borrower). Anything in this Section
9.08 to the contrary notwithstanding, the Borrower shall not be liable for the
fees and expenses of more than one counsel for any Indemnified Party in any
jurisdiction as to any Indemnified Matter or for any settlement of any
Indemnified Matter effected without its written consent. All obligations of the
Borrower under this Section 9.08 shall survive the making and repayment of the
Advances and the termination of this Agreement.

            SECTION 9.09 Confidentiality. None of the Administrative Agent, the
Issuing Banks or Lenders may disclose to any Person any confidential,
proprietary or non-public information of the Borrower furnished to the
Administrative Agent, the Issuing Banks or the Lenders by the Borrower or any of
its Subsidiaries (such information being referred to collectively herein as the
"BORROWER INFORMATION"), except that each of the Administrative Agent, each of
the Issuing Banks and each of the Lenders may disclose Borrower Information (i)
to its and its Affiliates' employees, officers, directors, agents, auditors and
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Borrower Information and
instructed to keep such Borrower Information confidential on substantially the
same terms as provided herein), (ii) to the extent requested by any regulatory
authority, (iii) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (iv) to any other party to this
Agreement, (v) in connection with the exercise of any remedies hereunder or any
suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder, (vi) subject to an agreement containing provisions
substantially the same as those of this Section 9.09 to any assignee of or
participant in, or any prospective assignee of or participant in, any of its
rights or obligations under this Agreement, (vii) to the extent such Borrower
Information (A) is or becomes generally available to the public on a
non-confidential basis other than as a result of a breach of this Section 9.09
by the Administrative Agent, such Issuing Bank or such Lender, or (B) is or
becomes available to the Administrative Agent, such Issuing Bank or such Lender
on a non-confidential basis from a source other than the Borrower, provided such
source is not bound by a confidentiality agreement or other legal or fiduciary
obligations of secrecy with the Borrower with respect to the Borrower
Information, and (viii) with the consent of the Borrower.

            SECTION 9.10 Patriot Act. The Administrative Agent hereby notifies
the Borrower that, pursuant to the requirements of the Patriot Act, it is
required to obtain, verify and record information that identifies the Borrower,
which information includes names and addresses and other information that will
allow it to identify the Borrower in accordance with the Patriot Act.

            SECTION 9.11 Judgment. (a) If for the purposes of obtaining judgment
in any court it is necessary to convert a sum due hereunder in Dollars into
another currency, the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in

                                       50



accordance with normal banking procedures the Administrative Agent could
purchase Dollars with such other currency at Citibank's principal office in
London at 11:00 A.M. (London time) on the Business Day preceding that on which
final judgment is given.

            (b)   If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in a Committed Currency into Dollars,
the parties agree to the fullest extent that they may effectively do so, that
the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase such Committed
Currency with Dollars at Citibank's principal office in London at 11:00 A.M.
(London time) on the Business Day preceding that on which final judgment is
given.

            (c)   The obligation of the Borrower in respect of any sum due from
it in any currency (the "PRIMARY CURRENCY") to any Lender, any Issuing Bank or
the Administrative Agent hereunder shall, notwithstanding any judgment in any
other currency, be discharged only to the extent that on the Business Day
following receipt by such Lender, Issuing Bank or the Administrative Agent (as
the case may be), of any sum adjudged to be so due in such other currency, such
Lender, Issuing Bank or the Administrative Agent (as the case may be) may in
accordance with normal banking procedures purchase the applicable Primary
Currency with such other currency; if the amount of the applicable Primary
Currency so purchased is less than such sum due to such Lender, Issuing Bank or
the Administrative Agent (as the case may be) in the applicable Primary
Currency, the Borrower agrees, as a separate obligation and notwithstanding any
such judgment, to indemnify such Lender, any Issuing Bank or the Administrative
Agent (as the case may be) against such loss, and if the amount of the
applicable Primary Currency so purchased exceeds such sum due to any Lender,
Issuing Bank or the Administrative Agent (as the case may be) in the applicable
Primary Currency, such Lender, Issuing Bank or the Administrative Agent (as the
case may be) agrees to remit to the Borrower such excess.

            SECTION 9.12 Consent to Jurisdiction and Service of Process. All
judicial proceedings brought against the Borrower with respect to this Agreement
or any instrument or other documents delivered hereunder may be brought in any
state or federal court in the Borough of Manhattan in the State of New York, and
by execution and delivery of this Agreement, the Borrower accepts, for itself
and in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Agreement
or any instrument or other document delivered hereunder from which no appeal has
been taken or is available. The Borrower agrees to receive service of process in
any such proceeding in any such court at its office at 77 West 66th Street, 15th
Floor, New York, New York 10023, Attention: Kenneth E. Newman (or at such other
address in the Borough of Manhattan in the State of New York as the Borrower
shall notify the Administrative Agent from time to time) and, if the Borrower
ever ceases to maintain such office in the Borough of Manhattan, irrevocably
designates and appoints CT Corporation System, 1633 Broadway, New York, New York
10019, or any other address in the State of New York communicated by CT
Corporation System to the Administrative Agent, as its agent to receive on its
behalf service of all process in any such proceeding in any such court, such
service being hereby acknowledged by the Borrower to be effective and binding
service in every respect.

            SECTION 9.13 Substitution of Currency. If a change in any Committed
Currency occurs pursuant to any applicable law, rule or regulation of any
governmental, monetary or multi-national authority, this Agreement (including,
without limitation, the definition of Eurocurrency Rate) will be amended to the
extent determined by the Administrative Agent (acting reasonably, in
consultation with the Borrower and in accordance with the terms of Section 9.01
hereof) to be necessary to reflect the change in currency and to put the Lenders
and the Borrower in the same position, so far as possible, that they would have
been in if no change in such Committed Currency had occurred.

                                       51


            SECTION 9.14 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

            SECTION 9.15 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement. A full set of executed counterparts of this
Agreement shall be lodged with the Administrative Agent and the Borrower.

            SECTION 9.16 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

                                       52


            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

                                  THE BORROWER

                                           THE WALT DISNEY COMPANY

                                           By: /s/ Christine M. McCarthy
                                               ---------------------------------
                                           Title: Senior Vice President and
                                                  Treasurer

                                  THE ADMINISTRATIVE AGENT

                                           CITICORP USA, INC.,
                                           as Administrative Agent

                                           By: /s/ William S. Timmons, III
                                               ---------------------------------
                                           Title: Vice President

                                  THE JOINT LEAD ARRANGERS
                                  AND JOINT BOOK MANAGERS

                                           BANC OF AMERICA, SECURITIES LLC
                                           as Joint Lead Arranger and Joint Book
                                           Manager

                                           By: /s/ Thomas J. Kane
                                               ---------------------------------
                                           Title: Principal

                                           CITIGROUP GLOBAL MARKETS, INC.,
                                           as Joint Lead Arranger and Joint Book
                                           Manager

                                           By: /s/ J. Gregory Davis
                                               ---------------------------------
                                           Title: Attorney-In-Fact

                                       53


                                  THE SYNDICATION AGENT

                                           BANK OF AMERICA, N.A.
                                           as Syndication Agent

                                           By: /s/ Thomas J. Kane
                                               ---------------------------------
                                           Title: Principal

                                  THE CO-DOCUMENTATION AGENTS

                                           BARCLAYS BANK PLC,
                                           as Co-Documentation Agent

                                           By: /s/ L. Peter Yetman
                                               ---------------------------------
                                           Title: Director

                                           BNP PARIBAS SA,
                                           as Co-Documentation Agent

                                           By: /s/ Nuala Marley
                                               ---------------------------------
                                           Title: Managing Director

                                           By: /s/ Todd Rodgers
                                               ---------------------------------
                                           Title: Vice President

                                           HSBC BANK USA,
                                           as Co-Documentation Agent

                                           By: /s/ David Wagstaff
                                               ---------------------------------
                                           Title: Senior Vice President

                                           JPMORGAN CHASE BANK,
                                           as Co-Documentation Agent

                                           By: /s/ William Rindfuss
                                               ---------------------------------
                                           Title: Vice President

                                       54


                                 INITIAL LENDERS

   Commitment
$210,000,000.00                           CITICORP USA, INC., as Lender

                                          By: /s/ William S. Timmons, III
                                             -----------------------------------
                                          Title: Vice President

                                       55


$210,000,000.00                           BANK OF AMERICA, N.A.,
                                          as Lender

                                          By: /s/ Thomas J. Kane
                                             -----------------------------------
                                          Title: Principal

                                       56


$160,000,000.00                           BARCLAYS BANK PLC,
                                          as Lender

                                          By: /s/ L. Peter Yetman
                                              ----------------------------------
                                          Title: Director

                                       57


$160,000,000.00                           BNP PARIBAS SA,
                                          as Lender

                                          By: /s/ Nuala Marley
                                              ----------------------------------
                                          Title: Managing Director

                                          By: /s/ Todd Rodgers
                                              ----------------------------------
                                          Title: Vice President

                                       58


$160,000,000.00                           HSBC BANK USA,
                                          as Lender

                                          By: /s/ David Wagstaff
                                              ----------------------------------
                                          Title: Senior Vice President

                                       59


$160,000,000.00                           JPMORGAN CHASE BANK,
                                          as Lender

                                          By: /s/ William Rindfuss
                                              ----------------------------------
                                          Title: Vice President

                                       60


$107,500,000.00                           CREDIT SUISSE FIRST BOSTON,
                                          acting through its Cayman Islands
                                          Branch as Lender

                                          By: /s/ Jay Chall
                                              ----------------------------------
                                          Title: Director

                                          By: /s/ Jennifer A. Pieza
                                              ----------------------------------
                                          Title: Associate

                                       61


$107,500,000.00                           DEUTSCHE BANK AG,
                                          as Lender

                                          By: /s/ William M. McGinty
                                              ----------------------------------
                                          Title: Director

                                          By: /s/ Christopher S. Hall
                                              ----------------------------------
                                          Title: Managing Director

                                       62


$107,500,000.00                           STANDARD CHARTERED BANK,
                                          as Lender

                                          By: /s/ Frieda Youlios
                                              ----------------------------------
                                          Title: Vice President

                                          By: /s/ Robert Reddington
                                              ----------------------------------
                                          Title: Assistant Vice President

                                       63


$107,500,000.00                           UBS LOAN FINANCE LLC,
                                          as Lender

                                          By: /s/ Wilfred V. Saint
                                              ----------------------------------
                                          Title: Associate Director

                                          By: /s/ Thomas R. Salzano
                                              ----------------------------------
                                          Title: Director

                                       64


$57,500,000.00                            BANCA INTESA, SPA,
                                          as Lender

                                          By: /s/ F. Maffei
                                              ----------------------------------
                                          Title: Vice President

                                       65


$57,500,000.00                            HARRIS NESBITT FINANCING, INC.,
                                          as Lender

                                          By: /s/ Joseph W. Linder
                                              ----------------------------------
                                          Title: Vice President

                                       66


$57,500,000.00                            MIZUHO CORPORATE BANK, LTD.,
                                          as Lender

                                          By: /s/ Mark Gronich
                                              ----------------------------------
                                          Title: Vice President

                                       67


$57,500,000.00                            SOCIETE GENERALE,
                                          as Lender

                                          By: /s/ Mark Vigil
                                              ----------------------------------
                                          Title: Managing Director

                                       68


$57,500,000.00                            SUMITOMO MITSUI
                                          BANKING CORPORATION,
                                          as Lender

                                          By: /s/ Leo E. Pagarigan
                                              ----------------------------------
                                          Title: Senior Vice President

                                       69


$57,500,000.00                            SUNTRUST BANK,
                                          as Lender

                                          By: /s/ David W. Penter
                                              ----------------------------------
                                          Title: Director

                                       70


$57,500,000.00                            WILLIAM STREET
                                          COMMITMENT CORPORATION,
                                          (Recourse only to assets of William
                                          Street Commitment Corporation),
                                          as Lender

                                          By: /s/ J.M. Hill
                                              ----------------------------------
                                          Title: CFO

                                       71


$32,500,000.00                            AUSTRALIA AND NEW ZEALAND BANKING
                                          GROUP LIMITED,
                                          as Lender

                                          By: /s/ Damodar Menon
                                              ----------------------------------
                                          Title: Director

                                       72


$32,500,000.00                            BANCA DI ROMA - SAN FRANCISCO,
                                          as Lender

                                          By: /s/ Luca Balestra
                                              ----------------------------------
                                          Title: Senior Vice President & Manager

                                          By: /s/ Richard G. Dietz
                                              ----------------------------------
                                          Title: Vice President

                                       73


$32,500,000.00                            BEAR STEARNS CORPORATE LENDING INC.,
                                          as Lender

                                          By: /s/ Victor Bulzacchelli
                                              ----------------------------------
                                          Title: Vice President

                                       74


$32,500,000.00                            ING BANK N .V.,
                                          as Lender

                                          By: /s/ Michael Fenlan
                                              ----------------------------------
                                          Title: Vice President

                                       75


$32,500,000.00                            LEHMAN BROTHERS BANK, FSB,
                                          as Lender

                                          By: /s/ Gary T. Taylor
                                              ----------------------------------
                                          Title: Vice President

                                       76


$32,500,000.00                            LLOYDS TSB BANK PLC,
                                          as Lender

                                          By: /s/ Peter Doyle
                                              ----------------------------------
                                          Title: Vice President

                                          By: /s/ Lisa Maguire
                                              ----------------------------------
                                          Title: Assistant Vice President

                                       77


$32,500,000.00                            MERRILL LYNCH BANK USA,
                                          as Lender

                                          By: /s/ Preston Jackson
                                              ----------------------------------
                                          Title: President and CEO

                                       78


$32,500,000.00                            STATE STREET BANK AND TRUST COMPANY,
                                          as Lender

                                          By: /s/ Mary H. Carey
                                              ----------------------------------
                                          Title: Vice President

                                       79


$32,500,000.00                            UFJ BANK LIMITED,
                                          as Lender

                                          By: /s/ Toshiko Boyd
                                              ----------------------------------
                                          Title: Vice President

                                       80


$32,500,000.00                            UNION BANK OF CALIFORNIA, N.A.,
                                          as Lender

                                          By: /s/ Kin W. Cheng
                                              ----------------------------------
                                          Title: Assistant Vice President

                                       81


$32,500,000.00                            WELLS FARGO BANK, N.A.,
                                          as Lender

                                          By: /s/ Ling Li
                                             -----------------------------------
                                          Title: Vice President

                                       82


                                THE ISSUING BANKS

                                          BNP PARIBAS SA.,
                                          as Issuing Bank

                                          By: /s/ Nuala Marley
                                              ----------------------------
                                          Title: Director

                                          By: /s/ Todd Rodgers
                                             -----------------------------
                                          Title: Vice President

                                          STANDARD CHARTERED BANK,
                                          as Issuing Bank

                                          By: /s/ Frieda Youlios
                                              ----------------------------
                                          Title: Vice President

                                       73

EX-10.B

                                                                   EXHIBIT 10(b)



                            364-DAY CREDIT AGREEMENT

                          Dated as of February 25, 2004

                                      Among

                             THE WALT DISNEY COMPANY

                                   as Borrower

                                       and

                     THE FINANCIAL INSTITUTIONS NAMED HEREIN

                                   as Lenders

                                       and

                               CITICORP USA, INC.

                             as Administrative Agent

                                       and

                         BANC OF AMERICA SECURITIES, LLC
                       AND CITIGROUP GLOBAL MARKETS, INC.

                 as Joint Lead Arrangers and Joint Book Managers

                                       and

                              BANK OF AMERICA, N.A.

                              as Syndication Agent

                                       and

                               BARCLAYS BANK PLC,
                        BNP PARIBAS SA, HSBC BANK USA AND
                               JPMORGAN CHASE BANK

                           as Co-Documentation Agents





                                TABLE OF CONTENTS



                                                                                  PAGE
                                                                                  ----
                                                                               
                   ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01.     Certain Defined Terms........................................     1

SECTION 1.02.     Computation of Time Periods..................................    12

SECTION 1.03.     Accounting Terms.............................................    12

                  ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES

SECTION 2.01.     The Advances.................................................    13

SECTION 2.02.     Making the Advances..........................................    13

SECTION 2.03.     Fees.........................................................    14

SECTION 2.04.     Reduction of the Revolving Credit Commitments................    15

SECTION 2.05.     Repayment of Advances........................................    15

SECTION 2.06.     Interest on Advances.........................................    16

SECTION 2.07.     Additional Interest on Eurocurrency Rate Advances............    16

SECTION 2.08.     Interest Rate Determination..................................    17

SECTION 2.09.     Optional Conversion of Advances..............................    18

SECTION 2.10.     Prepayments of Advances......................................    18

SECTION 2.11.     Increased Costs..............................................    19

SECTION 2.12.     Illegality...................................................    20

SECTION 2.13.     Payments and Computations....................................    21

SECTION 2.14.     Taxes........................................................    22

SECTION 2.15.     Sharing of Payments, Etc.....................................    24

SECTION 2.16.     Mandatory Assignment by a Lender; Mitigation.................    25

SECTION 2.17.     Evidence of Debt.............................................    25

SECTION 2.18.     Use of Proceeds..............................................    26

SECTION 2.19.     Extension of Termination Date................................    26




                                                                                
               ARTICLE III CONDITIONS OF EFFECTIVENESS AND LENDING

SECTION 3.01.     Conditions Precedent to Effectiveness........................    28

SECTION 3.02.     Conditions Precedent to Each Borrowing.......................    29

SECTION 3.03.     Determinations Under Section 3.01............................    29

                    ARTICLE IV REPRESENTATIONS AND WARRANTIES

SECTION 4.01.     Representations and Warranties of the Borrower...............    30

SECTION 4.02.     Additional Representations and Warranties of the Borrower
                  as of Each Extension Date....................................    31

                       ARTICLE V COVENANTS OF THE BORROWER

SECTION 5.01.     Affirmative Covenants........................................    31

SECTION 5.02.     Negative Covenants...........................................    33

                          ARTICLE VI EVENTS OF DEFAULT

SECTION 6.01.     Events of Default............................................    34

                      ARTICLE VII THE ADMINISTRATIVE AGENT

SECTION 7.01.     Authorization and Action.....................................    35

SECTION 7.02.     Administrative Agent's Reliance, Etc.........................    35

SECTION 7.03.     CUSA and Affiliates..........................................    36

SECTION 7.04.     Lender Credit Decision.......................................    36

SECTION 7.05.     Indemnification..............................................    36

SECTION 7.06.     Successor Administrative Agent...............................    36

SECTION 7.07.     Sub-Agent....................................................    37

                           ARTICLE VIII MISCELLANEOUS

SECTION 8.01.     Amendments, Etc..............................................    37

SECTION 8.02.     Notices, Etc.................................................    37

SECTION 8.03.     No Waiver; Remedies..........................................    39

SECTION 8.04.     Costs and Expenses...........................................    39

SECTION 8.05.     Right of Set-off.............................................    39



                                       ii


                                                                                
SECTION 8.06.     Binding Effect...............................................    39

SECTION 8.07.     Assignments and Participations...............................    39

SECTION 8.08.     Indemnification..............................................    42

SECTION 8.09.     Confidentiality..............................................    43

SECTION 8.10.     Patriot Act..................................................    43

SECTION 8.11.     Judgment.....................................................    43

SECTION 8.12.     Consent to Jurisdiction and Service of Process...............    44

SECTION 8.13.     Substitution of Currency.....................................    44

SECTION 8.14.     Governing Law................................................    44

SECTION 8.15.     Execution in Counterparts....................................    44

SECTION 8.16.     Severability.................................................    44

                                    SCHEDULE

Schedule I    -   List of Applicable Lending Offices

                                    EXHIBITS

Exhibit A     -   Form of Notice of Borrowing

Exhibit B     -   Form of Assignment and Acceptance

Exhibit C     -   Form of Opinion of Deputy General Counsel of the Borrower

Exhibit D-1   -   Form of Foreign Lender Certificate

Exhibit D-2   -   Form of Foreign Lender Certificates



                                       iii


                            364-DAY CREDIT AGREEMENT

                          DATED AS OF FEBRUARY 25, 2004

            THE WALT DISNEY COMPANY, a Delaware corporation (the "BORROWER"),
the banks, financial institutions and other institutional lenders (the "INITIAL
LENDERS") listed on the signature pages hereof under the heading "THE INITIAL
LENDERS", CITICORP USA, INC., a Delaware corporation ("CUSA"), as administrative
agent (together with any successor administrative agent appointed pursuant to
Article VII, the "ADMINISTRATIVE AGENT") for the Lenders (as hereinafter
defined), BANK OF AMERICA, N.A. as syndication agent (the "SYNDICATION AGENT"),
BANC OF AMERICA SECURITIES LLC and CITIGROUP GLOBAL MARKETS, INC., as Joint Lead
Arrangers and Joint Book Managers (the "ARRANGERS"), and BARCLAYS BANK PLC, BNP
PARIBAS SA, HSBC BANK USA and JPMORGAN CHASE BANK, as co-documentation agents
(the "CO-DOCUMENTATION AGENTS") for the Lenders hereunder, hereby agree as
follows:

                                    ARTICLE I
                        DEFINITIONS AND ACCOUNTING TERMS

      SECTION 1.01.Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

            "ABC" means ABC, Inc., a New York corporation and a wholly owned
      Subsidiary of the Borrower, or any successor thereto.

            "ADMINISTRATIVE AGENT" has the meaning specified in the recital of
      parties to this Agreement.

            "ADMINISTRATIVE AGENT'S ACCOUNT" means (a) in the case of Advances
      denominated in Dollars, the account of the Administrative Agent maintained
      by the Administrative Agent at the office of Citibank at 399 Park Avenue,
      New York, New York 10043, (b) in the case of Advances denominated in any
      Committed Currency, the account of the Sub-Agent, as the Administrative
      Agent shall notify in writing the Borrower and the Lenders from time to
      time, and (c) in any such case, such other account of the Administrative
      Agent or the Sub-Agent, as the case may be, as the Administrative Agent or
      the Sub-Agent shall notify in writing the Borrower and the Lenders from
      time to time.

            "ADVANCE" means an advance by a Lender to the Borrower as part of a
      Borrowing and refers to a Base Rate Advance or a Eurocurrency Rate
      Advance, each of which shall be a "Type" of Advance.

            "AFFILIATE" means, as to any Person, any other Person that, directly
      or indirectly, controls, is controlled by or is under common control with
      such Person or is a director or officer of such Person.

            "AGREEMENT" means this 364-Day Credit Agreement, as it may be
      amended, supplemented or otherwise modified from time to time in
      accordance with Section 8.01.

            "APPLICABLE LENDING OFFICE" means, with respect to each Lender, such
      Lender's Domestic Lending Office in the case of a Base Rate Advance and
      such Lender's Eurocurrency Lending Office in the case of a Eurocurrency
      Rate Advance.



            "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
      entered into by a Lender and an Eligible Assignee, and accepted by the
      Administrative Agent and the Borrower, in substantially the form of
      Exhibit B hereto.

            "ASSUMING LENDER" has the meaning specified in Section 2.19(c).

            "ASSUMPTION AGREEMENT" has the meaning specified in Section 2.19(c).

            "BASE RATE" means, for each day in any period, a fluctuating
      interest rate per annum as shall be in effect from time to time, which
      rate per annum shall at all times for such day during such period be equal
      to the higher of:

            (a) the rate of interest announced publicly by Citibank in New York,
      New York, from time to time, as Citibank's base rate in effect for such
      day; and

            (b) 0.50% per annum above the Federal Funds Rate for such day.

            "BASE RATE ADVANCE" means an Advance which bears interest as
      provided in Section 2.06(a)(i).

            "BORROWING" means a borrowing consisting of simultaneous Advances of
      the same Type made by each of the Lenders pursuant to Section 2.01.

            "BUSINESS DAY" means a day of the year on which banks are not
      required or authorized to close in Los Angeles, California, or New York
      City, New York, or San Francisco, California, or, if the applicable
      Business Day relates to any Eurocurrency Rate Advances, on which dealings
      are carried on in the London interbank market.

            "CITIBANK" means Citibank, N.A., a national banking association.

            "CO-DOCUMENTATION AGENTS" has the meaning specified in the recital
      of parties to this Agreement.

            "COMMITTED CURRENCIES" means lawful currency of the United Kingdom
      of Great Britain and Northern Ireland, lawful currency of Japan and lawful
      currency of the European Economic and Monetary Union.

            "CONSOLIDATED EBITDA" means, for any period, (a) net income or net
      loss, as the case may be, of the Borrower and its Subsidiaries on a
      consolidated basis for such period, as determined in accordance with GAAP
      for such period, plus (b) the sum of all amounts which, in the
      determination of such consolidated net income or net loss, as the case may
      be, for such period, have been deducted for (i) Consolidated Interest
      Expense, (ii) consolidated income tax expense, (iii) consolidated
      depreciation expense, and (iv) consolidated amortization expense, in each
      case determined in accordance with GAAP for such period.

            "CONSOLIDATED INTEREST EXPENSE" means, for any period, total
      interest expense of the Borrower and its Subsidiaries with respect to all
      outstanding Debt of the Borrower and its Subsidiaries during such period,
      all as determined on a consolidated basis for such period and in
      accordance with GAAP for such period.

                                       2


            "CONVERT", "CONVERSION" and "CONVERTED" each refers to a conversion
      of Advances of one Type into Advances of another Type pursuant to Section
      2.08 or 2.09.

            "CUSA" has the meaning specified in the recital of parties to this
      Agreement.

            "DEBT" means, with respect to any Person: (a) indebtedness for
      borrowed money, (b) obligations evidenced by bonds, debentures, notes or
      other similar instruments, (c) obligations to pay the deferred purchase
      price of property or services (other than trade payables incurred in the
      ordinary course of business), (d) obligations as lessee under leases which
      shall have been or should be, in accordance with GAAP, recorded as capital
      leases and (e) obligations under direct or indirect guaranties in respect
      of, and obligations (contingent or otherwise) to purchase or otherwise
      acquire, or otherwise to assure a creditor against loss in respect of,
      indebtedness or obligations of any other Person of the kinds referred to
      in clauses (a) through (d) above.

            "DECLINING LENDER" has the meaning specified in Section 2.19(b).

            "DISNEY" means Disney Enterprises, Inc., a Delaware corporation and
      a wholly owned Subsidiary of the Borrower, or any successor thereto.

            "DOLLARS" and the "$" sign each means lawful currency of the United
      States.

            "DOMESTIC LENDING OFFICE" means, with respect to any Lender, the
      office of such Lender specified as its "Domestic Lending Office" opposite
      its name on Schedule I hereto or in the Assumption Agreement or the
      Assignment and Acceptance, as the case may be, pursuant to which it became
      a Lender, or such other office of such Lender as such Lender may from time
      to time specify to the Borrower and the Administrative Agent for such
      purpose.

            "EFFECTIVE DATE" has the meaning specified in Section 3.01.

            "ELIGIBLE ASSIGNEE" means (a) a Lender or any Affiliate of a Lender
      or (b) any bank or other financial institution, or any other Person, which
      has been approved in writing by the Borrower and the Administrative Agent
      as an Eligible Assignee for purposes of this Agreement; provided, however,
      that neither the Borrower's approval nor the Administrative Agent's
      approval shall be unreasonably withheld; and provided further, however,
      that the Borrower may withhold its approval if the Borrower reasonably
      believes that an assignment to such Eligible Assignee pursuant to Section
      8.07 will result in the incurrence of increased costs payable by the
      Borrower pursuant to Section 2.11 or 2.14.

            "ENVIRONMENTAL CLAIM" means any administrative, regulatory or
      judicial action, suit, demand, claim, lien, notice or proceeding relating
      to any Environmental Law or any Environmental Permit.

            "ENVIRONMENTAL LAW" means any federal, state or local statute, law,
      rule, regulation, ordinance, code or duly promulgated policy or rule of
      common law, now or hereafter in effect, and in each case as amended, and
      any judicial or administrative interpretation thereof, including any
      order, consent decree or judgment, relating to the environment, health,
      safety or any Hazardous Material.

            "ENVIRONMENTAL PERMIT" means any permit, approval, identification
      number, license or other authorization required under any applicable
      Environmental Law.

                                       3


            "EQUIVALENT" in Dollars of any Committed Currency on any date means
      the equivalent in Dollars of such Committed Currency determined by using
      the quoted spot rate at which the Sub-Agent's principal office in London
      offers to exchange Dollars for such Committed Currency in London at or
      about 4:00 P.M. (London time) (unless otherwise indicated by the terms of
      this Agreement) on such date as is required pursuant to the terms of this
      Agreement, and the "Equivalent" in any Committed Currency of Dollars means
      the equivalent in such Committed Currency of Dollars determined by using
      the quoted spot rate at which the Sub-Agent's principal office in London
      offers to exchange such Committed Currency for Dollars in London at or
      about 4:00 P.M. (London time) (unless otherwise indicated by the terms of
      this Agreement) on such date as is required pursuant to the terms of this
      Agreement.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
      as amended from time to time, and the regulations promulgated and the
      rulings issued thereunder.

            "ERISA AFFILIATE" means any Person that for purposes of Title IV of
      ERISA is a member of the Borrower's controlled group, or under common
      control with the Borrower, within the meaning of Section 414 of the
      Internal Revenue Code of 1986, as amended.

            "ERISA EVENT" means: (a) (i) the occurrence with respect to a Plan
      of a reportable event, within the meaning of Section 4043 of ERISA, unless
      the 30-day notice requirement with respect thereto has been waived by the
      Pension Benefit Guaranty Corporation or (ii) the provisions of paragraph
      (1) of Section 4043(b) of ERISA (without regard to paragraph (2) of such
      Section) are applicable with respect to a contributing sponsor, as defined
      in Section 4001(a)(13) of ERISA, of a Plan, and an event described in
      paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA could
      reasonably be expected to occur with respect to such Plan within the
      following 30 days; (b) the provision by the administrator of any Plan of a
      notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of
      ERISA (including any such notice with respect to a plan amendment referred
      to in Section 4041(e) of ERISA); (c) the cessation of operations by the
      Borrower or any ERISA Affiliate at a facility in the circumstances
      described in Section 4062(e) of ERISA; (d) the withdrawal by the Borrower
      or any ERISA Affiliate from a Multiple Employer Plan during a plan year
      for which it was a substantial employer, as defined in Section 4001(a)(2)
      of ERISA; (e) the failure by the Borrower or any ERISA Affiliate to make a
      payment to a Plan described in Section 302(f)(1)(A) of ERISA; (f) the
      adoption of an amendment to a Plan requiring the provision of security to
      such Plan, pursuant to Section 307 of ERISA; or (g) the institution by the
      Pension Benefit Guaranty Corporation of proceedings to terminate a Plan,
      pursuant to Section 4042 of ERISA, or the occurrence of any event or
      condition which is reasonably likely to constitute grounds under Section
      4042 of ERISA for the termination of, or the appointment of a trustee to
      administer, a Plan.

            "EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
      Regulation D of the Board of Governors of the Federal Reserve System, as
      in effect from time to time.

            "EUROCURRENCY LENDING OFFICE" means, with respect to any Lender, the
      office of such Lender specified as its "Eurocurrency Lending Office"
      opposite its name on Schedule I hereto or in the Assumption Agreement or
      the Assignment and Acceptance, as the case may be, pursuant to which it
      became a Lender (or, if no such office is specified, its Domestic Lending
      Office), or such other office of such Lender as such Lender may from time
      to time specify to the Borrower and the Administrative Agent for such
      purpose.

            "EUROCURRENCY RATE" means, for any Interest Period for each
      Eurocurrency Rate Advance comprising part of the same Borrowing, (a) the
      rate per annum (rounded upwards, if

                                       4



      necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
      any successor page) as the London interbank offered rate for deposits in
      Dollars or the applicable Committed Currency, as the case may be, at 11:00
      A.M. (London time) two Business Days before the first day of such Interest
      Period for a period equal to such Interest Period divided by (b) a
      percentage equal to 100% minus the Eurocurrency Rate Reserve Percentage
      for such Interest Period (provided, that, if for any reason such rate is
      not available the term "Eurocurrency Rate" shall mean, for any Interest
      Period for each Eurocurrency Rate Advance comprising part of the same
      Borrowing, (a) an interest rate per annum equal to the average (rounded
      upward to the nearest whole multiple of 1/16 of 1% per annum, if such
      average is not such a multiple) of the rate per annum at which deposits in
      Dollars or the applicable Committed Currency, as the case may be, are
      offered by the principal office of each of the Reference Banks in London,
      England to prime banks in the London interbank market at 11:00 A.M.
      (London time) two Business Days before the first day of such Interest
      Period for a period equal to such Interest Period and in an amount
      substantially equal to such Reference Bank's (or, in the case of Citibank,
      CUSA's) Eurocurrency Rate Advance comprising part of such Borrowing
      divided by (b) a percentage equal to 100% minus the Eurocurrency Rate
      Reserve Percentage for such Interest Period). In the event that the
      Eurocurrency Rate is to be determined by the Reference Banks, the
      Eurocurrency Rate for any Interest Period for each Eurocurrency Rate
      Advance comprising part of the same Borrowing shall be determined by the
      Administrative Agent on the basis of applicable rates furnished to and
      received by the Administrative Agent from the Reference Banks two Business
      Days before the first day of such Interest Period, subject, however, to
      the provisions of Section 2.08.

            "EUROCURRENCY RATE ADVANCE" means an Advance denominated in Dollars
      or a Committed Currency which bears interest as provided in Section
      2.06(a)(ii).

            "EUROCURRENCY RATE MARGIN" means, as of any date, a percentage per
      annum determined by reference to the Public Debt Rating in effect on such
      date as set forth below:


                                                           APPLICABLE MARGIN
                                   APPLICABLE MARGIN      AFTER CONVERSION OF
       PUBLIC DEBT RATING         ON OR PRIOR TO THE     ADVANCES TO TERM LOAN
          S&P/MOODY'S              TERMINATION DATE       UNDER SECTION 2.05
- -----------------------------     ------------------     ---------------------
                                                   
Level 1

AA-/Aa3 or above                        0.135%                  0.260%

Level 2

Lower than AA-/Aa3 but                  0.150%                  0.275%

at least A/A2

Level 3

Lower than A/A2 but                     0.160%                  0.285%

at least A-/A3


                                       5



                                                          
Level 4

Lower than A-/A3 but                    0.185%                  0.310%

at least BBB+/Baa1

Level 5

Lower than BBB+/Baa1 or no              0.325%
                                                                0.450%
Public Debt Rating in effect




            "EUROCURRENCY RATE RESERVE PERCENTAGE" means, with respect to any
      Lender for any Interest Period for any Eurocurrency Rate Advance, the
      reserve percentage applicable during such Interest Period (or, if more
      than one such percentage shall be so applicable, the daily average of such
      percentages for those days in such Interest Period during which any such
      percentage shall be so applicable) under regulations issued from time to
      time by the Board of Governors of the Federal Reserve System (or any
      successor thereto) for determining the maximum reserve requirement
      (including, without limitation, any emergency, supplemental or other
      marginal reserve requirement) for such Lender with respect to liabilities
      or assets consisting of or including Eurocurrency Liabilities (or with
      respect to any other category of liabilities that includes deposits by
      reference to which the interest rate on Eurocurrency Rate Advances is
      determined) having a term equal to such Interest Period.

            "EURO DISNEY ENTITY" means any Subsidiary of the Borrower and any
      other Person whose equity securities or interests are owned, directly or
      indirectly, in whole or in part, by the Borrower or any of its
      Subsidiaries, the primary business of which is the direct or indirect
      ownership, management, operation, design, construction and/or financing of
      the recreational, commercial and residential facilities and complex, or
      any part thereof or any addition thereto, commonly known as `Euro Disney',
      `Euro Disneyland' or `Disneyland Resort Paris', located in
      Marne-la-Vallee, France, which Subsidiaries and other Persons include,
      without limitation, as of the date hereof, Euro Disney Investments, Inc.,
      EDL S.N.C. Corporation, Euro Disney Associes S.N.C., Euro Disneyland SNC,
      Euro Disney SCA, Euro Disneyland Participations S.A., Euro Disney S.A.,
      EDL Holding Company, EDL Participations S.A., Centre de Congres Newport
      S.A.S., Euro Disneyland Imagineering S.a.r.l. and Societe de Gerance
      d'Euro Disneyland SA.

            "EVENTS OF DEFAULT" has the meaning specified in Section 6.01.

            "EXCLUDED ENTITY" means each of the Euro Disney Entities, the Hong
      Kong Disneyland Entities and the Specified Project Entities.

            "EXTENSION DATE" has the meaning specified in Section 2.19(b).

            "EXTENDING LENDER" has the meaning specified in Section 2.19(b).

            "FACILITY FEE PERCENTAGE" means, as of any date, a percentage per
      annum determined by reference to the Public Debt Rating in effect on such
      date as set forth below:

                                       6





      PUBLIC DEBT RATING
         S&P/MOODY'S                                PERCENTAGE
- ---------------------------- -                      ----------
                                                 
Level 1

AA-/Aa3 or above                                      0.040%

Level 2

Lower than AA-/Aa3 but

at least A/A2                                         0.050%

Level 3

Lower than A/A2 but

at least A-/A3                                        0.065%

Level 4

Lower than A-/A3 but

at least BBB+/Baa1                                    0.090%

Level 5

Lower than BBB+/Baa1 or no

Public Debt Rating in effect                          0.125%


            "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
      rate per annum equal for each day during such period to the weighted
      average of the rates on overnight federal funds transactions with members
      of the Federal Reserve System arranged by federal funds brokers, as
      published for such day (or, if such day is not a Business Day, for the
      immediately preceding Business Day) by the Federal Reserve Bank of New
      York, or, if such rate is not so published for any day which is a Business
      Day, the average of the quotations for such day on such transactions
      received by the Administrative Agent from three federal funds brokers of
      recognized standing selected by the Administrative Agent.

            "FIVE-YEAR CREDIT AGREEMENT" means the Five-Year Credit Agreement
      dated as of February 25, 2004, among the Borrower, the banks, financial
      institutions and other institutional lenders party thereto, CUSA, as
      administrative agent thereunder, Bank of America, N.A., as syndication
      agent, Banc of America Securities LLC and Citigroup Global Markets Inc. as
      joint lead arrangers and joint book managers and Barclays Bank Plc, BNP
      Paribas SA, HSBC Bank USA and JPMorgan Chase Bank, as co-documentation
      agents thereunder, as such agreement may be amended, supplemented or
      otherwise modified hereafter from time to time.

                                       7


            "GAAP" means generally accepted accounting principles consistent
      with those applied in the preparation of the audited financial statements
      referred to in Section 4.01(c) dated September 30, 2003, subject, however,
      to the provisions of Section 1.03.

            "HAZARDOUS MATERIAL" means (a) any petroleum or petroleum product,
      natural or synthetic gas, asbestos in any form that is or could become
      friable, urea formaldehyde foam insulation, or radon gas, (b) any
      substance defined as or included in the definition of "hazardous
      substances", "hazardous wastes", "hazardous materials", "toxic
      substances", "contaminants" or "pollutants", or words of similar import,
      under any applicable Environmental Law or (c) any other substance to which
      exposure is regulated by any governmental or regulatory authority.

            "HONG KONG DISNEYLAND ENTITY" means any Subsidiary of the Borrower
      and any other Person whose equity securities or interests are owned,
      directly or indirectly, in whole or in part, by the Borrower or any of its
      Subsidiaries, the primary business of which is the direct or indirect
      ownership, management, operation, design, construction and/or financing of
      the recreational and commercial facilities and complex, or any part
      thereof or any addition thereto, commonly known as `Hong Kong Disney',
      `Hong Kong Disneyland' or `Disneyland Resort Hong Kong' located at Penny's
      Bay on Lantau Island, Hong Kong, which Subsidiaries and other Persons
      include, without limitation, as of the date hereof, Hongkong International
      Theme Parks Limited, Hong Kong Disneyland Management Limited, and Walt
      Disney Holdings (Hong Kong) Limited.

            "INDEMNIFIED MATTERS" has the meaning specified in Section 8.08.

            "INDEMNIFIED PARTY" has the meaning specified in Section 8.08.

            "INITIAL LENDERS" has the meaning specified in the recital of
      parties to this Agreement.

            "INTEREST PERIOD" means, for each Eurocurrency Rate Advance
      comprising part of the same Borrowing, the period commencing on the date
      of such Eurocurrency Rate Advance or on the date of the Conversion of any
      Base Rate Advance into such Eurocurrency Rate Advance and ending on the
      last day of the period selected by the Borrower pursuant to the provisions
      below and, thereafter, each subsequent period commencing on the last day
      of the immediately preceding Interest Period and ending on the last day of
      the period selected by the Borrower pursuant to the provisions below. The
      duration of each such Interest Period shall be one, two, three, six or, if
      generally available to all of the Lenders, nine or twelve months as the
      Borrower may, upon notice received by the Administrative Agent not later
      than (x) 11:00 A.M. (New York City time) on the third Business Day prior
      to the first day of such Interest Period for each Eurocurrency Rate
      Advance denominated in any Committed Currency, or (y) 1:00 P.M. (New York
      City time) on the third Business Day prior to the first day of such
      Interest Period for each Eurocurrency Rate Advance denominated in Dollars,
      select; provided, however, that:

                  (i)   Interest Periods commencing on the same date for
            Eurocurrency Rate Advances comprising part of the same Borrowing
            shall be of the same duration;

                  (ii)  whenever the last day of any Interest Period would
            otherwise occur on a day other than a Business Day, the last day of
            such Interest Period shall be extended to occur on the next
            succeeding Business Day, provided, however, that if such extension
            would cause the last day of such Interest Period to occur in the
            next succeeding calendar month, the last day of such Interest Period
            shall occur on the immediately preceding Business Day;

                                       8


                  (iii) whenever the first day of any Interest Period occurs on
            a day of an initial calendar month for which there is no numerically
            corresponding day in the calendar month that succeeds such initial
            calendar month by the number of months equal to the number of months
            in such Interest Period, such Interest Period shall end on the last
            Business Day of such succeeding calendar month; and

                  (iv)  the Borrower may not select for any Advance any Interest
            Period which ends after the scheduled Termination Date then in
            effect or, if the Advances have been converted to a term loan
            pursuant to Section 2.05 prior to the time of such selection, which
            ends after the Maturity Date.

            "IRS" has the meaning specified in Section 2.14(e).

            "LENDERS" means, collectively, each Initial Lender, each Assuming
      Lender that shall become a party hereto pursuant to Section 2.19 and each
      Eligible Assignee that shall become a party hereto pursuant to Section
      8.07; provided, however, that for purposes of any determination to be made
      under Section 2.07, 2.11, 2.12 or 8.04(b) with respect to CUSA, in its
      capacity as Lender, the term "Lenders" shall be deemed to include
      Citibank.

            "LIEN" means any lien, security interest or other charge or
      encumbrance of any kind, or any other type of preferential arrangement
      which has the same effect as a lien or security interest.

            "MAJORITY LENDERS" means, at any time, Lenders owed at least a
      majority in interest of the aggregate unpaid principal amount of the
      Advances owing to the Lenders at such time, or, if no such principal
      amount is outstanding at such time, Lenders having at least a majority in
      interest of the Revolving Credit Commitments at such time; provided,
      however, that neither the Borrower nor any of its Affiliates, if a Lender,
      shall be included in the determination of the Majority Lenders at any
      time.

            "MATERIAL SUBSIDIARY" means, at any date of determination, a
      Subsidiary of the Borrower that, either individually or together with its
      Subsidiaries, taken as a whole, has total assets exceeding $100,000,000 on
      such date.

            "MATURITY DATE" means the earlier of (a) the first anniversary of
      the Termination Date and (b) the date of termination in whole of the
      aggregate Revolving Credit Commitments pursuant to Section 2.04 or 6.01.

            "MEASUREMENT PERIOD" means, at any date of determination, the most
      recently completed four consecutive fiscal quarters of the Borrower on or
      immediately prior to such date.

            "MOODY'S" means Moody's Investors Service, Inc. or any successor
      thereto.

            "MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in
      Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate
      is making or accruing an obligation to make contributions, or has within
      any of the preceding five plan years made or accrued an obligation to make
      contributions.

            "MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined in
      Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
      Borrower or any ERISA Affiliate and at least one Person other than the
      Borrower and the ERISA Affiliates or (ii) was so

                                       9


      maintained and in respect of which the Borrower or an ERISA Affiliate
      could have liability under Section 4064 or 4069 of ERISA in the event such
      plan has been or were to be terminated.

            "NOTE" has the meaning specified in Section 2.17.

            "NOTICE OF BORROWING" has the meaning specified in Section 2.02(a).

            "OTHER TAXES" has the meaning specified in Section 2.14(b).

            "PATRIOT ACT" means the Uniting and Strengthening America by
      Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
      Act of 2001, Pub. L. 107-56 and all other laws and regulations relating to
      money-laundering and terrorist activities.

            "PAYMENT OFFICE" means, for any Committed Currency, such office of
      Citibank as shall be from time to time selected by the Administrative
      Agent and notified by the Administrative Agent to the Borrower and the
      Lenders.

            "PERSON" means an individual, partnership, corporation (including a
      business trust), joint stock company, trust, unincorporated association,
      joint venture or other entity, or a government or any political
      subdivision or agency thereof.

            "PLAN" means a Single Employer Plan or a Multiple Employer Plan.

            "PUBLIC DEBT RATING" means, as of any date of determination, the
      higher rating that has been most recently announced by either S&P or
      Moody's, as the case may be, for any class of non-credit enhanced
      long-term senior unsecured public debt issued by the Borrower. For
      purposes of the foregoing, (a) if only one of S&P and Moody's shall have
      in effect a Public Debt Rating, the Eurocurrency Rate Margin and the
      Facility Fee Percentage shall be determined by reference to the available
      rating; (b) if neither S&P nor Moody's shall have in effect a Public Debt
      Rating, the Eurocurrency Rate Margin and the Facility Fee Percentage will
      be set in accordance with Level 5 under the definition of "Eurocurrency
      Rate Margin" or "Facility Fee Percentage", as the case may be; (c) if the
      ratings established by S&P and Moody's shall fall within different levels,
      the Eurocurrency Rate Margin and the Facility Fee Percentage shall be
      based upon the higher rating; (d) if any rating established by S&P or
      Moody's shall be changed, such change shall be effective as of the date on
      which such change is first announced publicly by the rating agency making
      such change; and (e) if S&P or Moody's shall change the basis on which
      ratings are established, each reference to the Public Debt Rating
      announced by S&P or Moody's, as the case may be, shall refer to the then
      equivalent rating by S&P or Moody's, as the case may be.

            "REFERENCE BANKS" means Citibank, Bank of America, N.A., Barclays
      Bank Plc and BNP Paribas, or, in the event that fewer than two of such
      banks remain Lenders hereunder at any time, any other commercial bank
      designated by the Borrower and approved by the Majority Lenders as
      constituting a "Reference Bank" hereunder.

            "REGISTER" has the meaning specified in Section 8.07(c).

            "REPLACED LOAN AGREEMENTS" means, collectively, (a) the Amended and
      Restated 364-Day Credit Agreement dated as of February 26, 2003, as
      amended, among the Borrower, the lenders party thereto and Citicorp USA,
      Inc., as administrative agent, and (b) the Five-Year

                                       10


      Credit Agreement, dated as of March 8, 2000, as amended, among the
      Borrower, the lenders party thereto and Citicorp USA, Inc., as
      administrative agent.

            "REVOLVING CREDIT COMMITMENT" has the meaning specified in Section
      2.01.

            "S&P" means Standard & Poor's, a division of The McGraw-Hill
      Companies, Inc., or any successor thereto.

            "SEC" has the meaning specified in Section 5.01(e)(i).

            "SINGLE EMPLOYER PLAN" means a single employer plan, as defined in
      Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the
      Borrower or an ERISA Affiliate and no Person other than the Borrower and
      the ERISA Affiliates or (ii) was so maintained and in respect of which the
      Borrower or an ERISA Affiliate could have liability under Section 4069 of
      ERISA in the event such plan has been or were to be terminated.

            "SPECIFIED PROJECT ENTITY" means:

            (a)   DVD Financing, Inc.;

            (b)   each Affiliate of the Borrower organized after the Closing
      Date (or whose business commenced after the Closing Date) and any other
      Person organized after the Closing Date (or whose business commenced after
      the Closing Date) whose equity securities or interests are owned, directly
      or indirectly, in whole or in part, by the Borrower or any of its
      Subsidiaries, in each case, if:

                  (i)   such Affiliate or other Person has incurred Debt for the
            purpose of financing all or a part of the costs of the acquisition,
            construction, development or operation of a particular project
            ("PROJECT DEBT");

                  (ii)  except for customary guaranties, keep-well agreements
            and similar credit and equity support arrangements in respect of
            Project Debt incurred by such Affiliate or other Person from the
            Borrower or any of its Subsidiaries not in excess of $150,000,000 or
            from third parties, the source of repayment of such Project Debt is
            limited to the assets and revenues of such particular project (or,
            if such particular project comprises all or substantially all of the
            assets of such Affiliate or other Person, the assets and revenues of
            such Affiliate or other Person); and

                  (iii) the property over which Liens are granted to secure such
            Project Debt, if any, consists solely of the assets and revenues of
            such particular project or the equity securities or interests of
            such Affiliate or other Person or a Subsidiary of the Borrower
            referred to in clause (c) below; and

            (c)   each Affiliate of the Borrower organized after the Closing
      Date (or whose business commenced after the Closing Date) whose equity
      securities or interests are owned, directly or indirectly, in whole or in
      part, by the Borrower or any of its Subsidiaries, the primary business of
      which is the direct or indirect ownership, management or operation of, or
      provision of services to, any Affiliate or other Person referred to in
      clause (b) above.

            "SUB-AGENT" means Citibank International plc.

                                       11


            "SUBSIDIARY" means with respect to any Person, any (a) corporation
      (or foreign equivalent) other than an Excluded Entity or (b) general
      partnership, limited partnership or limited liability company (or foreign
      equivalent) other than an Excluded Entity (each, a "NON-CORPORATE
      ENTITY"), in either case, of which more than 50% of the outstanding
      capital stock (or comparable interest) having ordinary voting power
      (irrespective of whether at the time capital stock (or comparable
      interest) of any other class or classes of such corporation or
      Non-Corporate Entity shall or might have voting power upon the occurrence
      of any contingency) is at the time directly or indirectly (through one or
      more Subsidiaries) owned by such Person. In the case of a Non-Corporate
      Entity, a Person shall be deemed to have more than 50% of interests having
      ordinary voting power only if such Person's vote in respect of such
      interests comprises more than 50% of the total voting power of all such
      interests in such Non-Corporate Entity. For purposes of this definition,
      any managerial powers or rights comparable to managerial powers afforded
      to a Person solely by reason of such Person's ownership of general partner
      or comparable interests (or foreign equivalent) shall not be deemed to be
      `interests having ordinary voting power'.

            "TAXES" has the meaning specified in Section 2.14(a).

            "TERMINATION DATE" means the earlier of (a) February 23, 2005,
      subject to the extension thereof pursuant to Section 2.19, and (b) the
      date of termination in whole of the Revolving Credit Commitments pursuant
      to Section 2.04 or 6.01; provided, however, that the Termination Date of
      any Lender that is a Declining Lender to any requested extension pursuant
      to Section 2.19 shall be the Termination Date in effect immediately prior
      to the applicable Extension Date for all purposes of this Agreement.

            "TERM LOAN CONVERSION DATE" means the Termination Date on which all
      Advances outstanding on such date are converted into a term loan pursuant
      to Section 2.05.

            "TERM LOAN ELECTION" has the meaning specified in Section 2.05.

            "TYPE" has the meaning specified in the definition of "Advance".

            "UNITED STATES" and "U.S." each means the United States of America.

            "UTILIZATION FEE" has the meaning specified in Section 2.03(b).

      SECTION 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "FROM" means "from and including" and the words "TO" and "UNTIL" each
means "to but excluding".

      SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP; provided, however,
that if any changes in accounting principles from those used in the preparation
of the financial statements referred to in Section 3.01(c) dated September 30,
2003 hereafter occur by reason of the promulgation of rules, regulations,
pronouncements, opinions or other requirements of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and result in a change in
the method of calculation of financial covenants or the terms related thereto
contained in this Agreement, the Borrower shall, at its option, (i) furnish to
the Administrative Agent, together with each delivery of the consolidated
financial statements of the Borrower and its subsidiaries required to be
delivered pursuant to Section 5.01(e), a written reconciliation setting forth
the differences that would have resulted if such financial statements had been
prepared utilizing accounting principles and policies in conformity with those
used to prepare the financial statements referred to in

                                       12


Section 3.01(c) dated September 30, 2003 or (ii) enter into negotiations with
the Administrative Agent and the Lenders to amend such financial covenants or
terms equitably to reflect such changes so that the criteria for evaluating the
financial condition of the Borrower and its subsidiaries shall be the same after
such changes as if such changes had not been made; provided, however, that at
all times in the case of clause (i) above, and in the case of clause (ii) above
until the amendment referred to in such clause (ii) becomes effective, all
covenants and related calculations under this Agreement shall be performed,
observed and determined as though no such changes in accounting principles had
been made.

                                   ARTICLE II
                        AMOUNTS AND TERMS OF THE ADVANCES

      SECTION 2.01. The Advances. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make Advances to the Borrower from time to
time on any Business Day during the period from the Effective Date until the
Termination Date in an aggregate amount (based, in respect of any Advances
denominated in a Committed Currency, on the Equivalent in Dollars determined on
the date of delivery of the applicable Notice of Borrowing) not to exceed at any
time outstanding the Dollar amount set forth opposite such Lender's name on the
signature pages hereof or, if such Lender has become a Lender hereunder pursuant
to an Assumption Agreement, the Dollar amount set forth as the Revolving Credit
Commitment of such Lender in such Assumption Agreement or, if such Lender has
entered into an Assignment and Acceptance the Dollar amount set forth for such
Lender in the Register maintained by the Administrative Agent pursuant to
Section 8.07(c), as such amount may be reduced pursuant to Section 2.04 (such
Lender's "REVOLVING CREDIT COMMITMENT"); provided, that, the Lenders shall not
be obligated to, and shall not, make any Advances as part of a Borrowing if
after giving effect to such Borrowing the sum of the then outstanding aggregate
amount of all Borrowings, shall exceed the aggregate amount of the Revolving
Credit Commitments then in effect. Each Borrowing shall be in an aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof (or
the Equivalent thereof in any Committed Currency determined on the date of
delivery of the applicable Notice of Borrowing). Each Borrowing shall consist of
Advances of the same Type made on the same day by the Lenders ratably according
to their respective Revolving Credit Commitments. Within the limits of each
Lender's Revolving Credit Commitment, the Borrower from time to time may borrow
under this Section 2.01, prepay pursuant to Section 2.10 and reborrow under this
Section 2.01.

      SECTION 2.02. Making the Advances. (a) Each Borrowing shall be made on
notice, given not later than (x) 11:00 A.M. (New York City time) on the same
Business Day as the date of a proposed Borrowing comprised of Base Rate
Advances, (y) 11:00 A.M. (New York City time) on the third Business Day prior to
the date of a proposed Borrowing comprised of Eurocurrency Rate Advances
denominated in any Committed Currency, or (z) 1:00 P.M. (New York City time) on
the third Business Day prior to the date of a proposed Borrowing comprised of
Eurocurrency Rate Advances denominated in Dollars, by the Borrower to the
Administrative Agent (and, in the case of a Borrowing consisting in Eurocurrency
Rate Advances denominated in any Committed Currency, simultaneously to the
Sub-Agent), which shall give to each Lender prompt notice thereof by telecopier.
Each such notice of a Borrowing (a "NOTICE OF BORROWING") shall be by telecopier
or by telephone, confirmed immediately by telecopier, in substantially the form
of Exhibit A hereto, specifying therein the requested (i) date of such Borrowing
(which shall be a Business Day), (ii) Type of Advances comprising such
Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a
Borrowing comprised of Eurocurrency Rate Advances, initial Interest Period and
currency for each such Advance. Each Lender shall, before (A) 1:00 P.M. (New
York City time) on the date of such Borrowing consisting of Advances denominated
in Dollars or (B) 1:00 P.M. (London time) on the date of such Borrowing
consisting of Advances denominated in any Committed Currency, make available for
the account of its Applicable Lending Office to the Administrative Agent at the
Administrative Agent's (or the Sub-Agent's, as the case may be) Account, in same
day funds, such Lender's ratable portion of such Borrowing. After the

                                       13


Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article III, the Administrative Agent will
make such funds available to the Borrower at the office where the Administrative
Agent's (or the Sub-Agent's, as the case may be) Account is maintained.

            (b)   Anything in subsection (a) above or Section 2.01 to the
contrary notwithstanding, the Borrower may not select Eurocurrency Rate Advances
for any Borrowing if the aggregate amount of such Borrowing is less than
$20,000,000 (or the Equivalent thereof in any Committed Currency determined on
the date of delivery of the applicable Notice of Borrowing) or if the obligation
of the Lenders to make Eurocurrency Rate Advances shall be suspended at such
time pursuant to Section 2.08.

            (c)   Each Notice of Borrowing shall be irrevocable and binding on
the Borrower. In the case of any Borrowing which the related Notice of Borrowing
specifies as to be comprised of Eurocurrency Rate Advances, the Borrower shall
indemnify each Lender against any loss, cost or expense incurred by such Lender
as a result of any failure to fulfill on or before the date specified in such
Notice of Borrowing for such Borrowing the applicable conditions set forth in
Article III, including, without limitation, any loss, cost or expense incurred
by reason of the liquidation or redeployment of deposits or other funds acquired
by such Lender to fund the Advance to be made by such Lender as part of such
Borrowing when such Advance, as a result of such failure, is not made on such
date.

            (d)   Unless the Administrative Agent shall have received notice
from a Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that any Lender shall not have
so made such ratable portion available to the Administrative Agent, such Lender
agrees to pay to the Administrative Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is paid to the
Administrative Agent, at (A) the Federal Funds Rate in the case of Advances
denominated in Dollars or (B) the cost of funds incurred by the Administrative
Agent in respect of such amount in the case of Advances denominated in Committed
Currencies; provided, however, that (i) within two Business Days after any
Lender shall fail to make such ratable portion available to the Administrative
Agent, the Administrative Agent shall notify the Borrower of such failure and
(ii) if such Lender shall not have paid such corresponding amount to the
Administrative Agent within two Business Days after such demand is made of such
Lender by the Administrative Agent, the Borrower agrees to repay to the
Administrative Agent forthwith, upon demand by the Administrative Agent to the
Borrower, such corresponding amount together with interest thereon, for each day
from the date such amount is made available to the Borrower until the date such
amount is repaid to the Administrative Agent, at the interest rate applicable at
the time to Advances comprising such Borrowing. If and to the extent such
corresponding amount shall be paid by such Lender to the Administrative Agent in
accordance with this Section 2.02(d), such amount so paid shall constitute such
Lender's Advance as part of such Borrowing for all purposes of this Agreement.

            (e)   The failure of any Lender to make the Advance to be made by it
as part of any Borrowing shall not relieve any other Lender of its obligation,
if any, hereunder to make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on the date of any Borrowing.

      SECTION 2.03. Fees. (a) Facility Fee. The Borrower agrees to pay to each
Lender a facility fee on the average daily amount (whether used or unused) of
such Lender's Revolving Credit Commitment from the Effective Date, in the case
of each Initial Lender, and from the later of (a) the

                                       14


Effective Date and (b) the effective date specified in the Assumption Agreement
or the Assignment and Acceptance pursuant to which it became a Lender, in the
case of each other Lender, until, in each case, the Termination Date or, if the
Borrower has made the Term Loan Election pursuant to Section 2.05 on or prior to
such date, the Maturity Date, payable quarterly in arrears on the first Business
Day of each January, April, July and October during the term of such Lender's
Revolving Credit Commitment, commencing April 1, 2004, and on the Termination
Date or, if the Borrower has made the Term Loan Election pursuant to Section
2.05 on or prior to such date, the Maturity Date, at the rate per annum equal to
the Facility Fee Percentage in effect from time to time.

            (b)   Utilization Fee. For each day on which the outstanding
Advances exceeds 50% of the Commitments, the Borrower agrees to pay to the
Administrative Agent for the account of each Lender, a utilization fee equal to
the quotient obtained by dividing (A) the product of (1) the difference between
the aggregate outstanding Advances on such day and the outstanding Base Rate
Advances on such day and (2) 0.125% by (B) 365 (or, for any such day in a leap
year, 366). This Utilization Fee shall be paid quarterly in arrears on the first
Business Day of each January, April, July and October, and on the Termination
Date.

            (ii)  If the Borrower has made the Term Loan Election pursuant to
Section 2.05 below, the Borrower agrees to pay to the Administrative Agent for
the account of each Lender a utilization fee equal to the quotient obtained by
dividing (A) the product of (1) the difference between the aggregate outstanding
Advances on such day and the outstanding Base Rate Advances on such day and (2)
0.125% by (B) 365 (or, for any such day in a leap year, 366), if, on the Term
Loan Conversion Date, the sum of all outstanding Advances is greater than 50% of
the aggregate amount of all Revolving Credit Commitments on such date. This
Utilization Fee shall be paid quarterly in arrears on the first Business Day of
each January, April, July and October, and on the Maturity Date.

      SECTION 2.04. Reduction of the Revolving Credit Commitments. (a) Optional.
The Borrower shall have the right, upon at least three Business Days' notice to
the Administrative Agent, to terminate in whole or reduce ratably in part the
unused portions of the respective Revolving Credit Commitments of the Lenders;
provided, that, each partial reduction shall be in the aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, and;
provided, further, that after giving effect to any such partial reduction, the
total Revolving Credit Commitments shall not be less than the sum of the then
outstanding aggregate amount of Advances. Once terminated, such Revolving Credit
Commitments may not be reinstated.

            (b)   Mandatory. On the Termination Date, if the Borrower has made
the Term Loan Election in accordance with Section 2.05 prior to such date, and
from time to time thereafter upon each prepayment of the Advances, the aggregate
Revolving Credit Commitments of the Lenders under this Agreement shall be
automatically and permanently reduced on a pro rata basis by an amount equal to
the amount by which the aggregate Revolving Credit Commitments of the Lenders
under this Agreement immediately prior to such reduction exceeds the sum of the
aggregate unpaid principal amount of the Advances outstanding at such time.

      SECTION 2.05. Repayment of Advances. The Borrower shall, subject to the
next succeeding sentence, repay to each Lender on the Termination Date the
aggregate principal amount of the Advances owing to such Lender on such date.
The Borrower may, upon notice to the Administrative Agent at least 15 days prior
to the Termination Date then in effect, elect (the "TERM LOAN ELECTION") to
convert all of the Advances outstanding on the Termination Date in effect at
such time into a term loan which the Borrower shall repay in full ratably to the
Lenders on the Maturity Date; provided, that, no Event of Default, or event that
with the giving of notice or passage of time or both would constitute an

                                       15


Event of Default, has occurred and is continuing on the date of notice of the
Term Loan Election or on the Term Loan Conversion Date on which such election is
to be effected.

      SECTION 2.06. Interest on Advances. (a) Scheduled Interest. The Borrower
shall pay to each Lender interest on the unpaid principal amount of each Advance
owing to such Lender from the date of such Advance until such principal amount
shall be paid in full, at the following rates per annum:

            (i)   Base Rate Advances. (x) Prior to the Borrower making the Term
      Loan Election pursuant to Section 2.05 above, during such periods as such
      Advance is a Base Rate Advance, a rate per annum equal at all times to the
      Base Rate in effect from time to time, payable quarterly in arrears on the
      first Business Day of each January, April, July, and October during such
      periods and on the date such Base Rate Advance shall be Converted or paid
      in full and, for the avoidance of doubt, a Utilization Fee shall not be
      payable during such periods as such Advance is a Base Rate Advance.

                  (y)   If the Borrower has made the Term Loan Election pursuant
      to Section 2.05 above, during such periods on and after the Term Loan
      Conversion Date as such Advance is a Base Rate Advance, a rate per annum
      equal at all times to the Base Rate in effect from time to time plus(B)
      0.125% per annum, payable quarterly in arrears on the first Business Day
      of each January, April, July, and October during such periods and on the
      date such Base Rate Advance shall be Converted or paid in full, and, for
      the avoidance of doubt, a Utilization Fee shall not be payable during such
      periods as such Advance is a Base Rate Advance.

            (ii)  Eurocurrency Rate Advances. During such periods as such
      Advance is a Eurocurrency Rate Advance, a rate per annum equal at all
      times during each Interest Period for such Advance to the sum of (A) the
      Eurocurrency Rate for such Interest Period for such Advance and (B) the
      Eurocurrency Rate Margin in effect from time to time, payable in arrears
      on the last day of such Interest Period and, if such Interest Period has a
      duration of more than three months, on the date which occurs three months
      and, if applicable, six months, nine months and twelve months after the
      first day of such Interest Period and on the date such Eurocurrency Rate
      Advance shall be Converted or paid in full.

            (b)   Default Interest. The Borrower shall pay interest on the
unpaid principal amount of each Advance that is not paid when due and on the
unpaid amount of all interest, fees and other amounts payable hereunder that is
not paid when due, payable on demand, at a rate per annum equal at all times to
(i) in the case of any amount of principal, the greater of (x) 2% per annum
above the rate per annum required to be paid on such Advance immediately prior
to the date on which such amount became due and (y) 2% per annum above the Base
Rate in effect from time to time and (ii) to the fullest extent permitted by
law, in the case of all other amounts, 2% per annum above the Base Rate in
effect from time to time.

      SECTION 2.07. Additional Interest on Eurocurrency Rate Advances. The
Borrower shall pay to each Lender, so long as such Lender shall be required
under regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid principal
amount of each Eurocurrency Rate Advance of such Lender, from the date of such
Advance until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (i) the
Eurocurrency Rate for the applicable Interest Period for such Advance from (ii)
the rate obtained by dividing such Eurocurrency Rate by a percentage equal to
100% minus the Eurocurrency Rate Reserve Percentage of such Lender for such
Interest Period, payable on each date on which interest

                                       16


is payable on such Advance. Such additional interest shall be determined by such
Lender and notified in reasonable detail to the Borrower through the
Administrative Agent.

      SECTION 2.08. Interest Rate Determination. (a) To the extent required,
each Reference Bank agrees to furnish to the Administrative Agent timely
information for the purpose of determining each Eurocurrency Rate. If any one or
more of the Reference Banks shall not furnish such timely information to the
Administrative Agent for the purpose of determining such interest rate, the
Administrative Agent shall determine such interest rate on the basis of timely
information furnished by the remaining Reference Banks.

            (b)   The Administrative Agent shall give prompt notice to the
Borrower and the Lenders of the applicable interest rate determined by the
Administrative Agent for purposes of Section 2.06(a)(i) or (a)(ii), and , if
applicable, the rate, if any, furnished by each Reference Bank for the purpose
of determining the applicable interest rate under Section 2.06(a)(ii).

            (c)   If fewer than two Reference Banks furnish timely information
to the Administrative Agent for purposes of determining the Eurocurrency Rate
for any Eurocurrency Rate Advances, (i) the Administrative Agent shall forthwith
notify the Borrower and the Lenders that the interest rate cannot be determined
for such Eurocurrency Rate Advances, (ii) each such Advance will automatically,
on the last day of the then existing Interest Period therefor, Convert into a
Base Rate Advance (or, if such Advance is then a Base Rate Advance, will
continue as a Base Rate Advance), and (iii) the obligation of the Lenders to
make, or to Convert Advances into, Eurocurrency Rate Advances shall be suspended
until the Administrative Agent shall notify the Borrower and the Lenders that
the circumstances causing such suspension no longer exist.

            (d)   If, with respect to any Eurocurrency Rate Advances, the
Majority Lenders notify the Administrative Agent that (i) they are unable to
obtain matching deposits in the London inter-bank market at or about 11:00 A.M.
(London time) on the second Business Day before the making of a Borrowing in
sufficient amounts to fund their respective Eurocurrency Rate Advances as a part
of such Borrowing during its Interest Period or (ii) the Eurocurrency Rate for
any Interest Period for such Advances will not adequately reflect the cost to
such Majority Lenders (which cost each such Majority Lender reasonably
determines in good faith is material) of making, funding or maintaining their
respective Eurocurrency Rate Advances for such Interest Period, the
Administrative Agent shall forthwith so notify the Borrower and the Lenders,
whereupon, unless the Eurocurrency Rate Margin shall be increased to reflect
such costs as determined by such Majority Lenders and as agreed by the Borrower,
(A) the obligation of the Lenders to make, or to Convert Base Rate Advances
into, Eurocurrency Rate Advances shall be suspended until the Administrative
Agent shall notify the Borrower and the Lenders that the circumstances causing
such suspension no longer exist, and (B) the Borrower will, on the last day of
the then existing Interest Period therefor, (1) if such Eurocurrency Rate
Advances are denominated in Dollars, either (x) prepay such Advances or (y)
Convert such Advances into Base Rate Advances and (2) if such Eurocurrency Rate
Advances are denominated in any Committed Currency, either (x) prepay such
Advances or (y) redenominate such Advances into an Equivalent amount of Dollars
and Convert such Advances into Base Rate Advances. The Administrative Agent
shall use reasonable efforts to determine from time to time whether the
circumstances causing such suspension no longer exist and, promptly after the
Administrative Agent knows that the circumstances causing such suspension no
longer exist, the Administrative Agent shall so notify the Borrower and the
Lenders.

            (e)   If the Borrower shall fail to select the duration of any
Interest Period for any Eurocurrency Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Lenders and
such Advances will automatically, on the last day of the then existing Interest
Period therefor, (i) if

                                       17


such Eurocurrency Rate Advances are denominated in Dollars, be Converted into
Base Rate Advances and (ii) if such Eurocurrency Rate Advances are denominated
in a Committed Currency, be redenominated into an Equivalent amount of Dollars
and be Converted into Base Rate Advances.

            (f)   On the date on which the aggregate unpaid principal amount of
Eurocurrency Rate Advances comprising any Borrowing shall be reduced, by payment
or prepayment or otherwise, to less than $20,000,000, such Eurocurrency Rate
Advances shall automatically Convert into Base Rate Advances and, on and after
such date, the right of the Borrower to Convert such Advances into Eurocurrency
Rate Advances shall terminate; provided, however, that if and so long as each
such Eurocurrency Rate Advance shall have the same Interest Period as
Eurocurrency Rate Advances comprising another Borrowing or Borrowings, and the
aggregate unpaid principal amount of all such Eurocurrency Rate Advances shall
equal or exceed $20,000,000, the Borrower shall have the right to continue all
such Eurocurrency Rate Advances as, or to Convert all such Advances into,
Eurocurrency Rate Advances having such Interest Period.

            (g)   Upon the occurrence and during the continuance of any Event of
Default under Section 6.01(a), (i) each Eurocurrency Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
(A) if such Eurocurrency Rate Advances are denominated in Dollars, be Converted
into Base Rate Advances and (B) if such Eurocurrency Rate Advances are
denominated in any Committed Currency, be redenominated into an Equivalent
amount of Dollars and be Converted into Base Rate Advances and (ii) the
obligation of the Lenders to make, or to Convert Advances into, Eurocurrency
Rate Advances shall be suspended.

      SECTION 2.09. Optional Conversion of Advances. The Borrower may on any
Business Day, upon notice given to the Administrative Agent not later than (i)
11:00 A.M. (New York City time) on the same Business Day as the date of the
proposed Conversion in the case of a Conversion of Eurocurrency Rate Advances
into Base Rate Advances, and (ii) 1:00 P.M. (New York City time) on the third
Business Day prior to the date of the proposed Conversion in the case of a
Conversion of Base Rate Advances into Eurocurrency Rate Advances or of
Eurocurrency Rate Advances of one Interest Period into Eurocurrency Rate
Advances of another Interest Period, as the case may be, and subject to the
provisions of Sections 2.08, 2.09 and 2.12, Convert all Advances denominated in
Dollars of one Type comprising the same Borrowing into Advances denominated in
Dollars of the other Type; provided, however, that any Conversion of any
Eurocurrency Rate Advances into Base Rate Advances or into Eurocurrency Rate
Advances of another Interest Period shall be made on, and only on, the last day
of an Interest Period for such Eurocurrency Rate Advances. Promptly upon receipt
from the Borrower of a notice of a proposed Conversion hereunder, the
Administrative Agent shall give notice of such proposed Conversion to each
Lender. Each such notice of a Conversion shall, within the restrictions set
forth above, specify (x) the date of such Conversion (which shall be a Business
Day), (y) the Advances to be Converted, and (z) if such Conversion is into
Eurocurrency Rate Advances, the duration of the initial Interest Period for each
such Advance. The Borrower may Convert all Eurocurrency Rate Advances of any one
Lender into Base Rate Advances of such Lender in accordance with the provisions
of Section 2.12 by complying with the procedures set forth therein and in this
Section 2.09 as though each reference in this Section 2.09 to Advances
denominated in Dollars of any Type was to such Advances of such Lender. Each
such notice of Conversion shall, subject to the provisions of Sections 2.08 and
2.12, be irrevocable and binding on the Borrower.

      SECTION 2.10. Prepayments of Advances. (a) Optional. The Borrower may,
upon not less than (i) the same Business Day's notice to the Administrative
Agent received not later than 11:00 A.M. (New York City time) in the case of
Borrowings consisting of Base Rate Advances, (ii) three Business Days' notice to
the Administrative Agent received not later than 11:00 A.M. (New York City time)
in the case of Borrowings consisting of Eurocurrency Rate Advances denominated
in any

                                       18


Committed Currency, or (iii) three Business Days' notice to the Administrative
Agent received not later than 1:00 P.M. (New York City time) in the case of
Borrowings consisting of Eurocurrency Rate Advances denominated in Dollars,
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding principal
amounts of the Advances constituting part of the same Borrowings in whole or
ratably in part, together with accrued interest to the date of such prepayment
on the principal amount prepaid; provided, however, that (x) each partial
prepayment shall be in an aggregate principal amount of $1,000,000 or an
integral multiple of $1,000,000 in excess thereof (or the Equivalent thereof in
a Committed Currency determined on the date notice of prepayment is given), and
(y) in the case of any such prepayment of Eurocurrency Rate Advances, the
Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant
to Section 8.04(b).

            (b)   Mandatory. (i) If the Administrative Agent notifies the
Borrower in writing that, on any date, the sum of (A) the aggregate principal
amount of all Advances denominated in Dollars then outstanding and (B) the
Equivalent in Dollars (determined on the third Business Day prior to such date)
of the aggregate principal amount of all Advances denominated in Committed
Currencies then outstanding exceeds 102% of the aggregate Revolving Credit
Commitments of the Lenders on such date, the Borrower shall, within two Business
Days after receipt of such notice, prepay the outstanding principal amount of
any Advances necessary so that, after giving effect to such prepayment of
Advances, the sum of (A) and (B) above does not exceed 100% of the aggregate
Revolving Credit Commitments of the Lenders on such date.

            (ii)  Each prepayment made pursuant to this Section 2.10(b) shall be
made together with any interest accrued to the date of such prepayment on the
principal amounts prepaid and, in the case of any prepayment of a Eurocurrency
Rate Advance on a date other than the last day of an Interest Period, with any
additional amounts which the Borrower shall be obligated to reimburse to the
Lenders in respect thereof pursuant to Section 8.04(b). The Administrative Agent
shall give prompt notice of any prepayment required under this Section 2.10(b)
to the Borrower and the Lenders.

      SECTION 2.11. Increased Costs. (a) If, after the date hereof, either (i)
the introduction of or any change (other than any change by way of imposition or
increase of reserve requirements included in the Eurocurrency Rate Reserve
Percentage) in or in the interpretation of any law or regulation or (ii) the
compliance with any hereafter promulgated guideline or request from any central
bank or other governmental authority, including, without limitation, any agency
of the European Union or similar monetary or multinational authority (whether or
not having the force of law), which guideline or request either (x) imposes,
modifies or deems applicable any reserve, special deposit or similar requirement
against letters of credit or guarantees issued by, or assets held by or deposits
in or for the account of, any Lender or (y) imposes on any Lender any other
condition regarding this Agreement or any collateral thereon, there shall
increase the cost (excluding any allocation of corporate overhead) to such
Lender (which cost such Lender reasonably determines in good faith is material)
of agreeing to make or making, funding or maintaining Eurocurrency Rate
Advances, then such Lender shall so notify the Borrower promptly after Lender
knows of such increased cost and determines that such cost is material and the
Borrower shall from time to time, upon demand by such Lender (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender additional amounts sufficient to compensate such
Lender for such increased cost. A certificate of or such Lender as to the amount
of such increased cost in reasonable detail and stating the basis upon which
such amount has been calculated and certifying that such Lender's method of
allocating such costs is fair and reasonable and that such Lender's demand for
payment of such costs hereunder is not inconsistent with its treatment of other
borrowers which, as a credit matter, are substantially similar to the Borrower
and which are subject to similar provisions, submitted to the Borrower and the
Administrative Agent by such Lender, shall be conclusive and binding for all
purposes, absent manifest error.

                                       19


            (b)   If, after the date hereof, either (i) the introduction of or
change in or in the interpretation of any law or regulation or (ii) the
compliance by any Lender with any hereafter promulgated guideline or request
from any central bank or other governmental authority, including, without
limitation, any agency of the European Union or similar monetary or
multinational authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender or any entity controlling such Lender and the amount of such capital is
materially increased by or based upon the existence of such Lender's Revolving
Credit Commitment to lend hereunder and other commitments of this type, then
such Lender shall so notify the Borrower promptly after such Lender makes such
determination and, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), the Borrower shall pay to such Lender within five days
from the date of such demand, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender or such corporation in
the light of such circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the existence of such
Lender's commitment to lend hereunder. A certificate of such Lender as to such
amount in reasonable detail and stating the basis upon which such amount has
been calculated and certifying that such Lender's method of allocating such
increase of capital is fair and reasonable and that such Lender's demand for
payment of such increase of capital hereunder is not inconsistent with its
treatment of other borrowers which, as a credit matter, are substantially
similar to the Borrower and which are subject to similar provisions, submitted
to the Borrower and the Administrative Agent by such Lender, shall be conclusive
and binding for all purposes, absent manifest error.

            (c)   The Borrower shall not be obligated to pay under this Section
2.11 any amounts which relate to costs or increases of capital incurred prior to
the 12 months immediately preceding the date of demand for payment of such
amounts, unless the applicable law, regulation, guideline or request resulting
in such costs or increases of capital is imposed retroactively. In the case of
any law, regulation, guideline or request which is imposed retroactively, the
Lender making demand for payment of any amount under this Section 2.11 shall
notify the Borrower not later than 12 months from the date that such Lender
should reasonably have known of such law, regulation, guideline or request and
the Borrower's obligation to compensate such Lender for such amount is
contingent upon such Lender so notifying the Borrower; provided, however, that
any failure by such Lender to provide such notice shall not affect the
Borrower's obligations under this Section 2.11 with respect to amounts resulting
from costs or increases of capital incurred after the date which occurs 12
months immediately preceding the date on which or such Lender notified the
Borrower of such law, regulation, guideline or request.

            (d)   If any Lender shall subsequently recoup any costs (other than
from the Borrower) for which such Lender has theretofore been compensated by the
Borrower under this Section 2.11, such Lender shall remit to the Borrower an
amount equal to the amount of such recoupment. Amounts required to be paid by
the Borrower pursuant to this Section 2.11 shall be paid in addition to, and
without duplication of, any amounts required to be paid pursuant to Section
2.14.

            (e)   Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.11 shall survive the payment in full (after the Termination
Date) of all payment obligations of the Borrower in respect of Advances
hereunder.

      SECTION 2.12. Illegality. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Administrative Agent that the
introduction of or any change in or in the interpretation of any law or
regulation after the date hereof makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for any Lender or its
Eurocurrency Lending Office to perform its obligations hereunder to make
Eurocurrency Rate Advances in Dollars or any Committed Currency or to fund or
maintain Eurocurrency Rate Advances in Dollars or any Committed Currency, (a)

                                       20


the obligation of such Lender to make, or to Convert Base Rate Advances into,
Eurocurrency Rate Advances shall be suspended until such Lender shall notify the
Administrative Agent, and the Administrative Agent shall notify the Borrower and
the other Lenders (which notice shall be given promptly after the Administrative
Agent knows that the circumstances causing such suspension no longer exist) that
the circumstances causing such suspension no longer exist, and (b) the Borrower
shall forthwith prepay in full all Eurocurrency Rate Advances of such Lender
then outstanding, together with interest accrued thereon, unless the Borrower,
within five Business Days of notice from the Administrative Agent or, if
permitted by law, on and as of the last day of the then existing Interest Period
for such Eurocurrency Rate Advances, (i) if such Eurocurrency Rate Advance is
denominated in Dollars, Converts it into a Base Rate Advance or an Advance that
bears interest at the rate set forth in Section 2.06(a)(i), and (ii) if such
Eurocurrency Rate Advance is denominated in any Committed Currency,
redenominates it into an Equivalent amount of Dollars and Converts it into a
Base Rate Advance or an Advance that bears interest at the rate set forth in
Section 2.06(a)(i).

      SECTION 2.13. Payments and Computations. (a) The Borrower shall make each
payment hereunder (and under the Notes, if any), irrespective of any right of
set-off or counterclaim, except with respect to principal of, interest on, and
other amounts relating to, Advances denominated in a Committed Currency, not
later than 11:00 A.M. (New York City time) on the day when due, in Dollars to
the Administrative Agent at the Administrative Agent's (or Sub-Agent's) Account
in same day funds. The Borrower shall make each payment hereunder with respect
to principal of, interest on, and other amounts relating to, Advances
denominated in a Committed Currency, not later than 11:00 A.M. (at the Payment
Office for such Committed Currency) on the day when due, in such Committed
Currency to the Administrative Agent, by deposit of such funds to the
Administrative Agent's (or Sub-Agent's) Account in same day funds. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or fees ratably (other than
amounts payable pursuant to Sections 2.07, 2.11, 2.14, 8.04 and 8.08) to the
Lenders for the account of their respective Applicable Lending Offices, and like
funds relating to the payment of any other amount payable to any Lender to such
Lender for the account of its Applicable Lending Office, in each case to be
applied in accordance with the terms of this Agreement. Upon any Assuming Lender
becoming a Lender hereunder as a result of an extension of the Termination Date
pursuant to Section 2.19, and upon the Administrative Agent's receipt of such
Lender's Assumption Agreement and recording of the information contained therein
in the Register from and after the applicable Extension Date, the Administrative
Agent shall make all payments hereunder and under any Notes issued in connection
therewith in respect of the interest assumed thereby to the Assuming Lender.
Upon its acceptance of an Assignment and Acceptance and recording of the
information contained therein in the Register pursuant to Section 8.07(d), from
and after the effective date specified in such Assignment and Acceptance, the
Administrative Agent shall make all payments hereunder and under the Notes, if
any, issued in connection therewith in respect of the interest assigned thereby
to the Lender assignee thereunder, and the parties to such Assignment and
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves.

            (b)   All computations of interest based on clause (a) of the
definition of "Base Rate" shall be made by the Administrative Agent on the basis
of a year of 365 or 366 days, as the case may be, and all computations of
interest based on the Eurocurrency Rate or the Federal Funds Rate and of fees
shall be made by the Administrative Agent and all computations of additional
interest pursuant to Section 2.07 shall be made by a Lender, on the basis of a
year of 360 days (or, in each case of Advances denominated in Committed
Currencies where market practice differs, in accordance with such market
practice after notification of the Borrower), in each case for the actual number
of days (including the first day but excluding the last day) occurring in the
period for which such interest or fees are payable. Each determination by the
Administrative Agent (or, in the case of Section 2.07, by a Lender) of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.

                                       21


            (c)   Whenever any payment hereunder or under the Notes, if any,
shall be stated to be due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or fees, as the
case may be; provided, however, that if such extension would cause payment of
interest on or principal of Eurocurrency Rate Advances to be made in the next
following calendar month, such payment shall be made on the immediately
preceding Business Day.

            (d)   Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent that the Borrower shall not have so made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative Agent
at (i) the Federal Funds Rate in the case of Advances denominated in Dollars or
(ii) the cost of funds incurred by the Administrative Agent in respect of such
amount in the case of Advances denominated in Committed Currencies.

      SECTION 2.14. Taxes. (a) Any and all payments by the Borrower hereunder or
under the Notes, if any, shall be made, in accordance with Section 2.13, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the Administrative
Agent, taxes imposed on its income, and franchise taxes imposed on it by the
jurisdiction under the laws of which such Lender, the Administrative Agent is
organized or any political subdivision thereof and, in the case of each Lender,
taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof or by any other jurisdiction in which such Lender, the
Administrative Agent is doing business that is unrelated to this Agreement (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES"). If the Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender, the Administrative Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.14) such Lender, the Administrative Agent receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.

            (b)   In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Notes,
if any, or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or the Notes, if any (hereinafter referred to as
"OTHER TAXES").

            (c)   The Borrower will indemnify each Lender and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.14) paid by such Lender or the Administrative Agent
and any liability (including penalties to the extent not imposed as a result of
such Lender's or the Administrative Agent's gross negligence or willful
misconduct, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within 30 days from the date such Lender or
the Administrative Agent makes written demand therefor.

                                       22


            (d)   Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent, at its address referred to in
Section 8.02, the original or a certified copy of a receipt evidencing payment
thereof, to the extent that such a receipt is issued, or if such receipt is not
issued, other evidence of payment thereof that is reasonably satisfactory to the
Administrative Agent.

            (e)   Each Lender that is not created or organized under the laws of
the United States or a political subdivision thereof shall deliver to the
Borrower and the Administrative Agent on or prior to the date of its execution
and delivery of this Agreement, and each such Lender that is not a party hereto
on the date hereof shall deliver to the Borrower and the Administrative Agent on
or prior to the date on which such Lender becomes a Lender pursuant to Section
2.19 or 8.07 (as the case may be), a true and accurate certificate executed in
duplicate by a duly authorized officer of such Lender in substantially the form
set out in Exhibit D-1 or D-2 hereto, as applicable, to the effect that such
Lender is eligible under the provisions of an applicable tax treaty concluded by
the United States (in which case the certificate shall be accompanied by two
executed copies of Internal Revenue Service of the United States (the "IRS"),
Form W-8BEN (or any successor or substitute form or forms)) or under Section
1441(c) or 1442 of the Internal Revenue Code (in which case the certificate
shall be accompanied by two copies of IRS Form W-8ECI (or any successor or
substitute form or forms)), to receive, as of the date hereof or as of the date
such party becomes a Lender hereto pursuant to Section 2.19 or 8.07 (as the case
may be), as appropriate, payments hereunder without deduction or withholding of
United States federal income tax. Each such Lender further agrees to deliver to
the Borrower and the Administrative Agent from time to time, as reasonably
requested by the Borrower or the Administrative Agent, and in any case before or
promptly upon the occurrence of any events requiring a change in the most recent
certificate previously delivered pursuant to this Section 2.14(e), a true and
accurate certificate executed in duplicate by a duly authorized officer of such
Lender in substantially the form set out in Exhibit D-1 or D-2 hereto, as
applicable. Further, each Lender that delivers a certificate in the form set out
in Exhibit D-1 hereto agrees, to the extent permitted by law, to deliver to the
Borrower and the Administrative Agent within 15 days prior to every third
anniversary of the date of delivery of the initial IRS Form W-8BEN by such
Lender (or more often if required by law) on which this Agreement is still in
effect, two accurate and complete original signed copies of IRS Form W-8BEN (or
any successor or substitute form or forms required under the Internal Revenue
Code or the applicable regulations promulgated thereunder) and a certificate in
the form set out in such Exhibit D-1, and each Lender that delivers a
certificate in the form set out in Exhibit D-2 hereto agrees to deliver to the
Borrower and the Administrative Agent, to the extent permitted by law, within 15
days prior to every third anniversary of the date of delivery of the initial IRS
Form W-8ECI by such Lender (or more often if required by law) on which this
Agreement is still in effect, two accurate and complete original signed copies
of IRS Form W-8ECI (or any successor or substitute form or forms required under
the Internal Revenue Code or the applicable regulations promulgated thereunder)
and a certificate in the form of such Exhibit D-2. Each such certificate shall
certify as to one of the following:

            (i)   that such Lender is eligible to receive payments hereunder
      without deduction or withholding of United States federal income tax;

            (ii)  that such Lender is not eligible to receive payments hereunder
      without deduction or withholding of United States federal income tax as
      specified therein but does not require additional payments therefor
      pursuant to Section 2.14(a) or (c) because it is eligible and able to
      recover the full amount of any such deduction or withholding from a source
      other than the Borrower; or

            (iii) that such Lender is not eligible to receive payments hereunder
      without deduction or withholding of United States federal income tax as
      specified therein and that it is not eligible and able to recover the full
      amount of the same from a source other than the Borrower.

                                       23


If any form or document referred to in this subsection (e) requires the
disclosure of information, other than information necessary to compute the tax
payable and information required on the date hereof by IRS Forms W-8BEN or
W-8ECI, that any Lender reasonably considers to be confidential, such Lender
promptly shall give notice thereof to the Borrower and the Administrative Agent
and shall not be obligated to include in such form or document such confidential
information; provided, that, such Lender certifies to the Borrower that the
failure to disclose such confidential information does not increase the
obligations of the Borrower under this Section 2.14.

            (f)   For any period with respect to which a Lender has failed to
provide the Borrower with the appropriate form described in Section 2.14(e)
(other than if such failure is due to a change in law occurring subsequent to
the date on which a form originally was required to be provided, or if such form
otherwise is not required under the first two sentences of subsection (e)
above), such Lender shall not be entitled to indemnification under Section
2.14(c) with respect to Taxes imposed by any jurisdiction (including, without
limitation, the United States); provided, however, that should a Lender become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as the Lender shall reasonably request to
assist the Lender to recover such Taxes.

            (g)   Without affecting its rights under this Section 2.14 or any
provision of this Agreement, each Lender agrees that if any Taxes or Other Taxes
are imposed and required by law to be paid or to be withheld from any amount
payable to any Lender or its Applicable Lending Office with respect to which the
Borrower would be obligated pursuant to this Section 2.14 to increase any
amounts payable to such Lender or to pay any such Taxes or Other Taxes, such
Lender shall use reasonable efforts to select an alternative Applicable Lending
Office which would not result in the imposition of such Taxes or Other Taxes;
provided, however, that no Lender shall be obligated to select an alternative
Applicable Lending Office if such Lender determines that (i) as a result of such
selection such Lender would be in violation of an applicable law, regulation, or
treaty, or would incur unreasonable additional costs or expenses or (ii) such
selection would be inadvisable for regulatory reasons or inconsistent with the
interests of such Lender.

            (h)   Each Lender agrees with the Borrower that it will take all
reasonable actions by all usual means (i) to secure and maintain the benefit of
all benefits available to it under the provisions of any applicable double tax
treaty concluded by the United States of America to which it may be entitled by
reason of the location of such Lender's Applicable Lending Office or place of
incorporation or its status as an enterprise of any jurisdiction having any such
applicable double tax treaty, if such benefit would reduce the amount payable by
the Borrower in accordance with this Section 2.14 and (ii) otherwise to
cooperate with the Borrower to minimize the amount payable by the Borrower
pursuant to this Section 2.14; provided, however, that no Lender shall be
obliged to disclose to the Borrower any information regarding its tax affairs or
tax computations nor to reorder its tax affairs or tax planning pursuant hereto.

            (i)   Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.14 shall survive the payment in full of principal and interest
on all Advances and the termination of this Agreement until such date as all
applicable statutes of limitations (including any extensions thereof) have
expired with respect to such agreements and obligations of the Borrower
contained in this Section 2.14.

      SECTION 2.15. Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the Advances made by it (other than
pursuant to Section 2.07, 2.11, 2.14, 8.04 or 8.08) in excess of its ratable
share of payments on account of the Advances obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the Advances made by them as shall be necessary to cause such purchasing Lender
to share the excess payment ratably with each of them,

                                       24


provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery, together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of
such Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.15 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.

      SECTION 2.16. Mandatory Assignment by a Lender; Mitigation. If any Lender
requests from the Borrower either payment of additional interest on Eurocurrency
Rate Advances pursuant to Section 2.07, or reimbursement for increased costs
pursuant to Section 2.11, or payment of or reimbursement for Taxes pursuant to
Section 2.14, or if any Lender notifies the Administrative Agent that it is
unlawful for such Lender or its Eurocurrency Lending Office to perform its
obligations hereunder pursuant to Section 2.12, (i) such Lender will, upon three
Business Days' notice by the Borrower to such Lender and the Administrative
Agent, to the extent not inconsistent with such Lender's internal policies and
applicable legal and regulatory restrictions, use reasonable efforts to make,
fund or maintain its Eurocurrency Rate Advances through another Eurocurrency
Lending Office of such Lender if (A) as a result thereof the additional amounts
required to be paid pursuant to Section 2.07, 2.11 or 2.14, as applicable, in
respect of such Eurocurrency Rate Advances would be materially reduced or the
provisions of Section 2.12 would not apply to such Lender, as applicable, and
(B) as determined by such Lender in good faith but in its sole discretion, the
making or maintaining of such Eurocurrency Rate Advances through such other
Eurocurrency Lending Office would not otherwise materially and adversely affect
such Eurocurrency Rate Advances or such Lender and (ii) unless such Lender has
theretofore taken steps to remove or cure, and has removed or cured, the
conditions creating such obligation to pay such additional amounts or the
circumstances described in Section 2.12, the Borrower may designate an Eligible
Assignee to purchase for cash (pursuant to an Assignment and Acceptance) all,
but not less than all, of the Advances then owing to such Lender and all, but
not less than all, of such Lender's rights and obligations hereunder, without
recourse to or warranty by, or expense to, such Lender, for a purchase price
equal to the outstanding principal amount of each such Advance then owing to
such Lender plus any accrued but unpaid interest thereon and any accrued but
unpaid fees owing thereto and, in addition, (A) all additional cost
reimbursements, expense reimbursements and indemnities, if any, owing in respect
of such Lender's Revolving Credit Commitment hereunder, and all other accrued
and unpaid amounts owing to such Lender hereunder, at such time shall be paid to
such Lender and (B) if such Eligible Assignee is not otherwise a Lender at such
time, the applicable processing and recordation fee under Section 8.07(a) for
such assignment shall have been paid.

      SECTION 2.17. Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower agrees
that upon notice by any Lender to the Borrower (with a copy of such notice to
the Administrative Agent) to the effect that a promissory note or other evidence
of indebtedness is required or appropriate in order for such Lender to evidence
(whether for purposes of pledge, enforcement or otherwise) the Advances owing
to, or to be made by, such Lender, the Borrower shall promptly execute and
deliver to such Lender a promissory note or other evidence of indebtedness, in
form and substance reasonably satisfactory to the Borrower and such Lender (each
a "NOTE"), payable to the order of such Lender in a principal amount equal to
the Revolving Credit Commitment of such Lender; provided, however, that the
execution and

                                       25


delivery of such promissory note or other evidence of indebtedness shall not be
a condition precedent to the making of any Advance under this Agreement.

            (b)   The Register maintained by the Administrative Agent pursuant
to Section 8.07(c) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Borrowing made hereunder, the Type of Advances and currencies
comprising such Borrowing and, if appropriate, the Interest Period applicable
thereto, (ii) the terms of each Assumption Agreement and each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder, and (iv) the amount of any sum received by the Administrative
Agent from the Borrower hereunder and each Lender's share thereof.

            (c)   Entries made in good faith by the Administrative Agent in the
Register pursuant to subsection (b) above, and by each Lender in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender and, in the case
of such account or accounts, such Lender, under this Agreement, absent manifest
error; provided, however, that the failure of the Administrative Agent or such
Lender to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
obligations of the Borrower under this Agreement.

      SECTION 2.18. Use of Proceeds. The proceeds of the Advances shall be
available (and the Borrower agrees that it shall use such proceeds) to support
the obligations of the Borrower in respect of commercial paper issued by the
Borrower and/or for other general corporate purposes of the Borrower and its
Subsidiaries, including, but not limited to, the payment in full on the
Effective Date of all amounts due under each of the Replaced Loan Agreements.
Notwithstanding the foregoing provisions of this Section 2.18, the Borrower will
not use the proceeds of any Advance to purchase the capital stock of any
corporation in a transaction, or as part of a series of transactions, (i) the
purpose of which is, at the time of any such purchase, to acquire control of
such corporation or (ii) the result of which is the ownership by the Borrower
and its Subsidiaries of 10% or more of the capital stock of such corporation, in
either case if the board of directors of such corporation has publicly announced
its opposition to such transaction.

      SECTION 2.19. Extension of Termination Date. (a) At least 45 days but not
more than 60 days prior to the Termination Date in effect at any time, the
Borrower, by written notice to the Administrative Agent, may request an
extension of the Termination Date in effect at such time for a period of 364
days from its then scheduled expiration; provided, however, that the Borrower
shall not have made the Term Loan Election for Advances outstanding on such
Termination Date prior to the then scheduled Termination Date. The
Administrative Agent shall promptly notify each Lender of such request, and each
Lender shall in turn, in its sole discretion, not later than 30 days prior to
such Termination Date, notify the Borrower and the Administrative Agent in
writing as to whether such Lender will consent to such extension. If any Lender
shall fail to notify the Administrative Agent and the Borrower in writing of its
consent to any such request for extension of the Termination Date at least 30
days prior to the scheduled occurrence thereof at such time, such Lender shall
be deemed to be a Declining Lender with respect to such request. The
Administrative Agent shall notify the Borrower not later than 25 days prior to
the scheduled Termination Date in effect at such time of the decision of the
Lenders regarding the Borrower's request for an extension of the Termination
Date.

            (b)   If all of the Lenders consent in writing to any such request
in accordance with subsection (a) of this Section 2.19, the Termination Date
shall, effective as at the Termination Date otherwise in effect at such time
(the "EXTENSION DATE"), be extended for a period of 364 days from such

                                       26


Extension Date; provided, that, on each Extension Date, no Event of Default, or
event that with the giving of notice or passage of time or both would constitute
an Event of Default, shall have occurred and be continuing, or shall occur as a
consequence thereof. If less than all of the Lenders consent in writing to any
such request in accordance with subsection (a) of this Section 2.19, the
Termination Date in effect at such time shall, effective as at the applicable
Extension Date, be extended for a period of 364 days from such Extension Date as
to those Lenders that so consented (each an "EXTENDING LENDER") (provided that
on such Extension Date, no Event of Default, or event that with the giving of
notice or passage of time or both would constitute an Event of Default, shall
have occurred and be continuing, or shall occur as a consequence thereof) but
shall not be extended as to any other Lender (each a "DECLINING LENDER"). To the
extent that the Termination Date is not extended as to any Lender pursuant to
this Section 2.19 and the Revolving Credit Commitment of such Lender is not
assumed in accordance with subsection (c) of this Section 2.19 on or prior to
the applicable Extension Date, the Revolving Credit Commitment of such Declining
Lender shall automatically terminate in whole on such unextended Termination
Date without any further notice or other action by the Borrower, such Lender or
any other Person; provided, that, such Declining Lender's rights under Sections
2.11, 2.14, 8.04 and 8.08, and its obligations under Section 7.05, shall survive
the Termination Date for such Lender as to matters occurring prior to such date.
It is understood and agreed that no Lender shall have any obligation whatsoever
to agree to any request made by the Borrower for any requested extension of the
Termination Date.

            (c)   If there are any Declining Lenders, the Borrower may arrange
for one or more Extending Lenders or other Eligible Assignees (each such
Eligible Assignee that accepts an offer to assume a Declining Lender's Revolving
Credit Commitment as of the applicable Extension Date being an "ASSUMING
LENDER") to assume, effective as of the Extension Date, any Declining Lender's
Revolving Credit Commitment and all of the obligations of such Declining Lender
under this Agreement thereafter arising, without recourse to or warranty by, or
expense to, such Declining Lender; provided, however, that the amount of the
Revolving Credit Commitment of any such Assuming Lender as a result of such
substitution shall in no event be less than $25,000,000 unless the amount of the
Revolving Credit Commitment of such Declining Lender is less than $25,000,000,
in which case such Assuming Lender shall assume all of such lesser amount; and
provided further that:

            (i)   any such Extending Lender or Assuming Lender shall have paid
      to such Declining Lender (A) the aggregate principal amount of, and any
      interest accrued and unpaid to the effective date of the assignment on,
      the outstanding Advances, if any, of such Declining Lender plus (B) any
      accrued but unpaid fees owing to such Declining Lender as of the effective
      date of such assignment;

            (ii)  all additional costs reimbursements, expense reimbursements
      and indemnities payable to such Declining Lender, and all other accrued
      and unpaid amounts owing to such Declining Lender hereunder, as of the
      effective date of such assignment shall have been paid to such Declining
      Lender; and

            (iii) with respect to any such Assuming Lender, the applicable
      processing and recordation fee required under Section 9.07(a) for such
      assignment shall have been paid;

provided further that such Declining Lender's rights under Sections 2.11, 2.14,
8.04 and 8.08 and its obligations under Section 7.05 shall survive such
substitution as to matters occurring prior to the date of substitution. At least
three Business Days prior to any Extension Date, (A) each such Assuming Lender,
if any, shall have delivered to the Borrower and the Administrative Agent an
assumption agreement, in form and substance satisfactory to the Borrower and the
Administrative Agent (an "ASSUMPTION AGREEMENT"), duly executed by such Assuming
Lender, such Declining Lender, the Borrower and the Administrative Agent, (B)
any such Extending Lender shall have delivered confirmation in writing

                                       27


satisfactory to the Borrower and the Administrative Agent as to the increase in
the amount of its Revolving Credit Commitment and (C) each Declining Lender
being replaced pursuant to this Section 2.19 shall have delivered to the
Administrative Agent any Note or Notes held by such Declining Lender. Upon the
payment or prepayment of all amounts referred to in clauses (i), (ii) and (iii)
of the immediately preceding sentence, each such Extending Lender or Assuming
Lender, as of the Extension Date, will be substituted for such Declining Lender
under this Agreement and shall be a Lender for all purposes of this Agreement,
without any further acknowledgment by or the consent of the other Lenders and
the obligations of each such Declining Lender hereunder shall, by the provisions
hereof, be released and discharged.

            (d)   If all of the Extending and Assuming Lenders (after giving
effect to any assignments or assumptions pursuant to subsection (c) of this
Section 2.19) consent in writing to a requested extension (whether by written
consent pursuant to subsection (a) of this Section 2.19, by execution and
delivery of an Assumption Agreement or otherwise) not later than one Business
Day prior to such Extension Date, the Administrative Agent shall so notify the
Borrower, and, so long as no Event of Default, or event that with the giving of
notice or passage of time or both would constitute an Event of Default, shall
have occurred and be continuing as of such Extension Date, or shall occur as a
consequence thereof, the Termination Date in effect at such time shall,
effective as at the applicable Extension Date, be extended for a period of 364
days from such Extension Date as to the Extending Lenders and the Assuming
Lenders but shall not be extended as to any Declining Lender. Upon an extension
of the Termination Date as provided above, all references in this Agreement, and
in the Notes, if any, to the " Termination Date" shall, with respect to each
Extending Lender and each Assuming Lender for such Extension Date, refer to the
Termination Date as so extended. Promptly following each Extension Date, the
Administrative Agent shall notify the Lenders (including, without limitation,
each Assuming Lender) of the extension of the scheduled Termination Date in
effect immediately prior thereto and shall thereupon record in the Register the
relevant information with respect to each such Extending Lender and each such
Assuming Lender.

                                   ARTICLE III
                     CONDITIONS OF EFFECTIVENESS AND LENDING

      SECTION 3.01. Conditions Precedent to Effectiveness. This Agreement shall
become effective on and as of the first date (the "EFFECTIVE DATE") on which all
of the following conditions precedent have been satisfied or waived in
accordance with Section 8.01:

            (a)   The Administrative Agent shall have received on or before the
      Effective Date the following, each dated as of the Effective Date, in form
      and substance satisfactory to the Administrative Agent: (i) certified
      copies of the resolutions of the Board of Directors of the Borrower or the
      Executive Committee of such Board authorizing the execution and delivery
      of this Agreement, and approving all documents evidencing other necessary
      corporate action and governmental approvals, if any, with respect to this
      Agreement; (ii) a certificate of the Secretary or an Assistant Secretary
      of the Borrower certifying the name and true signature of the officer of
      the Borrower executing this Agreement on its behalf; and (iii) an opinion
      of David K. Thompson, Esq., Senior Vice President, Deputy General
      Counsel-Corporate and Corporate Secretary of the Borrower, in
      substantially the form of Exhibit C hereto;

            (b)   All consents and approvals of any governmental or regulatory
      authority and any other third party necessary in connection with this
      Agreement or the consummation of the transactions contemplated hereby
      shall have been obtained and shall remain in effect;

                                       28


            (c)   There shall have occurred no material adverse change in the
      business, financial condition or operations of the Borrower and its
      Subsidiaries, taken as a whole, since September 30, 2003, except as
      disclosed in periodic or other reports filed by the Borrower and its
      Subsidiaries during the period from September 30, 2003 to the date of this
      Agreement pursuant to Section 13 of the Securities Exchange Act of 1934,
      as amended, copies of which have been furnished to the Initial Lenders
      prior to the date of this Agreement;

            (d)   The Borrower shall have notified each Lender and the
      Administrative Agent in writing as to the proposed Effective Date at least
      three Business Days prior to the occurrence thereof;

            (e)   all of the representations and warranties contained in Section
      4.01 shall be correct in all material respects on and as of the Effective
      Date, before and after giving effect to such date, as though made on and
      as of the Effective Date (except to the extent that such representations
      and warranties relate to an earlier date, in which case such
      representations and warranties shall have been correct in all material
      respects on and as of such earlier date);

            (f)   no event shall have occurred and be continuing, or shall
      result from the occurrence of the Effective Date, that constitutes an
      Event of Default or would constitute an Event of Default but for the
      requirement that notice be given or time elapse or both; and

            (g)   the Administrative Agent shall have received a letter from an
      authorized officer of the administrative agent under each of the Replaced
      Loan Agreements to the effect that upon the effectiveness of this
      Agreement and the issuance of the letters of credit under the Five Year
      Credit Agreement, (i) all obligations under such Replaced Loan Agreements
      will be paid and satisfied in full (other than any obligations which,
      pursuant to the terms of each respective Replaced Loan Agreement, shall
      survive the termination of such Agreement), and (ii) there will be no
      commitments outstanding under such Replaced Loan Agreements.

      SECTION 3.02. Conditions Precedent to Each Borrowing. The obligation of
each Lender to make an Advance on the occasion of each Borrowing (including the
initial Borrowing) shall be subject to the further conditions precedent that the
Effective Date shall have occurred and on the date of such Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of Borrowing and the acceptance by the Borrower of the proceeds of such
Borrowing shall constitute a representation and warranty by the Borrower that on
the date of such Borrowing such statements are true):

            (a)   the representations and warranties contained in Section 4.01
      are true and correct in all material respects on and as of the date of
      such Borrowing, before and after giving effect to such Borrowing and to
      the application of the proceeds therefrom, as though made on and as of
      such date (except to the extent that such representations and warranties
      relate to an earlier date, in which case such representations and
      warranties shall have been correct in all material respects on and as of
      such earlier date); and

            (b)   no event has occurred and is continuing, or would result from
      such Borrowing or from the application of the proceeds therefrom, which
      constitutes an Event of Default or would constitute an Event of Default
      but for the requirement that notice be given or time elapse or both.

      SECTION 3.03. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lenders unless an officer
of the

                                       29


Administrative Agent responsible for the transactions contemplated by this
Agreement shall have received notice from such Lender prior to the date that the
Borrower, by notice to the Lenders, designates as the proposed Effective Date,
specifying its objection thereto. The Administrative Agent shall promptly notify
the Lenders of the occurrence of the Effective Date.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

      SECTION 4.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as of the Effective Date and from time to time
thereafter as required under this Agreement as follows:

            (a)   The Borrower is a corporation duly organized, validly existing
      and in good standing under the laws of the State of Delaware. The
      Borrower, Disney and ABC are duly qualified and in good standing as
      foreign corporations authorized to do business in each jurisdiction (other
      than the respective jurisdictions of their incorporation) in which the
      nature of their respective activities or the character of the properties
      they own or lease make such qualification necessary and in which the
      failure so to qualify would have a material adverse effect on the
      financial condition or operations of the Borrower and its Subsidiaries,
      taken as a whole.

            (b)   The execution, delivery and performance by the Borrower of
      this Agreement and each of the Notes, if any, delivered hereunder are
      within the Borrower's corporate powers, have been duly authorized by all
      necessary corporate action, and do not contravene (i) the Borrower's
      charter or by-laws or (ii) any law, rule, regulation, order, writ,
      judgment, injunction, decree, determination or award or any material
      contractual restriction binding on or affecting the Borrower, Disney or
      ABC, no authorization or approval or other action by, and no notice to or
      filing with, any governmental authority or regulatory body is required for
      the due execution, delivery and performance by the Borrower of this
      Agreement or the Notes, if any; and this Agreement is and each of the
      Notes, when delivered hereunder, will be the legal, valid and binding
      obligation of the Borrower, enforceable against the Borrower in accordance
      with their respective terms, subject to applicable bankruptcy,
      reorganization, insolvency, moratorium or similar laws affecting
      creditors' rights generally and general principles of equity.

            (c)   The Borrower's most recent annual report on Form 10-K
      containing the consolidated balance sheet of the Borrower and its
      Subsidiaries, and the related consolidated statements of income and of
      cash flows of the Borrower and its Subsidiaries, copies of which have been
      furnished to each Lender pursuant to Section 5.01(e)(ii) or as otherwise
      furnished to the Lenders, fairly present the consolidated financial
      condition of the Borrower and its Subsidiaries as at the date of such
      balance sheet and the consolidated results of operations of the Borrower
      and its Subsidiaries for the fiscal year ended on such date, all in
      accordance with generally accepted accounting principles consistently
      applied.

            (d)   There is no pending or, to the Borrower's knowledge,
      threatened claim, action or proceeding affecting the Borrower or any of
      its Subsidiaries which could reasonably be expected to have a material
      adverse effect on the financial condition or operations of the Borrower
      and its Subsidiaries, taken as a whole, or which could reasonably be
      expected to affect the legality, validity or enforceability of this
      Agreement; and to the Borrower's knowledge, the Borrower and each of its
      Subsidiaries have complied, and are in compliance, with all applicable
      laws, rules, regulations, permits, orders, consent decrees and judgments,
      except for any such matters which have not had, and would not reasonably
      be expected to have, a material adverse effect on the financial condition
      or operations of the Borrower and its Subsidiaries, taken as a whole.

                                       30


            (e)   The Borrower and the ERISA Affiliates have not incurred and
      are not reasonably expected to incur any material liability in connection
      with their Single Employer Plans or Multiple Employer Plans, other than
      ordinary liabilities for benefits; neither the Borrower nor any ERISA
      Affiliate has incurred or is reasonably expected to incur any material
      withdrawal liability (as defined in Part I of Subtitle E of Title IV of
      ERISA) to any Multiemployer Plan; and no Multiemployer Plan of the
      Borrower or any ERISA Affiliate is reasonably expected to be in
      reorganization or to be terminated, within the meaning of Title IV of
      ERISA.

      SECTION 4.02. Additional Representations and Warranties of the Borrower as
of Each Extension Date. The Borrower represents and warrants on each Extension
Date (and at no other time) that, as of each such date, the following statements
shall be true:

            (a)   there has been no material adverse change in the business,
      financial condition or operations of the Borrower and its Subsidiaries,
      taken as a whole, since the date of the audited financial statements of
      the Borrower and its Subsidiaries most recently delivered to the Lenders
      pursuant to Section 5.01(e)(ii) prior to the applicable Extension Date
      (except as disclosed in periodic or other reports filed by the Borrower
      and its Subsidiaries pursuant to Section 13 of the Securities Exchange Act
      of 1934, as amended, during the period from the date of the most recently
      delivered audited financial statements of the Borrower and its
      Subsidiaries pursuant to Section 5.01(e)(ii) to the date of the request
      for an extension of the Termination Date then in effect related to such
      Extension Date); and

            (b)   the representations and warranties contained in Section 4.01
      are correct in all material respects on and as of such date, as though
      made on and as of such date (except to the extent that such
      representations and warranties relate to an earlier date, in which case
      such representations and warranties shall have been correct in all
      material respects on and as of such earlier date).

                                    ARTICLE V
                            COVENANTS OF THE BORROWER

      SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Revolving Credit Commitment hereunder, the
Borrower will, unless the Majority Lenders shall otherwise consent in writing:

            (a)   Compliance with Laws, Etc. Comply, and cause each of its
      Subsidiaries to comply, in all material respects with all applicable laws,
      rules, regulations, permits, orders, consent decrees and judgments binding
      on the Borrower and its Subsidiaries, including ERISA and the Patriot Act,
      the failure with which to comply would have a material adverse effect on
      the financial condition or operations of the Borrower and its
      Subsidiaries, taken as a whole.

            (b)   Payment of Taxes, Etc. Pay and discharge, and cause each of
      its Subsidiaries to pay and discharge, before the same shall become
      delinquent, if the failure to so pay and discharge would have a material
      adverse effect on the financial condition or operations of the Borrower
      and its Subsidiaries, taken as a whole, (i) all taxes, assessments and
      governmental charges or levies imposed upon it or upon its property, and
      (ii) all lawful claims which, if unpaid, will by law become a Lien upon
      its property; provided, however, that neither the Borrower nor any of its
      Subsidiaries shall be required to pay or discharge any such tax,
      assessment, charge, levy or claim which is being contested in good faith
      and by proper proceedings and as to which appropriate reserves are being
      maintained in accordance with GAAP.

                                       31


            (c)   Preservation of Corporate Existence, Etc. Subject to Section
      5.02(a), preserve and maintain, and cause each of Disney and ABC to
      preserve and maintain, its corporate existence, rights (charter and
      statutory) and franchises; provided, however, that none of the Borrower,
      Disney or ABC shall be required to preserve any right or franchise if the
      loss thereof would not have a material adverse effect on the business,
      financial condition or operations of the Borrower and its Subsidiaries,
      taken as a whole; and provided further, however, that neither of Disney
      nor ABC shall be required to preserve its corporate existence if the loss
      thereof would not have a material adverse effect on the business,
      financial condition or operations of the Borrower and its Subsidiaries,
      taken as a whole.

            (d)   Maintenance of Interest Coverage Ratio. Maintain as of the
      last day of each fiscal quarter of the Borrower, commencing with the first
      fiscal quarter of the Borrower following the Effective Date, a ratio of
      (i) Consolidated EBITDA for the Measurement Period ending on such day to
      (ii) Consolidated Interest Expense for the Measurement Period ending on
      such day, of not less than 3 to 1.

            (e)   Reporting Requirements. Furnish to the Administrative Agent,
      on behalf of the Lenders:

                  (i)   as soon as available and in any event within 50 days
            after the end of each of the first three quarters of each fiscal
            year of the Borrower, a copy of the Borrower's quarterly report to
            shareholders on Form 10-Q as filed with the Securities and Exchange
            Commission (the "SEC"), in each case containing a consolidated
            balance sheet of the Borrower and its Subsidiaries as of the end of
            such quarter and consolidated statements of income and of cash flows
            of the Borrower and its Subsidiaries for the period commencing at
            the end of the previous fiscal year and ending with the end of such
            quarter, and a certificate of any of the Borrower's Chairman of the
            Board of Directors, President, Chief Financial Officer, Treasurer,
            Assistant Treasurer or Controller (A) stating that no Event of
            Default, or event that with the giving of notice or passage of time
            or both, would constitute an Event of Default, has occurred and is
            continuing and (B) containing a schedule which shall set forth the
            computations used by the Borrower in determining compliance with the
            covenant contained in Section 5.01(d);

                  (ii)  as soon as available and in any event within 100 days
            after the end of each fiscal year of the Borrower, a copy of the
            Borrower's annual report to shareholders on Form 10-K as filed with
            the SEC, in each case containing consolidated financial statements
            of the Borrower and its Subsidiaries for such year and a certificate
            of any of the Borrower's Chairman of the Board of Directors,
            President, Chief Financial Officer, Treasurer, Assistant Treasurer
            or Controller (A) stating that no Event of Default, or event that
            with the giving of notice or passage of time or both would
            constitute an Event of Default, has occurred and is continuing and
            (B) containing a schedule which shall set forth the computations
            used by the Borrower in determining compliance with the covenant
            contained in Section 5.01(d);

                  (iii) promptly after the Borrower obtains actual knowledge of
            the occurrence of each Event of Default, and each event that with
            the giving of notice or passage of time or both would constitute an
            Event of Default, a statement of any of the Borrower's Chairman of
            the Board of Directors, President, Chief Financial Officer,
            Treasurer, Assistant Treasurer or Controller setting forth details
            of such Event of Default or event continuing on the date of such
            statement, and the action which the Borrower has taken and proposes
            to take with respect thereto;

                                       32


                  (iv)   promptly after the commencement thereof, notice of any
            actions, suits and proceedings before any court or governmental
            department, commission, board, bureau, agency or instrumentality,
            domestic or foreign, affecting the Borrower or any of its
            Subsidiaries of the type described in Section 4.01(d);

                  (v)    promptly after the Borrower obtains actual knowledge
            thereof, written notice of any pending or threatened Environmental
            Claim against the Borrower or any of its Subsidiaries or any of
            their respective properties which could reasonably be expected to
            materially and adversely affect the financial condition or
            operations of the Borrower and its Subsidiaries, taken as a whole;

                  (vi)   promptly after the Borrower obtains actual knowledge of
            the occurrence of any ERISA Event which could reasonably be expected
            to materially and adversely affect the financial condition or
            operations of the Borrower and its Subsidiaries, taken as a whole, a
            statement of any of the Borrower's Chairman of the Board of
            Directors, President, Chief Financial Officer, Treasurer, Assistant
            Treasurer or Controller describing such ERISA Event and the action,
            if any, which the Borrower has taken and proposes to take with
            respect thereto;

                  (vii)  promptly after receipt thereof by the Borrower or any
            ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of
            each notice received by the Borrower or any ERISA Affiliate
            concerning (A) the imposition of withdrawal liability (as defined in
            Part I of Subtitle E of Title IV of ERISA) by a Multiemployer Plan,
            which withdrawal liability could reasonably be expected to
            materially and adversely affect the financial condition or
            operations of the Borrower and its Subsidiaries, taken as a whole,
            (B) the reorganization or termination, within the meaning of Title
            IV of ERISA, of any Multiemployer Plan, which reorganization or
            termination could reasonably be expected to materially adversely
            affect the financial condition or operations of the Borrower and its
            Subsidiaries, taken as a whole, or (C) the amount of liability
            incurred, or which may be incurred, by the Borrower or any ERISA
            Affiliate in connection with any event described in subclause
            (vii)(A) or (vii)(B) above; and

                  (viii) such other material information reasonably related to
            any Lender's credit analysis of the Borrower or any of its
            Subsidiaries as any Lender through the Administrative Agent may from
            time to time reasonably request.

      SECTION 5.02. Negative Covenants. So long as any Advance shall remain
unpaid or any Lender shall have any Revolving Credit Commitment hereunder, the
Borrower will not, without the written consent of the Majority Lenders:

            (a)   Mergers, Etc. Merge or consolidate with or into, or convey,
      transfer, lease or otherwise dispose of (whether in one transaction or in
      a series of transactions) all or substantially all of the assets of the
      Borrower and its Subsidiaries, taken as a whole (whether now owned or
      hereafter acquired), to, any Person, or permit any of its Subsidiaries to
      do so, unless (i) immediately after giving effect to such proposed
      transaction, no Event of Default or event that with the giving of notice
      or lapse of time or both would constitute an Event of Default, would exist
      and (ii) in the case of any such merger to which the Borrower is a party,
      the Borrower is the surviving corporation.

                                       33


                                   ARTICLE VI
                                EVENTS OF DEFAULT

      SECTION 6.01. Events of Default. If any of the following events ("EVENTS
OF DEFAULT") shall occur and be continuing:

            (a)   The Borrower shall fail to pay any principal of any Advance
      when the same becomes due and payable; or the Borrower shall fail to pay
      any interest on any Advance, or any fee or other amount payable under this
      Agreement, in each case within three Business Days after such interest,
      fee or other amount becomes due and payable; or

            (b)   Any representation or warranty made by the Borrower herein or
      by the Borrower (or any of its officers) delivered in writing and
      identified as delivered in connection with this Agreement shall prove to
      have been incorrect in any material respect when made; or

            (c)   The Borrower shall fail to perform or observe any covenant
      contained in Section 5.01(d), 5.01(e)(iii) or Section 5.02; or

            (d)   The Borrower shall fail to perform or observe any other term,
      covenant or agreement contained in this Agreement on its part to be
      performed or observed if the failure to perform or observe such other
      term, covenant or agreement shall remain unremedied for 30 days after
      written notice thereof shall have been given to the Borrower by the
      Administrative Agent or any Lender; or

            (e)   The Borrower or any of its Subsidiaries shall fail to pay any
      principal of or premium or interest on any Debt of the Borrower or such
      Subsidiary which is outstanding in a principal amount of at least
      $250,000,000 in the aggregate (but excluding Debt arising hereunder), when
      the same becomes due and payable (whether by scheduled maturity, required
      prepayment, acceleration, demand or otherwise), and such failure (i) shall
      continue after the applicable grace period, if any, specified in the
      agreement or instrument relating to such Debt and (ii) shall not have been
      cured or waived; or any other event shall occur or condition shall exist
      under any agreement or instrument relating to any such Debt and shall
      continue after the applicable grace period, if any, specified in such
      agreement or instrument, if the effect of such event or condition is to
      accelerate, or to permit the acceleration of, the maturity of such Debt;
      or any such Debt shall be declared to be due and payable, or required to
      be prepaid (other than by a regularly scheduled required prepayment),
      redeemed, purchased or defeased, or an offer to prepay, redeem, purchase
      or defease such Debt shall be required to be made, in each case prior to
      the stated maturity thereof; or

            (f)   The Borrower or any Material Subsidiary shall generally not
      pay its Debts as such Debts become due, or shall admit in writing its
      inability to pay its Debts generally, or shall make a general assignment
      for the benefit of creditors; or any proceeding shall be instituted by or
      against the Borrower or any Material Subsidiary seeking to adjudicate it a
      bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
      arrangement, adjustment, protection, relief, or composition of it or its
      debts under any law relating to bankruptcy, insolvency or reorganization
      or relief of debtors, or seeking the entry of an order for relief or the
      appointment of a receiver, trustee, custodian or other similar official
      for it or for substantially all of its property and, in the case of any
      such proceeding instituted against it (but not instituted by it), either
      such proceeding shall remain undismissed or unstayed for a period of 60
      days or any of the actions sought in such proceeding (including, without
      limitation, the entry of an order for relief against, or the appointment
      of a receiver, trustee, custodian or other similar official for, it or for
      any substantial

                                       34


      part of its property) shall occur; or the Borrower or any Material
      Subsidiary shall take any corporate action to authorize any of the actions
      set forth above in this subsection (f); or

            (g)   Any money judgment, writ or warrant of attachment or similar
      process against the Borrower, any Material Subsidiary or any of their
      respective assets involving in any case an amount in excess of
      $100,000,000 is entered and shall remain undischarged, unvacated, unbonded
      or unstayed for a period of 30 days or, in any case, within five days of
      any pending sale or disposition of any asset pursuant to any such process;

then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Majority Lenders, by notice to the Borrower, (A)
declare the obligation of each Lender to make Advances to be terminated,
whereupon the same shall forthwith terminate, or (B) declare the Advances, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
provided, however, that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower under the Federal Bankruptcy Code, (A)
the obligation of each Lender to make Advances shall automatically be terminated
and (B) the Advances, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or notice of
any kind, all of which are hereby expressly waived by the Borrower.

                                   ARTICLE VII
                            THE ADMINISTRATIVE AGENT

      SECTION 7.01. Authorization and Action. (a) Each Lender hereby appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
this Agreement (including, without limitation, enforcement of this Agreement or
collection of the Advances), the Administrative Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action which exposes the Administrative Agent to personal liability or which
is contrary to this Agreement or applicable law. The Administrative Agent agrees
to give to each Lender prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.

            (b)   The Syndication Agent, the Co-Documentation Agents and the
Arrangers shall have no duties under this Agreement other than those afforded to
them in their capacities as Lenders, and each Lender hereby acknowledges that
the Syndication Agent, the Co-Documentation Agents and the Arrangers have no
liability under this Agreement other than those assumed by them in their
capacities as Lenders.

      SECTION 7.02. Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable to any Lender for any action taken or omitted to be taken by it
or them under or in connection with this Agreement, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Administrative Agent: (i) may treat the Lender which made any
Advance as the holder of the Debt resulting therefrom until the Administrative
Agent receives and accepts an Assumption Agreement entered into by an Assuming
Lender as provided in Section 2.19, or an Assignment and Acceptance entered into
by such Lender, as assignor, and an Eligible Assignee, as assignee, as provided
in Section 8.07; (ii) may consult with legal counsel (including counsel for the
Borrower), independent public

                                       35


accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier)
believed by it to be genuine and signed or sent by the proper party or parties.

      SECTION 7.03. CUSA and Affiliates. With respect to its Revolving Credit
Commitment and the Advances made by it and any Note or Notes issued to it, CUSA
shall have the same rights and powers under this Agreement as any other Lender
and may exercise the same as though it were not the Administrative Agent and the
term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include
CUSA in its individual capacity. CUSA and its respective Affiliates may accept
deposits from, lend money to, act as trustee under indentures of, accept
investment banking engagements from, and generally engage in any kind of
business with, the Borrower, any of its Subsidiaries and any Person who may do
business with or own securities of the Borrower or any such Subsidiary, all as
if CUSA was not the Administrative Agent and without any duty to account
therefor to the Lenders.

      SECTION 7.04. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the financial statements referred to in Section
4.01(c) and such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement.

      SECTION 7.05. Indemnification. (a) Agent. The Lenders agree to indemnify
the Administrative Agent (to the extent not reimbursed by the Borrower), ratably
according to the respective principal amounts of Advances then owing to each of
them (or, if no Advances are at the time outstanding or if any Advances are then
owing to Persons which are not Lenders, ratably according to the respective
amounts of their Revolving Credit Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any action taken or omitted by
the Administrative Agent under this Agreement; provided, that, no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Administrative
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal or
bankruptcy proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that the Administrative
Agent is not reimbursed for such expenses by the Borrower.

      SECTION 7.06. Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrower and such resignation shall be effective upon the appointment of a
successor Administrative Agent as provided herein. Upon

                                       36


any such resignation, the Majority Lenders shall have the right to appoint a
successor Administrative Agent. If no successor Administrative Agent shall have
been so appointed by the Majority Lenders, and shall have accepted such
appointment, within 30 days after the retiring Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent. Any successor
Administrative Agent appointed hereunder shall be a commercial bank organized or
licensed under the laws of the United States or of any State thereof, or an
Affiliate of any such commercial bank, having a combined capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Administrative
Agent, and the retiring Administrative Agent shall be discharged from its duties
and obligations under this Agreement. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this Article
VII shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Administrative Agent under this Agreement.

      SECTION 7.07. Sub-Agent. The Borrower and the Lenders hereby acknowledge
that the Administrative Agent may, in its sole discretion, delegate any of its
obligations hereunder to the Sub-Agent, provided, that, it has obtained prior
consent to such delegation from the Sub-Agent. The Borrower and the Lenders
further agree that the Sub-Agent shall be entitled to exercise each of the
rights and to enjoy each of the benefits of the Administrative Agent under this
Agreement as related to the performance of its obligations hereunder.

                                  ARTICLE VIII
                                  MISCELLANEOUS

      SECTION 8.01. Amendments, Etc. (a) No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Majority Lenders, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders (other than the Borrower or any of its Affiliates, if
a Lender, at the time of any such amendment, waiver or consent), do any of the
following: (a) waive any of the conditions specified in Section 3.01 or 3.02,
(b) increase the Revolving Credit Commitments of the Lenders or subject the
Lenders to any additional obligations, (c) reduce the principal of, or interest
on, the Advances or the fees payable hereunder, (d) postpone any date fixed for
any payment of principal of, or interest on, the Advances (other than as
provided in Sections 2.05 and 2.19) or any fee, (e) change the percentage of the
Revolving Credit Commitments or of the aggregate unpaid principal amount of
Advances hereunder, or the number of Lenders, which shall be required for the
Lenders or any of them to take any action hereunder, or (f) amend this Section
8.01; and provided, further, that no amendment, waiver or consent shall, unless
in writing and signed by the Administrative Agent in addition to the Lenders
required above to take such action, affect the rights, duties or obligations of
the Administrative Agent under this Agreement or any Note.

            (b)   Limitation of Scope. All waivers and consents granted under
this Section 8.01 shall be effective only in the specific instance and for the
specific purpose for which given.

      SECTION 8.02. Notices, Etc. (a) All notices and other communications
provided for hereunder shall be, except as otherwise expressly provided for
herein, in writing (including telecopier communication) and mailed, telecopied
or delivered, if to the Borrower, at its address at:

                                       37


                  The Walt Disney Company
                  500 South Buena Vista Street
                  Burbank, California  91521
                  Attention:  Jonathan S. Headley and Carlos A. Gomez
                  Telecopier Number: (818) 563-1682;

with a copy to:

                  The Walt Disney Company
                  500 South Buena Vista Street
                  Burbank, California  91521
                  Attention:  Corporate Legal Department
                  Telecopier Number:  (818) 563-4160;

if to any Initial Lender, at its Domestic Lending Office specified opposite its
name on Schedule I hereto; if to any other Lender, at its Domestic Lending
Office specified in the Assumption Agreement or the Assignment and Acceptance
pursuant to which it became a Lender, as the case may be; and if to the
Administrative Agent, at its address at:

                  Citicorp USA, Inc.
                  Two Penns Way, Second Floor
                  New Castle, Delaware 19720
                  Attention: Cristian Garcia
                  Phone Number: (302) 894-6054
                  Telecopy Number: (302) 894-6120;

with a copy to:

                  Citicorp USA, Inc.
                  787 West Fifth Street, 29th Floor
                  Los Angeles, California  90071
                  Attention: Greg Davis
                  Phone Number: (213) 239-1896
                  Telecopy Number: (213) 239-1899;

or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall, when mailed or telecopied be effective when deposited in the mails or
telecopied, respectively, except that notices and communications to the
Administrative Agent pursuant to Article II or VII shall not be effective until
received by the Administrative Agent. Delivery by telecopier of an executed
counterpart of any amendment or waiver of any provision of this Agreement or of
any Exhibit hereto to be executed and delivered hereunder shall be effective as
delivery of an original executed counterpart thereof.

            (b)   If any notice required under this Agreement is permitted to be
made, and is made by telephone, actions taken or omitted to be taken in reliance
thereon by the Administrative Agent or any Lender shall be binding upon the
Borrower notwithstanding any inconsistency between the notice provided by
telephone and any subsequent writing in confirmation thereof provided to the
Administrative Agent or such Lender; provided, that, any such action taken or
omitted to be taken by the Administrative Agent or such Lender shall have been
in good faith and in accordance with the terms of this Agreement.

                                       38


      SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender or
the Administrative Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

      SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay, within
five Business Days of demand, all actual and reasonable costs and expenses, if
any (including, without limitation, actual and reasonable counsel fees and
expenses), of the Administrative Agent and each Lender in connection with the
enforcement (whether through legal proceedings or otherwise) of this Agreement)
and the other instruments and documents to be delivered hereunder, including,
without limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 8.04(a).

            (b)   If any payment of principal of, or Conversion of, any
Eurocurrency Rate Advance is made other than on the last day of the Interest
Period for such Advance, as a result of a payment or Conversion pursuant to
Section 2.08(f) or 2.10 or acceleration of the maturity of the Advances pursuant
to Section 6.01 or for any other reason (other than by reason of a payment
pursuant to Section 2.12), the Borrower shall, within five Business Days of
demand by any Lender (with a copy of such demand to the Administrative Agent),
pay to such Lender any amounts required to compensate such Lender for any
additional losses, costs or expenses which it may reasonably incur as a result
of such payment or Conversion, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or redeployment of deposits or
other funds acquired by such Lender to fund or maintain such Advance.

      SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Advances due and payable pursuant to the
provisions of Section 6.01 each Lender (and, in the case of CUSA, Citibank) is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final, but excluding trust accounts) at any time
held and other indebtedness at any time owing by such Lender (and, in the case
of CUSA, Citibank) to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter existing under
this Agreement, whether or not such Lender shall have made any demand under this
Agreement. Each Lender agrees promptly to notify the Borrower after any such
setoff and application made by such Lender (and, in the case of CUSA, Citibank);
provided, that, the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Lender (and, in the case of
CUSA, Citibank) under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which such Lender may
have.

      SECTION 8.06. Binding Effect. This Agreement shall become effective (other
than Section 2.01, which shall only become effective upon satisfaction of the
conditions precedent set forth in Section 3.01) when it shall have been executed
by the Borrower, the Administrative Agent and each Co-Documentation Agent and
when the Administrative Agent shall have been notified by each Initial Lender
that such Initial Lender has executed it and, thereafter, shall be binding upon
and inure to the benefit of the Borrower, the Administrative Agent, each
Co-Documentation Agent and each Lender and their respective successors and
permitted assigns, except that the Borrower shall not have the right to assign
its rights hereunder or any interest herein without the prior written consent of
the Lenders.

      SECTION 8.07. Assignments and Participations. (a) Each Lender may and, if
requested by the Borrower upon notice by the Borrower delivered to such Lender
and the Administrative

                                       39


Agent pursuant to clause (ii) of Section 2.16, will, assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Revolving
Credit Commitment and the Advances owing to it and any Note or Notes held by it;
provided, however, that (i) each such assignment shall be of a constant, and not
a varying, percentage of all rights and obligations under this Agreement, (ii)
the amount (without duplication) of the Revolving Credit Commitment and pro-rata
share of outstanding Advances of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance) shall not be less than $12,500,000 (unless such lesser amount is
previously agreed among such assigning Lender, the Administrative Agent and the
Borrower) or an integral multiple of $500,000 in excess thereof, (iii) the sum
of (A) the amount (without duplication) of the Revolving Credit Commitment and
pro-rata share of outstanding Advances of the assigning Lender being assigned
pursuant to each such assignment and (B) the amount of the commitment and
pro-rata share of outstanding advances of the assigning Lender being
contemporaneously assigned under the Five-Year Credit Agreement by the Person
that is such assigning Lender (in both cases determined as of the date of the
Assignment and Acceptance or similar agreement with respect to such assignments)
shall not be less than $25,000,000 in the aggregate (unless such lesser amount
is previously agreed among such assigning Lender, the Administrative Agent and
the Borrower) or an integral multiple of $1,000,000 in excess thereof, provided,
however, that if the aggregate amount of the Revolving Credit Commitment of such
assigning Lender hereunder and its commitment under the Five-Year Credit
Agreement is less than $25,000,000 on the date of such proposed assignments,
such assigning Lender may assign all, but not less than all, of its remaining
rights and obligations under this Agreement and the Five-Year Credit Agreement
(unless an assignment of a portion of such assigning Lender's obligations
hereunder and thereunder is otherwise previously agreed among such assigning
Lender, the Administrative Agent and the Borrower), (iv) each such assignment
shall be to an Eligible Assignee, and (v) the parties to each such assignment
(other than the Borrower) shall execute and deliver to the Administrative Agent,
for its acceptance and recording in the Register, an Assignment and Acceptance,
together with a processing and recordation fee of $3,500. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (y) the Lender assignor thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (other than
any rights such Lender assignor may have under Sections 2.11, 2.14 and 8.08) and
be released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto).

            (b)   By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any of
its Subsidiaries or the performance or observance by the Borrower of any of its
obligations under this Agreement or any instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01(c) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Administrative Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit

                                       40


decisions in taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.

            (c)   The Administrative Agent shall maintain at its address
referred to in Section 8.02 a copy of each Assignment and Acceptance and each
Assumption Agreement delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the Revolving Credit
Commitment of, and principal amount of the Advances owing to, each Lender from
time to time (the "REGISTER"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

            (d)   Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee representing that it is an Eligible Assignee
and, if applicable, the Borrower, together with any Note subject to such
assignment, the Administrative Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of Exhibit B hereto, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower.

            (e)   Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Revolving
Credit Commitment and the Advances owing to it and any Note issued to it
hereunder); provided, however, that (i) such Lender's obligations under this
Agreement (including, without limitation, its Revolving Credit Commitment
hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and (iv) such Lender shall
not agree in any participation agreement with any participant or proposed
participant to obtain the consent of such participant before agreeing to the
amendment, modification or waiver of any of the terms of this Agreement or any
Note, before consenting to any action or failure to act by the Borrower or any
other party hereunder or under any Note, or before exercising any rights it may
have in respect thereof, unless such amendment, modification, waiver, consent or
exercise would (A) increase the amount of such participant's portion of such
Lender's Revolving Credit Commitment, (B) reduce the principal amount of or rate
of interest on the Advances, or any fee or other amounts payable hereunder to
which such participant would be entitled to receive a share under such
participation agreement, or (C) postpone any date fixed for any payment of
principal of or interest on the Advances, or any fee or other amounts payable
hereunder to which such participant would be entitled to receive a share under
such participation agreement.

            (f)   Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
by or on behalf of the Borrower in writing and directly related to the
transactions contemplated hereunder; provided, that, prior to any such
disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any confidential information
relating to the Borrower received by it from such Lender in accordance with the
terms of Section 8.09.

                                       41


            (g)   No participation or assignment hereunder shall be made in
violation of the Securities Act of 1933, as amended from time to time, or any
applicable state securities laws, and each Lender hereby represents that it will
make any Advance for its own account in the ordinary course of its business and
not with a view to the public distribution or sale thereof.

            (h)   Anything in this Agreement to the contrary notwithstanding,
any Lender may at any time create a security interest in all or any portion of
its rights under this Agreement (including, without limitation, the Advances
owing to it and any Note issued to it hereunder) in favor of any Federal Reserve
Bank in accordance with Regulation A of the Board of Governors of the Federal
Reserve System (or any successor regulation thereto) and the applicable
operating circular of such Federal Reserve Bank.

      SECTION 8.08. Indemnification. The Borrower agrees to indemnify and hold
harmless the Administrative Agent, each Co-Documentation Agent and each Lender
and each of their Affiliates and their respective officers, directors,
employees, agents and advisors (each an "INDEMNIFIED PARTY") from and against
any and all claims, demands, damages, losses, liabilities, charges and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted against any Indemnified Party, in each case
arising out of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or proceeding
(whether or not an Indemnified Party is a party thereto) arising out of, related
to or in connection with the Revolving Credit Commitments hereunder or the
Advances made pursuant hereto or any transactions done in connection herewith,
including, without limitation, any transaction in which any proceeds of the
Advances are, or are proposed, to be applied (collectively, the "INDEMNIFIED
MATTERS"); provided, that, the Borrower shall have no obligation to any
Indemnified Party under this Section 8.08 with respect to (i) matters for which
such Indemnified Party has been reimbursed by or on behalf of the Borrower
pursuant to any other provision of this Agreement, but only to the extent of
such reimbursement, or (ii) Indemnified Matters found by a court of competent
jurisdiction to have resulted from the willful misconduct or gross negligence of
such Indemnified Party. If any action is brought against any Indemnified Party,
such Indemnified Party shall promptly notify the Borrower in writing of the
institution of such action and the Borrower shall thereupon have the right, at
its option, to elect to assume the defense of such action; provided, however,
that the Borrower shall not, in assuming the defense of any Indemnified Party in
any Indemnified Matter, agree to any dismissal or settlement of such Indemnified
Matter without the prior written consent of such Indemnified Party, which
consent shall not be unreasonably withheld, if such dismissal or settlement (A)
would require any admission or acknowledgement of culpability or wrongdoing by
such Indemnified Party or (B) would provide for any nonmonetary relief to any
Person to be performed by such Indemnified Party. If the Borrower so elects, it
shall promptly assume the defense of such action, including the employment of
counsel (reasonably satisfactory to such Indemnified Party) and payment of
expenses. Such Indemnified Party shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (1) the employment of such counsel
shall have been authorized in writing by the Borrower in connection with the
defense of such action or (2) the Borrower shall not have properly employed
counsel reasonably satisfactory to such Indemnified Party to have charge of the
defense of such action, in which case such fees and expenses shall be paid by
the Borrower. If an Indemnified Party shall have reasonably concluded (based
upon the advice of counsel) that the representation by one counsel of such
Indemnified Party and the Borrower creates a conflict of interest for such
counsel, the reasonable fees and expenses of such counsel shall be borne by the
Borrower and the Borrower shall not have the right to direct the defense of such
action on behalf of such Indemnified Party (but shall retain the right to direct
the defense of such action on behalf of the Borrower). Anything in this Section
8.08 to the contrary notwithstanding, the Borrower shall not be liable for the
fees and expenses of more than one counsel for any Indemnified Party in any
jurisdiction as to any Indemnified Matter or for any settlement of any
Indemnified Matter effected without its written consent. All obligations of the

                                       42


Borrower under this Section 8.08 shall survive the making and repayment of the
Advances and the termination of this Agreement.

      SECTION 8.09. Confidentiality. None of the Administrative Agent or Lenders
may disclose to any Person any confidential, proprietary or non-public
information of the Borrower furnished to the Administrative Agent or the Lenders
by the Borrower or any of its Subsidiaries (such information being referred to
collectively herein as the "BORROWER INFORMATION"), except that each of the
Administrative Agent and each of the Lenders may disclose Borrower Information
(i) to its and its Affiliates' employees, officers, directors, agents, auditors
and advisors (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Borrower Information
and instructed to keep such Borrower Information confidential on substantially
the same terms as provided herein), (ii) to the extent requested by any
regulatory authority, (iii) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (iv) to any other party
to this Agreement, (v) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (vi) subject to an agreement containing provisions
substantially the same as those of this Section 8.09 to any assignee of or
participant in, or any prospective assignee of or participant in, any of its
rights or obligations under this Agreement, (vii) to the extent such Borrower
Information (A) is or becomes generally available to the public on a
non-confidential basis other than as a result of a breach of this Section 8.09
by the Administrative Agent or such Lender, or (B) is or becomes available to
the Administrative Agent or such Lender on a non-confidential basis from a
source other than the Borrower, provided such source is not bound by a
confidentiality agreement or other legal or fiduciary obligations of secrecy
with the Borrower with respect to the Borrower Information, and (viii) with the
consent of the Borrower.

      SECTION 8.10. Patriot Act. The Administrative Agent hereby notifies the
Borrower that, pursuant to the requirements of the Patriot Act, it is required
to obtain, verify and record information that identifies the Borrower, which
information includes names and addresses and other information that will allow
it to identify the Borrower in accordance with the Patriot Act.

      SECTION 8.11. Judgment. (a) If for the purposes of obtaining judgment in
any court it is necessary to convert a sum due hereunder in Dollars into another
currency, the parties hereto agree to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase Dollars with such other currency at Citibank's principal office in
London at 11:00 A.M. (London time) on the Business Day preceding that on which
final judgment is given.

            (b)   If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in a Committed Currency into Dollars,
the parties agree to the fullest extent that they may effectively do so, that
the rate of exchange used shall be that at which in accordance with normal
banking procedures the Administrative Agent could purchase such Committed
Currency with Dollars at Citibank's principal office in London at 11:00 A.M.
(London time) on the Business Day preceding that on which final judgment is
given.

            (c)   The obligation of the Borrower in respect of any sum due from
it in any currency (the "Primary Currency") to any Lender or the Administrative
Agent hereunder shall, notwithstanding any judgment in any other currency, be
discharged only to the extent that on the Business Day following receipt by such
Lender or the Administrative Agent (as the case may be), of any sum adjudged to
be so due in such other currency, such Lender or the Administrative Agent (as
the case may be) may in accordance with normal banking procedures purchase the
applicable Primary Currency with such other currency; if the amount of the
applicable Primary Currency so purchased is less than such sum due to such
Lender or the Administrative Agent (as the case may be) in the applicable
Primary Currency, the

                                       43


Borrower agrees, as a separate obligation and notwithstanding any such judgment,
to indemnify such Lender or the Administrative Agent (as the case may be)
against such loss, and if the amount of the applicable Primary Currency so
purchased exceeds such sum due to any Lender or the Administrative Agent (as the
case may be) in the applicable Primary Currency, such Lender or the
Administrative Agent (as the case may be) agrees to remit to the Borrower such
excess.

      SECTION 8.12. Consent to Jurisdiction and Service of Process. All judicial
proceedings brought against the Borrower with respect to this Agreement or any
instrument or other documents delivered hereunder may be brought in any state or
federal court in the Borough of Manhattan in the State of New York, and by
execution and delivery of this Agreement, the Borrower accepts, for itself and
in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any final judgment rendered thereby in connection with this Agreement
or any instrument or other document delivered hereunder from which no appeal has
been taken or is available. The Borrower agrees to receive service of process in
any such proceeding in any such court at its office at 77 West 66th Street, 15th
Floor, New York, New York 10023, Attention: Kenneth E. Newman (or at such other
address in the Borough of Manhattan in the State of New York as the Borrower
shall notify the Administrative Agent from time to time) and, if the Borrower
ever ceases to maintain such office in the Borough of Manhattan, irrevocably
designates and appoints CT Corporation System, 1633 Broadway, New York, New York
10019, or any other address in the State of New York communicated by CT
Corporation System to the Administrative Agent, as its agent to receive on its
behalf service of all process in any such proceeding in any such court, such
service being hereby acknowledged by the Borrower to be effective and binding
service in every respect.

      SECTION 8.13. Substitution of Currency. If a change in any Committed
Currency occurs pursuant to any applicable law, rule or regulation of any
governmental, monetary or multi-national authority, this Agreement (including,
without limitation, the definition of Eurocurrency Rate) will be amended to the
extent determined by the Administrative Agent (acting reasonably, in
consultation with the Borrower and in accordance with the terms of Section 8.01
hereof) to be necessary to reflect the change in currency and to put the Lenders
and the Borrower in the same position, so far as possible, that they would have
been in if no change in such Committed Currency had occurred.

      SECTION 8.14. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.

      SECTION 8.15. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement. A full set of executed counterparts of this Agreement shall be
lodged with the Administrative Agent and the Borrower.

      SECTION 8.16. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

                                       44


      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.

                                  THE BORROWER

                                          THE WALT DISNEY COMPANY

                                          By: /s/ Christine M. McCarthy
                                              ----------------------------------

                                          Title: Senior Vice President and
                                                 Treasurer

                                  THE ADMINISTRATIVE AGENT

                                          CITICORP USA, INC.,

                                          as Administrative Agent

                                          By: /s/ William S. Timmons, III
                                              ----------------------------------

                                          Title: Vice President

                                  THE JOINT LEAD ARRANGERS
                                  AND JOINT BOOK MANAGERS

                                          BANC OF AMERICA, SECURITIES LLC
                                          as Joint Lead Arranger and Joint Book
                                          Manager

                                          By: /s/ Thomas J. Kane
                                              ----------------------------------

                                          Title: Principal

                                          CITIGROUP GLOBAL MARKETS, INC.,
                                          as Joint Lead Arranger and Joint Book
                                          Manager

                                          By: /s/ J. Gregory Davis
                                              ----------------------------------

                                          Title: Attorney-In-Fact



                                  THE SYNDICATION AGENT

                                          BANK OF AMERICA, N.A.

                                          as Syndication Agent

                                          By: /s/ Thomas J. Kane
                                              ----------------------------------

                                          Title: Principal

                                  THE CO-DOCUMENTATION AGENTS

                                          BARCLAYS BANK PLC,

                                          as Co-Documentation Agent

                                          By: /s/ L. Peter Yetman
                                              ----------------------------------

                                          Title: Director

                                          BNP PARIBAS SA,

                                          as Co-Documentation Agent

                                          By: /s/ Nuala Marley
                                              ----------------------------------

                                          Title: Managing Director

                                          By: /s/ Todd Rodgers
                                              ----------------------------------

                                          Title: Vice President

                                          HSBC BANK USA,

                                          as Co-Documentation Agent

                                          By: /s/ David Wagstaff
                                              ----------------------------------

                                          Title: Senior Vice President



                                          JPMORGAN CHASE BANK,

                                          as Co-Documentation Agent

                                          By: /s/ William Rindfuss
                                              ----------------------------------

                                          Title: Vice President




                                INITIAL LENDERS

Commitment

$210,000,000.00                           CITICORP USA, INC.,
                                          as Lender

                                          By: /s/ William S. Timmons, III
                                              ----------------------------------

                                          Title: Vice President



$210,000,000.00                           BANK OF AMERICA, N.A.,
                                          as Lender

                                          By: /s/ Thomas J. Kane
                                              ----------------------------------

                                          Title: Principal



$160,000,000.00                           BARCLAYS BANK PLC,
                                          as Lender

                                          By: /s/ L. Peter Yetman
                                              ----------------------------------

                                          Title: Director



$160,000,000.00                           BNP PARIBAS SA,
                                          as Lender

                                          By: /s/ Nuala Marley
                                              ----------------------------------

                                          Title: Managing Director

                                          By: /s/ Todd Rodgers
                                              ----------------------------------

                                          Title: Vice President



$160,000,000.00                           HSBC BANK USA,
                                          as Lender

                                          By: /s/ David Wagstaff
                                              ----------------------------------

                                          Title: Senior Vice President



$160,000,000.00                           JPMORGAN CHASE BANK,
                                          as Lender

                                          By: /s/ William Rindfuss
                                              ----------------------------------

                                          Title: Vice President



$107,500,000.00                           CREDIT SUISSE FIRST BOSTON,
                                          acting through its Cayman Islands
                                          Branch as Lender

                                          By: /s/ Jay Chall
                                              ----------------------------------

                                          Title: Director

                                          By: /s/ Jennifer A. Pieza
                                              ----------------------------------

                                          Title: Associate



$107,500,000.00                           DEUTSCHE BANK AG,
                                          as Lender

                                          By: /s/ William W. McGinty
                                              ----------------------------------

                                          Title: Director

                                          By: /s/ Christopher S. Hall
                                              ----------------------------------

                                          Title: Managing Director



$107,500,000.00                           STANDARD CHARTERED BANK,
                                          as Lender

                                          By: /s/ Frieda Youlios
                                              ----------------------------------

                                          Title: Vice President

                                          By: /s/ Robert Reddington

                                          Title: Assistant Vice President



$107,500,000.00                           UBS LOAN FINANCE LLC,
                                          as Lender

                                          By: /s/ Wilfred V. Saint
                                              ----------------------------------

                                          Title: Associate Director

                                          By: /s/ Thomas R. Salzano
                                              ----------------------------------

                                          Title: Director



$57,500,000.00                            BANCA INTESA, SPA,
                                          as Lender

                                          By: /s/ F. Maffei
                                              ----------------------------------

                                          Title: Vice President



$57,500,000.00                            HARRIS NESBITT FINANCING, INC.,
                                          as Lender

                                          By: /s/ Joseph W. Linder
                                              ----------------------------------

                                          Title: Vice President



$57,500,000.00                            MIZUHO CORPORATE BANK, LTD.,
                                          as Lender

                                          By: /s/  Mark Gronich
                                              ----------------------------------

                                          Title: Vice President



$57,500,000.00                            SOCIETE GENERALE,
                                          as Lender

                                          By: /s/ Mark Vigil
                                              ----------------------------------

                                          Title: Managing Director



$57,500,000.00                            SUMITOMO MITSUI BANKING CORPORATION,
                                          as Lender

                                          By: /s/ Leo E. Pagarigan
                                              ----------------------------------

                                          Title: Senior Vice President



$57,500,000.00                            SUNTRUST BANK,
                                          as Lender

                                          By: /s/ David W. Penter
                                              ----------------------------------

                                          Title: Director



$57,500,000.00                            WILLIAM STREET
                                          COMMITMENT CORPORATION,
                                          (Recourse only to assets of William
                                          Street Commitment Corporation),
                                          as Lender

                                          By: /s/ J.M. Hill
                                              ----------------------------------

                                          Title: CFO



$32,500,000.00                            AUSTRALIA AND NEW ZEALAND
                                          BANKING GROUP LIMITED,
                                          as Lender

                                          By: /s/ Damodar Menon
                                              ----------------------------------

                                          Title: Director



$32,500,000.00                            BANCA DI ROMA - SAN FRANCISCO,
                                          as Lender

                                          By: /s/ Luca Balestra
                                              ----------------------------------

                                          Title: Senior Vice President & Manager

                                          By: /s/ Richard G. Dietz
                                              ----------------------------------

                                          Title: Vice President



$32,500,000.00                            BEAR STEARNS CORPORATE LENDING INC.,
                                          as Lender

                                          By: /s/ Victor Bulzacchelli
                                              ----------------------------------

                                          Title: Vice President



$32,500,000.00                            ING BANK N .V.,
                                          as Lender

                                          By: /s/ Michael Fenlan
                                              ----------------------------------

                                          Title: Vice President



$32,500,000.00                            LEHMAN BROTHERS BANK, FSB,
                                          as Lender

                                          By: /s/ Gary T. Taylor
                                              ----------------------------------

                                          Title: Vice President



$32,500,000.00                            LLOYDS TSB BANK PLC,
                                          as Lender

                                          By: /s/ Peter Doyle
                                             -----------------------------------

                                          Title: Vice President

                                          By: /s/ Lisa Maguire
                                             -----------------------------------

                                          Title: Assistant Vice President



$32,500,000.00                            MERRILL LYNCH BANK USA,
                                          as Lender

                                          By: /s/ Preston Jackson
                                             -----------------------------------

                                          Title: President and CEO



$32,500,000.00                            STATE STREET BANK AND TRUST COMPANY,
                                          as Lender

                                          By: /s/ Mary H. Carey
                                             -----------------------------------

                                          Title: Vice President



$32,500,000.00                            UFJ BANK LIMITED,
                                          as Lender

                                          By: /s/ Toshiko Boyd
                                             -----------------------------------

                                          Title: Vice President



$32,500,000.00                            UNION BANK OF CALIFORNIA, N.A.,
                                          as Lender

                                          By: /s/ Kin W. Cheng
                                             -----------------------------------

                                          Title: Assistant Vice President




$32,500,000.00                            WELLS FARGO BANK, N.A.,
                                          as Lender

                                          By: /s/ Ling Li
                                             -----------------------------------

                                          Title: Vice President

                                        1

EX-10.C

                                                                   EXHIBIT 10(c)



                               First Amendment to
                              Amended and Restated
                    Employment Agreement dated June 29, 2000
                                     Between
                             The Walt Disney Company
                                       And
                                Michael D. Eisner

      The Walt Disney Company ("Company") and Michael D. Eisner ("Executive")
hereby amend the Amended and Restated Agreement dated June 29, 2000 between
Company and Executive ("Agreement") as follows, effective as of April 27, 2004.
Capitalized terms used but not defined in this amendment (the "First Amendment")
shall have the meanings given in the Agreement.

      1.    Section 2 of the Agreement is amended to delete the reference to the
            employment of Executive as the Company's "Chairman" and Section
            10(i) of the Agreement is amended to delete the reference to
            Executive's election or retention as "Chairman".

      2.    Section 2 of the Agreement is amended to include a new second
            sentence:

                  "For all purposes under this Agreement, as Chief Executive
                  Officer, Executive shall retain the same duties and
                  responsibilities, with the same scope of authority, with
                  respect to the management of the Company, as he previously
                  held as Chief Executive Officer during the term of the
                  Agreement."

      3.    Executive hereby agrees not to assert any right to terminate his
            employment under Section 10 of the Agreement, or to claim a breach
            of the Agreement or otherwise assert any claim or right, as a result
            of his removal from the position of Chairman on March 3, 2004.

      4.    Except as modified hereby, all provisions of the Agreement shall
            continue in full force and effect. Without limiting the generality
            of the foregoing, except as expressly provided herein, this First
            Amendment shall not affect any other rights that the Executive or
            the Company may have under the Agreement.

            IN WITNESS WHEREOF, the parties have executed this First Amendment
      on this 27th day of April 2004.

                                                        THE WALT DISNEY COMPANY

                                                        By: ALAN N. BRAVERMAN
                                                            --------------------

        MICHAEL D. EISNER
      ------------------------------
      MICHAEL D. EISNER

EX-31.A

Exhibit 31(a)

RULE 13a-14(a) CERTIFICATION IN
ACCORDANCE WITH SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Michael D. Eisner, Chief Executive Officer of The Walt Disney Company (the “Company”), certify that:

1.	I have reviewed this quarterly report on Form 10-Q of the Company;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2004

By:	MICHAEL D. EISNER
	Michael D. Eisner
	Chief Executive Officer

EX-31.B

Exhibit 31(b)

RULE 13a-14(a) CERTIFICATION IN
ACCORDANCE WITH SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas O. Staggs, Senior Executive Vice President and Chief Financial Officer of The Walt Disney Company (the “Company”), certify that:

1.	I have reviewed this quarterly report on Form 10-Q of the Company;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2004

By:	THOMAS O. STAGGS
	Thomas O. Staggs
	Senior Executive Vice President     and Chief Financial Officer

EX-32.A

Exhibit 32(a)

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

     In connection with the Quarterly Report of The Walt Disney Company (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Eisner, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	MICHAEL D. EISNER
	Michael D. Eisner
	Chief Executive Officer May 10, 2004

* A signed original of this written statement required by Section 906 has been provided to The Walt Disney Company and will be retained by The Walt Disney Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.B

Exhibit 32(b)

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

     In connection with the Quarterly Report of The Walt Disney Company (the “Company”) on Form 10-Q for the fiscal quarter ended March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas O. Staggs, Senior Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

1.	The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
2.	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

By:	THOMAS O. STAGGS
	Thomas O. Staggs
	Senior Executive Vice President     and Chief Financial Officer May 10, 2004

* A signed original of this written statement required by Section 906 has been provided to The Walt Disney Company and will be retained by The Walt Disney Company and furnished to the Securities and Exchange Commission or its staff upon request.