Form of Agreement

THE WALT DISNEY COMPANY

Performance-Based
Stock Unit Award
(Dual Performance Goals)

     AWARD AGREEMENT, dated as of                             , between The Walt
Disney Company, a Delaware corporation (“Disney”), and
                             (the “Participant”). This Award is granted on
                            , 200    (the “Date of Grant”) by the Compensation
Committee of the Disney Board of Directors (the “Committee”) pursuant to the
terms of the 2002 Executive Performance Plan (the “Plan”), and pursuant to the
terms of the Amended and Restated 1995 Stock Incentive Plan (the “Stock Plan”).
The applicable terms of the Plan and the Stock Plan are incorporated herein by
reference, including the definitions of terms contained therein.

     Section 1. Stock Unit Award. Disney hereby grants to the Participant, on
the terms and conditions set forth herein, an Award of                   “Stock
Units.” The Stock Units are notional units of measurement denominated in Shares
of Disney (i.e. one Stock Unit is equivalent in value to one Share, subject to
the terms hereof). The Stock Units represent an unfunded, unsecured obligation
of Disney. This Award is subdivided into “Tranche A” and “Tranche B,” each of
which constitute one half of the Award. Subject to the terms, conditions and
performance-based vesting requirements set forth herein, Tranche A of this Award
will vest on the second anniversary date of the Date of Grant and Tranche B on
the fourth anniversary of the Date of Grant.

     Section 2. Vesting Requirements. The vesting of this Award (other than
pursuant to accelerated vesting in certain circumstances as provided in
Section 3 below) shall be subject to the satisfaction of the conditions set
forth in each of subsections A, B and C of this Section 2:

  A.   Total Stockholder Return Vesting Requirement. The vesting of fifty
percent (50%) of both Tranche A and Tranche B shall be subject to performance
vesting under this Section 2.A. This performance vesting requirement, which is
applicable on both the second and fourth anniversary dates of the Date of
Grant), shall be satisfied if Total Shareholder Return (as defined below) of
Disney, determined on the relevant anniversary date as provided below, exceeds
the Total Shareholder Return for the Standard & Poor’s 500 Composite Stock Index
(the “Reference TSR”) over either (i) the period of one year preceding the
applicable anniversary date or (ii) the period of three years preceding the
applicable anniversary date. “Total Shareholder Return” shall mean, for any
given determination date, an amount equal to the average of the total return
figures, calculated on the basis of weekly periodicity, as currently reported
under “Comparative Returns” by Bloomberg L.P. (or any other reporting service
that the Committee may designate from time to time) (i) for Disney and (ii) for
the Reference TSR (which is designated by Bloomberg L.P. as the “S&P 500
Index”), as the case may be, for each of the four weeks immediately preceding
the determination date, it being

 

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      understood that if any such determination is made on the last trading day
of any week, then that week shall be treated as a preceding week.         If the
performance vesting requirements of this Section 2.A are not satisfied for
Tranche A on the second anniversary date of the Date of Grant, then 50% of
Tranche A shall not vest on that date. However, such 50% portion of Tranche A
shall not be forfeited at that time and shall vest if and when the performance
vesting requirements set forth in this Section 2.A applicable on the fourth
anniversary date hereof are achieved. If the performance vesting requirements
applicable on the fourth anniversary of the Date of Grant are not met, then the
50% portions of Tranche A and Tranche B subject to vesting under this
Section 2.A that are not then vested shall be immediately forfeited and the
Participant’s rights with respect thereto shall cease.     B.   Section 162(m)
Vesting Requirement. This Award shall also be subject to additional performance
vesting requirements under this Section 2.B with respect to 100% of both Tranche
A and Tranche B, based upon the achievement of the Performance Targets
applicable to the Performance Periods specified below, subject to certification
of achievement of such Performance Targets by the Committee pursuant to
Section 4.8 of the Plan. The respective Performance Targets (and the Business
Criteria to which they relate) shall be established by the Committee not later
than 90 days following the beginning of each Performance Period. If the
Performance Target for a Performance Period is not satisfied, the applicable
portion of the Award (i.e., Tranche A or Tranche B) shall be immediately
forfeited in its entirety. The Performance Periods for the Stock Units granted
hereunder shall be as follows:

              Performance Period

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  Stock Units

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  Fiscal 200    and 200   
(October 1, 200    - September 30, 200    )   Tranche A (         Stock Units)

  Fiscal 200    and 200   
(October 1, 200    - September 30, 200    )   Tranche B (         Stock Units)

  C.   Service Vesting Requirement. In addition to the performance vesting
requirements of subsections A and B of this Section 2, the right of the
Participant to receive payment of this Award shall become vested only if he or
she remains continuously employed by Disney or an Affiliate from the date hereof
until the later of (i) the last day of the Performance Period specified above in
Section 2.B with respect to Tranche A or Tranche B, as applicable, and (ii) the
date that the relevant portion of this Award (i.e., Tranche A or Tranche B)
satisfies the applicable performance vesting

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      requirement as provided in Section 2.A hereof; provided, however, that,
nothing set forth herein shall be deemed to modify, qualify, or otherwise
derogate from, the requirement of Section 4.8 of the Plan that the Committee
certify in writing that the applicable Performance Targets of Section 2.B above
have been satisfied prior to the payment of any amount to the Participant under
this Award.         If the service vesting requirements of this Section 2.C are
not satisfied for Tranche A or Tranche B, respectively, the applicable number of
Stock Units shall be immediately forfeited and the Participant’s rights with
respect thereto shall cease.

All Stock Units for which all of the requirements of this Section 2 have been
satisfied shall become vested and shall thereafter be payable in accordance with
Section 5 hereof.

     Section 3. Accelerated Vesting. Notwithstanding the terms and conditions of
Section 2 hereof, upon the Participant’s death or disability (within the meaning
of Section 409A of the Internal Revenue Code), or upon the occurrence of a
Triggering Event within the 12-month period following a Change in Control (in
accordance with Section 11 of the Stock Plan as in effect on the date hereof),
this Award shall become fully vested and shall be payable in accordance with
Section 5 hereof to the extent that it has not previously been forfeited. In
addition, if the Participant is employed pursuant to an employment agreement
with Disney, any provisions thereof relating to the effect of a termination of
the Participant’s employment upon his or her rights with respect to this Award,
including, without limitation, any provisions regarding acceleration of vesting
and/or payment of this Award in the event of termination of employment, shall be
fully applicable and supersede any provisions hereof with respect to the same
subject matter.

     Section 4. Dividend Equivalents. Any dividends paid in cash on Shares of
Disney will be credited to the Participant as additional Stock Units as if the
Stock Units previously held by the Participant were outstanding Shares, as
follows: such credit shall be made in whole and/or fractional Stock Units and
shall be based on the fair market value (as defined in the Stock Plan) of the
Shares on the date of payment of such dividend. All such additional Stock Units
shall be subject to the same vesting requirements applicable to the Stock Units
in respect of which they were credited and shall be payable in accordance with
Section 5 hereof.

     Section 5. Payment of Award. Payment of vested Stock Units shall be made
within 30 days following the later of:

  (i)   the applicable date under Section 2.C hereof as of which all of the
applicable vesting requirements under Section 2 hereof shall have been satisfied
for Tranche A or Tranche B, as applicable, or

  (ii)   the date of certification of achievement of the applicable Performance
Targets by the Committee as required under Section 2.B hereof,

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(or within 30 days following acceleration of vesting under Section 3 hereof, if
applicable). The Stock Units shall be paid in cash or in Shares (or some
combination thereof), as determined by the Committee in its discretion at the
time of payment, and in either case shall be paid to the Participant after
deduction of applicable withholding taxes in the amount determined by the
Committee, provided that such amount shall not exceed the Participant’s
estimated Federal, state and local tax obligation with respect to payment of the
Award.

     Section 6. Restrictions on Transfer. Neither this Stock Unit Award nor any
Stock Units covered hereby may be sold, assigned, transferred, encumbered,
hypothecated or pledged by the Participant, other than to Disney as a result of
forfeiture of the units as provided herein and as provided in Section 6 of the
Plan. The Stock Units constitute Restricted Units as defined in Section 2.2 of
the Plan.

     Section 7. No Voting Rights. The Stock Units granted pursuant to this
Award, whether or not vested, will not confer any voting rights upon the
Participant, unless and until the Award is paid in Shares.

     Section 8. Award Subject to Plans. This Stock Unit Award is subject to the
terms of the Plan and the Stock Plan, the terms and provisions of which are
hereby incorporated by reference. In the event of a conflict or ambiguity
between any term or provision contained herein and a term or provision of the
Plan or the Stock Plan, the Plan or the Stock Plan (as applicable) will govern
and prevail.

     Section 9. Changes in Capitalization. The Stock Units under this Award
shall be subject to the provisions of the Stock Plan relating to adjustments for
changes in corporate capitalization.

     Section 10. No Right of Employment. Nothing in this Award Agreement shall
confer upon the Participant any right to continue as an employee of Disney or an
Affiliate nor interfere in any way with the right of Disney or an Affiliate to
terminate the Participant’s employment at any time or to change the terms and
conditions of such employment.

     Section 11. Governing Law. This Award Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware, without giving
effect to the choice of law principles thereof.

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            THE WALT DISNEY COMPANY
      By:           Name:           Title:           PARTICIPANT

                     

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