<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 3, 1998
REGISTRATION NO. 333-52659
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
THE WALT DISNEY COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 95-4545390
(State or other jurisdiction (I.R.S. employer
of identification
incorporation or organization) number)
</TABLE>
500 SOUTH BUENA VISTA STREET BURBANK, CALIFORNIA 91521
(818) 560-1000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
DAVID K. THOMPSON
SENIOR VICE PRESIDENT--ASSISTANT GENERAL COUNSEL
THE WALT DISNEY COMPANY
500 SOUTH BUENA VISTA STREET BURBANK, CALIFORNIA 91521
(818) 560-1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPY TO:
RICHARD A. BOEHMER
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, California 90071
(213) 430-6000
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
--------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /X/
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION DATED AUGUST 3, 1998
PROSPECTUS
THE WALT DISNEY COMPANY
SECURITIES
----------------
The Walt Disney Company may offer from time to time the following types of
securities ("Securities"):
- debt securities, which may be senior debt securities, senior subordinated
debt securities or subordinated debt securities, in each case consisting
of notes or other unsecured evidences of indebtedness;
- shares of preferred stock, which may be issued in the form of depositary
receipts representing a fraction of a share of preferred stock;
- shares of common stock; or
- warrants to purchase debt securities, preferred stock or common stock.
The Securities will have an aggregate initial offering price of up to
$5,000,000,000 or an equivalent amount in U.S. dollars if any Securities are
denominated in a currency other than U.S. dollars. The Securities may be offered
separately or together in any combination and as separate series. The amounts,
prices, form, designation, specific terms and offering terms of each issuance of
Securities will be determined at the time of sale and will be set forth in a
Prospectus Supplement. Where applicable, the Prospectus Supplement will also
contain information about certain material United States Federal income tax
considerations relating to the Securities and any listing of the Securities on a
national securities exchange.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------
The Securities may be sold directly, through agents designated from time to
time or to or through underwriters or dealers. See "Plan of Distribution." If
any agents or underwriters are involved in the sale of any Securities, their
names and any applicable commissions or discounts will be set forth in a
Prospectus Supplement. The net proceeds to the issuer from the sale of
Securities also will be set forth in a Prospectus Supplement.
------------------------
, 1998
<PAGE>
AVAILABLE INFORMATION
The Walt Disney Company ("Disney") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith, files reports, proxy and information
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy and information statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such reports, proxy and information statements and other
information may also be inspected at the offices of the New York Stock Exchange,
20 Broad Street, New York, New York 10005 and the Pacific Exchange, 115 Sansome
Street, Suite 1104, San Francisco, California 94104. In addition, the Commission
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants, such as
Disney, that file electronically with the Commission.
Disney has filed with the Commission in Washington, D.C. a registration
statement on Form S-3 (including all amendments thereto, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. Such additional information is available for inspection and
copying at the offices of the Commission. Statements contained in this
Prospectus, in any Prospectus Supplement or in any document incorporated by
reference herein or therein as to the contents of any contract or other document
referred to herein or therein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to, or incorporated by reference in, the Registration Statement, each
such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by Disney (File No. 1-11605) with
the Commission under the Exchange Act are incorporated herein by reference:
(a) Disney's Annual Report on Form 10-K for the fiscal year ended
September 30, 1997 (as amended by two Form 10-K/As filed June 29, 1998); and
(b) Disney's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1997 and March 31, 1998.
All documents filed by Disney pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act prior to the termination of the offering of the Securities
made hereby, shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that is or is deemed to be incorporated by
reference herein) modifies or supersedes such previous statement. Any statement
so modified or superseded shall not be deemed to constitute a part hereof except
as so modified or superseded.
Disney will provide without charge to each person to whom a copy of this
Prospectus has been delivered, on the written or oral request of such person, a
copy of any or all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus other than exhibits to such
documents, unless such exhibits are also specifically incorporated by reference
herein. Requests for such copies should be directed to The Walt Disney Company,
500 South Buena Vista Street, Burbank, California 91521, Attention: Corporate
Secretary; telephone number (818) 560-1000.
------------------------
Unless otherwise indicated, currency amounts in this Prospectus and any
Prospectus Supplement are stated in United States dollars ("$," "dollars," "U.S.
dollars" or "U.S.$").
------------------------
2
<PAGE>
THE COMPANY
The Walt Disney Company, a Delaware corporation ("Disney" or the "Company"),
is a diversified international entertainment company with operations in the
businesses of Creative Content, Broadcasting and Theme Parks and Resorts. On
February 9, 1996, the Company completed its acquisition of ABC, Inc. ("ABC"),
which resulted in a new parent company, with the name "The Walt Disney Company",
replacing the old parent company of the same name. For convenience, unless the
context otherwise requires, the terms "Company" and "Disney" are used in this
Prospectus to refer to both the old and the new parent company and to refer
collectively to the parent company and the subsidiaries through which its
various businesses are actually conducted.
The Company's principal executive offices are located at 500 South Buena
Vista Street, Burbank, California 91521, and its telephone number is (818)
560-1000.
CREATIVE CONTENT
The Company produces and acquires live-action and animated motion pictures
for distribution to the theatrical, home video and television markets. The
Company also produces original television programming for the network and
first-run syndication markets. The Company distributes its filmed product
through its own distribution and marketing companies in the United States and
most foreign markets. The success of the Company's Creative Content operations
is heavily dependent upon public taste, which is unpredictable and subject to
change. In addition, filmed entertainment operating results fluctuate due to the
timing and performance of theatrical and home video releases. Release dates are
determined by several factors, including timing of vacation and holiday periods
and competition.
The Company licenses the name "Walt Disney," as well as the Company's
characters, visual and literary properties and songs and music, to various
consumer manufacturers, retailers, show promoters and publishers throughout the
world. The Company also engages in direct retail distribution principally
through The Disney Stores, and produces books and magazines for the general
public in the United States and Europe. In addition, the Company produces audio
products for all markets, as well as film, video and computer software products
for the educational marketplace. Operating results for the licensing and retail
distribution business are influenced by seasonal consumer purchasing behavior
and by the timing and performance of animated theatrical releases.
BROADCASTING
The Company operates the ABC Television Network, which has affiliated
stations providing coverage to U.S. television households. The Company also owns
television and radio stations, most of which are affiliated with the ABC
Television Network and the ABC Radio Networks. The Company's cable and
international broadcast operations are principally involved in the production
and distribution of cable television programming, the licensing of programming
to domestic and international markets and investing in joint ventures in
foreign-based television operations and television production and distribution
entities. The primary domestic cable programming services, which operate
principally through joint ventures, are ESPN, the A&E Television Networks,
Lifetime Television and E! Entertainment Television. The Company provides
programming for and operates Disney Channel, a cable and satellite television
programming service.
THEME PARKS AND RESORTS
The Company operates the Walt Disney World Resort-Registered Trademark- in
Florida, and Disneyland Park-Registered Trademark-, the Disneyland Hotel and the
Disneyland Pacific Hotel in California. The Walt Disney World Resort includes
the Magic Kingdom, Epcot and the Disney-MGM Studios, thirteen resort hotels and
a complex of villas and suites, a nighttime entertainment complex, a shopping
village, conference centers, campgrounds, golf courses, water parks and other
recreational facilities. The Company earns royalties generated by the Tokyo
Disneyland-Registered Trademark- theme park near Tokyo, Japan, which is owned
and operated by an unrelated Japanese corporation. The Company also has an
investment in Euro Disney S.C.A., a publicly held French corporation that
operates Disneyland Paris. The Company's Walt Disney Imagineering unit designs
and develops new theme park concepts and attractions, as well as resort
properties. The Company also manages and markets vacation ownership interests in
the Disney Vacation Club. Included in Theme Parks and Resorts are the Company's
National Hockey League franchise, the
3
<PAGE>
Mighty Ducks of Anaheim, and its ownership interest in the Anaheim Angels, a
Major League Baseball team. Historically, the theme parks and resorts business
experiences fluctuations in park attendance and resort occupancy resulting from
the 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.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, Disney
intends to use the net proceeds from the sale of the Securities for general
corporate purposes.
RATIOS OF EARNINGS TO FIXED CHARGES
Set forth below are the consolidated ratios of earnings to fixed charges for
Disney for the six-month periods ended March 31, 1998 and 1997 and for each of
the years in the five-year period ended September 30, 1997:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED
MARCH 31, SEPTEMBER 30,
-------------------- ------------------------------------------
1998 1997 1997 1996 1995 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (1)(2)(3)...................... 5X 5X 5X 4X 9X 9X
<CAPTION>
1993
---------
<S> <C>
Ratio of Earnings to Fixed Charges (1)(2)(3)...................... 7X
</TABLE>
- ------------------------
(1) For purposes of these ratios, earnings are calculated by adding to
(subtracting from) income from continuing operations before income taxes and
cumulative effect of accounting changes, the following: fixed charges,
excluding capitalized interest; and losses and (undistributed earnings)
recognized with respect to less than 50% owned equity investments. Fixed
charges consist of interest on borrowings, that portion of rental expense
that approximates interest and amortized debt expense, if any.
(2) The Company's acquisition of ABC was consummated on February 9, 1996.
Accordingly, the ratios set forth above for periods before and after the
acquisition are not comparable.
(3) Disney's ratios of earnings to combined fixed charges and preferred stock
dividends for the periods indicated above is the same as the ratios of
earnings to fixed charges set forth above because Disney had no shares of
preferred stock outstanding during the periods indicated and currently has
no such shares outstanding.
4
<PAGE>
CERTAIN FINANCIAL INFORMATION
The following table sets forth selected historical consolidated financial
information of Disney and has been derived from and should be read in
conjunction with Disney's audited consolidated financial statements and
unaudited interim consolidated financial statements, including the notes
thereto, which are incorporated by reference in this Prospectus. Unaudited
interim data reflect, in the opinion of Disney's management, all adjustments
considered necessary for a fair presentation of results for such interim
periods. Results of operations for unaudited interim periods are not necessarily
indicative of results which may be expected for any other interim or annual
period. During the quarter ended June 30, 1998, Disney effected a three-for-one
stock split by means of a stock dividend. All per share data have been restated
to reflect the stock split.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
-------------------- -----------------------------------------------------
1998 1997(1) 1997(1) 1996(2) 1995 1994 1993(3)
--------- --------- --------- --------- --------- --------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................. $ 11,581 $ 11,759 $ 22,473 $ 18,739 $ 12,151 $ 10,090 $ 8,531
Operating income.......................... 2,341 2,426 4,447 3,033 2,466 1,972 1,722
Income before cumulative effect of
accounting changes...................... 1,139 1,082 1,966 1,214 1,380 1,110 671
Earnings per share before cumulative
effect of accounting changes(4)
Diluted................................. 0.55 0.53 0.95 0.65 0.87 0.68 0.41
Basic................................... 0.56 0.53 0.97 0.66 0.88 0.69 0.42
Cash dividends per share.................. 0.10 0.08 0.17 0.14 0.12 0.10 0.08
BALANCE SHEET DATA (AT END OF PERIOD):
Total assets.............................. $ 39,317 $ 39,137 $ 37,776 $ 36,626 $ 14,606 $ 12,826 $ 11,751
Borrowings................................ 11,450 12,848 11,068 12,342 2,984 2,937 2,386
Stockholders' equity...................... 18,626 16,857 17,285 16,086 6,651 5,508 5,031
Book value per share...................... 9.14 8.34 8.59 7.96 4.23 3.50 3.13
</TABLE>
- ------------------------
(1) 1997 results include a $135 million gain from the Company's sale of KCAL-TV.
The diluted earnings per share impact of the gain was $0.04.
(2) 1996 results include a $300 million non-cash charge pertaining to the
implementation of SFAS 121 ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, and a $225 million
charge for costs related to the acquisition of ABC. The diluted earnings per
share impacts of these charges were $0.10 and $0.07, respectively.
(3) In 1993, the Company changed its accounting policy for project-related
pre-opening costs, adopted SFAS 106 EMPLOYERS' ACCOUNTING FOR POSTRETIREMENT
BENEFITS OTHER THAN PENSION and adopted SFAS 109 ACCOUNTING FOR INCOME
TAXES. The cumulative effect of these accounting changes on the 1993 results
follows:
<TABLE>
<CAPTION>
DILUTED EARNINGS BASIC EARNINGS
NET INCOME PER SHARE PER SHARE
----------- ----------------- ---------------
<S> <C> <C> <C>
Expense pre-opening costs as incurred................. $ (271) $ (.17) $ (.17)
Adopt SFAS 106........................................ (130) (.08) (.08)
Adopt SFAS 109........................................ 30 .02 .02
----- ----- -----
$ (371) $ (.23) $ (.23)
----- ----- -----
----- ----- -----
</TABLE>
Operating and net income for 1993 also reflect a $350 million charge to
fully reserve the Company's outstanding receivables from Euro Disney S.C.A.
and the Company's commitment to provide certain financing to Euro Disney
S.C.A. for a limited period. The diluted earnings per share impact of the
charge, net of income tax benefit, was $.13.
(4) During the quarter ended December 31, 1997, earnings per share for each
fiscal year presented were restated for the adoption of SFAS 128 EARNINGS
PER SHARE.
In addition, in compliance with the rules and regulations of the Commission
pertaining to the provision of separate financial statements of significant
acquired businesses, Disney hereby incorporates by reference its Current Report
on Form 8-K dated March 30, 1996 that was previously filed with the Commission,
which report contains the audited consolidated financial statements of Capital
Cities/ABC, Inc. for the three years ended December 31, 1995.
5
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the debt securities (the "Debt Securities") of Disney to which any Prospectus
Supplement may relate. The particular terms of the Debt Securities offered by
any Prospectus Supplement and the extent, if any, to which such general
provisions may apply to the Debt Securities so offered will be described in the
Prospectus Supplement relating to such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more series,
and will constitute either senior debt securities (the "Senior Debt
Securities"), senior subordinated debt securities (the "Senior Subordinated Debt
Securities") or subordinated debt securities (the "Subordinated Debt
Securities"). Senior Debt Securities may be issued from time to time under the
Indenture, dated as of March 7, 1996 (the "Senior Debt Securities Indenture"),
between Disney and Citibank, N.A., a national banking association, as trustee
(the "Senior Debt Securities Trustee"). Senior Subordinated Debt Securities may
be issued from time to time under an Indenture (the "Senior Subordinated Debt
Securities Indenture") to be entered into between Disney and Chase Manhattan
Bank and Trust Company, National Association, as trustee (the "Senior
Subordinated Debt Securities Trustee"). Subordinated Debt Securities may be
issued from time to time under an Indenture (the "Subordinated Debt Securities
Indenture") to be entered into between Disney and The First National Bank of
Chicago, as trustee (the "Subordinated Debt Securities Trustee").
The Senior Debt Securities Indenture, the Senior Subordinated Debt
Securities Indenture, and the Subordinated Debt Securities Indenture are
referred to herein individually as an "Indenture" and, collectively, as the
"Indentures," and the Senior Debt Securities Trustee, the Senior Subordinated
Debt Securities Trustee and the Subordinated Debt Securities Trustee are
referred to herein individually as the "Trustee" and collectively as the
"Trustees." The forms of the Indentures are filed, or incorporated by reference,
as exhibits to the Registration Statement. Capitalized terms used in this
section which are not otherwise defined in this Prospectus shall have the
meanings set forth in the Indentures to which they relate. The following
summaries of certain provisions of the Debt Securities and the Indentures do not
purport to be complete and are subject to, and are qualified in their entirety
by express reference to, all the provisions of the Indentures, including the
definitions therein of certain terms. As used in this section of the Prospectus,
"Disney" does not include its subsidiaries.
GENERAL
The Debt Securities will be direct, unsecured obligations of Disney.
The Indentures do not limit the aggregate principal amount of Debt
Securities that may be issued thereunder and provide that Debt Securities may be
issued thereunder from time to time in one or more series.
Under the Indentures, Disney will have the ability to issue Debt Securities
with terms different from, or the same as, those of Debt Securities previously
issued, without the consent of the holders of previously issued series of Debt
Securities, in an aggregate principal amount determined by Disney.
Securities may be issued as Discount Securities, which may be sold at a
discount below their principal amount. Even if Securities are not issued at a
discount below their principal amount, such Securities may, for United States
Federal income tax purposes, be deemed to have been issued with "original issue
discount" ("OID") because of certain interest payment characteristics. Special
United States Federal income tax considerations applicable to Securities issued
with original issue discount, including Discount Securities, will be described
in more detail in any applicable Prospectus Supplement. In addition, special
United States Federal tax considerations or other restrictions or terms
applicable to any Debt Securities which are issuable in bearer form, offered
exclusively to Non-United States Holders or denominated in a currency other than
United States dollars will be set forth in a Prospectus Supplement relating
thereto.
The applicable Prospectus Supplement or Prospectus Supplements will
describe, among other things, the following terms of the Debt Securities offered
thereby (the "Offered Debt Securities"):
(a) the title of the Offered Debt Securities;
(b) any limit on the aggregate principal amount of the Offered Debt
Securities;
6
<PAGE>
(c) whether the Offered Debt Securities are to be issuable as registered
securities or bearer securities or both and whether the Offered Debt
Securities may be represented initially by a Debt Security in temporary
or permanent global form, and if so, the initial Depositary with respect
to such temporary or permanent global Debt Security and whether and the
circumstances under which beneficial owners of interests in any such
temporary or permanent global Debt Security may exchange such interests
for Debt Securities of such series and of like tenor of any authorized
form and denomination;
(d) the price or prices at which the Offered Debt Securities will be issued;
(e) the person to whom any interest will be payable on any Offered Debt
Security that is a registered security, if other than the person in whose
name the Offered Debt Security is registered at the close of business on
the Regular Record Date for the payment of such interest;
(f) the manner in which, or the person to whom, any interest on any Offered
Debt Security that is a bearer security will be payable, if other than
upon presentation and surrender of the coupons appertaining thereto, and
the extent to which, or the manner in which, any interest payable on a
temporary or definitive global security on an Interest Payment Date will
be paid;
(g) the date or dates on which the principal of the Offered Debt Securities
is payable or the method of determination thereof;
(h) the rate or rates at which the Offered Debt Securities will bear
interest or the method of calculating such rate or rates, if any, the
date or dates from which such interest, if any, will accrue, the Stated
Maturities (as defined below) of installments of interest (the "Interest
Payment Dates"), if any, on which any interest on the Offered Debt
Securities will be payable and the Regular Record Dates for any interest
payable on any Offered Debt Securities which are registered securities;
(i) the place or places where and the manner in which the principal of and
premium, if any, and interest, if any, on such Offered Debt Securities
will be payable and the place or places where such Offered Debt
Securities may be presented for transfer and, if applicable, conversion
or exchange and notices and demands to or upon Disney in respect of the
Offered Debt Securities may be served;
(j) the period or periods within which, the price or prices at which and the
terms and conditions upon which, Offered Debt Securities may be redeemed,
in whole or in part, at the option of Disney;
(k) the obligation, if any, of Disney to redeem or purchase Offered Debt
Securities pursuant to any sinking fund or analogous provisions or at the
option of a holder thereof, the conditions, if any, giving rise to such
obligation, and the period or periods within which, the price or prices
at which and the terms and conditions upon which Offered Debt Securities
shall be redeemed or purchased, in whole or part, and any provisions for
the remarketing of such Offered Debt Securities;
(l) the denominations in which any Offered Debt Security that is a
registered security shall be issuable, if other than denominations of
$1,000 and any integral multiple thereof, and the denominations in which
any Offered Debt Security that is a bearer security shall be issuable, if
other than denominations of $5,000 and $100,000;
(m) the currency or currencies, including composite currencies, of payment
of principal of and interest, if any, on the Offered Debt Securities, if
other than U.S. dollars, and, if other than U.S. dollars, whether the
Offered Debt Securities may be satisfied and discharged other than as
provided in the Indenture;
(n) if the amount of payments of principal of and interest, if any, on the
Offered Debt Securities is to be determined by reference to an index,
formula or other method, or based on a coin or currency or currency unit
other than that in which the Offered Debt Securities are stated to be
payable, the manner in which such amounts are to be determined and the
calculation agent, if any, with respect thereto;
(o) if other than the principal amount thereof, the portion of the principal
amount of the Offered Debt Securities which will be payable upon
declaration or acceleration of the maturity thereof pursuant to an Event
of Default;
(p) whether such Offered Debt Securities are convertible or exchangeable
into other debt or equity securities, and, if so, the terms and
conditions upon which such conversion or exchange will be effected
including the initial conversion or exchange price or rate and any
adjustments thereto, the conversion or exchange period and other
conversion or exchange provisions;
7
<PAGE>
(q) any terms applicable to such Offered Debt Securities issued at an issue
price below their stated principal amount, including the issue price
thereof and the rate or rates at which such original issue discount will
accrue;
(r) any deletions from, modifications of or additions to the Events of
Default or covenants of Disney with respect to such Offered Debt
Securities, whether or not such Events of Default or covenants are
consistent with the Events of Default or covenants set forth herein;
(s) any special United States Federal income tax considerations applicable
to the Offered Debt Securities;
(t) if the Offered Debt Securities may be issued or delivered (whether upon
original issuance or upon exchange of a temporary Security of such series
or otherwise), or any installment of principal or any interest is payable
only, upon receipt of certain certificates or other documents or
satisfaction of other conditions in addition to those specified in the
Indenture, the form and terms of such certificates, documents or
conditions;
(u) if Disney has agreed to pay any additional amounts on any of the Offered
Debt Securities to any holder who is a United States Alien in respect of
any tax, assessment or governmental charge withheld or deducted, the
circumstances and procedures under which such payments will be made; and
(v) any other terms of the Offered Debt Securities not inconsistent with the
provisions of the applicable Indenture.
The applicable Prospectus Supplement will also describe the following terms
of any series of Subordinated or Senior Subordinated Debt Securities offered
hereby in respect of which this Prospectus is being delivered:
(i) the rights, if any, to defer payments of interest on the Subordinated or
Senior Subordinated Debt Securities of such series by extending the
interest payment period, and the duration of such extension; and
(ii) the subordination terms of the Subordinated or Senior Subordinated Debt
Securities of such series.
The foregoing is not intended to be an exclusive list of the terms that may
be applicable to any Offered Debt Securities and shall not limit in any respect
the ability of Disney to issue Debt Securities with terms different from or in
addition to those described above or elsewhere in this Prospectus provided that
such terms are not inconsistent with the applicable Indenture. Any such
Prospectus Supplement will also describe any special provisions for the payment
of additional amounts with respect to the Offered Debt Securities.
CONSEQUENCES OF HOLDING COMPANY STATUS
The operations of Disney are conducted almost entirely through subsidiaries.
Accordingly, the cash flow and the consequent ability to service debt of Disney,
including the Debt Securities, are dependent upon the earnings of its
subsidiaries and the distribution of those earnings to Disney, whether by
dividends, loans or otherwise. The payment of dividends and the making of loans
and advances to Disney by its subsidiaries may be subject to statutory or
contractual restrictions, are contingent upon the earnings of those subsidiaries
and are subject to various business considerations. Any right of Disney to
receive assets of any of its subsidiaries upon their liquidation or
reorganization (and the consequent right of the holders of the Debt Securities
to participate in those assets) will be effectively subordinated to the claims
of that subsidiary's creditors (including trade creditors), except to the extent
that Disney is itself recognized as a creditor of such subsidiary, in which case
the claims of Disney would still be subordinate to any security interests in the
assets of such subsidiary and any indebtedness of such subsidiary senior to that
held by Disney.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities of a series may be issued solely as registered
securities, solely as bearer securities (with or without coupons attached) or as
both registered securities and bearer securities. Debt Securities of a series
may be issuable in whole or in part in the form of one or more global Debt
Securities, as described below under "Global Debt Securities." Unless otherwise
indicated in an applicable Prospectus Supplement, registered securities will be
issuable in denominations of $1,000 and integral multiples thereof, and bearer
securities will be issuable in denominations of $5,000 and $100,000.
8
<PAGE>
Registered securities of any series will be exchangeable for other
registered securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if Debt Securities of
any series are issuable as both registered securities and as bearer securities,
at the option of the holder, subject to the terms of the applicable Indenture,
bearer securities (accompanied by all unmatured coupons, except as provided
below, and all matured coupons in default) of such series will be exchangeable
for registered securities of the same series of any authorized denominations and
of a like aggregate principal amount and tenor. Unless otherwise indicated in an
applicable Prospectus Supplement, any bearer security surrendered in exchange
for a registered security between a Regular Record Date or a Special Record Date
and the relevant date for payment of interest will be surrendered without the
coupon relating to such date for payment of interest and interest will not be
payable in respect of the registered security issued in exchange for such bearer
security, but will be payable only to the holder of such coupon when due in
accordance with the terms of the applicable Indenture. Bearer securities may not
be issued in exchange for registered securities.
Debt Securities may be presented for exchange as provided above, and unless
otherwise indicated in an applicable Prospectus Supplement, registered
securities may be presented for registration of transfer, at the office or
agency of Disney designated as registrar or co-registrar with respect to any
series of Debt Securities, without service charge and upon payment of any taxes,
assessments or other governmental charges as described in the applicable
Indenture. Such transfer or exchange will be effected on the books of the
registrar or any other transfer agent appointed by Disney upon such registrar or
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. Disney intends to initially
appoint the Trustee as registrar and the name of any different or additional
registrar designated by Disney with respect to the Offered Debt Securities will
be included in the Prospectus Supplement relating thereto. If a Prospectus
Supplement refers to any transfer agents (in addition to the registrar)
designated by Disney with respect to any series of Debt Securities, Disney may
at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, except that,
if Debt Securities of a series are issuable only as registered securities,
Disney will be required to maintain a transfer agent in each Place of Payment
for such series and, if Debt Securities of a series are issuable as bearer
securities, Disney will be required to maintain (in addition to the registrar) a
transfer agent in a Place of Payment for such series located outside the United
States. Disney may at any time designate additional transfer agents with respect
to any series of Debt Securities.
In the event of any partial redemption of Debt Securities of any series,
Disney will not be required to (i) issue, register the transfer of or exchange
Debt Securities of that series during a period beginning at the opening of
business 15 days before any selection of Debt Securities of that series to be
redeemed and ending at the close of business on (a) if Debt Securities of the
series are issuable only as registered securities, the day of mailing of the
relevant notice of redemption, and (b) if Debt Securities of the series are
issuable as bearer securities, the day of the first publication of the relevant
notice of redemption or, if Debt Securities of the series are also issuable as
registered securities and there is no publication, the mailing of the relevant
notice of redemption; (ii) register the transfer of or exchange any registered
security, or portion thereof, called for redemption, except the unredeemed
portion of any registered security being redeemed in part; or (iii) exchange any
bearer security called for redemption, except to exchange such bearer security
for a registered security of that series and of like tenor and principal amount
that is immediately surrendered for redemption.
COVENANTS
Unless otherwise indicated in an applicable Prospectus Supplement, the
Indentures do not include covenants limiting the amount of indebtedness that may
be incurred or otherwise restricting Disney's ability to enter into a highly
leveraged transaction, including a reorganization, restructuring, merger or
similar transaction involving Disney that may adversely affect the holders of
the Debt Securities, if such transaction is a permissible consolidation, merger
or similar transaction. In addition, unless otherwise specified in an applicable
Prospectus Supplement, the Indentures do not afford the holders of the Debt
Securities the right to require Disney to repurchase or redeem the Debt
Securities in the event of a highly leveraged transaction. See "Mergers and Sale
of Assets."
9
<PAGE>
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest, if any, on registered securities will be made at
the office of such paying agent or paying agents as Disney may designate from
time to time, except that at the option of Disney payment of principal or
interest may be made by check or by wire transfer to an account maintained by
the payee. Unless otherwise indicated in an applicable Prospectus Supplement,
payment of any installment of interest on registered securities will be made to
the person in whose name such registered security is registered at the close of
business on the Regular Record Date for such interest.
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and interest, if any, on bearer securities will be payable,
subject to any applicable laws and regulations, at the offices of such paying
agents outside the United States as Disney may designate from time to time, or
by check or by transfer to an account maintained by the payee outside the United
States. Unless otherwise indicated in an applicable Prospectus Supplement, any
payment of interest on any bearer securities will be made only against surrender
of the coupon relating to such interest installment.
Unless otherwise indicated in an applicable Prospectus Supplement, the
Trustee will be designated as Disney's sole paying agent for payments with
respect to Debt Securities which are issuable solely as registered securities
and as Disney's paying agent in the Borough of Manhattan, The City of New York,
for payments with respect to Debt Securities (subject to any limitations
described in any applicable Prospectus Supplement) which are issuable as bearer
securities. Any paying agents outside the United States and any other paying
agents in the United States initially designated by Disney for the Offered Debt
Securities will be named in an applicable Prospectus Supplement. Disney may at
any time designate additional paying agents or rescind the designation of any
paying agent or approve a change in the office through which any paying agent
acts, except that, if Debt Securities of a series are issuable only as
registered securities, Disney will be required to maintain a paying agent in
each Place of Payment for such series and, if Debt Securities of a series are
issuable as bearer securities, Disney will be required to maintain (i) a paying
agent in the Borough of Manhattan, The City of New York for payments with
respect to any registered securities of the series (and for payments with
respect to bearer securities of the series in the circumstances described in the
Indenture, but not otherwise), and (ii) a paying agent in a Place of Payment
located outside the United States where Debt Securities of such series and any
related coupons may be presented and surrendered for payment.
All moneys paid by Disney to a paying agent for the payment of principal of
or interest, if any, on any Debt Security which remains unclaimed at the end of
two years after such principal or interest shall have become due and payable
will be repaid to Disney, and the holder of such Debt Security or any coupon
will thereafter look only to Disney for payment thereof.
GLOBAL DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in global
form. A Debt Security in global form will be deposited with, or on behalf of, a
Depositary, which will be identified in an applicable Prospectus Supplement. A
global Debt Security may be issued in either registered or bearer form and in
either temporary or permanent form. A Debt Security in global form may not be
transferred except as a whole to the Depositary for such Debt Security or to a
nominee or successor of such Depositary. If any Debt Securities of a series are
issuable in global form, the applicable Prospectus Supplement will describe the
circumstances, if any, under which beneficial owners of interests in any such
global Debt Security may exchange such interests for definitive Debt Securities
of such series and of like tenor and principal amount in any authorized form and
denomination, the manner of payment of principal of and interest, if any, on any
such global Debt Security and the specific terms of the depositary arrangement
with respect to any such global Debt Security.
MERGERS AND SALES OF ASSETS
Each Indenture provides that Disney may not consolidate with or merge into
any other person or convey, transfer or lease its properties and assets
substantially as an entirety to another person, unless, among other things, (i)
the resulting, surviving or transferee person (if other than Disney) is a
corporation, partnership or trust organized and existing under the laws of the
United States, any state thereof or the District of Columbia
10
<PAGE>
and such person expressly assumes all obligations of Disney under the applicable
Debt Securities and the Indenture, and (ii) immediately after giving effect to
such transaction, no event which is, or after notice or passage of time or both
would be, an Event of Default (any such event, a "Default") or Event of Default
shall have occurred or be continuing under the Indenture. Upon the assumption of
Disney's obligations by a person to whom such properties or assets are conveyed
or transferred, Disney shall be discharged from all obligations under the
applicable Debt Securities and the applicable Indenture.
EVENTS OF DEFAULT
Each Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, with respect to each series of the Debt
Securities outstanding thereunder individually, the Trustee or the holders of
not less than 25% in aggregate principal amount of the outstanding Debt
Securities of such series may declare the principal amount (or, if any of the
Debt Securities of such series are Discount Securities, such portion of the
principal amount of such Debt Securities as may be specified by the terms
thereof) of the Debt Securities of such series to be immediately due and
payable. Under certain circumstances, the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of such series may rescind
such a declaration.
Under each Indenture, an Event of Default is defined as, with respect to
each series of Debt Securities outstanding thereunder individually, any of the
following: (i) default in payment of the principal of any Debt Security of such
series; (ii) default in payment of any interest on any Debt Security of such
series when due, continuing for 30 days; (iii) failure by Disney to comply with
its other agreements in the Debt Securities of such series or such Indenture for
the benefit of the holders of Debt Securities of such series upon the receipt by
Disney of notice of such Default by the Trustee or the holders of at least 25%
in aggregate principal amount of the outstanding Debt Securities of such series
and Disney's failure to cure such Default within 60 days after receipt by Disney
of such notice; (iv) certain events of bankruptcy or insolvency; and (v) any
other Event of Default set forth in an applicable Prospectus Supplement.
The Trustee shall give notice to holders of the Debt Securities of any
continuing Default known to the Trustee within 90 days after the occurrence
thereof; PROVIDED, that the Trustee may withhold such notice, as to any Default
other than a payment Default, if it determines in good faith that withholding
the notice is in the interests of the holders.
The holders of a majority in principal amount of the outstanding Debt
Securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Debt Securities of such
series; PROVIDED that such direction shall not be in conflict with any law or
the Indenture and subject to certain other limitations. Before proceeding to
exercise any right or power under the Indenture at the direction of such
holders, the Trustee shall be entitled to receive from such holders reasonable
security or indemnity satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in complying with any such direction.
With respect to each series of Debt Securities, no holder will have any right to
pursue any remedy with respect to the Indenture or the Debt Securities, unless
(i) such holder shall have previously given the Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of such series;
(ii) the holders of at least 25% in aggregate principal amount of the
outstanding Debt Securities of such series shall have made a written request to
the Trustee to pursue such remedy; (iii) such holder or holders have offered to
the Trustee reasonable indemnity satisfactory to the Trustee; (iv) the holders
of a majority in aggregate principal amount of the outstanding Debt Securities
of such series have not given the Trustee a direction inconsistent with such
request within 60 days after receipt of such request; and (v) the Trustee shall
have failed to comply with the request within such 60-day period.
Notwithstanding the foregoing, the right of any holder of any Debt Security
or coupon to receive payment of the principal of and interest in respect of such
Debt Security or payment of such coupon on the date specified in such Debt
Security or coupon representing such installment of interest as the fixed date
on which an amount equal to the principal of such Debt Security or an
installment of principal thereof or interest thereon is due and payable (the
"Stated Maturity" or "Stated Maturities") or to institute suit for the
enforcement of any such payments shall not be impaired or adversely affected
without such holder's consent. The holders of at least a
11
<PAGE>
majority in aggregate principal amount of the outstanding Debt Securities of any
series may waive an existing Default with respect to such series and its
consequences, other than (i) any Default in any payment of the principal of, or
interest on, any Debt Security of such series or (ii) any Default in respect of
certain covenants or provisions in the Indenture which may not be modified
without the consent of the holder of each outstanding Debt Security of such
series affected as described in "Modification and Waiver," below.
Each Indenture provides that Disney shall deliver to the Trustee within 120
days after the end of each fiscal year of Disney an officers' certificate
stating whether or not the signers know of any Default that occurred during such
period.
MODIFICATION AND WAIVER
Disney and the applicable Trustee may execute a supplemental indenture
without the consent of the holders of the Debt Securities or any related coupons
(i) to add to the covenants, agreements and obligations of Disney for the
benefit of the holders of all the Debt Securities of any series or to surrender
any right or power conferred in the applicable Indenture upon Disney; (ii) to
evidence the succession of another corporation to Disney and the assumption by
it of the obligations of Disney under the applicable Indenture and the Debt
Securities; (iii) to provide that bearer securities may be registrable as to
principal, to change or eliminate any restrictions (including restrictions
relating to payment in the United States) on the payment of principal of or
interest, if any, on bearer securities, to permit bearer securities to be issued
in exchange for registered securities, to permit bearer securities to be issued
in exchange for bearer securities of other authorized denominations or to permit
the issuance of Debt Securities in uncertificated form; (iv) to establish the
form or terms of Debt Securities of any series or coupons as permitted by the
applicable Indenture; (v) to provide for the acceptance of appointment under the
applicable Indenture of a successor Trustee with respect to the Debt Securities
of one or more series and to add to or change any provisions of such Indenture
as shall be necessary to provide for or facilitate the administration of the
trusts by more than one Trustee; (vi) to cure any ambiguity, defect or
inconsistency; (vii) to add to, change or eliminate any provisions (which
addition, change or elimination may apply to one or more series of Debt
Securities), PROVIDED that any such addition, change or elimination neither (a)
applies to any Debt Security of any series created prior to the execution of
such supplemental indenture and is entitled to the benefit of such provision nor
(b) modifies the rights of the holder of any such Debt Security with respect to
such provision; (viii) to secure the Debt Securities; or (ix) to make any other
change that does not adversely affect the rights of any Securityholder.
Each Indenture provides that, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding Debt Securities
of the series affected by such supplemental indenture, Disney and the Trustee
may also execute a supplemental indenture to add provisions to, or change in any
manner or eliminate any provisions of, the Indenture with respect to such series
of Debt Securities or modify in any manner the rights of the holders of the Debt
Securities of such series and any related coupons under such Indenture; PROVIDED
that no such supplemental indenture will, without the consent of the holder of
each such outstanding Debt Security affected thereby (i) change the stated
maturity of the principal of, or any installment of principal or interest on,
any such Debt Security or any premium payable upon redemption thereof, or reduce
the amount of principal of any Debt Security that is a Discount Security and
that would be due and payable upon declaration of acceleration of maturity
thereof; (ii) reduce the principal amount of, or the rate of interest on, any
such Debt Security; (iii) change the place or currency of payment of principal
or interest, if any, on any such Debt Security; (iv) impair the right to
institute suit for the enforcement of any payment on or with respect to any such
Debt Security; (v) reduce the above-stated percentage of holders of Debt
Securities of any series necessary to modify or amend such Indenture; (vi)
modify the foregoing requirements or reduce the percentage in principal amount
of outstanding Debt Securities of any series necessary to waive any covenant or
past default; or (vii) in the case of Senior Subordinated or Subordinated Debt
Securities, amend or modify any of the provisions of such Indenture relating to
subordination of the Debt Securities in any manner adverse to the holders of
such Debt Securities. Holders of not less than a majority in principal amount of
the outstanding Debt Securities of any series may waive certain past Defaults
and may waive compliance by Disney with certain of the restrictive covenants
described above with respect to the Debt Securities of such series.
12
<PAGE>
DISCHARGE AND DEFEASANCE
Unless otherwise indicated in an applicable Prospectus Supplement, each
Indenture provides that Disney may satisfy and discharge obligations thereunder
with respect to the Debt Securities of any series by delivering to the Trustee
for cancellation all outstanding Debt Securities of such series or depositing
with the Trustee, after such outstanding Debt Securities have become due and
payable, cash sufficient to pay at Stated Maturity all of the outstanding Debt
Securities of such series and paying all other sums payable under the Indenture
with respect to such series.
In addition, unless otherwise indicated in an applicable Prospectus
Supplement, each Indenture provides that: Disney (a) shall be discharged from
its obligations in respect of the Debt Securities of such series ("defeasance
and discharge"), or (b) may cease to comply with certain restrictive covenants
("covenant defeasance") including those described under "Mergers and Sales of
Assets" and any such omission shall not be an Event of Default with respect to
the Debt Securities of such series, in each case at any time prior to the Stated
Maturity or redemption thereof, when Disney has irrevocably deposited with the
Trustee, in trust, (i) sufficient funds in the currency or currency unit in
which the Debt Securities are denominated to pay the principal of (and premium,
if any) and interest to Stated Maturity (or redemption) on, the Debt Securities
of such series, or (ii) such amount of direct obligations of, or obligations the
principal of (and premium, if any) and interest on which are fully guaranteed
by, the government which issued the currency in which the Debt Securities are
denominated, and which are not subject to prepayment, redemption or call, as
will, together with the predetermined and certain income to accrue thereon
without consideration of any reinvestment thereof, be sufficient to pay when due
the principal of (and premium, if any) and interest to Stated Maturity (or
redemption) on, the Debt Securities of such series. Such defeasance and
discharge and covenant defeasance are conditioned upon, among other things,
Disney's delivery of an opinion of counsel to the effect that (i) in the case of
covenant defeasance, the holders of the Debt Securities of such series will not
recognize income, gain or loss for United States Federal income tax purposes as
a result of such defeasance, and will be subject to tax in the same manner as if
no covenant defeasance had occurred and (ii) in the case of defeasance and
discharge, either the Company has received from, or there has been published by,
the Internal Revenue Service a ruling or there has been a change in applicable
federal income tax law, and based thereon, the holders of the Debt Securities of
such series will not recognize income, gain or loss for United States Federal
income tax purposes as a result of such defeasance. Upon such defeasance and
discharge, the holders of the Debt Securities of such series shall no longer be
entitled to the benefits of the Indenture, except for the purposes of
registration of transfer and exchange of the Debt Securities of such series and
replacement of lost, stolen or mutilated Debt Securities and shall look only to
such deposited funds or obligations for payment.
THE TRUSTEES
The Senior Debt Securities Trustee is a national banking association, is a
participating lender under various credit arrangements with Disney's subsidiary,
Disney Enterprises, Inc., and its subsidiaries and is also the fiscal agent with
respect to certain debt securities of Disney Enterprises, Inc. The Senior Debt
Securities Trustee is also an affiliate of the administrative agent under
Disney's credit agreements. Each of the Trustees is a lender under Disney's
credit agreements. Each Trustee will be permitted to engage in other
transactions with Disney, Disney Enterprises, Inc., and each of their respective
subsidiaries; HOWEVER, if any Trustee acquires any conflicting interest, it must
eliminate such conflict or resign.
DESCRIPTION OF PREFERRED STOCK
Disney may issue, from time to time, shares of one or more series or classes
of its preferred stock (the "Preferred Stock"). The following description sets
forth certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The particular terms of any series of
Preferred Stock and the extent, if any, to which such general provisions may
apply to the series of Preferred Stock so offered will be described in the
Prospectus Supplement relating to such Preferred Stock. The following summary of
certain provisions of the Preferred Stock does not purport to be complete and is
subject to, and is qualified in its entirety by express reference to, the
provisions of Disney's Restated Certificate of Incorporation (the "Disney
Certificate of Incorporation") and the Certificate of Designation relating to a
specific series of the Preferred Stock (the "Certificate of Designation"), which
will be in the form filed as an exhibit to, or incorporated by
13
<PAGE>
reference in, the Registration Statement of which this Prospectus is a part at
or prior to the time of issuance of such series of Preferred Stock.
GENERAL
Under the Disney Certificate of Incorporation, Disney has the authority to
issue 100,000,000 shares of Preferred Stock. As of the date hereof, there have
been reserved for issuance 7,000,000 shares of Preferred Stock designated as
Series R Preferred Stock that may be issued solely pursuant to the Disney Rights
Plan. See "Description of Common Stock--Rights Plan." No shares of Series R
Preferred Stock are currently outstanding.
The Board of Directors of Disney is authorized to issue shares of Preferred
Stock, in one or more series or classes, and to fix for each such series voting
powers and such preferences and relative, participating, optional or other
special rights and such qualifications, limitations or restrictions as are
permitted by the Delaware General Corporation Law.
The Board of Directors of Disney shall be authorized to determine for each
series of Preferred Stock, and the Prospectus Supplement shall set forth with
respect to such series: (i) the designation of such shares and the number of
shares that constitute such series, (ii) the dividend rate (or the method of
calculation thereof), if any, on the shares of such series and the priority as
to payment of dividends with respect to other classes or series of capital stock
of Disney, (iii) the dividend periods (or the method of calculation thereof),
(iv) the voting rights of the shares, (v) the liquidation preference and the
priority as to payment of such liquidation preference with respect to other
classes or series of capital stock of Disney and any other rights of the shares
of such series upon any liquidation or winding-up of Disney, (vi) whether or not
and on what terms the shares of such series will be subject to redemption or
repurchase at the option of Disney, (vii) whether and on what terms the shares
of such series will be convertible into or exchangeable for other debt or equity
securities, (viii) whether depositary shares representing shares of such series
of Preferred Stock will be offered and, if so, the fraction of a share of such
series of Preferred Stock represented by each depositary share (see "Description
of Depositary Shares" below), (ix) whether the shares of such series of
Preferred Stock will be listed on a securities exchange, (x) any special United
States Federal income tax considerations applicable to such series, and (xi) the
other rights and privileges and any qualifications, limitations or restrictions
of such rights or privileges of such series.
DIVIDENDS
Holders of shares of Preferred Stock shall be entitled to receive, when and
as declared by the Board of Directors of Disney out of funds of Disney legally
available therefor, an annual cash dividend payable at such dates and at such
rates, if any, per share per annum as set forth in the applicable Prospectus
Supplement.
Unless otherwise set forth in the applicable Prospectus Supplement, each
series of Preferred Stock will rank junior as to dividends to any preferred
stock that may be issued in the future that is expressly senior as to dividends
to such Preferred Stock. If at any time Disney has failed to pay accrued
dividends on any such senior shares at the time such dividends are payable,
Disney may not pay any dividend on the junior Preferred Stock or redeem or
otherwise repurchase shares of junior Preferred Stock until such accumulated but
unpaid dividends on such senior shares have been paid or set aside for payment
in full by Disney.
Unless otherwise set forth in the applicable Prospectus Supplement, no
dividends (other than in common stock or other capital stock ranking junior to
the Preferred Stock of any series as to dividends and upon liquidation) shall be
declared or paid or set aside for payment, nor shall any other distribution be
declared or made upon the common stock, or any other capital stock of Disney
ranking junior to or on a parity with the Preferred Stock of such series as to
dividends, nor shall any common stock or any other capital stock of Disney
ranking junior to or on a parity with the Preferred Stock of such series as to
dividends be redeemed, purchased or otherwise acquired for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption of
any shares of any such stock) by Disney (except by conversion into or exchange
for other capital stock of Disney ranking junior to the Preferred Stock of such
series as to dividends) unless (i) if such series of Preferred Stock has a
cumulative dividend, full cumulative dividends on the Preferred Stock of such
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for all past dividend periods
and the then current dividend period and (ii) if such series of Preferred Stock
does not have a cumulative dividend, full dividends on the Preferred Stock of
such series have
14
<PAGE>
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for payment for the then current dividend
period; provided, however, that any monies theretofore deposited in any sinking
fund with respect to any preferred stock in compliance with the provisions of
such sinking fund may thereafter be applied to the purchase or redemption of
such preferred stock in accordance with the terms of such sinking fund,
regardless of whether at the time of such application full cumulative dividends
upon shares of the Preferred Stock outstanding on the last dividend payment date
shall have been paid or declared and set apart for payment; and provided,
further, that any such junior or parity preferred stock or common stock may be
converted into or exchanged for stock of Disney ranking junior to the Preferred
Stock as to dividends.
The amount of dividends payable for the initial dividend period or any
period shorter than a full dividend period shall be computed on the basis of a
360-day year of twelve 30-day months. Accrued but unpaid dividends will not bear
interest.
CONVERTIBILITY
No series of Preferred Stock will be convertible into, or exchangeable for,
other securities or property except as set forth in the applicable Prospectus
Supplement.
REDEMPTION AND SINKING FUND
No series of Preferred Stock will be redeemable or receive the benefit of a
sinking fund except as set forth in the applicable Prospectus Supplement.
LIQUIDATION RIGHTS
Unless otherwise set forth in the applicable Prospectus Supplement, in the
event of any liquidation, dissolution or winding up of Disney, the holders of
shares of each series of Preferred Stock are entitled to receive out of assets
of Disney available for distribution to stockholders, before any distribution of
assets is made to holders of (i) any other shares of preferred stock ranking
junior to such series of Preferred Stock as to rights upon liquidation,
dissolution or winding up and (ii) shares of common stock, liquidating
distributions per share in the amount of the liquidation preference specified in
the applicable Prospectus Supplement for such series of Preferred Stock plus any
dividends accrued and accumulated but unpaid to the date of final distribution;
but the holders of each series of Preferred Stock will not be entitled to
receive the liquidating distribution of, plus such dividends on, such shares
until the liquidation preference of any shares of Disney's capital stock ranking
senior to such series of the Preferred Stock as to the rights upon liquidation,
dissolution or winding up shall have been paid (or a sum set aside therefor
sufficient to provide for payment) in full. If upon any liquidation, dissolution
or winding up of Disney, the amounts payable with respect to the Preferred
Stock, and any other Preferred Stock ranking as to any such distribution on a
parity with the Preferred Stock are not paid in full, the holders of the
Preferred Stock and such other parity preferred stock will share ratably in any
such distribution of assets in proportion to the full respective preferential
amount to which they are entitled. Unless otherwise specified in a Prospectus
Supplement for a series of Preferred Stock, after payment of the full amount of
the liquidating distribution to which they are entitled, the holders of shares
of Preferred Stock will not be entitled to any further participation in any
distribution of assets by Disney. Neither a consolidation or merger of Disney
with another corporation nor a sale of securities shall be considered a
liquidation, dissolution or winding up of Disney.
VOTING RIGHTS
Holders of Preferred Stock will not have any voting right except as set
forth below or in the applicable Prospectus Supplement or as otherwise from time
to time required by law. Whenever dividends on any applicable series of
Preferred Stock shall be in arrears for the equivalent of six quarterly dividend
periods, whether or not consecutive, the holders of shares of such series of
Preferred Stock (voting separately as a class with all other series of preferred
stock then entitled to such voting rights) will be entitled to vote for the
election of two of the authorized number of directors of Disney at the next
annual meeting of stockholders and at each subsequent meeting until all
dividends accumulated on such series of Preferred Stock shall have been fully
paid or set apart for payment. The term of office of all directors elected by
the holders of such Preferred Stock shall
15
<PAGE>
terminate immediately upon the termination of the right of the holders of such
Preferred Stock to vote for directors. Unless otherwise set forth in the
applicable Prospectus Supplement, holders of shares of Preferred Stock will have
one vote for each share held.
So long as any shares of any series of Preferred Stock remain outstanding,
Disney shall not, without the consent of holders of at least two-thirds of the
shares of such series of Preferred Stock outstanding at the time, voting
separately as a class with all other series of preferred stock of Disney upon
which like voting rights have been conferred and are exercisable, (i) issue or
increase the authorized amount of any class or series of capital stock ranking
prior to the outstanding Preferred Stock as to dividends or upon liquidation or
(ii) amend, alter or repeal the provisions of Disney's Certificate of
Incorporation or of the resolutions contained in the Certificate of Designation
relating to such series of Preferred Stock, whether by merger, consolidation or
otherwise, so as to materially adversely affect any power, preference or special
right of such series of Preferred Stock or the holders thereof; PROVIDED,
HOWEVER, that any increase in the amount of the authorized common stock or
authorized preferred stock or any increase or decrease in the number of shares
of any series of preferred stock or the creation and issuance of other series of
common stock or preferred stock ranking on a parity with or junior to Preferred
Stock as to dividends and upon liquidation, dissolution or winding up shall not
be deemed to materially adversely affect such powers, preferences or special
rights.
MISCELLANEOUS
The holders of Preferred Stock will have no preemptive rights. The Preferred
Stock, upon issuance against full payment of the purchase price therefor, will
be fully paid and nonassessable. Shares of Preferred Stock redeemed or otherwise
reacquired by Disney shall resume the status of authorized and unissued shares
of preferred stock undesignated as to series, and shall be available for
subsequent issuance. There are no restrictions on repurchase or redemption of
the Preferred Stock while there is any arrearage on sinking fund installments
except as may be set forth in an applicable Prospectus Supplement. Payment of
dividends on any series of Preferred Stock may be restricted by loan agreements,
indentures and other transactions entered into by Disney. Any material
contractual restrictions on dividend payments will be described or incorporated
by reference in the applicable Prospectus Supplement.
NO OTHER RIGHTS
The shares of a series of Preferred Stock will not have any preferences,
voting powers or relative, participating, optional or other special rights
except as set forth above or in the applicable Prospectus Supplement, the Disney
Certificate of Incorporation or the applicable Certificate of Designation or as
otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for each series of Preferred Stock will be
designated in the applicable Prospectus Supplement.
16
<PAGE>
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
Disney may, at its option, elect to offer fractional shares rather than full
shares of the Preferred Stock of a series. In the event such option is
exercised, Disney will issue receipts for Depositary Shares, each of which will
represent a fraction (to be set forth in the Prospectus Supplement relating to a
particular series of Preferred Stock) of a share of a particular series of
Preferred Stock as described below.
The shares of any series of Preferred Stock represented by Depositary Shares
will be deposited under one or more Deposit Agreements (each, a "Deposit
Agreement") among Disney, a depositary to be named in the applicable Prospectus
Supplement (the "Depositary"), and the holders from time to time of depositary
receipts issued thereunder. Subject to the terms of the applicable Deposit
Agreement, each holder of a Depositary Share will be entitled, in proportion to
the applicable fraction of a share of Preferred Stock represented by such
Depositary Share, to all the rights and preferences of the Preferred Stock
represented thereby (including, as applicable, dividend, voting, redemption,
subscription and liquidation rights).
The Depositary Shares will be evidenced by depositary receipts issued
pursuant to the Deposit Agreement ("Depositary Receipts"). Depositary Receipts
will be distributed to those persons purchasing the fractional shares of the
related series of Preferred Stock.
The following description sets forth certain general terms and provisions of
the Depositary Shares to which any Prospectus Supplement may relate. The
particular terms of the Depositary Shares to which any Prospectus Supplement may
relate and the extent, if any, to which such general provisions may apply to the
Depositary Shares so offered will be described in the applicable Prospectus
Supplement. The forms of Deposit Agreement and Depositary Receipt are or will be
filed as exhibits to the Registration Statement. The following summary of
certain provisions of the Depositary Shares and Deposit Agreement does not
purport to be complete and is subject to, and is qualified in its entirety by
express reference to, all the provisions of the Deposit Agreement and the
applicable Prospectus Supplement, including the definitions therein of certain
terms.
Immediately following Disney's issuance of shares of a series of Preferred
Stock that will be offered as fractional shares, Disney will deposit such shares
with the Depositary, which will then issue and deliver the Depositary Receipts
to the purchasers thereof. Depositary Receipts will only be issued evidencing
whole Depositary Shares. A Depositary Receipt may evidence any number of whole
Depositary Shares.
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of Disney, issue temporary Depositary
Receipts substantially identical to (and entitling the holders thereof to all
the rights pertaining to) the definitive Depositary Receipts but not in
definitive form. Definitive Depositary Receipts will be prepared thereafter
without unreasonable delay, and such temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at Disney's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the related series of Preferred Stock to
the record holders of Depositary Shares relating to such series of Preferred
Stock in proportion to the number of such Depositary Shares owned by such
holders.
In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto in proportion to the number of Depositary Shares owned by such
holders, unless the Depositary determines that such distribution cannot be made
proportionately among such holders or that it is not feasible to make such
distributions, in which case the Depositary may, with the approval of Disney,
adopt such method as it deems equitable and practicable for the purpose of
effecting such distribution, including the sale (at public or private sale) of
the securities or property thus received, or any part thereof, at such place or
places and upon such terms as it may deem proper.
The amount distributed in any of the foregoing cases will be reduced by any
amounts required to be withheld by Disney or the Depositary on account of taxes
or other governmental charges.
17
<PAGE>
REDEMPTION OF DEPOSITARY SHARES
If any series of the Preferred Stock underlying the Depositary Shares is
subject to redemption, the Depositary Shares will be redeemed from the proceeds
received by the Depositary resulting from any redemption, in whole or in part,
of such series of the Preferred Stock held by the Depositary. The redemption
price per Depositary Share will be equal to the applicable fraction of the
redemption price per share payable with respect to such series of the Preferred
Stock. If Disney redeems shares of a series of Preferred Stock held by the
Depositary, the Depositary will redeem as of the same redemption date the number
of Depositary Shares representing the shares of Preferred Stock so redeemed. If
less than all the Depositary Shares are to be redeemed, the Depositary Shares to
be redeemed will be selected by lot or substantially equivalent method
determined by the Depositary.
After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
moneys payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption, upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares. Any funds deposited by Disney with the Depositary for any
Depositary Shares that the holders thereof fail to redeem will be returned to
Disney after a period of two years from the date such funds are so deposited.
VOTING THE UNDERLYING PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of any series of
the Preferred Stock are entitled to vote, the Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such series of Preferred Stock. Each record holder
of such Depositary Shares on the record date (which will be the same date as the
record date for the related series of Preferred Stock) will be entitled to
instruct the Depositary as to the exercise of the voting rights pertaining to
the number of shares of the series of Preferred Stock represented by such
holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote or cause to be voted the number of shares of Preferred
Stock represented by such Depositary Shares in accordance with such
instructions, provided the Depositary receives such instructions sufficiently in
advance of such meeting to enable it to so vote or cause to be voted the shares
of Preferred Stock, and Disney will agree to take all reasonable action that may
be deemed necessary by the Depositary in order to enable the Depositary to do
so. The Depositary will abstain from voting shares of the Preferred Stock to the
extent it does not receive specific instructions from the holders of Depositary
Shares representing such Preferred Stock.
WITHDRAWAL OF STOCK
Upon surrender of the Depositary Receipts at the corporate trust office of
the Depositary and upon payment of the taxes, charges and fees provided for in
the Deposit Agreement and subject to the terms thereof, the holder of the
Depositary Shares evidenced thereby is entitled to delivery at such office, to
or upon his or her order, of the number of whole shares of the related series of
Preferred Stock and any money or other property, if any, represented by such
Depositary Shares. Holders of Depositary Shares will be entitled to receive
whole shares of the related series of Preferred Stock, but holders of such whole
shares of Preferred Stock will not thereafter be entitled to deposit such shares
of Preferred Stock with the Depositary or to receive Depositary Shares therefor.
If the Depositary Receipts delivered by the holder evidence a number of
Depositary Shares in excess of the number of Depositary Shares representing the
number of whole shares of the related series of Preferred Stock to be withdrawn,
the Depositary will deliver to such holder or upon his or her order at the same
time a new Depositary Receipt evidencing such excess number of Depositary
Shares.
AMENDMENT AND TERMINATION OF A DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares of any
series and any provision of the applicable Deposit Agreement may at any time and
from time to time be amended by agreement between Disney and the Depositary.
However, any amendment that materially adversely alters the rights of the
holders of Depositary Shares of any series will not be effective unless such
amendment has been approved by the holders of
18
<PAGE>
at least a majority of the Depositary Shares of such series then outstanding.
Every holder of a Depositary Receipt at the time such amendment becomes
effective will be deemed, by continuing to hold such Depositary Receipt, to be
bound by the Deposit Agreement as so amended. Notwithstanding the foregoing, in
no event may any amendment impair the right of any holder of any Depositary
Shares, upon surrender of the Depositary Receipts evidencing such Depositary
Shares and subject to any conditions specified in the Deposit Agreement, to
receive shares of the related series of Preferred Stock and any money or other
property represented thereby, except in order to comply with mandatory
provisions of applicable law. The Deposit Agreement may be terminated by Disney
at any time upon not less than 60 days prior written notice to the Depositary,
in which case, on a date that is not later than 30 days after the date of such
notice, the Depositary shall deliver or make available for delivery to holders
of Depositary Shares, upon surrender of the Depositary Receipts evidencing such
Depositary Shares, such number of whole or fractional shares of the related
series of Preferred Stock as are represented by such Depositary Shares. The
Deposit Agreement shall automatically terminate after all outstanding Depositary
Shares have been redeemed or there has been a final distribution in respect of
the related series of Preferred Stock in connection with any liquidation,
dissolution or winding up of Disney and such distribution has been distributed
to the holders of Depositary Shares.
CHARGES OF DEPOSITARY
Disney will pay all transfer and other taxes and the governmental charges
arising solely from the existence of the depositary arrangements. Disney will
pay the charges of the Depositary, including charges in connection with the
initial deposit of the related series of Preferred Stock and the initial
issuance of the Depositary Shares and all withdrawals of shares of the related
series of Preferred Stock, except that holders of Depositary Shares will pay
transfer and other taxes and governmental charges and such other charges as are
expressly provided in the Deposit Agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Depositary may resign at any time by delivering to Disney written notice
of its election to do so, and Disney may at any time remove the Depositary, any
such resignation or removal to take effect upon the appointment of a successor
Depositary, which successor Depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a bank or trust
company having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000.
MISCELLANEOUS
The Depositary will forward to the holders of Depositary Shares all reports
and communications from Disney that are delivered to the Depositary and which
Disney is required to furnish to the holders of the related Preferred Stock.
The Depositary's corporate trust office will be identified in the applicable
Prospectus Supplement. Unless otherwise set forth in the applicable Prospectus
Supplement, the Depositary will act as transfer agent and registrar for
Depositary Receipts and if shares of a series of Preferred Stock are redeemable,
the Depositary will act as redemption agent for the corresponding Depositary
Receipts.
DESCRIPTION OF COMMON STOCK
Disney may issue, from time to time, shares of its common stock (the "Common
Stock"), the general terms and provisions of which are summarized below. This
summary does not purport to be complete and is subject to, and is qualified in
its entirety by express reference to, the provisions of the Disney Certificate
of Incorporation, Disney's Bylaws and the applicable Prospectus Supplement.
AUTHORIZED SHARES
Under the Disney Certificate of Incorporation, Disney has the authority to
issue 3,600,000,000 shares of Common Stock.
19
<PAGE>
DIVIDENDS
Subject to any preferential rights of any series of preferred stock, holders
of shares of Common Stock will be entitled to receive dividends on such stock
out of assets legally available for distribution when, as and if authorized and
declared by Disney's Board of Directors. The payment of dividends on the Common
Stock will be a business decision to be made by Disney's Board of Directors from
time to time based upon the results of operations and financial condition of
Disney and such other factors as Disney's Board of Directors considers relevant.
Payment of dividends on the Common Stock may be restricted by loan agreements,
indentures and other transactions entered into by Disney from time to time. The
applicable Prospectus Supplement will describe any material contractual
restrictions on dividend payments.
VOTING RIGHTS
Holders of Common Stock are entitled to one vote per share on all matters
voted on generally by the stockholders, including the election of directors,
and, except as otherwise required by law or except as provided with respect to
any series of preferred stock, the holders of such shares possess all voting
power. The Disney Certificate of Incorporation does not provide for cumulative
voting for the election of directors. As a result, under the Delaware General
Corporation Law, the holders of more than one-half of the outstanding shares of
Common Stock generally will be able to elect all the directors of Disney then
standing for election and holders of the remaining shares will not be able to
elect any director.
LIQUIDATION RIGHTS
Subject to any preferential rights of any series of preferred stock, holders
of shares of Common Stock are entitled to share ratably in the assets of Disney
legally available for distribution to its stockholders in the event of its
liquidation, dissolution or winding up.
ABSENCE OF OTHER RIGHTS
Holders of Common Stock have no preferences, preemptive, conversion or
exchange rights.
MISCELLANEOUS
The Common Stock, upon issuance against full payment of the purchase price
therefor, will be fully paid and nonassessable.
TRANSFER AGENT AND REGISTRAR
The principal transfer agent and registrar for the Common Stock is Disney.
RIGHTS PLAN
In November 1995, Disney adopted a stockholders' rights plan (the "Disney
Rights Plan") and, in connection therewith, entered into a Rights Agreement
dated as of November 8, 1995, between Disney and The Bank of New York, as rights
agent (the "Disney Rights Agreement"). To implement the Disney Rights Plan,
Disney's Board of Directors authorized the issuance of one Disney Right (as
defined below) (one-third of one Disney Right following the stock split effected
by Disney in June 1998) for each share of Common Stock issued at or following
the effective time of the Company's acquisition of ABC, Inc. and until the
earlier of the Distribution Date (as defined below) or the date on which the
Disney Rights expire or are redeemed. Each "Disney Right" entitles the
registered holder thereof to purchase from Disney one one-hundredth (1/100) of a
share of Disney's Series R Preferred Stock at an initial purchase price of
$350.00, subject to adjustment. All terms and conditions of the Disney Rights
and the Series R Preferred Stock are contained in the Disney Rights Agreement
and the Disney Certificate of Incorporation.
The Distribution Date is defined as the earlier to occur of (i) the tenth
day following a public announcement that a person or group of affiliated or
associated persons (each, an "Acquiring Person") has acquired, or obtained the
right to acquire, beneficial ownership of 25% or more of the outstanding Common
Stock (the "Stock Acquisition Date") or (ii) a date fixed by Disney's Board of
Directors which is not later than
20
<PAGE>
the nineteenth business day after the commencement by any person or group of, or
the first public announcement of the intent of any person or group to commence,
a tender or exchange offer which would result in that person or group owning 25%
or more of the outstanding Common Stock.
Until the close of business on the Distribution Date, the Disney Rights will
be represented by and transferred only with the Common Stock, and the Disney
Rights are not exercisable until the Distribution Date. The Disney Rights will
expire at the close of business on June 30, 1999, unless redeemed earlier as
described below.
The Series R Preferred Stock will be nonredeemable and, unless otherwise
provided in connection with the creation of a subsequent series of Preferred
Stock, subordinate to all other series of Preferred Stock. The Series R
Preferred Stock may not be issued except upon exercise of the Disney Rights.
Each share of Series R Preferred Stock will be entitled to receive, when, as and
if declared by Disney's Board of Directors, (i) a cash dividend in an amount per
share equal to 400 times the aggregate per share amount of all cash dividends
declared or paid on the Common Stock and (ii) a quarterly dividend in an amount
equal to $1.00 per share less the per share amount of all cash dividends
declared on the Series R Preferred Stock pursuant to the preceding clause (i)
since the last quarterly dividend. In addition, the Series R Preferred Stock is
entitled to 400 times any other cash or non-cash distribution declared on the
Common Stock (other than cash dividends payable pursuant to the immediately
preceding sentence and distributions of Disney's equity securities or debt
securities convertible into equity securities of Disney), payable to the holders
of Series R Preferred Stock in like kind. In the event of liquidation, the
holders of Series R Preferred Stock will be entitled to receive a liquidation
payment in an amount equal to the greater of $100.00 per share (plus an amount
equal to accumulated and unpaid dividends and distributions) and 400 times the
liquidation payment made per share of Common Stock. Each share of Series R
Preferred Stock will have 400 votes and shall be entitled to vote together with
the Common Stock and not as a separate class unless otherwise required by law or
the Disney Certificate of Incorporation. In the event of any merger,
consolidation or other transaction in which common shares are exchanged, each
share of Series R Preferred Stock will be entitled to receive 400 times, subject
to adjustment, the amount received per share of Common Stock.
The rights of the Series R Preferred Stock as to dividends, voting rights
and liquidation are protected by antidilution provisions. In addition, the
Purchase Price payable and the number of shares of Series R Preferred Stock or
other securities or property issuable upon exercise of the Disney Rights are
subject to adjustment from time to time to prevent dilution in the event of a
stock dividend on, or a subdivision, split, reverse split, combination,
consolidation or reclassification of, the Series R Preferred Stock.
If (i) any person becomes the beneficial owner of 25% or more of the then
outstanding shares of Common Stock, other than pursuant to a purchase or series
of related purchases of shares of Common Stock that Disney's Board of Directors,
taking into account the long-term value of Disney and all other factors that
Disney's Board of Directors considers relevant, determines to be fair and
otherwise in the best interests of the holders of Common Stock (a "Permitted
Transaction"), or (ii) any Acquiring Person or any of its affiliates or
associates engages in one or more "self-dealing" transactions as described in
the Disney Rights Agreement, then each holder of a Disney Right, other than the
Acquiring Person, will have the right to receive, upon payment of the Purchase
Price, in lieu of Series R Preferred Stock, a number of shares of Common Stock
having a market value equal to twice the Purchase Price. To the extent that
insufficient shares of Common Stock are available for the exercise in full of
the Disney Rights, holders of Disney Rights will receive upon exercise shares of
Common Stock to the extent available and then cash, assets or other securities
of Disney (which may be accompanied by a reduction in the Purchase Price), in
proportions determined by Disney, so that the aggregate net value received is
equal to twice the Purchase Price. Disney Rights are not exercisable following
the acquisition of shares of Common Stock by an Acquiring Person as described in
this paragraph until the expiration of the period during which the Disney Rights
may be redeemed as described below. In addition, after the occurrence of an
event described in the first sentence of this paragraph, Disney Rights that are
(or, under certain circumstances, Disney Rights that were) beneficially owned by
an Acquiring Person will be null and void.
Unless the Disney Rights are redeemed earlier, if, after the Stock
Acquisition Date, Disney is acquired in a merger or other business combination
(in which Disney is not the surviving corporation or in which any shares of
Common Stock are converted or exchanged) or more than 50% of the assets or
earning power of Disney and its
21
<PAGE>
subsidiaries (taken as a whole) are sold or transferred in one transaction or a
series of related transactions, the Disney Rights Agreement provides that proper
provision shall be made so that each holder of record of a Disney Right will
from and after that time have the right to receive, upon payment of the Purchase
Price, that number of shares of common stock of the acquiring company which has
a market value at the time of such transaction equal to twice the Purchase
Price.
Fractions of shares of Series R Preferred Stock may, at the election of
Disney, be evidenced by depositary receipts. Disney may also issue cash in lieu
of fractional shares of Series R Preferred Stock which are not integral
multiples of one one-hundredth of a share.
At any time until ten days following the Stock Acquisition Date (subject to
extension by Disney's Board of Directors), Disney's Board of Directors may cause
Disney to redeem the Disney Rights in whole, but not in part, at a price of $.01
per Disney Right, subject to adjustment to reflect any stock split, stock
dividend or similar transaction. Immediately upon the action of Disney's Board
of Directors authorizing redemption of the Disney Rights, the right to exercise
the Disney Rights will terminate, and the holders of the Disney Rights will only
be entitled to receive the redemption price without any interest thereon.
As long as the Disney Rights are redeemable, Disney may, except with respect
to the redemption price, the number of one one-hundredths of a share of Series R
Preferred Stock for which a Disney Right is exercisable, or the date of
expiration of the Disney Rights, amend the Disney Rights in any manner,
including an amendment to extend the time period in which the Disney Rights may
be redeemed. At any time when the Disney Rights are not redeemable, subject to
the foregoing exceptions and except for certain limitations regarding amendments
of time periods (including the time period during which the Disney Rights may be
redeemed), Disney may amend the Disney Rights in any manner that does not
adversely affect the interests of holders of the Disney Rights as such.
Until a Disney Right is exercised, the holder, as such, will have no rights
as a stockholder of Disney, including, without limitation, the right to vote or
to receive dividends.
The foregoing description of the Disney Rights does not purport to be
complete and is qualified in its entirety by reference to the Disney Rights
Agreement, which is incorporated by reference as an exhibit to the Registration
Statement of which this Prospectus is a part.
CERTAIN ANTI-TAKEOVER EFFECTS
GENERAL. Certain provisions of the Disney Certificate of Incorporation and
the Delaware General Corporation Law (the "DGCL") may have the effect of
impeding the acquisition of control of Disney by means of a tender offer, a
proxy fight, open market purchases or otherwise in a transaction not approved by
Disney's Board of Directors. The provisions described below have the effect of
reducing the vulnerability of Disney to an unsolicited proposal for the
restructuring or sale of all or substantially all of the assets of Disney or an
unsolicited takeover attempt which is unfair to Disney stockholders. The summary
of such provisions set forth below does not purport to be complete and is
qualified in its entirety by reference to the Disney Certificate of
Incorporation and the DGCL.
Disney's Board of Directors has no present intention to introduce additional
measures that might have an anti-takeover effect; however, Disney's Board of
Directors expressly reserves the right to introduce such measures in the future.
CLASSIFIED BOARD UNTIL 2001. The Disney Certificate of Incorporation
provides that Disney's Board of Directors shall consist of not less than nine
nor more than 21 directors, with the exact number of directors to be determined
from time to time by Disney's Board of Directors. Disney's Board of Directors is
currently divided into three classes, and each director who was elected during
the annual meeting of Disney's stockholders in 1998 or prior thereto will serve
for the full three-year term for which he or she was elected. Following the
annual meeting of Disney's stockholders in 1998, however, the Disney Certificate
of Incorporation provides that each newly elected director shall serve only
until the first annual meeting following the annual meeting at which he or she
is elected, which will have the effect of phasing out the classification of
Disney's Board of Directors. Commencing with the annual meeting of Disney's
stockholders in 2001, Disney's Certificate of Incorporation
22
<PAGE>
provides that the foregoing classification of Disney's Board of Directors shall
cease, and all directors shall be of one class.
BUSINESS COMBINATIONS. Section 203 of the DGCL restricts a wide range of
transactions ("business combinations") between a corporation and an interested
stockholder. An "interested stockholder" is, generally, any person who
beneficially owns, directly or indirectly, 15% or more of the corporation's
outstanding voting stock. Business combinations are broadly defined to include
(i) mergers or consolidations with, (ii) sales or other dispositions of more
than 10% of the corporation's assets to, (iii) certain transactions resulting in
the issuance or transfer of any stock of the corporation or any subsidiary to,
(iv) certain transactions resulting in an increase in the proportionate share of
stock of the corporation or any subsidiary owned by, or (v) receipt of the
benefit (other than proportionately as a stockholder) of any loans, advances or
other financial benefits by, an interested stockholder. Section 203 provides
that an interested stockholder may not engage in a business combination with the
corporation for a period of three years from the time of becoming an interested
stockholder unless (a) the board of directors approved either the business
combination or the transaction which resulted in the person becoming an
interested stockholder prior to the time such person became an interested
stockholder; (b) upon consummation of the transaction which resulted in the
person becoming an interested stockholder, that person owned at least 85% of the
corporation's voting stock (excluding shares owned by persons who are directors
and also officers and shares owned by certain employee stock plans); or (c) the
business combination is approved by the board of directors and authorized by the
affirmative vote of at least 66 2/3% of the outstanding voting stock not owned
by the interested stockholder. The restrictions on business combinations with
interested stockholders contained in Section 203 of the DGCL do not apply to a
corporation whose certificate of incorporation contains a provision expressly
electing not to be governed by the statute; however, the Disney Certificate does
not contain a provision electing to "opt-out" of Section 203.
SUPERMAJORITY REQUIREMENTS. In addition to the requirements of Section 203
of the DGCL, the Disney Certificate of Incorporation provides that the
affirmative vote of four-fifths of the outstanding stock of Disney entitled to
vote shall be required for (i) any merger or consolidation to which Disney, or
any of its subsidiaries, and an Interested Person (as defined below) are
parties; (ii) any sale or other disposition by Disney, or any of its
subsidiaries, of all or substantially all of its assets to an Interested Person;
(iii) any purchase or other acquisition by Disney, or any of its subsidiaries,
of all or substantially all of the assets or stock of an Interested Person; and
(iv) any other transaction with an Interested Person which requires the approval
of the stockholders of Disney under the DGCL; except that the foregoing shall
not apply to any transaction if (a) such transaction is authorized by a
resolution of Disney's Board of Directors, provided that a majority of the
members of Disney's Board of Directors voting for the approval of such
transaction were duly elected and acting members of Disney's Board of Directors
prior to the date that the person, firm or corporation, or any group thereof,
with whom such transaction is proposed, became an Interested Person, or (b) the
provision of a vote in excess of that required by the DGCL for such transaction
violates the express provisions of the DGCL. An "Interested Person" is any
person, firm or corporation, or any group thereof, acting or intending to act in
concert, including any person directly or indirectly controlling or controlled
by or under direct or indirect common control with such person, firm or
corporation or group, which owns of record or beneficially, directly or
indirectly, 5% or more of any class of voting securities of Disney.
SPECIAL MEETINGS. Pursuant to the DGCL, a special meeting of stockholders
may be called by the board of directors or by any other person authorized to do
so in the certificate of incorporation or the bylaws. The Disney Certificate of
Incorporation provides that special meetings of stockholders may only be called
by Disney's Board of Directors, the Chairman of Disney's Board of Directors, or
the President of Disney.
RIGHTS PLAN. The Disney Rights issued under the Disney Rights Plan have
certain anti-takeover effects because they will result in substantial dilution
to a person or group that attempts to acquire, or merge with, Disney without
conditioning the offer on the Disney Rights being rendered inapplicable. See
"Description of Common Stock--Rights Plan."
ADDITIONAL AUTHORIZED SHARES OF CAPITAL STOCK. The additional shares of
authorized Common Stock and Preferred Stock available for issuance under the
Disney Certificate of Incorporation could be issued at such times, under such
circumstances and with such terms and conditions as to impede a change in
control of Disney.
23
<PAGE>
DESCRIPTION OF WARRANTS
Disney may issue, together with other Securities or separately, warrants for
the purchase of (i) Debt Securities ("Debt Warrants"), (ii) Preferred Stock
("Preferred Stock Warrants"), or (iii) Common Stock ("Common Stock Warrants"
and, together with the Debt Warrants and the Preferred Stock Warrants, the
"Warrants").
The Warrants will be issued under Warrant Agreements (as defined below) to
be entered into between Disney and a bank or trust company, as warrant agent
(the "Warrant Agent"), all to be set forth in the applicable Prospectus
Supplement relating to any or all Warrants in respect of which this Prospectus
is being delivered. Copies of the form of agreement for each Warrant (each a
"Debt Securities Warrant Agreement", a "Preferred Stock Warrant Agreement" or a
"Common Stock Warrant Agreement", as the case may be, or collectively the
"Warrant Agreements"), including the forms of certificates representing the
Warrants (the "Debt Warrant Certificates", the "Preferred Stock Warrant
Certificates" or the "Common Stock Warrant Certificates", as the case may be, or
collectively, the "Warrant Certificates"), and reflecting the provisions to be
included in such agreements that will be entered into with respect to the
particular offerings of each type of warrant, are or will be filed as exhibits
to the Registration Statement of which this Prospectus forms a part.
The following description sets forth certain general terms and provisions of
the Warrants to which any Prospectus Supplement may relate. The particular terms
of the Warrants to which any Prospectus Supplement may relate and the extent, if
any, to which such general provisions may apply to the Warrants so offered will
be described in the applicable Prospectus Supplement. The following summary of
certain provisions of the Warrants, Warrant Agreements and Warrant Certificates
does not purport to be complete and is subject to, and is qualified in its
entirety by express reference to, all the provisions of the Warrant Agreements
and Warrant Certificates, including the definitions therein of certain terms.
GENERAL
The Prospectus Supplement shall set forth the terms of the Warrants in
respect of which this Prospectus is being delivered as well as the related
Warrant Agreement and Warrant Certificates, including the following, where
applicable: (a) the principal amount of Debt Securities and/or the number of
shares of Preferred Stock or Common Stock, as the case may be, purchasable upon
exercise of the Warrants; (b) the designation and terms of the Debt Securities
or Preferred Stock, as the case may be, purchasable upon exercise thereof and of
any related Debt Securities or Preferred Stock with which such Warrants are
issued; (c) the procedures and conditions relating to the exercise of the
Warrants; (d) the date, if any, on and after which such Warrants and the related
Debt Securities or Preferred Stock, as the case may be, will be separately
transferable; (e) the offering price of the Warrants, if any; (f) the principal
amount of Debt Securities or the number of shares of Preferred Stock or Common
Stock, as the case may be, purchasable upon exercise of each Warrant and the
initial price at which such principal amount of Debt Securities or shares of
Preferred Stock or Common Stock, as the case may be, may be purchased upon such
exercise; (g) the date on which the right to exercise the Warrants shall
commence and the date on which such right shall expire; (h) a discussion of any
material United States federal income tax considerations applicable to the
exercise of the Warrants; (i) whether the Warrants represented by the Warrant
Certificates will be issued in registered or bearer form, and, if registered,
where they may be transferred and registered; (j) call provisions of the
Warrants, if any; (k) antidilution provisions of the Warrants, if any; and (l)
any other material terms of the Warrants.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase for cash such principal
amount of Debt Securities or such number of shares of Preferred Stock or Common
Stock, as the case may be, at such exercise price as shall in each case be set
forth in, or be determinable as set forth in, the applicable Prospectus
Supplement relating to the Warrants offered thereby. Unless otherwise specified
in the applicable Prospectus Supplement, Warrants may be exercised at the
corporate trust office of the Warrant Agent or any other office indicated in the
applicable Prospectus Supplement at any time up to 5:00 p.m. New York City time
on the expiration date set forth in the applicable Prospectus Supplement. After
5:00 p.m. New York City time on the expiration date, unexercised Warrants will
become void. Upon receipt of payment and the Warrant Certificate properly
completed and duly
24
<PAGE>
executed, Disney will, as soon as practicable, issue the Debt Securities,
Preferred Stock or Common Stock, as the case may be, purchasable upon such
exercise. If less than all of the Warrants represented by such Warrant
Certificate are exercised, a new Warrant Certificate will be issued for the
remaining amount of Warrants.
NO RIGHTS OF SECURITY HOLDER PRIOR TO EXERCISE
Prior to the exercise of their Warrants, holders of Warrants will not have
any of the rights of holders of the Debt Securities, Preferred Stock or Common
Stock, as the case may be, purchasable upon such exercise and will not be
entitled to (i) in the case of Debt Warrants, payments of principal of (and
premium, if any) or interest, if any, on the Debt Securities purchasable upon
such exercise or (ii) in the case of Preferred Stock Warrants and Common Stock
Warrants, the right to vote or to receive dividend payments on the Preferred
Stock or Common Stock, as the case may be, purchasable upon such exercise.
EXCHANGE OF WARRANT CERTIFICATES
Warrant Certificates will be exchangeable for new Warrant Certificates of
different denominations at the corporate trust office of the Warrant Agent or
any other office indicated in the applicable Prospectus Supplement.
PLAN OF DISTRIBUTION
Disney may sell Securities to one or more underwriters for public offering
and sale by them or may sell Securities to investors directly or through agents
or dealers. Any such underwriter or agent involved in the offer and sale of the
Securities will be named in the applicable Prospectus Supplement. Securities
offered pursuant to a particular Prospectus Supplement are referred to herein as
"Offered Securities." The Company may also sell Offered Securities to an agent
as principal.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Disney also may, from time to time, authorize underwriters
acting as its agents to offer and sell the Offered Securities upon the terms and
conditions set forth in any Prospectus Supplement. In connection with the sale
of Offered Securities, underwriters may be deemed to have received compensation
from Disney in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Offered Securities for whom they may act
as agent.
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, Disney will sell such Offered Securities to
such dealer, as principal. The dealer may then resell such Offered Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
Any underwriting compensation paid by Disney to underwriters or agents in
connection with the offering of Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to participating dealers,
will be set forth in an applicable Prospectus Supplement. Underwriters, dealers
and agents participating in the distribution of the Offered Securities may be
deemed to be underwriters under the Securities Act, and any discounts and
commissions received by them and any profit realized by them on resale of the
Offered Securities may be deemed to be underwriting discounts and commissions
under the Securities Act. Underwriters, dealers and agents may be entitled under
agreements with Disney to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by Disney for certain expenses.
If so indicated in an applicable Prospectus Supplement, Disney will
authorize dealers acting as its agents to solicit offers by certain institutions
to purchase Offered Securities from Disney at the public offering price set
forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated in
such Prospectus Supplement. Each Contract will be for an amount not less than,
and the aggregate principal amount or offering price of Offered Securities sold
pursuant to Contracts shall not be less nor more than, the respective amounts
stated in such Prospectus Supplement. Institutions with whom Contracts, when
authorized, may be made include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and other institutions, but will in all cases be subject to the
approval of Disney.
25
<PAGE>
Offered Securities may also be offered and sold, if so indicated in the
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company. Any remarketing firm will be identified
and the terms of its agreement, if any, with the Company and its compensation
will be described in the Prospectus Supplement. Remarketing firms may be deemed
to be underwriters in connection with the Offered Securities remarketed thereby.
Remarketing firms may be entitled under agreements which may be entered into
with the Company to indemnification by the Company against certain liabilities,
including liabilities under the Securities Act.
The Securities may or may not be listed on a national securities exchange or
a foreign securities exchange. No assurances can be given that there will be a
market for any of the Securities.
LEGAL MATTERS
Certain legal matters with respect to the legality of the Securities being
offered hereby will be passed upon for Disney by O'Melveny & Myers LLP, Los
Angeles, California.
EXPERTS
The consolidated financial statements and related schedules of Disney
incorporated in this Prospectus by reference to Disney's Annual Report on Form
10-K for the year ended September 30, 1997 have been so incorporated in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Capital Cities/ABC, Inc.
incorporated by reference in this Prospectus from Disney's Current Report on
Form 8-K dated March 30, 1996 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements referred to above
are incorporated herein by reference in reliance upon such report, given upon
the authority of such firm as experts in accounting and auditing.
26
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All expenses other than the Securities and Exchange Commission filing fees
are estimated.
<TABLE>
<S> <C>
SEC registration fee................................................. $1,268,500
Accountants' fees and expenses....................................... 20,000
Legal fees and expenses.............................................. 50,000
Printing and engraving expenses...................................... 75,000
Rating agencies' fees................................................ 750,000
Trustee's and registrar's fees and expenses.......................... 25,000
Miscellaneous........................................................ 61,500
---------
Total:............................................................. $2,250,000
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Restated Certificate of Incorporation and Bylaws, as
amended to date, provide that the Registrant 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 Registrant
or by reason of the fact that such director or officer, at the request of the
Registrant, is or was serving any other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, in any capacity.
Under Section 145 of the Delaware General Corporation Law, a corporation may
indemnify a director, officer, employee or agent of the corporation (or a person
who is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise) against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by the person if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. In the case of an action brought by or in the right of a
corporation, the corporation may indemnify a director, officer, employee or
agent of the corporation (or a person who is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) against
expenses (including attorneys' fees) actually and reasonably incurred by him if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, except that no indemnification
may be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent a court finds that, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as the
court shall deem proper.
The Registrant's Restated Certificate of Incorporation and Bylaws further
provide that (i) Registrant may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of Registrant or is
serving at the request of Registrant 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
Registrant would have the power to indemnify him against such liability under
the provisions of law, and (ii) Registrant may create a trust fund, grant a
security interest and/or use other means (including, without limitation, letters
of credit, surety bonds and/or similar arrangements), as well as enter into
contracts providing for indemnification to the full extent authorized or
permitted by law and including as part thereof provisions with respect to any
and all of the foregoing to ensure the payment of such amounts as may become
necessary to effect indemnification as provided therein, or elsewhere.
II-1
<PAGE>
Registrant maintains an officer's and director's liability insurance policy
insuring its officers and directors against certain liabilities and expenses
incurred by them in their capacities as such, and insuring Registrant under
certain circumstances, in the event that indemnification payments are made to
such officers and directors.
Registrant has also entered into indemnification agreements (the
"Indemnification Agreements") with certain of its directors and officers
(individually, the "Indemnitee"). The Indemnification Agreements, among other
things, provide for indemnification to the fullest extent permitted by law
against any and all expenses, judgments, fines, penalties and amounts paid in
settlement of any claim. The Indemnification Agreements provide for the prompt
advancement of all expenses to the Indemnitee and for reimbursement to
Registrant if it is found that such Indemnitee is not entitled to such
indemnification under applicable law. The Indemnification Agreements also
provide that after a Change in Control (as defined in the Indemnification
Agreements) of Registrant which is not approved by the Board of Directors of
Registrant, all determinations regarding a right to indemnity and the right to
advancement of expenses shall be made by independent legal counsel selected by
the Indemnitee and approved by the Board of Directors. In addition, in the event
of a Potential Change In Control (as defined in the Indemnification Agreements),
the Indemnitee may require Registrant to establish a trust for his or her
benefit and to fund such trust in amounts reasonably anticipated or proposed to
be paid to satisfy Registrant's indemnification obligations under the
Indemnification Agreements.
The foregoing summaries are necessarily subject to the complete text of the
statute, the Registrant's Restated Certificate of Incorporation and Bylaws, and
the arrangements referred to above and are qualified in their entirety by
reference thereto.
II-2
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement with respect to Debt Securities.
**1.2 Form of Underwriting Agreement with respect to Preferred Stock.
**1.3 Form of Underwriting Agreement with respect to Common Stock.
**1.4 Form of Underwriting Agreement with respect to Warrants.
1.5 Form of Distribution Agreement with respect to Debt Securities.
4.1 Restated Certificate of Incorporation of Registrant.
*4.2 Amended Bylaws of Registrant.
4.3 Indenture, dated as of March 7, 1996, between Registrant and Citibank, N.A., a national banking association,
as trustee, pertaining to the Senior Debt Securities (incorporated by reference from the Registrant's
Current Report on Form 8-K dated March 7, 1996).
*4.4 Form of Senior Subordinated Debt Securities Indenture.
*4.5 Form of Subordinated Debt Securities Indenture.
*4.6 Form of Debt Securities Warrant Agreement (including form of Debt Warrant Certificate).
*4.7 Form of Preferred Stock Warrant Agreement (including form of Preferred Stock Warrant Certificate).
*4.8 Form of Common Stock Warrant Agreement (including form of Common Stock Warrant Certificate).
*4.9 Form of Deposit Agreement (including form of Depositary Receipts).
*4.10 Specimen Common Stock Certificate.
4.11 Rights Agreement dated as of November 8, 1995 between Registrant and the Bank of New York, as rights agent
(incorporated by reference from the Registration Statement on Form S-4 of Registrant under its former name,
DC Holdco, Inc., filed on November 13, 1995).
**4.12 Certificate of Designation of Preferred Stock.
**4.13 Form of Preferred Stock Certificate.
5.1 Opinion of O'Melveny & Myers LLP regarding the Securities.
*12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of O'Melveny & Myers LLP (included in their opinion filed as Exhibit 5.1).
23.2 Consent of Independent Accountants (PricewaterhouseCoopers LLP).
23.3 Consent of Independent Auditors (Ernst & Young LLP).
*24 Powers of Attorney (included on the signature page hereto).
*25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Citibank, N.A., as
Trustee under the Senior Debt Securities Indenture.
*25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Chase Manhattan Bank
and Trust Company, National Association, as Trustee under the Senior Subordinated Debt Securities
Indenture.
*25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee under the Subordinated Debt Securities Indenture.
</TABLE>
- ------------------------
* Previously filed.
** To be filed by a post-effective amendment to the Registration Statement or
incorporated by reference from a Current Report on Form 8-K.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
Provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Burbank, State of California, on the 3rd day of
August, 1998.
<TABLE>
<S> <C> <C>
THE WALT DISNEY COMPANY
By: /s/ THOMAS O. STAGGS
------------------------------------------
Thomas O. Staggs
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -----------------
<C> <S> <C>
Chairman of the Board and
/s/ MICHAEL D. EISNER* Chief Executive Officer
- ------------------------------ (Principal Executive August 3, 1998
(Michael D. Eisner) Officer)
/s/ ROY E. DISNEY*
- ------------------------------ Vice Chairman of the Board August 3, 1998
(Roy E. Disney)
Senior Executive Vice
/s/ SANFORD M. LITVACK* President, Chief of
- ------------------------------ Corporate Operations and August 3, 1998
(Sanford M. Litvack) Director
Executive Vice President
/s/ THOMAS O. STAGGS and Chief Financial
- ------------------------------ Officer (Principal August 3, 1998
(Thomas O. Staggs) Financial and Accounting
Officer)
/s/ REVETA F. BOWERS*
- ------------------------------ Director August 3, 1998
(Reveta F. Bowers)
/s/ STANLEY P. GOLD*
- ------------------------------ Director August 3, 1998
(Stanley P. Gold)
/s/ IGNACIO E. LOZANO, JR.*
- ------------------------------ Director August 3, 1998
(Ignacio E. Lozano, Jr.)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -----------------
<C> <S> <C>
/s/ GEORGE J. MITCHELL*
- ------------------------------ Director August 3, 1998
(George J. Mitchell)
/s/ THOMAS S. MURPHY*
- ------------------------------ Director August 3, 1998
(Thomas S. Murphy)
/s/ RICHARD A. NUNIS*
- ------------------------------ Director August 3, 1998
(Richard A. Nunis)
/s/ LEO J. O'DONOVAN, S.J.*
- ------------------------------ Director August 3, 1998
(Leo J. O'Donovan, S.J.)
/s/ SIDNEY POITIER*
- ------------------------------ Director August 3, 1998
(Sidney Poitier)
/s/ IRWIN E. RUSSELL*
- ------------------------------ Director August 3, 1998
(Irwin E. Russell)
/s/ ROBERT A.M. STERN*
- ------------------------------ Director August 3, 1998
(Robert A.M. Stern)
/s/ E. CARDON WALKER*
- ------------------------------ Director August 3, 1998
(E. Cardon Walker)
/s/ RAYMOND L. WATSON*
- ------------------------------ Director August 3, 1998
(Raymond L. Watson)
/s/ GARY L. WILSON*
- ------------------------------ Director August 3, 1998
(Gary L. Wilson)
</TABLE>
*By: /s/ DAVID K. THOMPSON
-------------------------
David K. Thompson,
ATTORNEY-IN-FACT
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -------------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement with respect to Debt Securities.
**1.2 Form of Underwriting Agreement with respect to Preferred Stock.
**1.3 Form of Underwriting Agreement with respect to Common Stock.
**1.4 Form of Underwriting Agreement with respect to Warrants.
1.5 Form of Distribution Agreement with respect to Debt Securities.
4.1 Restated Certificate of Incorporation of Registrant.
*4.2 Amended Bylaws of Registrant.
4.3 Indenture, dated as of March 7, 1996, between Registrant and Citibank, N.A., a national banking association,
as trustee, pertaining to the Senior Debt Securities (incorporated by reference from the Registrant's
Current Report on Form 8-K dated March 7, 1996).
*4.4 Form of Senior Subordinated Debt Securities Indenture.
*4.5 Form of Subordinated Debt Securities Indenture.
*4.6 Form of Debt Securities Warrant Agreement (including form of Debt Warrant Certificate).
*4.7 Form of Preferred Stock Warrant Agreement (including form of Preferred Stock Warrant Certificate).
*4.8 Form of Common Stock Warrant Agreement (including form of Common Stock Warrant Certificate).
*4.9 Form of Deposit Agreement (including form of Depositary Receipts).
*4.10 Specimen Common Stock Certificate.
4.11 Rights Agreement dated as of November 8, 1995 between Registrant and the Bank of New York, as rights agent
(incorporated by reference from the Registration Statement on Form S-4 of Registrant under its former name,
DC Holdco, Inc., filed on November 13, 1995).
**4.12 Certificate of Designation of Preferred Stock.
**4.13 Form of Preferred Stock Certificate.
5.1 Opinion of O'Melveny & Myers LLP regarding the Securities.
*12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of O'Melveny & Myers LLP (included in their opinion filed as Exhibit 5.1).
23.2 Consent of Independent Accountants (PricewaterhouseCoopers LLP).
23.3 Consent of Independent Auditors (Ernst & Young LLP).
*24 Powers of Attorney (included on the signature page hereto).
*25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Citibank, N.A., as
Trustee under the Senior Debt Securities Indenture.
*25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of Chase Manhattan Bank
and Trust Company, National Association, as Trustee under the Senior Subordinated Debt Securities
Indenture.
*25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The First National
Bank of Chicago, as Trustee under the Subordinated Debt Securities Indenture.
</TABLE>
- ------------------------
* Previously filed.
** To be filed by a post-effective amendment to the Registration Statement or
incorporated by reference from a Current Report on Form 8-K.
<PAGE>
EXHIBIT 1.1
FORM OF UNDERWRITING AGREEMENT - DEBT SECURITIES
UNDERWRITING AGREEMENT
[Date]
The Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521
Dear Sirs:
We (the "Representatives") are acting on behalf of the underwriters
(including ourselves) named below (such underwriters being herein called the
"Underwriters"), and we understand that The Walt Disney Company, a Delaware
corporation (the "Company"), proposes to issue and sell [Currency and
Principal Amount] aggregate principal amount of its [Full Title of Debt
Securities](the "Debt Securities").
Subject to the terms and conditions set forth or incorporated by
reference herein, the Company hereby agrees to sell and the Underwriters
agree to purchase, severally and not jointly, the principal amount of Debt
Securities set forth below opposite their names at a purchase price of [ ]%
of the principal amount thereof plus accrued interest, if any, from [ ]:
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NAME DEBT SECURITIES
---- -------------------
<S> <C>
[Lead Underwriter] $[ ]
[Syndicate List]
-----------------
$[ ]
-----------------
-----------------
</TABLE>
The Underwriters will pay for the Debt Securities upon delivery thereof
to The Depository Trust Company or its designated custodian at [ ] a.m.
(New York time) on [ ] or at such other time, not later than [ ]
a.m. (New York time) on [ ] as shall be designated by the
Representatives. The time and date of such payment and delivery are
hereinafter referred to as the "Closing Date."
The Debt Securities shall have the terms set forth in the Prospectus
dated [ ], as supplemented by the Prospectus Supplement dated
[ ], including the following:
2
<PAGE>
<TABLE>
<CAPTION>
TERMS OF DEBT SECURITIES:
<S> <C>
Title: [ ]
Aggregate Principal Amount: [ ]
Initial Offering Price: [ ]%
Purchase Price: [ ]%
Currency of Payment: [ ]
[Ratings of debt
securities included in the
Registration Statement: [ ]
[ ]
[ ]]
Maturity Date: [ ]
Interest Rate: [ ]%
Redemption Provisions: [ ]
Interest Payment Dates: [ ] and [ ] commencing
[ ] (interest accrues from [ ]).
Regular Record Dates: [ ] and [ ]
Form and Denominations: [ ]
Ranking: The Debt Securities will be senior/senior
subordinated/subordinated indebtedness of the Company issued
under the Senior/Senior Subordinated/Subordinated Indenture dated
as of [ ] (the "Indenture") by and between the Company,
as issuer and [ ], as trustee (the "Trustee").
Listing: [ ]
</TABLE>
3
<PAGE>
Please confirm your agreement by having an authorized officer sign a
copy of this Agreement in the space set forth below.
Very truly yours,
[LEAD UNDERWRITER]
[NAME OF OTHER LEAD MANAGERS],
acting severally on behalf of themselves and the
Underwriters named herein
BY: [LEAD UNDERWRITER]
[NAME OF OTHER LEAD MANAGERS]
By:
---------------------------------------------
Name:
Title:
Accepted:
THE WALT DISNEY COMPANY
By:
-----------------------------------
Name:
Title:
4
<PAGE>
THE WALT DISNEY COMPANY
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
(DEBT SECURITIES)
[Date]
From time to time, The Walt Disney Company, a Delaware corporation (the
"Company"), may enter into one or more underwriting agreements that provide
for the sale of designated securities to the several underwriters named
therein. The standard provisions set forth herein may be incorporated by
reference in any such underwriting agreement (an "Underwriting Agreement").
The Underwriting Agreement, including the provisions incorporated therein by
reference, is herein referred to as "this Agreement". Terms defined in the
Underwriting Agreement are used herein as therein defined.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement including a prospectus, which, among
other things, relates to the Debt Securities and has filed with, or
transmitted for filing to, or shall promptly hereafter file with or transmit
for filing to, the Commission a prospectus supplement (the "Prospectus
Supplement") specifically relating to the Debt Securities pursuant to Rule
424 under the Securities Act of 1933, as amended (the "1933 Act"), and/or a
term sheet or an abbreviated term sheet (each, a "Term Sheet"), pursuant to
Rule 434 of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations"), specifically relating to the Debt Securities.
The term Registration Statement means the registration statement as amended
to the date of this Agreement and shall include any related Registration
Statement filed pursuant to Rule 462(b) of the 1933 Act Regulations. The
term Basic Prospectus means the prospectus included in the Registration
Statement at the time the Registration Statement was declared effective by
the Commission. The term Prospectus means the Basic Prospectus together with
the final Prospectus Supplement relating to the offering of the Debt
Securities, each in the form furnished to the Underwriters by the Company for
use in connection with the offering of the Debt Securities, as from time to
time amended or supplemented in accordance with the 1933 Act, except that if
any revised prospectus or prospectus supplement shall be provided to the
Underwriters by the Company for use in connection with the offering of the
Debt Securities which differs from the prospectus or prospectus supplement on
file at the Commission (whether or not such revised prospectus or prospectus
supplement is required to be filed by the Company pursuant to Rule 424 under
the 1933 Act Regulations), the term "Prospectus" shall refer to the
prospectus and prospectus supplement, as so revised, from and after the time
it is first provided to the Underwriters for such use; provided, however,
that if the Company elects to rely upon Rule 434 of the 1933 Act Regulations,
then all references to the Prospectus shall be deemed to refer to the final
or preliminary prospectus and the Term Sheet relating to the Debt Securities
in the form furnished to the Underwriters by the Company in reliance upon
Rule 434 of the 1933 Act Regulations (in which case, all references in this
Agreement to the date of the Prospectus shall mean the date of such Term
Sheet). The term preliminary prospectus means a preliminary prospectus
supplement specifically relating to the Debt Securities together with the
Basic Prospectus. Any reference herein to the Registration Statement or the
Prospectus shall be deemed to refer to and include the documents, financial
statements and schedules incorporated by reference therein or deemed to be
incorporated by reference therein pursuant to Item 12 of Form S-3 under the
1933 Act, and any reference to any amendment or supplement to the
Registration Statement or the Prospectus shall be deemed to
1
<PAGE>
refer to and include any documents, financial statements and schedules filed
by the Company with the Commission under the Securities Exchange Act of 1934,
as amended (the "1934 Act") after the date hereof, and so incorporated by
reference or deemed to be incorporated therein (such incorporated documents,
financial statements and schedules being herein called the "Incorporated
Documents"). Notwithstanding the foregoing, for purposes of this Agreement
any prospectus, prospectus supplement, term sheet or abbreviated term sheet
prepared or filed with respect to an offering pursuant to the Registration
Statement of a series of securities other than the Debt Securities shall not
be deemed to have supplemented the Prospectus.
1. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
to each of the Underwriters that:
(a) The Company meets the requirements for use of Form S-3 under the 1933
Act. The Registration Statement has become effective under the 1933 Act
and no stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act and no proceedings for that
purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated by the Commission, and any request on the part of
the Commission for additional information has been complied with. In
addition, the Indenture has been duly qualified under the Trust Indenture
Act of 1939, as amended (the "1939 Act").
(b) The Registration Statement, at the time it became effective, complied
in all material respects with the provisions of the 1933 Act and the 1933
Act Regulations and did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. At the date of the
Underwriting Agreement and at the Closing Date, the Prospectus and any
amendments and supplements thereto did not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. If the Company elects to rely upon Rule 434 of
the 1933 Act Regulations, the Company will comply with the requirements of
Rule 434. Notwithstanding the foregoing, this representation and warranty
does not apply to statements or omissions in the Registration Statement,
the Prospectus or any preliminary prospectus, or any amendment or
supplement thereto, made in reliance upon information furnished to the
Company in writing by or on behalf of the Underwriters expressly for use
therein or to those parts of the Registration Statement which constitute
the Trustee's Statement of Eligibility and Qualification on Form T-1 under
the 1939 Act (the "Form T-1"). There is no contract or document of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement which
is not described or filed as required.
(c) The Incorporated Documents, when they became effective or were filed
(or, if an amendment with respect to any such Incorporated Document was
filed or became effective, when such amendment was filed or became
effective) with the Commission, as the case may be, complied in all
material respects with the requirements of the 1934 Act, and any
Incorporated Documents filed subsequent to the date of the Underwriting
Agreement and prior to the termination of the offering of the Debt
Securities, will, when they are filed with the Commission, comply in all
material respects with the requirements of the 1934 Act; no such
Incorporated Document, when it became effective or was filed (or, if an
amendment with respect to any such Incorporated Document was filed or
became effective, when such amendment was filed or became effective) with
the Commission, contained, and no Incorporated Document filed subsequent to
the date of the Underwriting Agreement and prior to the
2
<PAGE>
Closing Date will contain, an untrue statement of a material fact or
omitted, or will omit, to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) This Agreement, the Indenture and the Debt Securities have been duly
authorized by the Company and conform in all material respects to the
descriptions thereof in the Prospectus.
(e) The Indenture (assuming due execution and delivery thereof by the
Trustee) is, and the Debt Securities (when executed by the Company and
authenticated in accordance with the Indenture and delivered to and paid
for by the Underwriters) will be, the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to or affecting the enforcement of
creditors' rights generally, (B) general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity or at
law), (C) requirements that a claim with respect to any Debt Securities
denominated other than in United States dollars (or a judgment denominated
other than in United States dollars in respect of such claim) be converted
into United States dollars at a rate of exchange prevailing on a date
determined pursuant to applicable law and (D) governmental authority to
limit, delay or prohibit the making of payments outside the United States
or in a foreign currency or composite currency. The Debt Securities (when
executed by the Company and authenticated in accordance with the terms of
the Indenture and delivered to and paid for by the Underwriters) will be
entitled to the benefits of the Indenture (subject to the exceptions set
forth in the preceding sentence).
(f) The Company is a validly existing corporation in good standing under
the laws of Delaware. The Company has full corporate power and authority
to own, lease and operate its properties and to conduct its business as
presently conducted and as described in the Prospectus; and the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required
whether by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a material
adverse effect on the consolidated financial condition or earnings of the
Company and its subsidiaries considered as one enterprise.
(g) Except as contemplated in the Prospectus or reflected therein by the
filing of any amendment or supplement thereto or any Incorporated Document,
since the date of the most recent consolidated financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus there has not been any material adverse change in the
consolidated financial condition or earnings of the Company and its
subsidiaries, considered as one enterprise.
(h) The Company is not in violation of its Restated Certificate of
Incorporation or Bylaws, as amended. The execution and delivery of this
Agreement by the Company, the issuance and sale of the Debt Securities and
the performance by the Company of its obligations under this Agreement and
the Indenture will not conflict with or constitute a breach of or a default
(with the passage of time or otherwise) under (A) the Restated Certificate
of Incorporation or Bylaws, as amended of the Company, (B) any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which the Company is a party or by which it may be bound, or to which any
of the properties or assets of the Company is subject, which breach or
default would, singly or in the aggregate, reasonably be expected to have a
material adverse effect on the consolidated financial condition or earnings
of the Company and its subsidiaries, considered as one enterprise, or (C)
any applicable law, administrative regulation
3
<PAGE>
or administrative or court decree. Except for orders, permits and
similar authorizations required under or by the securities or Blue Sky
laws of certain jurisdictions, any securities exchange on which any of
the Debt Securities might be listed or with respect to Debt Securities
which are to be indexed or linked to any foreign currency, composite
currency, commodity, equity index or similar index, no consent,
approval, authorization or other order of any regulatory body,
administrative agency or other governmental body is legally required for
the valid issuance and sale of the Debt Securities.
(i) To the best of the Company's knowledge, the accountants who have
audited and reported upon the financial statements filed with the
Commission as part of the Registration Statement and the Prospectus are
independent accountants as required by the 1933 Act. The historical
financial statements included in the Registration Statement or
Prospectus or incorporated therein by reference fairly present the
consolidated financial position and results of operations of the Company
and its subsidiaries at the respective dates and for the respective
periods to which they apply. Such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied, except as set forth in the Registration Statement
and Prospectus. The selected financial data and the summary historical
financial information of Disney included in the Prospectus present
fairly the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements of Disney
incorporated by reference in the Registration Statement and the
Prospectus. The unaudited pro forma financial statements, if any,
together with the related notes and any supporting schedules included or
incorporated by reference in the Registration Statements and the
Prospectus, fairly present the information shown therein and have been
compiled on a basis substantially consistent with the audited financial
statements of Disney included or incorporated by reference in the
Registration Statement and the Prospectus; the assumptions on which such
unaudited pro forma financial statements have been prepared are
reasonable; and such unaudited pro forma financial statements have been
prepared, and the pro forma adjustments set forth therein have been
applied, in accordance with the applicable accounting requirements of
the 1933 Act and the 1933 Act Regulations (including, without
limitation, Regulations S-X promulgated by the Commission), and such pro
forma adjustments have been properly applied to the historical amounts
in the compilation of such statements.
(j) Each of Disney Enterprises, Inc., ABC, Inc. and Walt Disney World Co.
(collectively, the "Significant Subsidiaries"), is a validly existing
corporation in good standing in the state of its incorporation. Each of the
Significant Subsidiaries has full corporate power and authority to own,
lease and operate its properties and to conduct its business as presently
conducted and as described in the Prospectus; and each of the Significant
Subsidiaries is duly qualified as a foreign corporation to transact
business and is in good standing in each United States jurisdiction in
which such qualification is required whether by reason of the ownership or
leasing of property or the conduct of business, except where a failure to
so qualify would not have a material adverse effect on the consolidated
financial condition or earnings of the Company and its subsidiaries,
considered as one enterprise.
(k) The Company has complied with, and is and will be in compliance with,
the provisions of that certain Florida act relating to disclosure of doing
business with Cuba, codified as Section 517.075 of the Florida statutes,
and the rules and regulations thereunder or is exempt therefrom.
Any certificate signed by any officer of the Company and delivered to
any Underwriter or to counsel for the Underwriters in connection with the
offering of the Debt Securities shall be deemed a representation and warranty
by the Company to such Underwriter as to the matters covered thereby on the
date of such certificate.
2. PUBLIC OFFERING. The Company is advised by the Representatives
that the Underwriters propose to make a public offering of their respective
portions of the Debt Securities as soon after this Agreement has been entered
into as in the Representatives' judgment is advisable. The terms of the
public offering of the Debt Securities have been provided by the
Representatives to the Company and are in all material respects completely
set forth in the Prospectus.
3. PURCHASE AND DELIVERY. Except as otherwise provided in this
Section 3, payment for the Debt Securities shall be made by wire transfer, of
immediately available funds, by the Underwriters to the order of
4
<PAGE>
the Company, at the time set forth in the Underwriting Agreement, upon
delivery to the Representatives for the respective accounts of the several
Underwriters of the Debt Securities, registered in such names and in such
denominations as the Representatives shall request in writing not less than
two full business days prior to the date of delivery, with any transfer taxes
payable in connection with the sale of the Debt Securities to the
Underwriters duly paid. The Notes may be represented by one or more global
notes which may be deposited with a custodian for, and registered in the name
of, The Depository Trust Company or its nominee.
4. PAYMENT OF EXPENSES. The Company will pay all expenses incident to
the performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the printing and delivery to the Underwriters of this
Agreement, any Underwriting Agreement, any Agreement among Underwriters, the
Indenture and such other documents as may be required in connection with the
offering, purchase, sale and delivery of the Debt Securities, (iii) the
preparation, issuance and delivery of the Debt Securities and any
certificates for the Debt Securities to the Underwriters, (iv) the fees and
disbursements of the Company's counsel, accountants and other advisors or
agents (including transfer agents and registrars), as well as the fees and
disbursements of the Trustee and its counsel, (v) the qualification of the
Debt Securities under state securities laws or the applicable laws of any
foreign jurisdiction in which the Debt Securities are offered in accordance
with the provisions of Section 6(g) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation, printing and
delivery of the Blue Sky Survey and any Legal Investment Survey, and any
amendment thereto, (vi) the printing and delivery to the Underwriters of
copies of each preliminary prospectus, any Term Sheet, and the Prospectus and
any amendments or supplements thereto, (vii) the fees charged by nationally
recognized statistical rating organizations for the rating of the Debt
Securities, and (viii) the fees and expenses incurred with respect to the
listing of the Debt Securities on any securities exchange.
5. CONDITIONS TO CLOSING. The several obligations of the Underwriters
hereunder are subject to the following conditions:
(a) OPINION OF COUNSEL TO COMPANY. On the Closing Date, the
Underwriters shall have received an opinion from O'Melveny & Myers
LLP, counsel to the Company, dated as of the Closing Date and in form
and substance satisfactory to counsel for the Underwriters to the effect
that:
(i) The Company and each of the Significant Subsidiaries is a
corporation validly existing and in good standing under the laws of
its state of incorporation.
(ii) The Company has the corporate power and corporate authority to
enter into and perform its obligations under this Agreement and the
Indenture, to borrow money as contemplated in this Agreement and the
Indenture and to issue, sell and deliver the Debt Securities.
(iii) This Agreement has been duly authorized, executed and
delivered by the Company.
(iv) The Indenture has been duly authorized by all necessary
corporate action on the part of the Company and duly executed and
delivered by the Company and constitutes a valid and binding
agreement of the Company enforceable against the Company in
accordance with its terms, except (x) as may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or similar
laws
5
<PAGE>
relating to creditors' rights generally (including, without
limitation, fraudulent conveyance laws) and (B) general principles
of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief,
regardless of whether is considered in a proceeding at law or in
equity and (y) the waiver contained in Section 6.12 of the
Indenture may be deemed unenforceable and the provisions regarding
jurisdiction contained in Section [12.9] [13.9] of the Indenture
may not be honored by the courts included or excluded.
(v) No consent or approval of any California, New York or United
States federal governmental authority is required in connection
with the issuance or sale of the Debt Securities other than
registration thereof under the 1933 Act, qualification of the
Indenture under the 1939 Act, and such registrations or
qualifications as may be necessary under the securities or Blue Sky
laws of the various United States jurisdictions in which the Debt
Securities are to be offered or sold.
(vi) The Debt Securities, when executed and authenticated in
accordance with the terms of the Indenture and delivered to and
paid for by the Underwriters, will constitute valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms, except (x) as may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to creditors' rights generally (including, without
limitation, fraudulent conveyance laws) and (B) general principles
of equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief,
regardless of whether considered in a proceeding at law or in
equity and (y) the waiver contained in Section 6.12 of the
Indenture may be deemed unenforceable and the provisions regarding
jurisdiction contained in Section [12.9] [13.9] of the Indenture
may not be honored by the courts included or excluded.
(vii) The Registration Statement has been declared effective under
the 1933 Act and the Indenture has been qualified under the 1939
Act, and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
are pending or threatened by the Commission.
(viii) The execution and delivery of this Agreement and the
Indenture by the Company, the issuance and sale of the Debt
Securities and the performance by the Company of its obligations
under this Agreement and the Indenture will not (A) violate the
Restated Certificate of Incorporation or Bylaws, as amended of the
Company, (B) violate the Delaware General Corporation Law or any
statute, law or regulation of the States of California or New York
or the United States of America to which the Company or any of its
properties may be subject or (C) breach or otherwise violate any
obligation of or restriction on the Company under any judgment,
decree or order, known to such counsel, of any court or
governmental agency or authority entered in any proceeding to which
the Company was or is now a party or by which it is bound;
provided, that such counsel may state that (1) the opinion set
forth in clause (B) of this paragraph (viii) is limited to such
statutes, laws or regulations currently in effect which such
counsel has, in the exercise of customary diligence, recognized as
applicable to the Company or the transactions of the type
contemplated by this Agreement, and (2) no opinion is expressed as
to the securities or Blue Sky laws of the various jurisdictions in
which the Debt Securities are to be offered and (3) no opinion is
expressed with respect to such clause (B) with respect to Debt
Securities which are indexed or linked to any foreign currency,
composite currency, commodity, equity index or similar index.
(ix) The Registration Statement, as of the date it became
effective, and the Prospectus, as of the date of the Underwriting
Agreement, appear on their face to comply in all material respects
with the requirements as to form for registration statements on
Form S-3 and the related rules and regulations then in effect,
except that in each case such counsel need not express an opinion
as to (i) the Incorporated Documents, (ii) the financial
6
<PAGE>
statements and schedules and other financial data included or
incorporated by reference therein or excluded therefrom or (iii)
the Form T-1.
(x) The statements in the Prospectus under the captions "Description
of the Debt Securities" and "Description of the Notes," insofar as
they purport to summarize certain provisions of documents
specifically referred to therein, fairly present the information
required by Form S-3.
[(xi) Although the discussion set forth in the Prospectus under the
heading "Certain United States Federal Tax Considerations" does not
purport to discuss all possible United States Federal income tax
consequences of the purchase, ownership, and disposition of the
Debt Securities, in such counsel's opinion, such discussion
constitutes, in all material respects, a fair and accurate summary
of the United States Federal income tax consequences of the
purchase, ownership, and disposition of the Debt Securities, based
upon current law and subject to the qualifications set forth
therein.]
In rendering the opinions set forth above, such counsel may state that
(1) with respect to paragraphs (iv) and (vi), such enforcement may be
limited by (i) requirements that a claim with respect to any Debt
Securities denominated other than in United States dollars (or a judgment
denominated other than in United States dollars in respect of such claim)
be converted into United States dollars at a rate of exchange prevailing on
a date determined pursuant to applicable law and (ii) governmental
authority to limit, delay or prohibit the making of payments outside the
United States or in foreign currency or composite currency; and (2) with
respect to paragraphs (iv), (v) and (vi), no opinion is expressed thereto
with respect to any Debt Securities that are to be indexed or linked to any
foreign currency or composite currency, commodity, equity index or similar
index.
In addition such counsel may state that, in connection with such
counsel's participation in conferences in connection with the preparation
of the Registration Statement and Prospectus, such counsel has not
independently verified the accuracy, completeness or fairness of the
statements contained therein, and the limitation inherent in such
examination made by such counsel and the knowledge available to such
counsel are such that such counsel is unable to assume, and does not
assume, and responsibility for such accuracy, completeness or fairness
(except as otherwise specifically stated in clauses (x) [and (xi)]
above). However, such counsel shall state that, on the basis of such
counsel's review and participation in conferences in connection with the
preparation of the Registration Statement and the Prospectus, such
counsel does not believe that the Registration Statement (excluding the
Incorporated Documents) at its effective date, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein not misleading, and such counsel shall state that
such counsel does not believe that the Prospectus (excluding the
Incorporated Documents) as of the date of the Underwriting Agreement and
as of the Closing Date contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except that such counsel
need express no opinion or belief with respect to (i) the Incorporated
Documents, (ii) the financial statements, schedules and other financial
data included or incorporated by reference in, or excluded from, the
Registration Statement or the Prospectus or (iii) the exhibits to the
Registration Statement, including the Form T-1.
(b) OPINION OF COUNSEL EMPLOYED BY COMPANY. On the Closing Date, the
Underwriters shall have received an opinion from David K. Thompson, Senior
Vice President-Assistant General Counsel or from other counsel employed by
the Company (provided that such counsel is at least a vice president of the
Company), dated as of the date hereof and in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
7
<PAGE>
(i) Except as set forth in the Prospectus (including the Incorporated
Documents), there is not pending or, to the best of such counsel's
knowledge, after reasonable inquiry, threatened any action, suit or
proceeding against the Company or any of its subsidiaries before or by
any court or governmental agency or body, which is likely (to the
extent not covered by insurance) to have a material adverse effect on
the consolidated financial condition or earnings of the Company and
its subsidiaries, considered as one enterprise.
(ii) To the best of such counsel's knowledge, after reasonable
inquiry, there is no contract or document of a character required to
be described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed as required.
(iii) To the best of such counsel's knowledge, after reasonable
inquiry, the Company is not in violation of its Restated Certificate
of Incorporation or Bylaws, as amended.
(iv) To the best of such counsel's knowledge, after reasonable
inquiry, the execution, delivery and performance of this Agreement and
the Indenture will not conflict with or constitute a breach of, or
default (with the passage of time or otherwise) under, any material
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company is a party or by which it may be
bound, or to which any of the property or assets of the Company or any
of its subsidiaries is subject.
(v) The Incorporated Documents, as of the date of the Underwriting
Agreement, complied as to form in all material respects with the
requirements of the 1934 Act, except that in each case such counsel
need not express an opinion as to the financial statements and
schedules and other financial data included or incorporated by
reference therein.
In addition, such counsel shall state that no facts have come to such
counsel's attention that have led him to believe that the Registration
Statement (including the Incorporated Documents) at the time such
Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Prospectus (including the Incorporated Documents) as of the date of the
Underwriting Agreement and as of the Closing Date contained or contains an
untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that such
counsel need express no opinion or belief with respect to the financial
statements, schedules and other financial data included or incorporated by
reference in, or excluded from, the Registration Statement or Prospectus or
with respect to the Form T-1.
(c) OPINION OF UNDERWRITERS' COUNSEL. On the Closing Date, the
Underwriters shall have received an opinion from counsel to the
Underwriters, dated as of the Closing Date and in form and substance
satisfactory to the Underwriters.
(d) OFFICER'S CERTIFICATE. On the Closing Date the Underwriters shall
have received a certificate signed by an officer of the Company, dated the
Closing Date, to the effect that (i) the representations and warranties of
the Company contained in Section 1 hereof are true and correct in all
material respects with the same force and effect as though expressly made
at and as of the date of such
8
<PAGE>
certificate, (ii) the Company has complied with all agreements and
satisfied all conditions required by this Agreement or the Indenture on
its part to be performed or satisfied at or prior to the date of such
certificate and (iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been initiated or, to the best of such officer's knowledge,
threatened by the Commission. The Officer's Certificate shall further
state that except as contemplated in the Prospectus or reflected therein
by the filing of any amendment or supplement thereto or any Incorporated
Document, at the Closing Date, there shall not have been, since the date
of the most recent consolidated financial statements included or
incorporated by reference in the Prospectus, any material adverse change
in the consolidated financial condition or earnings of the Company and
its subsidiaries considered as one enterprise. As used in this Section
5(d), the term "Prospectus" means the Prospectus (as defined herein) in
the form first used to confirm sales of the Debt Securities.
(e) COMFORT LETTERS. At the time of the execution of the Underwriting
Agreement, the Underwriters shall have received letters from the Company's
independent certified public accountants, dated as of the date of the
Underwriting Agreement and in form and substance reasonably satisfactory to
the Underwriters.
(f) BRING-DOWN COMFORT LETTERS. On the Closing Date, the Underwriters
shall have received letters from the Company's independent certified public
accountants dated as of the Closing Date, to the effect that they reaffirm
the statements made in the letter furnished pursuant to subsection (e) of
this Section 5, except that the specified date referred to shall be a date
not more than five business days prior to the Closing Date.
(g) RATINGS. At the Closing Date, the debt securities included in the
Registration Statement shall have the ratings accorded by any "nationally
recognized statistical rating organization", as defined by the Commission
for purposes of Rule 436(g)(2) of the 1933 Act Regulations, if and as
specified in the Underwriting Agreement, and the Company shall have
delivered to the Representatives a letter, dated as of such date, from each
such rating organization, or other evidence satisfactory to the
Representatives, confirming that the Debt Securities have such ratings.
(h) OTHER DOCUMENTS. On the Closing Date, counsel to the Underwriters
shall have been furnished with such documents and opinions as such counsel
may reasonably require for the purpose of enabling such counsel to pass
upon the issuance and sale of Debt Securities as herein contemplated and
related proceedings, or in order to evidence the accuracy and completeness
of any of the representations and warranties or the fulfillment of any of
the conditions herein contained.
If any condition specified in this Section 5 shall not have been fulfilled
when and as required to be fulfilled, this Agreement may be terminated by
the Representatives by notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party
to any other party, except that (i) the Company shall reimburse the
Underwriters for all of their reasonable out-of-pocket expenses, including
the reasonable fees and disbursements of counsel for the Underwriters and
(ii) the covenants set forth in Section 6(f) hereof, the indemnity and
contribution agreement set forth in Sections 7, 8, 9 and 10 hereof and the
provisions of Section 18 hereof shall remain in effect.
9
<PAGE>
6. COVENANTS OF THE COMPANY. In further consideration of the agreements
of the Underwriters contained herein, the Company covenants as follows:
(a) NOTICE OF CERTAIN EVENTS. The Company will notify the Representatives
promptly of (i) the effectiveness of any post-effective amendment to the
Registration Statement (other than a post-effective amendment relating
solely to an offering of securities other than the Debt Securities), (ii)
the transmittal to the Commission for filing of any supplement to the
Prospectus (other than a supplement relating solely to an offering of
securities other than the Debt Securities), (iii) the receipt of any
comments from the Commission with respect to the Registration Statement or
the Prospectus (other than any comments relating solely to an offering of
securities other than the Debt Securities), (iv) any request by the
Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information (other than
any such request relating solely to an offering of securities other than
the Debt Securities) and (v) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose. The Company will make
every reasonable effort to prevent the issuance of any such stop order and,
if any such stop order is issued, to obtain the lifting thereof at the
earliest possible time unless the Company shall, in its sole discretion,
determine that it is not in its best interest to do so.
(b) NOTICE OF CERTAIN PROPOSED FILINGS. During the period from the date
of the Underwriting Agreement to and including the Closing Date, at or
prior to the filing thereof, the Company will give the Representatives
notice of its intention to file any additional registration statement with
respect to the registration of additional Debt Securities to be covered by
this Agreement, any amendment to the Registration Statement or any
amendment or supplement to the Prospectus (other than an amendment or
supplement relating solely to an offering of securities other than the Debt
Securities), whether by the filing of documents pursuant to the 1934 Act,
the 1933 Act or otherwise, and will furnish the Underwriters with copies of
any such amendment or supplement or other documents a reasonable amount of
time prior to such proposed filing or use, as the case may be, and will not
file or use any such document to which the Representatives or counsel to
the Underwriters shall reasonably object, unless, in the judgment of the
Company or its counsel, such amendment or supplement or other document is
necessary to comply with law.
(c) COPIES OF THE REGISTRATION STATEMENT AND THE PROSPECTUS. The Company
will deliver to the Underwriters one copy of the Registration Statement (as
originally filed) and of each amendment thereto (including the Incorporated
Documents and any exhibits filed therewith or incorporated by reference
therein) and the preliminary prospectus as the Representatives may
reasonably request. The Company will furnish to the Underwriters as many
copies of the Prospectus (as amended or supplemented) as the
Representatives shall reasonably request so long as the Underwriters are
required to deliver a Prospectus in connection with sales or solicitations
of offers to purchase the Debt Securities.
(d) REVISIONS OF REGISTRATION STATEMENT AND PROSPECTUS -- MATERIAL
CHANGES. So long as the Underwriters are required to deliver a Prospectus
in connection with sales of the Debt Securities, if any event shall occur
or condition exist as a result of which it is necessary, in the opinion of
counsel for the Company, after consultation with counsel for the
Underwriters, to further amend or supplement the Prospectus in order that
the Prospectus will not include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light
10
<PAGE>
of the circumstances existing at the time it is delivered to a
purchaser, not misleading, or if it shall be necessary, in the opinion
of counsel for the Company, to amend or supplement the Registration
Statement or the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, prompt notice shall be given,
and confirmed in writing, to the Representatives, and the Company will
prepare and file as soon as practicable such amendment or supplement to
the Registration Statement or Prospectus as may be necessary to correct
such misstatement or omission or to make the Registration Statement or
the Prospectus comply with such requirements and the Company will
furnish to the Underwriters, without charge, such number of copies of
such amendment or supplement as the Underwriters may reasonably request.
The filing of any such amendment or supplement shall not constitute a
waiver of any of the conditions set forth in Section (5) hereof or of
Section 11 (i).
(e) COMPLIANCE WITH 1934 ACT. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act,
will comply, in a timely manner, with all applicable requirements under the
1934 Act relating to the filing with the Commission of the Company's
reports pursuant to Section 13(a), 13(c) or 15(d) of the 1934 Act and, if
then applicable, the Company's proxy statements pursuant to Section 14(a)
of the 1934 Act.
(f) EARNINGS STATEMENT. The Company will make generally available to its
security holders, as soon as practicable but in any event not later than 15
months after the Closing Date, a consolidated earnings statement (which
need not be audited) covering the twelve-month period beginning after the
latest of (i) the effective date of the Registration Statement, (ii) the
effective date of the most recent post-effective amendment to the
Registration Statement to become effective or (iii) the Company's most
recent annual report on Form 10-K filed with the Commission prior to the
Closing Date, which earnings statement will satisfy the provisions of
Section 11(a) of the 1933 Act. The Company may elect to rely upon Rule 158
under the 1933 Act and may elect to make such earnings statement available
more frequently than once in any period of twelve months.
(g) BLUE SKY QUALIFICATIONS. The Company will endeavor, in cooperation
with the Underwriters, to qualify the Debt Securities for offering and sale
under the applicable securities laws of such states in the United States as
the Representatives may reasonably designate, and will maintain such
qualifications in effect for as long as may be required for the
distribution of the Debt Securities; provided, however, that the Company
will promptly notify the Representatives of any suspension or termination
of any such qualifications; and provided further, that the Company shall
not be obligated to register or qualify as a foreign corporation or take
any action which would subject it to general service of process in any
jurisdiction where it is not now so subject.
7. INDEMNIFICATION OF THE UNDERWRITERS. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(a) against any and all loss, liability, claim, damage and expense
whatsoever (including, subject to the limitations set forth in Section 9
hereof, the reasonable fees and disbursements of counsel chosen by the
Underwriters), as incurred, insofar as such loss, liability, claim, damage
or expense arises out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or arises out of any untrue statement or
alleged untrue statement of a material fact contained in the Prospectus (or
11
<PAGE>
any amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(b) against any and all loss, liability, claim, damage and expense
whatsoever (including, subject to the limitations set forth in Section 9
hereof, the reasonable fees and disbursements of counsel chosen by the
Underwriters), as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever insofar as such loss, liability, claim, damage or expense arises
out of any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the written
consent of the Company; and
(c) against any and all expense whatsoever (including, subject to the
limitations set forth in Section 9 hereof, the reasonable fees and
disbursements of counsel chosen by the Underwriters), as incurred,
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever, based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission;
PROVIDED, HOWEVER, that this indemnity shall not apply to any loss,
liability, claim, damage or expense (A) to the extent arising out of or
based upon any untrue statement or omission or alleged untrue statement or
omission made in reliance upon the Form T-1 under the 1939 Act filed as an
exhibit to the Registration Statement; or (B) to the extent arising out of
any untrue statement or omission or alleged untrue statement or omission in
the Prospectus if such untrue statement or alleged untrue statement or
omission or alleged omission is corrected in all material respects in an
amendment or supplement to the Prospectus and if, having previously been
furnished by or on behalf of the Company with copies of the Prospectus, as
so amended or supplemented, such Underwriter thereafter failed to deliver
such Prospectus, as so amended or supplemented, if required to be delivered
by such Underwriter prior to or concurrently with the sale of the Debt
Securities to the person asserting such loss, liability, claim, damage or
expense who purchased such the Debt Securities which are the subject
thereof from such Underwriter; or (C) as to which such Underwriter may be
required to indemnify the Company pursuant to the provisions of Section 8.
8. INDEMNIFICATION OF THE COMPANY. Each Underwriter severally (and
not jointly) agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and
each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) of Section 7 hereof, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of such Underwriter through the Representatives expressly for use in the
Registration Statement or the Prospectus.
9. GENERAL. In case any action, suit or proceeding (including any
governmental or regulatory investigation or proceeding) shall be brought against
any Underwriter or any person controlling such Underwriter, based upon the
Registration Statement or the Prospectus and with respect to which indemnity may
be sought against the Company pursuant to Section 7, such Underwriter or
controlling person shall promptly
12
<PAGE>
notify the Company in writing, and the Company shall assume the defense
thereof, including the employment of counsel (such counsel to be reasonably
acceptable to such Underwriter) and payment of all expenses. Any such
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such separate counsel shall
be at the expense of such Underwriter or such controlling person unless (A)
the employment of such counsel shall have been specifically authorized in
writing by the Company, (B) the Company shall have failed to assume the
defense and employ counsel or (C) the named parties to any such action, suit
or proceeding (including any impleaded parties) shall include both such
Underwriter or such controlling person and the Company, and such Underwriter
or such controlling person shall have been advised by counsel that there may
be one or more legal defenses available to it which are different from, or
additional to, those available to the Company (in which case, if such
Underwriter or such controlling person notifies the Company in writing that
it selects to employ separate counsel at the expense of the Company, the
Company shall not have the right to assume the defense of such action, suit
or proceeding on behalf of such Underwriter or such controlling person, it
being understood, however, that the Company shall not, in connection with any
one such action or separate but substantially similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) for all
such Underwriters and such controlling persons, which firm shall be
designated in writing by the Representatives on behalf of all of such
Underwriters and such controlling persons).
In case any action, suit or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought against the Company,
any of the Company's directors or officers, or any person controlling the
Company, with respect to which indemnity may be sought against any
Underwriter pursuant to Section 8, such Underwriter shall have the rights and
duties given to the Company by this Section 9, and the Company, the Company's
directors and officers and any such controlling person shall have the rights
and duties given to the Underwriters by this Section 9.
10. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for
in Sections 7 and 8 hereof is for any reason held to be unenforceable with
respect to the indemnified parties although applicable in accordance with its
terms, the Company and the Underwriters shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated
by said indemnity agreement incurred by the Company and the Underwriters, as
incurred, in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Debt Securities. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
pursuant to Section 9 hereof or pursuant to the last sentence of this Section
10, then the Company and the Underwriters shall contribute to such aggregate
losses, liabilities, claims, damages and expenses incurred by the Company and
the Underwriters, as incurred, in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and the Underwriters on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Debt Securities shall be deemed to be in the same proportion as the total net
proceeds from the sale of the Debt Securities received by the Company (before
deducting expenses) bear to the total commissions or other compensation or
remuneration received by the Underwriters in respect thereof. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
13
<PAGE>
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the provisions of this Section 10, no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Debt Securities purchased by it
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 10, each person,
if any, who controls an Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each
officer of the Company who signed the Registration Statement and each person,
if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution
as the Company. Any party entitled to contribution pursuant to the first
sentence of this Section 10, will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect
of which a claim for contribution may be made against another party or
parties under this Section 10, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought, from any other obligation it or they may have otherwise than under
this Section 10; PROVIDED, HOWEVER, that such notice need not be given if
such party entitled to contribution hereunder has previously given notice
pursuant to Section 9 hereof with respect to the same action, suit or
proceeding.
11. TERMINATION. The Underwriters may terminate the Underwriting
Agreement immediately upon notice to the Company, at any time prior to the
Closing Date if (i) there has been, since the date of the Underwriting
Agreement, any material adverse change in the consolidated financial
condition or earnings of the Company and its subsidiaries, considered as one
enterprise, (ii) there has occurred any material adverse change in the
financial markets in the United States or any outbreak or escalation of
hostilities or other calamity or crisis, the effect of which is such as to
make it, in the reasonable judgment of the Representatives, impracticable to
market the Debt Securities or to enforce contracts for the sale of the Debt
Securities, (iii) trading in any securities of the Company has been suspended
(other than pursuant to a request by the Company with respect to an
announcement by the Company of certain information not constituting a
material adverse change, since the date of the Underwriting Agreement, in the
consolidated financial condition or earnings of the Company and its
subsidiaries, considered as one enterprise), the effect of which is such as
to make it, in the reasonable judgment of the Representatives, impracticable
to market the Debt Securities or to enforce contracts for the sale of the
Debt Securities, (iv) trading generally on the New York Stock Exchange has
been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities shall have been required, by such
exchange or by order of the Commission or any other governmental authority,
or if a banking moratorium has been declared by either Federal or New York
authorities or if a banking moratorium has been declared by the relevant
authorities in the country or countries of origin of any foreign currency or
currencies in which the Debt Securities are denominated or payable or (v)
after the date of the Underwriting Agreement, the rating assigned by any
nationally recognized securities rating agency to any debt securities of the
Company or its Significant Subsidiaries as of the date of the Underwriting
Agreement shall have been lowered or any such rating agency shall have
publicly announced that it has placed any debt securities of the Company or
its Significant Subsidiaries on what is commonly termed a "watch list" with
negative implications. As used in this Section 11, the term "Prospectus"
means the Prospectus (as defined herein) in the form first used to confirm
sales of the Debt Securities.
14
<PAGE>
In the event of any such termination, no party will have any liability
to any other party hereto, except that (i) the covenants set forth in Section
6(f) hereof, the indemnity and contribution agreement set forth in Sections
7, 8, 9 and 10 hereof and the provisions of Section 18 hereof shall remain in
effect and (ii) if the Underwriting Agreement is terminated by the
Underwriters in accordance with the provisions of Section 11(i) hereof, the
Company shall reimburse the Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
Underwriters.
12. DEFAULTING UNDERWRITERS. If on the Closing Date any one or more of
the Underwriters shall fail or refuse to purchase Debt Securities that it has
or they have agreed to purchase on such date, and the aggregate amount of
Debt Securities which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
amount of the Debt Securities to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the amount
of Debt Securities set forth opposite their respective names above bears to
the aggregate amount of Debt Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as the
Representatives may specify, to purchase the Debt Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date. If on the Closing Date any Underwriter or
Underwriters shall fail or refuse to purchase Debt Securities and the
aggregate amount of Debt Securities with respect to which such default occurs
is more than one-tenth of the aggregate amount of Debt Securities to be
purchased on such date, and arrangements satisfactory to the Representatives
and the Company for the purchase of such Debt Securities are not made within
36 hours after such default, this Agreement shall terminate without liability
on the part of any non-defaulting Underwriter or the Company. In any such
case either the Representative or the Company shall have the right to
postpone the Closing Date but in no event for longer then seven days, in
order that the required changes, if any, in the Registration Statement and in
the Prospectus or in any other documents or arrangements may be effected.
Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter
under this Agreement.
[13. SELLING AND OTHER RESTRICTIONS. (a) Each Underwriter, on behalf of
itself and each of its affiliates that participates in the initial distribution
of the Debt Securities, severally represents to and agrees with the Company
that:
(i) (a) it has not offered or sold and will not offer or sell any of
the Debt Securities to persons in the United Kingdom (the "U.K.")
except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public
in the U.K. within the meaning of the Public Offers of Securities
Regulation 1995; (b) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect
to anything done by it in relation to the Debt Securities in, from or
otherwise involving the U.K.; and (c) it has only issued or passed on,
and will only issue or pass on, in the U.K. any document received by
it in connection with the issue of the Debt Securities to a person who
is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisement) (Exemptions) Order 1995 or is a person
to whom the document may otherwise lawfully be issued or passed on.
(ii) it will not offer or sell any Debt Securities directly or
indirectly in Japan or to or for the benefit of any Japanese person or
to others, for re-offering or re-sale directly or indirectly
15
<PAGE>
in Japan or to any Japanese person except under circumstances which
will result in compliance with all applicable laws, regulations and
guidelines promulgated by the relevant governmental and regulatory
authorities in effect at the relevant time. For purposes of this
subparagraph (ii), "Japanese person" shall mean any person resident in
Japan, including any corporation or other entity organized under the
laws of Japan.
(iii) it has not distributed and will not distribute the preliminary
prospectus or the Prospectus in Hong Kong other than to persons
whose business involves the acquisition, disposal or holding of
securities, whether as principal or as agent, unless such Underwriter
is a person permitted to do so under the securities laws of Hong Kong.
(b) In addition to the provisions of subparagraph (a)(i), (ii) and (iii)
of this Section 13, each Underwriter severally represents to and agrees
with the Company that it has not offered, sold or delivered and that it
will not offer, sell or deliver, directly or indirectly, any of the Debt
Securities or distribute the Prospectus, any preliminary prospectus or any
other material relating to the Debt Securities, in or from any jurisdiction
except under circumstances that will, to the best of its knowledge and
belief, result in compliance with the applicable laws and regulations
thereof and which will not impose any obligations on the Company except as
contained in this Agreement.
(c) Without prejudice to the other provisions of this Section 13 and
except for registration under the 1933 Act and compliance with the 1933 Act
Regulations and the qualification of the Debt Securities for offer and sale
under the applicable securities laws of such jurisdictions within the
United States as the Representatives may designate pursuant to Section
6(g), the Company shall not have any responsibility for, and each
Underwriter severally agrees with the Company that each such Underwriter
and its respective affiliates will obtain, any consent, approval or
authorization required by them for the subscription, offer, sale or
delivery by them of any of the Debt Securities under the laws and
regulations in force in any jurisdiction to which they are subject or in or
from which they make such subscription, offer, sale or delivery of any of
the Debt Securities.]
14. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication.
15. PARTIES. This Agreement shall inure to the benefit of and be binding
upon the Company and the Underwriters and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters and the
Company and their respective successors and the controlling persons and officers
and directors referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
No purchaser of Debt Securities from any Underwriter shall be deemed to be a
successor by reason merely of such purchase.
16. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto shall remain
operative and in full force and effect, regardless of any investigation made by
or
16
<PAGE>
on behalf of any Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of and payment for the Debt Securities.
17. MISCELLANEOUS. The Underwriting Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto were upon the same instrument.
18. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING WITHOUT LIMITATION
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
19. HEADINGS. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
17
<PAGE>
EXHIBIT 1.5
FORM OF DISTRIBUTION AGREEMENT - DEBT SECURITIES
THE WALT DISNEY COMPANY
Medium-Term Notes
Due Nine Months or More from Date of Issue
DISTRIBUTION AGREEMENT
[Date]
[Investment Banks]
Dear Ladies and Gentlemen:
The Walt Disney Company, a Delaware corporation (the "Company"),
confirms its agreement with each of [Investment Banks] (each an "Agent" and
collectively, the "Agents") with respect to the issue and sale by the Company
of its Medium-Term Notes (the "Notes"). The Notes are to be issued pursuant to
the Indenture, dated as of March 7, 1996 (the "Indenture"), between the
Company and Citibank, N.A., a national banking association, as trustee (the
"Trustee"). As of the date hereof, the Company has authorized the issuance
and sale of up to U.S. $5,000,000,000 aggregate initial offering price (or
its equivalent, based upon the applicable exchange rate at the time of
issuance, in such foreign currencies or composite currencies as the Company
shall designate in the Notes at the time of issuance) of Notes directly or
through the Agents pursuant to the terms of this Agreement. Such Notes are
in addition to other Medium Term Notes of the Company outstanding at the date
hereof. It is understood, however, that the Company may from time to time
authorize the issuance of additional Notes and that, at the option of the
Company, such Notes may be distributed through or sold to the Agents pursuant
to the terms of this Agreement, all as though the issuance of such Notes were
authorized as of the date hereof.
<PAGE>
This Agreement provides both for the sale of Notes by the Company
directly to purchasers, in which case the Agents will act as agents of the
Company in soliciting Note purchasers, and (as may from time to time be agreed
to by the Company and one or more Agents) to such Agent or Agents as principal
for resale to purchasers.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333- [ ]
) for the registration of debt securities and other securities, including the
Notes, under the Securities Act of 1933, as amended (the "1933 Act"), and the
offering thereof from time to time in accordance with Rule 415 of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). Such registration statement has been declared effective by the
Commission and the Indenture has been qualified under the Trust Indenture Act
of 1939, as amended (the "1939 Act"). Such registration statement (and any
further registration statements that may be filed by the Company for the
purpose of registering additional Notes and which the Company and the Agents
agree is to be covered by this Agreement) and the prospectus constituting a
part thereof, together with any prospectus supplement relating to the Notes,
including, in each case, all Incorporated Documents (as hereinafter defined),
as from time to time amended or supplemented by the filing of documents
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
or the 1933 Act or otherwise, are referred to herein as the "Registration
Statement" and the "Prospectus," respectively, except that, if any revised
prospectus shall be provided to the Agents by the Company for use in
connection with the offering of the Notes which is not required to be filed
by the Company pursuant to Rule 424(b) of the 1933 Act Regulations, the term
"Prospectus" shall refer to such revised prospectus from and after the time
it is first provided to the Agents for such use. The term "Prospectus" shall
also include any term sheet or abbreviated term sheet as such terms are used
in Rule 434 of the 1933 Act Regulations (each a "Terms Sheet"). The term
"Registration Statement" shall also include any related registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations. In
addition, any reference herein to the Registration Statement or the
Prospectus shall be deemed to refer to and include the documents, financial
statements and schedules incorporated by reference therein pursuant to Item
12 of Form S-3 under the 1933 Act, and any reference to any amendment or
supplement to the Registration Statement or the Prospectus shall be deemed to
refer to and include any documents, financial statements and schedules filed
by the Company with the Commission under the 1934 Act after the date hereof,
and so incorporated by reference or deemed incorporated by reference(such
incorporated documents, financial statements and schedules being herein
called the "Incorporated Documents"). Notwithstanding the foregoing, for
purposes of this Agreement any prospectus or prospectus supplement or any
Term Sheets prepared or filed with respect to an offering pursuant to the
Registration Statement of securities other than the Notes shall not be deemed
to have supplemented the Prospectus.
2
<PAGE>
SECTION 1. REPRESENTATIONS AND WARRANTIES; ADDITIONAL CERTIFICATES
(a) REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to each Agent as of the date hereof, as of the date of each acceptance
by the Company of an offer for the purchase of Notes (whether through an Agent
as agent or from an Agent as principal), as of the date of each delivery of
Notes by the Company to the purchasers (the date of each such delivery to an
Agent as principal being hereafter referred to as a "Settlement Date"), and as
of the dates referred to in Section 6(a) hereof (each of the dates referenced
above being referred to hereafter as a "Representation Date"), as follows:
(i) The Incorporated Documents, when they became effective
or were filed (or, if an amendment with respect to any such Incorporated
Document was filed or became effective, when such amendment was filed or became
effective) with the Commission, as the case may be, complied in all material
respects with the requirements of the 1934 Act, and any Incorporated Documents
filed subsequent to the date hereof and prior to the termination of the offering
of the Notes, will, when they are filed with the Commission, comply in all
material respects with the requirements of the 1934 Act; no such Incorporated
Document, when it became effective or was filed (or, if an amendment with
respect to any such Incorporated Document was filed or became effective, when
such amendment was filed or became effective) with the Commission, contained,
and no Incorporated Document filed subsequent to the date hereof and prior to
the termination of the offering of the Notes will contain, an untrue statement
of a material fact or omitted, or will omit, to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(ii) The Registration Statement, at the time it became
effective, complied in all material respects with the provisions of the 1933 Act
and the 1933 Act Regulations; at the applicable Representation Date, the
Registration Statement and the Prospectus, and any supplements or amendments
thereto, will comply in all material respects with the provisions of the 1933
Act and the 1933 Act Regulations; and the Registration Statement and the
Prospectus, and any such supplement or amendment thereto, at all such times did
not and will not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; except that this representation and warranty does not apply to
statements or omissions in the Registration Statement, the Prospectus or any
preliminary prospectus, or any amendment or supplement thereto, made in reliance
upon information furnished to the Company in writing by or on behalf of the
Agents expressly for use therein or to those parts of the Registration Statement
which constitute the Trustee's Statement of Eligibility and Qualification on
Form T-1 under the 1939 Act (the
3
<PAGE>
"Form T-1"). There is no contract or document of a character required to be
described in the Registration Statement or the Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required.
(iii) This Agreement, the Indenture, the Notes and any
applicable Terms Agreement have been duly authorized by the Company and conform
in all material respects to the descriptions thereof in the Prospectus.
(iv) The Indenture (assuming due execution and delivery
thereof by the Trustee) is, and the Notes (when executed by the Company and
authenticated in accordance with the Indenture and delivered to and paid for by
the purchasers thereof) will be, the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by (A) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to or affecting the enforcement of creditors' rights generally,
(B) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), (C) requirements that a claim
with respect to any Notes denominated other than in United States dollars (or a
judgment denominated other than in United States dollars in respect of such
claim) be converted into United States dollars at a rate of exchange prevailing
on a date determined pursuant to applicable law and (D) governmental authority
to limit, delay or prohibit the making of payments outside the United States or
in a foreign currency or composite currency. The Notes (when executed by the
Company and authenticated in accordance with the terms of the Indenture and
delivered to and paid for by the purchasers thereof) will be entitled to the
benefits of the Indenture (subject to the exceptions set forth in the preceding
sentence).
(v) The Company is a validly existing corporation in good
standing under the laws of its state of incorporation. The Company has full
corporate power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the Prospectus;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not have a
material adverse effect on the consolidated financial condition or earnings of
the Company and its subsidiaries, considered as one enterprise.
(vi) Each of Disney Enterprises, Inc., ABC, Inc. and Walt
Disney World Co. (collectively, the "Significant Subsidiaries") is a validly
existing corporation in good standing under the laws of its state of
incorporation. Each of the Significant Subsidiaries has full corporate power
and authority to own,
4
<PAGE>
lease and operate its properties and to conduct its business as presently
conducted and as described in the Prospectus; and each of the Significant
Subsidiaries is duly qualified as a foreign corporation to transact business and
is in good standing in each United States jurisdiction in which such
qualification is required whether by reason of the ownership or leasing of
property or the conduct of business, except where a failure to so qualify would
not have a material adverse effect on the consolidated financial condition or
earnings of the Company and its subsidiaries, considered as one enterprise.
(vii) Except as contemplated in the Prospectus or reflected
therein by the filing of any amendment or supplement thereto or any Incorporated
Document, since the date of the most recent consolidated financial statements
included or incorporated by reference in the Registration Statement and the
Prospectus, unless the Company has notified the Agents as provided in Section
3(d) hereof, there has not been any material adverse change in the consolidated
financial condition or earnings of the Company and its subsidiaries, considered
as one enterprise.
(viii) The Company is not in violation of its Restated
Certificate of Incorporation or Bylaws, as amended. The execution and
delivery of this Agreement by the Company, the issuance and sale of the Notes
and the performance by the Company of its obligations under this Agreement,
the Indenture and any applicable Terms Agreement will not conflict with or
constitute a breach of or a default (with the passage of time or otherwise)
under (A) the Restated Certificate of Incorporation or Bylaws, as amended, of
the Company, (B) subject to the Company's compliance with any applicable
covenants pertaining to its incurrence of unsecured indebtedness contained
therein, any contract, indenture, mortgage, loan agreement, note, lease or
other instrument to which the Company is a party or by which it may be bound,
or to which any of the properties or assets of the Company is subject, which
breach or default would, singly or in the aggregate, have a material adverse
effect on the consolidated financial condition or earnings of the Company and
its subsidiaries, considered as one enterprise, or (C) any applicable law,
administrative regulation or administrative or court decree. Except for
orders, permits and similar authorizations required under or by the
securities or Blue Sky laws of certain jurisdictions, any securities exchange
on which any of the Notes might be listed or with respect to Notes which are
to be indexed or linked to any foreign currency, composite currency,
commodity, equity index or similar index, no consent, approval, authorization
or other order of any regulatory body, administrative agency or other
governmental body is legally required for the valid issuance and sale of the
Notes. As of the date of each acceptance by the Company of an offer for the
purchase of Notes and as of the date of each delivery of Notes by the
Company, the Company by such acceptance or delivery, as the case may be,
shall be deemed to represent and warrant to the
5
<PAGE>
Agents that, both immediately before and immediately after giving effect to such
acceptance or delivery, the Company shall be in compliance with the requirements
of any applicable covenants pertaining to its incurrence of unsecured
indebtedness contained in the agreements or instruments referred to in clause
(B) above.
(ix) To the best of the Company's knowledge, the
accountants who have audited and reported upon the financial statements filed
with the Commission as part of the Registration Statement and the Prospectus
are independent accountants as required by the 1933 Act. The historical
financial statements included in the Registration Statement or Prospectus or
incorporated therein by reference fairly present the consolidated financial
position and results of operations of the Company and its subsidiaries at the
respective dates and for the respective periods to which they apply. Such
historical financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied, except as set
forth in the Registration Statement and Prospectus. The unaudited pro forma
financial statements, if any, together with the related notes and any
supporting schedules included or incorporated by reference in the
Registration Statements and the Prospectus, fairly present the information
shown therein and have been compiled on a basis substantially consistent with
the audited financial statements of Disney included or incorporated by
reference in the Registration Statement and the Prospectus; the assumptions
on which such unaudited pro forma financial statements have been prepared are
reasonable; and such unaudited pro forma financial statements have been
prepared, and the pro forma adjustments set forth therein have been applied,
in accordance with the applicable accounting requirements of the 1933 Act and
the 1933 Act Regulations (including, without limitation, Regulations S-X
promulgated by the Commission), and such pro forma adjustments have been
properly applied to the historical amounts in the compilation of such
statements.
(x) The Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder or is exempt
therefrom.
(b) ADDITIONAL CERTIFICATIONS. Any certificate signed by any officer
of the Company and delivered to an Agent or to counsel for the Agents in
connection with an offering of Notes shall be deemed a representation and
warranty by the Company to such Agent as to the matters covered thereby on the
date of such certificate.
SECTION 2. SOLICITATIONS AS AGENTS; PURCHASES AS PRINCIPALS
(a) SOLICITATIONS AS AGENTS. Subject to the terms and conditions
stated herein and subject to the reservation by the Company of the right to
sell Notes directly on its own behalf and to any person, to sell Notes
through others (provided that any other agent will execute an agreement with
the Company which contains substantially the same terms and conditions
contained herein), and to designate and select additional agents to become
party to this Agreement, the Company hereby (i) appoints each Agent as an
agent of the Company for the purpose of soliciting offers to purchase the
Notes from the Company by others and (ii) agrees that whenever the Company
determines to sell Notes directly to an Agent as principal for resale to
others, it will enter into a Terms Agreement relating to such sale in
accordance with the provisions of Section 2(b) hereof. Without the prior
written consent of the Company, the Agents are not authorized to appoint
sub-agents or to engage the services of any other broker or dealer in
connection with the offer or sale of the
6
<PAGE>
Notes; provided, that without the Company's consent, the Agents may solicit
offers to purchase the Notes from other brokers or dealers. In connection with
the solicitation of offers to purchase Notes, without the prior consent of the
Company, the Agents are not authorized to provide any written information
relating to the Company to any prospective purchaser other than the Prospectus
and the Incorporated Documents. Each Agent will make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Notes from the Company has been solicited by such Agent, as agent, and
accepted by the Company, but such Agent shall not have any liability to the
Company in the event any such purchase is not consummated for any reason.
The Company reserves the right, in its sole discretion, to suspend the
solicitation of offers to purchase the Notes through the Agents commencing at
any time for any period of time or permanently. Upon receipt of instructions
from the Company, the Agents will, as soon as possible, suspend the solicitation
of offers to purchase the Notes from the Company until such time as the Company
has advised the Agents that such solicitation may be resumed.
The Company agrees to pay each Agent a commission, which such Agent is
hereby authorized to deduct from the sales proceeds of each Note sold by the
Company as a result of a solicitation made by such Agent, equal to the
applicable percentage of the principal amount of each such Note, as set forth in
Exhibit A hereto. Without the consent of the Company, no Agent, as an agent,
may reallow any portion of the commission payable pursuant hereto to dealers or
purchasers in connection with the offer and sale of any Notes.
As an agent, each Agent is authorized, except during periods of
suspension as provided in this Agreement, to solicit offers to purchase the
Notes. Each Agent shall communicate to the Company, orally or in writing, each
reasonable offer to purchase Notes received by such Agent, as agent. Each Agent
shall have the right in its discretion reasonably exercised to reject any offer
to purchase the Notes received by such Agent which it does not deem reasonable,
and any such rejection shall not be deemed a breach of such Agent's agreements
contained herein. The Company shall have the sole right to accept offers to
purchase the Notes and may reject any such offer in whole or in part, and any
such rejection shall not be deemed to be a breach of any agreement of the
Company contained herein. The purchase price, interest rate, maturity date and
other terms of the Notes agreed upon by the Company shall be set forth in a
pricing supplement to the Prospectus to be prepared following each acceptance by
the Company of an offer for the purchase of Notes (a "Pricing Supplement").
Except as may be otherwise provided in any Pricing Supplement, each Note will be
issued in the denomination of U.S. $1,000 or any amount in excess thereof which
is an integral multiple of U.S. $1,000. All Notes will be sold at 100% of their
principal
7
<PAGE>
amount unless otherwise agreed to by the Company. Each Agent acknowledges and
agrees that any funds which such Agent receives in respect of a purchase of
Notes, which purchase has been solicited by such Agent, as agent of the Company,
will be received, held and disposed of by such Agent, as agent of the Company,
subject to the right of such Agent to deduct from the sale proceeds the
applicable commission as set forth on Exhibit A hereto.
If requested by a prospective purchaser of Notes denominated in a
currency other than U.S. dollars, the Agent soliciting the offer to purchase
will use its reasonable efforts to arrange for the conversion of U.S. dollars
into such currency to enable the purchaser to pay for such Notes. Such requests
must be made on or before the third business day preceding the date of delivery
of the Notes, or by such other dates as determined by such Agent. Each such
conversion will be made by the relevant Agent on such terms and subject to such
conditions, limitations and charges as such Agent may from time to time
establish in accordance with its regular foreign exchange practice. All costs
of exchange will be borne by purchasers of the Notes.
(b) PURCHASES AS PRINCIPAL. Each sale of Notes to an Agent as
principal shall be made in accordance with the terms contained herein and
pursuant to a separate agreement which will provide for the sale of such Notes
to, and the purchase and any reoffering thereof by, such Agent. Each such
separate agreement (which may be an oral agreement if confirmed within 24 hours
thereafter by an exchange of any standard form of written telecommunication
(including facsimile transmission) between the Agent and the Company) is herein
referred to as a "Terms Agreement." Unless the context otherwise requires, each
reference contained herein to "this Agreement" shall be deemed to include any
applicable Terms Agreement between the Company and the Agent. Each such Terms
Agreement, whether oral (and confirmed in writing, which confirmation may be by
facsimile transmission) or in writing shall be with respect to such information
(as applicable) as is specified in Exhibit B hereto. An Agent's commitment to
purchase Notes pursuant to any Terms Agreement shall be deemed to have been made
on the basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein set forth.
The Agents may offer the Notes they have purchased as principal to other
dealers. The Agents may sell Notes to any dealer at a discount and, unless
otherwise specified in the applicable Terms Agreement, such discount allowed to
any dealer will not be in excess of the discount to be received by such Agent
from the Company. Unless otherwise specified in the applicable Terms Agreement,
any Notes sold to an Agent as principal will be purchased by such Agent at a
price equal to 100% of the principal amount thereof less a percentage equal to
the commission applicable to any agency sale of a Note of identical maturity.
8
<PAGE>
(c) ADMINISTRATIVE PROCEDURES. Administrative procedures with
respect to the sale of Notes shall be agreed upon from time to time by the
Agents and the Company (the "Procedures"). The Procedures initially agreed upon
shall be those set forth in Exhibit C hereto. The Agents and the Company agree
to perform the respective duties and obligations specifically provided to be
performed by the Agents and the Company herein and in the Procedures.
SECTION 3. COVENANTS OF THE COMPANY
The Company covenants with each Agent as follows:
(a) NOTICE OF CERTAIN EVENTS. The Company will notify the Agents
promptly of (i) the designation and selection of additional agents to become
party to this Agreement, (ii) the designation and selection of additional agents
for the sale of Notes pursuant to any agreement other than this Agreement, (iii)
the effectiveness of any post-effective amendment to the Registration Statement
(other than a post-effective amendment relating solely to an offering of debt
securities other than the Notes), (iv) the transmittal to the Commission for
filing of any supplement to the Prospectus (other than a Pricing Supplement or a
supplement relating solely to an offering of securities other than the Notes),
(v) the receipt of any comments from the Commission with respect to the
Registration Statement or the Prospectus (other than any comments relating
solely to an offering of securities other than the Notes), (vi) any request by
the Commission for any amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional information (other than any
such request relating solely to an offering of securities other than the Notes)
and (vii) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose. The Company will make every reasonable effort to prevent the
issuance of any such stop order and, if any such stop order is issued, to obtain
the lifting thereof at the earliest possible time unless the Company shall, in
its sole discretion, determine that it is not in its best interest to do so.
(b) NOTICE OF CERTAIN PROPOSED FILINGS. At or prior to the filing
thereof, the Company will give the Agents notice of its intention to file any
additional registration statement with respect to the registration of additional
Notes to be covered by this Agreement, any amendment to the Registration
Statement or any amendment or supplement to the Prospectus (other than a Pricing
Supplement or an amendment or supplement relating solely to an offering of debt
securities other than the Notes), whether by the filing of documents pursuant to
the 1934 Act, the 1933 Act or otherwise, and will furnish the Agents with copies
of any such amendment or supplement or other documents promptly after the filing
thereof.
9
<PAGE>
(c) COPIES OF THE REGISTRATION STATEMENT AND THE PROSPECTUS. The
Company will deliver to the Agents one signed and as many conformed copies of
the Registration Statement (as originally filed) and of each amendment thereto
(including the Incorporated Documents and any exhibits filed therewith or
incorporated by reference therein) as the Agents may reasonably request. The
Company will furnish to the Agents as many copies of the Prospectus (as amended
or supplemented) as the Agents shall reasonably request so long as the Agents
are required to deliver a Prospectus in connection with sales or solicitations
of offers to purchase the Notes.
(d) REVISIONS OF PROSPECTUS -- MATERIAL CHANGES. So long as the
Agents are required to deliver a Prospectus in connection with sales or
solicitations of offers to purchase the Notes, if any event shall occur or
condition exist as a result of which it is necessary, in the opinion of
counsel for the Company, after consultation with counsel for the Agents, to
further amend or supplement the Prospectus in order that the Prospectus will
not include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of
the circumstances existing at the time it is delivered to a purchaser, not
misleading, or if it shall be necessary, in the opinion of such counsel for
the Company, to amend or supplement the Registration Statement or the
Prospectus in order to comply with the requirements of the 1933 Act or the
1933 Act Regulations, prompt notice shall be given, and confirmed in writing,
to the Agents to cease the solicitation of offers to purchase the Notes in
their capacity as agents and to cease sales of any Notes the Agents may then
own as principal. In addition, if any Agent holds Notes purchased for resale
pursuant to a Terms Agreement and the Company has given notice to the Agents
pursuant to this subsection (d) within 90 days after the date of execution of
such Terms Agreement, the Company will prepare and file as soon as
practicable an amendment or supplement to the Prospectus so that the
Prospectus, as amended or supplemented, will not include any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein not misleading in light of the circumstances
existing at the time it is delivered to the Agents.
(e) COMPLIANCE WITH 1934 ACT; ACCOUNTANTS' CONSENTS. The Company
will (i) comply, in a timely manner, with all applicable requirements under the
1934 Act relating to the filing with the Commission of the Company's reports
pursuant to Section 13(a), 13(c) or 15(d) of the 1934 Act and, if then
applicable, of the Company's proxy statements pursuant to Section 14 of the 1934
Act and (ii) use its best efforts to obtain the written consent of the Company's
independent accountants as to the incorporation by reference in the Registration
Statement of the audited financial statements reported on by them and contained
in the Company's annual reports on Form 10-K under the 1934 Act.
10
<PAGE>
(f) EARNINGS STATEMENTS. The Company will make generally
available to its security holders, in each case as soon as practicable but in
any event not later than 15 months after the acceptance by the Company of an
offer to purchase Notes hereunder, a consolidated earnings statement (which
need not be audited) covering the twelve-month period beginning after the
latest of (i) the effective date of the Registration Statement, (ii) the
effective date of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of such
acceptance and (iii) the date of the Company's most recent annual report on
Form 10-K filed with the Commission prior to the date of such acceptance,
which earnings statement will satisfy the provisions of Section 11(a) of the
1933 Act (and, at the option of the Company, Rule 158 of the 1933 Act
Regulations). Nothing in this Section 3(f) shall require the Company to make
such earnings statement available more frequently than once in any period of
twelve months.
(g) BLUE SKY QUALIFICATIONS. The Company will endeavor, in
cooperation with the Agents, to qualify the Notes for offering and sale under
the applicable securities laws of such states and other jurisdictions of the
United States as the Agents may reasonably designate, and will maintain such
qualifications in effect for as long as may be required for the distribution
of the Notes; PROVIDED, HOWEVER, that the Company will promptly notify the
Agents of any suspension or termination of any such qualifications, and
PROVIDED, FURTHER, that the Company shall not be obligated to register or
qualify as a foreign corporation or take any action which would subject it to
general service of process in any jurisdiction where it is not now so subject.
(h) SUSPENSION OF CERTAIN OBLIGATIONS. The Company shall not be
required to comply with the provisions of subsections (b), (c), (d), (e) or
(g) of this Section 3 during any period from the time the Agents shall have
been notified to suspend the solicitation of offers to purchase the Notes in
their capacity as agents or resales of Notes purchased pursuant to a Terms
Agreement to the time the Company shall determine that the solicitation of
offers to purchase the Notes through any Agent or Agents or resales as
principal of Notes purchased pursuant to a Terms Agreement by any Agent or
Agents should be resumed. Notwithstanding the foregoing, if any Agent holds
Notes purchased for resale pursuant to a Terms Agreement the Company shall
comply with the provisions of subsections (b), (c), (d), (e) and (g) of this
Section 3 during the 90 day period from and including the date of execution
of such Terms Agreement; PROVIDED, HOWEVER, that the Company shall have the
right, in its reasonable business judgment, to suspend such compliance during
such 90 day period for an aggregate of up to 45 days, in which event such 90
day period shall be extended by the greater of (i) the number of days
included in any such period of suspension and (ii) 30 days.
11
<PAGE>
SECTION 4. PAYMENT OF EXPENSES
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The preparation and filing of the Registration
Statement and all amendments thereto and the Prospectus and any
amendments or supplements thereto and all Incorporated Documents;
(b) The preparation, filing and printing of this Agreement;
(c) The preparation, printing, issuance and delivery of the
Notes;
(d) The fees and disbursements of the Trustee and its
counsel, of any calculation agent or exchange rate agent and of The
Depository Trust Company;
(e) The reasonable fees and disbursements of counsel to
the Agents incurred in connection with the execution and delivery of
this Agreement and in connection with the review of subsequent
deliveries pursuant to this Agreement;
(f) The qualification of the Notes under securities laws in
accordance with the provisions of Section 3(g) hereof, including
filing fees and the reasonable fees and disbursements of counsel to
the Agents in connection therewith and in connection with the
preparation of any Blue Sky survey;
(g) The printing and delivery to the Agents in quantities
as hereinabove stated of copies of the Registration Statement and any
amendments thereto, and of the Prospectus and any amendments or
supplements thereto, and the delivery by the Agents of the Prospectus
and any amendments or supplements thereto in connection with
solicitations of offers to purchase, or confirmations of sales of, the
Notes;
12
<PAGE>
(h) Any fees charged by rating agencies for the rating of
the Notes;
(i) Any advertising and other out-of-pocket expenses of the
Agents incurred with the prior written approval of the Company; and
(j) Reasonable fees and disbursements in connection with
the subsequent delivery of legal opinions pursuant to Section 6(b)
hereof.
SECTION 5. CONDITIONS OF OBLIGATIONS
The obligations of any Agent to solicit offers to purchase the Notes
as agent of the Company and the obligations of any Agent to purchase Notes
pursuant to any Terms Agreement will be subject at all times to the accuracy, as
of the applicable Representation Date, of the representations and warranties on
the part of the Company herein and to the accuracy, as of the date made, of the
statements of the Company's officers made in any certificate furnished pursuant
to the provisions hereof, to the performance and observance by the Company of
all covenants and agreements herein contained on its part to be performed and
observed, and to the following additional conditions precedent:
(a) OPINION OF COUNSEL TO COMPANY. On the date hereof, the
Agents shall have received an opinion from O'Melveny & Myers LLP, counsel to
the Company, dated as of the date hereof and in form and substance
satisfactory to counsel for the Agents to the effect that:
(i) The Company and each of the Significant Subsidiaries is
a corporation validly existing and in good standing under the laws of
its state of incorporation.
(ii) The Company has the corporate power and corporate
authority to enter into and perform its obligations under this
Agreement and the Indenture, to borrow money as contemplated in this
Agreement and the Indenture, and to issue, sell and deliver the Notes.
(iii) This Agreement has been duly authorized, executed and
delivered by the Company.
13
<PAGE>
(iv) The Indenture has been duly authorized by all
necessary corporate action on the part of the Company and duly
executed and delivered by the Company and constitutes a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms, except (x) as may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally (including,
without limitation, fraudulent conveyance laws) and (B) general
principles of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity
or at law and (y) counsel may state that no opinion is expressed
with respect to the enforceability or effect of the waiver
contained in Section 6.12 of the Indenture and may advise that the
provisions regarding jurisdiction contained in Section 12.9 of the
Indenture may not be honored by the courts included or excluded.
(v) No Governmental Approval is required in connection with
the issuance or sale of the Notes other than registration thereof
under the 1933 Act, qualification of the Indenture under the 1939 Act,
and such registrations or qualifications as may be necessary under the
securities or Blue Sky laws of the various United States jurisdictions
in which the Notes are to be offered or sold.
(vi) The Notes, when the final terms of a particular Note
and its issuance and sale have been established in accordance with
the provisions of the Indenture and when executed and authenticated
in accordance with the terms of the Indenture and delivered to and
paid for by the purchasers thereof in accordance with the terms of
the Distribution Agreement, will constitute valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms, except (x) as may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally (including,
without limitation, fraudulent conveyance laws) and (B) general
principles of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity
or at law and (y) counsel may state that no opinion is expressed
with respect to the enforceability or effect of the waiver
contained in Section 6.12 of the Indenture and may advise that the
provisions regarding jurisdiction contained in Section 12.9 of the
Indenture may not be honored by the courts included or excluded.
(vii) The Registration Statement has been
declared effective under the 1933 Act and the Indenture has been
qualified under the 1939 Act, and, to the best of such counsel's
knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated.
14
<PAGE>
(viii) The execution and delivery of this Agreement and the
Indenture by the Company, the issuance and sale of the Notes and
the performance by the Company of its obligations under this
Agreement and the Indenture will not (A) violate the Restated
Certificate of Incorporation or Bylaws, as amended, of the Company,
(B) violate any Applicable Laws or (C) breach or otherwise violate
any obligation of or restriction on the Company under any judgment,
decree or order, known to such counsel, of any court or
Governmental Authority entered in any proceeding to which the
Company was or is now a party or by which it is bound; provided,
that such counsel may state that no opinion is expressed as to the
securities or Blue Sky laws of the various jurisdictions in which
the Notes are to be offered.
(ix) The Registration Statement, as of its effective
date, and the Prospectus, as of its date, appeared on their face to
comply in all material respects with the requirements as to form
for registration statements on Form S-3 and the related rules and
regulations then in effect, except that in each case such counsel
need not express an opinion as to (i) the Incorporated Documents,
(ii) the financial statements, schedules and other financial data
included or incorporated by reference therein or excluded therefrom
or (iii) the exhibits to the Registration Statement, including the
Form T-1.
(x) The statements in the Prospectus under the captions
"Description of the Debt Securities" and "Description of the Notes,"
insofar as they purport to summarize certain provisions of documents
specifically referred to therein, fairly present the information
required by Form S-3.
In rendering the opinions set forth above, such counsel may state that
(1) with respect to paragraphs (iv) and (vi), such enforcement may be limited by
(i) requirements that a claim with respect to any Notes denominated other than
in United States dollars (or a judgment denominated other than in United States
dollars in respect of such claim) be converted into United States dollars at a
rate of exchange prevailing on a date determined pursuant to applicable law and
(ii) governmental authority to limit, delay or prohibit the making of payments
outside the United States or in foreign currency or composite currency; and (2)
with respect to paragraphs (iv), (v),(vi) and (viii), no opinion is expressed
thereto with
15
<PAGE>
respect to any Notes that are to be indexed or linked to any foreign currency or
composite currency, commodity, equity index or similar index.
In rendering the opinion set forth in paragraph (v) and clause (B)
and (C) of paragraph (viii) above, the term "Applicable Laws" shall mean the
Delaware General Corporation Law and those laws, rules and regulations of the
States of California and New York and of the United States of America which
such counsel has, in the exercise of customary diligence, recognized as
applicable to the Company or the transactions of the type contemplated by
this Agreement, the term "Governmental Authority" shall mean any California,
New York, Delaware or federal executive, legislative, judicial,
administrative or regulatory body and the term "Governmental Approval" shall
mean any order, consent, permit or approval of any Governmental Authority
pursuant to Applicable Laws.
In addition such counsel may state that, in connection with such
counsel's participation in conferences in connection with the preparation of
the Registration Statement and Prospectus, such counsel has not independently
verified the accuracy, completeness or fairness of the statements contained
therein, and the limitation inherent in such examination made by such counsel
and the knowledge available to such counsel are such that such counsel is
unable to assume, and does not assume, and responsibility for such accuracy,
completeness or fairness (except as otherwise specifically stated in clause
(x) above). However, such counsel shall state that, on the basis of such
counsel's review and participation in conferences in connection with the
preparation of the Registration Statement and the Prospectus, such counsel
does not believe that the Registration Statement (excluding the Incorporated
Documents) at its effective date contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, and such
counsel shall state that such counsel does not believe that the Prospectus
(excluding the Incorporated Documents) as of the date of this Agreement (and,
if the opinion is being given pursuant to Section 6(b) hereof as a result of
the Company having entered into a Terms Agreement, as of the Settlement Date
with respect to such Terms Agreement) contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except that such counsel need express no opinion with
respect to (i) the Incorporated Documents, (ii) the financial statements,
schedules and other financial data included or incorporated by reference
therein or excluded therefrom or (iii) the exhibits to the Registration
Statement, including the Form T-1.
(b) OPINION OF COUNSEL EMPLOYED BY COMPANY. On the date hereof, the
Agents shall have received an opinion from David K. Thompson, Senior Vice
President-Assistant General Counsel or from other counsel employed
16
<PAGE>
by the Company (provided that such counsel is at least a Vice President of the
Company), dated as of the date hereof and in form and substance satisfactory to
counsel for the Agents, to the effect that:
(i) Except as set forth in the Prospectus (including the
Incorporated Documents), there is not pending or, to the best of such
counsel's knowledge, after reasonable inquiry, threatened any action,
suit or proceeding against the Company or any of its subsidiaries
before or by any court or governmental agency or body, which is likely
(to the extent not covered by insurance) to have a material adverse
effect on the consolidated financial condition or earnings of the
Company and its subsidiaries, considered as one enterprise.
(ii) To the best of such counsel's knowledge, after
reasonable inquiry, there is no contract or document of a character
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as required.
(iii) To the best of such counsel's knowledge, after
reasonable inquiry, the Company is not in violation of its Restated
Certificate of Incorporation or Bylaws, as amended.
(iv) To the best of such counsel's knowledge, after
reasonable inquiry, (x) the execution and delivery and (y) the
performance of this Agreement and the Indenture will not conflict
with or constitute a breach of, or default (with the passage of
time or otherwise) under, any material contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which
the Company is a party or by which it may be bound, or to which any
of the property or assets of the Company or any of its subsidiaries
is subject.
(v) The Incorporated Documents, as of the date of this
Agreement, comply as to form in all material respects with the
requirements of the 1934 Act, except that in each case such counsel
need not express an opinion as to the financial statements, schedules
and other financial data included or incorporated by reference therein
or excluded therefrom.
In addition, such counsel shall state that nothing has come to such
counsel's attention that leads him to believe that either the Registration
Statement (including the Incorporated Documents) at the time such Registration
Statement
17
<PAGE>
became effective contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or the Prospectus (including the Incorporated
Documents) as of the date of this Agreement (and, if the opinion is being given
pursuant to Section 6(b) hereof as a result of the Company having entered into a
Terms Agreement, as of the Settlement Date with respect to such Terms Agreement)
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, except
that such counsel need express no opinion with respect to the financial
statements, schedules and other financial data included or incorporated by
reference therein or excluded therefrom or the exhibits to the Registration
Statement, including the Form T-1.
(c) OPINION OF AGENTS' COUNSEL. On the date hereof, the Agents
shall have received an opinion from counsel to the Agents, dated as of the
date hereof and in form and substance satisfactory to the Agents.
(d) OFFICER'S CERTIFICATE. On the date hereof (and, if this
certificate is being delivered pursuant to a Terms Agreement, as of the
Settlement Date with respect to such Terms Agreement), the Agents shall have
received a certificate signed by an officer of the Company, substantially in the
form of Appendix I hereto and dated the date hereof, to the effect that (i) the
representations and warranties of the Company contained in Section 1(a) hereof
(other than Section 1(a)(vii)) are true and correct in all material respects
with the same force and effect as though expressly made at and as of the date of
such certificate, (ii) the Company has complied with all agreements and
satisfied all conditions required by this Agreement or the Indenture on its part
to be performed or satisfied at or prior to the date of such certificate, and
(iii) no stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been initiated or, to
the best of such officer's knowledge, threatened by the Commission. The
officer's certificate shall further state that except as contemplated in the
Prospectus or reflected therein by the filing of any amendment or supplement
thereto or any Incorporated Document, at the date hereof and at each Settlement
Date with respect to any Terms Agreement, there has not been, since the date of
the most recent consolidated financial statements included or incorporated by
reference in the Prospectus, any material adverse change in the consolidated
financial condition or earnings of the Company and its subsidiaries, considered
as one enterprise.
(e) COMFORT LETTER. On the date hereof, the Agents shall have
received a letter from the Company's independent certified public accountants,
18
<PAGE>
dated as of the date hereof and in form and substance satisfactory to the
Agents, to the effect that:
(i) They are independent public accountants with respect to
the Company and its subsidiaries within the meaning of the 1933 Act
and the 1933 Act Regulations.
(ii) In their opinion, the consolidated financial statements
and supporting schedule(s) of the Company and its subsidiaries audited
and reported upon by them and incorporated by reference in the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the 1933
Act Regulations with respect to registration statements on Form S-3
and the 1934 Act and the published rules and regulations thereunder.
(iii) They have performed specified procedures, not
constituting an audit, including a reading of the latest available
interim consolidated financial statements of the Company, a reading of
the minute books of the Company since the end of the most recent
fiscal year with respect to which an audit report has been issued,
inquiries of and discussions with certain officials of the Company and
certain of its subsidiaries responsible for financial and accounting
matters with respect to the latest available interim unaudited
consolidated financial statements of the Company, and such other
inquiries and procedures as may be specified in such letter, and on
the basis of such inquiries and procedures nothing came to their
attention that caused them to believe that: (A) the latest available
unaudited consolidated financial statements of the Company were not
fairly presented in conformity with generally accepted accounting
principles in the United States applied on a basis substantially
consistent with that of the audited financial statements incorporated
by reference therein, or (B) at a specified date not more than five
days prior to the date of such letter, there was any change in the
outstanding capital stock of the Company or any increase in
consolidated long-term debt of the Company or any decrease in the
stockholders' equity of the Company, in each case as compared with
the amounts shown on the most recent consolidated balance sheet of
the Company incorporated by reference in the Registration Statement
and Prospectus or, during the period from the date of such balance
sheet to a specified date not more than five days prior to the date
of such letter, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated
revenues or net income of the Company, except in each such case as
set forth in or contemplated by the Registration Statement and
Prospectus or except for such exceptions enumerated in such letter
as shall have been agreed to by the Agents and the Company.
(iv) In addition to the examination referred to in their
report included or incorporated by reference in the Registration
Statement and the Prospectus, and the limited procedures referred to
in clause (iii) above, they have carried out certain other specified
procedures, not constituting an audit, with respect to certain
financial information which is included or incorporated by reference
in the Registration Statement and Prospectus, which would normally be
covered under auditing procedures and which are specified by the
Agents, and have found such financial information to be in
19
<PAGE>
agreement with the relevant accounting, financial and other records of
the Company identified in such letter.
(f) OTHER DOCUMENTS. On the date hereof and on each Settlement Date
with respect to any applicable Terms Agreement, counsel to the Agents shall have
been furnished with such documents and opinions as such counsel may reasonably
require for the purpose of enabling such counsel to pass upon the issuance and
sale of Notes as herein contemplated and related proceedings, or in order to
evidence the accuracy and completeness of any of the representations and
warranties or the fulfillment of any of the conditions herein contained.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by any of the Agents (as to itself only) and any Terms Agreement may be
terminated by the Agent party to such Terms Agreement by notice to the Company
at any time and any such termination shall be without liability of any party to
any other party, except that the covenants set forth in Section 3(f) hereof, the
provisions of Section 4 hereof, the indemnity and contribution agreement set
forth in Sections 7 and 8 hereof, and the provisions of Sections 9 and 13 hereof
shall remain in effect.
SECTION 6. SUBSEQUENT DOCUMENTATION REQUIREMENT OF THE COMPANY
The Company covenants and agrees that so long as Notes are authorized
for sale pursuant to this Agreement and unless the sale of Notes has been
suspended as provided in this Agreement:
(a) SUBSEQUENT DELIVERY OF CERTIFICATES. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented
(other than by (i) a Pricing Supplement or an amendment or other supplement
providing solely for a change in the interest rates of the Notes or changes
in other terms of the Notes or (ii) an amendment or supplement which relates
exclusively to an offering of securities other than the Notes) or there is
filed with the Commission any document (other than a Current Report on Form
8-K unless delivery of a certificate is reasonably requested by the Agents
with respect to such filing) incorporated by reference into the Prospectus or
the Company sells Notes to an Agent pursuant to a Terms Agreement, the terms
of which so require, the Company shall use its best efforts to furnish or
cause to be furnished to the Agents or to the Agent party to the Terms
Agreement, as the case may be, promptly following such amendment, supplement
or filing or on the Settlement Date with respect to such Terms Agreement, as
the case may be, a certificate in form satisfactory to counsel for the Agents
to the effect that the statements contained in the certificate referred to in
Section 5(d) hereof, which was last furnished to the Agents, are true and
correct at the time of such amendment, supplement, filing or sale, as the
case may be, as
20
<PAGE>
though made at and as of such time (except that such statements shall be deemed
to relate to the Registration Statement and the Prospectus as amended and
supplemented to such time) or, in lieu of such certificate, a certificate of the
same tenor as the certificate referred to in said Section 5(d), modified as
necessary to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such certificate; PROVIDED, HOWEVER,
that in the case of any such amendment or supplement that relates to Notes which
are indexed or linked to any foreign currency, composite currency, commodity,
equity index or similar index, such certificate shall state that, for purposes
of such certificate, the phrase "or with respect to Notes which are to be
indexed or linked to any currency, composite currency, commodity, equity index
or similar index" appearing in the second sentence of Section 1(a)(viii) hereof
shall be deemed not to apply with respect to such Notes.
(b) SUBSEQUENT DELIVERY OF LEGAL OPINIONS. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by (i) a Pricing Supplement or an amendment or other supplement providing
solely for a change in the interest rates of the Notes or changes in other terms
of the Notes or (ii) an amendment or supplement providing primarily for the
inclusion of additional financial information, or (iii) an amendment or
supplement which relates exclusively to an offering of securities other than the
Notes) or there is filed with the Commission any document incorporated by
reference into the Prospectus (other than any Annual Report on Form 10-K,
Current Report on Form 8-K or Quarterly Report on Form 10-Q relating primarily
to financial statements or other financial information as of and for any fiscal
quarter) or the Company sells Notes to an Agent pursuant to a Terms Agreement,
the terms of which so require, the Company shall use its best efforts to furnish
or cause to be furnished promptly following such amendment, supplement or filing
or on the Settlement Date with respect to such Terms Agreement, as the case may
be, to the Agents or to the Agent party to the Terms Agreement, as the case may
be (with a copy to counsel to the Agents or counsel to such Agent, as the case
may be), letters substantially in the form of Appendix II hereto (modified, as
necessary, in the case of a Terms Agreement) from the counsel last furnishing
the opinions referred to in Sections 5(a) and 5(b) hereof or, in lieu of such
letters, letters from other counsel reasonably satisfactory to the Agents
(which, in the case of the opinions referred to in such Section 5(b), shall
include David K. Thompson, Senior Vice President - Assistant General Counsel of
the Company), dated the date of delivery of such letter and in form satisfactory
to counsel for the Agents, of the same tenor as the opinions referred to in
Sections 5(a) and 5(b) (other than, in the case of the opinion delivered
pursuant to Section 5(b) hereof, the matters covered by Sections 5(b)(i) and
5(b)(iv)(x)) hereof, but modified, as necessary, to relate to the Registration
Statement and the Prospectus as amended and supplemented to the time of delivery
of such opinion; PROVIDED, HOWEVER, that (i) in the case of any such amendment
or
21
<PAGE>
supplement that relates to Notes which are indexed or linked to any foreign
currency, composite currency, commodity, equity index or similar index, the
opinions referred to in Section 5(a) hereof shall not include the exceptions
set forth in such Section 5(a) as to Notes which are to be indexed or linked
to any foreign currency, composite currency, commodity, equity index or
similar index and (ii) if reasonably requested by the Agents, the counsel
delivering such opinion shall expand the opinion rendered pursuant to Section
5(a)(i) to include any other subsidiary of the Company that, as a result of
actions or events occurring after the date of this Agreement is of
substantially similar materiality to the Company, on a consolidated basis, as
each of the Significant Subsidiaries are as of the date of this Agreement.
The Company shall use its best efforts to furnish or cause to be furnished to
the Agents, promptly following each filing by the Company of a Quarterly
Report on Form 10-Q or an Annual Report on Form 10-K, a letter from the
counsel last furnishing the opinion referred to in Section 5(b) hereof, or
from other counsel reasonably satisfactory to the Agents, dated the date of
delivery of such letter and in form satisfactory to counsel for the Agents,
of the same tenor as the opinion referred to in Section 5(b)(i) hereof, but
modified, as necessary, to relate to the Registration Statement and
Prospectus as amended and supplemented to the time of delivery of such letter.
(c) SUBSEQUENT DELIVERY OF COMFORT LETTERS. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information or there is filed with the
Commission any document incorporated by reference into the Prospectus which
contains additional financial statement information relating to the Company
or the Company sells Notes pursuant to a Terms Agreement, the terms of which
so require, the Company shall use its best efforts to cause the Company's
independent public accountants promptly following such amendment, supplement
or filing or on the Settlement Date with respect to such Terms Agreement, as
the case may be, to furnish the Agents or to the Agent party to the Terms
Agreement, as the case may be, a letter, dated the date of filing of such
amendment, supplement or document with the Commission, or such Settlement
Date, as the case may be, in form satisfactory to counsel for the Agents (or
such Agent), of the same tenor as the portions of the letter referred to in
clauses (i) and (ii) of Section 5(e) hereof but modified, as necessary, to
relate to the Registration Statement and Prospectus, as amended and
supplemented to the date of such letter, and of the same general tenor as the
portions of the letter referred to in clause (iii) (other than the
information required by clause (B) thereof, except in the case of a Terms
Agreement, the terms of which so require) and clause (iv) of said Section
5(e) with such changes as may be necessary to reflect changes in the
financial statements and other information derived from the accounting
records of the Company; PROVIDED, HOWEVER, that if the Registration Statement
or the Prospectus is amended or supplemented primarily to include financial
information as of and for a fiscal quarter, the Company's independent
certified public accountants may
22
<PAGE>
limit the scope of such letter to the unaudited financial statements included in
such amendment or supplement.
SECTION 7. INDEMNIFICATION
(a) INDEMNIFICATION OF THE AGENTS. The Company agrees to indemnify
and hold harmless each Agent and each person, if any, who controls an Agent
within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever (including, subject to the limitations set forth in
subsection (c) below, the reasonable fees and disbursements of counsel
chosen by the Agents), as incurred, insofar as such loss, liability,
claim, damage or expense arises out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or arises out of any untrue statement or
alleged untrue statement of a material fact contained in the
Prospectus or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever (including, subject to the limitations set forth in
subsection (c) below, the reasonable fees and disbursements of counsel
chosen by the Agents), as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever insofar as such loss,
liability, claim, damage or expense arises out of any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever (including,
subject to the limitations set forth in subsection (c) below, the
reasonable fees and disbursements of counsel chosen by the Agents), as
incurred, reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
23
<PAGE>
claim whatsoever, based upon any such untrue statement or omission, or
any such alleged untrue statement or omission;
PROVIDED, HOWEVER, that this indemnity shall not apply to any loss,
liability, claim, damage or expense (A) to the extent arising out of or based
upon any untrue statement or omission or alleged untrue statement or omission
made in reliance upon the Form T-1; or (B) to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission in the
Prospectus if such untrue statement or alleged untrue statement or omission
or alleged omission is corrected in all material respects in an amendment or
supplement to the Prospectus and if, having previously been furnished by or
on behalf of the Company with copies of the Prospectus, as so amended or
supplemented, such Agent thereafter failed to deliver such Prospectus, as so
amended or supplemented, prior to or concurrently with the sale of a Note or
Notes to the person asserting such loss, liability, claim, damage or expense
who purchased such Note or Notes which are the subject thereof from such
Agent; or (C) as to which such Agent may be required to indemnify the Company
pursuant to the provisions of subsection (b) of this Section 7.
(b) INDEMNIFICATION OF THE COMPANY. Each Agent agrees to
indemnify and hold harmless the Company, its directors, each of its officers
who signed the Registration Statement, and each person, if any, who controls
the Company within the meaning of Section 15 of the 1933 Act against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section 7, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the Company by
or on behalf of such Agent expressly for use in the Registration Statement or
the Prospectus.
(c) GENERAL.
(i) In case any action, suit or proceeding (including any
governmental or regulatory investigation or proceeding) shall be
brought against any Agent or any person controlling such Agent,
based upon the Registration Statement or the Prospectus and with
respect to which indemnity may be sought against the Company
pursuant to this Section 7, such Agent or controlling person shall
promptly notify the Company in writing, and the Company shall
assume the defense thereof, including the employment of counsel
(such counsel to be reasonably acceptable to such Agent) and
payment of all expenses. Any such Agent or any such controlling
person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such separate counsel shall
be at the expense of such Agent or such controlling person unless
(A) the employment of such counsel shall have been specifically
authorized in writing by the Company,
24
<PAGE>
(B) the Company shall have failed to assume the defense and employ
counsel or (C) the named parties to any such action, suit or
proceeding (including any impleaded parties) shall include both
such Agent or such controlling person and the Company, and such
Agent or such controlling person shall have been advised by counsel
that there may be one or more legal defenses available to it which
are different from, or additional to, those available to the
Company (in which case, if such Agent or such controlling person
notifies the Company in writing that it elects to employ separate
counsel at the expense of the Company, the Company shall not have
the right to assume the defense of such action, suit or proceeding
on behalf of such Agent or such controlling person, it being
understood, however, that the Company shall not, in connection with
any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all such Agents and such
controlling persons, which firm shall be designated in writing by a
majority of all such Agents, on behalf of all of such Agents and
such controlling persons).
(ii) In case any action, suit or proceeding (including
any governmental or regulatory investigation or proceeding) shall
be brought against the Company, any of the Company's directors or
officers, or any person controlling the Company, with respect to
which indemnity may be sought against any Agent pursuant to this
Section 7, such Agent shall have the rights and duties given to the
Company by subsection (c)(i) of this Section 7, and the Company,
the Company's directors and officers and any such controlling
person shall have the rights and duties given to the Agents by
subsection (c)(i) of this Section 7.
SECTION 8. CONTRIBUTION
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 7 hereof
is for any reason held to be unenforceable with respect to the indemnified
parties although applicable in accordance with its terms, the Company and each
Agent shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by the
Company and the Agents, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and each
of the Agents participating in the offering that gave rise to such losses,
liabilities, claims, damages and expenses (a "Relevant Agent") on the other hand
from the offering of such Notes. If however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required pursuant to Section 7(c)
hereof or pursuant to the last sentence of this Section 8, then the Company and
each Agent shall contribute to
25
<PAGE>
such aggregate losses, liabilities, claims, damages and expenses incurred by the
Company and the Agents, as incurred, in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and each Relevant Agent on the other in connection with
the statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and each Relevant
Agent on the other hand in connection with the offering of such Notes shall be
deemed to be in the same proportion as the total net proceeds from the sale of
such Notes by such Relevant Agent received by the Company (before deducting
expenses) bear to the total commissions or other compensation or remuneration
received by such Relevant Agent in respect thereof. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or such Relevant
Agent and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. If more than one
Agent is a Relevant Agent in respect of a proceeding, each Relevant Agent's
obligation to contribute pursuant to this Section 8 shall be several and not
joint, and shall be in the proportion that the principal amount of the Notes
that are the subject of such proceeding and that were offered and sold through
such Relevant Agent bears to the aggregate principal amount of the Notes that
are the subject of such proceeding. Notwithstanding the provisions of this
Section 8, no Agent shall be required to contribute any amount in excess of the
amount by which the total price at which the Notes purchased by or through it
were sold exceeds the amount of any damages which such Agent has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 8, each person, if any, who controls an Agent within
the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as such Agent, and each director of the Company, each officer of
the Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Company. Any party entitled to
contribution pursuant to the first sentence of this Section 8 will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties under this Section 8, notify such party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought, from any other obligation it or they may have otherwise than
under this Section 8; PROVIDED, HOWEVER, that such notice need not be given if
such party entitled to
26
<PAGE>
contribution hereunder has previously given notice pursuant to Section 7(c)
hereof with respect to the same action, suit or proceeding.
SECTION 9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY
All representations, warranties and agreements contained in this
Agreement or any Terms Agreement, or contained in certificates of officers of
the Company submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any Agent or
any controlling person as defined in Section 15 of the 1933 Act of any Agent, or
by or on behalf of the Company, and shall survive each delivery of and payment
for any of the Notes.
SECTION 10. TERMINATION
(a) TERMINATION OF THIS AGREEMENT. This Agreement (excluding any
Terms Agreement) may be terminated by the Company (i) for any reason at any time
with respect to any Agent or Agents upon the giving of 2 business days' written
notice of such termination to each other party hereto or (ii) at any time upon
notice to each other party hereto if no Notes then remain authorized for sale
pursuant hereto. This Agreement may be terminated by any Agent (as to itself
only) either (x) upon the giving of 2 business days' written notice of such
termination to each other party hereto or (y) at any time upon notice to the
Company if the Company shall have failed to furnish or cause to be furnished the
certificates, opinions or letters referred to in Section 5 or 6 hereof or if no
Notes then remain authorized for sale pursuant hereto.
(b) TERMINATION OF A TERMS AGREEMENT. An Agent party to a Terms
Agreement may terminate such Terms Agreement (as to itself only) immediately
upon notice to the Company, at any time prior to the Settlement Date relating
thereto if (i) there has been, between the date of such Terms Agreement and the
related Settlement Date, any material adverse change in the consolidated
financial condition or earnings of the Company and its subsidiaries,
considered as one enterprise, (ii) there has occurred any material adverse
change in the financial markets in the United States or any outbreak or
escalation of hostilities or other calamity or crisis, the effect of which is
such as to make it, in the reasonable judgment of such Agent, impracticable
to market the Notes or to enforce contracts for the sale of the Notes, (iii)
trading in any securities of the Company has been suspended (other than
pursuant to a request by the Company with respect to an announcement by the
Company of certain information not constituting a material adverse change,
since the date of such Terms Agreement,
27
<PAGE>
in the consolidated financial condition or earnings of the Company and its
subsidiaries, considered as one enterprise), the effect of which is such as
to make it, in the reasonable judgment of such Agent, impracticable to market
the Notes or to enforce contracts for the sale of the Notes, (iv) trading
generally on the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices for
securities shall have been required, by such exchange or by order of the
Commission or any other governmental authority, or if a banking moratorium
has been declared by either Federal or New York authorities or if a banking
moratorium has been declared by the relevant authorities in the country or
countries of origin of any foreign currency or currencies in which the Notes
are denominated or payable or (v) after the date of such Terms Agreement the
rating assigned by any nationally recognized securities rating agency to any
debt securities of the Company as of the date of such Terms Agreement shall
have been lowered or any such rating agency shall have publicly announced
that it has placed any debt securities of the Company on what is commonly
termed a "watch list" with negative implications.
(c) GENERAL. In the event of any such termination, no party will
have any liability to any other party hereto, except that (i) a terminating
Agent shall be entitled to any commissions earned in accordance with the
third paragraph of Section 2(a) hereof, (ii) if at the time of termination
(A) a terminating Agent and the Company shall have entered into a Terms
Agreement and the Settlement Date with respect thereto shall not yet have
occurred or (B) an offer to purchase any of the Notes has been accepted by
the Company but the time of delivery to the purchaser or his agent of the
Note or Notes relating thereto has not occurred, the covenants set forth in
Sections 3 (subject to the provisions of Section 3(h)) and 6 hereof shall
remain in effect until such Settlement Date or until such Notes are so
delivered, as the case may be, and (iii) the covenant set forth in Section
3(f) hereof, the provisions of Section 4 hereof, the indemnity and
contribution agreements set forth in Sections 7 and 8 hereof, and the
provisions of Sections 9 and 13 hereof shall remain in effect.
28
<PAGE>
SECTION 11. NOTICES
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Agents shall be directed, as the case
may be, to: [ ]
Notices to the Company shall be directed to it at:
500 South Buena Vista Street
Burbank, California 91521
Attention: Legal Department
SECTION 12. PARTIES
This Agreement shall inure to the benefit of and be binding upon the
Agents (and, in the case of a Terms Agreement, the Agent or Agents party
thereto) and the Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to in
Sections 7 and 8 hereof and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provisions herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and their respective successors and said controlling persons and officers
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Notes shall be deemed to
be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAWS
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES CREATED
HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, INCLUDING WITHOUT LIMITATION, Sections 5-1401, 5-1402 AND
NYCPLR 327(b).
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between the Agents and the Company in accordance with its terms.
Very truly yours,
THE WALT DISNEY COMPANY
By
-------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
[ ]
By
---------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Commission
Term (1) Rate (2)
- -------- --------
<S> <C>
More than 9 months but less than 1 year. . . . . . . . . . . . . . . .
From 1 year but less than 18 months. . . . . . . . . . . . . . . . . .
From 18 months but less than 2 years . . . . . . . . . . . . . . . ..
From 2 years but less than 3 years . . . . . . . . . . . . . . . . . .
From 3 years but less than 4 years . . . . . . . . . . . . . . . . . .
From 4 years but less than 5 years . . . . . . . . . . . . . . . . . .
From 5 years but less than 6 years . . . . . . . . . . . . . . . . . .
From 6 years but less than 7 years . . . . . . . . . . . . . . . . . .
From 7 years but less than 10 years. . . . . . . . . . . . . . . . . .
From 10 years but less than 15 years . . . . . . . . . . . . . . . . .
From 15 years but less than 20 years . . . . . . . . . . . . . . . . .
From 20 years but less than 30 years . . . . . . . . . . . . . . . . .
From 30 years. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
- --------------------
(1) With respect to each Note that is subject to purchase by the Company
at the option of the holder thereof (a "Put Note"), the word "Term" as
used in this Exhibit A refers to the earliest purchase date specified
in the applicable Put Note.
(2) WITH RESPECT TO EACH NOTE THAT IS A DISCOUNT SECURITY (AS DEFINED IN
THE INDENTURE), THE COMMISSION PAYABLE TO EACH AGENT WITH RESPECT TO
EACH SUCH NOTE SOLD AS A RESULT OF A SOLICITATION MADE BY SUCH AGENT
SHALL BE BASED ON THE PURCHASE PRICE OF SUCH NOTE.
<PAGE>
EXHIBIT B
The following terms, if applicable, shall be agreed to by each Agent
and the Company pursuant to each Terms Agreement:
Principal Amount: $__________
(or principal amount of
foreign currency or
composite currency)
Interest Rate
If Fixed Rate Note, Interest Rate:
If Floating Rate Note:
Base Rate or Rates:
Initial Interest Rate:
Spread or Spread Multiplier, if any:
Interest Reset Dates:
Interest Payment Dates:
Index Maturity:
CMT Maturity Index, if any:
Interest Determination Dates:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Reset Period:
Interest Payment Period:
Calculation Agent (if other than the
Trustee):
If Redeemable:
Earliest Redemption Date:
Redemption Price:
Stated Maturity:
Final Maturity (for Renewable Notes):
Initial Maturity (for Renewable Notes):
Purchase Price: __%
<PAGE>
Settlement Date and Time:
Currency of Denomination (if currency is other
than U.S. dollar):
Currency of Payment (if currency is other than
U.S. dollar):
Denominations:
Additional Terms:
Also, agreement(3) as to whether the following will be required:
Officer's Certificate pursuant to Section 6(a) of the Distribution
Agreement.
Legal Opinion pursuant to Section 6(b) of the Distribution Agreement.
Comfort Letter pursuant to Section 6(c) of the Distribution Agreement.
Any restriction on the ability of the Company to sell senior debt
securities with an identical or substantially similar maturity between
the date of the Terms Agreement and the applicable Settlement Date.
Payment by the Company of legal expenses of counsel to Agent(s).
- --------------------
(3) The following generally will not be required in connection with a sale
of less than $50,000,000 aggregate principal amount of Notes.
<PAGE>
EXHIBIT C
THE WALT DISNEY COMPANY
MEDIUM TERM NOTES
ADMINISTRATIVE PROCEDURES
_______________
[ ]
The administrative procedures and specific terms of the offering of
Medium-Term Notes (the "Notes") on a continuing basis by The Walt Disney Company
(the "Issuer") pursuant to the Distribution Agreement, dated [ ] (as
amended, modified or supplemented from time to time, the "Distribution
Agreement"), between the Issuer and each of [the investment banks] (each an
"Agent" and collectively, the "Agents") are explained below. In the
Distribution Agreement, the Agents have agreed to act as agents of the Issuer to
solicit offers to purchase the Notes. Each Agent, as principal, may purchase
Notes for its own account pursuant to the terms and settlement details of a
terms agreement entered into between the Issuer and such Agent, as contemplated
by the Distribution Agreement. In the Distribution Agreement, the Issuer
reserves the right to sell Notes directly on its own behalf and to or through
others.
Each Note will be issued under an indenture between the Issuer and
Citibank, N.A., as trustee (the "Trustee"), dated as of March 7, 1996 (the
"Indenture"), relating to senior debt securities of the Issuer. Notes will bear
interest at either fixed rates ("Fixed Rate Notes") or floating rates ("Floating
Rate Notes"). Each Note will be represented by either a Global Security (as
defined hereinafter) delivered to the Trustee, as agent for The Depository Trust
Company ("DTC"), and recorded in the book-entry system maintained by DTC (a
"Book-Entry Note") or a certificate delivered to the Holder thereof or a Person
designated by such Holder (a "Certificated Note"). Owners of beneficial
interests in a Global Security will be entitled to physical delivery of
Certificated Notes equal in principal amount to their respective beneficial
interests only under certain limited circumstances.
The Trustee will act as Paying Agent for the payment of principal of
and interest on the Notes and will perform, as Paying Agent, unless otherwise
specified in the Notes, the Indenture or herein, the other duties specified
herein. Book-Entry Notes will be issued in accordance with the administrative
procedures
<PAGE>
set forth in Part I hereof, and Certificated Notes will be issued in accordance
with the administrative procedures set forth in Part II hereof. Any
administrative responsibilities, document control and record-keeping functions
to be performed by the Issuer will be performed by its Treasury Department. To
the extent that the procedures set forth herein conflict with any provision of
the Notes (which, in the case of Book-Entry Notes shall be the related Global
Security), the Indenture or the Distribution Agreement, the relevant provisions
of the Notes, the Indenture or the Distribution Agreement shall be controlling.
Unless otherwise defined herein, terms defined in the Indenture, the Officers'
Certificate establishing the Notes pursuant to Section 2.3(a) of the Indenture
or the Notes shall be used herein as therein defined.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK ENTRY NOTES
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Trustee will perform
the custodial, document control and administrative functions described below, in
accordance with its respective obligations under a Letter of Representations
from the Issuer and the Trustee to DTC, dated [ ], and a Medium-Term
Note Certificate Agreement between the Trustee and DTC, dated [ ], and
its obligations as a participant in DTC, including DTC's Same-Day Funds
Settlement System ("SDFS").
ISSUANCE: On any date of settlement (as defined under
"Settlement" below) for one or more Book-Entry Notes,
the Issuer will issue a single global security in fully
registered form without coupons (a "Global Security")
representing up to $200,000,000 principal amount of all
such Notes that have the same Stated Maturity and Final
Maturity, Earliest Redemption Date, Redemption Price
and other redemption provisions, if any, Interest
Payment Dates, Regular Record Dates, Interest Payment
Period, original issue discount, if any, and,
additionally, in the case of Fixed Rate Notes, interest
rate and, in the case of Floating Rate Notes, Initial
Interest Rate, Base Rate or Rates, Index Maturity,
Interest Reset Period, Interest Reset Dates, Spread or
Spread Multiplier, if any, Minimum Interest Rate, if
any, and Maximum Interest Rate, if
2
<PAGE>
any (collectively, the "Terms"). Each Global Security
will be dated and issued as of the date of its
authentication by the Trustee. Each Global Security
will bear interest from the later of the Original Issue
Date specified therein or from the most recent Interest
Payment Date with respect to such Global Security (or
Predecessor Security) to which interest has been paid
or duly provided for (such later date being herein
referred to as a "Global Interest Accrual Date").
Book-Entry Notes may only be denominated and payable in
U.S. dollars. No Global Security will represent any
Certificated Note.
IDENTIFICATION NUMBERS: The Issuer has arranged with the CUSIP Service Bureau
of Standard & Poor's Corporation (the "CUSIP Service
Bureau") for the reservation of a series of CUSIP
numbers (including tranche numbers), which series
consists of approximately [900] CUSIP numbers (of which
[900] remained unassigned as of the date hereof) and
relates to Global Securities representing the
Book-Entry Notes. The Issuer has obtained from the
CUSIP Service Bureau a written list of such series of
reserved CUSIP numbers and has delivered to the Trustee
and DTC such written list of such CUSIP numbers. The
Trustee will assign CUSIP numbers to Global Securities
as described under Settlement Procedure "B" below. DTC
will notify the CUSIP Service Bureau periodically of
the CUSIP numbers that the Trustee has assigned to
Global Securities. At any time when fewer than 100 of
the reserved CUSIP numbers of a series remain
unassigned to Global Securities, the Trustee, if it
deems necessary, will reserve additional CUSIP numbers
for assignment to Global Securities representing
Book-Entry Notes. Upon obtaining such additional CUSIP
numbers, the Trustee shall deliver a list of such
additional CUSIP numbers to the Issuer and DTC.
3
<PAGE>
REGISTRATION: Each Global Security will be registered in the name of
Cede & Co., as nominee for DTC, on the register of
Securities maintained under the Indenture. The
beneficial owner of a Book-Entry Note (or one or more
indirect participants in DTC designated by such owner)
will designate one or more participants in DTC (with
respect to such Note, the "Participants") to act as
agent or agents for such owner in connection with the
book-entry system maintained by DTC, and DTC will
record in book-entry form, in accordance with
instructions provided by such Participants, a credit
balance with respect to such Note in the account of
such Participants. The ownership interest of such
beneficial owner in such Note will be recorded through
the records of such Participants or through the
separate records of such Participants and one or more
indirect participants in DTC.
TRANSFERS: Transfers of a Book-Entry Note will be accomplished by
book entries made by DTC and, in turn, by Participants
(and in certain cases, one or more indirect
participants in DTC) acting on behalf of beneficial
transferors and transferees of such Note.
EXCHANGES: At the request of the Issuer, the Trustee shall deliver
to DTC and the CUSIP Service Bureau at any time a
written notice of consolidation specifying (i) the
CUSIP numbers of two or more Outstanding Global
Securities that represent Book-Entry Notes having the
same Terms and for which interest has been paid to the
same date, (ii) a date, occurring at least 30 days
after such written notice is delivered and at least 30
days before the next Interest Payment Date for such
Book-Entry Notes, on which such Global Securities shall
be exchanged for a single replacement Global Security
and (iii) a new CUSIP number, obtained from the Issuer,
to be assigned to such replacement Global Security.
Upon receipt of such a notice, DTC will send to its
Participants (including the Trustee) a written
4
<PAGE>
reorganization notice to the effect that such exchange
will occur on such date. Prior to the specified
exchange date, the Trustee will deliver to the CUSIP
Service Bureau a written notice setting forth such
exchange date and the new CUSIP number and stating
that, as of such exchange date, the CUSIP numbers of
the Global Securities to be exchanged will no longer be
valid. On the specified exchange date, the Trustee
will exchange such Global Securities for a single
Global Security bearing the new CUSIP number, and the
CUSIP numbers of the exchanged Global Securities will,
in accordance with CUSIP Service Bureau customary
procedures, be cancelled and not immediately
reassigned. Notwithstanding the foregoing, if the
Global Securities to be exchanged exceed $200,000,000
in aggregate principal amount, one Global Security will
be authenticated and issued to represent each
$200,000,000 of principal amount of the exchanged
Global Securities and an additional Global Security
will be authenticated and issued to represent any
remaining principal amount of such Global Securities
(see "Denominations" below).
MATURITIES: Each Book-Entry Note will mature on a date nine months
or more after the settlement date for such Note.
NOTICE OF REDEMPTION
DATES: In the case of a full redemption of all Book-Entry
Notes represented by a single Global Security, the
Trustee will notify DTC, not more than 60 but not less
than 30 days prior to the Redemption Date with respect
to such Global Security, of the CUSIP number of such
Global Security, the Redemption Date and the Redemption
Price. In the case of a redemption of less than all
Book-Entry Notes represented by a single Global
Security, the Trustee will notify DTC not more than 2
Business Days before 60 days, but not less than 2
Business Days before 30 days, prior to the Redemption
Date with respect to such Global Security,
5
<PAGE>
of the CUSIP number of such Global Security, the
Redemption Date and the Redemption Price.
DENOMINATIONS: Book-Entry Notes will be sold in denominations of
$1,000 and any amount in excess thereof that is an
integral multiple of $1,000. Global Securities will be
issued in denominations of $1,000 and any amount in
excess thereof that is an integral multiple of $1,000,
up to a maximum denomination of $200,000,000. If one
or more Book-Entry Notes having an aggregate principal
amount in excess of $200,000,000 would, but for the
preceding sentence, be represented by a single Global
Security, then one Global Security will be issued to
represent each $200,000,000 principal amount of such
Book-Entry Note or Notes and an additional Global
Security will be issued to represent any remaining
principal amount of such Book-Entry Note or Notes. In
such a case, each of the Global Securities representing
such Book-Entry Note or Notes shall be assigned the
same CUSIP number.
INTEREST: GENERAL. Interest on each Book-Entry Note will accrue
from the Global Interest Accrual Date with respect to
the Global Security representing such Note and will be
paid on the Interest Payment Dates of the Global
Security representing such Book-Entry Note. In the
case of a Global Security originally issued between a
Regular Record Date and the related Interest Payment
Date or on an Interest Payment Date, the first interest
payment will be made on the Interest Payment Date
immediately following the next Regular Record Date.
Each payment of interest on a Global Security will
include interest accrued to but excluding the Interest
Payment Date or Maturity. See "Calculation of
Interest" below. Interest payable at the Maturity of a
Book-Entry Note will be payable to the Person to whom
the principal of such Note is payable. Standard &
Poor's Corporation will use the information received in
the pending deposit message described under
6
<PAGE>
Settlement Procedure "C" below in order to include the
amount of any interest payable and certain other
information regarding any Global Security in the
appropriate weekly supplement to the Corporate
Registered Bond Interest Record published by Standard &
Poor's Corporation.
REGULAR RECORD DATES. Except as otherwise provided
with respect to any Book-Entry Note as specified in the
related Global Security, the Regular Record Date with
respect to any Interest Payment Date for Fixed Rate
Book-Entry Notes shall be the January 15 or July 15, as
the case may be, next preceding the applicable Interest
Payment Date. Except as otherwise provided with
respect to any Book-Entry Note as specified in the
related Global Security, the Regular Record Date with
respect to any Interest Payment Date for Floating Rate
Book-Entry Notes shall be the fifteenth day (whether or
not a Business Day) next preceding such Interest
Payment Date.
FIXED RATE BOOK-ENTRY NOTES. Except as otherwise
provided with respect to any Book-Entry Note as
specified in the related Global Security, interest
payments on Fixed Rate Book-Entry Notes will be made
semiannually on February 1 and August 1 of each year,
as specified in the related Global Security, and at
Stated Maturity, subject to the exceptions specified in
"Payments of Principal and Interest" below.
FLOATING RATE BOOK-ENTRY NOTES. Except as otherwise
provided with respect to any Book-Entry Note as
specified in the related Global Security, interest
payments on Floating Rate Book-Entry Notes will be made
monthly, quarterly, semiannually or annually of each
year, as specified in the related Global Security, and
at Stated Maturity. Except as otherwise provided with
respect to any Book-Entry Note as specified in the
7
<PAGE>
related Global Security, subject to the exceptions
specified in "Payments of Principal and Interest"
below, interest will be payable, in the case of
Floating Rate Book-Entry Notes which pay interest (i)
monthly, on the third Wednesday of each month; (ii)
quarterly, on the third Wednesday of each March, June,
September and December of each year; (iii)
semiannually, on the third Wednesday of each of the two
months specified in the Global Security representing
the applicable Book-Entry Note; and (iv) annually, on
the third Wednesday of the month specified in the
Global Security representing the applicable Book-Entry
Note.
NOTICE OF INTEREST PAYMENT AND REGULAR RECORD DATES.
On the first Business Day of January, April, July and
October of each year, the Trustee will deliver to the
Issuer and DTC a written list of Regular Record Dates
and Interest Payment Dates (to the extent then
determinable by the Trustee) that will occur with
respect to each Global Security during the six-month
period beginning on such first Business Day. Promptly
after each Interest Determination Date for Floating
Rate Notes, the calculation agent (the "Calculation
Agent") will notify Standard & Poor's Corporation of
the interest rates determined on such Interest
Determination Date.
CALCULATION OF
INTEREST: FIXED RATE BOOK-ENTRY NOTES. Interest on Fixed Rate
Book-Entry Notes (including interest for partial
periods) will be calculated on the basis of a 360-day
year of twelve 30-day months.
FLOATING RATE BOOK-ENTRY NOTES. Interest rates on
Floating Rate Book-Entry Notes will be determined as
set forth in the Global Security representing the
applicable Floating Rate Book-Entry Notes. Interest
will be calculated in the case of (a) Commercial Paper
8
<PAGE>
Rate Notes, LIBOR Notes, CD Rate Notes, Federal Funds
Rate Notes and Prime Rate Notes, on the basis of the
actual number of days in the interest period and a
360-day year; and (b) Treasury Rate Notes and CMT Rate
Notes, on the basis of the actual number of days in the
interest period and the actual number of days in the
year.
PAYMENTS OF PRINCIPAL
AND INTEREST PAYMENTS OF INTEREST ONLY. Promptly after each Regular
Record Date, the Trustee will deliver to the Issuer and
DTC a written notice specifying by CUSIP number the
amount of interest to be paid on each Global Security
on the following Interest Payment Date (other than an
Interest Payment Date coinciding with Stated Maturity)
and the total of such amounts. DTC will check the
amount payable on each Global Security on such Interest
Payment Date as shown in the appropriate weekly
supplements to the Corporate Registered Bond Interest
Record published by Standard & Poor's Corporation. On
such Interest Payment Date, the Issuer will pay to the
Trustee the total amount of interest due on such
Interest Payment Date (other than at Stated Maturity),
and the Trustee will pay such amount to DTC at the
times and in the manner set forth below under "Manner
of Payment."
If any Interest Payment Date for a Fixed Rate
Book-Entry Note is scheduled to occur on a day that is
not a Business Day with respect to such Fixed Rate
Book-Entry Note, the payment due on such Interest
Payment Date will be made on the following day that is
a Business Day with respect to such Fixed Rate
Book-Entry Note, and no interest shall accrue on the
amount payable on such Interest Payment Date for the
period from and after such Interest Payment Date to
such following day that is a Business Day.
9
<PAGE>
If any Interest Payment Date for a Floating Rate
Book-Entry Note is scheduled to occur on a day that is
not a Business Day with respect to such Floating Rate
Book-Entry Note, the payment due on such Interest
Payment Date will be made on the following day that is
a Business Day with respect to such Floating Rate
Book-Entry Note, and no interest shall accrue on the
amount payable on such Interest Payment Date for the
period from and after such Interest Payment Date to
such following day that is a Business Day, except that
in the case of a Floating Rate Book-Entry Note that is
a LIBOR Note (or a Floating Rate Book-Entry Note for
which LIBOR is the applicable Base Rate), if such
Business Day is in the next succeeding calendar month,
the payment due on such Interest Payment Date will be
made on the immediately preceding day that is a
Business Day.
PAYMENTS AT MATURITY. On or about the first Business
Day of each month, the Trustee will deliver to the
Issuer and DTC a written list of principal and interest
to be paid on each Global Security maturing either at
Stated Maturity or on a Redemption Date occurring in
the following month (to the extent then determinable by
the Trustee). The Issuer, the Trustee and DTC will
confirm the amounts of such principal and interest
payments with respect to each such Global Security on
or about the fifth Business Day preceding the Maturity
of such Global Security. The Issuer will pay to
Citibank, N.A., as the Paying Agent, the principal
amount of such Global Security, together with interest
due at such Maturity. Citibank, N.A. will pay such
amounts to DTC at the times and in the manner set forth
under "Manner of Payment" below. If any Maturity of a
Global Security representing Book-Entry Notes is not a
Business Day, the payment due on such day shall be made
on the next succeeding Business Day and no interest
shall accrue on such payment for the period from and
after such Maturity. Promptly
10
<PAGE>
after payment to DTC of the principal and interest due
at the Stated Maturity of such Global Security, the
Trustee will cancel such Global Security in accordance
with the terms of the Indenture, deliver to the Issuer
an appropriate debit advice and a certificate of
destruction relating to all such cancelled Global
Securities. On the first Business Day of each month,
the Trustee will deliver to the Issuer by facsimile
transmission a written statement, indicating the total
principal amount of Outstanding Global Securities for
which it serves as trustee as of the immediately
preceding Business Day.
MANNER OF PAYMENT. The total amount of any principal
and interest due on Global Securities on any Interest
Payment Date or at Maturity shall be debited from an
account of the Issuer maintained at the Trustee with
funds available for immediate use in the amount
required for such payment. The Trustee will pay by
separate wire transfer (using Fedwire message entry
instructions in a form previously specified by DTC) to
an account at the Federal Reserve Bank of New York
previously specified by DTC, in funds available for
immediate use by DTC, each payment of interest and
principal due on a Global Security on such date. On
each Interest Payment Date, interest payments shall be
made to DTC in same day funds in accordance with
existing arrangements between the Trustee and DTC.
Thereafter on each such date, DTC will pay, in
accordance with its SDFS operating procedures then in
effect, such amounts in funds available for immediate
use to the respective Participants in whose names the
Book-Entry Notes represented by such Global Securities
are recorded in the book-entry system maintained by
DTC. Neither the Issuer (either as Issuer or as Paying
Agent) nor the Trustee shall have any responsibility or
liability for the payment by DTC to such Participants
of the principal of and interest on the Book-Entry
Notes.
11
<PAGE>
WITHHOLDING TAXES. The amount of any taxes required
under applicable law to be withheld from any interest
payment on a Book-Entry Note will be determined and
withheld by the Participant, indirect participant in
DTC or other Person responsible for forwarding payments
and materials directly to the beneficial owner of such
Note.
ACCEPTANCE AND
REJECTION OF OFFERS: The Issuer has the sole right to accept offers to
purchase Book-Entry Notes and may reject any such offer
in whole or in part. Each Agent may, in its discretion
reasonably exercised, reject any offer to purchase
Book-Entry Notes received by it in whole or in part.
Each Agent will advise the Issuer promptly by telephone
or by facsimile transmission of all offers to purchase
Book-Entry Notes received by such Agent, other than
those rejected by it.
SETTLEMENT: The receipt by the Issuer of immediately available
funds in payment for a Book-Entry Note and the
authentication and issuance of the Global Security
representing such Note shall constitute "settlement"
with respect to such Note. Each offer accepted by the
Issuer will be settled on the third Business Day (or,
if acceptance by the Issuer occurs after 4:30 p.m.,
New York time, on the fourth Business Day) following
acceptance of such offer pursuant to the timetable for
settlement set forth below, unless the Issuer and the
purchaser agree to settlement on another day which
shall be no earlier than the Business Day following
acceptance of such offer.
SETTLEMENT PROCEDURES: In the event of a purchase of Book-Entry Notes by one
or more of the Agents, as principal, appropriate
settlement details, if different from those set forth
below, will be set forth in an applicable Terms
Agreement to be entered into between such Agent or
Agents and the Issuer pursuant to the Distribution
12
<PAGE>
Agreement. Settlement Procedures with regard to each
Book-Entry Note sold by the Issuer through an Agent, as
agent, shall be as follows:
A. Such Agent will advise the Issuer by facsimile
transmission or orally (if confirmed within 24
hours by written telecommunication) of the
following settlement information:
1. Principal amount.
2. Stated Maturity.
3. If such Note is a Fixed Rate Note, the
interest rate. If such Note is a Floating
Rate Note, the following:
a. Base Rate or Base Rates;
b. Initial Interest Rate;
c. Spread or Spread Multiplier, if any;
d. Interest Reset Dates;
e. Interest Reset Period;
f. Interest Payment Dates;
g. Index Maturity;
h. Interest Payment Period;
i. Calculation Agent (if other than
Citibank, N.A.;
j. Maximum Interest Rate, if any;
k. Minimum Interest Rate, if any;
13
<PAGE>
l. Interest Determination Dates; and
m. Index Currency, if applicable.
4. Earliest Redemption Date, Redemption Price
and other redemption provisions, if any.
5. Settlement date.
6. Original Issue Price.
7. Original issue discount, if any.
8. Agent's commission, determined as provided in
Section 2 of the Distribution Agreement
between the Issuer and such Agent.
9. Additional terms or provisions of such Note,
if any.
10. Net Proceeds to the Issuer.
11. Commission.
12. Discount.
13. Initial Maturity Date (for Renewable Notes).
14. Final Maturity Date (for Renewable Notes).
B. The Issuer will advise the Trustee by telephone
(confirmed in writing signed by an authorized
person at any time on the same date) or facsimile
transmission signed by an authorized person of the
information set forth in
14
<PAGE>
Settlement Procedure "A" above and the name of
such Agent.
C. The Trustee will assign a CUSIP number to the
Global Security representing such Note. The
Trustee will notify the Issuer and the Agent of
such CUSIP number by telephone as soon as
practicable.
D. The Trustee will enter a pending deposit message
through DTC's Participant Terminal System,
providing the following settlement information to
DTC, such Agent, and Standard & Poor's
Corporation.
1. The information set forth in Settlement
Procedure "A" above.
2. Numbers of the participant accounts
maintained by DTC on behalf of the Trustee
and the Agent.
3. Identification as a Fixed Rate Book-Entry
Note or a Floating Rate Book-Entry Note.
4. Initial Interest Payment Date for such Note,
Regular Record Date and amount of interest
payable on such Interest Payment Date.
5. Interest Payment Period.
6. CUSIP number of the Global Security
representing such Note.
7. Whether such Global Security will represent
any other Book-Entry Note (to the extent
known at such time).
15
<PAGE>
E. The Issuer will deliver to the Trustee a
pre-printed Global Security to represent such
Note, in a form that has been approved by the
Issuer, the Agents and the Trustee.
F. The Trustee will complete and authenticate the
Global Security representing such Note.
G. DTC will credit such Note to the Trustee's
participant account at DTC.
H. The Trustee will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Note to the
Trustee's participant account and credit such
Note to such Agent's participant account and (ii)
debit such Agent's settlement account and credit
the Trustee's settlement account for an amount
equal to the price of such Note less such Agent's
commission. The entry of such a deliver order
shall constitute a representation and warranty by
the Trustee to DTC that (i) the Global Security
representing such Book-Entry Note has been issued
and authenticated and (ii) the Trustee is holding
such Global Security pursuant to the Medium-Term
Note Certificate Agreement between the Trustee and
DTC.
I. Such Agent will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC (i) to debit such Note to such
Agent's participant account and credit such Note
to the participant accounts of the Participants
with respect to such Note and (ii) to debit the
settlement accounts of such Participants and
credit the settlement account of such Agent for
any amount equal to the price of such Note.
16
<PAGE>
J. Transfers of funds in accordance with SDFS deliver
orders described in Settlement Procedures "G" and
"H" above will be settled in accordance with SDFS
operating procedures in effect on the settlement
date.
K. The Trustee will credit to an account of the
Issuer maintained at the Trustee funds available
for immediate use in the amount transferred to the
Trustee in accordance with Settlement Procedure
"G" above.
L. The Trustee will retain the Global Security
representing such Note and will send a photocopy
thereof to the Issuer by first-class mail. The
Trustee will send to the Issuer, at the request of
the Issuer, a written statement setting forth (i)
the principal amount of Notes Outstanding under
the Indenture as of the date of such report, (ii)
a brief description of any sales of which the
Issuer has advised the Trustee but which have not
yet been settled and (iii) a description of
issuances and retirements of, payment on and other
activity relating to the Notes during the related
month.
M. Such Agent will confirm the purchase of such Note
to the purchaser either by transmitting to the
Participants with respect to such Note a
confirmation order or orders through DTC's
institution delivery system or by mailing a
written confirmation to such purchaser.
SETTLEMENT PROCEDURES
TIMETABLE: For orders of Book-Entry Notes solicited by an Agent,
as agent, and accepted by the Issuer for settlement on
the first Business Day after the sale date, Settlement
Procedure "A" through "L" above shall be completed
17
<PAGE>
as soon as possible but not later than the respective
times (New York City time) set forth below:
<TABLE>
<CAPTION>
SETTLEMENT
PROCEDURE TIME
--------- ----
<S> <C>
A . . . . . . . 11:00 a.m. on the sale date
B . . . . . . . 12:00 noon on the sale date
C . . . . . . . 2:00 p.m. on the sale date
D . . . . . . . 3:00 p.m. on the sale date
E . . . . . . . 9:00 a.m. on settlement date
F . . . . . . . 10:00 a.m. on settlement date
G-I . . . . . . 2:00 p.m. on settlement date
J-M . . . . . . 5:00 p.m. on settlement date
</TABLE>
If a sale is to be settled more than one Business Day
after the sale date, Settlement Procedure "A" shall be
completed as soon as practicable but no later than
11:00 a.m. on the first Business Day after the sale
date and Settlement Procedures "B" and "C" shall be
completed as soon as practicable but no later than
12:00 noon and 2:00 p.m., respectively, on the first
Business Day after the sale date. If the Initial
Interest Rate for a Floating Rate Book-Entry Note has
not been determined at the time that Settlement
Procedure "A" is completed, Settlement Procedures "B"
and "C" shall be completed as soon as such rate has
been determined but no later than 12:00 noon and 2:00
p.m., respectively, on the second Business Day before
the settlement date. Settlement Procedures "D" through
"L" shall be completed as soon as possible thereafter
but not later than the respective times (New York City
time) set forth in the preceding table, except that
Settlement Procedures "I" through "L" are subject to
extension in accordance with any extension of Fedwire
closing deadlines and in the other events specified in
the SDFS operating procedures in effect on the
settlement date.
18
<PAGE>
If settlement of a Book-Entry Note is rescheduled or
cancelled, the Trustee will deliver to DTC, through
DTC's Participant Terminal System, a cancellation
message to such effect by no later than 2:00 p.m. on
the Business Day immediately preceding the scheduled
settlement date.
FAILURE TO SETTLE: If the Trustee fails to enter an SDFS deliver order
with respect to a Book-Entry Note pursuant to
Settlement Procedure "G," the Trustee may deliver to
DTC, through DTC's Participant Terminal System, as soon
as practicable, a withdrawal message instructing DTC to
debit such Note to the Trustee's participant account.
DTC will process the withdrawal message, provided that
the Trustee's participant account contains a principal
amount of the Global Security representing such Note
that is at least equal to the principal amount to be
debited. If a withdrawal message is processed with
respect to all the Book-Entry Notes represented by a
Global Security, the Trustee will mark such Global
Security "cancelled," make appropriate entries in the
Trustee's records and send such cancelled Global
Security to the Issuer. The CUSIP number assigned to
such Global Security shall, in accordance with CUSIP
Service Bureau customary procedures, be cancelled and
not immediately reassigned. If a withdrawal message is
processed with respect to one or more, but not all, of
the Book-Entry Notes represented by a Global Security,
the Trustee will exchange the Global Security for two
Global Securities, one of which shall represent such
Book-Entry Note or Notes for which such withdrawal
message has been processed and shall be cancelled
immediately after issuance and the other of which shall
represent the remaining Book-Entry Notes previously
represented by the surrendered Global Security and
shall bear the CUSIP number of the surrendered Global
Security.
19
<PAGE>
If the purchase price for any Book-Entry Note is not
timely paid to the applicable Participants with respect
to such Note by the beneficial purchaser thereof (or a
Person, including an indirect participant in DTC,
acting on behalf of such purchaser), such Participants
and, in turn, the Agent for such Note, may enter SDFS
deliver orders through DTC's Participant Terminal
System reversing the orders entered pursuant to
Settlement Procedures "H" and "G," respectively.
Thereafter, the Trustee will deliver the withdrawal
message and take the related actions described in the
preceding paragraph. If such failure shall have
occurred for any reason other than default by the
applicable Agent in the performance of its obligations
hereunder or under the Distribution Agreement, the
Issuer will pay to such Agent an amount equal to the
interest earned by the Issuer with respect to such
funds during the period when the funds were credited to
the account of the Issuer.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may take
such actions as it deems appropriate in accordance with
its SDFS operating procedures then in effect in order
to reverse the orders entered into DTC's Participant
Terminal System pursuant to Settlement Procedures "H"
and "G," respectively. In the event of a failure to
settle with respect to one or more, but not all, of the
Book-Entry Notes to have been represented by a Global
Security, the Trustee will provide, in accordance with
Settlement Procedures "D" and "E," for the
authentication and issuance of a Global Security
representing the other Book-Entry Notes to have been
represented by such Global Security and will make
appropriate entries in its records.
PROCEDURE FOR POSTINGS: The Issuer will periodically contact one or more Agents
for recommended interest rates, coupons or spreads
("postings") with respect to Notes being offered. When
the Issuer has determined or changed its postings with
20
<PAGE>
respect to Notes being offered, it will promptly advise
the Agents. At such times as the Issuer is not
posting, the Agents will not solicit firm offers but
may record "indications of interest" only.
PRICING SUPPLEMENTS: Within five Business Days after any sale of Notes, the
Issuer will file or transmit for filing with the
Securities and Exchange Commission (the "Commission"),
in compliance with Rule 424(b)(3) of the rules and
regulations of the Commission promulgated under the
Securities Act of 1933, as amended, a copy of a pricing
supplement to the Prospectus (as defined in the
Distribution Agreement) relating to such Notes that
reflects the applicable interest rates and other terms
(the "Pricing Supplement") and will deliver a copy of
such Pricing Supplement to each of the Agents and to
the Trustee.
SUSPENSION OF
SOLICITATION,
AMENDMENT OR
SUPPLEMENT: The Issuer may instruct the Agents to suspend
solicitation of offers to purchase Book-Entry Notes at
any time. Upon receipt of such instructions, each
Agent will as soon as possible suspend such
solicitations until such time as it has been advised by
the Issuer that such solicitations may be resumed. The
Issuer will, consistent with its obligations under the
Distribution Agreement, promptly advise each Agent and
the Trustee whether orders outstanding at the time such
Agent suspends solicitation may be settled and whether
copies of the Prospectus, as in effect at the time of
the suspension, together with the appropriate Pricing
Supplement, may be delivered in connection with the
settlement of such orders. The Issuer will have the
sole responsibility for such decision and for any
arrangements that may be made in the event that the
Issuer determines that such orders may not be settled
or
21
<PAGE>
that copies of such Prospectus and Pricing Supplement
may not be so delivered.
DELIVERY OF PROSPECTUS: A copy of the most recent Prospectus and of the
applicable Pricing Supplement, if any, must be provided
to a purchaser by the applicable Agent prior to or at
the time of the earlier of (a) the written confirmation
of a sale sent to a purchaser of Book-Entry Notes or
his Agent, and (b) the date of settlement of any such
Book-Entry Notes (see "Settlement Procedures").
ADVERTISING COSTS: The Issuer will determine with the Agents the amount
and nature of advertising that may be appropriate in
offering the Notes. Advertising expenses approved in
writing by the Issuer in connection with the
solicitation of purchases of the Notes from the Issuer
will be paid by the Issuer.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as Registrar in connection with the
Certificated Notes.
ISSUANCE: Each Certificated Note will be dated and issued as of
the date of its authentication by the Trustee. Each
Certificated Note will bear interest from the later of
the Original Issue Date specified therein or from the
most recent Interest Payment Date with respect to such
Certificated Note (or Predecessor Security) to which
interest has been paid or duly provided for (such later
date being herein referred to as a "Certificated
Interest Accrual Date").
REGISTRATION: Certificated Notes will be issued only in fully registered form
without coupons.
TRANSFERS AND
22
<PAGE>
EXCHANGES: A Certificated Note may be presented for transfer or
exchange at the Corporate Trust office of the Trustee.
Certificated Notes will be exchangeable for other
Certificated Notes having identical terms but different
denominations without service charge. Certificated
Notes will not be exchangeable for Book-Entry Notes.
MATURITIES: Each Certificated Note will mature on a date nine
months or more from the settlement date for such Note.
DENOMINATIONS: Certificated Notes will be issued in denominations of
$1,000 or any amount in excess thereof that is an
integral multiple of $1,000.
INTEREST: GENERAL. Interest on each Certificated Note will
accrue from the Certificated Interest Accrual Date of
such Note. In the case of a Certificated Note
originally issued between a Regular Record Date and the
related Interest Payment Date or on an Interest Payment
Date, the first interest payment will be made on the
Interest Payment Date following the next Regular Record
Date. Each payment of interest on a Certificated Note
will include interest accrued to but excluding the
Interest Payment Date or Maturity. See "Calculation of
Interest" below. Interest will be payable to the
person in whose name a Certificated Note is registered
on the register of Securities at the close of business
on the Regular Record Date next preceding the
applicable Interest Payment Date; PROVIDED, HOWEVER,
interest payable at Maturity will be payable to the
Person to whom principal of such Certificated Note is
payable.
REGULAR RECORD DATE. The Regular Record Date with
respect to Fixed Rate Certificated Notes shall be the
January 15 or July 15, as the case may be, next
preceding the applicable Interest Payment Date. The
Regular Record Date with respect to any Interest
Payment Date for Floating Rate Certificated Notes shall
23
<PAGE>
be the fifteenth day (whether or not a Business Day)
next preceding such Interest Payment Date.
FIXED RATE CERTIFICATED NOTES. Interest payments on
Fixed Rate Certificated Notes will be made semiannually
on February 1 and August 1 of each year and at
Maturity, subject to the exceptions specified in
"Payments of Principal and Interest" below.
FLOATING RATE CERTIFICATED NOTES. Interest payments
will be made on Floating Rate Certificated Notes
monthly, quarterly, semiannually or annually of each
year, as specified in the related Note, and at
maturity. Subject to the exceptions specified in
"Payments of Principal and Interest" below, interest
will be payable, in the case of Floating Rate
Certificated Notes which pay interest (i) monthly, on
the third Wednesday of each month; (ii) quarterly, on
the third Wednesday of March, June, September and
December of each year; (iii) semiannually, on the third
Wednesday of each of the two months specified in the
applicable Certificated Note; and (iv) annually, on the
third Wednesday of the month specified in the
applicable Certificated Note.
CALCULATION OF
INTEREST: FIXED RATE CERTIFICATED NOTES. Interest on Fixed Rate
Certificated Notes (including interest for partial
periods) will be calculated on the basis of a 360-day
year of twelve 30-day months.
FLOATING RATE CERTIFICATED NOTES. Interest rates on
Floating Rate Certificated Notes will be determined as
set forth in the applicable Notes. The Issuer and the
Trustee will confirm the amount of the initial interest
payment due on any Floating Rate Certificated Note for
which the initial Interest Period is shorter or longer
than the Index Maturity. Promptly after each Interest
Determination Date for Floating Rate Certificated
Notes, the Calculation Agent will notify Standard &
24
<PAGE>
Poor's Corporation of the interest rates determined on
such Interest Determination Date. Interest will be
calculated in the case of (a) Commercial Paper Rate
Notes, LIBOR Notes, CD Rate Notes, Federal Funds Rate
Notes and Prime Rate Notes on the basis of the actual
number of days in the interest period and a 360-day
year; and (b) Treasury Rate Notes and CMT Rate Notes,
on the basis of the actual number of days in the
interest period and the actual number of days in the
year.
PAYMENTS OF PRINCIPAL
AND INTEREST: The Trustee will pay the principal amount of each
Certificated Note at Maturity upon presentation of such
Note to the Trustee. Such payment, together with
payment of interest due at Maturity of such Note, will
be made in funds available for immediate use by the
Holder of such Note. Certificated Notes presented to
the Trustee at Maturity for payment will be cancelled
by the Trustee in accordance with the terms of the
Indenture and returned to the Issuer. All interest
payments on a Certificated Note (other than interest
due at Maturity) will be made by check drawn on the
Trustee (or another Person appointed by the Trustee)
and mailed by the Trustee to the Person entitled
thereto as provided in such Note. Following each
Regular Record Date and Special Record Date, the
Trustee will furnish the Issuer with a list of interest
payments to be made on the following Interest Payment
Date for each Certificated Note and in total for all
Certificated Notes. Interest at Maturity will be
payable to the Person to whom the payment of principal
is payable. The Trustee will provide monthly to the
Issuer lists of principal and interest to be paid on
Certificated Notes maturing in the next month. The
Trustee will be responsible for withholding taxes on
interest paid on Certificated Notes as required by
applicable law. On the first Business Day of each
month, the Trustee will deliver to the Issuer by
facsimile transmission a written statement,
25
<PAGE>
indicating the total principal amount of Outstanding
Certificated Notes for which it serves as trustee as of
the immediately preceding Business Day.
If any Interest Payment Date for a Fixed Rate
Certificated Note is scheduled to occur on a day that
is not a Business Day with respect to such Fixed Rate
Certificated Note, the payment due on such Interest
Payment Date will be made on the following day that is
a Business Day with respect to such Fixed Rate
Certificated Note, and no interest shall accrue on the
amount payable on such Interest Payment Date for the
period from and after such Interest Payment Date to
such following day that is a Business Day.
If any Interest Payment Date for a Floating Rate
Certificated Note is scheduled to occur on a day that
is not a Business Day with respect to such Floating
Rate Certificated Note, such Interest Payment Date will
be the following day that is a Business Day with
respect to such Floating Rate Certificated Note;
PROVIDED, HOWEVER, that in the case of a Floating Rate
Certificated Note that is a LIBOR Note (or a Floating
Rate Certificated Note for which LIBOR is the
applicable Base Rate), if such Business Day is in the
next succeeding calendar month, such Interest Payment
Date will be the immediately preceding day that is a
Business Day.
If the date of Maturity of a Certificated Note is
scheduled to occur on a day that is not a Business Day
with respect to such Certificated Note, the payment due
at Maturity will be made on the following day that is a
Business Day with respect to such Certificated Note,
and no interest shall accrue on the amount payable at
Maturity for the period from and after the date of
Maturity.
26
<PAGE>
ACCEPTANCE AND
REJECTION OF OFFERS: The Issuer has the sole right to accept offers to
purchase Certificated Notes and may reject any offer in
whole or in part. Each Agent may, in its discretion
reasonably exercised, reject any offer to purchase
Certificated Notes received by it in whole or part.
Each Agent will advise the Issuer promptly by telephone
or facsimile transmission of all offers to purchase
Certificated Notes received by such Agent, other than
those rejected by it.
SETTLEMENT: The receipt by the Issuer of immediately available
funds in exchange for an authenticated Certificated
Note delivered to the selling Agent and such Agent's
delivery of such Note against receipt of immediately
available funds shall constitute "settlement" with
respect to such Note. Each offer accepted by the
Issuer will be settled on the third Business Day (or,
if acceptance by the Issuer occurs after 4:30 p.m., New
York time, on the fourth Business Day) following
acceptance of such offer pursuant to the timetable for
settlement set forth below, unless the Issuer and the
purchaser agree to settlement on another day; PROVIDED,
HOWEVER, that the Issuer will notify the Trustee at
least twenty-four hours prior to the time of
settlement.
SETTLEMENT PROCEDURES: In the event of a purchase of Certificated Notes by one
or more of the Agents, as principal, appropriate
settlement details, if different from those set forth
below, will be set forth in an applicable Terms
Agreement to be entered into between such Agent or
Agents and the Issuer pursuant to the Distribution
Agreement.
Settlement Procedures with regard to each Certificated
Note sold by the Issuer through an Agent, as agent,
shall be as follows:
27
<PAGE>
A. Such Agent will advise the Issuer by
facsimile transmission or orally (if
confirmed within 24 hours by written
telecommunication) of the following
settlement information:
1. Name in which such Note is to be
registered (the "Registered Owner").
2. Address of the Registered Owner and
address for payment of principal and
interest.
3. Taxpayer identification or Social
Security number of the Registered Owner
(if available).
4. Principal amount.
5. Stated Maturity.
6. If such Note is Fixed Rate Note, the
interest rate.
If such Note is a Floating Rate Note,
the following:
a. Base Rate or Base Rates;
b. Initial Interest Rate;
c. Spread or Spread Multiplier, if
any;
d. Interest Reset Dates;
e. Interest Reset Period;
f. Interest Payment Dates;
g. Index Maturity;
28
<PAGE>
h. Interest Payment Period;
i. Calculation Agent (if other than
Citibank, N.A.;
j. Maximum Interest Rate, if any;
k. Minimum Interest Rate, if any;
l. Interest Determination Dates; and
m. Index Currency, if applicable.
7. Earliest Redemption Date, Redemption
Price and other redemption provisions,
if any.
8. Settlement date.
9. Original Issue Price.
10. Original issue discount, if any.
11. Agent's commission, determined as
provided in Section 2 of the
Distribution Agreement between the
Issuer and such Agent.
12. Additional terms or provisions of such
Note, if any.
13. Net Proceeds to the Issuer.
14. Commission.
15. Discount.
16. Initial Maturity Date (for Renewable
Notes).
29
<PAGE>
17. Final Maturity Date (for Renewable
Notes).
B. The Issuer will advise the Trustee by
telephone (confirmed in writing signed by an
authorized person at any time on the same
date) or facsimile transmission signed by an
authorized person of the information set
forth in Settlement Procedure "A" above and
the name of such Agent.
C. The Issuer will deliver (if not previously
delivered) to the Trustee a preprinted
four-ply packet for such Note, which packet
will contain the following documents in forms
that have been approved by the Issuer, the
Agents and the Trustee:
1. Note with customer confirmation.
2. Stub One - for the Trustee.
3. Stub Two - for the Agent.
4. Stub Three - for the Issuer.
D. The Trustee will complete and authenticate
such Note and deliver it (with the
confirmation) and Stubs One and Two to such
Agent, and such Agent will acknowledge
receipt of the Note by stamping or otherwise
marking Stub One and returning it to the
Trustee. Such delivery will be made only
against such acknowledgment of receipt and
evidence that instructions have been given by
such Agent for payment to the account of the
Issuer at the Trustee, in funds available for
immediate use, of an amount equal to the
price of such note less Agent's commission.
In the event that the instructions given by
such
30
<PAGE>
Agent for payment to the account of the
Issuer are revoked, the Issuer will, as
promptly as possible, wire transfer to the
account of such Agent an amount of
immediately available funds equal to the
amount of such payment and such Agent will
return such Note to the Trustee.
E. Such Agent will deliver such Note (with
confirmation) to the customer against payment
in immediately available funds. Such Agent
will obtain the acknowledgment of receipt of
such Note by retaining Stub Two.
F. The Trustee will retain Stub One and will
send Stub Three to the Issuer by first-class
mail. Monthly, the Trustee will send to the
Issuer a written statement, setting forth (i)
the principal amount of the Notes Outstanding
under the Indenture as of the date of such
report, (ii) a brief description of any sales
of which the Issuer has advised the Trustee
but which have not yet been settled and (iii)
a description of issuances and retirements
of, payments on and other activity relating
to the Notes during the related month.
SETTLEMENT PROCEDURES
TIMETABLE: For offers of Certificated Notes solicited by an
Agent, as agent, and accepted by the Issuer,
Settlement Procedures "A" through "F" set forth
above shall be completed on or before the
respective times (New York City time) set forth
below:
<TABLE>
<CAPTION>
SETTLEMENT
PROCEDURE TIME
--------- ----
<S> <C>
A . . . 3:00 p.m. on day before settlement
date
31
<PAGE>
B . . . 4:00 p.m. on day before settlement
date
C-D . . 2:15 p.m. on settlement date
E . . . 3:00 p.m. on settlement date
F . . . 5:00 p.m. on settlement date
</TABLE>
FAILURE TO SETTLE: If a purchaser fails to accept delivery of and
make payment for any Certificated Note, the
selling Agent will notify the Issuer and the
Trustee by telephone and return such Note to the
Trustee. Upon receipt of such Note, the Issuer
will immediately wire transfer to the account of
the Agent an amount equal to the amount previously
credited thereto in respect of such Note. Such
wire transfer will be made on the settlement date,
if possible, and in any event not later than the
day following the settlement date. If the failure
shall have occurred for any reason other than a
default by the applicable Agent in the performance
of its obligations hereunder and under the
Distribution Agreement, the Issuer will pay to
such Agent an amount equal to the interest earned
by the Issuer with respect to such funds during
the period when they were credited to the account
of the Issuer. Immediately upon receipt of the
Certificated Note in respect of which such failure
occurred, the Trustee will mark such Note
"cancelled," make appropriate entries in the
Trustee's records and send such cancelled Note to
the Issuer.
PROCEDURE FOR POSTINGS: The Issuer will periodically contact one or more
Agents for recommended postings with respect to
Certificated Notes being offered. When the Issuer
has determined or changed its postings with
respect to Certificated Notes being offered, it
will promptly advise the Agents. At such times as
the Issuer is not posting, the Agents will not
solicit firm offers but may record "indications of
interest" only.
PRICING SUPPLEMENTS: Within five Business Days after any sale of
Certificated Notes, the Issuer will file or
transmit for filing with the
32
<PAGE>
Commission in compliance with Rule 424(b)(3) of
the rules and regulations of the Commission
promulgated under the Securities Act of 1933, as
amended, a copy of a Pricing Supplement to the
Prospectus relating to such Notes that reflects
the applicable interest rates and other terms and
will deliver a copy of such Pricing Supplement to
each of the Agents and the Trustee.
SUSPENSION OF
SOLICITATION,
AMENDMENT OR
SUPPLEMENT: The Issuer may instruct the Agents to suspend
solicitation of offers to purchase Certificated
Notes at any time. Upon receipt of such
instructions, each Agent will as soon as possible
suspend such solicitations until such time as it
has been advised by the Issuer that such
solicitations may be resumed. The Issuer will,
consistent with its obligations under the
Distribution Agreement, promptly advise each Agent
and the Trustee whether orders outstanding at the
time such Agent suspends solicitation may be
settled and whether copies of the Prospectus, as
in effect at the time of the suspension, together
with the appropriate Pricing Supplement, may be
delivered in connection with the settlement of
such orders. The Issuer will have the sole
responsibility for such decision and for any
arrangements that may be made in the event that
the Issuer determines that such orders may not be
settled or that copies of such Prospectus and
Pricing Supplement may not be so delivered.
DELIVERY OF PROSPECTUS: A copy of the most recent Prospectus and of the
applicable Pricing Supplement, if any, must be
provided to a purchaser by the applicable Agent
prior to or at the time of the earlier of (a) the
written confirmation of a sale sent to a purchaser
of Certificated Notes or his agent and (b) the
delivery of any such Certificated Notes to a
purchaser or his agent (see Settlement
Procedures).
33
<PAGE>
ADVERTISING COSTS: The Issuer will determine with the Agents the
amount and nature of advertising that may be
appropriate in offering the Certificated Notes.
Advertising expenses approved in writing by the
Issuer in connection with the solicitation of
purchases of Certificated Notes from the Issuer
will be paid by the Issuer.
34
<PAGE>
Appendix I
FORM OF OFFICER'S CERTIFICATE
THE WALT DISNEY COMPANY
I, [Name], [Title] of The Walt Disney Company, a Delaware
corporation (the "Company"), pursuant to Section 5(d) of the Distribution
Agreement, dated [____________] (the "Distribution Agreement"), among the
Company and [____________] (collectively, the "Agents"), relating to the
offering from time to time by the Company directly or through the Agents of
up to $5,000,000,000 aggregate principal amount of Medium-Term Notes of the
Company, hereby certify on behalf of the Company that:
1. Except as contemplated in the Prospectus or reflected therein
by the filing of any amendment or supplement thereto or any Incorporated
Document, since the date of the most recent consolidated financial statements
included or incorporated by reference in the Prospectus, there has not been
any material adverse change in the consolidated financial condition or
earnings of the Company and its subsidiaries, considered as one enterprise.
2. The representations and warranties of the Company contained in
Section 1(a) of the Distribution Agreement (other than Section 1(a)(vii)
thereof) are true and correct in all material respects with the same force and
effect as though expressly made at and as of the date hereof.
3. The Company has complied with all agreements and satisfied all
conditions required by the Distribution Agreement or the Indenture on its
part to be performed or satisfied at or prior to the date hereof.
4. No stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or, to the best of my knowledge, threatened by the Securities and
Exchange Commission.
Capitalized terms used but not defined herein have the meaning
given in the Distribution Agreement.
<PAGE>
IN WITNESS WHEREOF, I have hereunto signed my name this ____ day of
_________.
By:
--------------------------------------
Name:
Title:
<PAGE>
Appendix II
FORM OF RELIANCE LETTER OF COUNSEL
[Date]
[Investment Banks]
Re: The Walt Disney Company Medium-Term Notes
-----------------------------------------
Dear Sirs:
[We] [I] have delivered an opinion to you dated ___________ as
counsel to The Walt Disney Company (the "Company"), pursuant to Section [5(a)]
[5(b)] of the Distribution Agreement, dated as of ___________ (the
"Distribution Agreement"), among the Company and [the investment banks]. You
may continue to rely upon such opinion [(other than, in the case of the opinion
delivered pursuant to Section 5(b) of the Distribution Agreement, the matters
covered by Section 5(b)(i) and 5(b)(iv)(x) thereof, as to which no opinion is
expressed)] as if it were dated as of this date, except that all statements
and opinions contained therein shall be deemed to relate to the Registration
Statement and Prospectus (as such terms are defined in the Distribution
Agreement) as amended and supplemented to this date.
This letter is delivered to you pursuant to Section 6(b) of the
Distribution Agreement.
Very truly yours,
<PAGE>
EXHIBIT 4.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
THE WALT DISNEY COMPANY
The undersigned, David K. Thompson, certifies that he is the Senior Vice
President-Assistant General Counsel of The Walt Disney Company, a corporation
organized and existing under the laws of the State of Delaware (the
"Corporation"), and hereby further certifies as follows:
1. The name of the Corporation is The Walt Disney Company and the
name under which the corporation was originally incorporated is DC Holdco,
Inc.
2. The original Certificate of Incorporation of the Corporation was
filed in the Office of the Secretary of State of the State of Delaware on
July 28, 1995.
3. Restated Certificates of Incorporation were filed in the office of
the Secretary of State of Delaware on September 21, 1995, January 19,
1996, February 20, 1996 and February 25, 1998.
4. This Restated Certificate of Incorporation was duly adopted in
accordance with the provisions of Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
5. This Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of this
Corporation by amending Article FOURTH to provide for the increase in the
total number of authorized shares of the Corporation.
6. The text of the Certificate of Incorporation as amended or
supplemented heretofore is further amended to read as herein set forth in
full:
FIRST: The name of the Corporation is The Walt Disney Company.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of its registered agent at that
address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may now or hereafter be organized under the
General Corporation Law of the State of Delaware as set forth in Title 8 of the
Delaware Code, as in effect from time to time (the "GCL").
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 3,700,000,000, consisting of 3,600,000,000 shares of
common stock, par value $0.01 per share ("Common Stock"), and 100,000,000
shares of preferred stock, par value $0.01 per share ("Preferred Stock").
Shares of the Preferred Stock of the Corporation may be issued from time to
time in one or more classes or series, each of which class or series shall have
such distinctive designation, number of shares, or title as shall be fixed by
the Board of Directors of the Corporation (the "Board of Directors") prior to
the issuance of any shares thereof. Each such class or series of Preferred Stock
shall consist of such number of shares, and have such voting powers, full or
limited, or no voting powers, and such preferences and relative, participating,
optional or other special rights and such qualifications, limitations or
restrictions thereof, as shall be stated in such resolution or resolutions
providing for the issue of such
1
<PAGE>
class or series of Preferred Stock as may be adopted from time to time by the
Board of Directors prior to the issuance of any shares thereof pursuant to the
authority hereby expressly vested in it, all in accordance with the laws of the
State of Delaware.
SERIES R PREFERRED STOCK. There is designated a Series R Preferred Stock of
the Corporation, the designation and amount thereof and the voting powers,
preferences and relative, participating, optional or other special rights of the
shares of such series and the qualifications, limitations and restrictions
thereof, which are as follows:
Section 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated "Series R Preferred Stock" ("Series R Preferred Stock") and the
number of shares constituting such series shall be 1,800,000. Shares of Series
R Preferred Stock shall have a par value of $.01 per share.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the provisions for adjustment hereinafter set forth, the
holders of shares of Series R Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, (i) cash dividends in an amount per share (rounded to
the nearest cent) equal to 400 times the aggregate per share amount of all cash
dividends declared or paid on the Common Stock of the Corporation and (ii) a
preferential cash dividend (a "Preferential Dividend"), if any, on the fifteenth
day of January, April, July and October of each year (each a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series R Preferred
Stock, in an amount equal to $1.00 per share of Series R Preferred Stock less
the per share amount of all cash dividends declared on the Series R Preferred
Stock pursuant to clause (i) of this sentence since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series R Preferred Stock. In the event the Corporation shall, at any time after
the issuance of any share or fraction of a share of Series R Preferred Stock,
make any distribution on the shares of Common Stock, whether by way of a
dividend or a reclassification of stock, a recapitalization, reorganization or
partial liquidation of the Corporation or otherwise, which is payable in cash or
any debt security, debt instrument, real or personal property or any other
property (other than cash dividends subject to clause (i) of the immediately
preceding sentence and other than a distribution of shares of Common Stock or
other capital stock of the Corporation and other than a distribution of rights
or warrants to acquire any such share, including any debt security convertible
into or exchangeable for any such share, at a price less than the Current Market
Price of such share), then and in each such event the Corporation shall
simultaneously pay on each then outstanding share of Series R Preferred Stock of
the Corporation a distribution, in like kind, of 400 times (subject to the
provisions for adjustment hereinafter set forth) such distribution paid on a
share of Common Stock. The dividends and distributions on the Series R
Preferred Stock to which holders thereof are entitled pursuant to clause (i) of
the first sentence of this paragraph and the second sentence of this paragraph
are hereinafter referred to as "Participating Dividends," and the multiple of
cash and non-cash dividends on the Common Stock applicable to the determination
of the Participating Dividends, which shall be 400, subject to adjustment from
time to time as hereinafter provided, is hereinafter referred to as the
"Dividend Multiple." In the event the Corporation shall at any time declare or
pay any dividend or make any distribution on Common Stock payable in shares of
Common Stock, or effect a subdivision or split or a combination, consolidation
or reverse split of the outstanding shares of Common Stock into a greater or
lesser number of shares of Common Stock, then in each such event the Dividend
Multiple thereafter applicable to the determination of the amount of
Participating Dividends which holders of shares of Series R Preferred Stock
shall be entitled to receive shall be the Dividend Multiple applicable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare each Participating Dividend at the same
time it declares any cash or non-cash dividend or distribution on the Common
Stock in respect of which a Participating Dividend is required to be paid. No
cash or non-cash dividend or distribution on the Common Stock in respect of
which a Participating Dividend is required shall be paid or set aside for
payment on the
2
<PAGE>
Common Stock unless a Participating Dividend in respect of such dividend or
distribution on the Common Stock shall be simultaneously paid or set aside for
payment on the Series R Preferred Stock.
(C) Preferential Dividends shall begin to accumulate on outstanding shares
of Series R Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issuance of any shares of Series R Preferred Stock.
Accumulated but unpaid Preferential Dividends shall cumulate but shall not bear
interest. Preferential Dividends paid on the shares of Series R Preferred
Stock in an amount less than the total amount of such dividends at the time
accumulated and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
Section 3. VOTING RIGHTS. The holders of shares of Series R Preferred
Stock shall have the following voting rights:
(A) Each share of Series R Preferred Stock shall entitle the holder
thereof to 400 votes on all matters submitted to a vote of the stockholders
of the Corporation. The number of votes which a holder of Series R Preferred
Stock is entitled to cast, as the same may be adjusted from time to time as
hereinafter provided, is hereinafter referred to as the "Vote Multiple." In
the event the Corporation shall at any time declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding
shares of Common Stock into a greater or lesser number of shares of Common
Stock, then in each such case the Vote Multiple thereafter applicable to the
determination of the number of votes per share to which holders of shares of
Series R Preferred Stock shall be entitled after such event shall be the Vote
Multiple immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series R Preferred Stock and the holders of shares of Common Stock shall vote
together as one class on all matters submitted to a vote of stockholders of the
Corporation.
(C) If at the time of any annual meeting of stockholders for the election
of directors a default in preference dividends on the Series R Preferred Stock
shall exist, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two, and the holders of the Series R Preferred
Stock, together with the holders of any other series of Preferred Stock of the
Corporation who shall have been granted voting rights to elect directors upon a
default in the payment of dividends by the Corporation (collectively with the
holders of the Series R Preferred Stock, the "Preferred Stockholders"), shall
have the right at such meeting, voting together as a single class without regard
to series, to the exclusion of the holders of Common Stock, to elect two
directors of the Corporation to fill such newly created directorships. Such
right shall continue until there are no dividends in arrears upon the Series R
Preferred Stock. Each director elected by the Preferred Stockholders (herein
called a "Preferred Director") shall continue to serve as such director for the
full term for which he shall have been elected, notwithstanding that prior to
the end of such term a default in preference dividends shall cease to exist. Any
Preferred Director may be removed by, and shall not be removed without cause
except by, the vote of the Preferred Stockholders, voting together as a single
class without regard to series, at a meeting of the stockholders, or of the
Preferred Stockholders, called for the purpose. So long as a default in any
preference dividends on the Series R Preferred Stock shall exist (i) any vacancy
in the office of a Preferred Director may be filled (except as provided in the
following clause (ii)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (ii) in case of the
removal of any Preferred Director, the vacancy may be filled by the vote of the
Preferred Stockholders, voting together as a single class without regard to
series, at the same meeting at which such removal shall be voted. Each director
appointed as aforesaid by the remaining Preferred Director shall be deemed, for
all purposes hereof, to be a Preferred Director. Whenever the term of office of
the Preferred Directors shall end and a default in preference dividends shall no
longer exist, the number of directors constituting the Board of Directors shall
be reduced by two. For the purposes hereof, a "default in preference dividends"
on the Series R Preferred Stock shall be deemed to have occurred whenever the
amount of accrued dividends upon the Series R Preferred Stock shall be
equivalent to six full quarter yearly dividends or more and, having so occurred,
such default shall be deemed to exist thereafter until, but only until, all
accrued dividends on all
3
<PAGE>
shares of Series R Preferred Stock then outstanding shall have been paid to the
end of the last preceding quarterly dividend period.
(D) Except as otherwise required by law or set forth herein, holders of
Series R Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for the taking of any corporate
action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever Preferential Dividends or Participating Dividends are in
arrears or the Corporation shall be in default in payment thereof, thereafter
and until all accumulated and unpaid Preferential Dividends and Participating
Dividends, whether or not declared, on shares of Series R Preferred Stock
outstanding shall have been paid or set aside for payment in full, and in
addition to any and all other rights which any holder of shares of Series R
Preferred Stock may have in such circumstances, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series R Preferred Stock;
(ii) declare or pay dividends or make any other distributions on any
shares of stock ranking on a parity as to dividends with the Series R
Preferred Stock, unless dividends are paid ratably on the Series R
Preferred Stock and all such parity stock on which dividends are payable or
in arrears in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) except as permitted by subparagraph (iv) of this paragraph (A),
redeem or purchase or otherwise acquire for consideration shares of any
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series R Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of the
Corporation ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series R Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series R Preferred Stock, or any shares of stock ranking on a parity with
the Series R Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
(C) The Corporation shall not issue any shares of Series R Preferred Stock
except upon exercise of Rights issued pursuant to that certain Rights Agreement
dated as of November 8, 1995 between the Corporation and The Bank of New York
(the "Rights Agreement"), a copy of which is on file at the principal executive
office of the Corporation and shall be made available to holders of record of
Common Stock or Series R Preferred Stock without charge upon written request
therefor addressed to the Secretary of the Corporation. Notwithstanding the
foregoing sentence, nothing contained in the provisions hereof shall prohibit or
restrict the Corporation from issuing for any purpose any series of Preferred
Stock with rights and privileges similar to, different from, or greater than
those of the Series R Preferred Stock.
4
<PAGE>
Section 5. REACQUIRED SHARES. Any shares of Series R Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. The
Corporation shall cause all such shares upon their retirement and cancellation
to become authorized but unissued shares of Preferred Stock, without designation
as to series, and such shares may be reissued as part of a new series of
Preferred Stock to be created by resolution or resolutions of the Board of
Directors.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (i) to the holders of shares of stock ranking junior
to the Series R Preferred Stock (upon liquidation, dissolution or winding up)
unless the holders of shares of Series R Preferred Stock shall have received,
subject to adjustment as hereinafter provided, the greater of either (A) $100.00
per share plus an amount equal to accumulated and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(B) the amount equal to 400 times the aggregate amount to be distributed per
share to holders of Common Stock, or (ii) to the holders of stock ranking on a
parity upon liquidation, dissolution or winding up with the Series R Preferred
Stock, unless simultaneously therewith distributions are made ratably on the
Series R Preferred Stock and all other shares of such parity stock in proportion
to the total amounts to which the holders of shares of Series R Preferred Stock
are entitled under clause (i) (A) of this sentence and to which the holders of
such parity shares are entitled, in each case upon such liquidation, dissolution
or winding up. The amount to which holders of Series R Preferred Stock shall be
entitled upon liquidation, dissolution or winding up of the Corporation pursuant
to clause (i) (B) of the foregoing sentence is hereinafter referred to as the
"Participating Liquidation Amount," and the multiple of the amount to be
distributed to holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the Corporation applicable pursuant to said clause
to the determination of the Participating Liquidation Amount, which shall be 400
subject to adjustment from time to time as hereinafter provided, is hereinafter
referred to as the "Liquidation Multiple." In the event the Corporation shall at
any time declare or pay any dividend on Common Stock payable in shares of Common
Stock, or effect a subdivision or split or a combination, consolidation or
reverse split of the outstanding shares of Common Stock into a greater or lesser
number of shares of Common Stock, then in each such case the Liquidation
Multiple thereafter applicable to the determination of the Participating
Liquidation Amount to which holders of Series R Preferred Stock shall be
entitled after such event shall be the Liquidation Multiple applicable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event
Section 7. CERTAIN RECLASSIFICATIONS AND OTHER EVENTS
(A) In the event that holders of shares of Common Stock receive in respect
of their shares of Common Stock any share of capital stock of the Corporation
(other than any share of Common Stock of the Corporation), whether by way of
reclassification, recapitalization, reorganization, dividend or other
distribution or otherwise ("Transaction"), then in each such event the dividend
rights, rights upon the liquidation, dissolution or winding up of the
Corporation and voting rights of the shares of Series R Preferred Stock shall be
adjusted so that after such event the holders of Series R Preferred Stock shall
be entitled, in respect of each share of Series R Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such adjustment, to (i) such additional dividends as equal
the Dividend Multiple in effect immediately prior to such Transaction multiplied
by the additional dividends which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the Transaction of such capital
stock, (ii) such additional distributions upon liquidation, dissolution or
winding up of the Corporation as equal the Liquidation Multiple in effect
immediately prior to such Transaction multiplied by the additional amount which
the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Corporation by virtue of the
receipt in the Transaction of such capital stock, as the case may be, all as
provided by the terms of such capital stock and (iii) such additional voting
rights as equal the Vote Multiple in effect immediately prior to such
Transaction multiplied by the additional voting rights which the holder of a
share of Common Stock shall be entitled to receive by virtue of the receipt in
the Transaction of such capital stock.
5
<PAGE>
(B) In the event that holders of shares of Common Stock receive in respect
of their shares of Common Stock any right or warrant to purchase Common Stock
(including as such a right, for all purposes of this paragraph, any security
convertible into or exchangeable for Common Stock) at a purchase price per share
less than the Current Market Price (as hereinafter defined) of a share of Common
Stock on the date of issuance of such right or warrant, then in each such event
the dividend rights, rights upon the liquidation, dissolution or winding up of
the Corporation and voting rights of the shares of Series R Preferred Stock
shall each be adjusted so that after such event the Dividend Multiple and the
Liquidation Multiple and the Vote Multiple shall each be the product of the
Dividend Multiple, the Liquidation Multiple and the Vote Multiple, as the case
may be, in effect immediately prior to such event multiplied by a fraction the
numerator at or of which shall be the number of shares of Common Stock
outstanding immediately before such issuance of rights or warrants plus the
maximum number of shares of Common Stock which could be acquired upon exercise
in full of all such rights or warrants and the denominator of which shall be the
number of shares of Common Stock outstanding immediately before such issuance of
rights or warrants plus the number of shares of Common Stock which could be
purchased, at the Current Market Price of the Common Stock at the time of such
issuance, by the maximum aggregate consideration payable upon exercise in full
of all such rights or warrants.
(C) In the event that holders of shares of Common Stock receive in respect
of their shares of Common Stock any right or warrant to purchase capital stock
of the Corporation (other than shares of Common Stock), including as such a
right, for all purposes of this paragraph, any security convertible into or
exchangeable for capital stock of the Corporation (other than Common Stock), at
a purchase price per share less than the Current Market Price of such shares of
capital stock on the date of issuance of such right or warrant, then in each
such event the dividend rights, rights upon liquidation, dissolution or winding
up of the Corporation and the voting rights of the shares of Series R Preferred
Stock shall each be adjusted so that after such event each holder of a share of
Series R Preferred Stock shall be entitled, in addition to such rights in
respect thereof to which such holder was entitled immediately prior to such
event, to receive (i) such additional dividends as equal the Dividend Multiple
in effect immediately prior to such event multiplied, first, by the additional
dividends to which the holder of a share of Common Stock shall be entitled upon
exercise of such right or warrant by virtue of the capital stock which could be
acquired upon such exercise and multiplied again by the Discount Fraction (as
hereinafter defined), (ii) such additional distributions upon liquidation,
dissolution or winding up of the Corporation as equal the Liquidation Multiple
in effect immediately prior to such event multiplied, first, by the additional
amount which the holder of a share of Common Stock shall be entitled to receive
upon liquidation, dissolution or winding up of the Corporation upon exercise of
such right or warrant by virtue of the capital stock which could be acquired
upon such exercise and multiplied again by the Discount Fraction and (iii) such
additional voting rights as equal the Vote Multiple in effect immediately prior
to such event multiplied, first, by the additional voting rights to which the
holder of a share of Common Stock shall be entitled upon exercise of such right
or warrant by virtue of the capital stock which could be acquired upon such
exercise and multiplied again by the Discount Fraction. For purposes of this
paragraph, the "Discount Fraction" shall be a fraction the numerator of which
shall be the difference between the Current Market Price (as hereinafter
defined) of a share of the capital stock subject to a right or warrant
distributed to holders of shares of Common Stock as contemplated by this
paragraph immediately after the distribution thereof and the purchase price per
share for such share of capital stock pursuant to such right or warrant and the
denominator of which shall be the Current Market Price of a share of such
capital stock immediately after the distribution of such right or warrant.
(D) For purposes of this Section 7, the "Current Market Price" of a share
of capital stock of the Corporation (including a share of Common Stock) on any
date shall be deemed to be the average of the daily closing prices per share
thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date, provided that in the event that such
Current Market Price of any such share of capital stock is determined during a
period which includes any date that is within 30 Trading Days after the
ex-dividend date for (i) a dividend or distribution on stock payable in shares
of such stock or securities convertible into shares of such stock or (ii) any
subdivision, split, combination, consolidation, reverse stock split or
reclassification of such stock, then in each such event, the Current Market
Price shall be appropriately adjusted by the Board of Directors to reflect the
Current Market Price of such stock to take into account ex-dividend trading.
The closing price for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
6
<PAGE>
asked prices, regular way, in either case as reported in the principle
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the shares are
listed or admitted to trading or, if the shares are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in use, or if on
any such date the shares are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the shares selected by the Board of Directors. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the shares are listed or admitted to trading is open for the
transaction of business or, if the shares are not listed or admitted to trading
on any national securities exchange, on which the New York Stock Exchange or
such other national securities exchange as may be selected by the Board of
Directors is open. If the shares are not publicly held or not so listed or
traded on any day within the period of 30 Trading Days applicable to the
determination of Current Market Price thereof as aforesaid, "Current Market
Price" shall mean the fair market value thereof per share as determined in good
faith by the Board of Directors. In either case referred to in the foregoing
sentence, the determination of Current Market Price shall be described in a
statement filed with the Secretary of the Corporation.
Section 8. CONSOLIDATION, MERGER, ETC. In the event that the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such event each
outstanding share of Series R Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and other property (payable in like kind), as the case may be,
for which or into which each share of Common Stock is changed or exchanged
multiplied by the higher of the Dividend Multiple, the Liquidation Multiple or
the Vote Multiple in effect immediately prior to such event.
Section 9. EFFECTIVE TIME OF ADJUSTMENTS.
(A) Adjustments to the Series R Preferred Stock required by the provisions
hereof shall be effective as of the time at which the event requiring such
adjustments occurs.
(B) The Corporation shall give prompt written notice to each holder of a
share of Series R Preferred Stock of the effect on any such shares of any
adjustment to the dividend rights or rights upon liquidation, dissolution or
winding up of the Corporation required by the provisions hereof. Notwithstanding
the foregoing sentence, the failure of the Corporation to give such notice shall
not affect the validity of or the force or effect of or the requirement for such
adjustment.
Section 10. NO REDEMPTION. The shares of Series R Preferred Stock shall
not be redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire shares of Series R Preferred Stock in any other manner permitted by law
or the provisions hereof.
Section 11. RANKING. Unless otherwise provided in the Restated
Certificate of Incorporation or a Certificate of Designation relating to a
subsequent series of Preferred Stock of the Corporation, the Series R Preferred
Stock shall rank junior to all other series of the Corporation's Preferred Stock
as to the payment of dividends and the distribution of assets on liquidation,
dissolution or winding up and senior to the Common Stock.
Section 12. AMENDMENT. After the Distribution Date (as defined in the
Rights Agreement), the provisions of the Restated Certificate of Incorporation
shall not be amended in any manner which would materially affect the rights,
privileges or powers of the Series R Preferred Stock without, in addition to any
other vote of stockholders required by law, the affirmative vote of the holders
of 80% or more of the outstanding shares of Series R Preferred Stock, voting
together as a single class.
7
<PAGE>
FIFTH: The business and affairs of the Corporation shall be managed by or
under the direction of a Board of Directors consisting of not less than nine
directors or more than twenty-one directors, the exact number of directors to be
determined from time to time solely by resolution adopted by the Board of
Directors. Until the annual meeting of stockholders in 2001, the directors
shall be divided into three classes, consisting initially of five, six and five
directors and designed Class I, Class II and Class III, respectively. Each
director elected prior to the effective date of this Article FIFTH shall serve
for the full term for which he or she was elected, such that the term of each
director elected at the 1996 annual meeting (Class III) shall end at the annual
meeting in 1999, the term of each director elected at the 1997 annual meeting
(Class I) shall end at the annual meeting in 2000, and the term of each director
elected at the 1998 annual meeting (Class II) shall end at the annual meeting in
2001. The term of each director elected after the 1998 annual meeting, whether
at an annual meeting or to fill a vacancy in the Board of Directors arising for
any reason, including an increase in the size of the Board of Directors, shall
end at the first annual meeting following his or her election. Commencing with
the annual meeting in 2001, the foregoing classification of the Board of
Directors shall cease, and all directors shall be of one class and serve for a
term ending at the annual meeting following the annual meeting at which the
director was elected. In no case shall a decrease in the number of directors
shorten the term of any incumbent director. Each director shall hold office
after the annual meeting at which his or her term is scheduled to end until his
or her successor shall be elected and shall qualify, subject, however, to prior
death, resignation, disqualification or removal from office. Any newly created
directorship resulting from an increase in the number of directors may be filled
by a majority of the Board of Directors then in office, provided that a quorum
is present, and any other vacancy on the Board of Directors may be filed by a
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director.
SIXTH: Notwithstanding the provisions of Article FIFTH, whenever the
holders of any one or more classes or series of Preferred Stock issued by the
Corporation shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of this Restated Certificate of Incorporation or the
resolution or resolutions adopted by the Board of Directors pursuant to Article
FOURTH applicable thereto.
SEVENTH: Elections of directors at an annual or special meeting of
stockholders shall be by written ballot unless the Bylaws of the Corporation
shall otherwise provide.
EIGHTH: Special meetings of the stockholders of the Corporation for any
purpose or purposes may be called at any time by the Board of Directors, the
Chairman of the Board of Directors or the President. Special meetings of the
stockholders of the Corporation may not be called by any other person or
persons.
NINTH: A. Except as set forth in Section B of this Article NINTH, the
affirmative vote of the holders of four-fifths (4/5) of the outstanding stock of
the Corporation entitled to vote shall be required for:
(i) any merger or consolidation to which the Corporation, or any of
its subsidiaries, and an Interested Person (as hereinafter defined) are
parties;
(ii) any sale or other disposition by the Corporation, or any of its
subsidiaries, of all or substantially all of its assets to an Interested
Person;
(iii) any purchase or other acquisition by the Corporation, or any of
its subsidiaries, of all or substantially all of the assets or stock of an
Interested Person; and
(iv) any other transaction with an Interested Person which requires
the approval of the stockholders of the Corporation under the GCL.
B. The provisions of Section A of this Article NINTH shall not be
applicable to any transaction described therein if (i) such transaction is
approved by resolution of the Corporation's Board of Directors,
8
<PAGE>
provided that a majority of the members of the Board of Directors voting for the
approval of such transaction were duly elected and acting members of the Board
of Directors prior to the date that the person, firm or corporation, or any
group thereof, with whom such transaction is proposed, became an Interested
Person, or (ii) the provision of a vote in excess of that required by the GCL
for such transaction violates the express provisions of the GCL.
C. As used in this Article NINTH, the term "Interested Person" shall mean
any person, firm or corporation, or any group thereof, acting or intending to
act in concert, including any person directly or indirectly controlling or
controlled by or under direct or indirect common control with such person, firm
or corporation or group, which owns of record or beneficially, directly or
indirectly, five percent (5%) or more of any class of voting securities of the
Corporation.
D. The affirmative vote of the owners of four-fifths (4/5) of the
outstanding stock of the Corporation entitled to vote shall be required to
amend, alter or repeal this Article NINTH.
TENTH: The officers of the Corporation shall be chosen in such a manner,
shall hold their offices for such terms and shall carry out such duties as are
determined solely by the Board of Directors, subject to the right of the Board
of Directors to remove any officer or officers at any time with or without
cause.
ELEVENTH: A. The Corporation shall indemnify to the full extent
authorized or permitted by law (as now or hereinafter 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 A of Article ELEVENTH
shall apply to or have any effect on any right to indemnification provided
hereunder with respect to any acts or omissions occurring prior to such
amendment or repeal.
B. A director of this Corporation shall not be liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except to the extent such exemption from liability or limitation
thereof is not permitted under the GCL.
Any repeal or modification of the foregoing paragraph shall not adversely
affect any right or protection of a director of the Corporation existing
hereunder with respect to any act or omission occurring prior to such repeal or
modification.
C. In furtherance and not in limitation of the powers conferred by
statute:
(i) 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
(ii) 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.
9
<PAGE>
TWELFTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend or rescind the Bylaws of the Corporation. In addition, the Bylaws of the
Corporation may be adopted, repealed, altered, amended or rescinded by the
affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the
outstanding stock of the Corporation entitled to vote thereon.
THIRTEENTH: The Corporation reserves the right to repeal, alter, amend or
rescind any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred on
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, The Walt Disney Company. has caused its corporate seal
to be hereunto affixed and this Restated Certificate of Incorporation to be
signed by David K. Thompson, its Senior Vice President-Assistant General
Counsel, this 10th day of June, 1998.
THE WALT DISNEY COMPANY
/s/ David K. Thompson
----------------------------------------
David K. Thompson
Senior Vice President-Assistant General Counsel
10
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF O'MELVENY & MYERS LLP]
August 3, 1998
The Walt Disney Company
500 South Buena Vista Street
Burbank, California 91521
Re: The Walt Disney Company
Amendment No. 1 to Registration Statement on Form S-3
(File No. 333-52659)
-----------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to The Walt Disney Company, a
Delaware corporation ("Disney"), in connection with the preparation of
Amendment No. 1 to the Registration Statement on Form S-3 (File No. 333-52659)
(the "Registration Statement") filed with the Securities and Exchange
Commission (the "Commission") on August 3, 1998 under the Securities Act of
1933, as amended (the "Securities Act"). The Registration Statement relates
to the issuance and sale from time to time, pursuant to Rule 415 of the
General Rules and Regulations of the Commission promulgated under the
Securities Act, of the following securities of Disney with an aggregate
initial public offering price of up to $5,000,000,000 or the equivalent
thereof in one or more foreign currencies or composite currencies:
(i) senior, senior subordinated or subordinated debt securities, in one
or more series (the "Debt Securities"), which may be issued under
Indentures (the "Indentures") entered into or proposed to be entered into
among Disney and trustees (the "Trustees") that have been or will be
appointed prior to the issuance of Debt Securities; (ii) shares of Disney
preferred stock, par value $.01 per share (the "Preferred Stock"), in
one or more series, which may also be issued in the form of depositary shares
(the "Depositary Shares") evidenced by depositary receipts (the "Receipts");
(iii) shares of Disney common stock, par value $.01 per share (the "Common
Stock"); (iv) warrants to purchase Debt Securities (the "Debt Warrants") to
be issued pursuant to a warrant agreement (the "Debt Warrant Agreement")
between Disney and a warrant agent to be appointed prior to the issuance of
Debt Warrants; (v) warrants to purchase Preferred Stock (the "Preferred
<PAGE>
Stock Warrants") to be issued pursuant to a warrant agreement (the "Preferred
Stock Warrant Agreement") between Disney and a warrant agent to be appointed
prior to the issuance of Preferred Stock Warrants; and (vi) warrants to
purchase Common Stock (the "Common Stock Warrants" and, together with the
Debt Warrants and the Preferred Stock Warrants, the "Warrants") to be issued
pursuant to a warrant agreement (the "Common Stock Warrant Agreement" and,
together with the Debt Warrant Agreement and the Preferred Stock Warrant
Agreement, the "Warrant Agreements") between Disney and a warrant agent to be
appointed prior to the issuance of Common Stock Warrants. The Debt
Securities, the Preferred Stock, the Common Stock, the Depositary Shares and
the Warrants are collectively referred to herein as the "Offered Securities."
This opinion is being furnished in accordance with the requirements of
Item 601(b)(5) of Regulation S-K promulgated under the Securities Act.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such corporate and
other records and documents as we considered appropriate including, without
limitation:
(i) the Registration Statement;
(ii) the form of underwriting agreement filed as an exhibit to the
Registration Statement that may be entered into between or among Disney and
one or more underwriters to be named therein in connection with any offering
of Debt Securities;
(iii) the form of distribution agreement filed as an exhibit to
the Registration Statement that may be entered into between or among Disney
and one or more agents to be named therein in connection with the sale of
certain Debt Securities (the "Distribution Agreement");
(iv) the Indentures or forms thereof filed, or incorporated by
reference, as exhibits to the Registration Statement;
(v) the form of deposit agreement (the "Deposit Agreement") filed
as an exhibit to the Registration Statement that may be entered into among
Disney, a depositary to be appointed by Disney (the "Depositary") and the
holders from time to time of Receipts issued thereunder in connection with
any offering of Depositary Shares, including the form of Receipt evidencing
the Depositary Shares included as Annex A to the Deposit Agreement;
2
<PAGE>
(vi) the forms of the Warrant Agreements filed as exhibits to the
Registration Statement;
(vii) a specimen certificate representing the Common Stock;
(viii) the Restated Certificate of Incorporation of Disney, as
presently in effect;
(ix) the Amended By-laws of Disney, as presently in effect; and
(x) certain resolutions of the Board of Directors of Disney
adopted at a meeting duly held on April 21, 1998 (the "Board Resolutions")
relating to the issuance and sale of the Offered Securities and related
matters, including a delegation of authority to Disney's Executive Committee
to fix and determine the terms of certain of the Offered Securities.
We have also obtained and relied upon certificates of public
officials, certificates of officers or other representatives of Disney and
others, and certificates as we considered appropriate.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified, conformed or photostatic
copies and the authenticity of the originals of such latter documents. In
making our examination of documents executed or to be executed by parties
other than Disney, we have assumed that such parties had or will have the
power, corporate or other, to enter into and perform all obligations
thereunder and have also assumed the due authorization by all requisite
action, corporate or other, and execution and delivery by such parties of
such documents and the validity and binding effect thereof. As to any facts
material to the opinions expressed herein which were not independently
established or verified, we have relied upon oral or written statements and
representations of officers and other representatives of Disney and others.
We do not express any opinion as to the laws of any jurisdiction
other than those of the State of New York and the General Corporation Law of
the State of Delaware.
3
<PAGE>
On the basis of such examination, our reliance upon the assumptions
in this opinion and our consideration of those questions of law we considered
relevant, and subject to the limitations and qualifications in this opinion,
we are of the opinion that:
1. With respect to any series of Debt Securities (the "Offered
Debt Securities"), when (i) the authorized officers of Disney have taken all
necessary corporate action to fix and determine the terms of the Offered Debt
Securities in accordance with the Board Resolutions; (ii) the terms of the
Offered Debt Securities and of their issuance and sale have been duly
established in conformity with the Indenture; (iii) the applicable Indenture
has been duly executed and delivered; and (iv) the Offered Debt Securities
have been duly executed and authenticated in accordance with the terms of the
applicable Indenture and duly delivered to the purchasers thereof upon
payment of the agreed-upon consideration therefor, the issuance and sale of
the Offered Debt Securities (including any Offered Debt Securities duly
issued (A) upon exchange or conversion of any shares of Preferred Stock that
are exchangeable or convertible into Debt Securities or (B) upon the exercise
of any Warrants exercisable for Debt Securities) will have been duly
authorized by all necessary corporate action on the part of Disney, and the
Offered Debt Securities will constitute valid and binding obligations of
Disney enforceable against Disney in accordance with their terms, except (x)
as may be limited by (1) bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors' rights generally (including,
without limitation, fraudulent conveyance laws), (2) general principles of
equity including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the possible unavailability
of specific performance or injunctive relief, regardless of whether
considered in a proceeding at law or in equity, (3) requirements that a claim
with respect to any Offered Debt Securities denominated other than in United
States dollars (or a judgment denominated other than in United States dollars
in respect of such claim) be converted into United States dollars at a rate
of exchange prevailing on a date determined pursuant to applicable law and
(4) governmental authority to limit, delay or prohibit the making of payments
outside the United States or in foreign currency or composite currency and
(y) the waiver contained in Section 6.12 of the applicable Indenture may be
deemed unenforceable and the provisions regarding jurisdiction contained in
Section 12.9 of the senior Debt Securities Indenture and Section 13.9 of the
senior subordinated and subordinated Debt Securities Indentures may not be
honored by the courts included or excluded.
2. With respect to the shares of any series of Preferred Stock (the
"Offered Preferred Stock"), when (i) the Board of Directors or the Executive
Committee has taken all necessary corporate action to fix and determine the
terms of the Offered Preferred Stock in accordance with the Board
Resolutions, including the adoption of a Certificate of Designation for such
Preferred Stock in the form required by applicable law; (ii) such
4
<PAGE>
Certificate of Designation has been duly filed with the Secretary of State of
the State of Delaware; (iii) certificates representing the shares of the
Offered Preferred Stock have been manually signed by an authorized officer of
the transfer agent and registrar for the Preferred Stock and registered by
such transfer agent and registrar, and delivered to the purchasers thereof;
and (iv) Disney receives consideration per share of the Offered Preferred
Stock (A) in such amount (not less than the par value per share) as may be
determined by the Board of Directors or the Executive Committee in the form
of cash, services rendered, personal property, real property, leases of real
property, or a combination thereof or (B) in an amount not less than the
amount of consideration determined to be capital, in any of the above-stated
forms, and a binding obligation of the purchaser to pay the balance of such
purchase price, the issuance and sale of the shares of Offered Preferred
Stock will have been duly authorized by all necessary corporate action on the
part of Disney, and such shares will be validly issued, fully paid and
nonassessable.
3. With respect to Depositary Shares representing fractional
interests in any series of Preferred Stock, when (i) the Executive Committee
has taken all necessary corporate action to fix and determine the terms of
the Depositary Shares and the related series of Preferred Stock in accordance
with the Board Resolutions, including the adoption of a Certificate of
Designation for such related series of Preferred Stock in the form required
by applicable law; (ii) such Certificate of Designation has been duly filed
with the Secretary of State of the State of Delaware; (iii) the terms of the
Depositary Shares and of their issuance and sale have been duly established
in conformity with the Deposit Agreement; (iv) the applicable Deposit
Agreement has been duly executed and delivered; (v) the related series of
Preferred Stock has been duly authorized and validly issued in accordance
with the laws of the State of Delaware and delivered to the Depositary for
deposit in accordance with the Deposit Agreement; and (vi) the Receipts
evidencing the Depositary Shares have been duly issued against deposit of the
related series of Preferred Stock with the Depositary in accordance with the
Deposit Agreement, the issuance and sale of the Depositary Shares will be
validly issued and the Receipts will entitle the holders thereof to the
rights specified therein and in the Deposit Agreement.
4. With respect to the shares of Common Stock (the "Offered Common
Stock"), when (i) the Board of Directors or the Executive Committee has taken
all necessary corporate action to authorize the issuance and sale of the
Offered Common Stock in
5
<PAGE>
accordance with the Board Resolutions; (ii) certificates representing the
shares of the Offered Common Stock in the form of the specimen certificates
examined by us have been manually signed by an authorized officer of the
transfer agent and registrar for the Common Stock and registered by such
transfer agent and registrar, and delivered to the purchasers thereof; and
(iii) Disney receives consideration per share of the Offered Common Stock
(A) in such an amount (not less than the par value per share) as may be
determined by the Board of Directors or the Executive Committee in the form
of cash, services rendered, personal property, real property, leases of real
property, or a combination thereof or (B) in an amount not less than the
amount of consideration determined to be capital, in any of the above-stated
forms, and a binding obligation of the purchaser to pay the balance of such
purchase price, the issuance and sale of the shares of Offered Common Stock
(including any Offered Common Stock duly issued (1) upon exchange or
conversion of any Debt Securities or shares of Preferred Stock that are
exchangeable or convertible into Common Stock or (2) upon the exercise of any
Warrants exercisable for Common Stock) will have been duly authorized by all
necessary corporate action on the part of Disney, and such shares will be
validly issued, fully paid and nonassessable.
5. With respect to any Warrants (the "Offered Warrants"), when (i)
the Board of Directors or the Executive Committee or the authorized officers
of Disney, as the case may be, have taken all necessary corporate action to
fix and determine the terms of the Offered Warrants in accordance with the
Board Resolutions; (ii) the terms of the Offered Warrants and of their
issuance and sale have been duly established in conformity with the
applicable Warrant Agreement; (iii) the applicable Warrant Agreement has been
duly executed and delivered; and (iv) the Offered Warrants have been duly
executed and authenticated in accordance with the terms of the applicable
Warrant Agreement and duly delivered to the purchasers thereof upon payment
of the agreed-upon consideration therefor, the issuance and sale of the
Offered Warrants will have been duly authorized by all necessary corporate
action on the part of Disney, and the Offered Warrants will constitute valid
and binding obligations of Disney enforceable against Disney in accordance
with their terms, except as may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to creditors' rights
generally (including, without limitation, fraudulent conveyance laws), (B)
general principles of equity including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the possible
unavailability of specific performance or injunctive relief, regardless of
whether considered in a proceeding at law or in equity, (C) requirements
that a claim with respect to any Offered Warrants denominated
6
<PAGE>
other than in United States dollars (or a judgment denominated other than in
United States dollars in respect of such claim) be converted into United
States dollars at a rate of exchange prevailing on a date determined pursuant
to applicable law and (D) governmental authority to limit, delay or prohibit
the making of payments outside the United States or in foreign currency or
composite currency.
Notwithstanding the foregoing, the opinions expressed above with
respect to the Offered Debt Securities shall be deemed not to address the
application of the Commodity Exchange Act, as amended, or the rules,
regulations or interpretations of the Commodity Futures Trading Commission to
Offered Debt Securities the payment or interest on which will be determined
by reference to one or more currency exchange rates, commodity prices, equity
indices or other factors.
We hereby consent to the filing of this opinion with the Commission
as an exhibit to the Registration Statement. We also consent to the
reference to our firm under the caption "Legal Matters" in the Registration
Statement.
Respectfully submitted,
O'Melveny & Myers LLP
7
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated November 18, 1997 appearing on page 31 of The Walt Disney Company's
Annual Report on Form 10-K for the year ended September 30, 1997. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
Century City, California
July 29, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and the
incorporation by reference of our report dated March 8, 1996 with respect to the
consolidated financial statements of Capital Cities/ABC, Inc. as of December 31,
1995 and 1994 and for each of the three years in the period ended December 31,
1995 in the Registration Statement on Form S-3 to be filed with the Securities
and Exchange Commission by The Walt Disney Company on or about August 3, 1998.
Ernst & Young LLP
New York, New York
July 29, 1998
