10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2004

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

For the transition period from                      to                     .

Commission File Number 001-32337

DREAMWORKS ANIMATION SKG, INC.

(Exact name of registrant as specified in its charter)

Delaware	68-0589190
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Campanile Building 1000 Flower Street Glendale, California	91201
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 695-5000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange on Which Registered
Class A Common Stock, par value $.01 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨.

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes  ¨    No  x.

As of June 30, 2004, there was no established public market for the registrant’s Class A common stock. The aggregate market value of Class A common stock held by non-affiliates as of December 31, 2004 was approximately $1,314,789,229, using the closing price per share of $37.51, as reported on the New York Stock Exchange as of such date. As of such date, non-affiliates held no shares of Class B common stock or Class C common stock. There is no active market for the Class B common stock or the Class C common stock.

As of March 1, 2005, there were 52,174,447 shares of Class A common stock, 50,842,414 shares of Class B common stock and one share of Class C common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required by Part III of this report is incorporated by reference from the registrant’s proxy statement to be filed pursuant to Regulation 14A with respect to the registrant’s 2005 annual meeting of stockholders.

DreamWorks Animation SKG, Inc.

Form 10-K

For the Year Ended December 31, 2004

		Page
PART I
Item 1.	Business	1
Item 2.	Properties	36
Item 3.	Legal Proceedings	37
Item 4.	Submission of Matters to a Vote of Security Holders	37
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	39
Item 6.	Selected Financial Data	41
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	47
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 8.	Financial Statements and Supplementary Data	65
Item 9.	Change in and Disagreements with Accountants on Accounting and Financial Disclosure	97
Item 9A.	Controls and Procedures	97
PART III
Item 10.	Directors and Executive Officers of the Registrant	98
Item 11.	Executive Compensation	98
Item 12.	Security Ownership of Certain Beneficial Owners and Management	98
Item 13.	Certain Relationships and Related Transactions	98
Item 14.	Principal Accounting Fees and Services	98
PART IV
Item 15.	Exhibits, Financial Statement Schedules	99

PART I

Item 1. Business

FORWARD-LOOKING STATEMENTS

Certain statements in this Form 10-K are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on current expectations, estimates, forecasts and projections about the industry in which we operate, management’s beliefs and assumptions made by management. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not have any intention or obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise.

Unless the context otherwise requires, the terms “DreamWorks Animation,” the “Company,” “we,” “us” and “our” refer to DreamWorks Animation SKG, Inc., its predecessors in interest, and the subsidiaries and assets and liabilities contributed to it by DreamWorks L.L.C. (“DreamWorks Studios”) on October 27, 2004 (the “Separation Date”) in connection with our separation from DreamWorks Studios (“the Separation”), including Pacific Data Images, Inc. (“PDI”) and its subsidiary, Pacific Data Images, LLC (“PDI LLC”). In connection with the Separation, we entered into a distribution agreement (the “Distribution Agreement”) with DreamWorks Studios pursuant to which DreamWorks Studios generally distributes all of our films.

Overview

DreamWorks Animation is principally devoted to developing and producing computer generated, or CG, animated feature films. With world-class creative talent, a strong and experienced management team and advanced CG filmmaking technology and techniques, we make high quality CG animated films meant for a broad movie-going audience. Based on our knowledge of the industry and the announced release schedules of our competitors, we believe we currently have more CG animated feature films in development and production than any other animation studio. We employ a core staff of artists, technology personnel and production staff who have been creating, developing and applying CG techniques for over 20 years.

We have theatrically released a total of nine animated feature films, four of which have been CG-only, and one direct-to-video title. Our four CG animated feature films have achieved domestic box office success, with Antz, Shark Tale, Shrek and Shrek 2 grossing approximately $90.2 million, $160.8 million, $267.7 million and $436.7 million, respectively, and as of December 31, 2004, collectively selling approximately 96.1 million home video units (totaling approximately $1,316.5 million in revenue) worldwide. Shrek 2 was the best selling home video title of 2004, selling 33.7 million home video units totaling approximately $554.8 million in revenue. In addition, Shrek 2 was the third highest grossing film of all time in the domestic box office, achieved the highest domestic box office gross of any animated film, had the most successful three-day opening weekend of any animated film and broke the single-day box office sales record for any film by grossing $44.8 million and was the most widely distributed film ever in the domestic theatrical market (playing in 4,223 theaters at its peak). Our five non-CG animated feature films, Sinbad: Legend of the Seven Seas, The Road to El Dorado, Spirit: Stallion of the Cimarron, The Prince of Egypt and Chicken Run have domestically grossed approximately $26.4 million, $50.9 million, $73.3 million, $101.3 million and $106.8 million, respectively, and as of December 31, 2004, have collectively sold approximately 46.8 million home video units worldwide (totaling approximately $563.9 million

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in revenue). The average domestic box office performance of our CG animated films has been significantly higher than that of our hand-drawn, two dimensional feature films. We do not have any hand-drawn, two dimensional films currently in production and do not intend to produce any such films.

We believe our experience, creative talent, scale of operations, technology and animation proficiency enable us to release two high quality CG animated feature films per year. We released both Shrek 2 and Shark Tale in 2004, and we are scheduled to release our next CG animated feature film, Madagascar, into the domestic theatrical market on May 27, 2005 and Wallace & Gromit: Curse of the Were Rabbit, a stop-motion animated film produced by Aardman Animations, on October 5, 2005. We are in various stages of pre-production and production on four additional feature films that we expect to release through 2007. In addition, we have a substantial number of projects in creative and story development that are expected to fill the release schedule in 2008 and beyond.

Our feature films are the source of substantially all of our revenue. We derive revenue from the worldwide exploitation of our feature films in theaters and in markets such as home video, pay and free broadcast television and ancillary markets. In the years 2002, 2003 and 2004, our operating revenue was $434.3 million, $301.0 million and $1,078.2, respectively. Our net loss in 2002 and 2003 was $25.1 million and $187.2 million, respectively, and our net income in 2004 was $333.0 million. Except for the fourth quarter of 2004, these results do not reflect the effects of our arrangements with DreamWorks Studios under the Distribution Agreement.

We retain the exclusive copyright and other intellectual property rights to all of our films and characters, excluding Aardman Animations films and characters which we co-own with Aardman Animations (other than Wallace & Gromit: Curse of the Were Rabbit, for which we generally have worldwide distribution rights in perpetuity, excluding certain United Kingdom television rights and certain ancillary markets), and we have access to an established distribution and marketing network to fully exploit our films and characters in theatrical, home video, television and ancillary markets throughout the world. We have important strategic relationships with retailers, promotional partners and licensees around the world that significantly enhance both consumer awareness of our films and their revenue-producing potential. In addition to producing feature films for theatrical release, we intend to develop and produce CG animated films for the direct-to-video market.

Effective October 1, 2004, we entered into the Distribution Agreement with DreamWorks Studios, pursuant to which DreamWorks Studios is generally responsible for the distribution, marketing and servicing of all of our completed animated films, including our previously released films, and direct-to-video films. DreamWorks Studios currently distributes, and we expect will continue to distribute, our motion pictures in international theatrical markets through distribution agreements with Vivendi Universal Entertainment LLLP (“Universal Studios”), a subsidiary of Universal Studios, Inc., an industry leading distributor and fulfillment services provider, CJ Corporation and its affiliate CJ Entertainment (collectively, “CJ Entertainment”) (in Korea and the People’s Republic of China) and Kadokawa Entertainment Inc. (“Kadokawa Entertainment”) (in Japan). DreamWorks Studios has engaged Universal Studios to be our worldwide principal fulfillment services provider for our home videos, excluding only Korea and Japan, where CJ Entertainment and Kadokawa Entertainment, respectively, perform such functions. The Distribution Agreement covers the distribution of our films and pictures in all media and markets on a worldwide basis that are available for delivery through the later of (i) delivery of 12 animated feature films, beginning with Shark Tale, and (ii) December 31, 2010. In general, the term of the Distribution Agreement will be extended to the extent of the term, if longer, of any of DreamWorks Studios’ sub-distribution, servicing and licensing agreements that cover our films and that we pre-approve (such as the Universal Agreements and DreamWorks Studios’ existing arrangements with CJ Entertainment and Kadokawa Entertainment). Even if we terminate our distribution relationship with DreamWorks Studios, our existing and future films generally will be subject to the terms of those pre-approved agreements. We retain the copyrights and other intellectual property related to our films and the right to directly exploit certain ancillary rights, such as commercial tie-ins and promotions, literary publishing, music publishing, soundtrack, radio, legitimate stage and merchandising rights. We believe our relationship with DreamWorks Studios provides us with many advantages, including the ability to create consumer awareness and demand for our films through

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DreamWorks Studios’ seasoned theatrical marketing, distribution and home video teams. Please see “—How We Distribute, Promote and Market our Films—Distribution Agreement” for a more detailed description of the Distribution Agreement.

Company History

Prior to the Separation on October 27, 2004, we were a business division of DreamWorks Studios, the diversified entertainment company formed in October 1994 by Steven Spielberg, Jeffrey Katzenberg and David Geffen. We have grown from several hundred employees releasing a single animated film per year to our current status as a separate company with approximately 1,200 employees and the capacity to release two CG animated feature films annually.

As a division of DreamWorks Studios, we conducted our business primarily through DreamWorks Studios’ animation division, which included DreamWorks Animation L.L.C. and PDI. The Separation was completed in connection with our initial public offering by the direct transfer of certain of the assets and liabilities that comprise our business, as well as by the transfer, by way of merger or otherwise, of certain of DreamWorks Studios’ subsidiaries to us. As part of the Separation, we acquired all of the outstanding stock of PDI and PDI LLC. Prior to the Separation, PDI was an approximately 90% owned subsidiary of DreamWorks Studios and its sole asset was its 60% interest in PDI LLC, of which DreamWorks Studios owned the remaining 40%. PDI LLC was formed in 1997 as a joint venture between PDI and DreamWorks Studios for the principal purpose of developing and enhancing the production processes used in the creation of CG animated characters and films. As a result of our acquisition of PDI, current and former employees of PDI received approximately 276,924 shares of our Class A common stock.

On October 28, 2004, our Class A common stock began trading on the NYSE in connection with our initial public offering pursuant to which we sold 25,000,000 newly-issued shares and the selling stockholders sold an aggregate of 8,350,000 existing shares at a price of $28.00 per share. We realized net proceeds of $635.5 million from our initial public offering, net of underwriting discounts and commissions and offering expenses. We used approximately $325 million of the net proceeds to repay revolving credit debt we assumed from DreamWorks Studios in connection with the Separation, $30 million to repay a portion of DreamWorks Studios’ subordinated debt owned to HBO that we assumed, $101.4 million to repay revolving debt we incurred to purchase films subject to the DreamWorks Studios film securitization facility and $179.1 million for general corporate purposes, including for working capital.

We conduct our business primarily in two studios—in Glendale, where we are headquartered, and in Redwood City, California. Our Glendale animation campus, where the majority of our animators and production staff is based, was custom built in 1997 for use as an animation studio. In 1997, we formed a joint venture with PDI to produce Antz, and in 2000 we acquired a controlling stake in PDI. Our animators hold numerous awards for their work in CG animation, most recently winning a Technical Achievement Award from the Academy of Motion Picture Arts and Sciences for our facial animation system. Both Shrek 2 and Shark Tale were nominated for Academy Awards^® in 2004 for best animated feature film of the year.

Since 1998, we have theatrically released nine animated feature films, including both Shrek 2 and Shark Tale in 2004. In addition, we have released one animated direct-to-video film. Historically, we have produced both CG animated feature films as well as hand-drawn two dimensional animated feature films. While all of our films produced to date, except Chicken Run, contained CG images, only Antz, Shrek, Shrek 2 and Shark Tale were created solely using CG animation. The average domestic box office performance of those films has been significantly higher than that of our hand-drawn, two dimensional feature films. In 2001, due to the success of CG animated films, we decided to exit the hand-drawn, two dimensional animation business after the completion and release, in 2002 and 2003, of the two remaining hand-drawn features that were in production. Beginning with Shrek 2, all films in production and projects in development, other than certain films that we may finance, co-produce or distribute for Aardman Animations, are expected to be produced solely using CG images and

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techniques. Aardman Animations is the Academy Award^® winning animation studio founded in 1972 by David Sproxton and Peter Lord, best known for its work in stop-motion animation. DreamWorks Studios and Aardman Animations collaborated in the past on Chicken Run, which was produced by Aardman Animations and distributed in certain territories, including the United States, by DreamWorks Studios. We have a commitment to distribute Wallace & Gromit: Curse of the Were Rabbit, another stop-motion animated film being produced by Aardman Animations.

In addition to our strategic shift to CG animated films, in 2001 we decided to focus on developing a unique identity for our films that seeks to appeal to a broad-based audience of families, teens and adults. Shrek, in particular, represented a breakthrough for this kind of movie. Shrek was nominated for two Academy Awards^® and won the first ever Academy Award^® for Best Animated Feature. In addition, it generated domestic box office receipts of approximately $267.7 million. Shrek’s domestic box office receipts surpassed the box office receipts of all other animated feature films released prior to it, excluding only The Lion King. In addition, Shrek has been very successful in the home video market, with approximately 31.0 million units sold as of December 31, 2004 (totaling approximately $409.2 million in revenue) domestically (approximately 15.3 million, or $220.8 million, of which were DVDs) and approximately 16.4 million units sold internationally (totaling approximately $196.3 million in revenue). Like Shrek, Shrek 2 has been critically acclaimed. It has also established several box office records, including achieving the highest domestic box office gross of any animated film at $436.7 million, and the highest single-day sales total of any film, with $44.8 million in domestic box office receipts. As of December 31, 2004, Shrek 2 sold a total of 33.7 million home video units worldwide (totaling approximately $554.8 million in revenue).

Our Strengths

We believe our competitive strengths are as follows:

• Strong Management Team with a Successful Track Record.    Our creative and production management team, led by Jeffrey Katzenberg, consists of some of the most experienced individuals in the CG animation industry, with an average of over 12 years of experience in the animation field and 18 years in the entertainment industry.

• Creative and Experienced Talent.    Our producers, directors and production executives, many of whom are signed to long-term contracts, are among the most experienced in the CG animation industry, having produced, directed or otherwise overseen highly successful animated feature films such as Shrek, Shrek 2, The Lion King, Toy Story, Beauty and the Beast and Aladdin. Our dedicated artists, technology personnel and production staff, numbering approximately 1,000 employees, are also among the most talented and creative in the industry.

• Strong and Adaptable Technology Foundation.    Our technology development staff has been responsible for many award-winning innovations that continue to advance the art of CG animated filmmaking and we continue to innovate in the application of new technologies to the production process, which has enabled us to produce progressively richer and more visually sophisticated imagery in our films.

• Exclusive Ownership of Our Films and Characters.    We exclusively own the copyright and other property rights to all of our films and characters, including the animated films released prior to the Separation, with the exception of certain films that we produce with Aardman Animations. Because of our exclusive ownership, we control the creative direction and the exploitation of our films and characters and retain the sole right during the applicable copyright period to create sequels and other derivative products such as direct-to-video films and consumer products.

• Established Distribution and Promotion Infrastructure.    We believe our relationship with DreamWorks Studios and its international distributors and fulfillment services partners creates proven distribution channels and marketing networks for our films. In addition, we and DreamWorks Studios have developed strong relationships with a host of prominent retailers and consumer products companies to help promote our films.

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Our Strategy

We intend to maintain our position as one of the leading developers and producers of CG animated feature films. To accomplish this goal, we are pursuing the major strategies described below.

• Focus on Maintaining Broad Audience Appeal for Our Films Through the Unique Identity of DreamWorks Animation.    We believe that DreamWorks has developed a unique identity that the public associates with innovative and popular movies such as the Shrek films. We intend to build on DreamWorks’ brand recognition by continuing to make unique, high quality, CG animated films that have a sophisticated tone and visual style and appeal to a broad-based audience of families, teens and adults.

• Use Our Existing Scale of Operations to Release Two CG Animated Feature Films Per Year.    We intend to release two CG animated feature films per year (excluding 2005, in which we expect to release one CG animated film and one stop-motion animated film produced by Aardman Animations). Based on our knowledge of the industry and the announced release schedules of our competitors, we believe this exceeds the current production schedule of any other CG animation studio and allows us to leverage our infrastructure and spread overhead costs over a greater number of films than our current competitors.

• Use Star Talent to Increase Popular Appeal.    Our films feature the voice talent of some of the most celebrated actors in the entertainment industry. We believe that using their unique voices and talent enhances our films and helps bring our characters to life.

• Take Advantage of Franchise Opportunities.    We intend to take advantage of our ownership rights and the broad marketability of animated films to create franchises that can generate prequels, sequels and other derivative works and licensing opportunities in several different markets, including theme park attractions, stage plays, interactive games and, in particular, direct-to-video films.

• Continue Developing Superior CG Animation Skills.    We have built a user-friendly production environment that allows our artists and animators to exploit fully the complex technologies used in CG animated filmmaking and have invested significant resources in the proper training and support of our creative staff. We intend to continue to invest in our technology and personnel to ensure that, from an artistic and technical perspective, our films remain state-of-the-art in CG animated filmmaking.

• Maximize the Success of Our Films Through Promotional Partnerships.    We believe that the strong relationships that we have developed with well-known retailers and consumer products companies throughout the world will help us promote our films in many valuable ways. We intend to continue developing new relationships with prominent companies and to continue utilizing existing relationships to ensure maximum consumer awareness for our films.

Our Challenges

We face a number of risks associated with our business and industry and must overcome a variety of challenges in implementing our operating strategy in order to be successful. For example:

• The motion picture industry is highly competitive and any particular film’s success is primarily dependent on its popular acceptance. Whether a film will be successful is extremely difficult to predict, yet each film requires a substantial capital investment before it generates any receipts. To be successful, we must produce films that generate significant receipts to offset production and overhead costs, while also providing for a return on the investment. Because this success is predicated on popular acceptance, it cannot be predicted with certainty.

• Unlike the major U.S. studios, which release an average of approximately 29 movies per year, we expect to release two CG animated films per year for the foreseeable future (excluding 2005, in which we expect to release one CG animated film and one stop-motion animated film produced by Aardman Animations). The commercial failure of any one of them could have a material adverse effect on our business.

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• Unlike the major studios, we are not part of large diversified corporate groups whose other operations can make up for volatility in their results. We principally operate in one business, the production of CG animated feature films, and our lack of a diversified business could adversely affect us.

• We are dependent on DreamWorks Studios for the distribution and promotion of our feature films and direct-to-video films. If DreamWorks Studios were to experience financial difficulty, file for bankruptcy or otherwise cease operations, our business could be materially adversely affected.

• We have only recently operated as an independent company, and we do business in a relatively new industry, each of which makes it more difficult to predict whether our business model will be successful.

For further discussion of these and other risks that we face, see “—Risk Factors.”

Our Films

Films in Production

We are currently producing five animated feature films and have committed to acquire distribution rights to one stop-motion animated film being produced by Aardman Animations. In addition, we have a substantial number of projects in development that are expected to fill our release schedule in 2007 and beyond. The table below lists all of our films in various stages of pre-production and production that are expected to be released through 2007.

Title	Expected Release Date*	Voice Talent*
Madagascar	May 27, 2005	Ben Stiller, Chris Rock, Jada Pinkett-Smith, David Schwimmer
Wallace & Gromit: Curse of the Were Rabbit (stop-motion)	October 7, 2005	Ralph Fiennes, Helena Bonham Carter, Peter Sallis
Over the Hedge	May 19, 2006	Bruce Willis, Garry Shandling
Flushed Away	Fall, 2006	Hugh Jackman, Ian McKellen, Kate Winslet
Shrek 3	May, 2007	Mike Myers, Cameron Diaz, Eddie Murphy, Antonio Banderas
Bees	Fall, 2007	Jerry Seinfeld

* Release dates and voice talent are tentative. Due to the uncertainties involved in the development and production of animated feature films, the date of their completion can be significantly delayed and planned voice talent can change.

Madagascar.    A comic adventure about four New York City Central Park Zoo animals who find themselves unexpectedly shipwrecked on the exotic island of Madagascar. Best of friends in the civilized world, these die-hard native New Yorkers must try to survive in the wild and discover the true meaning of the phrase, “it’s a jungle out there.” Madagascar features the voices of Ben Stiller, Chris Rock, Jada Pinkett-Smith and David Schwimmer. As of March 2005, Madagascar was in post production.

Wallace & Gromit: Curse of the Were Rabbit.    Produced with Aardman Animations in Bristol, England (makers of Chicken Run), Wallace & Gromit: Curse of the Were Rabbit is the first feature film about the characters of the Academy Award-winning film shorts of the same name. Wallace & Gromit: Curse of the Were Rabbit is being produced in stop-motion animation, the style for which Aardman and its award-winning director, Nick Park, are well recognized. As of March 2005, Wallace & Gromit: Curse of the Were Rabbit was three quarters through its shooting schedule with nearly all of the film’s final voices recorded.

Over the Hedge.    Based on the popular comic strip seen in over 200 newspapers, Over the Hedge tells the story of a mischievous raccoon named R.J. (voiced by Bruce Willis) and a timid turtle named Verne (voiced by Garry Shandling). When R.J., Verne and their woodland friends find a suburban housing development encroaching on their forest home, Verne’s first instinct is to head for the hills. But the opportunistic R.J. sees a

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treasure trove to be had from his unsuspecting new neighbors. Together, Verne and R.J. form an unlikely friendship as they observe and exploit this strange new world called suburbia. As March 2005, one third of Over the Hedge was in production, with three quarters of the film’s final voices recorded.

Flushed Away.    Flushed Away marks the third collaboration between us and Aardman Animations. Sophisticated socialite rat, Roderick St. James, lives a charmed life in a posh Kensington flat. Accidentally flushed down his own loo, Roddy winds up in the sewer and strikes a deal with a street-smart rat named Rita to take him home. As they voyage through the sewer, a thriving underground “Ratropolis” full of both great charm and peril, sparks fly between our rats from opposite worlds. But when Roddy realizes this secret city is facing disaster, he is forced to choose between the life of privilege “up top” and Rita and the citizens of Ratropolis. As of March 2005, one third of Flushed Away was in production with three quarters of the film’s final voices recorded.

Shrek 3.    Shrek 2, the #1 comedy film of all time, based on domestic box office receipts, continues with Shrek 3. Mike Myers, Eddie Murphy, Cameron Diaz, Antonio Banderas, and the behind-the-scenes talent of Shrek 2 return for this new adventure. As of March 2005, Shrek 3 was in pre-production, with production set to commence in mid-2005.

Bees.    Bees, a comedy featuring the voice of Jerry Seinfeld, is scheduled for release in the fall of 2007.

Released Films

To date, we have theatrically released nine animated feature films and one direct-to-video film. Each of these films continues to generate first-cycle revenue. The table below lists our animated films produced and released to date and the domestic box office receipts and worldwide home video units and revenue by film. Domestic box office receipts represent the amounts collected by theatrical exhibitors for exhibition of films and do not represent measures of revenue. Worldwide home video revenue represents gross revenue generated by our films as of December 31, 2004.

Title	Domestic Release Date	Domestic Box Office Receipts(1)		Worldwide Home Video Units Sold		Worldwide Home Video Revenue
				(As of 12/31/04)		(As of 12/31/04)
	(In millions)
CG Animated
Shrek 2	May 19, 2004	$	436.7	33.7		$	554.8
Shrek	May 18, 2001		267.7	47.4			605.5
Shark Tale	Oct. 1, 2004		160.8	—	(2)		—	(2)
Antz	Oct. 2, 1998		90.6	15.1			156.2
Primarily Hand-Drawn and Other
Chicken Run (stop-motion)(3)	June 21, 2000		106.8	9.4			108.2
The Prince of Egypt	Dec. 18, 1998		101.3	13.8			178.0
Spirit: Stallion of the Cimarron	May 24, 2002		73.3	12.2			154.9
The Road to El Dorado	Mar. 31, 2000		50.9	6.6			67.2
Sinbad: Legend of the Seven Seas	July 06, 2003		26.4	4.8			55.7
Joseph: King of Dreams (direct-to-video)	Nov. 7, 2000		N/A	2.8			27.2

⁽¹⁾ Source: Variety. In the past, our distributors’ percentage of box office receipts has generally ranged from an effective rate of over 50% to 35% depending on the financial success of the motion picture and the number of weeks that it plays at the box office. Under the Distribution Agreement, the portion of domestic box office receipts that we recognize as revenue for a film is reduced by the distribution and marketing costs and 8% distribution fee with respect to that film that DreamWorks Studios recoups.

⁽²⁾ Shark Tale’s home video unit sales are not included in this table, as it was released in the home video market on February 8, 2005.

⁽³⁾ Produced by Aardman Animations and co-financed and distributed by us in certain territories.

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In addition to the films above, in 2004 we developed and produced a CG animated television series for NBC called Father of the Pride. Father of the Pride is no longer airing, and we do not expect to produce a second season.

How We Distribute, Promote and Market our Films

Distribution and Marketing

In general, we have distributed and marketed our films in all media through our parent, DreamWorks Studios and its sub-distributors and fulfillment services providers in a manner that we believe has been consistent with general industry practice. Effective October 1, 2004, our distribution relationship has been governed by the Distribution Agreement we entered into with DreamWorks Studios. Pursuant to the Distribution Agreement, we granted to DreamWorks Studios the exclusive worldwide right to distribute all of our animated feature films and direct-to-video pictures completed and available for release through the later of (i) delivery of 12 animated feature films, beginning with Shark Tale, and (ii) December 31, 2010. In general, the term of the Distribution Agreement will be extended to the extent of the term, if longer, of any of DreamWorks Studios’ sub-distribution, servicing and licensing agreements that we pre-approve (such as DreamWorks Studios’ existing arrangements with Universal Studios, CJ Entertainment and Kadokawa Entertainment). In addition, even if we terminate our distribution relationship with DreamWorks Studios, our existing and future films generally will still be subject to the terms of those pre-approved agreements. The Distribution Agreement also grants DreamWorks Studios identical rights with respect to all animated feature films and direct-to-video pictures that we have previously released.

The Distribution Agreement provides that DreamWorks Studios is responsible for advertising, publicizing, promoting, distributing and exploiting our animated feature films and direct-to-video pictures in a manner consistent with the customary and reasonable business practices of the motion picture industry and DreamWorks Studios’ prevailing and commercially reasonable practices. Specifically, the distribution, promotional and marketing services that DreamWorks Studios provides with respect to our theatrically released animated feature films are required to be substantially comparable to the distribution, promotional and marketing services provided by DreamWorks Studios in connection with the initial theatrical and home video release of our four most recent films.

The cost to market and distribute feature films can be significant. In general, the cost to market and distribute a film for its worldwide theatrical release can range from $125 to $175 million. Additionally, the costs to market, distribute and duplicate a film for worldwide release in the home video market can be substantial and will vary depending on the number of units sold and the success of the films in the theatres.

Distribution Agreement

The following is a summary of the Distribution Agreement, which is filed as an exhibit to this Form 10-K. This summary is qualified in all respects by such reference. Investors in our common stock are encouraged to read the Distribution Agreement.

Term of Agreement and Exclusivity.    Effective October 1, 2004, we entered into a Distribution Agreement with DreamWorks Studios, whereby we granted to DreamWorks Studios the exclusive worldwide right to distribute all of our animated feature films, including our previously released films, and direct-to-video films completed and available for release through the later of (i) delivery of 12 animated feature films, beginning with Shark Tale, and (ii) December 31, 2010, unless, in either case, terminated earlier as described below. In general, the term of the Distribution Agreement will be extended to the extent of the term, if longer, of any of DreamWorks Studios’ sub-distribution, servicing and licensing agreements that we pre-approve (such as DreamWorks Studios’ existing arrangements with Universal Studios, CJ Entertainment and Kadokawa Entertainment as described below). In addition, even if we terminate our distribution relationship with DreamWorks Studios, our existing and future films generally will still be subject to the terms of those

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pre-approved agreements, as well as the agreements with Universal Studios described below. The Distribution Agreement also grants DreamWorks Studios identical rights with respect to all animated feature films and direct-to-video films we have previously released.

Distribution of our films generally includes (1) domestic and international theatrical exhibition, (2) domestic and international home video exhibition, (3) domestic and international television licensing, including pay-per-view, pay television, network, basic cable and syndication, (4) non-theatrical exhibition, such as on airlines, in schools and in armed forces institutions and (5) Internet, radio (for promotional purposes only) and new media rights, to the extent that we or any of our affiliates own or control the rights to the foregoing. We retain all other rights to exploit our films, including the right to make prequels and sequels, commercial tie-in and promotional rights with respect to each film, as well as merchandising, interactive, literary publishing, music publishing and soundtrack rights. Once it has acquired the license to distribute one of our animated films or direct-to-video films, DreamWorks Studios generally has the right to exploit the animated film or direct-to-video film in the manner described above for 16 years from its initial general theatrical release, or 10 years from initial release, with respect to direct-to-video films.

Distribution Services.    DreamWorks Studios is directly responsible for the initial U.S. theatrical release of all of our qualified animated films, but may engage one or more sub-distributors and service providers for all other markets, subject to our prior written approval with respect to entities not currently so engaged by DreamWorks Studios. DreamWorks Studios has entered into an international theatrical distribution agreement (the “Universal Distribution Agreement”) with Universal Studios (described below) that provides that Universal Studio’s affiliate will distribute and market DreamWorks Studios’ films (including ours) in international theatrical markets excluding Japan, Korea and the People’s Republic of China. In Japan, DreamWorks Studios has contracted with Kadokawa Entertainment to provide such services and in Korea and the People’s Republic of China, DreamWorks Studios has contracted with CJ Entertainment. For worldwide home video fulfillment services (excluding Japan and Korea), DreamWorks Studios has entered into a worldwide home video fulfillment services agreement (the “Universal Home Video Agreement” and, together with the Universal Distribution Agreement, the “Universal Agreements”) with Universal Studios (described below) to provide marketing, distribution and other fulfillment services. Such services are provided in Japan by Kadokawa Entertainment and in Korea by CJ Entertainment. DreamWorks Studios has also entered into output agreements with many of the major pay and broadcast television providers throughout the world. In the past, as a division of DreamWorks Studios, our films were generally covered by these license and output agreements. We expect that under the Distribution Agreement we will continue to benefit from DreamWorks Studios’ existing agreements and relationships.

The agreement provides that DreamWorks Studios will advertise, publicize, promote, distribute and exploit our animated feature films and direct-to-video films in a manner consistent with DreamWorks Studios’ past practices used to service our previously released films and its prevailing and commercially reasonable practices with respect to its films under similar circumstances to the extent and as long as applicable and if a higher standard. Specifically, the distribution, promotional and marketing services DreamWorks Studios provides with respect to our theatrically released animated feature films must be substantially comparable on an overall basis in quality, level, priority and quantity to the provision of such services by DreamWorks Studios in connection with the initial theatrical and home video release of our four most recent films. DreamWorks Studios’ obligations to provide these services in the international theatrical markets serviced by Universal Studios and in the home video market serviced by Universal Studios are subject to the standards set forth in the Universal Agreements.

Additional Pictures.    To the extent we produce or acquire an animated feature film or hybrid animated/live action film that does not meet the criteria set forth in the Distribution Agreement, we will submit that additional film to DreamWorks Studios for possible license pursuant to the Distribution Agreement. DreamWorks Studios will prepare an estimate of the prints and advertising expenses for such film and, if we agree with such estimate, DreamWorks Studios may license the film pursuant to the Distribution Agreement. If we disagree with the estimate, subject to certain exceptions, we can license the film to another distributor if they offer us more favorable terms unless we are required to license the film to Universal Studios pursuant to the terms of the Universal Distribution Agreement.

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Distribution Approvals and Controls.    Under the agreement, subject to the applicable terms and conditions of the Universal Agreements (with respect to the services Universal Studios provides), DreamWorks Studios is required to consult and submit to us a detailed plan and budget regarding the theatrical and home video marketing, release and distribution of each of our films. We have certain approval rights over these plans and are entitled, subject to certain limitations, to determine the initial domestic theatrical release dates for two films per year and, subject to the applicable terms and conditions of the Universal Agreements (with respect to the services Universal Studios provides), to approve the release date in the top 15 major international territories. Generally, DreamWorks Studios is not permitted to theatrically release any film with an MPAA rating of PG or less within the period beginning one week prior to, and ending one week following, the initial domestic and top 15 major international territories theatrical release dates of one of our films. Similar restrictions apply with respect to the home video distribution of DreamWorks Studios’ and our films.

Expenses and Fees.    The Distribution Agreement provides that we are solely responsible for all of the costs of developing and producing our animated feature films and direct-to-video films, including contingent compensation and residual costs. DreamWorks Studios is responsible for all of the out-of-pocket costs, charges and expenses incurred in the distribution, advertising, marketing, publicizing and promotion of each film (collectively, “Distribution Expenses”), including:

• marketing materials such as theatrical and home video trailers and television spots;

• advertising space in any print or electronic media;

• film festivals, premieres, advance screenings and other special events promoting the films, and all associated expenses such as travel and accommodation expenses for talent and DreamWorks Studios’ employees and subject to our approval, such expenses of any territory managers and marketing managers of subdistributors pursuant to approved subdistribution agreements;

• home video cassettes, DVDs, CD-ROMs and other such home video devices and prints, including for creation, manufacture, editing, dubbing, subtitling, rescoring, delivery and use of the foregoing or any other existing or future means of exploitation and including freight, shipping, transportation and storage costs;

• checking and collecting gross receipts;

• trade dues and assessments by trade organizations;

• taxes and government fees;

• remittance and conversion of gross receipts;

• license fees, duties, other fees or any other amounts paid to permit use of our feature films;

• a proportionate share of errors and omissions insurance;

• transaction fees imposed on credit card charges purchasing admission to view our animated films;

• the distribution of our animated films incurred at our direction, including an incremental costs to provide, at our request, distribution services or information not available in DreamWorks Studios’ normal course of business;

• home video distribution expenses;

• the prosecution, defense or settlement of any action directly relating to DreamWorks Studios’ exhibition or use of our animated films (or any element thereof), including interest and penalties; and

• anti-piracy and security measures specific or incremental to our animated feature films.

We and DreamWorks Studios mutually agree on the amount of Distribution Expenses to be incurred with respect to the initial theatrical and home video release of each film in the domestic territory and in the 15 major international territories, including all print and advertising costs and media buys. Unless we and DreamWorks

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Studios otherwise agree, the aggregate amount of Distribution Expenses to be incurred is equal to or greater than 80% of the average amount of Distribution Expenses incurred by DreamWorks Studios to release our four most recent films, subject to certain adjustments. However, if we determine in good faith that a film’s gross receipts will be materially enhanced by the expenditure of additional Distribution Expenses, we may cause DreamWorks Studios to increase such expenditures, provided that we will be solely responsible for advancing to or reimbursing DreamWorks Studios for those additional expenditures within five business days of receiving an invoice from DreamWorks Studios.

DreamWorks Studios is entitled to (i) retain a fee of 8.0% of revenue (without deduction for distribution and marketing costs and third-party distribution and fulfillment services fees and sales agent fees) and (ii) recoup all of its distribution and marketing costs prior to our recognizing any revenue. If a feature film or a direct-to-video film does not generate revenue, net of the 8.0% distribution fee, sufficient for DreamWorks Studios to recoup its Distribution Expenses, DreamWorks Studios is not entitled to recoup those costs from proceeds of our other feature films or direct-to-video films.

Since the Distribution Agreement became effective on October 1, 2004, DreamWorks Studios has retained an aggregate 8.0% distribution fee of $81.2 million through February 28, 2005.

Creative Control.    We retain the exclusive right to make all decisions and initiate any action with respect to the development, production and acquisition of each of our films, including the right to abandon the development or production of a film, the right to exercise final cut and the right to delegate final cut to the director of any of our films. In order for DreamWorks Studios to be required to distribute our animated films under the Distribution Agreement, our animated films must, among other requirements, (i) be filmed in color and in the English language, (ii) be at least 75 minutes long, (iii) be an animated film or hybrid animated/live-action film, (iv) obtain a rating by the MPAA no more restrictive than PG-13, (v) be an animated feature film or hybrid animated/live action film possessing comparable production values and animation quality on an overall basis in comparison to animated feature films our hybrid animated/live action films released by DreamWorks Studios prior to the effectiveness of the Distribution Agreement, (vi) have certain available distribution rights owned by us and (vii) not have been refused by Universal Studios fulfillment services in connection with its video distribution in the domestic territory or distribution services in a substantial portion of the international territory pursuant to the terms of the Universal Agreements (described below).

Assignment.    DreamWorks Studios (i) may assign its rights and obligations under the Distribution Agreement to any of its affiliates that it controls, (ii) if DreamWorks Studios ceases to operate its domestic theatrical distribution business, DreamWorks Studios may assign or sub-license its domestic theatrical rights with respect to our films to Universal Studios under the same terms and conditions as set forth in the Distribution Agreement (in which case Universal Studios would continue to enjoy its rights and obligations, with respect to our films, that it currently enjoys under its sub-distribution and fulfillment servicing agreement with DreamWorks Studios) and (iii) DreamWorks Studios may assign to any entity that acquires substantially all of DreamWorks Studios’ motion picture business—whether by acquisition, merger or otherwise.

Security Interest.    We and DreamWorks Studios have granted mutual security interests in connection with rights under the Distribution Agreement. We have granted DreamWorks Studios a security interest in our rights under the Distribution Agreement and to the distribution rights in and to each of our films licensed under the Distribution Agreement and the related assets, including marketing materials and the underlying literary and music materials, in order to secure the performance of our obligations and DreamWorks Studios’ rights under the Distribution Agreement. DreamWorks Studios has granted us a security interest in its distribution rights to each of our films licensed under the Distribution Agreement and its rights to, among other assets, (i) the gross revenues, (ii) distribution fees, (iii) distribution expenses and (iv) the marketing materials from our films. We each expect to enter into interparty agreements with secured lenders under our respective revolving credit agreements as well.

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Termination.    Upon the occurrence of certain events of default, which include the failure of either party to make a payment and the continuance thereof for five business days, material uncured breach of the agreement and certain bankruptcy-related events, the non-breaching party may terminate the agreement. If we fail to deliver to DreamWorks Studios three films per each five-year period, if applicable, of the Distribution Agreement (e.g., three films within the first five years, six films within the first ten years), then DreamWorks Studios has the right to terminate the agreement. In addition, if DreamWorks Studios (i) is in breach or default under any sub-distribution or third-party service agreements that have been approved by us; and such breach or default has or will have a material adverse effect on the distribution rights granted under the Distribution Agreement, (ii) ceases to employ David Geffen and Steven Spielberg or they cease to be meaningfully involved in the management of DreamWorks Studios’ distribution business, or (iii) undergoes a change of control, including a sale of all or substantially all of its assets or its motion picture division, then we may terminate the agreement. If we terminate the agreement, we generally can require DreamWorks Studios to stop distributing our films in the various territories and markets in which DreamWorks Studios directly distributes our films or we can terminate the remaining term of the Distribution Agreement, but require DreamWorks Studios to continue distributing our films that it is currently distributing or are ready for release pursuant to the Distribution Agreement, subject, in each case, to the terms of any output or other agreements to which the films are then subject (provided that DreamWorks Studios continues to pay us all amounts required to be paid to us and to perform its other obligations pursuant to the Distribution Agreement) or permit DreamWorks Studios to continue distribution in territories and markets that we choose. Unless otherwise agreed, termination of the Distribution Agreement will not affect the rights that any sub-distributor or service provider has with respect to our films pursuant to sub-distribution, servicing and licensing agreements that we have approved. Subject to the preceding sentence, in the event (i) DreamWorks Studios’ agreement with Universal Studios expires or is terminated by either party or (ii) DreamWorks Studios ceases to be engaged in the domestic theatrical distribution business and domestic theatrical exhibition rights are not assigned or sublicensed to Universal Studios in accordance with the terms of the Distribution Agreement, then either we or DreamWorks Studios may terminate the Distribution Agreement.

DreamWorks Studios’ Agreements with Universal Studios

The Universal Distribution Agreement covers the international theatrical distribution of all films (whether live action, animated, or a combination of both) that DreamWorks Studios theatrically releases in the domestic territory, as well as the worldwide home video fulfillment services of those films (excluding in each case the territories serviced by CJ Entertainment and Kadokawa). We have agreed with Universal Studios and DreamWorks Studios that the terms of the Universal Distribution Agreement shall apply to our films in the international theatrical markets where Universal Studios currently has the right to distribute DreamWorks Studios’ films and that the terms of the Universal Home Video Agreement shall apply in the worldwide markets where Universal Studios currently has the right to provide fulfillment services with respect to home videos.

International Theatrical Distribution

Term of Agreement and Exclusivity.    Pursuant to the Universal Distribution Agreement, DreamWorks Studios has granted to Universal Studios the exclusive right to initially theatrically distribute in the international territory (currently excluding Korea, the People’s Republic of China and Japan) all of the films DreamWorks Studios (including our films) initially theatrically distributes in the domestic territory. The agreement covers films domestically released by DreamWorks Studios through December 31, 2010, although Universal Studios has the right to extend the term of the agreement for up to two years under certain conditions. Notwithstanding expiration of the Universal Distribution Agreement, Universal Studios’ right to the exclusive initial international theatrical distribution of each of DreamWorks Studios’ distributed films extends for one year after DreamWorks Studios initially theatrically distributes that film in the domestic territory during the term of the Universal Distribution Agreement.

Distribution Services.    Universal Studios has agreed to provide marketing and distribution services in the international theatrical market for DreamWorks Studios’ films in a manner substantially equivalent in quantity,

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level and priorities to the services provided by Universal Studios with respect to theatrical distribution of Universal Studios’ motion pictures. Universal Studios has agreed to provide such services through United International Pictures, B.V. (“UIP”) which is co-owned by an affiliate of Universal Studios and an affiliate of Paramount Pictures. Services provided by UIP are required to be substantially equivalent in quality, level and priorities to the services provided by UIP to Universal Studios and Paramount Pictures for comparable pictures.

Distribution Approvals and Controls.    DreamWorks Studios has the right to exercise complete and final control in its absolute discretion over all aspects of the distribution, marketing and advertising of its films in the international theatrical market. Universal Studios may engage subdistributors, subject to DreamWorks Studios’ right of approval, which it must not unreasonably withhold. Universal Studios cannot, however, engage a subdistributor except in territories where UIP does not distribute any other films.

Expenses and Fees.    Universal Studios is entitled to retain a portion of the revenue it receives from theaters and subdistributors for DreamWorks Studios’ films it theatrically releases in the international market as a distribution fee. In addition, Universal Studios is entitled to recoup distribution expenses it incurs in distributing DreamWorks Studios’ films out of such revenue. Amounts payable to DreamWorks Studios and distribution expenses incurred by Universal Studios with respect to DreamWorks Studios’ films are aggregated on a monthly basis, and to the extent Universal Studios has incurred distribution expenses that exceed its revenue from DreamWorks Studios’ films it distributes, DreamWorks Studios must pay the difference to Universal Studios within five business days.

Retained Rights.    Universal Studios’ rights under the agreement extend solely to international theatrical distribution rights, the home video fulfillment services described below and limited non-theatrical international distribution rights (such as the right to exhibit films in hotels or motels); DreamWorks Studios retains the right to exploit all other rights to the films it theatrically releases, including domestic and international free and pay TV, home video and DVD sales. As described below, DreamWorks Studios has engaged Universal Studios as the home video fulfillment service provider for its films.

Assignment.    The Universal Distribution Agreement is non-assignable by either DreamWorks Studios or Universal Studios except to an affiliate or with the other party’s prior written consent.

Termination.    Either party may terminate the agreement upon certain events of default. In addition, DreamWorks Studios has the right to terminate the Universal Distribution Agreement if UIP ceases to distribute Universal Pictures’ and/or Paramount Pictures’ films or UIP’s ownership changes (in either event, a “UIP Restructure”).

Home Video Fulfillment Services

Term of Agreement and Exclusivity.    Under the Universal Home Video Agreement, Universal Studios has the exclusive worldwide right and obligation to render fulfillment services for every picture released by DreamWorks Studios into the home video market (including videocassettes, DVDs, video CDs and laserdiscs). The Universal Home Video Agreement covers home video releases by DreamWorks Studios (including our films) through December 31, 2010, although Universal Studios has the right to extend the term of the agreement for up to two years under certain conditions.

Fulfillment Services.    Under the agreement, Universal Studios is responsible for preparing marketing and distribution plans with respect to DreamWorks Studios’ home video releases, as well as arranging necessary third party services, preparing artwork, making media buys for product marketing, maintaining secure physical inventory sites and arranging shipping of the released picture. The fulfillment services Universal Studios provides must be in the aggregate substantially equivalent in quantity, level and priorities to the fulfillment services accorded by Universal Studios with respect to its own home video releases.

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Approvals and Controls.    DreamWorks Studios exercises total dominion and control over the distribution of its home video releases. DreamWorks Studios has sole discretion over which pictures, if any, it releases into the home video market. Except in limited circumstances, Universal Studios cannot refuse to provide fulfillment services with respect to DreamWorks Studios’ home video releases.

Expenses and Fees.    In return for Universal Studios’ fulfillment services, DreamWorks Studios pays it a percentage of the total home video receipts DreamWorks Studios receives. This fee arrangement must be no less favorable to DreamWorks Studios than that of any of Universal Studios fulfillment services arrangements with third parties. DreamWorks Studios pays all expenses relating to home video distribution.

Assignment.    The Universal Home Video Agreement is non-assignable by either DreamWorks Studios or Universal Studios except to an affiliate or with the other party’s prior written consent.

Termination.    Either party may terminate the agreement upon certain events of default. In the event DreamWorks Studios can terminate the Universal Distribution Agreement due to a UIP Restructure, the Universal Home Video Agreement may also be terminated by DreamWorks Studios, but only in the international territory.

Theatrical Distribution

DreamWorks Studios directly distributes and markets our films in the domestic theatrical market. Outside of this market, DreamWorks Studios distributes and markets our films through the Universal Distribution Agreement and its distribution and fulfillment services agreements with CJ Entertainment and its distribution and licensing agreements with Kadokawa Entertainment. Outside of Japan, Korea, the People’s Republic of China, and the domestic market, Universal Studios theatrically distributes and markets our films through United International Pictures B.V., a joint venture with Paramount Pictures. United International Pictures B.V. is one of the leading international film distributors in the world and operates in approximately fifty countries. In Korea and the People’s Republic of China, CJ Entertainment provides theatrical distribution services, and in Japan, Kadokawa Entertainment provides such services.

DreamWorks Studios has a domestic distribution group that distributes our films through theaters and theater circuits and through non-theatrical venues, such as hotels, airlines, cruise ships and other common carriers and military installations. All of our films are intended to be distributed as wide releases on more than 1,500 screens. DreamWorks Studios’ distribution group selects exhibitors for our films based on the quality of the facility, the box office success of animated films in that theater and geographic area, the terms of the exhibition agreement, the length of the run to which the exhibitor is willing to commit and all other relevant information available to them.

DreamWorks Studios uses sophisticated technology that provides the informational background for the decision-making process involved in the distribution of our film products. In the United States and Canada, the

information system links DreamWorks Studios’ distribution offices with each other and with exhibitors, print laboratories, film shippers, advertising agencies and publicists. This seamless book-to-billing system allows DreamWorks Studios to set shipment dates for print ads and trailers to theaters, send billing statements to exhibitors and track performance, all electronically.

The system currently maintains four years of historical industry film performance data, which is used in an on-line environment that tracks theater-by-theater performance histories for DreamWorks Studios’ distributed films. This system assists DreamWorks Studios and us in determining the most profitable venues for our films and helps determine optimal release dates. In addition, the system provides weekly receipts information so that DreamWorks Studios can accurately track gross receipts at theaters and the proceeds it is due.

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DreamWorks Studios is directly responsible for all billing and collection of gross rentals from theater operators for the domestic markets. Each week, DreamWorks Studios receives a billing statement from each theater indicating the level of box office receipts. The billing is followed by a written confirmation of receipts, at which time DreamWorks Studios prepares a bill to the theater owner. DreamWorks Studios estimates that at least 80% of the box office data required to generate theater billings is received through a centralized collection information agency that is linked directly to DreamWorks Studios’ book-to-billing system. The remainder is generated through direct inquiry on a circuit-by-circuit or theater-by-theater basis.

Home Video Distribution

DreamWorks Studios has entered into the Universal Home Video Agreement with Universal Studios to service the worldwide distribution of our DVDs and videocassettes for home video, other than in Japan and Korea. The services of Universal Studios are comprehensive and include all manufacturing and packaging, marketing, distribution, billing and collection. See “—DreamWorks Studios’ Agreements with Universal Studios.” In Japan and Korea, DreamWorks Studios has entered into agreements with Kadokawa Entertainment and CJ Entertainment, respectively, to provide similar services. DreamWorks Studios’ home video division maintains a small core of executives to oversee distribution, marketing and operations. These agreements pertain to both home video rental and the sell-through markets, both domestically and internationally.

In addition, we and DreamWorks Studios enjoy a strong relationship with some of the world’s largest retailers. We work with these key retailers to develop custom marketing programs to support the launch of our home video titles. Our relationship with these stores have resulted in broad promotion of our home videos and ancillary consumer products in stores throughout the world.

Since 1996, DreamWorks Studios has released over 70 films into the worldwide home video market and has had a successful track record in “event” marketing of such films as Shrek, which ranks as one of the top-selling home videos of all time, with approximately 47.4 million home video units sold worldwide. DreamWorks Studios has achieved this success through the creative marketing efforts of its seasoned executive team, which pioneered the sell-through business prior to joining DreamWorks Studios, and by cultivating close relationships with retailers around the world. DreamWorks Studios’ home video division has received numerous awards for creativity and marketing from consumer and industry organizations including the Cannes DVD Festival, Parent’s Choice, DVD Entertainment Awards and the VSDA Home Entertainment Awards.

Television Distribution

DreamWorks Studios distributes our films in worldwide television markets, including pay television, by licensing our films pursuant to output agreements and individual and package film agreements, which generally provide that the exhibitor pays a fee for each film exhibited during the specified license period for that film, which may vary according to the theatrical success of the film. DreamWorks Studios has entered into license agreements for domestic pay television, domestic free television and domestic basic cable with respect to our films. Worldwide, DreamWorks Studios has output agreements in place with many of the largest pay and free television distributors around the world. In the past, as a division of DreamWorks Studios, our films were generally covered by these license and output agreements. Under the Distribution Agreement we continue to benefit from DreamWorks Studios’ existing agreements and relationships.

Consumer Products

We have directly entered into strategic licensing arrangements with a number of well-known consumer products companies that generate royalty-based licensing fees. In general, pursuant to these agreements we provide a license to use our characters and film elements in connection with merchandise in exchange for a percentage of net sales of those products. We have entered into agreements with companies such as Activision, Hasbro, Scholastic and Hallmark. Activision is our interactive partner for a number of our movies, including

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Shrek 2, Shark Tale, Madagascar and Over the Hedge, and is creating several video games for a variety of interactive platforms. Hasbro, our master toy licensee for Shrek 2, Shark Tale and Madagascar, is manufacturing and selling toys, puzzles and games such as Shrek Monopoly Jr. and Shrek Operation, each of which are based on classic board games. Scholastic is our worldwide English language (and to a limited extent, Spanish language) publishing partner for several films, beginning with Shrek 2. Scholastic, one of the only brand names in children’s publishing, is our primary publishing partner for storybooks and color/activity books produced 19 books based on Shrek 2. Hallmark is creating party goods and greeting cards for Madagascar.

Promotional Partnerships

The success of our films greatly depends not only on their quality, but also on the degree of consumer awareness that we are able to generate for their theatrical and home video releases. In order to maximize consumer awareness, together with DreamWorks Studios, we have developed promotional partnerships with a host of well known companies. For example, for Shrek 2, we had promotional partnerships with Burger King, Baskin Robbins, General Mills, M&M Mars, Pepsi, Frito-Lay, Hewlett Packard, Dial and The United States Post Office. Likewise, to promote Shark Tale, we partnered with Burger King, General Mills, Coca-Cola, Hewlett-Packard and Krispy Kreme Doughnuts. For Madagascar, we have promotional partnerships with Hewlett-Packard, General Mills, Denny’s, Payless ShoeSource and Krispy Kreme.

We have similar relationships with brand leaders in the international marketplace, such as Proctor & Gamble, Nestle, Kellogg’s, Ferrero (Europe), Barilla (Italy), Quik (France) and Red Rooster (Australia). Our promotional partnerships are either multi-picture or picture-by-picture arrangements. In general, these arrangements provide that we license our characters and storylines for use in conjunction with our promotional partners’ products or services. In exchange, we generally receive promotional fees in addition to substantial marketing benefits from cross-promotional opportunities, such as inclusion of our characters and movie images in television commercials, print media and on promotional packaging. We believe these relationships are mutually valuable. We benefit because of the substantial consumer awareness generated for our films, and our partners benefit because these arrangements provide them the opportunity to build their brand awareness and associate with popular culture in ways they otherwise might not be able.

How We Develop and Produce our Films

The CG Animated Filmmaking Process

The filmmaking process starts with an idea. Inspiration for a film comes from many sources—from our in-house staff, from freelance writers and from existing literary works. Successful ideas are generally written up as a treatment (or story description) and then proceed to a screenplay, followed by the storyboarding process and then finally into the production process. After the majority of the development phase is complete, the entire production process, from storyboarding to filming out the final image, can take approximately three to four years.

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We employ small collaborative teams that are responsible for preparing storylines and ideas for the initial stages of development. These teams, through a system of creative development controls, are responsible for ensuring that ideas follow the best creative path within a desired budget and schedule parameter. The table below depicts, in a very general manner, a timeline for the filmmaking process, and describes the four general and overlapping phases that constitute the process and their components:

An animated film, in its most basic state, is a collection of shots that are assembled and combined with dialogue, sound effects and music to create a cohesive story. A group of shots—for example a close up of Shrek speaking followed by a close-up of Puss-in-Boots responding would constitute two shots—that logically flow together and form a cohesive group is known as a sequence. The collection of sequences that make up the entire film is called the story reel. The story reel is the most important tool for providing continuity and comprehension during the filmmaking process and is the most basic form of the film that will ultimately reach theaters some three-plus years later. All of the component shots and sequences in the story reel (characters, voices, sets, music, and the like) are manipulated using a digital editing console that keeps track of the high-resolution shots and sequences stored in our database and allows for quick, non-linear editing and manipulation of low-resolution duplicates on the story reel. Throughout the filmmaking process, new and modified shots and sequences are integrated into the story reel and replace older shots, sequences and placeholders. As each shot and sequence follows its path to completion, a copy of it is edited into the story reel, which allows the filmmakers to access the most complete version of the film at all times.

Development.    The development phase generally consists of story and visual development and its duration can vary project by project—from a matter of months to a number of years. The primary components of the development stage are:

Treatment:    Typically a three to five page outline of the story.

Screenplay:    An approximately 80-page script of the story that combines dialogue and stage directions to elaborate the outline of the story.

Storyboarding:    A visual script, or storyboard, developed from the screenplay that breaks down the story into thousands of hand-drawn still pictures, similar to a comic book. The storyboard describes and further weaves the plot and characters into a continuous narrative fabric. This is the first stage of the process that adds motion and personality to our characters.

Visual Development:    Artists begin to draw character designs, backgrounds and other images that help develop the characters and the setting of the film. Decisions on stylistic approaches, color, use of space and light and other elements, in other words, how the film will eventually look, are all decided in this phase of development.

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Pre-Production.    This phase is preparatory to the actual CG animation phase and involves the following:

Modeling:    The CG modeler translates two-dimensional imagery of props, environments and characters into three-dimensional geometric representations that can be viewed and manipulated in a computer.

Character Rigging:    During character rigging, the three-dimensional model is affixed within the computer with all the points of potential movement or anatomical control, which can number anywhere from a few hundred to several thousand for a primary character. These specialized controls are custom programmed to allow the entire range of a character’s movement and emotion.

Voice Recording:    Directors instruct and coach the actors by walking through the scenes and describing the emotions that need to be conveyed. Because the actors are performing their roles, sessions are usually videotaped to help provide reference for the next phases of production and ensure that key expressions, reactions and other nuances are captured.

Production.    The production phase is the longest phase and involves the largest number of staff. It can last up to two years and it primarily consists of:

Layout:    Using rough character shapes, we block out the movement of the character in the scene. We determine camera movement, character placement, spacing, basic lighting, geography and scene timing before beginning animation.

Animation:    Animators articulate the thousands of skeletal-like controls that were created during the character rigging phase to bring each character to life and to synchronize the characters to the voice recordings. Animation ranges from a subtle change of a sub-surface muscle that changes the expression on a character’s face to a rapid series of intense jerks and twists of digital spine controls that allow characters to run, jump and fly.

Lighting:    By applying textures to surfaces, a lighter brings the scene to life. Setting quantity, color, intensity and positioning of light creates the depth and shadow of the desired dramatic effect. In the end, a three-dimensional animated scene is simply hundreds of millions of digital polygons (or surfaces) that have been manipulated to create three dimensional illusion.

Post Production.    In the post production phase, the core visual and dialogue are in place and we add the following important aspects to the film:

Sound Effects:    All non-dialogue sounds effects are added.

Music/Score:    The final musical components are delivered and cut into the film in addition to the final score.

Sound Mixing:    All of the elements of the film are mixed together for proper volume levels and mixing.

Color Correction:    The entire film is viewed by the filmmakers to ensure that the colors have properly translated during the final stages of the process.

Final Print:    A final version of the completed film is sent to the lab to be printed, checked and ultimately duplicated and shipped to exhibitors around the world.

Our Technology

Our technology plays an important role in the production of our films. Our technology development staff has been responsible for many award-winning innovations that continue to advance the art of CG animated film-making and many of our employees are active leaders of industry trade organizations, which help set standards within the CG animation community. We also continue to innovate in the application of new technologies to the production process, which has enabled us to produce progressively richer and more visually sophisticated

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imagery in our films. Our focus on user interface and tool development enables our animators to adeptly use existing and emerging CG technologies, allowing us to leverage our extraordinary artistic talent. In addition, we have strategic relationships with leading technology companies that allow us to leverage third-party advancements and technology innovation substantially before they are available to the open market, which in the rapidly changing landscape of technology gives us a valuable advantage.

We have several core proprietary technologies and production processes: (1) Our Adaptable Production Environment is a robust data and workflow management architecture for connecting various tools together into an organized and efficient pipeline; (2) Emo is our character animation system; (3) Light and D_Render are an interactive lighting tool and a photo realistic rendering software system, respectively; (4) Comp is a high-quality digital compositor; (5) Nile is a sophisticated production tracking and management tool and (6) Virtual Studio Collaboration encompasses a suite of high-end collaboration tools that enable efficient production workflow and collaboration across multiple geographically diverse sites.

Adaptable Production Environment:    The adaptable and flexible production environment at DreamWorks Animation exists because of our core pipeline software that permits the use of specialized proprietary custom tools as well as commercially available applications. The proprietary pipeline software includes hundreds of scripts and applications that manage and version the millions of digital elements comprising each of our CG productions. The basis for our production pipeline is a linked collection of proprietary tools that are customizable and allow for the creation of unique, groundbreaking images and visual effects in our films.

EMOtion:    Emo is our Academy Award^® winning animation system. It is one of the primary tools used by our animators to put our CG characters in motion. Unlike commercially available software solutions that focus primarily on film visual effects or computer game animation, Emo is designed to deliver animators the control and flexibility to achieve convincing facial expression and full body motion worthy of the world-class acting talent in our films.

Light and D_Render:    Together these two software systems provide an interactive lighting interface and a powerful photo-realistic image rendering software. Light provides an interactive shading interface that enables artists to make creative adjustments to the shot’s lighting environment. D_Render provides the engine that synthesizes the environment according to the settings established in Light. Light and D_Render are essential for establishing the complex visual imagery that is a hallmark of DreamWorks Animation films.

Comp:    Comp is our integrated and interactive compositing package specifically targeted for the needs of high-end CG animation. Architected for parallel work, Comp allows many artists to work concurrently on the same shot. Comp has a sophisticated user interface that maximizes artist productivity and also provides programmatic access for customization and integration into the production workflow.

Nile:    Nile is our production management system used to schedule, coordinate and track the flow of work through the production pipeline. Due to the complex interdependent nature of three dimensional animation, accurate production information is essential for producing high quality animation on a specific schedule and budget. Nile acts as the central repository for all notes, changes and key decisions that take place throughout the production of a film. Furthermore, Nile shares information across productions, allowing the production management team to optimize studio resources and regulate the inventory of work for individual departments.

Virtual Studio Collaboration:    Our Virtual Studio Collaboration technology enables creative collaboration across multiple geographic sites. This technology has been applied to the several areas of the creative, production and technical collaboration processes at DreamWorks Animation, which has enabled us to build virtual studios across physical boundaries and leverage our talent pool without regard to location. The technology has been deployed internally to enable remote digital dailies, remote editing collaboration, remote storyboard pitching and many other forms of remote collaboration involving the real-time sharing of high- resolution images combined with interactive communication among staff. This technology, which is now at the core of our operation, has enabled us to leverage the latest in research and development with our strategic technology partners.

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Competition

Because of the importance of the domestic theatrical market in determining revenue from other sources, our primary competition comes from both animated and live-action films that are targeted at similar audiences and released into the domestic theatrical market at the same time as our films. At this level, in addition to competing for box office receipts, we compete with other film studios over optimal release dates and the number of motion picture screens on which our movies are exhibited. In addition, we compete with other films released into the international theatrical market and the worldwide home video and television markets. We also face intense competition from other animation studios for the services of talented writers, directors, producers, animators and other employees.

Competition for Film Audiences.    Our feature films compete with both live-action and animated films for motion picture screens, particularly during national and school holidays when demand is at its peak. Due to the competitive environment, the opening weekend for a film is extremely important in establishing momentum for its domestic box office performance. Because we expect to release only two films per year, the scheduling of optimal release dates is critical to our success. One of the most important factors we consider when determining the release date for any particular film is the expected release date of competing films. In this regard, we pay particular attention to the expected release dates of films produced by other animation studios, and in particular Pixar, Disney and Fox Entertainment’s Blue Sky Studios, although we expect that in the future, we may also need to consider the release dates of animated films produced by others.

Disney, Pixar, and Blue Sky Studios are the other CG animation studios that we believe target similar audiences and currently have comparable CG animated filmmaking capabilities, and each of them has released animated films produced solely with CG technology. Pixar released The Incredibles on November 5, 2004 and has announced that it intends to release Cars in the summer of 2006. Blue Sky Studios is a smaller animation studio and production company that has produced two CG animated feature films, Ice Age, which was released in March 2002, and Robots, which was released on March 11, 2005. In addition to producing Dinosaur in 2000, Disney has announced that it plans to release the CG animated feature film, Chicken Little, in 2005. In addition to these animated film studios, other smaller animated film studios and production companies currently exist, such as DNA Productions, which in 2001 released the CG animated feature film Jimmy Neutron: Boy Genius in conjunction with Nickelodeon and Paramount Pictures. In addition to CG animated films, a number of hand-drawn animated films are released each year.

Competition for Talent.    Currently, we compete with other animated film and visual effect studios for artists, animators, directors and producers. In addition, we compete for the services of computer programmers and other technical production staff with other CG animation studios and production companies and, increasingly, with video game producers. In order to recruit and retain the most talented creative and technical personnel possible, we have established relationships with the top animation schools and industry trade groups. We have also established well organized and thorough in-house digital training and artistic development training programs. Through these programs, we were able to re-train approximately 140 talented two-dimensional animators to become highly proficient three-dimensional CG animators.

Potential Competition.    In addition to existing CG animation studios, a number of film and visual effect studios, including Sony Entertainment and Lucasfilm Ltd., have announced their intention to enter the market or produce additional CG animated films. While we and most of the other existing CG animation studios and production companies have developed proprietary software to create CG animated films, other film studios would not be required to do so, as technological advances have made it possible to purchase third-party software capable of producing high-quality CG images. However, we believe that our experience in the CG animation field, along with the technology and talent that we have developed, provide us with significant competitive advantages over new entrants.

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Employees

We employ approximately 1,200 full and part-time employees, most of which are currently covered by employment contracts, which generally include non-disclosure agreements. Of that total, approximately three quarters are directly employed in the production of our films as animators, modelers, story artists, visual development artists, layout artists, editors, technical directors, lighters and visual effects artists and production staff, approximately 180 are primarily engaged in supporting and developing our animation technology, and approximately 80 work on general corporate and administrative matters, including training. We also hire additional employees on a picture-by-picture basis. The salaries of these additional employees, as well as portions of the salaries of certain full-time employees who provide direct production services, are typically allocated to the capitalized costs of the related feature film. In addition, approximately 450 of our current employees (and some of the employees or independent contractors that we hire on a project-by-project basis) are represented under three industry-wide collective bargaining agreements to which we are a party, namely the Local 839 of the International Alliance of Theatrical Stage Employees Agreement and the International Alliance of Theatrical Stage Employee Basic Agreement, which generally cover certain members of our production staff, and an agreement with the Screen Actors Guild, which generally covers artists such as actors and singers. The collective bargaining agreements with Local 839 and the IATSE expire in August 2006 and the SAG agreement expires in June 2008. We believe that our employee and labor relations are good.

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RISK FACTORS

You should carefully consider the following risks and other information in this report before making an investment decision with respect to shares of our Class A common stock. The following risks and uncertainties could materially adversely affect our business, financial condition or operating results.

Our success is primarily dependent on audience acceptance of our films, which is extremely difficult to predict and therefore inherently risky.

We cannot predict the economic success of any of our motion pictures because the revenue derived from the distribution of a motion picture (which does not necessarily bear any correlation to the production or distribution costs incurred) depends primarily upon its acceptance by the public, which cannot be accurately predicted. The economic success of a motion picture also depends upon the public’s acceptance of competing films, the availability of alternative forms of entertainment and leisure time activities, general economic conditions and other tangible and intangible factors, all of which can change and cannot be predicted with certainty. Furthermore, part of the appeal of CG animated films may be due to their relatively recent introduction to the market. We cannot assure you that the introduction of new animated filmmaking techniques, an increase in the number of CG animated films or the resurgence in popularity of older animated filmmaking techniques will not adversely impact the popularity of CG animated films.

In general, the economic success of a motion picture is dependent on its domestic theatrical performance, which is a key factor in predicting revenue from other distribution channels and is largely determined by our ability to produce content and develop stories and characters that appeal to a broad audience and the effective marketing of the motion picture. If we are unable to accurately judge audience acceptance of our film content or to have the film effectively marketed, the commercial success of the film will be in doubt, which could result in costs not being recouped or anticipated profits not being realized. Moreover, we cannot assure you that any particular feature film will generate enough revenue to offset its distribution and marketing costs, in which case we would not receive any gross receipts for such film from DreamWorks Studios. In the past, some of our films have not recovered, after recoupment of marketing and distribution costs, their production costs in an acceptable timeframe or at all. For example, in 2003 we released our final primarily hand-drawn animated feature film, Sinbad: Legend of the Seven Seas, which we estimate will not generate sufficient revenue over its first 10 years in distribution to fully recover, after recoupment of marketing and distribution costs, its production costs.

Our business is dependent upon the success of a limited number of releases each year and the commercial failure of any one of them could have a material adverse effect on our business.

We expect to theatrically release a limited number of animated feature films per year for the foreseeable future. The commercial failure of just one of these films can have a significant adverse impact on our results of operations in both the year of release and in the future. For example, for the remainder of 2005, we will be dependent on the continuing success of Shrek 2 and Shark Tale home video sales. Historically, there has been a close correlation between domestic box office success and international box office, home video and television success, such that feature films that are successful in the domestic theatrical market are generally also successful in the international theatrical, home video and television markets. Because of this close correlation, we believe that Shrek 2 and Shark Tale, both of which performed successfully in the domestic and international theatrical markets, will continue to strongly perform in the home video and television markets, although there is no way to guarantee such results. Our success in 2005 also significantly depends on audience acceptance of Madagascar, which is scheduled for release in the domestic theatrical market on May 27, 2005, and Wallace & Gromit: Curse of the Were Rabbit, which is scheduled for domestic theatrical release on October 7, 2005. If our films fail to achieve domestic box office success, because of the close correlation mentioned above, their international box office and home video success and our business, results of operations and financial condition could be adversely affected in the remainder of 2005 and beyond. Further, we can make no assurances that the historical correlation between domestic box office results and international box office and home video results will continue in the future. In addition, we can make no assurances that home video wholesale prices can be maintained at current

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levels due to aggressive retail pricing or other factors. Finally, the limited number of films that we release in a year magnifies fluctuations in our earnings. Therefore, our reported results at quarter and year end may be skewed based on the release dates of our films, which could result in volatility in the price of our Class A common stock.

Our operating results fluctuate significantly.

We continue to expect significant fluctuations in our future quarterly and annual operating results because of a variety of factors, including the following:

• the success of our feature films;

• the timing of the domestic and international theatrical releases and home video release of our feature films; and

• DreamWorks Studios’ costs to distribute and market our feature films under the Distribution Agreement.

We also expect that our operating results will continue to be affected by the terms of the Distribution Agreement. Under the Distribution Agreement, DreamWorks Studios uses film revenue (i) to recover the distribution and marketing expenses it incurs for the film and (ii) to cover its distribution fee relating to these markets before we recognize any revenue for that film. Accordingly, we recognize significantly less revenue from a film in the period of that film’s theatrical release than we would absent the Distribution Agreement. Furthermore, in the event that the Distribution Agreement were terminated, depending on the arrangement that we negotiate with a replacement distributor, we could be required to directly incur distribution and marketing expenses related to our films, which under the Distribution Agreement are incurred by DreamWorks Studios. Because we would expense those costs as incurred, further significant fluctuations in our operating results could result.

In response to these fluctuations, the market price of our Class A common stock could decrease significantly in spite of our operating performance.

We principally operate in one business, the production of CG animated feature films, and our lack of a diversified business could adversely affect us.

Unlike most of the major studios, which are part of large diversified corporate groups with a variety of other operations, we depend primarily on the success of our feature films. For example, unlike us, many of the major studios are part of corporate groups that include television networks and cable channels that can provide stable sources of earnings and cash flows that offset fluctuations in the financial performance of their feature films. Substantially all of our revenue is derived from a single source—our CG animated feature films—and our lack of a diversified business model could adversely affect us if our films fail to perform to our expectations.

Animated films are expensive to produce and the uncertainties inherent in their production could result in the expenditure of significant amounts on films that are canceled or significantly delayed.

The production, completion and distribution of animated feature films is subject to a number of uncertainties, including delays and increased expenditures due to creative problems, technical difficulties, talent availability, accidents, natural disasters or other events beyond our control. Because of these uncertainties, the projected costs of an animated feature film at the time it is set for production may increase, the date of completion may be substantially delayed or the film may be abandoned due to the exigencies of production. Delays in production may also result in a film not being ready for release at the intended time and postponement to a potentially less favorable time, which could result in lower gross receipts for that film. In extreme cases, a film in production may be abandoned or significantly modified (including as a result of creative changes) after

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substantial amounts have been spent, causing the write-off of expenses incurred with respect to the film. This was the case in 2003 when we wrote-off a significant amount of expenses that we had incurred for two of our animated films.

Animated films typically take longer to produce than live-action films, which increases the uncertainties inherent in their production and distribution.

Animated feature films typically take three to four years to produce after the initial development stage, as opposed to an average of twelve to eighteen months for live-action films. The additional time that it takes to produce and release an animated feature film increases the risk that our films in production will fall out of favor with target audiences and that competing films will be released in advance of or concurrently with ours, either of which risks could reduce the demand for, or popular appeal of, our films.

The production and marketing of CG animated feature films is capital intensive and our capacity to generate cash from our films may be insufficient to meet our anticipated cash requirements.

The costs to develop, produce and market a film are substantial and some of our competitors have more capital and greater resources than we and DreamWorks Studios have. In 2004, for example, we spent approximately $315 million to fund production costs (excluding capitalized interest and overhead expense) of our feature films, to make contingent compensation and residual payments and to fund technology capital expenditures. For 2005, we expect that these costs will be approximately $311 million, which includes a one-time payment to Aardman Animations related to Wallace & Gromit: Curse of the Were Rabbit and additional production spending related to an increase in our direct-to-video business. In addition, historically, we made substantial expenditures on distribution and marketing costs that are now generally incurred by DreamWorks Studios under the Distribution Agreement. Although we retain the right to exploit each of the ten films that we have previously released, the size of our film collection is insubstantial compared to the film libraries of the major U.S. movie studios, which typically have the ability to exploit hundreds of library titles. Library titles can provide a stable source of earnings and cash flows that offset fluctuations in the financial performance of newly released films. Many of the major studios use these cash flows, as well as cash flows from their other businesses, to finance the production and marketing of new feature films. We are not able to rely on such cash flows and are required to fund our films in development and production and other commitments with cash retained from operations and the proceeds of films that are generating revenue from theatrical, home video and ancillary markets. If our films fail to perform, we may be forced to seek substantial sources of outside financing. Such financing may not be available in sufficient amounts for us to continue to make substantial investments in the production of new CG animated feature films or may be available only on terms that are disadvantageous to us, either of which could have a material adverse effect on our growth or our business.

The costs of producing and marketing feature films have steadily increased and may increase in the future, which may make it more difficult for a film to generate a profit or compete against other films.

The production and marketing of theatrical feature films requires substantial capital and the costs of producing and marketing feature films have generally increased in recent years. According to the MPAA, the average negative cost of a motion picture produced by a major U.S. studio, which includes all costs associated with creating a feature film, including production costs, allocated studio overhead and capitalized interest, but excludes abandoned project costs, has grown at a compound annual growth rate of 6.4% from 1994 to 2004 and the average domestic marketing cost (which includes prints and advertising costs) per picture has grown at a compound annual growth rate of 7.9% over the same period. Although these growth rates include the costs of both live-action and animated films, they are indicative of the cost trend for motion pictures generally. These costs may continue to increase in the future, which may make it more difficult for our films to generate a profit or compete against other films. Historically, production costs and marketing costs have risen at a rate faster than increases in either domestic admissions to movie theaters or admission ticket prices. A continuation of this trend would leave us more dependent on other media, such as home video, television, international markets and new media for revenue.

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We compete for audiences based on a number of factors, many of which are beyond our control.

Despite a general increase in movie theater attendance, the number of animated and live-action feature films released by competitors, particularly the major U.S. motion picture studios, may create an oversupply of product in the market, and may make it more difficult for our films to succeed. In particular, we compete directly against other animated films and family oriented live-action films. Oversupply of such products may become most pronounced during peak release times, such as school holidays, national holidays and the summer release season, when theater attendance has traditionally been highest. Although we seek to release our films during peak release times, we cannot guarantee that we will be able to release all of our films during those times and, therefore, may miss potentially higher gross box-office receipts. In addition, a substantial majority of the motion picture screens in the U.S. typically are committed at any one time to only 10 to 15 films distributed nationally by major studio distributors. If our competitors were to increase the number of films available for distribution and the number of exhibition screens remained static, it could be more difficult for us to release our films during optimal release periods.

The market for CG animated films is relatively new, and the entrance of additional film studios into the CG animated film market could adversely affect our business in several ways.

CG animation is a relatively new form of animation that has been successfully exploited by a limited number of movie studios since the first CG animated feature film, Toy Story, was released by Pixar in 1995. Because there are currently only a few studios capable of producing CG animated feature films, there are a limited number of CG animated feature films in the market each year, a fact that may enhance their popular appeal. If additional studios were to enter the CG animated film market and increase the number of CG animated films released per year, the popularity of the CG animation technique could suffer. Although we have developed proprietary technology, experience and know-how in the CG animation field that we believe provide us with significant advantages over new entrants in the CG animated film market, there are no substantial technological barriers to entry that would prevent other film studios from entering the field, and in 2004 both Sony and Lucasfilm Ltd. announced plans to do so. Furthermore, advances in technology may substantially decrease the time that it takes to produce a CG animated feature film, which could result in a significant number of new CG animated films or products. The entrance of additional animation companies into the CG animated feature film market could adversely impact us by eroding our market share, increasing the competition for CG animated film audiences and increasing the competition for, and cost of, hiring and retaining talented employees, particularly CG animators and technical staff.

Our success depends on certain key employees.

Our success greatly depends on our employees. In particular, we are dependent upon the services of Jeffrey Katzenberg. We do not maintain key person life insurance for any of our employees. We have entered into employment agreements with Mr. Katzenberg and with all of our top executive officers and production executives. However, although it is standard in the motion picture industry to rely on employment agreements as a method of retaining the services of key employees, these agreements cannot assure us of the continued services of such employees. The loss of the services of Mr. Katzenberg or a substantial group of key employees could have a material adverse effect on our business, operating results or financial condition.

Our scheduled releases of CG animated feature films will place a significant strain on our resources.

We have established multiple creative and production teams so that we can simultaneously produce more than one CG animated feature film. As of March 2005, we have theatrically released four CG animated feature films and five non-CG animated feature films and have limited experience sustaining the ability to produce and release more than one CG animated feature film at the same time. Due to the strain on our personnel from the effort required to produce a film and the time required for creative development of future films, it is possible that we will be unable to consistently release two CG animated feature films per year. In the past, we have been

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required, and may continue to be required, to expand our employee base, increase capital expenditures and procure additional resources and facilities in order to accomplish the scheduled releases of our animated feature films. This growth and expansion has placed, and continues to place, a significant strain on our resources. We cannot provide any assurances that any of our animated feature films will be released as targeted or that this strain on resources will not have a material adverse effect on our business, financial condition or results of operations.

We are dependent on DreamWorks Studios and others for the distribution and promotion of our feature films and related products.

In connection with the Separation, we entered into the Distribution Agreement with DreamWorks Studios, pursuant to which DreamWorks Studios is responsible, with some exceptions, for the worldwide distribution of all of our films in all media. For a description of the terms of the Distribution Agreement, see “—How We Distribute, Promote and Market our Films—Distribution Agreement.” Although the Distribution Agreement obligates DreamWorks Studios to distribute our films, DreamWorks Studios is able to terminate the agreement upon the occurrence of certain events of default, including a failure by us to deliver to DreamWorks Studios a minimum number of films over specified time periods. If DreamWorks Studios fails to perform under the Distribution Agreement or the agreement is terminated by DreamWorks Studios or otherwise (including as a result of DreamWorks Studios ceasing to be engaged in the motion picture distribution business), we may have difficulty finding a replacement distributor, in part because our films would become directly subject to the terms and conditions of the Universal Distribution Agreement and the Universal Home Video Agreement and would continue to be subject to the terms of the existing sub-distribution, servicing and licensing agreements that DreamWorks Studios has entered into with CJ Entertainment, Kadokawa Entertainment and our other third-party service providers. See “—How We Distribute, Promote and Market our Films—DreamWorks Studios’ Agreements with Universal Studios.” We cannot assure you that we will be able to find a replacement distributor on terms as favorable as those in the Distribution Agreement. In addition, in general, the term of the Distribution Agreement will be extended to the extent of the term, if longer, of any of DreamWorks Studios’ sub-distribution, servicing and licensing agreements that we pre-approve (such as the Universal Agreements and DreamWorks Studios’ existing arrangements with CJ Entertainment and Kadokawa Entertainment). As a result, our ability to terminate the Distribution Agreement is effectively limited. Moreover, under the Universal Agreements, we would be required to pay Universal Studios distribution fees and reimburse them for distribution expenses as they are incurred, regardless of the performance of our films. As a result, we would have to record such expenses as they were incurred and we would recognize revenue consistent with the method we recognized revenue prior to the effectiveness of the Distribution Agreement.

DreamWorks Studios currently distributes, and we expect will continue to distribute, our motion pictures in international theatrical markets through the Universal Agreements and distribution agreements with CJ Entertainment (in Korea and the People’s Republic of China) and Kadokawa Entertainment (in Japan). In addition, DreamWorks Studios has engaged Universal Studios to be our worldwide principal fulfillment services provider for our home videos, excluding only Japan and Korea. We are therefore dependent on the ability of each of these companies to exploit our feature films in the territories in which they distribute them and any termination of these agreements could adversely affect DreamWorks Studios’ ability to distribute our films. In addition, if Universal Studios, CJ Entertainment or Kadokawa Entertainment were to experience financial difficulty or file for bankruptcy, our revenue could be substantially reduced with respect to the films in distribution.

DreamWorks Studios provides a number of services to us pursuant to a services agreement (the “Services Agreement”). If the Services Agreement were terminated, we would be required to replace those services on terms that may be less favorable to us.

Under the terms of a Services Agreement that we entered into with DreamWorks Studios, DreamWorks Studios provides us with certain accounting, insurance administration, risk management, information systems

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management, tax, payroll, legal and business affairs, human resources administration, procurement and other general support services. In addition, pursuant to the Services Agreement, we provide DreamWorks Studios office space at our Glendale facility, facilities management, information technology purchasing services and limited legal services. DreamWorks Studios and we charge the receiving party so that it or we generally recovers the actual costs of providing these services, including allocable employee salaries, fringe benefits and office costs and all out-of-pocket costs and expenses, plus 5% of the actual costs. While our historical financial statements reflect our allocated costs of these services, neither the historical financial statements nor our pro forma statement of operations necessarily reflect what the costs of these services will be in the future. Both DreamWorks Studios and we have the right, upon notice, to terminate any or all of the services either party is providing under the Services Agreement. As a receiving party, both we and DreamWorks Studios may exercise our termination rights generally upon 45 days’ notice. As a providing party, both we and DreamWorks Studios may exercise our termination rights generally upon 45 days’ notice, provided that the party exercising termination rights is not providing such service for itself. If the Services Agreement is terminated, DreamWorks Studios will no longer be obligated to provide these services to us or pay us for the services we are providing it, and we will be required to either enter a new agreement with DreamWorks Studios or another services provider or assume the responsibility for these functions ourselves and, in the case of office space, seek to find a new tenant. If we were to enter a new agreement with DreamWorks Studios, hire a new services provider, assume these services ourselves or find a new tenant, the economic terms of the new arrangement may be less favorable than our current arrangement with DreamWorks Studios, which may adversely affect our business, financial condition or results of operations.

If DreamWorks Studios were to experience financial difficulty or file for bankruptcy, our business, results of operations and financial conditions could be materially adversely affected.

Under the terms of the Distribution Agreement, DreamWorks Studios is entitled to collect all amounts relating to our films from the various distribution channels—including from domestic theatrical exhibitors, international sub-distributors, domestic and international home video services providers and television licensees. DreamWorks Studios is obligated to remit the amounts that it collects to us after it has deducted its distribution fee and distribution and marketing costs. If DreamWorks Studios were to default in its obligations to pay us these amounts, our revenue with respect to films in distribution at that time could be substantially reduced. Moreover, because we rely on DreamWorks Studios’ relationships and agreements with its sub-distributors, home video fulfillment services providers and licensees, if DreamWorks Studios were to experience financial difficulty or file for bankruptcy, we could lose the benefit of some of those relationships and agreements. In addition, DreamWorks Studios is responsible for the costs of marketing our films in substantially all media and markets. If DreamWorks Studios were to experience financial difficulty or file for bankruptcy, DreamWorks Studios may not have sufficient resources to market our films as effectively as the major studios market their films, which could adversely affect our revenue. In addition, pursuant to the terms of the Services Agreement, we rely on DreamWorks Studios for specified services, share expenses relating to some of these services and receive payments from DreamWorks Studios for certain services we provide, including office space. If DreamWorks Studios were not able to pay its share of these expenses, or ceased to provide these services, we may be required to absorb a greater portion of these expenses or obtain them from other sources or seek a new tenant, which could be more costly. Accordingly, if DreamWorks Studios were to experience financial difficulty or file for bankruptcy, our business, results of operations and financial conditions could be materially adversely affected.

We face risks relating to the international distribution of our films and related products.

Because we have historically derived approximately one-third of our revenue from the exploitation of our films in territories outside of the United States, our business is subject to risks inherent in international trade, many of which are beyond our control. These risks include:

• laws and policies affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws;

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• differing cultural tastes and attitudes, including varied censorship laws;

• differing degrees of protection for intellectual property;

• financial instability and increased market concentration of buyers in foreign television markets, including in European pay television markets;

• the instability of foreign economies and governments;

• fluctuating foreign exchange rates; and

• war and acts of terrorism.

Piracy of motion pictures, including digital and Internet piracy, may decrease revenue received from the exploitation of our films.

Motion picture piracy is extensive in many parts of the world and is made easier by technological advances and the conversion of motion pictures into digital formats, which facilitates the creation, transmission and sharing of high quality unauthorized copies of motion pictures in theatrical release, on videotapes and DVDs, from pay-per-view through set top boxes and other devices and through unlicensed broadcasts on free TV and the Internet. The proliferation of unauthorized copies and piracy of these products has an adverse affect on our business because these products reduce the revenue we receive from our legitimate products. Under the Distribution Agreement, DreamWorks Studios is primarily responsible for enforcing our intellectual property rights with respect to all of our films subject to the Distribution Agreement and is required to maintain security and anti-piracy measures consistent with the highest levels it maintains for its own motion pictures. Other than the remedies we have in the Distribution Agreement, we have no way of requiring DreamWorks Studios to take any anti-piracy actions, and DreamWorks Studios’ failure to take such actions may result in our having to undertake such measures ourselves, which could result in significant expenses and losses of indeterminate amounts of revenue. Even if applied, there can be no assurance that the highest levels of security and anti-piracy measures will prevent piracy.

Unauthorized copying and piracy are prevalent in territories outside of the U.S., Canada and Western Europe and in countries where we may have difficulty enforcing our intellectual property rights. The MPAA, the American Motion Picture Marketing Association and American Motion Picture Export Association monitor the progress and efforts made by various countries to limit or prevent piracy. In the past, some of these trade associations have enacted voluntary embargoes on motion picture exports to certain countries in order to pressure the governments of those countries to become more aggressive in preventing motion picture piracy. In addition, the U.S. government has publicly considered implementing trade sanctions against specific countries that, in its opinion, do not make appropriate efforts to prevent copyright infringements of U.S. produced motion pictures. There can be no assurance, however, that voluntary industry embargoes or U.S. government trade sanctions will be enacted or, if enacted, effective. If enacted, such actions could impact the amount of revenue that we realize from the international exploitation of motion pictures depending upon the countries subject to such action and the duration and effectiveness of such action. If embargoes or sanctions are not enacted or if other measures are not taken, we may lose an indeterminate amount of additional revenue as a result of motion picture piracy.

We cannot predict the effect that rapid technological change or alternative forms of entertainment may have on us or the motion picture industry.

The entertainment industry in general, and the motion picture industry in particular, continue to undergo significant changes, primarily due to technological developments. Due to rapid growth of technology and shifting consumer tastes, we cannot accurately predict the overall effect that technological growth or the availability of alternative forms of entertainment may have on the potential revenue from and profitability of our animated feature films. In addition, certain outlets for the distribution of motion pictures may not obtain the public acceptance that is or was previously predicted. For example, while we have benefited from the rapid growth in

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the DVD market, we cannot assure that such growth will continue, or that other developing distribution channels, such as video-on-demand, will be accepted by the public or that, if they are accepted by the public, we will be successful in exploiting such channels. Moreover, to the extent that other distribution channels gain popular acceptance, it is possible that demand for existing delivery channels, such as DVDs, will decrease. If we are unable to exploit new delivery channels to the same extent that we have exploited existing channels, our business, results of operations or financial condition could be materially adversely affected.

We have only recently operated as an independent company, and we do business in a relatively new industry, each of which makes it more difficult to predict whether our business model is sound.

Prior to the Separation, which occurred on October 27, 2004, we were a business division of DreamWorks Studios. Accordingly, we have limited experience operating as an independent company implementing our own business model and an evaluation of our prospects is difficult to make, particularly in light of the fact that CG animation constitutes a relatively new form of animated filmmaking and has been successfully exploited since only 1995. Our prospects must be considered in light of the risks, expenses and difficulties encountered by companies in the early stages of independent business operations, particularly companies in highly competitive markets. To address these risks, we must, among other things, respond to changes in the competitive environment, continue to attract, retain and motivate qualified persons and continue to upgrade our technologies. We cannot provide any assurances that we will be successful in addressing such risks.

Our historical and pro forma financial information may not be indicative of our results as a separate company.

Our historical financial information presented in this document does not reflect what our results of operations, financial condition and cash flows would have been had we been a separate, stand-alone entity pursuing independent strategies during all periods presented. For example, our historical consolidated financial statements do not reflect what our results of operations, financial condition or cash flows would have been had the Distribution Agreement been in place for all periods presented or had we shifted to our current business model of primarily producing CG animated films at an earlier date. Furthermore, our pro forma consolidated statement of operations does not necessarily reflect what our results of operations would have been had we been a stand-alone company operating under the Distribution Agreement for the entire period. As a result, our historical and pro forma financial information is not necessarily indicative of our future results of operations, financial condition or cash flows.

We could be adversely affected by strikes and other union activity.

Along with the major U.S. film studios, we employ members of the International Alliance of Theatrical and Stage Employees, or IATSE, on many of our productions. We are subject to a collective bargaining agreement with the IATSE that expires in August 2006. We are also subject to a collective bargaining agreement with Local 839 of IATSE. In addition, we employ members of the Screen Actors Guild, or SAG, and we have signed an industry-wide collective bargaining agreement with SAG that expires on June 30, 2008. We may also become subject to additional collective bargaining agreements. A strike by one or more of the unions that provide personnel essential to the production of our feature films could delay or halt our ongoing production activities. Such a halt or delay, depending on the length of time involved, could cause the delay of the release date of our feature films and thereby could adversely affect the revenue that the film generates.

To be successful, we must continue to attract and retain qualified personnel and our inability to do so would adversely affect the quality of our films.

Our success continues to depend to a significant extent on our ability to identify, attract, hire, train and retain qualified creative, technical and managerial personnel. Competition for the caliber of talent required to make our films, particularly for our film directors, producers, animators, creative and technology personnel, will continue to intensify as other studios build their in-house CG animation or special effects capabilities. For

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example, Lucasfilm Ltd. has announced its intent to make CG animated feature films, Sony has announced that it is producing its first CG animated feature film, and we believe Disney has begun to focus more heavily on CG animated feature films. The entrance of additional film studios into the CG animated film industry or the increased production capacity of existing film studios will increase the demand for the limited number of talented CG animators and programmers. There can be no assurance that we will be successful in identifying, attracting, hiring, training and retaining such qualified personnel in the future. If we are unable to hire and retain qualified personnel in the future, particularly film directors, producers, animators, creative personnel and technical directors, there could be a material adverse effect on our business, operating results or financial condition.

We depend on technology and computer systems for the timely and successful development of our animated feature films and related products.

Because we are dependent upon a large number of software applications and computers for the development and production of our animated feature films, an error or defect in the software, a failure in the hardware, a failure of our backup facilities or a delay in delivery of products and services could result in significantly increased production costs for a feature film. Moreover, if a software or hardware problem is significant enough, it could result in delays in one or more productions, which in turn could result in potentially significant delays in the release dates of our feature films or affect our ability to complete the production of a feature film. Significant delays in production and significant delays in release dates, as well as the failure to complete a production, could have a material adverse effect on our results of operations. In addition, because we seek to make cutting edge CG animated films, we must ensure that our production environment integrates the latest CG animation tools and techniques developed in the industry. To accomplish this, we can either develop these capabilities by upgrading our proprietary software, which can result in substantial research and development costs, or we can seek to purchase third-party licenses, which can also result in significant expenditures. In the event we seek to obtain third-party licenses, we cannot guarantee that they will be available or, once obtained, will continue to be available on commercially reasonable terms, or at all.

Our revenue may be adversely affected if we fail to protect our proprietary technology or enhance or develop new technology.

We depend on our proprietary technology to develop and produce our CG animated feature films. We rely on a combination of patents, copyright and trade secret protection and nondisclosure agreements to establish and protect our proprietary rights. We currently have five patents in force and 16 patent applications pending in the United States. We cannot provide any assurances that patents will issue from any of these pending applications or that, if patents do issue, any claims allowed will be sufficiently broad to protect our technology or that they will not be challenged, invalidated or circumvented. In addition, we also rely on third-party software to produce our films, which is readily available to others. Failure of our patents, copyrights and trade secret protection, non-disclosure agreements and other measures to provide protection of our technology and the availability of third-party software may make it easier for our competitors to obtain technology equivalent to or superior to our technology. If our competitors develop or license technology that is superior to ours or that makes our technology obsolete, our films could become uneconomical to make. In such a case, we may be required to incur significant costs to enhance or acquire new technology so that our feature films remain competitive. We cannot assure you that such costs would not have a material adverse affect on our business, financial condition or results of operations.

In addition, we may be required to litigate in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on our business, financial condition or results of operations.

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Third-party technology licenses may not continue to be available to us in the future.

In addition to our proprietary technology, we also rely on certain technology that we license from third-parties, including software that we use with our proprietary software. We cannot provide any assurances that these third-party technology licenses will continue to be available to us on commercially reasonable terms or at all. The loss of or inability to maintain any of these technology licenses, or our inability to complete a given feature film, could result in delays in feature film releases until equivalent technology could be identified, licensed and integrated. Any such delays or failures in feature film releases could materially adversely affect our business, financial condition or results of operations.

Others may assert intellectual property infringement claims against us.

One of the risks of the CG animated film production business is the possibility of claims that our productions and production techniques misappropriate or infringe the intellectual property rights of third-parties with respect to their technology and software, previously developed films, stories, characters, other entertainment or intellectual property. We have received, and are likely to receive in the future, claims of infringement of other parties’ proprietary rights. There can be no assurance that infringement or misappropriation claims (or claims for indemnification resulting from such claims) will not be asserted or prosecuted against us, or that any assertions or prosecutions will not materially adversely affect our business, financial condition or results of operations. Irrespective of the validity or the successful assertion of such claims, we would incur significant costs and diversion of resources with respect to the defense thereof, which could have a material adverse effect on our business, financial condition or results of operations. If any claims or actions are asserted against us, we may seek to obtain a license of a third-party’s intellectual property rights. We cannot provide any assurances, however, that under such circumstances a license would be available on reasonable terms or at all.

Forecasting film revenue and associated gross profits from our feature films prior to release is extremely difficult and may result in significant write-offs.

We are required to amortize capitalized film production costs over the expected revenue streams as we recognize revenue from the associated films. The amount of film production costs that will be amortized each quarter depends on how much future revenue we expect to receive from each film. Unamortized film production costs are evaluated for impairment each reporting period on a film-by-film basis. If estimated remaining revenue is not sufficient to recover the unamortized film production costs, the unamortized film production costs will be written down to fair value. In any given quarter, if we lower our previous forecast with respect to total anticipated revenue from any individual feature film, we would be required to accelerate amortization of related film costs. Such accelerated amortization would adversely impact our business, operating results and financial condition. In addition, we base our estimates of revenue on information supplied to us from DreamWorks Studios and other sources. If the information is not provided in a timely manner or is incorrect, the amount of revenue and related expenses that we recognize from our animated feature films and related products could be wrong, which could result in fluctuations in our earnings.

If our stock price fluctuates, you could lose a significant part of your investment.

The market price of our Class A common stock may be influenced by many factors, some of which are beyond our control, including those described above and the following:

• changes in financial estimates by analysts;

• announcements by us or our competitors of significant contracts, productions, acquisitions, or capital commitments;

• variations in quarterly operating results;

• general economic conditions;

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• terrorist acts;

• future sales of our common stock; and

• investor perception of us and the filmmaking industry.

In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated to and disproportionate to the operating performance of movie studios. These broad market and industry factors may materially reduce the market price of our Class A common stock, regardless of our operating performance.

We have agreed to effect up to two follow-on secondary offerings of our Class A common stock in respect of the Holdco arrangements described below. Sales of our Class A common stock in such follow-on offering or offerings may cause the market price of our Class A common stock to drop significantly, even if our business is doing well.

As described below, certain members of DreamWorks Studios who received shares of our common stock in connection with the Separation entered into an arrangement among themselves with respect to the allocation of such shares among such members. Entities controlled by Paul Allen, Steven Spielberg, Jeffrey Katzenberg and David Geffen, together with Lee Entertainment L.L.C. (“Lee Entertainment”) and Universal Studios, contributed the shares of our common stock received by them in the Separation to DWA Escrow LLLP, a limited liability limited partnership referred to in this report as “Holdco” (other than (1) in the case of entities controlled by Steven Spielberg, Jeffrey Katzenberg and David Geffen, 577,040 shares of Class A common stock and 1,154,079 shares of Class B common stock, (2) in the case of an entity controlled by Paul Allen, 12,627,933 shares of Class A common stock (4,901,858 shares of which were sold in our initial public offering) and one share of Class C common stock, (3) in the case of Lee Entertainment, 1,997,067 shares of Class A common stock (775,213 shares of which were sold in our initial public offering) and (4) in the case of Universal Studios, 1,039,756 shares of Class A common stock (all of which were sold in our initial public offering). In connection with the establishment of Holdco, we have agreed that Jeffrey Katzenberg and David Geffen (or entities controlled by them), acting together, or Paul Allen (or entities controlled by him) may select the timing of one follow-on secondary offering of Class A common stock, which must occur during the period beginning six months after our initial public offering and ending on May 31, 2006. Such follow-on offering must be of a sufficient size to permit the Holdco partners to receive a minimum of approximately $533 million of aggregate net cash proceeds from a combination of sales of secondary shares in our initial public offering and such follow-on secondary offering (assuming participation by all Holdco partners in such offerings, subject in the case of entities controlled by Steven Spielberg, Jeffrey Katzenberg and David Geffen, to the 365-day lock-up described in the following risk factor). Shares to be sold in such follow-on offering will consist of shares of common stock retained by Holdco partners and certain of the common stock contributed to Holdco. Under no circumstances will we be obligated to issue additional shares of our common stock for sale in the follow-on offering, regardless of the size of such offering. Upon consummation of a follow-on offering that satisfies this requirement, each Holdco partner will have the right to receive a portion of the remaining shares of common stock held by Holdco and allocated to such

partner and, in the case of certain Holdco partners, a portion of any net proceeds received by Holdco in connection with such offering, in each case in accordance with the Holdco partnership agreement.

If such follow-on offering has not occurred by May 31, 2006, then Paul Allen (or entities controlled by him) will have the ability to initiate a follow-on offering during the 18-month period (or 24-month period if Universal Studios triggers a follow-on offering as described below) beginning June 1, 2006. If such follow-on offering has not occurred by December 1, 2007 (or June 1, 2008 if Universal Studios triggers a follow-on offering as described below), then Jeffrey Katzenberg and David Geffen (or entities controlled by them) will have the right to initiate a follow-on offering on or prior to December 31, 2007 (or June 30, 2008 if Universal Studios triggers a follow-on offering as described below). In addition, if a follow-on offering has not been consummated prior to December 1, 2006, then during the period from December 1, 2006 through February 28, 2007, Universal Studios will have the right to initiate a follow-on offering of a portion of the stock contributed to Holdco of a sufficient

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size to generate aggregate net proceeds of $75 million for Universal Studios, when combined with the net proceeds received by Universal Studios in our initial public offering.

The follow-on offering or offerings may cause the market price of our Class A common stock to drop significantly, even if our business is doing well and even though we will not issue any additional shares to be sold in such offering or offerings.

Shares eligible for future sale may cause the market price of our Class A common stock to drop significantly, even if our business is doing well.

The market price of our Class A common stock could decline as a result of sales of a large number of shares of our Class A common stock in the market or the perception that these sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

As of March 1, 2005, there were 52,174,447 shares of our Class A common stock, 50,842,414 shares of our Class B common stock and one share of our Class C common stock outstanding. The shares of Class B common stock and Class C common stock are convertible into Class A common stock on a one-for-one basis. The 33,350,000 shares of Class A common stock sold in our initial public offering, the 2,146,505 shares of our Class A common stock delivered to DreamWorks Studios’ and our employees (in connection with the conversion of equity-based compensation awards of DreamWorks Studios that are vested or will vest within 60 days and the grant of shares to our and DreamWorks Studios employees and advisors in connection with our initial public offering) and the 276,924 shares of Class A common stock issued to current and former employees of PDI in connection with the merger of PDI and a wholly owned subsidiary of ours are freely tradeable without restriction or further registration under the Securities Act of 1933, as amended, by persons other than our affiliates within the meaning of Rule 144 under the Securities Act.

In addition to the follow-on secondary offerings described in the previous risk factor (which will occur no earlier than May 2, 2005), following the final allocation of shares by Holdco to the Holdco partners, each of Steven Spielberg, Jeffrey Katzenberg, David Geffen and Paul Allen or entities controlled by them or their permitted transferees, subject to the lock-up described below, will be able to sell their shares in the public market from time to time without registering them, subject to certain limitations on the timing, amount and method of those sales imposed by regulations promulgated by the Securities and Exchange Commission (the “SEC”). Entities controlled by each of Paul Allen, Steven Spielberg, Jeffrey Katzenberg and David Geffen (and certain of their permitted transferees), as well as Universal Studios in limited circumstances, will also have the right to cause us to register the sale of shares of Class A common stock beneficially owned by them. In addition, certain of our stockholders that are members of DreamWorks Studios on the closing date will have the right to include shares of Class A common stock beneficially owned by them (including the Class A common stock into which our Class B and Class C common stock is convertible) in certain future registration statements relating to our securities. If any of Paul Allen, Steven Spielberg, Jeffrey Katzenberg, David Geffen, Holdco, Universal Studios, entities controlled by them or their respective permitted transferees were to sell a large number of their shares, including in the follow-on secondary offerings described above, the market price of our Class A common stock could decline significantly. In addition, the perception in the public markets that sales by them might occur could also adversely affect the market price of our Class A common stock.

In connection with our initial public offering, entities controlled by Steven Spielberg, Jeffrey Katzenberg and David Geffen agreed to a lock-up period, meaning that they and their permitted transferees may not sell any of their shares without the prior consent of the underwriters of our initial public offering until October 28, 2005. Each selling stockholder and certain other stockholders agreed to a lock-up period with the underwriters until April 26, 2005, subject to extension in certain circumstances. In addition to these lock-up agreements, sales of our Class A common stock are also restricted by lock-up agreements until April 26, 2005, subject to extension in certain circumstances, that we, our directors and executive officers entered into with the underwriters for our

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initial public offering. Certain of our other existing stockholders holding non-public shares are also restricted by lock-up agreements until April 26, 2005, subject to extension in certain circumstances, with respect to 50% of their share ownership (collectively, approximately 450,000 shares held by these stockholders will not be restricted by lock-up agreements). These lock-up agreements restrict us and these stockholders, subject to specified exceptions, from selling or otherwise disposing of any shares until April 26, 2005, subject to extension in certain circumstances, without the prior consent of the underwriters for our initial public offering. Although there is no present intention to do so, the underwriters may, in their sole discretion and without notice, release all or any portion of the shares from the restrictions in any of the lock-up agreements described above. In addition to the lock-up agreements described above, we and entities controlled by Paul Allen, Steven Spielberg, Jeffrey Katzenberg and David Geffen and the other Holdco partners (and their parent entities) have agreed to certain trading and hedging limitations until the final allocation of shares by Holdco to the Holdco partners.

In addition, Holdco and members of DreamWorks Studios not participating in Holdco (other than Thomson) have pledged approximately 10,714,286 shares of our common stock as security for DreamWorks Studios’ obligations under its revolving credit agreement. Under certain circumstances, including an event of default by DreamWorks Studios under that revolving credit agreement, the lenders will be entitled to take possession of the pledged shares of common stock (after converting any pledged Class B common stock into Class A common stock) and sell them in the open market, subject to applicable bankruptcy, securities and other laws, as well as any applicable lock-up agreements.

In October 2004, we filed a registration statement on Form S-8 under the Securities Act to register an aggregate of 16,521,358 shares of our Class A common stock reserved for issuance under our 2004 Omnibus Incentive Compensation Plan, including shares of our common stock underlying equity-based awards made at the time of our initial public offering. Subject to the lock-ups described above and any limitations on sales of our common stock by our affiliates, shares registered under the registration statement on Form S-8 are available for sale into the public market.

Also, in the future, we may issue our securities in connection with investments and acquisitions. The amount of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then outstanding common stock.

A few significant stockholders control the direction of our business. The concentrated ownership of our common stock and certain corporate governance arrangements will prevent you and other stockholders from influencing significant corporate decisions.

Holdco, which is controlled by Jeffrey Katzenberg and David Geffen or entities controlled by them (subject to certain approval rights of Holdco’s limited partners) prior to the final allocation of shares contributed to Holdco, currently owns 97.8% of the outstanding shares of our Class B common stock (which represents 48.2% of our common equity and 91.5% of the total voting power of our common stock). In addition, Jeffrey Katzenberg and David Geffen each own 577,040 shares of our Class B common stock outside of Holdco, which represents the remaining outstanding shares of Class B common stock and in the aggregate 1.1% of our common equity and 2.1% of the total voting power of our common stock. Accordingly, Jeffrey Katzenberg and David Geffen or entities controlled by them generally have the collective ability to control all matters requiring stockholder approval, including the nomination and election of directors (other than the director elected by an entity controlled by Paul Allen as the holder of Class C common stock), the determination of our corporate and management policies and the determination, without the consent of our other stockholders, of the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions. In addition, the disproportionate voting rights of the Class B common stock relative to the Class A common stock and the Class C common stock may make us a less attractive takeover target.

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The interests of our controlling and significant stockholders may conflict with the interests of our other stockholders.

We cannot assure you that the interests of Jeffrey Katzenberg, David Geffen, Steven Spielberg and Paul Allen, or entities controlled by them, will coincide with the interests of the holders of our Class A common stock. For example, Jeffrey Katzenberg and David Geffen, or entities controlled by them, could cause us to make acquisitions that increase the amount of our indebtedness or outstanding shares of common stock or sell revenue-generating assets. Additionally, DreamWorks Studios (which is controlled by Jeffrey Katzenberg, David Geffen and Steven Spielberg) is in the business of making movies and derivative products and may, from time to time, compete directly or indirectly with us or prevent us from taking advantage of corporate opportunities. Jeffrey Katzenberg, David Geffen, Steven Spielberg and DreamWorks Studios may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. Our restated certificate of incorporation provides for the allocation of corporate opportunities between us, on the one hand, and certain of our founding stockholders, on the other hand, which could prevent us from taking advantage of certain corporate opportunities. So long as Jeffrey Katzenberg, David Geffen or entities controlled by them continue to collectively own shares of our Class B common stock with significant voting power, Jeffrey Katzenberg and David Geffen, or entities controlled by them, will continue to collectively be able to strongly influence or effectively control our decisions.

Additionally, in connection with the Separation we entered into a tax receivable agreement with an entity controlled by Paul Allen. As a result of certain transactions that entities controlled by Paul Allen engaged in, the tax basis of our assets was partially increased and the amount of tax we may pay in the future is expected to be reduced. Under the tax receivable agreement, we are required to pay to an entity controlled by Paul Allen 85% of the amount of any cash savings in certain taxes resulting from the partial increase in tax basis and certain other related tax benefits, subject to repayment if it is determined that these savings should not have been available to us. As a result, the interests of Paul Allen and entities controlled by him and the holders of our Class A common stock could differ. The actual amount and timing of any payments under this tax receivable agreement will vary depending upon a number of factors. As a result of the increased tax basis, we expect to be entitled to a tax benefit of $83.1 million as management has determined that such benefit can be realized through a reduction or refund of taxes paid in 2004. The tax receivable agreement requires us to pay an entity controlled by Paul Allen 85% of such benefit. As a result of the size of the increase in the tax basis of our tangible and intangible assets, during the approximately 15-year average amortization period for such increased tax basis, the payments that may be made to an entity controlled by Paul Allen could be substantial. See “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Provision for Income Taxes” for further discussion of the tax receivable agreement.

Anti-takeover provisions of our charter and by-laws, as well as Delaware law may reduce the likelihood of any potential change of control or unsolicited acquisition proposal that you might consider favorable.

The anti-takeover provisions of Delaware law impose various impediments to the ability of a third-party to acquire control of us, even if a change in control would be beneficial to our existing stockholders. Additionally, provisions of our charter and by-laws could deter, delay or prevent a third-party from acquiring us, even if doing so would benefit our stockholders. These provisions include:

• the division of our capital stock into Class A common stock and Class C common stock, each entitled to one vote per share, and Class B common stock, entitled to 15 votes per share, all of which Class B common stock will initially be owned or controlled by Jeffrey Katzenberg and David Geffen;

• the right of the holder of Class C common stock (voting as a separate class) to elect one director;

• the authority of the board to issue preferred stock with terms as the board may determine;

• the absence of cumulative voting in the election of directors;

• following such time as the outstanding shares of Class B common stock cease to represent a majority of the combined voting power of the voting stock, prohibition on stockholder action by written consent;

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• limitations on who may call special meetings of stockholders;

• advance notice requirements for stockholder proposals;

• following such time as the outstanding shares of Class B common stock cease to represent a majority of the combined voting power of the voting stock, super-majority voting requirements for stockholders to amend the by-laws; and

• stockholder super-majority voting requirements to amend certain provisions of the charter.

It is possible that we may be treated as a personal holding company for Federal tax purposes now or in the future.

The Internal Revenue Code currently imposes an additional tax at a rate of 15% on the “undistributed personal holding company income” (as defined in the Internal Revenue Code) of a corporation that is a “personal holding company” and such rate of tax is scheduled to increase for taxable years beginning after December 31, 2008. A corporation is treated as a personal holding company for a taxable year if both (i) five or fewer individuals directly or indirectly own (or are deemed under attribution rules to own) more than 50% of the value of the corporation’s stock at any time during the last half of that taxable year and (ii) 60% or more of the corporation’s gross income for that taxable year is “personal holding company income” (which includes, among other things, dividends, interest, annuities and, under certain circumstances, royalties and rents). We believe that, under applicable attribution rules, five or fewer individuals may be deemed to own more than 50% of the value of our stock and the stock of our subsidiaries. We also believe, however, that less than 60% of our and our subsidiaries’ gross income consists of personal holding company income and, as a result, we believe that neither we nor any of our subsidiaries is a personal holding company. There can be no assurance, however, that we or any of our subsidiaries are not, or will not become, a personal holding company and thus be subject, or become subject to, the tax imposed on our or our subsidiaries’ undistributed personal holding company income.

WHERE YOU CAN FIND MORE INFORMATION

We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. These filings are not deemed to be incorporated by reference into this report. You may read and copy any documents filed by us at the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Our filings with the SEC are also available to the public through the SEC’s website at http://www.sec.gov.

Our common stock is listed on the NYSE under the symbol “DWA”. You can inspect and copy reports, proxy statements and other information about us at the NYSE’s offices at 20 Broad Street, New York, New York 10005. We also maintain an Internet site at http://DreamworksAnimation.com. We make available free of charge, on or through our website, our annual, quarterly and current reports, as well as any amendments to these reports, as soon as reasonably practicable after electronically filing these reports with the SEC. We have adopted a code of ethics applicable to our principal executive, financial and accounting officers. We make available free of charge, on or through our website’s investor relations page, our code of ethics. Our website and the information contained posted on it or connected to it shall not be deemed to be incorporated by reference into this report.

Item 2. Properties

We conduct our business primarily in two studios—in Glendale, where we are headquartered, and in Redwood City, California.

Glendale Animation Campus

Our Glendale animation campus is approximately 326,000 square feet and houses approximately 1,100 employees, including employees of DreamWorks Studios. In May 1996, we entered into an agreement with a

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financial institution for the construction of an animation campus in Glendale, California, and the subsequent lease of the facility upon its completion in early 1998. The lease on the Glendale animation campus, which was acquired and financed by the financial institution for $76.5 million, qualified as an operating lease for us. In March 2002, we renegotiated the lease through the creation of a special purpose entity that acquired the property from the financial institution for $73.0 million and the special purpose entity leased the facility back to us for a five-year term. We sub-lease a portion of the property to DreamWorks Studios.

Redwood City Facility

Our Redwood City facility is approximately 100,000 square feet and houses approximately 380 employees. We entered into a 10-year lease agreement for our Redwood City facility in 2002 with an annual rent of approximately $2.8 million.

Item 3. Legal Proceedings

From time to time we are involved in legal proceedings arising in the ordinary course of our business, typically intellectual property litigation and infringement claims related to our feature films, which could cause us to incur significant expenses or prevent us from releasing a film. We also have been the subject of patent and copyright claims relating to technology and ideas that we may use or feature in connection with the production, marketing or exploitation of our feature films, which may affect our ability to continue to do so.

We believe that there is no litigation pending against us, including the matters described above, that should have, individually or in the aggregate, a material adverse effect on our financial position or results of operations.

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

On October 22, 2004, DreamWorks Studios, then our sole stockholder, approved our 2004 Omnibus Incentive Compensation Plan. No other matters were submitted to a vote of our stockholders during the fourth quarter of 2004.

Executive Officers of the Registrant

The following table sets forth information as to our executive officers as of December 31, 2004, together with their positions and ages.

Name	Age	Position
Jeffrey Katzenberg	54	Chief Executive Officer and Director
Roger A. Enrico	60	Chairman of the Board of Directors
Ann Daly	48	Chief Operating Officer
Katherine Kendrick	44	General Counsel and Secretary
Kristina M. Leslie	40	Chief Financial Officer

Our executive officers are appointed by, and serve at the discretion of, the Board of Directors. Each executive officer is an employee of DreamWorks Animation. There is no family relationship between any executive officer or director of DreamWorks Animation. Set forth below is a brief description of the business experience of the persons serving as our executive officers:

Jeffrey Katzenberg—Chief Executive Officer and Director. Mr. Katzenberg co-founded and has been a principal member of DreamWorks Studios since its founding in October 1994. Prior to founding DreamWorks Studios, Mr. Katzenberg served as chairman of the board of The Walt Disney Studios from 1984 to 1994. As chairman, he was responsible for the worldwide production, marketing and distribution of all Disney filmed entertainment, including motion pictures, television, cable, syndication, home video and interactive entertainment. During his tenure, the studio produced a number of live-action and animated box office hits, including Who Framed Roger Rabbit, The Little Mermaid, Beauty and the Beast, Aladdin and The Lion King.

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Prior to joining Disney, Mr. Katzenberg was president of Paramount Studios. Mr. Katzenberg serves on the boards of The Motion Picture and Television Fund, The Museum of Moving Image, Cedars-Sinai Medical Center, California Institute of the Arts and The Simon Wiesenthal Center. He is co-chairman of each of the Creative Rights Committee of the Directors Guild of America, and the Committee on the Professional Status of Writers of the Writers Guild of America. In addition, his fundraising efforts on behalf of AIDS Project Los Angeles have helped to provide its clients with medical and social services. In addition, Mr. Katzenberg serves as a consultant to DreamWorks Studios, where he spends up to 10% of his time, and is one of its principal members. As a director, Mr. Katzenberg serves on our Nominating and Corporate Governance Committee.

Roger A. Enrico—Chairman of the Board. Mr. Enrico is the chairman of our board of directors and has also assumed additional duties and responsibilities as described below under “—Board of Directors—Chairman of the Board.” Mr. Enrico is the former chairman and chief executive officer of PepsiCo, Inc. Mr. Enrico was chief executive officer of PepsiCo, Inc. from April 1996 to April 2001, chairman of PepsiCo, Inc.’s board from November 1996 to April 2001, and vice chairman from April 2001 to April 2002. He joined PepsiCo, Inc. in 1971, became president and chief executive officer of Pepsi-Cola USA in 1983, president and chief executive officer of PepsiCo Worldwide Beverages in 1986, chairman and chief executive officer of Frito-Lay, Inc. in 1991, and chairman and chief executive officer of PepsiCo Worldwide Foods in 1992. Mr. Enrico was chairman and chief executive officer, PepsiCo Worldwide Restaurants, from 1994 to 1997. He is also on the boards of directors of Electronic Data Systems Corporation, Belo Corp. and The National Geographic Society. As a director, Mr. Enrico serves on our Audit Committee.

Ann Daly—Chief Operating Officer. Ms. Daly has served as head of feature animation at DreamWorks Studios since July 1997, where she guided the strategic, operational, administrative and production-oriented concerns of the animation division, as well as overseeing the worldwide video operations of DreamWorks Studios. Prior to joining DreamWorks Studios, Ms. Daly served as president of Buena Vista Home Video (“BVHV”), North America, a division of The Walt Disney Company, where she presided over what was then the single largest home video company in the world. Ms. Daly was responsible for marketing, sales, distribution, operations, production and all other facets of the home video division. During her 14-year tenure at Disney, she was a home video industry pioneer, orchestrating many innovations such as the direct-to-video business, where high quality, family-oriented films were produced exclusively for the home video market. Under Ms. Daly’s direction, BVHV won several vendor awards for marketing and advertising, as well as for its state-of-the-art distribution, shipping and inventory replenishment systems. Ms. Daly received her B.A. in economics from The University of California, Los Angeles.

Katherine Kendrick—General Counsel and Secretary. Ms. Kendrick joined DreamWorks Studios in April 1996 as general counsel. Prior to joining DreamWorks Studios, Ms. Kendrick was employed by The Walt Disney Company in various legal roles, most recently as vice president—European legal affairs. Prior to joining Disney, Ms. Kendrick was an associate at the law firm of Latham & Watkins in Los Angeles. Ms. Kendrick has received several civic honors for her legal work and serves on the boards of numerous civic and charitable institutions, including The Next Generation Council of The Motion Picture and Television Fund, the Advisory Board of the Los Angeles Sports and Entertainment Commission, the Kernochan Center for Law, Media and the Arts for Columbia University School of Law, and Big Brothers/Big Sisters of Greater Los Angeles. Ms. Kendrick received her J.D. degree from Columbia University and a B.A. in Economics from The University of California, Berkeley.

Kristina M. Leslie—Chief Financial Officer. Ms. Leslie assumed the role of chief financial officer of DreamWorks Studios in the fall of 2003. Prior to becoming chief financial officer, she was head of corporate finance and strategic planning since joining DreamWorks Studios in June 1996, where she oversaw its long range planning, banking and investor relations and participated in all financing activities. Prior to joining DreamWorks Studios, Ms. Leslie was director of financial planning at Viacom following its acquisition of Paramount Communications, where she had served in various finance positions including treasury, investor relations and strategic planning since 1990. Ms. Leslie received an M.B.A. from Columbia University and a B.A. in economics from Bucknell University.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Price of Our Class A Common Stock

Our Class A common stock has been listed on the New York Stock Exchange under the symbol “DWA” since October 28, 2004. Prior to that time, there was no public market for our Class A common stock. The following table sets forth for the periods indicated the high and low sale prices of our Class A common stock on the New York Stock Exchange:

2004	High		Low
Fourth Quarter (commencing October 28, 2004)	$	42.60	$	34.77
2005	High		Low
First Quarter (ending March 24, 2005)	$	40.45	$	33.38

On March 24, 2005, the last quoted price per share of our Class A common stock on the NYSE was $39.54. As of March 1, 2005, there were approximately 2,723 stockholders of record. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

Dividend Policy

We currently intend to retain all our earnings to finance the growth and development of our business. We do not anticipate paying any dividends on our common stock in the foreseeable future. Any future change in our dividend policy will be made at the discretion of our board of directors and will depend on contractual restrictions contained in our credit facility or other agreements, our results of operations, earnings, capital requirements and other factors considered relevant by our board of directors.

Use of Proceeds from Sales of Registered Securities

On November 2, 2004, we closed the sale of a total of 33,350,000 shares of our Class A common stock at a price of $28.00 per share in a firm commitment underwritten initial public offering, of which 25,000,000 shares were sold by us and 8,350,000 shares (including 4,350,000 shares sold to the underwriters pursuant to the underwriters’ exercise of an over-allotment option) were sold by selling stockholders. The offering was effected pursuant to a Registration Statement on Form S-1 (File No. 333-117528), which the Securities and Exchange Commission declared effective on October 27, 2004. The joint book-running managers in the offering were Goldman, Sachs & Co. and J.P. Morgan Securities Inc.

Of the $700 million in gross proceeds raised by us in the offering:

1. approximately $40.3 million was paid to the underwriters in connection with the underwriting discount;

2. approximately $24.2 million was paid by us in connection with offering expenses, printing fees, listing fees, filing fees, accounting fees and legal fees, and fees and expenses related to the Separation;

3. approximately $325 million was used to repay revolving debt we assumed from DreamWorks Studios in connection with the Separation;

4. approximately $101.4 million was used to repay revolving debt we incurred to purchase films subject to the DreamWorks Studios film securitization facility;

5. approximately $30 million was used to repay debt that we assumed with respect to DreamWorks Studios’ subordinated obligations to Home Box Office, Inc.; and

6. approximately $179.1 million was used for general corporate purposes, including for working capital.

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Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth certain information regarding our equity compensation plans as of December 31, 2004:

Plan Category	Number of Securities to be issued upon exercise of outstanding options (a)	Weighted-average exercise price of outstanding options (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by securityholders	4,350,181	$	27.26	6,674,420

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Item 6. Selected Financial Data

The following table sets forth our selected financial information derived from our unaudited consolidated financial statements as of and for the year ended December 31, 2000 and the audited consolidated financial statements as of and for the years ended December 31, 2001, 2002, 2003 and 2004. The historical selected financial information may not be indicative of our future performance as a stand-alone company. The historical selected financial information should be read in conjunction with “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the consolidated financial statements and notes to our consolidated financial statements and the unaudited pro forma consolidated statement of operations and notes to our unaudited pro forma consolidated statement of operations included elsewhere in this report.

Consolidated Statement of Operations Data

	Year Ended December 31,
	2000			2001			2002			2003			2004
	(Unaudited)			(Audited)
	(In thousands, except per share data)
Operating revenue	$	298,729		$	661,144		$	434,324		$	300,986		$	1,078,160
Costs of revenue		372,968			509,090			391,214			438,959			566,209
Gross profit (loss)		(74,239	)		152,054			43,110			(137,973	)		511,951
Selling, general and administrative expenses		33,830			49,404			34,922			29,322			73,608
Operating income (loss)		(108,069	)		102,650			8,188			(167,295	)		438,343
Interest expense, net of interest income		(6,212	)		(812	)		(3,940	)		(12,360	)		(15,402	)
Other income (expense), net		212			(15,405	)		(27,124	)		(3,145	)		385
Income (loss) before income taxes and cumulative effect of accounting changes		(114,069	)		86,433			(22,876	)		(182,800	)		423,326
Provision for income taxes		(1,400	)		(1,434	)		(2,191	)		(1,839	)		(90,326	)
Income (loss) before cumulative effect of accounting changes		(115,469	)		84,999			(25,067	)		(184,639	)		333,000
Cumulative effect of accounting changes		—			(82,743	)		—			(2,522	)		—
Net income (loss)	$	(115,469	)	$	2,256		$	(25,067	)	$	(187,161	)	$	333,000
Unaudited pro forma financial information
Pro Forma income (loss) before cumulative effect of accounting changes(1)	$	(115,469	)	$	50,502		$	(25,067	)	$	(184,639	)	$	298,684
Pro Forma net income (loss)(1)		(115,469	)		(794	)		(25,067	)		(187,161	)		298,684
Basic income (loss) per share before cumulative effect of accounting changes(2)		(1.51	)		0.66			(0.33	)		(2.41	)		3.67
Basic net income (loss) per share(2)		(1.51	)		(0.01	)		(0.33	)		(2.44	)		3.67
Diluted income (loss) per share before cumulative effect of accounting changes(3)		(1.51	)		0.65			(0.33	)		(2.41	)		3.64
Diluted net income (loss) per share(3)		(1.51	)		(0.01	)		(0.33	)		(2.44	)		3.64
Shares used in computing unaudited pro forma net income (loss) per share
Basic(2)		76,636			76,636			76,636			76,636			81,432
Diluted(3)		76,636			77,123			76,636			76,636			82,151

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Consolidated Balance Sheet Data

	December 31,
	2000		2001		2002		2003			2004
	(Unaudited)		(Audited)
	(In thousands)
Assets
Cash and cash equivalents	$	164	$	835	$	3	$	41		$	63,134
Accounts receivable, net of allowance for doubtful accounts		147,082		313,966		150,915		132,329			14,015
Receivable from affiliate		—		—		—		—			372,116
Receivables from employees		2,544		1,360		2,080		2,480			1,634
Film inventories, net		516,019		444,207		477,613		427,463			519,926
Property, plant and equipment, net of accumulated depreciation and amortization		11,505		13,250		20,632		89,777			85,997
Deferred costs, net of amortization		—		—		1,986		1,641			3,741
Deferred taxes, net		—		—		—		—			93,343
Goodwill		25,998		26,462		26,462		26,462			34,216
Other assets		299		298		578		1,644			11,881
Total assets	$	703,611	$	800,378	$	680,269	$	681,837		$	1,200,003
Liabilities and Stockholders’ Equity (Deficiency)
Accounts payable	$	5,323	$	13,382	$	1,994	$	1,615		$	4,414
Payable to stockholder		—		—		—		—			70,643
Accrued liabilities		76,009		122,235		117,902		101,993			58,968
Other advances and unearned revenue		27,568		11,090		32,902		38,684			18,892
Obligations under capital leases		5,595		5,001		4,375		3,732			2,993
Debt allocated by DreamWorks Studios		105,999		168,461		313,814		418,379			—
Universal Studios advance		—		—		32,295		50,325			75,000
Other debt		—		—		—		76,612			139,207
Total liabilities		220,494		320,169		503,282		691,340			370,117
Non-controlling minority interest		—		—		—		2,941			2,941
Stockholders’ equity (deficiency)		483,117		480,209		176,987		(12,444	)		826,945
Total liabilities and stockholders’ equity (deficiency)	$	703,611	$	800,378	$	680,269	$	681,837		$	1,200,003

⁽¹⁾ Pro forma income (loss) before cumulative effect of accounting changes and pro forma net income (loss) represents the amounts that would have been recorded had we been incorporated and paid taxes historically.

⁽²⁾ For each of the years in the four year period ending December 31, 2003, pro forma basic share amounts are calculated using the number of shares of common stock outstanding immediately following the Separation, but not including the shares issued in our initial public offering, as if such shares were outstanding for all periods presented. For the year ended December 31, 2004, the pro forma basic per share amounts are calculated using the weighed average of: (i) from January 1, 2004 through the Separation Date, the number of shares of common stock outstanding immediately following the Separation, but not including the shares issued in our initial public offering, as if such shares were outstanding for the entire period and (ii) from the Separation Date through December 31, 2004, the weighted average number of shares of common stock outstanding.

⁽³⁾ Pro forma diluted per share amounts for each of the years in the four year period ending December 31, 2003 are calculated using the number of shares of common stock outstanding immediately following the Separation, but not including the shares issued in our initial public offering, as if such shares were outstanding for all periods presented, excluding, because their effect would be anti-dilutive, the impact of 487,000 shares

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of Class A common stock which underlie equity based compensation awards converted at the Separation. For the year ended December 31, 2004, the pro forma diluted share amount is calculated using the weighted average of: (i) from January 1, 2004 through the Separation Date, the number of shares of common stock outstanding immediately following the Separation, but not including the shares issued in our initial public offering, plus the impact of 487,000 shares of Class A common stock which underlie equity based compensation awards converted at the Separation (using the treasury stock method) and (ii) from the Separation Date through December 31, 2004, the weighted average number of shares of common stock outstanding plus 1,418,000 shares of Class A common stock which underlie equity-based compensation awards converted at the Separation as well as those issued during the period (using the treasury stock method), excluding the dilutive impact of 1,020,952 shares of restricted stock granted to certain named executive officers that had performance criteria that were not set by our compensation committee until January 2005 and 1,020,952 shares of performance compensation awards issued in January 2005 to certain named executive officers.

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PRO FORMA FINANCIAL INFORMATION

The following pro forma financial information should be read in conjunction with “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes thereto included elsewhere in this report. The pro forma consolidated statement of operations was prepared (i) as if the Distribution Agreement had become effective on January 1, 2004 and had been in effect in all periods since and (ii) as if we had been taxable as a corporation since January 1, 2004.

The pro forma adjustments are based upon available information and assumptions that we believe are reasonable and do not give effect to any transactions other than those mentioned above, including those contemplated by the Services Agreement. Please see the notes to our pro forma consolidated statement of operations for a more detailed discussion of how the adjustments described above are presented in our pro forma consolidated statement of operations.

The primary effect on our pro forma combined statement of operations of giving pro forma effect to the Distribution Agreement as of January 1, 2004 is that we recognize revenue net of (i) DreamWorks Studios’ 8.0% distribution fee and (ii) the distribution and marketing costs that DreamWorks Studios incurs for our films. In fiscal 2004, this results in a substantial reduction to our revenue. In addition, our costs of revenue decline because we no longer incur distribution and marketing costs, including third-party distribution and fulfillment services fees. Also, selling, general and administrative expenses are reduced because we are no longer allocating overhead costs related to DreamWorks Studios’ marketing and distribution departments, nor do we otherwise incur such costs.

As a result of the timing differences arising from giving effect to the Distribution Agreement, to the extent distribution and marketing costs were incurred during the year ended December 31, 2004 but the related film will not be released until after December 31, 2004 (as is the case with Madagascar), the costs are deducted in our pro forma costs of revenue but there is no corresponding reduction to pro forma revenue.

The pro forma effects of the Distribution Agreement also shift the timing of amortization of film inventory from period to period, although the total amount of film inventory amortized does not change. Under the Distribution Agreement, we recognize revenue from our films net of the distribution fee and the distribution and marketing costs that DreamWorks Studios incurs. Because amortization of film inventory is based on the ratio that current period actual revenue bears to estimated remaining unrecognized revenue, the pro forma reductions in revenue result in pro forma changes in film amortization for the periods presented.

The pro forma consolidated statement of operations also includes a provision for pro forma income tax to reflect federal income taxes that we would have been required to pay had we been a taxable corporation since January 1, 2004. These pro forma federal income taxes are separate from and in addition to the foreign withholding taxes and state franchise taxes shown in our historical financial statements.

The following pro forma consolidated statement of operations has been derived from the consolidated financial statements included elsewhere in this report and does not purport (i) to represent what our financial position and results of operations actually would have been had we been a stand-alone taxable corporation operating under the Distribution Agreement for the periods presented or (ii) to project our financial performance for any future period.

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DREAMWORKS ANIMATION

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2004

	Historical			Adjustments			Pro Forma
	(In thousands except per share data)
Operating revenue(1)	$	1,078,160		$	(274,905	)	$	803,255
Costs of revenue		566,209			(292,151	)(2)		274,058
Gross profit (loss)		511,951			17,246			529,197
Selling, general and administrative expenses		73,608			(12,160	)(3)		61,448
Operating income (loss)		438,343			29,406			467,749
Interest income (expense), net		(15,402	)		—			(15,402	)
Other income (expense), net		385			—			385
Total income (loss) before income taxes		423,326			29,406			452,732
Provision for income taxes		(90,326	)		(21,053	)(4)		(111,379	)
Net income (loss)	$	333,000		$	8,353		$	341,353
Pro forma:
Basic net income per share(5)	$	4.09					$	3.32
Diluted net income per share(6)	$	4.05					$	3.27
Shares used in computing pro forma:
Basic net income per share(5)		81,432						102,810
Diluted net income per share(6)		82,151						104,520

⁽¹⁾ Reflects the reduction in operating revenue that would have occurred had the Distribution Agreement been in effect as of January 1, 2004. Under the terms of the Distribution Agreement, DreamWorks Studios would have been entitled to retain a distribution fee equal to 8.0% of revenue (without deduction for any distribution and marketing costs or third-party distribution and fulfillment services fees) with respect to our films, of approximately $43.1 million. DreamWorks Studios would also have been entitled to recoup distribution and marketing costs out of this revenue in the amount of approximately $231.8 million.

⁽²⁾ In addition to the other adjustments noted in the following paragraph, the pro forma adjustment reflects a reduction in distribution and marketing costs of approximately $233.5 million, as these costs are borne by DreamWorks Studios under the terms of the Distribution Agreement. This amount does not match the $231.8 million of marketing and distribution costs noted in footnote 1 above that DreamWorks Studios would have recouped under the Distribution Agreement. To the extent distribution and marketing costs were incurred during 2004 prior to October 1, 2004 (the effective date of the Distribution Agreement), but the related film will be released in 2005, the costs are deducted in our pro forma costs of revenue but there is no corresponding reduction to pro forma revenue.

In addition, the pro forma adjustment to cost of revenues reflects the elimination of distribution and fulfillment services fees payable primarily to Universal Studios and CJ Entertainment, in the amount of approximately $21.5 million, as these costs are solely borne by DreamWorks Studios pursuant to the Distribution Agreement. The pro forma adjustment to cost of revenues also reflects a decrease in production costs amortization of approximately $37.2 million as, under the individual-film-forecast-computation-method, the revenue that we would have recognized in this period would have represented a lower proportion of the total revenue that we would have estimated our released films to ultimately produce.

⁽³⁾ Reflects the elimination of allocated overhead costs that are primarily related to the salaries and benefits of employees in DreamWorks Studios’ distribution and marketing departments, as these costs are solely borne by DreamWorks Studios pursuant to the Distribution Agreement.

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⁽⁴⁾ Reflects federal and state income taxes that we would have been required to pay, if any, had we been a taxable corporation for the entire year.

⁽⁵⁾ Pro forma basic net income per share is calculated using the weighted average number of shares of common stock outstanding from the Separation through December 31, 2004 as if such shares were outstanding for the entire year.

⁽⁶⁾ Pro forma diluted net income per share is calculated using the weighted average number of shares of common stock outstanding from the Separation Date through December 31, 2004 as if such shares were outstanding for the entire year plus the impact of 1,710,000 shares of Class A common stock which underlie equity based compensation awards (using the treasury method) as if such shares were outstanding for the entire year, excluding the dilutive impact of 1,020,952 shares of restricted stock to certain named executive officers that had performance criteria that were not set by our compensation committee until January 2005 and 1,020,952 shares of performance compensation awards issued in January 2005 to certain named executive officers.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This management’s discussion and analysis of financial condition and results of operations contains forward-looking statements that involve risks and uncertainties. Please see “Item 1—Business—Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements. You should read the following discussion in conjunction with our audited consolidated financial statements, the notes to our audited consolidated financial statements, our unaudited pro forma consolidated statement of operations and the notes to our unaudited pro forma statement of operations included elsewhere in this report. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those listed under “Item 1—Business—Risk Factors” and included in other portions of this report.

Overview

Our business (the “Animation Business”) includes the development, production and exploitation of animated films in the domestic and international theatrical, home video, television and other markets, as well as consumer products activities. Prior to the Separation Date, we were a division of DreamWorks Studios and our operations were conducted through DreamWorks Studios. DreamWorks Studios is a limited liability company formed in 1994 that, prior to October 27, 2004, engaged primarily in the businesses of developing, producing and distributing live action and animated feature films. As a result of the Separation, the assets and liabilities that comprised the Animation Business were transferred to DreamWorks Animation SKG, Inc., the entity through which we now conduct our business. Prior to the Separation, our assets, liabilities and operating results were included in DreamWorks Studios’ financial statements.

We have theatrically released a total of nine animated feature films, including Antz, Shrek, Shrek 2 and Shark Tale. We have a substantial number of projects in development that are expected to fill our release schedule through 2007 and beyond. The table below lists our next six films and their anticipated release schedule.

• Madagascar (release on May 27, 2005)

• Wallace and Gromit: Curse of the Were Rabbit (release on October 7, 2005)

• Over the Hedge (release on May 19, 2006)

• Flushed Away (release in fall 2006)

• Shrek 3 (release in May 2007)

• Bees (release in fall 2007)

Release dates are tentative. Due to the uncertainties involved in the development and production of animated feature films, the date of their completion can be significantly delayed.

Our audited consolidated financial statements, which are discussed below, reflect the historical financial position, results of operations and cash flows of the Animation Business transferred to us on October 27, 2004 and thereafter operated by us as a stand-alone company. The financial information, however, does not reflect what our financial position, results of operations and cash flows will be in the future or what our financial position, results of operations and cash flows would have been in the past had we been a separate, stand-alone company prior to October 27, 2004.

Sources of Revenue

Our feature films are the source of substantially all of our revenue, which is derived through their worldwide exploitation in sequential domestic and international distribution channels, typically beginning with domestic theatrical exhibition. Historically, we have released an average of one film per year. In 2004, we released two films—Shrek 2 and Shark Tale—and we expect to continue theatrically releasing an average of two CG animated

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films per year in the future, except in 2005, when we expect to release one CG animated film and one stop motion animated film produced by Aardman Animations (described below). Prior to the effectiveness of the Distribution Agreement, our principal sources of revenue were the domestic and international theatrical, home video and television markets, although we also derived revenue from ancillary sources, such as through the merchandising and licensing of our characters and films. Under the Distribution Agreement, which is described below, DreamWorks Studios uses film receipts to recover the distribution and marketing expenses it incurs for the film and to cover its distribution fee relating to these markets. Accordingly, we only record revenue from film receipts to the extent it exceeds these costs. As a result, we expect that our revenue will be principally derived from the home video and television markets and from the same ancillary sources as in the past, and we expect that domestic and international theatrical receipts will principally be used by DreamWorks Studios to recover distribution and marketing expenses. Because DreamWorks Studios recoups distribution and marketing costs and its distribution fee before we recognize any revenue, our revenue will be significantly lower than it would have been had we not entered the Distribution Agreement.

Historically, there has been a close correlation between domestic box office success and home video and international theatrical box office success, such that films that achieve high domestic box office receipts also tend to sell large numbers of home videos and achieve a high international theatrical box office gross. In addition, license fees derived from pay and broadcast television are often based on the box office success of a film. Therefore, we consider domestic box office sales to be the most important indicator of how much revenue our films will ultimately generate. Regardless of the number of films we make or how we report our revenue, our revenue will always be dependent on the performance of our films.

Our films are distributed in foreign countries and, in recent years, we derived approximately one-third of our revenue from foreign sources. As a result, fluctuations in foreign currency exchange rates can adversely affect our business, results of operations and cash flow. Due to the nature of the distribution agreements that have been in place at DreamWorks Studios, whereby DreamWorks Studios has not been responsible for collecting foreign currency, there is a relatively short period between revenue recognition and cash payment under those agreements. As a result, neither we nor DreamWorks Studios generally have hedged foreign currency exchange risks associated with those distribution agreements (although we have used hedging transactions in connection with foreign currency denominated production costs), and we do not expect to do so in the future.

Our historical financial statements do not reflect any material allocations of revenue from DreamWorks Studios and we do not expect any material allocations in the future.

Costs of Revenue and Selling, General and Administrative Expenses

Historically, our costs of revenue included distribution and marketing costs; third-party distribution and fulfillment services fees; the amortization of capitalized production, overhead and interest costs; contingent compensation and residual costs; and write-offs of film inventory for films not expected to be released and released films not expected to recoup their capitalized costs. Selling, general and administrative expenses include salaries, employee benefits, rent and other routine overhead expenses described below under “—Allocations,” net of expenses included in capitalized overhead. Over the past decade, expenses in the motion picture industry have increased rapidly as a result of increased production costs and distribution and marketing costs. See “Item 1—Business—Risk Factors—The costs of producing and marketing feature films have steadily increased and may increase in the future, which may make it more difficult for a film to generate a profit or compete against other films.”

Distribution and marketing costs consist primarily of the costs of advertising, preparing release prints and manufacturing home video units. The costs of advertising a CG animated feature film for the theatrical market are significant and typically involve national and target market media campaigns, as well as public appearances of the film’s stars. In addition, there are significant advertising costs associated with other distribution channels, such as home video marketing.

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Capitalized production costs include all of the costs incurred to develop and produce animated films, which primarily consist of salaries and fringe benefits for animators and voice talent (which, in the case of sequels such as Shrek 2, can be significant), equipment and other direct operating costs. Capitalized production overhead generally represents the salaries of individual employees or entire departments with exclusive or significant responsibilities for the production of our films.

We are responsible for certain compensation paid to creative participants, such as writers, producers, directors, voice talent, animators and other persons associated with the production of a film, which is dependent on the performance of the film and is based on factors such as domestic box office and total revenue recognized by the distributor related to the film. In some cases, particularly with respect to sequels (such as Shrek 2), these contingent compensation costs can be significant. We are also responsible for residuals, which are payments based on similar factors and generally made to third-parties pursuant to collective bargaining, union or guild agreements or for providing certain services such as recording or synchronization services. Accordingly, residual payments generally increase as total revenue for a film increases.

Under the Distribution Agreement, our costs of revenue include the amortization of capitalized production, overhead and interest costs, contingent compensation and residual costs and write-offs of film inventory for unreleased films, but generally do not include distribution and marketing costs or third-party distribution and fulfillment services fees. Distribution and marketing costs are included in our costs of revenue only to the extent that we cause DreamWorks Studios to make additional expenditures in excess of agreed amounts or to the extent we become obligated under the Universal Agreements. See “Item 1—Business—How We Distribute, Promote and Market our Films—Distribution Agreement” and “Item 1—Business—How We Distribute, Promote and Market our Films—DreamWorks Studios’ Agreements with Universal Studios.”

Our selling, general and administrative expenses no longer include allocated costs of DreamWorks Studios’ selling and marketing departments. After the Separation, our selling, general and administrative expenses include payments to DreamWorks Studios under the Services Agreement described below for services it provides to us, as well as costs we incur for providing the services on our own, net of reimbursement for services we provide to DreamWorks Studios under the Services Agreement. We have incurred additional general and administrative expenses as a result of becoming a public company.

Distribution Agreement

We entered into several agreements with DreamWorks Studios in connection with the Separation, including the Distribution Agreement. For a more detailed description of this agreement, please see “Item 1—Business—How We Distribute, Promote and Market our Films—Distribution Agreement.”

Pursuant to the Distribution Agreement, we granted to DreamWorks Studios the exclusive right to distribute all of our completed animated feature films, including our previously released films, throughout the world that are available for delivery through the later of (i) delivery of 12 animated feature films, beginning with Shark Tale, and (ii) December 31, 2010. However, in general, the term of the Distribution Agreement will be extended to the extent of the term, if longer, of any of DreamWorks Studios’ sub-distribution, servicing and licensing agreements that we pre-approve (such as the Universal Agreements and DreamWorks Studios’ existing arrangements with CJ Entertainment and Kadokawa Entertainment). In addition, even if we terminate our distribution relationship with DreamWorks Studios, our existing and future films generally will still be subject to the terms of pre-approved agreements. DreamWorks Studios is responsible for (1) the domestic and international theatrical exhibition of our films, (2) the domestic and international home video exhibition of our films and direct-to-video pictures, (3) the domestic and international television licensing of our films, including pay-per-view, pay television, network, basic cable and syndication, (4) non-theatrical exhibition of our films, such as on airlines, in schools and in armed forces institutions. DreamWorks Studios has also been granted Internet, radio (for promotional purposes only) and new media rights with respect to our films. We retain all other rights to exploit our films, including the right to make sequels and commercial tie-in and promotional rights with respect

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to each film, as well as merchandising, interactive, literary publishing, music publishing, soundtrack, radio, legitimate stage and theme park rights. However, to the extent we wish to exploit theme park rights, we will only do so through Universal Studios for so long as Steven Spielberg has certain contractual relationships with us or if he, his wife, his or her issue (or trusts for the primary benefit of any of them) or a private charitable foundation organized by him and/or his wife directly or indirectly owns or controls our Class A common stock.

DreamWorks Studios is directly responsible for the initial U.S. theatrical release of all of our animated films, but may engage one or more sub-distributors and service providers for all other markets, subject to our prior written approval with respect to entities not currently so engaged by DreamWorks Studios. Pursuant to the Distribution Agreement, we are solely responsible for all of the costs of developing and producing our animated feature films and for contingent compensation and residual costs. DreamWorks Studios is responsible for all out-of-pocket costs, charges and expenses incurred in the distribution (including prints and the manufacture of home video units and distribution and fulfillment services fees payable to third-parties), advertising, marketing, publicizing and promotion of the films, and has agreed to make expenditures consistent with historical levels with respect to our films. If we make a good faith determination that the expenditure of additional distribution and marketing amounts will enhance a film’s gross receipts, we may cause DreamWorks Studios to spend additional amounts. In such a case, we will be solely responsible for advancing such additional amounts to DreamWorks Studios for those additional expenditures and we will expense such additional costs in the period in which they are incurred. The Distribution Agreement also provides that DreamWorks Studios is entitled to (i) retain a fee of 8.0% of revenue (without deduction for any distribution and marketing costs or third-party distribution and fulfillment services fees) and (ii) recoup all of its distribution and marketing costs prior to our recognizing any revenue. Once DreamWorks Studios acquires the license to distribute one of our animated films or direct-to-video pictures, it has the right to exploit the animated film or direct-to-video film in the manner described above for 16 years from initial general theatrical release or 10 years from initial direct-to-video release.

Under the terms of the Distribution Agreement, all amounts received by DreamWorks Studios from sub-distributors are payable by DreamWorks Studios to us within three business days from the date received by DreamWorks Studios. (In general, sub-distributors remit 30% of applicable home video net receipts to DreamWorks Studios within 60 days from the end of the month in which applicable home video shipments were billed and the remaining 70% within 90 days from the end of the month in which applicable home video shipments were billed). All other applicable net receipts received by DreamWorks Studios are due to us 30 days after the end of the month in which such receipts were received by DreamWorks Studios.

Allocations and Services

As an operating division of DreamWorks Studios prior to October 27, 2004, we have historically been allocated a portion of DreamWorks Studios’ total overhead expenses incurred prior to the Separation for the marketing and distribution of all DreamWorks Studios’ films (including our films), and for corporate functions, such as executive management, finance, accounting, legal, human resources, facilities management, insurance and information technology. In general, these allocations were calculated based on the percentage that our films, headcount, revenue or other criteria constituted of the total films, headcount, revenue or other criteria of DreamWorks Studios (which amounts include our films, headcount, revenue or other criteria).

Services Agreement.    In connection with the Separation, we entered into the Services Agreement with DreamWorks Studios in connection with certain services DreamWorks Studios provides to us. These include (i) risk management; (ii) information systems management; (iii) payroll services; (iv) legal and business affairs advisory and consulting services; (v) human resources administration; (vii) certain procurement services and (viii) other general support services. We provide DreamWorks Studios with certain services under the Services Agreement, including information technology procurement, office space and facilities management services. The Services Agreement requires both parties to reimburse the other party for its actual costs incurred, plus 5%.

Worldwide Marketing and Distribution:    Certain overhead expenses for the marketing and distribution of our films were historically allocated to us by DreamWorks Studios. These costs include the salaries, fringe

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benefits and operating expenses of the employees in DreamWorks Studios’ theatrical, home video, marketing and television sales/distribution departments. The allocation of the overhead associated with these functions was based on several factors, including: (1) marketing costs incurred for our films as a percentage of marketing costs incurred for all DreamWorks Studios’ films in a given year; (2) the number of films we released as a percentage of all DreamWorks Studios’ films released in a given year and (3) estimates of time spent on our releases as a percentage of time spent on all DreamWorks Studios’ releases in a given year. Although DreamWorks Studios historically allocated a portion of the overhead costs of these departments to us, these services are now provided to us pursuant to the Distribution Agreement.

Executive Management:    Executive management expense is comprised of the expenses relating to DreamWorks Studios’ principals, chief operating officers, and their respective administrative staffs, including costs associated with transportation. These costs were historically allocated to us based on a combination of (1) revenue generated by us as a percentage of DreamWorks Studios’ consolidated revenue in a given year and (2) our headcount as a percentage of DreamWorks Studios’ consolidated headcount in a given year. As a result of Separation, we directly incur executive management expense, including costs associated with transportation.

Finance and Accounting:    DreamWorks Studios historically allocated accounting and finance services related costs, including the costs of financial systems, to us based on several factors, including: (1) revenue generated by us as a percentage of DreamWorks Studios’ consolidated revenue in a given year; (2) our headcount as a percentage of DreamWorks Studios’ total headcount in a given year and (3) time spent on our finance projects as a percentage of time spent on all DreamWorks Studios’ finance projects in a given year. As a result of the Separation, we directly incur the costs of some accounting and finance services, such as strategic planning, financial reporting, treasury and investor relations. Other accounting and finance services, such as billing and collection of receivables (except receivables derived from rights retained by us, such as licensing and merchandising rights) and contingent compensation and residual reporting oversight services, are provided pursuant to the Distribution Agreement. As a result, DreamWorks Studios no longer allocates any of these costs to us. However, DreamWorks Studios provides other accounting services to us, such as payroll, pursuant to the Services Agreement.

Legal and Business Affairs:    Costs related to legal and business affairs services, other than outside legal fees and film specific trademark related expenses that were directly charged to us were historically allocated to us based on actual time spent by DreamWorks Studios’ attorneys on matters related primarily to us or our films. As a result of the Separation, we directly incur the costs of most legal and business affairs services, either through our employees or through our direct retention of outside legal counsel. However, attorneys employed by DreamWorks Studios provide some legal and business affairs services, such as work related to employment and music law, to us under the Services Agreement. We reimburse DreamWorks Studios for these services pursuant to the Services Agreement.

Human Resources:    DreamWorks Studios historically allocated some human resources costs, including management, benefits administration and employee relations to us based on our headcount as a percentage of the consolidated headcount of DreamWorks Studios. Other costs related to human resources, such as recruiting and relocation costs, were directly incurred by us. As a result of the Separation, we directly incur the costs associated with human resources management and employee relations. DreamWorks Studios provides other services, such as benefits management, for which we reimburse DreamWorks Studios pursuant to the Services Agreement.

Occupancy and Facilities Management:    The costs of facilities management and mail services were allocated to us historically based on the square footage that we occupied at our Glendale animation campus and our Redwood City production facility as a percentage of total square footage of all DreamWorks Studios’ facilities. As a result of the Separation, we incur the costs of facilities management and mail services directly. We charge a portion of our occupancy and facilities management costs to DreamWorks Studios pursuant to the Services Agreement.

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Insurance:     Property insurance premiums were historically allocated to us based on our insurable asset values as a proportion of DreamWorks Studios’ total insurable asset values, based on the asset’s fair market or replacement value as determined at the time of premium renewal. The insurance premiums for policies such as errors and omissions, directors and officers, travel, and excess liability, were historically allocated to us based on (1) our headcount as a percentage of the consolidated headcount of DreamWorks Studios in a given year and (2) the number of films we have released as a percentage of all DreamWorks Studios’ films released in a given year. After the Separation, we began directly incurring all insurance costs.

Information Technology:    DreamWorks Studios historically allocated to us the costs of network infrastructure and administrative desktop computer support. This allocation was based on our headcount as a percentage of total DreamWorks Studios’ headcount, in each case excluding the headcount of our Redwood City facility, as the costs related to Redwood City were directly incurred by us. As a result of the Separation, DreamWorks Studios provides network infrastructure and administrative desktop support services to us, and we reimburse DreamWorks Studios for these services pursuant to the Services Agreement. For telecommunications, we were historically allocated a fixed fee for every telephone user, which includes the costs of the equipment and related maintenance and support costs. We were charged for actual local and long distance usage.

Other Allocations:    We were historically allocated certain other costs, including (1) costs to track, deliver and store various film and film related content (for example, film elements, photos and artwork); (2) costs to oversee dubbing of our films and (3) costs to oversee the placement of musical content in our films. As a result of the Separation we directly incur some of these costs, such as the placement of musical content in our films. DreamWorks Studios provides some of these services to us, such as the dubbing of our films, as set forth in the Distribution Agreement. Other of these services, such as the costs of storing various film and film related content, are provided to us, and we reimburse DreamWorks Studios pursuant to the Services Agreement.

Debt, Interest and Other Expense Allocations:    DreamWorks Studios historically allocated to us debt and interest expense associated with its debt, and other income and expense associated with its interest rate swap agreements. This allocation was based on the proportion of capital invested in our films in production as a percentage of total capital invested by DreamWorks Studios in all films in production. A portion of this allocated interest expense was capitalized to film inventory. In connection with the Separation, we did not assume any obligations with respect to any of DreamWorks Studios’ interest rate swap agreements. In the future, to the extent we incur debt and interest expense, we will do so directly.

Critical Accounting Policies

Revenue Recognition

Both historically and under the Distribution Agreement, we have recognized and will recognize revenue from the distribution of our animated feature films when earned, as reasonably determinable in accordance with the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants Statement of Position 00-2, “Accounting by Producers or Distributors of Films” (the “SOP”). The following are the conditions that must be met in order to recognize revenue in accordance with the SOP: (i) persuasive evidence of a sale or licensing arrangement with a customer exists; (ii) the film is complete and has been delivered or is available for immediate and unconditional delivery; (iii) the license period of the arrangement has begun and the customer can begin its exploitation, exhibition or sale; (iv) the arrangement fee is fixed or determinable and (v) collection of the arrangement fee is reasonably assured. Revenue from the theatrical distribution of films is recognized at the later of (i) when films are exhibited in theaters or (ii) when theatrical revenues are reported to us by third parties, such as third party distributors.

Revenue from the sale of home video units is recognized at the later of (i) when product is made available for retail sale or (ii) when video sales to customers are reported to us by third parties, such as fulfillment service providers or distributors. We follow the practice of providing for future returns of home video product at the time the products are sold. We calculate an estimate of future returns of product by analyzing a combination of

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historical returns, current economic trends, projections of consumer demand for our product and point-of-sale data available from certain retailers. Based on this information, a percentage of each sale is reserved, provided that the customer has the right of return. Customers are currently given varying rights of return, from 15% up to 100%. However, although we allow various rights of return for our customers, we do not believe that these rights are critical in establishing return estimates, as other factors, such as our historical experience with similar types of sales, information we receive from retailers, and our assessment of the products appeal based on domestic box office success and other research, are more important in estimating returns. Generally, payment terms are within 90 days from the end of the month in which the product was shipped. Actual returns are charged against the reserve. Revenue associated with the licensing of home video product under revenue-sharing agreements is recorded as earned under the terms of the underlying agreements.

Revenue from both free and pay television licensing agreements are recognized at the time the production is made available for exhibition in those markets.

Revenue from licensing and merchandising is recognized when the associated films have been released and the criteria for revenue recognition have been met. In most instances, this generally results in the recognition of revenue in periods when royalties are reported by licenses or cash is received.

For periods prior to October 1, 2004 (the effective date of the Distribution Agreement), we recognized revenue from our films net of reserves for returns, rebates and other incentives. Under the Distribution Agreement, we are entitled to recognize revenue net of reserves for returns, rebates and other incentives after DreamWorks Studios (i) retains a distribution fee of 8.0% of revenue (without deduction for any distribution and marketing costs or third-party distribution and fulfillment services fees) and (ii) recovers all of its distribution and marketing costs with respect to our films. As of October 1, 2004, DreamWorks Studios began retaining its 8.0% fee for all revenue recognized by it subsequent to the effective date, regardless of whether the revenue relates to a film released prior to the effective date of the Distribution Agreement and regardless of whether it has recouped the distribution and marketing expenses related to that film that it has incurred.

Because DreamWorks Studios is the principal distributor of our films, in accordance with the SOP, the amount of revenue that we recognize from our films in any given period following the effective date of the Distribution Agreement depends on the timing, accuracy and sufficiency of the information we receive from DreamWorks Studios. Although DreamWorks Studios has agreed to provide us with the most current information available to it to enable us to recognize our share of revenue, we may make adjustments to that information based on our estimates and judgments. For example, we may make adjustments to our revenue derived from home video units for estimates on return reserves, rebates and other incentives that may differ from those that DreamWorks Studios recommends. The estimates on reserves may be adjusted periodically based on actual rates of returns, inventory levels in the distribution channel, as well as other business and industry information. We also review expense estimates and may make adjustments to these estimates in order to ensure that our revenue and gross margin are accurately reflected in our financial statements. In addition, as is typical in the movie industry, our distributor and its sub-distributors may also make subsequent adjustments to the information that they provide and these adjustments could have a material impact on our operating results in later periods.

Costs of Revenue

Film Production Costs.    We capitalize film production costs to film inventories in production in accordance with the provisions of the SOP. Direct film production costs include costs to develop and produce CG animated films, which primarily consists of salaries and fringe benefits for animators and voice talent, equipment and other direct operating costs. Production overhead, a component of film inventory, includes allocable costs of individuals or departments with exclusive or significant responsibility for the production of our films. In addition to the films being produced, we are also working on the development of several new projects. Costs of these projects are capitalized as film inventories in development in accordance with the provisions of the SOP and are transferred to film inventories in production when a film is set for production. We evaluate each project in

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development and production on a quarterly basis to determine whether capitalized costs are in excess of our estimate of fair value. If they are in excess, then we write-off the excess cost and reflect these in costs of revenue. In addition, after three years, if the project is still in development and has not been set for production, it is written off and reflected in costs of revenue.

Contingent Compensation and Residuals.    Certain compensation paid to creative participants, such as writers, producers, directors, voice talent and other persons associated with the production of a film is dependent on the performance of the film, based on factors such as domestic box office and total revenue recognized by the distributor related to the film. We are also responsible for residuals, which are payments based on similar factors and generally made to third-parties pursuant to collective bargaining, union or guild agreement or for providing certain services such as recording or synchronization services. These forms of contingent compensation and residual costs are accrued in accordance with the SOP, using the individual-film-forecast-computation method, which accrues and amortizes such costs in the same ratio that current period actual revenue (numerator) bears to estimated remaining unrecognized revenue as of the beginning of the current fiscal year (denominator), as described below.

Amortization.    Once a film is released, the amount of film inventory relating to that film, including film production costs and contingent compensation and residual costs, is amortized and included in costs of revenue in the proportion that the revenue during the period for each film (“Current Revenue”) bears to the estimated total revenue to be received from all sources for each film (“Ultimate Revenue”) under the individual-film-forecast-computation method in accordance with the provision of the SOP. The amount of film costs that are amortized each quarter will therefore depend on the ratio of Current Revenue to Ultimate Revenue for each film. We make certain estimates and judgments of Ultimate Revenue to be received for each film based on information received from DreamWorks Studios, and our knowledge of the industry. Estimates of Ultimate Revenue and anticipated contingent compensation and residual costs are reviewed periodically and are revised if necessary. A change to the Ultimate Revenue for an individual film will result in an increase or decrease to the percentage of amortization of capitalized film costs relative to a previous period. Unamortized film production costs are evaluated for impairment each reporting period on a film-by-film basis in accordance with the requirements of the SOP. If estimated remaining revenue is not sufficient to recover the unamortized film inventory for that film, the unamortized film inventory will be written down to fair value determined using a net present value calculation.

We expect that, in periods following the effectiveness of the Distribution Agreement, the amount of revenue that we recognize in the periods immediately following a film’s release will be substantially less than the amounts that we have historically recognized in similar periods, due to the fact that, under the Distribution Agreement, we recognize revenue net of DreamWorks Studios’ 8.0% distribution fee and the distribution and marketing costs that it incurs. Consequently, although the total amount of production costs that are amortized for any particular film will be the same over the life of the film, the timing of the amortization will change, since amortization is calculated based on the ratio of Current Revenue to Ultimate Revenue.

Marketing and Distribution Expenses.    The costs of marketing a film consist primarily of prints and advertising costs, as well as third-party distribution and fulfillment services fees. Print costs are expensed upon the theatrical release of a film, and advertising and third-party distribution and fulfillment services fees are expensed as incurred in accordance with the SOP and are included in costs of revenue. Third-party distribution and fulfillment services fees have historically included fees earned by our distributors and fulfillment services providers, which in the periods up to the effectiveness of the Distribution Agreement were primarily Universal Studios and CJ Entertainment. Manufacturing costs (including duplication and replication) related to home video units are expensed when the related product revenue is recognized. We periodically evaluate inventories of such products for impairment and obsolescence and make appropriate adjustments to their carrying value as necessary. Although our historical financial statements include these costs, as described above, pursuant to the Distribution Agreement, DreamWorks Studios is generally responsible for all costs associated with the distribution and marketing of our films. Accordingly, in the future, our costs of revenue will be lower than historical because they

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will not include distribution and marketing costs and third-party distribution and fulfillment services fees. Our revenue will also be lower because it will be net of the distribution and marketing costs that DreamWorks Studios recoups, as well as its 8.0% distribution fee.

Selling, General and Administrative Expenses

Selling, general and administrative expenses generally consist of general and administrative expenses, including allocations (historically), depreciation and non-film amortization, net of expenses included in capitalized overhead. General and administrative expenses consist of salaries, rent and other allocated overhead costs as described in allocations above. Capitalized overhead generally represents the salaries of individual employees or entire departments with exclusive or significant responsibilities for the production of our films, which we capitalize and include in production costs as described above.

In connection with the Separation, we issued various equity awards to our employees and advisors, as well as to employees of DreamWorks Studios as described below. We issued fully vested shares to our and DreamWorks Studios’ employees who had fully vested awards granted by DreamWorks Studios on an equivalent value basis. Outstanding unvested equity awards previously issued by DreamWorks Studios were exchanged for equity awards granted by us with the same intrinsic value and remaining vesting terms. We recorded deferred compensation related to grants of unvested restricted stock awards to our employees of approximately $33.2 million that will be amortized on a straight-line basis over a four to seven year period. Of this amount, $1.0 million was amortized to expense in the fourth quarter of 2004. In addition, we issued fully vested stock to certain of our employees and advisors upon the consummation of our initial public offering, and recorded an expense of $20.0 million during the fourth quarter of 2004. We accounted for the vested and unvested equity awards granted to employees of DreamWorks Studios as a dividend to DreamWorks Studios of $31.9 million determined based on the fair value of the awards at the date of grant. In addition, as of January 1, 2005, we began expensing all unvested stock options.

We currently estimate that our compensation expense for the year ended December 31, 2005 will be approximately $25.0 million for equity awards granted to date. Changes to our underlying stock price or satisfaction of performance criteria could significantly impact compensation expense to be recognized in 2005 and future periods. In addition, future grants of equity awards will result in additional compensation expense in 2005 and future periods.

Changes to our underlying stock price or satisfaction of performance criteria could significantly impact compensation expense to be recognized in future periods. In addition, future grants of equity awards will result in additional compensation expense in future periods.

Interest Expense and Other Income and Expense

Interest expense and other income and expense historically included allocations of interest expense and other income and expense associated with DreamWorks Studios’ debt and its interest rate swap agreements, and other non-operating income and expense. Following effectiveness of the Distribution Agreement, we incur these expenses directly.

Property, Plant and Equipment

Property, plant and equipment are recorded at the lower of cost or fair value and are depreciated on a straight-line method over the estimated useful lives of such assets. Property, plant and equipment consist primarily of our Glendale animation campus, leasehold improvements associated with our Redwood City facility, furniture and computer equipment.

Provision for Income Taxes

Prior to the Separation, DreamWorks Studios paid no federal income taxes as an entity as the operations of DreamWorks Studios were included in the taxable income of its individual members. The tax expense in our

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consolidated statements of operations, through the Separation Date, principally represents foreign withholding taxes and state franchise taxes. Effective as of the Separation, we are subject to federal taxation as a corporation and will be filing separate tax returns. We account for income taxes pursuant to SFAS No. 109, “Accounting for Income Taxes.” Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates and a change in tax status is recognized in income in the period that includes the enactment date.

At the time of the Separation, entities controlled by Paul Allen entered into a series of transactions that resulted in a partial increase in the tax basis of our tangible and intangible assets. This partial increase in tax basis is expected to reduce the amount of tax that we may pay in the future, to the extent we generate taxable income in sufficient amounts in the future. We are obligated to remit to an entity controlled by Paul Allen 85% of any such cash savings in U.S. Federal income tax and California franchise tax and certain other related tax benefits, subject to repayment if it is determined that these savings should not have been available to us. At the time of the Separation, the increase in the tax basis of the assets was approximately $1.64 billion, resulting in a deferred tax asset of approximately $620 million. A substantial portion of these potential tax benefits may be realized over approximately 15 years. As a result of taxable income generated by us from the Separation Date through December 31, 2004, we expect to realize $6.5 million in tax benefits as a result of the increased basis in the assets for the period from October 28, 2004 through December 31, 2004. We also currently expect to receive a tax benefit of $76.6 million in future years, as management has determined that the benefits can be realized through a refund of taxes paid in 2004. Accordingly, we recorded a liability to an entity controlled by Paul Allen of approximately $70.6 million representing 85% of these recognized benefits. All transactions described in this section with an entity controlled by Paul Allen have been recognized as a component of stockholders’ equity and have not impacted our operating results.

Results of Operations

Year Ended December 31, 2004, Compared to Year Ended December 31, 2003

For the year ended December 31, 2004, our results were primarily driven by the domestic theatrical release of Shrek 2 and Shark Tale, and from home video sales of Shrek 2. This was partially offset by advertising and print costs associated with the release of Shrek 2 and Shark Tale.

Revenue.    For the year ended December 31, 2004, revenue increased by $777.2 million, from $301.0 million to $1,078.2 million, as compared to the year ended December 31, 2003. Film revenue for the year ended December 31, 2004 was primarily driven by the success of Shrek 2 in the worldwide theatrical and home video markets. In 2004, Shrek 2 generated total revenue of $790.4 million, including revenue earned through merchandising and licensing. Shark Tale, which had its domestic theatrical release in the fourth quarter of 2004, generated total revenue of $62.3 million in 2004. Our film library contributed $144.3 million of revenue in 2004 primarily from the $116.8 million of revenues from Shrek in the worldwide home video and international television markets.

Since the revenues we recognized in the fourth quarter of 2004, including all revenues recognized from the theatrical release of Shark Tale and the home video release of Shrek 2, followed the effectiveness of the Distribution Agreement, the amount of revenue that we recognized in the fourth quarter of 2004 was substantially less than the amounts that we would have recognized if the Distribution Agreement had not been in effect, due to the fact that, under the Distribution Agreement, we recognize revenue net of DreamWorks Studios’ 8.0% distribution fee and the distribution and marketing costs that it incurs. In addition, the revenues we recognized in the fourth quarter with respect to Shark Tale were higher than what our revenues would have been had the

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Distribution Agreement been in effect prior to the time that any marketing and distribution expenses were incurred with respect to Shark Tale, which, had the Distribution Agreement been in effect, would have been recouped by DreamWorks Studios prior to our recognizing such revenues.

Film revenue for the year ended December 31, 2003 was derived primarily from our film library in the worldwide home video and television markets which generated revenues of $151.1 million, the majority of which was generated by Shrek and Chicken Run. Film revenue for the year ended December 31, 2003 was also derived from the worldwide theatrical and home video release of Sinbad: Legend of the Seven Seas which generated total revenue of $78.9 million and worldwide home video and domestic pay television revenue from Spirit: Stallion of the Cimarron, in the amount of $67.3 million. The substantially higher revenue in the year ended December 31, 2004 as compared to 2003 was primarily due to the success of Shrek 2.

Costs of Revenue.    Costs of film revenue were $566.2 million in the year ended December 31, 2004, as compared to $439.0 million in the year ended December 31, 2003. For the year ended December 31, 2004, marketing and distribution costs incurred in connection with the release of Shrek 2 and Shark Tale were substantially higher than those incurred for all films in the same period of 2003. When comparing the year ended December 31, 2004 and 2003, however, the effect of the higher marketing costs for Shrek 2 and Shark Tale in 2004 is offset by the fact that, following the effectiveness of the Distribution Agreement, our costs of revenue are lower in the fourth quarter of 2004 than they would have been had the Distribution Agreement not been put into effect because they do not include marketing and distribution costs and third-party distribution and fulfillment services fees. In addition, the higher marketing costs for Shrek 2 and Shark Tale are offset by an inventory write-down in the year ended December 31, 2003. For the year ended December 31, 2003, we recorded a pre-release write-down for a change in the estimated fair value of unamortized film inventory for Sinbad: Legend of the Seven Seas, which was released on July 2, 2003. Amortization for released films as a percentage of film revenue in the year ended December 31, 2004 was 28%, compared to 62% for the year ended December 31, 2003, which includes the impact of the pre-release write-down of Sinbad: Legend of the Seven Seas. Amortization of film inventory as a percentage of film revenue may vary from period to period due to several factors, including: (i) changes in the mix of films earning revenue, (ii) changes in any film’s Ultimate Revenue and capitalized costs and (iii) write offs of film inventory due to changes in the estimated fair value of unamortized film inventory, as required by the SOP. In addition, following the effectiveness of the Distribution Agreement in the fourth quarter of 2004, the amount of revenue that we recognize in the periods immediately following a film’s release will be substantially less than the amounts that we have historically recognized in similar periods, due to the fact that, under the Distribution Agreement, we recognize revenue net of DreamWorks Studios’ 8.0% distribution fee and the distribution and marketing costs that it incurs. Consequently, although the total amount of production costs that are amortized for any particular film will be the same over the life of the film, the timing of the amortization will change, since amortization is calculated based on the ratio of Current Revenue for a film to Ultimate Revenue for the film.

The decline in amortization of film inventory as a percentage of film revenue for the year ended December 31, 2004 was primarily due to the change in the mix of films earning revenue. Shrek 2, which has a low amortization percentage due to the size of its Ultimate Revenue in comparison to its capitalized costs, earned substantially more revenue than any of our other films in the year ended December 31, 2004. This resulted in a lower overall amortization percentage when compared to the year ended December 31, 2003, where we had the pre-release write-down of Sinbad: Legend of the Seven Seas and substantial revenue was earned from Spirit: Stallion of the Cimarron, which had a higher amortization percentage due to the higher ratio of its capitalized costs to its Ultimate Revenue.

Selling, General and Administrative Expenses.    Total selling, general and administrative expenses were $73.6 million (including $21.4 million of stock compensation expense) for the year ended December 31, 2004 as compared to $29.3 million (including a stock compensation credit of $2.3 million) for the year ended December 31, 2003. Net of the stock compensation costs for 2004 and 2003, this $20.6 million increase was primarily due to legal and outside consulting costs related to the Separation and employee bonuses in recognition of the success

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of Shrek 2 and Shark Tale, which was a combined expense of $13.0 million and an increase in personnel and professional services fees in our legal, finance, investor relations and information technology functions in order to accommodate the increased demands of a public company.

Stock Compensation Expense

Stock compensation expenses were $21.4 million for the year ended December 31, 2004 as compared to a stock compensation credit of $2.3 million for the year ended December 31, 2003, which reflected a reduction in the redemption value of the underlying awards. The increase in stock compensation expense resulted from the fact that we recorded deferred compensation related to grants of unvested restricted stock awards of approximately $33 million of which $1.0 million was amortized to expense in the fourth quarter of 2004. In addition, we granted fully vested stock to certain employees and advisors and recorded an expense of $20.0 million in the fourth quarter of 2004.

Interest and Other Income (Expense).    Total interest expense net of other income was $15.0 million for the year ended December 31, 2004 as compared to total interest expense and other expense of $15.5 million for the year ended December 31, 2003. This $0.5 million net decrease in expense was primarily due to a decrease in expense from interest rate swap agreements allocated from DreamWorks Studios of $10.0 million and lower interest expense from allocated DreamWorks Studios debt of $2.6 million. This was partially offset by increased interest expense from the Universal advance of $5.5 million and by a non-recurring settlement in 2003 unrelated to our core business and by other income recognized in 2003 in connection with preferred vendor arrangements.

Provision for Income Taxes

For the year ended December 31, 2004 we recorded actual income tax expense of $90.3 million which represents U.S Federal and State income taxes incurred from the Separation Date through December 31, 2004, and foreign taxes for the entire year. In 2004 our effective tax rate of 21.3% was significantly lower than the statutory tax rate primarily because of our pre-Separation income not being subject to tax and a reduced valuation allowance on our net deferred tax assets. For 2005 we anticipate our effective tax rate to be approximately 38%. See footnote 13 of the accompanying audited consolidated financial statements contained herein for further discussion.

Operating Results.    The year ended December 31, 2004 resulted in operating income of $438.3 million and net income of $333.0 million, as compared to operating losses of $167.3 million and a net loss of $187.2 million for the year ended December 31, 2003. This was primarily due to substantial profits generated from the success of Shrek 2 in the worldwide theatrical and home video markets In addition, for the year ended December 31, 2003, we recorded a write-down for a change in the estimated fair value of unamortized film inventory for Sinbad: Legend of the Seven Seas.

Year Ended December 31, 2003, Compared to the Year Ended December 31, 2002

Revenue.    For the year ended December 31, 2003, revenue decreased by $133.3 million, or 31%, to $301.0 million from $434.3 million for the year ended December 31, 2002. Film revenue for the year ended December 31, 2003 was derived primarily from worldwide home video and television revenue from Shrek, which is classified as a library title, and from the worldwide theatrical and home video release of Sinbad: Legend of the Seven Seas. Also contributing to revenue in 2003 was ongoing revenue from Spirit: Stallion of the Cimarron in the international theatrical and worldwide home video markets. Other revenue, primarily from library titles other than Shrek (Antz, Prince of Egypt, The Road to El Dorado, Chicken Run and Joseph: King of Dreams), contributed approximately $58.7 million in the year ended December 31, 2003, primarily from the worldwide home video and television markets. Film revenue for the year ended December 31, 2002 was primarily driven by the ongoing success of Shrek in the worldwide home video and television markets, and by the release of Spirit: Stallion of the Cimarron in the worldwide theatrical and home video markets, along with their associated

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ancillary revenue. Revenue in 2002 from domestic home video sales of Shrek, which was initially released in the domestic home video market in November 2001, also benefited from unprecedented low rates of returns of home video units shipped in 2001. We based 2001 returns reserves on the number of units shipped, historical experience and sales data available at the time. During 2002, as Shrek sales continued with low rates of returns, we reversed $42.3 million of previously recorded reserves for returns. Other revenue, primarily from library titles (Antz, Prince of Egypt, The Road to El Dorado, Chicken Run and Joseph: King of Dreams), contributed revenue of approximately $55.5 million for the year ended December 31, 2002, primarily from worldwide home video and television. The decline in revenue was primarily due to two factors. First, Shrek, which was released in May 2001, continued to perform extraordinarily well in 2002, generating revenue of approximately $225.6 million. In the worldwide home video markets alone, Shrek generated revenue of $175.9 million in 2002. Second, the disappointing performance of our 2003 release, Sinbad: Legend of the Seven Seas, which generated only $26.4 million in domestic box office receipts, contributed less revenue than Spirit: Stallion of the Cimarron, our 2002 release.

Costs of Revenue.    Costs of film revenue were $439.0 million for the year ended December 31, 2003, as compared to $391.2 million for the year ended December 31, 2002. The primary component of this $47.8 million increase in costs of revenue during 2003 was a write-off for two unreleased animated projects because they were creatively inconsistent with our overall strategy shift, and an increase in amortization for the same period. Amortization as a percentage of film revenue in the year ended December 31, 2003 was 62%, compared to 35% for the year ended December 31, 2002. The increase in amortization as a percentage of film revenue for 2003 was primarily due to a write down of film inventory due to changes in the estimated fair value of unamortized film inventory for Sinbad: Legend of the Seven Seas, as required by the SOP. These increases in costs of revenue were partially offset by distribution and marketing costs associated with the 2003 initial release of Sinbad: Legend of the Seven Seas in the worldwide theatrical and home video markets, which were significantly lower than the costs incurred for the 2002 release of Spirit: Stallion of the Cimarron.

The write-offs referenced in the paragraph above resulted from our overall strategic shift that occurred in 2003. Between 1999 and 2003, both Tortoise v. Hare and Tusker recorded capitalized costs and met all criteria for capitalization in accordance with the SOP. In addition, both movies were set for production in 2000. However, after our decision to make a strategic shift to comedic stories intended to appeal to a broader audience, we determined that these projects would not be usable in their original form. Tusker was originally envisioned as a more dramatic story and we reconceived the movie with a comedic premise. Tortoise v. Hare required more creative development in order to achieve a broader comedic sensibility. Due to our decision to no longer pursue these projects as originally conceived because of our new strategic direction, we abandoned these two projects and wrote them off in 2003.

Selling, General and Administrative Expenses.    Total selling, general and administrative expenses for the year ended December 31, 2003 were $29.3 million, as compared to $34.9 million for the year ended December 31, 2002. The primary component of this $5.6 million decrease in operating expenses was a lower allocation of DreamWorks Studios’ sales and distribution departments, which was due in part to our lower revenue as a percentage of DreamWorks Studios’ consolidated revenue. The lower revenue in 2003 as compared to 2002 therefore resulted in lower allocations of these overhead costs.

Interest Expense and Other Income and Expense.    Total interest expense and other expense were $15.5 million for the year ended December 31, 2003 as compared to $31.1 million for the year ended December 31, 2002. This $15.6 million decrease in expense is primarily due to other income recognized in 2003 in connection with preferred vendor arrangements, and a decline in interest expense and other expense associated with interest rate swap agreements allocated to us by DreamWorks Studios.

Operating Results.    The year ended December 31, 2003, resulted in an operating loss of $167.3 million and a net loss of $187.2 million, as compared to operating income of $8.2 million and a net loss of $25.1 million for the year ended December 31, 2002. There were two principal reasons for the decline in operating income and the

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increase in net loss in 2003: the disappointing performance of Sinbad: Legend of the Seven Seas, and the write- off of the two unreleased animated projects described above. As of December 31, 2003, we began consolidating our Glendale headquarters and animation campus, and its associated debt, in accordance with the requirements of the Financial Accounting Standards Board Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”). As a result, we recorded an expense of $2.5 million, which is reported as a cumulative effect of accounting change in the statement of operations for the year ended December 31, 2003. Because we operated as a division of a limited liability company for both periods, we incurred only minimal income taxes related to foreign withholding and state franchise taxes.

Liquidity and Capital Resources

We retained small amounts of cash and cash equivalents for each of the three years in the period ended December 31, 2004. During all periods prior to the Separation, DreamWorks Studios provided all working capital required for development, production and marketing of our films and other operations through centralized cash management. As a stand-alone company, we expect to fund our operating activities with cash that is generated from the films that we release, a portion of the proceeds from our initial public offering described below and with borrowings from a revolving credit facility which is described in the following paragraph. As a result of the Separation, we are responsible for all costs of developing and producing our animated feature films and direct-to-video films, while DreamWorks Studios is generally responsible for all costs of distributing and marketing those products. As a result of our initial public offering in October 2004, we received approximately $635.5 million of net proceeds after deducting underwriting discounts, and commissions and offering expenses. A portion of those net proceeds was used to repay an aggregate of $355 million of revolving credit and subordinated debt that we assumed from DreamWorks Studios in connection with the Separation. Later in the fourth quarter of 2004 we also repaid the $101.4 million of debt borrowed under our new revolving credit facility to fund the acquisition of our library films from DreamWorks Studios. Although we expect that, for the next twelve months, cash on hand and cash from operations will be sufficient to satisfy our anticipated cash needs for working capital and capital expenditures, in the event that these cash flows are insufficient, we expect to be able to draw funds from the revolving credit facility to meet these needs. However, there can be no assurance that cash on hand together with cash from operations in 2005 will be sufficient to fund our operations or that we will be able to draw on our revolving credit facility at that time. If cash on hand together with cash from operations is insufficient to fund our operations in 2005 and we are unable to draw on our credit facility, in order to manage our cash needs we would most likely seek alternative financing for films and/or delay or alter production or release schedules.

Revolving Credit Facility

In connection with the Separation, we entered into a five-year $200 million revolving credit facility with a number of banks, including JPMorgan Chase Bank, an affiliate of J.P. Morgan Securities Inc., and affiliates of certain of the other underwriters for our initial public offering. We intend to use the credit facility, which is secured by substantially all of our assets, to fund our working capital needs. As of March 15, 2005, we had no outstanding borrowings on our revolving credit facility. The maximum amount of borrowings available to us under the credit facility is the lesser of $200 million and an available amount generally determined by applying an advance rate of 67% against estimated receipts from all sources (net of estimated cash expenses directly associated with such receipts) for all of our released films and an advance rate of 100% against our cash on hand to the extent the lenders have a perfected security interest in such cash and by reducing such available amount by the amount of our outstanding debt (other than subordinated debt owing to HBO and up to $50 million of other subordinated debt). Interest on borrowed amounts is determined at either a floating rate of LIBOR plus 1.75% or the alternate base rate (which is generally the prime rate) plus 0.75% per annum. In addition, we pay a commitment fee on undrawn amounts at an annual rate of 0.50% on any date when more than $100 million is outstanding under the credit facility and 0.75% on any other date. The credit agreement requires us to maintain certain financial ratios and has customary terms that restrict our ability to make fundamental changes to our business, sell assets, incur secured debt, declare dividends and make other distributions. As of March 1, 2005, we were in compliance with all financial ratios with which we are required to comply under the credit agreement.

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Our historical balance sheets prior to December 31, 2004 reflect a portion of DreamWorks Studios’ indebtedness that was allocated to us. This allocation was based on the proportion of capital invested in our films in production as a percentage of total capital invested by DreamWorks Studios in all films in production. Because DreamWorks Studios funded all of our operations prior to the Separation, we did not directly incur any debt to fund production of our films in any period prior to the Separation and our historical balance sheets prior to December 31, 2004 do not reflect any of this debt other than the debt allocated by DreamWorks Studios. However, we directly incurred debt related to our Glendale animation campus and an animated film currently being produced by Aardman Animations. If we had historically operated as a stand-alone company, the amount of debt that we would have incurred would have depended on our evaluation of then-current economic and industry conditions and factors such as our optimal capital structure, our funding needs, our acquisition and capital investment activity and other considerations relevant to a stand-alone company operating in the animated filmmaking industry. In connection with the Separation, we assumed (i) approximately $325 million of indebtedness that DreamWorks Studios borrowed under its revolving credit facility, (ii) $75 million in advances that Universal Studios made to DreamWorks Studios related to the animated motion pictures and (iii) $80 million of subordinated debt owed to HBO. We repaid all of the revolver debt and $30 million of the subordinated debt owed to HBO with proceeds from our initial public offering, and DreamWorks Studios was released from its obligation to repay this indebtedness. In addition, on the closing date of the initial public offering, we borrowed $101.4 million under our revolving credit facility to repay an equivalent amount of debt of DreamWorks Studios. We repaid this debt in full in the fourth quarter of 2004.

Universal Studios Advance

As part of their distribution and home video fulfillment services relationship, DreamWorks Studios and Universal Studios have entered into agreements pursuant to which Universal Studios advances amounts to DreamWorks Studios based on projected cash receipts, net of projected expenses, due to DreamWorks Studios for pictures that DreamWorks Studios intends to license to Universal Studios for distribution in the international theatrical and worldwide home video markets. These advances are generally based on quarterly estimates of projected cash receipts, net of projected expenses, distribution and service fees, that will become due to DreamWorks Studios from Universal Studios in the markets where Universal Studios provides distribution and fulfillment services. In October 2003, Universal Studios agreed to advance to DreamWorks Studios a maximum of $75 million, which was based on the projected net receipts of our animated feature films released subsequent to December 2002 (the “2003 advance”). The 2003 advance carries an effective annualized interest rate of 8.75% and matures, subject to certain conditions, upon the expiration or termination of the Universal Distribution Agreement and the Universal Home Video Agreement. See “Item 1—Business—How We Distribute, Promote and Market our Films—DreamWorks Studios’ Agreements with Universal Studios.” We assumed the obligation to repay the entire 2003 advance and agreed to comply with its terms and conditions. Our agreement with Universal Studios provides that the existing arrangements between Universal Studios and DreamWorks Studios related to the international theatrical distribution and the worldwide home video fulfillment services of our films continue to apply to us following the Separation. See “Item 1—Business—How We Distribute, Promote and Market our Films—DreamWorks Studios’ Agreements with Universal Studios.”

HBO Subordinated Debt

In connection with the Separation, we assumed $80 million of subordinated notes issued by DreamWorks Studios to HBO in December 2000 pursuant to a subordinated loan agreement, $30 million of which we repaid with proceeds of our initial public offering. The subordinated notes bear interest in an amount equal to the Eurodollar rate plus 0.50% per annum and are due in November 2007. Subject to the consent of the lenders under our revolving credit facility (or any replacement senior credit facility), we are able to prepay all or a portion of the principal amount of the subordinated notes. The notes are not subject to any sinking fund obligations.

The subordinated notes were secured by a lien granted by DreamWorks Studios in favor of HBO in certain exhibition rights related to DreamWorks Studios’ films that is junior to the security interest granted to HBO in

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connection with a 1995 licensing agreement between DreamWorks Studios and HBO. We granted substantially the same security interests in rights to exploit our films to HBO when we assumed the subordinated indebtedness.

The terms of the subordinated notes require us to maintain certain financial ratios and they have customary terms that restrict us from making fundamental changes to our business, selling assets, incurring secured debt, declaring dividends and making other distributions. Additionally, we are restricted from entering non-arm’s length transactions with our affiliates.

Liquidity

	2004			2003			2002
Net cash (used in) provided by operating activities	$	(43,652	)	$	(168,440	)	$	44,901
Net cash used in investing activities		(1,084	)		(3,108	)		(5,267	)
Net cash (used in) provided by financing activities		107,829			171,586			(40,466	)

Cash used by operating activities for the year ended December 31, 2004 was $43.7 million and was primarily attributable to film production spending, contingent compensation and other operating uses. Under the terms of the Distribution Agreement, receivables increased because we did not collect a significant portion of receipts from our 2004 releases (especially the home video release of Shrek 2) until early 2005. Cash used in operating activities for the year ended December 31, 2003 was $168.4 million and was primarily attributable to production spending. Cash provided by operating activities for 2003 included cash collected from revenue for the worldwide home video release of Spirit: Stallion of the Cimarron and other library titles, but was insufficient to fund our operating and production cash requirements. Cash provided by operating activities for 2002 was $44.9 million. Cash provided by operating activities for 2002 was attributable to collection of revenues from the worldwide home video release of Shrek, partially offset by film production, contingent compensation and residuals and other operating uses. Cash used in investing activities for 2004 was $1.1 million, stemming mainly from investment in equipment. Cash used in investing activities for 2003 and 2002 were $3.1 million and $5.3 million, respectively, and were primarily related to investment in the equipment and leasehold improvements for our Glendale and Redwood City production and administration facilities. Cash provided by (used in) financing activities for the years ended December 31, 2004, 2003 and 2002 were $107.8 million, $171.6 million and ($40.5) million, respectively. In 2004, this primarily was the result of the net proceeds from an initial public offering of $635.5 million less the repayment of debt totalling $456.3 million. In 2003 and 2002, this was primarily related to cash funding and the difference in the amount of debt allocated to us by DreamWorks Studios in each period.

In 2004, prior to entering into the Distribution Agreement, our principal source of liquidity was cash generated by operations and contributions from DreamWorks Studios. Our commitments prior to the Distribution Agreement becoming effective were primarily for production funding, contingent compensation and residual payments, distribution and marketing costs and technology capital expenditures. Following the effectiveness of the Distribution Agreement, our primary commitments have been to fund production costs of our feature films, to make contingent compensation and residual payments and to fund technology capital expenditures. For the full year 2005, we expect our commitments to fund production costs (excluding capitalized interest and overhead expense), to make contingent compensation and residual payments (on films released to date) and to fund technology capital expenditures will be approximately $311.0 million, which includes the obligation to acquire certain distribution rights to Wallace & Gromit: Curse of the Were Rabbit and additional production spending related to an increase in our direct-to-video business.

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Contractual Obligations.    As of December 31, 2004, we had contractual commitments to make the following payments (in thousands):

	Payments Due by Year
Contractual Cash Obligations	2005		2006		2007		2008		2009		Thereafter		Total
Operating leases, net of sublease income	$	9,616	$	7,783	$	4,097	$	3,558	$	3,665	$	9,971	$	38,690
Executive officers’ employment agreements(1)		2,150		2,175		2,200		2,200		2,200		—		10,925
Wallace & Gromit: Curse of the Were Rabbit obligation(2)		37,862		—		—		—		—		—		37,862
Glendale animation campus note payable(3)		—		—		70,059		—		—		—		70,059
Universal advance(4)		—		—		—		—		—		75,000		75,000
HBO subordinated debt(5)		—		—		50,000		—		—		—		50,000
Capital leases(6)		996		996		996		332		—		—		3,320
Total contractual cash obligations	$	50,624	$	10,954	$	127,352	$	6,090	$	5,865	$	84,971	$	285,856

⁽¹⁾ In connection with the Separation, we entered into employment agreements with contractual cash salaries totaling $10.9 million over the next five years.

⁽²⁾ In October 2003, we entered into an agreement to acquire certain distribution rights to Wallace & Gromit: Curse of the Were Rabbit, an animated film currently in production. Pursuant to the acquisition agreement, we are obligated to pay approximately $45.0 million to acquire substantially all rights to the film (of which $34.9 million had been paid as of December 31, 2004). In connection with the acquisition, DreamWorks Studios entered into loan agreements for the financing of the production costs of up to approximately $27.8 million. Of this amount, $21.6 million had been borrowed at December 31, 2004. Because we are obligated to acquire this film upon its completion in 2005, the $21.6 million borrowed as of December 31, 2004 plus the amount the Company is still obligated to fund are included in this table.

⁽³⁾ We operate an animation campus in Glendale, California. The lease on the property, which was originally acquired for $76.5 million, qualified as an operating lease. In March 2002, we renegotiated the lease through the creation of a special-purpose entity that acquired the property for $73.0 million and leased the facility to us for a five-year term. In accordance with the provisions of FIN 46, we have included the asset, debt and non-controlling interest on our combined balance sheet as of December 31, 2004. We expect to refinance this obligation prior to its maturity.

⁽⁴⁾ In connection with the Separation, we assumed approximately $75 million of indebtedness related to advances that Universal Studios made to DreamWorks Studios to fund animated motion pictures. Universal Studios advanced DreamWorks Studios amounts based on anticipated future receipts from films that DreamWorks Studios is expected to release, and DreamWorks Studios allocated to us $87.2 million of this advance on a historical basis. Of this allocation, $12.2 million relates to a 2001 animated film advance that was initially allocated to us but, as part of the Separation, was not assumed by us.

⁽⁵⁾ In connection with the Separation, we assumed $80 million of subordinated debt that DreamWorks Studios incurred from HBO in December 2000, $30 million of which we repaid with proceeds from our initial public offering.

⁽⁶⁾ Includes $0.4 million of imputed interest.

New Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (“FASB”) issued FAS No. 123R, “Share-Based Payments” (“FAS 123R”) which is a revision of FAS No. 123 “Accounting for Stock Based Compensation”. FAS 123R supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” and amends FAS No. 95, “Statement of Cash Flows”. FAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. FAS 123R is effective for public companies at the beginning of the first interim or annual period beginning after June 15, 2005. We have elected to adopt FAS 123R as of January 1, 2005. We anticipate that the adoption of this new standard will have a material impact to our financial position

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and results of operations. We currently estimate that our compensation expense for the year ended December 31, 2005 will be approximately $25.0 million for equity awards granted to date. We have measured the fair value of these equity awards at the date of grant using a Black-Scholes option pricing model. FAS 123R offers alternative adoption methods. We have determined that we will use the modified prospective transition method. Changes to our underlying stock price or satisfaction of performance criteria could significantly impact compensation expense to be recognized in 2005 and future periods. In addition, future grants of equity awards will result in additional compensation expense in 2005 and future periods.

In December 2002 the FASB issued FAS No. 148 “Accounting for Stock-Based Compensation—Transition and Disclosure” (“FAS No. 148”) that amended FAS No. 123. FAS 148 amended the disclosure provisions of FAS 123 to require prominent disclosure of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported operating results, including per share amounts, in annual and interim financial statements. The disclosure provisions of FAS 148 were effective immediately upon issuance in 2002.

In January 2003, the FASB issued FIN 46, “Consolidation of Variable Interest Entities.” In November 2003, the FASB revised certain provisions of FIN 46. FIN 46 requires a variable interest entity (defined as a corporation, partnership, trust or any other legal structure used for business purposes that either does not have equity investors with voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its activities) to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns, or both. The consolidation requirements of FIN 46, as revised, apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements for older entities were effective on December 31, 2003. Upon our adoption of FIN 46 as of December 31, 2003, we consolidated the special-purpose entity that acquired our Glendale animation campus. Such consolidation resulted in an increase in property, plant and equipment of approximately $70.2 million, net of accumulated depreciation, an increase in debt and a non-controlling minority interest of $70.1 million and $2.9 million, respectively, and a cumulative effect of a change in accounting principle of $2.5 million.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market and Exchange Rate Risk

Interest Rate Risk.    We are exposed to the impact of interest rate changes as a result of our variable rate long-term debt and debt allocated to us by DreamWorks Studios. DreamWorks Studios uses derivative instruments from time to time to manage the related risk. Because DreamWorks Studios allocates to us the income and expense associated with these derivative instruments, this has resulted in short term gains or losses. As a result of the Separation, we are no longer allocated interest expense or other income and expense associated with derivative instruments, although we did assume the interest rate swap and cap agreements associated with our production funding indebtedness. We continue to actively monitor fluctuations in interest rates. A hypothetical 1% change in the interest rates applicable to the debt associated with our Glendale animation campus would approximately result in a $0.7 million increase or decrease in annual interest expense. We are not subject to significant interest rate risk on our other financing arrangements.

Foreign Currency Risk.    We are subject to market risks resulting from fluctuations in foreign currency exchange rates through our non-U.S. revenue sources and we incur certain distribution and production costs in foreign currencies. However, there is a natural hedge against foreign currency changes due to the fact that, while significant receipts for international territories may be foreign currency denominated, significant distribution expenses are similarly denominated, mitigating fluctuations to some extent depending on their relative magnitude. Wallace & Gromit: Curse of the Were Rabbit and Flushed Away are currently being produced or partially produced in the United Kingdom and are our only productions being produced abroad. We have entered into a hedge agreement for Wallace & Gromit intended to reduce our exposure to changes in the British pound. Flushed Away is only partially produced in the United Kingdom and a hypothetical currency fluctuation of 20% would approximately result in $1.2 million increase or decrease in exchange gain or loss.

Credit Risk.    We are exposed to credit risk from DreamWorks Studios and third parties, including customers, counter parties and distribution partners. These parties may default on their obligations to us, due to bankruptcy, lack of liquidity, operational failure or other reasons.

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INDEX TO FINANCIAL STATEMENTS

Item 8. Financial Statements and Supplementary Data

	Page
Report of Independent Registered Public Accounting Firm	66
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 2003 and 2004	67
Consolidated Statements of Operations for the years ended December 31, 2002, 2003 and 2004	68
Consolidated Statements of Stockholders’ Equity (Deficiency) for the years ended December 31, 2002, 2003 and 2004	69
Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2003 and 2004	70
Notes to Consolidated Financial Statements	71

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of DreamWorks Animation SKG, Inc.:

We have audited the accompanying consolidated balance sheets of DreamWorks Animation SKG, Inc. (the “Company”) as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders’ equity (deficiency), and cash flows for each of the three years in the period ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of DreamWorks Animation SKG, Inc. at December 31, 2004 and 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.

As more fully described in Note 1, the Company changed its method of accounting for consolidation of variable interest entities as of December 31, 2003.

/s/    ERNST & YOUNG LLP

Los Angeles, California

March 17, 2005

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DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,
	2003			2004
	(in thousands)
Assets
Cash and cash equivalents	$	41		$	63,134
Trade accounts receivable, net of allowance for doubtful accounts		132,329			14,015
Receivable from affiliate		—			372,116
Receivables from employees		2,480			1,634
Film inventories, net		427,463			519,926
Property, plant, and equipment, net of accumulated depreciation and amortization		89,777			85,997
Deferred costs, net of amortization of $838, and $1,438, respectively		1,641			3,741
Deferred taxes, net		—			93,343
Goodwill		26,462			34,216
Other assets		1,644			11,881
Total assets	$	681,837		$	1,200,003
Liabilities and Stockholders’ Equity (Deficiency)
Liabilities
Accounts payable	$	1,615		$	4,414
Payable to stockholder		—			70,643
Accrued liabilities		101,993			58,968
Other advances and unearned revenue		38,684			18,892
Obligations under capital leases		3,732			2,993
Debt allocated by DreamWorks Studios		418,379			—
Universal Studios advance		50,325			75,000
Bank borrowings and other debt		76,612			139,207
Total liabilities		691,340			370,117
Commitments and contingencies
Non-controlling minority interest		2,941			2,941
Stockholders’ equity (deficiency)
Owners’ deficiency		(12,444	)		—
Class A common stock, par value $.01 per share, 350,000,000 shares authorized, 52,107,616 shares outstanding		—			521
Class B common stock, par value $.01 per share, 150,000,000 shares authorized, 50,842,414 shares outstanding		—			508
Class C common stock, par value $.01 per share, one share authorized and outstanding		—			—
Additional paid-in capital		—			693,198
Less: Deferred compensation		—			(32,171	)
Retained earnings		—			165,320
Less: Treasury stock, at cost		—			(431	)
Total stockholders’ equity (deficiency)		(12,444	)		826,945
Total liabilities and stockholders’ equity (deficiency)	$	681,837		$	1,200,003

See accompanying notes.

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DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended December 31,
	2002			2003			2004
	(in thousands)
Operating revenue	$	434,324		$	300,986		$	1,078,160
Costs of revenue		391,214			438,959			566,209
Gross profit (loss)		43,110			(137,973	)		511,951
Selling, general and administrative expenses		34,922			29,322			73,608
Operating income (loss)		8,188			(167,295	)		438,343
Interest expense, net of interest income		(3,940	)		(12,360	)		(15,402	)
Other income (expense), net		(27,124	)		(3,145	)		385
Income (loss) before income taxes and cumulative effect of accounting change		(22,876	)		(182,800	)		423,326
Provision for income taxes		(2,191	)		(1,839	)		(90,326	)
Income (loss) before cumulative effect of accounting change		(25,067	)		(184,639	)		333,000
Cumulative effect of accounting change		—			(2,522	)		—
Net income (loss)	$	(25,067	)	$	(187,161	)	$	333,000
Basic net income (loss) per share:
Income (loss) before cumulative effect of accounting change	$	(0.33	)	$	(2.41	)	$	4.09
Cumulative effect of accounting change		—			(0.03	)		—
Net income (loss)	$	(0.33	)	$	(2.44	)	$	4.09
Diluted net income (loss) per share:
Income (loss) before cumulative effect of accounting change	$	(0.33	)	$	(2.41	)	$	4.05
Cumulative effect of accounting change		—			(0.03	)		—
Net income (loss)	$	(0.33	)	$	(2.44	)	$	4.05
Shares used in computing net income (loss) per share
Basic		76,636			76,636			81,432
Diluted		76,636			76,636			82,151

See accompanying notes.

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DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

(In thousands except share amounts)

	Owners Equity (Deficiency)			Common Stock			Deferred Compensation			Additional Paid-in Capital			Retained Earnings		Treasury Stock				Stockholders’ Equity (Deficiency)
				Shares	Amount										Shares	Amount
Balance at January 1, 2002	$	480,209		—	$	—	$	—		$	—		$	—	—	$	—		$	480,209
Net transfers to DreamWorks Studios		(278,155	)	—		—		—			—			—	—		—			(278,155	)
Net loss		(25,067	)	—		—		—			—			—	—		—			(25,067	)
Balance at December 31, 2002		176,987		—		—		—			—			—	—		—			176,987
Net transfers to DreamWorks Studios		(2,270	)	—		—		—			—			—	—		—			(2,270	)
Net loss		(187,161	)	—		—		—			—			—	—		—			(187,161	)
Balance at December 31, 2003		(12,444	)	—		—		—			—			—	—		—			(12,444	)
Net transfers to DreamWorks Studios		(141,032	)	—		—		—			—			—	—		—			(141,032	)
Conversion from a division of DreamWorks Studios to a corporation		(767	)	76,670,136		767		—			—			—	—		—			—
Contribution of net liabilities from DreamWorks Studios upon Separation		18,507		—		—		—			(18,507	)		—	—		—			—
Issuance of shares to purchase PDI minority interest		—		276,924		3		—			7,751			—	—		—			7,754
Net tax benefits realized from transaction with a stockholder		—		—		—		—			12,468			—	—		—			12,468
Issuance of equity awards to Dream Works Studios employees		(31,944	)	51,100		—		—			—			—	—		—			(31,944	)
Issuance of common stock pursuant to initial public offering, net		—		25,000,000		250		—			635,275			—	—		—			635,525
Issuance of common stock to employees and advisors		—		703,785		7		—			19,986			—	—		—			19,993
Restricted shares granted to employees		—		—		—		(33,174	)		33,174			—	—		—			—
Amortization of restricted shares granted to employees		—		—		—		1,003			—			—	—		—			1,003
Issuance of shares for stock option exercises and restricted share lapses		—		248,086		2		—			3,051			—	—		—			3,053
Purchase of treasury shares		—		—		—		—			—			—	11,536		(431	)		(431	)
Net income		167,680		—		—		—			—			165,320	—		—			333,000
Balance at December 31, 2004	$	—		102,950,031	$	1,029	$	(32,171	)	$	693,198		$	165,320	11,536	$	(431	)	$	826,945

See accompanying notes.

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DREAMWORKS ANIMATION SKG, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	December 31,
	2002			2003			2004
	(in thousands)
Operating activities
Net income (loss)	$	(25,067	)	$	(187,161	)	$	333,000
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Cumulative effect of accounting change		—			2,522			—
Amortization and write off of film inventories		157,796			292,106			312,694
Stock compensation expense		257			(2,255	)		21,533
Depreciation and amortization		3,483			4,138			6,664
Change in operating assets and liabilities:
Trade accounts receivable		163,051			18,586			118,314
Receivables from employees		(720	)		(400	)		846
Receivable from affiliate		—			—			(372,116	)
Film inventories		(191,202	)		(241,956	)		(405,157	)
Other assets		(280	)		(1,066	)		(11,714	)
Deferred taxes, net		—			—			(16,741	)
Accounts payable and accrued expenses		(21,236	)		(13,488	)		(6,461	)
Revenues recorded against advances and unearned revenue		(41,181	)		(39,466	)		(24,514	)
Net cash provided by (used in) operating activities		44,901			(168,440	)		(43,652	)
Investing activities
Purchases of property, plant, and equipment		(5,267	)		(3,108	)		(1,084	)
Net cash used in investing activities		(5,267	)		(3,108	)		(1,084	)
Financing Activities
Net transfers to DreamWorks Studios		(278,155	)		(2,270	)		(230,009	)
Bank borrowings and other debt		—			6,553			16,622
Increase in debt allocated from DreamWorks Studios		145,353			104,565			29,712
Deferred debt costs		(2,327	)		(152	)		(2,700	)
Payments on capital leases		(626	)		(643	)		(739	)
Payments on subordinated note		—			—			(30,000	)
Proceeds from initial public offering		—			—			635,525
Receipts from exercise of stock options		—			—			3,053
Purchase of treasury stock		—			—			(431	)
Payments on bank borrowings and allocated debt		—			—			(426,378	)
Universal Studios and HBO advances		95,289			63,533			113,174
Net cash provided by (used in) financing activities		(40,466	)		171,586			107,829
Increase (decrease) in cash and cash equivalents		(832	)		38			63,093
Cash and cash equivalents at beginning of period		835			3			41
Cash and cash equivalents at end of period	$	3		$	41		$	63,134

See accompanying notes.

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DREAMWORKS ANIMATION SKG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Basis of Presentation and Business

DreamWorks Animation has been developing and producing animated films as a division of DreamWorks L.L.C. (“DreamWorks Studios”) since its formation in 1994. On October 27, 2004 (“Separation Date”), the Company was spun off from DreamWorks Studios. As a result of the separation from DreamWorks Studios (the “Separation”), the assets and liabilities that comprised the animation business of DreamWorks Studios were transferred to DreamWorks Animation SKG, Inc., the entity through which the Company now conducts it business (see Note 2). Immediately thereafter, the Company sold shares to the public as a part of an initial public offering that closed November 2, 2004. The consolidated financial statements of DreamWorks Animation SKG, Inc. present the stand-alone financial position, results of operations, and cash flows of the animation businesses and activities of DreamWorks Studios and its consolidated subsidiaries on a combined basis up through the Separation Date, and the consolidated financial position, results of operations and cash flows of DreamWorks Animation SKG, Inc. thereafter. In the accompanying consolidated financial statements and footnotes, “DreamWorks Animation” or the “Company” are terms used interchangeably to refer to DreamWorks Animation SKG, Inc. as well as its predecessor. The businesses and activities of DreamWorks Studios’ animation business included the development, production and exploitation of animated films in the domestic and international theatrical, home video, television and other markets, as well the activities of its consumer products division. DreamWorks Studios is a limited liability company that prior to the Separation Date engaged primarily in the businesses of development, production and distribution of live action and animated feature films. The consolidated financial statements of the Company prior to the Separation Date reflect all adjustments, including allocations of costs incurred by DreamWorks Studios, necessary for a fair presentation of the operations of the Company. After the Separation Date, the consolidated financial statements of the Company include the accounts of DreamWorks Animation SKG, Inc. and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

Upon the Separation, the Company authorized three classes of common stock which are identical and generally vote together on all matters, except that the Class A common stock and the Class C common stock each carry one vote per share, whereas the Class B common stock carries 15 votes per share. In addition, the Class C common stock, voting separately as a class, has the right to elect one director. The Class A, Class B and Class C common stock each have a par value of $.01 per share and authorized shares of 350 million, 150 million and one, respectively.

As of the Separation, DreamWorks Studios and DreamWorks Animation are effectively under common ownership and control.

In connection with the Separation, the Company assumed $325 million of debt that DreamWorks Studios had borrowed under its revolving credit facility and $80 million of subordinated debt DreamWorks Studios owed to HBO. In addition, the Company borrowed $101.4 million under a new revolving credit facility to repay an equivalent amount of debt of DreamWorks Studios.

In connection with the Separation, DreamWorks Studios contributed to the Company its interests in Pacific Data Images, Inc. (“PDI”) and its subsidiary, Pacific Data Images LLC (“PDI LLC”). Prior to the contribution, PDI was an approximately a 90% owned subsidiary of DreamWorks Studios. PDI’s sole asset was its 60% ownership interest in PDI LLC. The remaining 40% interest in PDI LLC was owned directly by DreamWorks Studios. As part of the contribution, DreamWorks Studios contributed its 40% interest in PDI LLC to the Company in exchange for shares of Class A Common stock of the Company. Both DreamWorks Studios and the minority stockholders of PDI received shares of the Company’s Class A common stock pursuant to the merger.

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DREAMWORKS ANIMATION SKG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As a result of these transactions, PDI became a wholly owned subsidiary of the Company and PDI LLC became a wholly owned subsidiary of PDI.

The acquisition of the approximately 10% minority interest in PDI has been accounted for as a purchase of minority interest and, accordingly, the Company recorded goodwill for the purchase price over the fair value of the assets acquired of $7.8 million.

Effective October 2004, the Company entered into the Distribution Agreement (the “Distribution Agreement”) with DreamWorks Studios. Pursuant to the Distribution Agreement, the Company has granted DreamWorks Studios the exclusive right to distribute, throughout the world, all of it animated feature films that it delivers to DreamWorks Studios through the later of (i) delivery of 12 animated feature films, beginning with Shark Tale, and (ii) December 31, 2010. DreamWorks Studios is responsible for (1) the domestic and international theatrical exhibition of our films, (2) the domestic and international home video exhibition of our films and direct-to-video pictures, (3) the domestic and international television licensing of the films, including pay-per-view, pay television, network, basic cable and syndication, and (4) non-theatrical exhibition of the films, such as on airlines, in schools and in armed forces institutions. DreamWorks Studios was also granted Internet, radio (for promotional purposes only) and new media rights with respect to the films. The Company has retained all other rights to exploit the films, including the right to make sequels, commercial tie-in and promotional rights with respect to each film, as well as merchandising, interactive, literary publishing, music publishing, soundtrack, radio, legitimate stage and theme park rights.

Pursuant to the Distribution Agreement, DreamWorks Animation is responsible for all of the costs of developing and producing its animated feature films, and for contingent compensation and residual payments. DreamWorks Studios is generally responsible for all out-of-pocket costs, charges and expenses incurred in the distribution (including prints and the manufacture of home video units), advertising, marketing, publicizing and promotion of the films, and has agreed to make distribution expenditures consistent with historical levels with respect to its films. The Distribution Agreement also provides that DreamWorks Studios will be entitled to (1) retain a fee of 8.0% of revenue (without deduction of any distribution or marketing costs, and third-party distribution and fulfillment services fees) and (2) recoup all of its distribution and marketing costs prior to the Company recognizing any revenue.

Upon the Separation, the Company entered into a services agreement with DreamWorks Studios (the “Services Agreement”) that provides for certain services to be provided to the Company by DreamWorks Studios, including risk management, information systems management, payroll, legal and certain business affairs advisory, human resources administration, procurement, and other general support services. The Services Agreement also provides that the Company will provide certain services for DreamWorks Studios including information technology procurement and office space and facilities management services. The Services Agreement requires both parties to reimburse the other party for its actual costs incurred, plus 5%.

In November 2004, the Company issued shares of Class A common stock and received approximately $635.5 million in net proceeds from the closing of its initial public offering after deducting underwriting discounts, and commissions and offering expenses. From those net proceeds the Company repaid the $325 million of debt assumed with respect to DreamWorks Studios revolving credit facility and $30 million of the $80 million assumed with respect to DreamWorks Studios subordinated debt owed to HBO.

Changes in Accounting Principles

In December 2002, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“FAS”) No. 148 “Accounting for Stock-Based Compensation—Transaction and Disclosure” that amended FAS No 123. FAS 148 amended the disclosure provisions of FAS 123 to require

72

DREAMWORKS ANIMATION SKG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

prominent disclosure of the effects of an entity’s accounting policy with respect to stock-based employee compensation on reported operating results, including per share amounts, in annual and interim financial statements. The disclosure provisions of FAS 148 were effective immediately upon issuance in 2002.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“Interpretation 46”). In November 2003, the FASB revised certain provisions of Interpretation 46. Interpretation 46 requires a variable interest entity (defined as a corporation, partnership, trust or any other legal structure used for business purposes that either does not have equity investors with voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its activities) to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or entitled to receive a majority of the entity’s residual returns, or both. The consolidation requirements of Interpretation 46, as revised, apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements for older entities were effective on December 31, 2003. Upon adoption of Interpretation 46, the Company consolidated the special-purpose entity that acquired its Glendale animation campus in March 2002 (see Note 6). Such consolidation has resulted in an increase in property, plant and equipment of $70.2 million, net of accumulated depreciation, an increase in debt and a non-controlling minority interest of $70.1 million and $2.9 million, respectively, and a cumulative effect of a change in accounting principle of $2.5 million.

Supplemental Cash Flow Information

Cash paid for taxes for the years ended December 31, 2002, 2003 and 2004 was $2.2 million, $1.8 million and $107.3 million respectively. Interest payments, net of amounts capitalized, for the years ended December 31, 2002, 2003 and 2004 was $5.0, $13.7 and $11.2, respectively. Payments for interest and income taxes prior to the Separation were paid by DreamWorks Studios on behalf of the Company and do not necessarily reflect what the Company would have paid had it been a stand-alone company.

In 2003, in connection with the adoption of Interpretation 46, the Company recorded property, plant and equipment, net of accumulated depreciation, of $70.2 million, other debt of $70.1 million, non-controlling minority interest of $2.9 million, and a cumulative effect of accounting change of $2.5 million.

As part of the Separation, the Company acquired the remaining approximate 10% minority interest in PDI valued at $7.8 million, in exchange for the Company’s common stock.

Contributions of net liabilities from DreamWorks Studios to the Company at the Separation were composed predominantly of the following transactions (in thousands).

Liabilities contributed:
Subordinated note, net of discount	$	75,674
Debt related to acquisition of film library		101,378
Revolving credit facility		325,000
Less:
Reduction in allocated debt from DreamWorks Studios		(448,091	)
Reduction in advance from Universal Studios		(11,931	)
Retention of interest rate swap agreements by DreamWorks Studios		(24,212	)
Other, net		689
Contribution of net liabilities	$	18,507

73

DREAMWORKS ANIMATION SKG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reclassifications

Certain prior year amounts have been reclassified to conform to current year presentation.

Summary of Significant Accounting Policies

The accounting for motion picture films is governed by Statement of Position 00-2, “Accounting by Producers or Distributors of Films”, issued by the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants (“the SOP”). In accordance with the SOP, the Company presents an unclassified balance sheet.

Cash and Cash Equivalents and Concentration of Credit Risk

Cash and cash equivalents consist of cash on deposit and high quality money market investments, principally commercial paper and commercial paper mutual funds, with maturities when purchased of three months or less.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company limits its exposure to credit loss by placing its cash and cash equivalents in short term investments with high-credit, quality financial institutions. Prior to the Separation Date, significant accounts receivable were due from Universal Studios, Inc. (“Universal”), the Company’s international theatrical distributor and worldwide home video fulfillment services provider. As of December 31, 2002 and 2003, approximately 82% and 68% respectively, of accounts receivable was due from Universal. Effective as of the Separation Date, significant accounts receivable are due from DreamWorks Studios. As of December 31, 2004, $372.1 million was due from DreamWorks Studios (See Note 2). Accounts receivable resulting from revenues earned in other markets are derived from sales to customers located principally in North America, Europe and Asia. The Company and DreamWorks Studios perform ongoing credit evaluations of their customers and generally do not require collateral.

Financial Instruments

The fair value of cash and cash equivalents, accounts receivable, accounts payable, and advances approximates carrying value due to the short-term maturity of such instruments. The fair value of interest rate swap and foreign exchange agreements is the estimated amount the Company would receive or pay to terminate the agreements, taking into account current interest or exchange rates and the current creditworthiness of the counterparties.

DreamWorks Studios has entered into interest rate swap agreements to serve as a hedge against interest rate fluctuations associated with the Company’s payment obligations under its real estate lease agreement (See Note 6). Accordingly, prior to the Separation Date, DreamWorks Studios had attributed interest rate swap agreements with a notional amount of $73 million to the Company. These interest rate swap agreements do not qualify for special hedge accounting and, as a result, changes in the fair value of such interest rate swap agreements has been reflected in Other Income (Expense) in the consolidated statements of operations. Upon the Separation, such interest rate swap agreements were retained by DreamWorks Studios. The impact of including these agreements in the previously issued financial statements was to decrease net income and owners equity for the year ended December 31, 2002 by $0.9 million and to increase net income and owners equity by $2.7 million for the year ended December 31, 2003, and to increase net income and owner’s equity by $1.3 million for the period from January 1, 2004 through the Separation Date.

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DREAMWORKS ANIMATION SKG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

DreamWorks Animation has entered into loan agreements with two banks for financing of the production of a film (see Note 6). In connection with these agreements, the Company entered into foreign currency exchange transactions to limit the Company’s foreign exchange rate exposure associated with its purchase of British pounds to finance the film. These agreements do not qualify for special hedge accounting and, as a result, the fair value of such foreign currency exchange transactions, which represents an unrealized gain of $2.6 million at December 31, 2004, has been included in Other Income (Expense) in the consolidated statements of operations.

The accompanying consolidated financial statements also reflect the allocations of DreamWorks Studios’ indebtedness and the effects of DreamWorks Studios’ interest rate swap agreements prior to the Separation Date as described in Note 6.

Inventories, Revenue and Costs Inventories

The Company capitalizes direct film production costs in accordance with the SOP. Production overhead, a component of film inventory, includes allocable costs of individuals or departments with exclusive or significant responsibility for the production of films. Substantially all of the Company’s resources are dedicated to the production of our films. Capitalized production overhead does not include selling, general and administrative expenses. Interest expense on funds invested in production is capitalized into film inventories until production is completed. In addition to films being produced, the Company capitalizes into film inventory costs for projects in development in accordance with the SOP. In the event a film is not set for production within three years from the time of the first capitalized transaction, all such costs will be expensed.

Revenue

The following are the conditions that must be met in order to recognize revenue in accordance with the SOP: (i) persuasive evidence of a sale or licensing arrangement with a customer exists; (ii) the film is complete and has been delivered or is available for immediate and unconditional delivery; (iii) the license period of the arrangement has begun and the customer can begin its exploitation, exhibition or sale; (iv) the arrangement fee is fixed or determinable and (v) collection of the arrangement fee is reasonably assured. Amounts received from customers prior to the availability date of the product are included in unearned revenue. Revenue from the theatrical distribution of films is recognized at the later of (i) when films are exhibited in theatres or (ii) when theatrical revenues are reported to us by third parties, such as third party distributors. Revenue from the sale of home video units is recognized at the later of (i) when product is made available for retail sale or (ii) when video sales to customers are reported by third parties, such as fulfillment service providers or distributors. DreamWorks Studios and the Company follow the practice of providing for future returns of home video product at the time the products are sold. Management calculates an estimate of future returns of product by analyzing a combination of historical returns, current economic trends, projections of consumer demand for the product and point-of-sale data available from certain retailers. Based on this information, a percentage of each sale is reserved, provided that the customer has the right of return. Customers are currently given varying rights of return, from 15% up to 100%. However, although DreamWorks Studios and the Company allow various rights of return for customers, it does not believe that these rights are critical in establishing return estimates, as other factors, such as historical experience with similar types of sales, information received from retailers, and management’s assessment of the products appeal based on domestic box office success and other research, are more important in estimating. Generally, payment terms are within 90 days from the end of the month in which the product was shipped. Actual returns are charged against the reserve. Revenue associated with the licensing of home video product under revenue-sharing agreements is recorded as earned under the terms of the underlying agreements.

Revenue from both free and pay television licensing agreements are recognized at the time the production is made available for exhibition in those markets.

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DREAMWORKS ANIMATION SKG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenue from licensing and merchandising is recognized when the associated films have been released and the criteria for revenue recognition have been met. In most instances, this generally results in the recognition of revenue in periods when royalties are reported by licenses or cash is received.

For periods prior to October 1, 2004 (the effective date of the Distribution Agreement), we recognized revenue from films net of reserves for returns, rebates and other incentives. Under the Distribution Agreement, the Company is entitled to recognize revenues net of reserves for returns, rebates and other incentives after DreamWorks Studios (i) retains a distribution fee of 8.0% of revenue (without deduction of any distribution and marketing costs or third-party distribution and fulfillment services fees) and (ii) recovers all of its distribution and marketing costs with respect to the Company. As of October 1, 2004, DreamWorks Studios began retaining its 8.0% fee for all revenue recognized by it subsequent to the effective date, regardless of whether the revenue relates to a film released prior to the effective date of the Distribution Agreement and regardless of whether it has recouped the distribution and marketing expenses related to that film that it has incurred.

Because DreamWorks Studios is the principal distributor of the Company’s films, in accordance with the SOP, the amount of revenue recognized from films in any given period following the effective date of the Distribution Agreement, depends on the timing, accuracy and sufficiency of the information received from DreamWorks Studios. Although DreamWorks Studios has agreed to provide the Company with the most current information available to enable the Company to recognize its share of revenue, management may make adjustments to that information based on its estimates and judgments. For example, the management may make adjustments to revenue derived from home video units for estimates on return reserves, rebates and other incentives that may differ from those that DreamWorks Studios recommends. The estimates on reserves may be adjusted periodically based on actual rates of returns, inventory levels in the distribution channel, as well as other business and industry information. Company management also reviews expense estimates and may make adjustments to these estimates in order to ensure that revenue and gross margin are accurately reflected in the financial statements. In addition, as is typical in the motion picture industry, the Company’s distributor and its sub-distributors may also make subsequent adjustments to the information that they provide and these adjustments could have a material impact on the operating results in later periods.

Costs

Inventories are amortized and contingent compensation and residuals are accrued on an individual film basis in the proportion that current revenues bear to total remaining estimated lifetime revenues as required by the SOP.

Prior to the effective date of the Distribution Agreement, distribution and marketing costs, including advertising and marketing were expensed as incurred. Theatrical print costs were expensed upon release of the film. During the years ended December 31, 2002, 2003 and 2004, the Company included $212.2 million, $142.0 million and $228.5 million, respectively, of distribution and marketing costs in costs of revenue.

Prior to the effective date of the Distribution Agreement, home video manufacturing costs were charged to costs of revenue at the time home video revenues are recognized.

Following the effective date of the Distribution Agreement, the Company generally no longer incurs distribution and fulfillment services fees in the markets covered by the Distribution Agreement, including distribution and marketing costs, print costs, and home video manufacturing costs.

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DREAMWORKS ANIMATION SKG, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Property, Plant and Equipment

Property, plant and equipment are stated at the lower of cost or fair value. Depreciation of property, plant and equipment is calculated using the straight-line method over estimated useful lives assigned to each major asset category as below:

Asset Category	Estimated Useful Life
Buildings	40 years
Building Improvements	5-10 years
Furniture, Fixtures and Other	4-10 years
Software and Computer Equipment	2 years

Leasehold improvements are amortized using the straight-line method over the life of the asset, not to exceed the length of the lease. Amortization of assets acquired under capital leases is included in depreciation expense.

Income Taxes

Prior to the Separation, DreamWorks Studios paid no federal income taxes as an entity as the operations of DreamWorks Studios were included in the taxable income of its individual members. The tax expense in the accompanying consolidated statements of operations, through the Separation Date, principally represents foreign withholding taxes and minimum state franchise taxes. See Note 13 for pro forma income tax information reflecting the income tax provision that the Company would have recorded if the Company, through the Separation Date, had been subject to federal taxation as a corporation and had filed separate tax returns for all periods presented.

Effective as of the Separation, the Company is subject to federal taxation as a corporation and will be filing separate tax returns. The Company accounts for income taxes pursuant to SFAS No. 109, “Accounting for Income Taxes.” Under the asset and liability method of SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of ultimate revenues and ultimate costs of film and television product and estimates of product sales that will be returned and the amount of receivables that ultimately will be collected. Actual results could differ from those estimates.

Impairment of Long-Lived Assets

In accordance with SFAS No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. In such cases, the amount of the impairment is determined based on the relative fair values of the impaired assets. The Company has not identified any such impairment losses.

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Goodwill

The Company has goodwill of approximately $29.2 and $36.9 million, less accumulated amortization of $2.7 million, as of December 31, 2003 and 2004, respectively, related to DreamWorks Studios’ 2000 acquisition of a majority interest in PDI and the subsequent acquisition of the remaining minority interest in 2004. In 2003 and 2004, the Company performed its annual assessment of goodwill and determined that there was no impairment.

Deferred Costs

Costs associated with negotiating the Company’s animation facility lease and revolving credit facility, which consist principally of legal costs and bank fees, are deferred and amortized to interest expense using the straight-line method over the life of the arrangement.

Stock-Based Compensation

The Company follows the provisions of FAS 123, “Accounting for Stock-Based Compensation” (“FAS 123”). The provisions of FAS 123 allow companies to either expense the estimated fair value of equity awards or to continue to follow the intrinsic value method set forth in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). The Company has elected to continue to apply APB 25 in accounting for its preexisting stock options which were outstanding at the time of the acquisition of PDI. DreamWorks Studios used stock appreciation rights (which allowed all employees to share in the growth in value of DreamWorks Studios) as its principal stock-based compensation plan. The vested amount of these awards are recorded at their redemption value, and prior to the Separation Date, DreamWorks Studios allocated to the Company the redemption liability and the associated compensation expense related to the Company’s employees. Compensation expense, determined using the accelerated expense attribution method under FASB Interpretation No. 28, “Accounting for Stock Appreciation Rights and Other Variable Stock Option Plans”, is adjusted to reflect changes in redemption value (See Note 8).

In connection with the Separation, the Company issued various equity awards to its employees and advisors, as well as to the employees of DreamWorks Studios as described below. The Company issued fully vested shares to its and DreamWorks Studios’ employees who had fully vested awards granted by DreamWorks Studios on an equivalent value basis. Outstanding unvested equity awards previously issued by DreamWorks Studios were exchanged for equity awards granted by the Company with the same aggregate intrinsic value and remaining vesting terms. The Company recorded deferred compensation related to grants of unvested restricted stock awards to its employees of approximately $33 million (determined based on the grant date fair value) that will be amortized on a straight-line basis over a four to seven year period. Deferred compensation of $1.0 million was amortized to expense in the fourth quarter of 2004. In addition, the Company granted fully vested stock to certain of its and Dream Work’s Studios employees and advisors upon the consummation of its initial public offering, and recorded an expense of $20.0 million during the fourth quarter of 2004. The Company accounted for the vested and unvested equity awards granted to employees of DreamWorks Studios as a dividend to DreamWorks Studios of $31.9 million determined based on the fair value of the awards at the date of grant.

For the stock option awards granted to Company employees at the Separation and the Company’s initial public offering, the Company has elected to use the intrinsic value method of accounting for stock-based compensation plans in accordance with APB 25. The Company has adopted those provisions of FAS 123 and FAS No. 148 “Accounting for Stock-Based Compensation—Transition and Disclosure” which require disclosure of the pro forma effects on net income and net income per share as if compensation cost had been recognized based on the fair-value based method at the date of grant of the awards.

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The following table reflects pro forma net income and net income per share for the year ended December 31, 2004 had the Company elected to adopt the fair-value based method for the stock option awards granted to its employees at the Separation and its initial public offering (in thousands, except per share data).

Net income:
As reported	$	333,000
Fair value based compensation cost for stock options granted to employees, net of taxes		(434	)
Pro forma net income	$	332,566
Basic net income per share:
As reported	$	4.09
Pro forma	$	4.08
Diluted net income per share:
As reported	$	4.05
Proforma	$	4.05

These pro forma amounts may not be representative of future disclosures since the estimated fair value of the stock option awards are amortized to expense over the vesting periods, and additional stock option awards may be granted in future years. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The weighted average fair value of stock options granted to Company employees was $13.40 for the year ended December 31, 2004. Values were estimated using a zero dividend yield, expected volatility of 50%, risk free interest rate range of 2.23% to 3.78% and weighted average expected lives of 5.5 years.

Recent Accounting Pronouncements

In December 2004, the FASB issued FAS No. 123R “Share-Based Payments” (“FAS 123R”) which is a revision of FAS No. 123 “Accounting for Stock Based Compensation. FAS 123R supersedes Accounting Principals Board (“APB”) Opinion No 25, “Accounting for Stock Issued to Employees”, and amends FAS No. 95, “Statement of Cash Flows”. FAS No. 123R requires all share-based payments to employees, including grants of employee stock options to be recognized in the financial statements based on their fair values. FAS 123R is effective for public companies at the beginning of the first interim or annual period beginning after June 15, 2005. The Company has elected to adopt FAS 123R as of January 1, 2005. The Company anticipates that the adoption of this new standard will have a material impact to its financial position and results of operations. Management estimates that stock compensation expense for the year ended December 31, 2005 will be approximately $25.0 million for equity awards granted to date. The Company measured the fair value of these equity awards at the date of grant using a Black-Scholes option pricing model. FAS 123R offers alternative adoption methods. The Company has determined that it will use the modified prospective transition method. Changes to our underlying stock price or satisfaction of performance criteria for performance-based awards granted to our employees could significantly impact compensation expense to be recognized in 2005 and future periods. In addition, future grants of equity awards will result in additional compensation expense in 2005 and future periods.

2. Relationship to DreamWorks Studios

As an operating division of DreamWorks Studios prior to October 27, 2004, the Company has historically been allocated a portion of DreamWorks Studios overhead expenses including executive management, domestic theatrical marketing and distribution, oversight of international theatrical distribution and worldwide home video

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distribution, worldwide television sales, accounting and finance, legal, employee benefits, risk management and information technology. DreamWorks Studios has allocated such costs to the Company to reflect the amounts that DreamWorks Studios believes is a fair and reasonable allocation of its costs to provide these services to the Company. In general, these allocations have been calculated based on the percentage that the Company’s films, headcount, revenue or other criteria constitute of the total films, headcount, revenue or other criteria of DreamWorks Studios (including those of the Company). Certain of these costs that are significantly or exclusively related to the production of films are included in capitalized overhead in accordance with the SOP and are reported as Film Inventories in the accompanying consolidated balance sheets. All other allocations have been included in Selling, General and Administrative Expenses in the accompanying consolidated statements of operations. Costs, including capitalized costs, allocated from DreamWorks Studios for the years ended December 31, 2002, 2003 and 2004 are $34.2 million, $34.6 million and $30.0 million respectively. Prior to the Separation, DreamWorks Studios provided all working capital required for the development, production, and marketing of films, as well as overhead, through centralized cash management. The net impact of DreamWorks Studios’ funding of the Company’s operations, after the allocation of its indebtedness (Note 6), have been reflected as a component of Stockholders’ Equity (Deficiency) in the accompanying consolidated financial statements.

To the extent that DreamWorks Studios provides these or other services to the Company after the Separation that are not covered by the Distribution Agreement, the Company will reimburse DreamWorks Studios pursuant to the Services Agreement.

Allocations

Worldwide Marketing and Distribution:    Certain overhead expenses for the marketing and distribution of the Company’s films have historically been allocated to the Company by DreamWorks Studios. These costs include the salaries, fringe benefits, and operating expenses of the employees in DreamWorks Studios’ theatrical, home video, marketing and television sales/distribution departments. The allocation of the overhead associated with these functions has been based on several factors, including: (1) marketing costs incurred for the Company’s films as a percentage of marketing costs incurred for all DreamWorks Studios’ films; (2) the number of films the Company has released as a percentage of all DreamWorks Studios’ films released in a given year and (3) estimates of time spent on the Company’s releases as a percentage of time spent on all DreamWorks Studios’ releases. After the Separation, these services are provided under the Distribution Agreement.

Executive Management:    Executive management expense is comprised of the expenses relating to the principals and chief operating officers employed by DreamWorks Studios, including the costs associated with transportation provided by DreamWorks Studios to the Company’s executives. These costs were historically allocated to the Company based on a combination of (1) revenue generated by the Company as a percentage of DreamWorks Studios consolidated revenue and (2) the Company’s headcount as a percentage of DreamWorks Studios consolidated headcount. After the Separation, the Company directly incurs executive management expenses.

Finance and Accounting:    DreamWorks Studios has historically allocated accounting and finance services related costs, including the costs of financial systems, to the Company based on several factors, including: (1) revenue generated by the Company as a percentage of DreamWorks Studios consolidated revenue; (2) the Company’s headcount as a percentage of DreamWorks Studios total headcount and (3) estimates of time spent on the Company’s finance projects as a percentage of time spent on all DreamWorks Studios finance projects. After the Separation, the Company directly incur the costs of some accounting and finance services, such as strategic planning, financial reporting, treasury and investor relations. Other accounting and finance services, such as billing and collection of receivables (except receivables derived from rights retained by the Company, including

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licensing and merchandising rights) and contingent compensation and residual reporting oversight services, are provided pursuant to the Distribution Agreement. As a result, DreamWorks Studios no longer allocates any these costs to the Company. However, DreamWorks Studios provides other accounting services to the Company such as payroll, for which the Company reimburses DreamWorks Studios pursuant to the Services Agreement.

Legal and Business Affairs:    Costs related to legal and business affairs services, other than outside legal fees and film specific trademark-related expenses that were directly charged to the Company were historically allocated to the Company based on actual time spent by DreamWorks Studios’ attorneys on matters related primarily to the Company or the Company’s films. After the Separation, the Company directly incurs the costs of most legal and business affairs services, either through Company employees or through direct retention of outside legal counsel. However, attorneys employed by DreamWorks Studios provide some legal and business affairs services, such as work related to employment and music law, to the Company under the Services Agreement. The Company reimburses DreamWorks Studios for these services pursuant to the Services Agreement.

Human Resources:    DreamWorks Studios historically has allocated human resources costs, including management, benefits administration and employee relations to the Company based on the Company’s headcount as a percentage of the consolidated headcount of DreamWorks Studios. Other costs related to human resources, such as recruiting and relocation costs have been directly incurred by the Company. After the Separation, the Company directly incurs the costs associated with human resources management and employee relations. DreamWorks Studios provides other services, such as benefits management, for which the Company reimburses DreamWorks Studios pursuant to the Services Agreement.

Occupancy and Facilities Management:    The costs of facilities, facilities management and mail services were allocated to the Company historically based on the square footage that the Company has occupied at the Company’s Glendale animation campus and the Company’s Redwood City production facility as a percentage of total square footage of all DreamWorks Studios facilities. After the Separation, the Company incurs the costs of facilities management and mail services directly. The Company charges a portion of the Company’s occupancy costs to DreamWorks Studios pursuant to the Services Agreement for DreamWorks Studios’ occupancy of these facilities.

Insurance:    Property insurance premiums were historically allocated to the Company based on the Company’s insurable asset values as a proportion of DreamWorks Studios’ total insurable asset values, based on the asset’s fair market or replacement value as determined a the time of premium renewal. The insurance premiums for policies such as errors and omissions, directors and officers, travel, and excess liability, were historically allocated to the Company based on (1) the Company’s headcount as a percentage of the consolidated headcount of DreamWorks Studios in a given year and (2) the number of films the Company has released as a percentage of all DreamWorks Studios’ films released in a given year. These allocations continued until the end of 2004. After the Separation, the Company began directly incurring all insurance costs.

Information Technology:    DreamWorks Studios historically has allocated to the Company the costs of network infrastructure and administrative desktop computer support. This allocation has been based on the Company’s headcount as a percentage of total DreamWorks Studios’ headcount, in each case excluding the headcount of the Company’s Redwood City facility, as the costs related to Redwood City were directly incurred by the Company. After the Separation, DreamWorks Studios provides network infrastructure and administrative desktop support services to the Company and the Company reimburses DreamWorks Studios for these services pursuant to the Services Agreement. For telecommunications, the Company historically allocates a fixed fee for every telephone user, which includes the costs of equipment and related maintenance and support costs. The Company is charged for actual local and long distance usage.

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Other Allocations:    The Company historically has been allocated certain other costs, including (1) costs to track, deliver and store various film and film related content (for example, film elements, photos and artwork); (2) costs to oversee dubbing of the Company’s films and (3) costs to oversee the placement of musical content in the Company’s films. As a result of the Separation, the Company directly incurs some of these costs, such as the placement of musical content in the Company’s films. DreamWorks Studios provides some of these services to the Company such as the dubbing of films, as set forth in the Distribution Agreement. Other of these services, such as the costs of storing various film and film related content, are provided to the Company and the Company reimburses DreamWorks Studios pursuant to the Services Agreement.

Prior to the Separation, DreamWorks Studios provided fringe benefits to the Company’s employees. DreamWorks Studios paid all costs of the employer provided benefits package, including health and 401(k) plans and employer payroll taxes, and allocated such costs to the Company based on a percentage of total salaries incurred by or allocated to the Company in relation to the total salaries incurred by DreamWorks Studios. Employee fringe expense allocated to the Company for the years ended December 31, 2002, 2003 and 2004 was $7.6 million, $9.7 million and $8.5 million respectively, which were recorded as Selling, General and Administrative expenses. As a result of the Separation, the Company provides and pays costs directly for fringe benefits provided to the Company’s employees.

The Company leases its animation campus in Glendale, California (see Note 6). The Company incurs all costs related to the operation of the facility, and allocates occupancy costs to DreamWorks Studios. DreamWorks Studios was allocated occupancy expense of approximately $8.9 million, $9.0 million and $5.1 million for the years ended December 31, 2002, 2003 and 2004, respectively. A portion of these costs have been reallocated to the Company through the departmental allocations discussed above.

3. Advances

DreamWorks Studios has received advances from Home Box Office, Inc. (“HBO”) against license fees payable for future film product under an exclusive 10-year domestic pay television license agreement between HBO and DreamWorks Studios. Since the advances are identified for each film, the Company has been allocated the portion of the advances related to its animated features. During the years ended December 31, 2002, 2003 and 2004, the Company recognized as revenue $10 million, $10 million and $6.2 million of such advances, respectively, in each case representing a portion of the license fee due from HBO upon availability of the underlying films. As of December 31, 2003, there were no unrecognized advances. As of December 31, 2004, there were $3.5 million in unrecognized advances from HBO. DreamWorks Studios and the Company are obligated to refund the advances if the advances exceed the license fees earned by the films in accordance with the HBO agreement.

In the normal course of business, the Company received advances for licensing of the Company’s animated characters from various customers on a worldwide basis. As of December 31, 2003 and 2004, the Company had unearned licensing advances of $19.3 million and $10.6 million, respectively.

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4. Film Inventories

The following is an analysis of film inventories (in thousands):

	December 31,
	2003		2004
In development:
Animated feature films	$	31,633	$	42,531
In production:
Animated feature films		299,213		254,940
Television series		10,414		—
In release, (net of amortization):
Animated feature films		86,203		221,048
Television series		—		1,407
Total film inventories	$	427,463	$	519,926

The Company anticipates that 94% of “in release” inventory as of December 31, 2004 will be amortized over the next three years. The Company further anticipates that 58% of “in release” inventory will be amortized during 2005.

Interest capitalized to film inventories during the years ended December 31, 2003 and 2004 totaled $6.9 million, and $7.1 million, respectively.

5. Property, Plant and Equipment

Property, plant and equipment are comprised of the following (in thousands):

	December 31,
	2003			2004
Leasehold improvements	$	24,596		$	28,592
Furniture and equipment		7,934			8,871
Computer hardware and software		4,373			4,506
Equipment acquired under capital leases		6,982			6,982
Land and buildings		73,000			73,000
Total property, plant and equipment		116,885			121,951
Accumulated depreciation and amortization		(27,108	)		(35,954	)
Property, plant and equipment, net	$	89,777		$	85,997

For the years ended December 31, 2002, 2003, and 2004 the Company recorded depreciation and amortization expense (other than film amortization) of $3.1 million, $3.6 million, and $5.8 million, respectively in selling, general and administrative expenses. Accumulated depreciation and amortization includes depreciation of assets acquired under capital leases. On December 31, 2003, the Company adopted Interpretation 46, as revised, and has consolidated the special-purpose entity that acquired the Glendale animation campus, which increased property, plant and equipment as of December 31, 2003, and increased non-film depreciation and amortization after December 31, 2003 (see Note 6).

6. Financing Arrangements

(a) Debt Allocated by DreamWorks Studios.    Prior to the Separation, DreamWorks Studios historically allocated its debt and related interest to the Company based on the proportion of the Company’s capital invested

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in films in production as a percentage of total capital invested by DreamWorks Studios in all films in production. For the years ended December 31, 2002, 2003 and 2004, interest allocated to the Company amounted to $15.3 million, $20.5 million and $15.2 million, respectively. Of these amounts, interest capitalized to Film Inventories in accordance with FAS 34 “Capitalization of Interest Cost”, totaled $10.2 million, $6.9 million and $7.1 million for the years ended December 31, 2002, 2003 and 2004, respectively. In connection with the Separation, the Company assumed $325 million of debt that DreamWorks Studios had borrowed under its credit facility. In November 2004, the Company fully repaid this debt.

DreamWorks Studios utilizes interest rate swap agreements to hedge the interest rate sensitivity of its indebtedness. These agreements do not qualify for special hedge accounting and, as a result, changes in the fair value of such agreements have been charged to operations. The impact of these agreements has been historically allocated to the Company in a manner similar to the allocation of debt. Accordingly, the net change in the fair value of these contracts has been charged to Other Income (Expense), and the allocated fair value of these contracts has been reflected in Accrued Liabilities. For the years ended December 31, 2002 and 2003, the Company recorded other expense of $19.9 million and $0.6 million, respectively, and for the year ended December 31, 2004, recorded other income of $7.0 million related to the allocated changes in the fair value of these instruments.

DreamWorks Studios has entered into interest rate swap agreements and has allocated to the Company agreements with aggregate notional principal amounts of $73.0 million for the years ended December 31, 2002 and 2003. These contracts serve as a hedge against the interest rate fluctuations associated with the Company’s animation campus indebtedness. Pursuant to these agreements, DreamWorks Studios paid and allocated to the Company fixed rates of interest ranging from 6.06% to 6.20% in 2002 and 2003 (weighted average of 6.16%) and received and allocated to the Company floating LIBOR-based rates of interest (weighted average of 1.51% at December 31, 2002 and 1.18% at December 31, 2003).

At December 31, 2003, the Company estimated it would have been required to pay approximately $31.8 million to terminate all the aforementioned swap agreements. These amounts have been recorded in Accrued Liabilities in the accompanying consolidated financial statements as of December 31, 2003. Upon the Separation, DreamWorks Studios retained all of these interest rate swap agreements which represented an obligation of $24.2 million as of the Separation Date. Accordingly, changes in market value were recorded by the Company only through the Separation Date.

(b) Animation Campus Financing.    In May 1996, DreamWorks Animation entered into an agreement with a financial institution for the construction of an animation campus in Glendale, California, and the subsequent lease of the facility upon its completion in early 1998. The lease on the property, which was acquired and financed by the financial institution for $76.5 million, qualified as an operating lease for the Company. In March 2002, the Company renegotiated the lease through the creation of a special-purpose entity that acquired the property from the financial institution for $73.0 million and the special-purpose entity leased the facility to the Company for a five-year term. This transaction was structured to qualify as an operating lease and obligated the Company to provide a residual value guarantee of approximately $61 million. The entire amount of the obligation, $70.1 million at December 31, 2004, is due and is payable in March 2007. In connection with the adoption of Interpretation 46, the special-purpose entity has been consolidated by the Company as of December 31, 2003 (see Note 5).

(c) Production Financing.    In October 2003, the Company entered into an agreement to acquire an animated film currently in production. Pursuant to the acquisition agreement, the Company will pay approximately $45.0 million to acquire substantially all distribution rights to the film. Of this amount $14.6 million and $34.9 had been paid as of December 31, 2003 and 2004, respectively. In connection with the acquisition, DreamWorks Studios entered into loan agreements for the financing of the production costs of up to

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approximately $27.8 million. Of this amount, $6.6 million and $21.6 million had been incurred as of December 31, 2003 and December 31, 2004, respectively. This obligation is included in Other Debt and Film Inventories in the accompanying consolidated balance sheets. The loan agreement is secured by a perfected first security interest in all rights and title to the film and is cross-defaulted with the Company’s revolving credit facility. The Company has entered into certain foreign exchange transactions intended to hedge the fluctuations of foreign currency payments related to the acquisition of this film. Pursuant to these transactions, the Company is obligated to purchase up to 16.7 million British pounds at an exchange rate specified in the transaction documents. These transactions do not quality for special hedge accounting and, accordingly, changes in the fair value of these agreements are recorded as Other Income/Expense in the accompanying consolidated statements of operations. At December 31, 2003 and December 31, 2004, the banks would be required to pay the Company approximately $1.2 million and $2.7 million, respectively, to terminate the foreign currency agreements. These amounts have been recorded in Other Assets in the accompanying consolidated financial statements.

(d) Universal Studios Advance.    In prior years, DreamWorks Studios entered into several agreements with Universal and its affiliates to provide international theatrical distribution and international and domestic home video fulfillment services. In 2001, DreamWorks Studios amended and extended its agreements with Universal (the “2001 Universal Agreement”). In accordance with the Universal Agreement, DreamWorks Studios received an advance against amounts due to DreamWorks Studios based on the projected net receipts, as defined, of pictures in release and pictures in production or pre-production (the “2001 Advance”). DreamWorks Studios is required to provide to Universal quarterly estimates of projected cash receipts, net of projected expenses, distribution and service fees, due to DreamWorks Studios from Universal in the markets where Universal provides distribution and fulfillment services (the “Pipeline Estimate”).

The 2001 Advance is calculated as the lesser of $100 million or 87% of the Pipeline Estimate. At December 31, 2003, the 2001 Advance was calculated to be $100 million. A portion of the 2001 Advance has historically been allocated to the Company based on the relative share of the Company’s net receipts included in the Pipeline Estimate. Accordingly, at December 31, 2003, $12.8 million of the 2001 Advance has been allocated to the Company and is included in Universal Studios advance in the accompanying consolidated balance sheets. Effective as of the Separation, no portion of the 2001 advance was assumed by the Company.

In October 2003, DreamWorks Studios entered into a new amended and restated agreement with Universal (the “2003 Universal Agreement”). The 2003 Universal Agreement extends the terms of the international theatrical distribution and international and domestic home video fulfillment services agreements until December 31, 2010, with an option for Universal to extend the term for an additional one or two years if certain performance thresholds are not met. Pursuant to the 2003 Universal Agreement, DreamWorks Studios retains responsibility for all direct distribution costs and Universal receives a fee for distribution and fulfillment services.

Pursuant to the 2003 Universal Agreement, Universal agreed to pay to DreamWorks Studios an additional advance of $75 million (the “2003 Advance”), of which $37.5 million was received in December 2003 and $37.5 million was received in March 2004. The entire 2003 Advance is based on projected net receipts, as defined, of the Company’s animated features released subsequent to December 31, 2002. As a result, 100% of the 2003 Advance has been allocated to the Company and is included in Universal Studios advance in the accompanying consolidated balance sheets. The 2003 Advance bears interest at a rate of 8.75% per annum.

If future Pipeline Estimates fall below the levels required to maintain the maximum advance (which, as of December 31, 2004, the amount would be $86.2 million), the excess advance must be repaid within five business days. The advances are otherwise not recoupable or refundable until the earlier of a payment default or termination of the Universal Agreements. Management does not expect any amounts to be payable in 2005.

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In the event that the Distribution Agreement with DreamWorks Studios is terminated, the Company remains subject to the terms of the DreamWorks Studios’ 2003 Universal Agreement, including the obligation to pay distribution fees and to pay distribution expenses as they are incurred. The Company will not have the right to terminate the 2003 Universal Agreement unless and until (i) DreamWorks Studios has repaid all amounts it owes to Universal Studios, including in respect of investments and advances which aggregate $125 million as of December 31, 2004, (ii) the Company has repaid all amounts owed to Universal Studios, and (iii) Universal Studios has received an aggregate of $75 million of net proceeds from the sale of shares of the Company’s common stock.

(e) Revolving Credit Facility.    In connection with the Separation, the Company entered into a five-year $200 million revolving credit facility with a number of banks. The credit facility is secured by substantially all of the Company’s assets. Interest on borrowed amounts is determined either at a floating rate of LIBOR plus 1.75% or the alternate base rate (which is generally the prime rate) plus 0.75% per annum. In addition, the Company is required to pay a commitment fee on undrawn amounts at an annual rate of 0.50% on any date when more then $100 million is outstanding under the credit facility and 0.75% on any other date. The credit agreement requires the Company to maintain certain financial ratios.

The Company borrowed $101.4 million on the credit facility in October 2004 to repay an equivalent amount of debt of DreamWorks Studios in connection with the Separation. In November 2004, the Company repaid the entire outstanding balance. As of December 31, 2004 there were no borrowings on the credit facility.

(f) HBO Subordinated Notes.    In connection with the Separation, the Company assumed $80 million of subordinated notes issued by DreamWorks Studios in December 2000 pursuant to a subordinated loan agreement, $30 million of which was repaid with the proceeds from the Company’s initial public offering. The subordinated notes bear interest in amount equal to the Eurodollar rate plus 0.50% per annum and are due in November 2007. The subordinated notes are secured by a lien in favor of HBO that is junior to the security interest in certain exhibition rights related to DreamWorks Studios films. The subordinated notes are recorded net of a discount of $4.0 million, which is to be amortized to interest expense over the remaining term of the subordinated loan agreement. In the event that DreamWorks Studios ceases to be the Company’s distributor, the Company remains obligated to continue to license its films to HBO under the terms of DreamWorks Studios’ license agreement with HBO. The terms of the notes require the Company to maintain certain financial ratios.

As of December 31, 2004 the Company was in compliance with all applicable debt covenants.

7. Commitments and Contingencies

On December 31, 2003, the Company adopted Interpretation 46, as revised, and has consolidated the special-purpose entity that acquired the Glendale animation campus by recording the lease obligation as debt and increasing property, plant and equipment (see Notes 5 & 6).

The Company is allocated lease expense by DreamWorks Studios for certain non-cancelable office space and equipment operating leases. Certain of these office leases contain escalations in the monthly rental amounts. DreamWorks Studios has also entered into several operating leases for furniture, computers and production equipment with terms ranging from three to five years. These leases also provide for certain termination and purchase options. For the years ended December 31, 2002, 2003 and 2004, the Company incurred lease expense, including that allocated by DreamWorks Studios, of approximately $9.8 million, $11.6 million, and $7.5 million, respectively.

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In December 1997, DreamWorks Studios entered into a capital lease with Pacific Enterprises for the energy management assets associated with the Company’s Glendale animation campus. This capital lease has been attributed to the Company, and, accordingly, the Company has reflected an asset of approximately $7.0 million. As of December 31, 2004, $3.0 million of the related capital lease obligation remains outstanding. Payments of obligations under the capital lease totaled approximately $0.6 million in each of the years ended December 31, 2002 and 2003 and $0.7 million for the year ended December 31, 2004.

Future minimum lease commitments of all leases are as follows (in thousands):

	Operating Lease Commitments		Sublease Income			Net Operating Lease Commitments		Capital Lease Commitments
2005	$	10,423	$	(806	)	$	9,616	$	996
2006		8,590		(806	)		7,783		996
2007		4,097		—			4,097		996
2008		3,558		—			3,558		332
2009		3,665		—			3,665		—
Thereafter		9,971		—			9,971		—
Subtotal		40,304		(1,612	)		38,690		3,320
Less amount representing interest		—		—			—		(393	)
Total	$	40,304	$	(1,612	)	$	38,690	$	2,927

The Company estimates that in 2005, it will pay approximately $32.7 million of its accrued contingent compensation and residual costs as of December 31, 2004.

As of December 31, 2004, we had contractual commitments to make the following payments (in thousands):

	Payments Due by Year
Contractual Cash Obligations	2005		2006		2007		2008		2009		Thereafter		Total
Operating leases, net of sublease income	$	9,616	$	7,783	$	4,097	$	3,558	$	3,665	$	9,971	$	38,690
Executive officers employment agreements(1)		2,150		2,175		2,200		2,200		2,200		—		10,925
Wallace & Gromit: Curse of the Were Rabbit obligation(2)		37,862		—		—		—		—		—		37,862
Glendale animation campus note payable(3)		—		—		70,059		—		—		—		70,059
Universal advance(4)		—		—		—		—		—		75,000		75,000
HBO subordinated debt(5)		—		—		50,000		—		—		—		50,000
Capital leases(6)		996		996		996		332		—		—		3,320
Total contractual cash obligations	$	50,624	$	10,954	$	127,352	$	6,090	$	5,865	$	84,971	$	285,856

⁽¹⁾ In connection with the Separation, the Company entered into employment agreements with contractual cash salaries totaling $10.9 million over the next five years.

⁽²⁾ In October 2003, the Company entered into an agreement to acquire certain distribution rights to Wallace & Gromit: Curse of the Were Rabbit, an animated film currently in production. Pursuant to the acquisition agreement, the Company is obligated to pay approximately $45.0 million to acquire substantially all rights to

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the film (of which $34.9 million had been paid as of December 31, 2004). In connection with the acquisition, DreamWorks Studios entered into loan agreements for the financing of the production costs of up to approximately $27.8 million. Of this amount, $21.6 million had been borrowed at December 31, 2004. Because the Company is obligated to acquire this film upon its completion in 2005, the $21.6 million borrowed as of December 31, 2004 plus the amount the Company is obligated to fund are included in this table.

⁽³⁾ The Company operates an animation campus in Glendale, California. The lease on the property, which was originally acquired for $76.5 million, qualified as an operating lease. In March 2002, the lease was renegotiated through the creation of a special-purpose entity that acquired the property for $73.0 million and leased the facility to the Company for a five-year term. In accordance with the provisions of FIN 46, the asset, debt and non-controlling interest has been included on the consolidated balance sheet as of December 31, 2004. The Company expects to refinance this obligation prior to its maturity.

⁽⁴⁾ In connection with the Separation, the Company assumed approximately $75 million of indebtedness related to advances that Universal Studios made to DreamWorks Studios to fund animated motion pictures. Universal Studios advanced DreamWorks Studios amounts based on anticipated future receipts from films that DreamWorks Studios is expected to release, and DreamWorks Studios allocated to the Company $87.2 million of this advance on a historical basis. Of this allocation, $12.2 million relates to a 2001 animated film advance that was initially allocated but, as part of the Separation, was not assumed by the Company.

⁽⁵⁾ In connection with the Separation, the Company assumed $80 million of subordinated debt that DreamWorks Studios incurred from HBO in December 2000, $30 million of which was repaid with proceeds from the Company’s initial public offering.

⁽⁶⁾ Includes $0.4 million of imputed interest.

From time to time, DreamWorks Studios is involved in various claims, legal proceedings and complaints arising in the ordinary course of business. The Company does not believe that adverse decisions in any pending or threatened proceedings, or any amount which the Company might be required to pay by reason thereof, would have a material adverse effect on the financial condition or operating results of the Company.

8. Employee Benefits Plan

401(k) Plans

Effective at the Separation, the Company sponsors a defined contribution retirement plan (the “Plan”) under provisions of Section 401(k) of the Internal Revenue Code (“IRC”). Substantially all employees not covered by collective bargaining agreements are eligible to participate in the Plan. The maximum contribution for the employer match is equal to 50% of the employees’ contribution, up to 4% of their compensation, as limited by Sec. 415 of the IRC. Prior to the Separation, Company employees participated in a similar plan sponsored by DreamWorks Studios. Effective at the Separation, the costs of the employer match, as well as all third party costs of administering the Plan are paid directly by the Company. The management of the Plan is provided by DreamWorks Studios, for which the Company reimburses DreamWorks Studios pursuant to the Services Agreement. Prior to the Separation, the costs of the employer match, as well as the costs of administration, were included in DreamWorks Studios’ fringe benefit allocation to the Company.

Employee Equity Plans

Prior to the Separation, the Company participated in DreamWorks Studios’ Employee Equity Participation Plan (the “Equity Plan”). DreamWorks Studios granted to employees or consultants either actual or phantom shares of stock (“Shares”). For the year ended December 31, 2002, compensation expense attributable to the Company’s employees pursuant to the Equity Plan of $0.3 million was allocated to the Company. During the year ended December 31, 2003 and 2004, DreamWorks Studios determined that the fair market value of the

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Shares in the Equity Plan had decreased from the previously determined fair market value. Accordingly in the year ended December 31, 2003 the Company reversed previously recorded compensation expense related to the Equity Plan aggregating $2.3 million to reflect the reduction in fair value as of December 31, 2003. For the year ended December 31, 2004, $0.4 million in compensation expense pursuant to the Equity Plan net of reversals of previously recorded compensation expense was allocated to the Company. As of December 31, 2003 and 2004, deferred compensation liabilities associated with the Equity Plan of $6.4 million and $0.9 million, were allocated to the Company.

In connection with the Separation, the Company’s Board of Directors approved the 2004 Omnibus Incentive Compensation Plan (“Omnibus Plan”). The Omnibus Plan provides for the grant of incentive stock options to Company employees and non statutory stock options, restricted stock, stock appreciation rights, performance units, performance shares, restricted stock units and other stock equity awards to the Company’s employees, directors and consultants. In connection with the Omnibus Plan, the Company issued various equity awards to its employees and advisors, as well as to the employees of DreamWorks Studios as described below. The Company issued fully vested shares to its and DreamWorks Studios’ employees who had fully vested awards granted by DreamWorks Studios on an equivalent value basis. Outstanding unvested equity awards previously issued by DreamWorks Studios were exchanged for equity awards granted by the Company with the same aggregate intrinsic value and remaining vesting terms. In connection with the acquisition of PDI in 2000, the Company inherited a stock option plan that was previously established by PDI. PDI employees who had fully vested shares of PDI were issued fully vested shares of the Company on an equivalent basis. PDI employees who had outstanding and unexercised stock options had those stock options converted with the same intrinsic value and remaining vesting terms.

As described above, the Company issued restricted stock grants to its and DreamWorks Studios’ employees. The restrictions on restricted stock grants generally lapse upon meeting certain performance-based milestones, or passage of time, or a combination of both. Restricted stock grants are generally measured at fair value on the date of grant based on the number of shares granted and the quoted price of the Company’s common stock. For those restricted stock grants issued to DreamWorks Studios employees, such value was accounted for as a dividend to DreamWorks Studios, based on the grant date fair value of the underlying stock. For those restricted stock grants issued to Company employees, such value (determined based on the grant date fair value of the underlying stock) is recognized as an expense over the corresponding vesting period. For the year ended December 31, 2004, approximately 1.8 million shares of restricted stock were issued, excluding 1.0 million shares of restricted stock that had performance criteria that were not set by the Compensation Committee of the Company’s Board of Directors (“the Committee”) until January, 2005. In addition, on January 13, 2005, the Committee approved performance compensation awards with respect to approximately 1.0 million shares of Common Stock for certain named executive officers. Pursuant to the terms and conditions of such awards, delivery of shares of Common Stock is contingent on a determination and certification by the Committee at the end of a four-year performance period that certain objective performance goals based upon the Company’s revenues and operating cash flow in excess of a return on investment had been achieved.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Stock option activity since the Separation under the Company’s Omnibus Plan is summarized as follows (in thousands, except per share amounts):

	Options Outstanding		Weighted Average Exercise Price per Share
Balance at October 27, 2004 (conversions)	2,262		$	25.21
Options granted	2,342			28.00
Options exercised	(223	)		13.75
Options canceled	(31	)		31.30
Balance at December 31, 2004	4,350		$	27.26

The following table summarizes information concerning outstanding and exercisable options as of December 31, 2004 (in thousands, except years and per share amounts):

	Options outstanding				Options exercisable
Range of Exercise Prices per Share	Number Outstanding	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price per Share		Number Exercisable	Weighted Average Exercise Price per Share
$1.00-$3.23	60	1.1	$	1.20	60	$	1.20
$6.46-$8.06	311	4.2		8.03	307		8.03
$22.43-$26.95	447	9.8		24.34	357		24.23
$28.00	2,535	9.8		28.00	0		0.00
$31.41-$32.31	563	9.8		31.78	217		31.49
$36.90-$ 37.51	434	9.8		37.48	171		37.48
Total	4,350	9.8	$	27.26	1,112	$	21.97

9. Related Party Transactions

Pursuant to the Distribution Agreement, the Company incurred distribution fees payable to DreamWorks Studios of $63.6 million for the period from the effective date of the Distribution Agreement through December 31, 2004. As of December 31, 2004, the Company had a receivable from DreamWorks Studios of approximately $372.1 million pursuant to the Distribution Agreement.

Pursuant to the Services Agreement, the Company reimbursed DreamWorks Studios $1.3 million and DreamWorks Studios reimbursed the Company $1.0 million for the period from the effective date of the Services Agreement through December 31, 2004.

The Company has made loans to certain of its employees pursuant to various notes receivable arrangements. These arrangements require interest to be paid at rates ranging from 0% to 5.88%. Payments are due under terms ranging from 1 to 10 years. Amounts due at December 31, 2003 and 2004 are reflected in Receivables from Employees in the accompanying consolidated balance sheets. Interest income associated with these notes receivable for the years ended December 31, 2002, 2003 and 2004 was not material. As of December 31, 2004 the Company had no loans outstanding to named executive officers.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company provides services to DreamWorks Studios related to the licensing of products based on DreamWorks Studios’ films and characters in such films. In the years ended December 31, 2002, 2003 and 2004 revenues earned from licensing activities on behalf of DreamWorks Studios totaled $0.7 million, $3.7 million and $3.7 million, respectively.

The Company has an arrangement with an affiliate of a stockholder to share tax benefits generated by the stockholder. See Note 13.

10. Significant Customer, Segment and Geographic Information

For the years ended December 31, 2002, 2003 and 2004, Universal Studios represented 72%, 56% and 44%, respectively, of total revenue. If the Distribution Agreement had not been in effect as of October 1, 2004, Universal Studios would have represented 66% of revenues for the year ended December 31, 2004.

The Company operates in a single segment: the production and distribution of animated films. Revenues attributable to foreign countries were approximately $199.1 million, $135.6 million and $403.6 million for the years ended December 31, 2002, 2003 and 2004, respectively. Long-lived assets located in foreign countries were not material.

Pursuant to the terms of the distribution agreements in place at DreamWorks Studios, whereby DreamWorks Studios has not been responsible for collecting foreign currency, there is a relatively short period between revenue recognition and cash payment. DreamWorks Studios generally has not used foreign currency swap transactions to hedge foreign currency exchange risks associated with these distribution agreements.

The following is an analysis of the Copmpany’s revenue by film:

	Year Ended
	2002		2003		2004
Spirit: Stallion of the Cimmaron	$	153,234	$	67,282	$	32,307
Sinbad: Legend of the Seven Seas		—		78,915		22,704
Shrek 2		—		—		790,373
Shark Tale		—		—		62,273
Film Library / Other(1)		281,090		154,789		151,464
Television Series		—		—		19,039
	$	434,324	$	300,986	$	1,078,160

⁽¹⁾ Primarily includes film library revenue from Antz, Prince of Egypt, The Road to El Dorado, Chicken Run and Joseph: King of Dreams and Shrek.

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11. Valuation and Qualifying Accounts and Reserves

The following is a summary of the valuation and qualifying accounts included in the consolidated balance sheets for the years ended December 31, 2002, 2003, and 2004 (in thousands):

	Balance at Beginning of Period		Charged to (Credited) Operations		Deductions and Bad Debt Write-offs			Balance at End of Period
Trade accounts receivable
Allowance for doubtful accounts
2002	$	624	$	2,300	$	(1,077	)	$	1,847
2003		1,847		824		(325	)		2,346
2004		2,346		752		(1,971	)		1,127

	Balance at Beginning of Period	Charged to Expenses		Charged to other Accounts(1)		Balance at End of Period
Deferred tax assets
Valuation allowance
2002	—		—		—		—
2003	—		—		—		—
2004	—	$	33,569	$	544,031	$	577,600

⁽¹⁾ Amounts not charged to expenses were charged to equity.

12. Accrued Liabilities

Accrued liabilities consists of the following:

	December 31, 2003		December 31, 2004
Fair value of derivative instruments	$	31,828	$	110
Accrued distribution costs		31,654		1,513
Participations and residuals		13,254		32,692
Production costs		3,331		6,443
Occupancy		8,744		9,844
Other accrued liabilities		13,182		8,366
	$	101,993	$	58,968

13. Income Taxes

Effective as of the Separation, the Company is taxed at regular corporate rates. Deferred tax assets and liabilities are recognized for the tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. A deferred tax asset valuation allowance will be recorded if it is more likely than not that all or a portion of the recorded deferred tax assets will not be realized. Actual income tax expense on the consolidated statement of operations represents U.S. Federal and State income

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taxes incurred from the Separation Date through December 31, 2004, and foreign taxes for the entire year. The following are the components of the provision for income taxes (in thousands):

Current:
Federal	$	95,472
State and Local		9,277
Foreign		2,318
Total current provision		107,067
Deferred:
Federal		(16,741	)
Total deferred benefit		(16,741	)
Total income tax provision	$	90,326

The provision for income taxes for the year ended December 31, 2004 differed from the amounts computed by applying the U.S. federal income tax rate of 35% to income before income before income taxes as a result of the following (in thousands):

U.S. Federal statutory rate	35.0	%
U.S. state taxes, net of Federal benefit	2.1
Pre-Separation income not subject to tax	(14.3	)
Revaluation of deferred tax assets, net	(0.5	)
Permanent and other items	(1.0	)
	21.3	%

The tax effects of temporary differences for the period from October 28, 2004 through December 31, 2004 that give rise to a significant portion of the deferred tax assets and deferred tax liabilities are presented below (in thousands):

Deferral tax assets:
Film assets	$	8,806
Abandoned films		32,497
Basis step-up, related party (see below)		620,633
Expense accruals		7,969
State taxes		3,042
		672,947
Less: Valuation allowance		(577,600	)
Net deferred tax assets		95,347
Deferred tax liabilities:
Fixed assets		(1,032	)
Other		(972	)
		(2,004	)
	$	93,343

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent on the generation of taxable income during the periods in which temporary differences become deductible. At the time of the Separation, the net deferred tax assets recorded as a result of the Company’s change in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

tax status were fully reserved with a valuation allowance. The Company has a valuation allowance of $577.6 million as of December 31, 2004 for deferred tax assets because of uncertainty regarding their realization.

At the time of the Separation, affiliates controlled by a stockholder entered into a series of transactions that resulted in a partial increase in the tax basis of the Company’s tangible and intangible assets. This partial increase in tax basis is expected to reduce the amount of tax that the Company may pay in the future, to the extent that the Company generates taxable income in sufficient amounts in the future. The Company is obligated to remit to the stockholder’s affiliate 85% of any such cash savings in U.S. Federal income tax and California franchise tax and certain other related tax benefits, subject to repayment if it is determined that these savings should not have been available to the Company. At the time of the Separation, the increase in the tax basis of the assets was approximately $1.64 billion, resulting in a deferred tax asset of approximately $620 million. A substantial portion of these potential tax benefits may be realized over approximately 15 years. As a result of the taxable income generated by the Company from the Separation Date through December 31, 2004, the Company expects to realize $6.5 million in tax benefits as a result of the increased basis in the assets for the period from October 28, 2004 through December 31, 2004. The Company also expects to receive a tax benefit of $76.6 million in future years as management has determined that the benefits can be realized through a refund of taxes paid in 2004. Accordingly, the Company has recorded a liability to the stockholder’s affiliate of approximately $70.6 million representing 85% of these recognized benefits. All of the tax benefits to the Company and related obligation to an affiliate of a stockholder described in this section have been recognized as a component of stockholders’ equity and have not impacted the Company’s operating results.

As the Company was not subject to U.S. Federal and State taxes until the Separation Date, the following sets forth its pro forma income tax expense for the year ended December 31, 2004 as if the Company had historically been subject to U.S. Federal and State taxes (in thousands):

	Year ended December 31, 2004
	(unaudited)
Income before income taxes	$	423,326
Provision for income taxes—pro forma		(124,642	)
Pro forma net income	$	298,684
Pro forma net income per share—basic	$	3.67
Pro forma net income per share—diluted	$	3.64

On a pro forma basis, there would be no impact on the Company’s financial results for the years ended December 31, 2002 and 2003 had the Company been subject to U.S. Federal and State income taxes because any benefit from the Company’s net operating loss carryforwards would require a full valuation allowance.

14. Earnings Per Share Data

Basic per share amounts exclude dilution and is the weighted average number of common shares outstanding for the period. Unless the effects are anti-dilutive, diluted per share amounts reflect the potential reduction in earnings per share that could occur if equity based awards were exercised or converted into common stock. For the years ended December 31, 2002 and 2003, basic per share amounts are calculated using the number of shares of common stock outstanding immediately following the Separation, but not including the shares issued in our initial public offering, as is such shares were outstanding for all periods presented. For the year ended December 31, 2004, the basic per share amount is calculated using the weighted average of (i) from January 1, 2004 through the Separation Date, the number of shares of common stock outstanding immediately following the separation, but not including the shares issued in our initial public offering, as if such shares were

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

outstanding for the entire period and (ii) from the Separation Date through December 31, 2004, the weighted average number of shares of common stock outstanding.

For the years ended December 31, 2002 and 2003 diluted per share amounts are calculated using the number of shares of common stock outstanding immediately following the Separation, but not including the shares issued in our initial public offering, as is such shares were outstanding for all periods presented, excluding, because their effect would be anti-dilutive, the impact of 487,000 shares of Class A common stock which underlie equity based compensation awards converted at the Separation. For the year ended December 31, 2004 the diluted share amount is calculated using the weighted average of: (i) from January 1, 2004 through the Separation Date, the number of shares of common stock outstanding immediately following the separation, but not including the shares issued in our initial public offering, plus the impact of 487,000 shares of Class A common stock which underlie equity based compensation awards converted at the Separation (using the treasury stock method) and (ii) from the Separation Date through December 31, 2004, the weighted average number of shares of common stock outstanding plus 1,418,000 shares of Class A common stock which underlie equity based compensation awards converted at the Separation and issued during the period (using the treasury stock method). For the period from the Separation Date through December 31, 2004, options to purchase 442,000 shares were not included in the calculation of diluted per share amounts because these options were out-of-the-money and 1,020,952 shares of unvested restricted stock to certain named executive officers were not included in the calculation of diluted per share amounts because the performance criteria for these awards were not set by the Compensation Committee of the Company’s Board of Directors until January, 2005.

The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands except per share amounts)

	2002			2003			2004
Numerator:
Income (loss) before cumulative effect of accounting change	$	(25,067	)	$	(184,639	)	$	333,000
Cumulative effect of accounting change		—			(2,522	)		—
Net income (loss)	$	(25,067	)	$	(187,161	)	$	333,000
Denominator:
Weighted average common shares and denominator for basic calculation		76,636			76,636			81,432
Weighted average effects of dilutive equity-based compensation awards
Employee stock options		—			—			660
Unvested restricted shares		—			—			59
Denominator for diluted calculation		76,636			76,636			82,151
Net income (loss) per share—basic
Income (loss) per share before cumulative effect of accounting change	$	(0.33	)	$	(2.41	)	$	4.09
Cumulative effect of accounting change per share		—			(0.03	)		—
Net income (loss) per share	$	(0.33	)	$	(2.44	)	$	4.09
Net income (loss) per share—diluted
Income (loss) per share before cumulative effect of accounting change	$	(0.33	)	$	(2.41	)	$	4.05
Cumulative effect of accounting change per share		—			(0.03	)		—
Net income (loss) per share	$	(0.33	)	$	(2.44	)	$	4.05

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

15. Quarterly Financial Information (Unaudited)

The unaudited quarterly financial statements have been prepared on substantially the same basis as the audited financial statements, and, in the opinion of management include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the results of operations for such periods (in thousands, except per share data):

	Quarter Ended
	March 31			June 30			September 30			December 31
2003
Operating Revenue	$	46,576		$	71,948		$	47,828		$	134,634
Gross profit (loss)		6,763			(82,943	)		(25,145	)		(36,648	)
Loss before income taxes and cumulative effect of accounting change		(10,281	)		(103,528	)		(35,573	)		(33,418	)
Net loss		(10,366	)		(104,328	)		(35,898	)		(36,569	)
Basic net loss per share		(0.14	)		(1.36	)		(0.47	)		(0.48	)
Diluted net loss per share		(0.14	)		(1.36	)		(0.47	)		(0.48	)
2004
Operating Revenue	$	40,814		$	300,304		$	241,343		$	495,699
Gross profit (loss)		(4,612	)		147,515			45,032			324,016
Income (loss) before income taxes and cumulative effect of accounting change		(25,152	)		146,358			21,569			280,551
Net income (loss)		(25,455	)		146,133			20,313			192,009
Basic net income (loss) per share		(0.33	)		1.91			0.27			2.02
Diluted net income (loss) per share		(0.33	)		1.89			0.26			1.99

The amount of revenues and cost of revenues recognized for the quarter ended December 31, 2004 is substantially less than the amounts that would have been recognized if the Distribution Agreement had not become effective on October 1, 2004.

96

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

With the participation of our Chief Executive Officer and our Chief Financial Officer, management has carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2004.

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the fourth quarter of fiscal 2004 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

97

PART III

Item 10. Directors and Executive Officers of the Registrant

In addition to the information set forth under the caption “Executive Officers of the Registrant” in Part I of this Form 10-K, the information required by this Item is incorporated by reference to our Proxy Statement for the 2005 Annual Meeting of Stockholders.

Item 11. Executive Compensation

The information required by this Item is incorporated by reference to our Proxy Statement for the 2005 Annual Meeting of Stockholders.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by this Item is incorporated by reference to our Proxy Statement for the 2005 Annual Meeting of Stockholders.

Item 13. Certain Relationships and Related Transactions

The information required by this Item is incorporated by reference to our Proxy Statement for the 2005 Annual Meeting of Stockholders.

Item 14. Principal Accounting Fees and Services

The information required by this Item is incorporated by reference to our Proxy Statement for the 2005 Annual Meeting of Stockholders.

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PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)(1) Financial Statements

The information required by this Item is included in Item 8 of Part II of this report.

(a)(2) Financial Statement Schedules

The information required by this item is included in Item 8 of Part II of this report.

(a)(3) Exhibits

See Item 15(b) below.

(b) Exhibits

2.1	Separation Agreement, dated October 27, 2004, among DreamWorks Animation L.L.C., DreamWorks Animation SKG, Inc. and DreamWorks L.L.C.*
3.1	Restated Certificate of Incorporation of DreamWorks Animation SKG, Inc.*
3.2	By-laws of DreamWorks Animation SKG, Inc.*
4.1	Specimen Class A Common stock certificate*
4.2	Restated Certificate of Incorporation of DreamWorks Animation SKG, Inc. (filed as Exhibit 3.1 hereto)
4.3	Registration Rights Agreement, dated October 27, 2004, among DreamWorks Animation SKG, Inc., DWA Escrow LLLP, M&J K Dream Limited Partnership, M&J K B Limited Partnership, DG-DW, L.P., DW Lips, L.P., DW Investment II, Inc. and the other stockholders party thereto*
10.1	DreamWorks Animation SKG, Inc. 2004 Omnibus Incentive Compensation Plan*
10.2	Formation Agreement, dated October 27, 2004, among DreamWorks Animation SKG, Inc., DreamWorks L.L.C., DWA Escrow LLLP and the stockholders and other parties named therein*
10.3	Stockholder Agreement, dated October 27 , 2004, among Holdco LLLP, M&J K B Limited Partnership, M&J K Dream Limited Partnership, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, L.P., Jeffrey Katzenberg and David Geffen*
10.4	Stockholder Agreement, dated October 27, 2004, among DreamWorks Animation SKG, Inc., Holdco LLLP, M&J K B Limited Partnership, M&J K Dream Limited Partnership, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, L.P., DW Investment II, Inc., Jeffrey Katzenberg, David Geffen and Paul Allen*
10.5	Distribution Agreement, dated October 7, 2004, between DreamWorks Animation SKG, Inc. and DreamWorks L.L.C.*
10.6	Services Agreement, dated October 7, 2004, between DreamWorks Animation SKG, Inc. and DreamWorks L.L.C.*
10.7	Assignment of Trademarks and Service Marks, dated October 27, 2004, between DreamWorks Animation L.L.C. and DreamWorks L.L.C.*
10.8	Trademark License Agreement, dated October 27, 2004, between DreamWorks Animation L.L.C. and DreamWorks L.L.C.*
10.9	Tax Receivable Agreement, dated October 27, 2004, between DreamWorks Animation SKG, Inc. and DW Investment II, Inc.*
10.10	Agreement Among DreamWorks L.L.C., DreamWorks Animation SKG, Inc. and Vivendi Universal Entertainment LLLP, dated as of October 7, 2004*
10.11	Amended and Restated Master Agreement, dated October 31, 2003, between DreamWorks L.L.C. and Vivendi Universal Entertainment LLLP (the “DW/Universal Master Agreement”)*

99

10.12	Exhibit A to the DW/Universal Master Agreement—Foreign Theatrical Distribution Agreement between DreamWorks L.L.C. and Universal City Studios, Inc.*
10.13	Exhibit B to the DW/ Universal Master Agreement—Home Video Fulfillment Services Agreement between DreamWorks L.L.C. and Universal City Studios, Inc.*
10.14	Amendment 2 to Exhibit B to the DW/Universal Master Agreement, dated January 15, 2002*
10.15	Exhibit D to the DW/ Universal Master Agreement—Theme Park Agreement between DreamWorks L.L.C. and Universal City Studios, Inc.*
10.16	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Jeffrey Katzenberg (as amended on March 24, 2005)*
10.17	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Roger Enrico*
10.18	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Ann Daly*
10.19	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Katherine Kendrick*
10.20	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Kristina M. Leslie*
10.21	Consulting Agreement dated October 8, 2004, between DreamWorks Animation SKG, Inc. and David Geffen*
10.22	Consulting Agreement dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Steven Spielberg*
10.23	Credit Agreement, dated October 27, 2004, among DreamWorks Animation SKG, Inc. and the lenders party thereto*
10.24	Limited Liability Limited Partnership Agreement of DWA Escrow LLLP, dated October 27, 2004*
10.25	Standstill Agreement, dated October 27, 2004 among DreamWorks Animation SKG, Inc., Steven Spielberg, DW Lips, L.P., M&J K B Limited Partnership, DG-DW, L.P. and DW Investment II, Inc.*
10.26	Agreement and Plan of Merger, dated October 7, 2004, between Pacific Data Images, Inc., DreamWorks Animation SKG, Inc. and DWA Acquisition Corp.*
10.27	Subordinated Loan Agreement, dated October 27, 2004, between DreamWorks Animation SKG, Inc. and Home Box Office, Inc.*
10.28	Share Withholding Agreement, dated March 23, 2005, between DreamWorks Animation SKG, Inc. and DreamWorks L.L.C.*
14	Code of Ethics*
21.1	List of subsidiaries of DreamWorks Animation SKG, Inc.*
23.1	Consent of Ernst & Young LLP*
24.1	Powers of Attorney*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350*

* Filed herewith

100

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed on behalf of the registrant by the undersigned, thereunto duly authorized on this 28th day of March, 2005.

DREAMWORKS ANIMATION SKG, INC.
By:	/S/    KRISTINA M. LESLIE
	Kristina M. Leslie
	Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/S/    JEFFREY KATZENBERG Jeffrey Katzenberg	Chief Executive Officer and Director	March 28, 2005
/S/     KRISTINA M. LESLIE Kristina M. Leslie	Chief Financial Officer	March 28, 2005
/S/     WILLIAM LOSCH William Losch	Chief Accounting Officer	March 28, 2005
* Roger A. Enrico	Chairman of the Board of Directors	March 28, 2005
* Paul G. Allen	Director	March 28, 2005
* Howard Schultz	Director	March 28, 2005
* Lewis W. Coleman	Director	March 28, 2005
* Mellody Hobson	Director	March 28, 2005
* Nathan Myhrvold	Director	March 28, 2005
* David Geffen	Director	March 28, 2005

*By:	/S/    KATHERINE KENDRICK, ESQ.,
	Katherine Kendrick Attorney-in-fact

EXHIBIT INDEX

Exhibits
2.1	Separation Agreement, dated October 27, 2004, among DreamWorks Animation L.L.C., DreamWorks Animation SKG, Inc. and DreamWorks L.L.C.*
3.1	Restated Certificate of Incorporation of DreamWorks Animation SKG, Inc.*
3.2	By-laws of DreamWorks Animation SKG, Inc.*
4.1	Specimen Class A Common stock certificate*
4.2	Restated Certificate of Incorporation of DreamWorks Animation SKG, Inc. (filed as Exhibit 3.1 hereto)
4.3	Registration Rights Agreement, dated October 27, 2004, among DreamWorks Animation SKG, Inc., DWA Escrow LLLP, M&J K Dream Limited Partnership, M&J K B Limited Partnership, DG-DW, L.P., DW Lips, L.P., DW Investment II, Inc. and the other stockholders party thereto*
10.1	DreamWorks Animation SKG, Inc. 2004 Omnibus Incentive Compensation Plan*
10.2	Formation Agreement, dated October 27, 2004, among DreamWorks Animation SKG, Inc., DreamWorks L.L.C., DWA Escrow LLLP and the stockholders and other parties named therein*
10.3	Stockholder Agreement, dated October 27 , 2004, among Holdco LLLP, M&J K B Limited Partnership, M&J K Dream Limited Partnership, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, L.P., Jeffrey Katzenberg and David Geffen*
10.4	Stockholder Agreement, dated October 27, 2004, among DreamWorks Animation SKG, Inc., Holdco LLLP, M&J K B Limited Partnership, M&J K Dream Limited Partnership, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, L.P., DW Investment II, Inc., Jeffrey Katzenberg, David Geffen and Paul Allen*
10.5	Distribution Agreement, dated October 7, 2004, between DreamWorks Animation SKG, Inc. and DreamWorks L.L.C.*
10.6	Services Agreement, dated October 7, 2004, between DreamWorks Animation SKG, Inc. and DreamWorks L.L.C.*
10.7	Assignment of Trademarks and Service Marks, dated October 27, 2004, between DreamWorks Animation L.L.C. and DreamWorks L.L.C.*
10.8	Trademark License Agreement, dated October 27, 2004, between DreamWorks Animation L.L.C. and DreamWorks L.L.C.
10.9	Tax Receivable Agreement, dated October 27, 2004, between DreamWorks Animation SKG, Inc. and DW Investment II, Inc.*
10.10	Agreement Among DreamWorks L.L.C., DreamWorks Animation SKG, Inc. and Vivendi Universal Entertainment LLLP, dated as of October 7, 2004*
10.11	Amended and Restated Master Agreement, dated October 31, 2003, between DreamWorks L.L.C. and Vivendi Universal Entertainment LLLP (the “DW/Universal Master Agreement”)*
10.12	Exhibit A to the DW/Universal Master Agreement—Foreign Theatrical Distribution Agreement between DreamWorks L.L.C. and Universal City Studios, Inc.*
10.13	Exhibit B to the DW/ Universal Master Agreement—Home Video Fulfillment Services Agreement between DreamWorks L.L.C. and Universal City Studios, Inc.*
10.14	Amendment 2 to Exhibit B to the DW/Universal Master Agreement, dated January 15, 2002*
10.15	Exhibit D to the DW/ Universal Master Agreement—Theme Park Agreement between DreamWorks L.L.C. and Universal City Studios, Inc.*
10.16	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Jeffrey Katzenberg (as amended on March 24, 2005)*

10.17	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Roger Enrico*
10.18	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Ann Daly*
10.19	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Katherine Kendrick*
10.20	Employment Agreement, dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Kristina M. Leslie*
10.21	Consulting Agreement dated October 8, 2004, between DreamWorks Animation SKG, Inc. and David Geffen*
10.22	Consulting Agreement dated October 8, 2004, between DreamWorks Animation SKG, Inc. and Steven Spielberg*
10.23	Credit Agreement, dated October 27, 2004, among DreamWorks Animation SKG, Inc. and the lenders party thereto*
10.24	Limited Liability Limited Partnership Agreement of DWA Escrow LLLP, dated October 27, 2004*
10.25	Standstill Agreement, dated October 27, 2004 among DreamWorks Animation SKG, Inc., Steven Spielberg, DW Lips, L.P., M&J K B Limited Partnership, DG-DW, L.P. and DW Investment II, Inc.*
10.26	Agreement and Plan of Merger, dated October 7, 2004, between Pacific Data Images, Inc., DreamWorks Animation SKG, Inc. and DWA Acquisition Corp.*
10.27	Subordinated Loan Agreement, dated October 27, 2004, between DreamWorks Animation SKG, Inc. and Home Box Office, Inc.*
10.28	Share Withholding Agreement, dated March 23, 2005, between DreamWorks Animation SKG, Inc. and DreamWorks L.L.C.*
14	Code of Ethics*
21.1	List of subsidiaries of DreamWorks Animation SKG, Inc.*
23.1	Consent of Ernst & Young LLP*
24.1	Powers of Attorney*
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350*

* Filed herewith

EX-2.1

EXHIBIT 2.1

SEPARATION AGREEMENT

by and among

DREAMWORKS L.L.C.,

DREAMWORKS ANIMATION L.L.C.,

and

DREAMWORKS ANIMATION SKG, INC.

Dated as of October 27, 2004

TABLE OF CONTENTS

		Page
ARTICLE I
Definitions
ARTICLE II
The Separation
SECTION 2.01.	Transfer of Contributed Assets and Assumption of Contributed Liabilities	20
SECTION 2.02.	Preferred Transactions and DWA LLC Transactions	22
SECTION 2.03.	PDI and Other Transactions	22
SECTION 2.04.	Termination of Agreements	23
SECTION 2.05.	Insurance Matters.	24
SECTION 2.06.	Documents Relating to Other Transfers of Assets and Assumption of Liabilities	25
SECTION 2.07.	Other Ancillary Agreements	25
SECTION 2.08.	Disclaimer of Representations and Warranties	25
SECTION 2.09.	Governmental Approvals and Consents	26
SECTION 2.10.	Novation of Contributed Liabilities	27
SECTION 2.11.	Novation of Liabilities other than Contributed Liabilities	28
SECTION 2.12.	Employee Benefit Arrangements	29
ARTICLE III
The IPO and Actions Pending the IPO
SECTION 3.01.	The IPO	33
SECTION 3.02.	Proceeds of the IPO	33
SECTION 3.03.	Charter; Bylaws	33

ARTICLE IV
Conditions Precedent to Consummation of Separation Transactions
SECTION 4.01.	Separation Date	33
ARTICLE V
Mutual Releases; Indemnification
SECTION 5.01.	Release of Pre-Closing Claims	34
SECTION 5.02.	Indemnification by the Corporation	36
SECTION 5.03.	Indemnification by the LLC	37
SECTION 5.04.	Indemnification Obligations Net of Insurance Proceeds and Other Amounts; Shared Contract Liabilities	38
SECTION 5.05.	Procedures for Indemnification of Third Party Claims	38
SECTION 5.06.	Additional Matters	39
SECTION 5.07.	Remedies Cumulative	40
SECTION 5.08.	Survival of Indemnities	40
ARTICLE VI
Certain Business Matters
SECTION 6.01.	Certain Business Matters	40
SECTION 6.02.	Late Payments	41
ARTICLE VII
Exchange of Information; Confidentiality
SECTION 7.01.	Agreement for Exchange of Information; Archives	41
SECTION 7.02.	Ownership of Information	42
SECTION 7.03.	Compensation for Providing Information	42
SECTION 7.04.	Record Retention	43
SECTION 7.05.	Limitations of Liability	43

2

SECTION 7.06.	Other Agreements Providing for Exchange of Information	43
SECTION 7.07.	Production of Witnesses; Records; Cooperation	43
SECTION 7.08.	Confidentiality	44
SECTION 7.09.	Protective Arrangements	44
ARTICLE VIII
Dispute Resolution
SECTION 8.01.	Disputes	45
SECTION 8.02.	Escalation; Mediation	45
SECTION 8.03.	Court Actions	46
ARTICLE IX
Further Assurances
SECTION 9.01.	Further Assurances	46
ARTICLE X
Termination
SECTION 10.01.	Termination by Mutual Consent	47
SECTION 10.02.	Effect of Termination	47
ARTICLE XI
Miscellaneous
SECTION 11.01.	Counterparts; Entire Agreement; Corporate Power	47
SECTION 11.02.	Governing Law	48
SECTION 11.03.	Assignability	48
SECTION 11.04.	Third Party Beneficiaries	48
SECTION 11.05.	Notices	48
SECTION 11.06.	Severability	49
SECTION 11.07.	Force Majeure	49

3

SECTION 11.08.	Publicity	49
SECTION 11.09.	Expenses	49
SECTION 11.10.	Headings	50
SECTION 11.11.	Survival of Covenants	50
SECTION 11.12.	Waivers of Default	50
SECTION 11.13.	Specific Performance	50
SECTION 11.14.	Amendments	50
SECTION 11.15.	Interpretation	50
SECTION 11.16.	Submission to Jurisdiction; Waivers	50
SECTION 11.17.	Special Damages	51

4

THIS SEPARATION AGREEMENT, dated as of October 27, 2004, is by and among DREAMWORKS L.L.C., a Delaware limited liability company (the “LLC”), DREAMWORKS ANIMATION L.L.C., a Delaware limited liability company (“DWA LLC”), and DREAMWORKS ANIMATION SKG, INC., a Delaware corporation (the “Corporation”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I hereof.

R E C I T A L S

WHEREAS, DreamWorks Inc., a Delaware corporation (“DW Inc”) and a Subsidiary of the LLC, has previously contributed all of its various limited liability company interests (other than its 1% limited liability company interest in DWA LLC and its 1% limited liability company interest in DreamWorks Post-Production LLC) to Blue Sea Productions Inc., a Delaware corporation (“Blue Sea”);

WHEREAS, DW Inc has previously distributed all of its capital stock in Blue Sea to the LLC, leaving a 1% limited liability company interest in DWA LLC and a 1% limited liability company interest in DreamWorks Post-Production LLC as DW Inc’s only assets;

WHEREAS, the members of the LLC have determined that it is in the best interests of the LLC and its members to separate the LLC’s existing businesses into two independent businesses;

WHEREAS, the LLC and the Corporation have obtained all Material Consents or a waiver thereof;

WHEREAS, the PDI Merger Agreement has been entered into by the parties thereto;

WHEREAS, in furtherance of the foregoing, it is appropriate and desirable to effect the separation transactions, all as more fully described in this Agreement and the Ancillary Agreements;

WHEREAS, the members of the LLC have further determined that it is appropriate and desirable, on the terms and conditions contemplated hereby, to cause the Corporation, together with certain selling stockholders, to offer and sell in the IPO shares of Class A Common Stock; and

WHEREAS, it is appropriate and desirable to set forth the transactions required to effect the foregoing;

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the parties, intending to be legally bound, hereby agree as follows:

5

Definitions

For the purpose of this Agreement the following terms shall have the following meanings:

“Action” means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.

“Actual E Shares” means actual limited liability company interests in the LLC granted pursuant to the LLC’s Employee Equity Participation Plan.

“Affiliate” of any Person means a Person that controls, is controlled by, or is under common control with such Person. As used herein, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise.

“Agreement” means this Separation Agreement, including all of the Schedules and Exhibits hereto.

“Ancillary Agreements” means the Ancillary Services Agreement, the Film Distribution Agreement, the Services Agreement, the Trademark License Agreement, the Trademark Assignment, the Copyright Assignments and the Tax Receivable Agreement.

“Ancillary Services Agreement” means the Merchandise & Promotion Ancillary Services Agreement, dated as of the Separation Date, between the Corporation and the LLC.

“Animated Film Assumption Agreement” means the Animated Film Assumption Agreement, dated as of the Separation Date, between the Corporation and the LLC related to the assumption by the Corporation of indebtedness of the LLC incurred in connection with the purchase by the LLC of certain Animated Film Assets from DW Funding.

“Animated Motion Picture” means any means a Motion Picture that is created predominantly by one or more non-live action production methods (e.g., hand-drawn animation such as “Prince of Egypt”, CGI such as “Shrek”, stop-motion such as “Chicken Run” and/or motion capture such as “Polar Express”) (each, an “Animation Method”). However, a Motion Picture shall not be deemed to be an Animated Motion Picture if digital Animation Method(s) are used, in whole or in part, to create photorealistic characters that interact with live-action characters in live-action settings. (Photorealistic characters include both “real world” characters modified by an Animation Method e.g., Babe the pig in “Babe” and characters that are invented but which are depicted in a “real world” manner by an Animation Method (e.g., Yoda in “Star Wars II: Attack of the Clones,” Gollum in “Lord of the Rings,” the dinosaurs in “Jurassic Park,” the robots in “I, Robot,” and the toy soldiers in “Small Soldiers.”)

6

“Animated Motion Picture Business” means the business, activities and operations of the LLC and its Subsidiaries (prior to the Separation) that constitute the creation, development, pre-production, production and post-production of animated content for distribution into various existing and future media channels, including for theatrical, television, home video and internet distribution, as well as the business of merchandising consumer products and related materials; provided, for the avoidance of doubt, it is understood and agreed that the Animated Motion Picture Business shall not include the business activities and operations that constitute the distribution of Animated Motion Pictures (except to the extent that the merchandising of consumer products may be considered a “distribution” business).

“Animated Film Assets” means the Film Assets related primarily to the Animated Motion Pictures listed on Schedule 1.01(a), which, for the avoidance of doubt, excludes all Film Assets related primarily to the Retained Motion Pictures.

“Assets” means assets, properties and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person, including the following:

(a) all accounting and other books, records and files whether in paper, microfilm, microfiche, computer tape or disk, magnetic tape or any other form;

(b) all apparatus, computers, computer generated animation equipment, other animation equipment, other electronic data processing equipment, studio equipment, fixtures, machinery, other equipment, furniture, office equipment, automobiles, motor vehicles and other transportation equipment, special and general tools, test devices, prototypes and models and other tangible personal property;

(c) all inventories of materials, parts, raw materials, supplies, work-in-process and finished goods and products;

(d) all interests in real property of whatever nature, including easements, whether as owner, mortgagee, lessor, sublessor, lessee, sublessee or otherwise;

(e) all interests in any capital stock or other equity interests of any other Person, all bonds, notes, debentures or other securities issued by any other Person, all loans, advances or other extensions of credit or capital contributions to any other Person and all other investments in any Person;

(f) all license agreements, leases of personal property, open purchase orders for supplies, parts or services and other contracts, agreements or commitments;

7

(g) all deposits, letters of credit and performance and surety bonds;

(h) all written technical information, data, specifications, research and development information, engineering drawings, operating and maintenance manuals, animation techniques and processes and materials and analyses prepared by consultants and other third parties;

(i) all domestic and foreign patents, copyrights, trade names, trademarks, service marks and registrations and applications for any of the foregoing, mask works, trade secrets, inventions, other proprietary information, rights to films and television programs and licenses from third Persons granting the right to use any of the foregoing;

(j) all computer applications, programs and other software, including operating software, network software, firmware, middleware, design software, design tools, systems documentation, animation software and instructions;

(k) all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product literature, artwork, design, development and manufacturing files, vendor and customer drawings, formulations and specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents;

(l) all prepaid expenses, trade accounts and other accounts and notes receivable;

(m) all rights under contracts or agreements, all claims or rights against any Person arising from the ownership of any Asset, all rights in connection with any bids or offers and all claims, choices in action and similar rights, whether accrued or contingent;

(n) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution;

(o) all licenses, permits, approvals and authorizations which have been issued by any Governmental Authority;

(p) cash or cash equivalents, bank accounts, lock boxes and other deposit arrangements; and

(q) interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements.

“Blue Sea” has the meaning set forth in the recitals hereto.

“Class A Common Stock” means the Class A Common Stock, $0.0l par value per share, of the Corporation.

8

“Class B Common Stock” means the Class B Common Stock, $0.01 par value per share, of the Corporation.

“Class C Common Stock” means the Class C Common Stock, $0.01 par value per share, of the Corporation.

“Compensation Committee” has the meaning set forth in Section 2.13(e).

“Consents” means any consents, waivers or approvals from, or notification requirements to, any third parties.

“Contributed Assets” means all Assets used, held for use or intended to be used primarily in the operation or conduct of the Animated Motion Picture Business other than Excluded Assets, including (without limitation):

the Assets listed or described on Schedule 1.01(b);

the Animated Film Assets;

all intellectual property listed or described on Schedule 1.01(c);

all Corporation Contracts;

the LLC’s 99% limited liability company interest in DreamWorks Post-Production LLC;

the Redwood City Lease;

the Grandview Lease; and

all accounting and other books, records and files whether in paper, microfilm, microfiche, computer tape or disk, magnetic tape or any other form, in each case, primarily relating to the business and operations of the animation group of the LLC or any of its Subsidiaries

“Contributed Liabilities” means (without duplication) (a) all Liabilities primarily related to, arising out of or resulting from the operation or conduct of the Animated Motion Picture Business, including any Liabilities to the extent relating to, arising out of or resulting from any Contributed Asset, in each case whether arising before, on or after the Separation Date, (b) all Shared Contract Liabilities, whether arising before, on or after the Separation Date, (c) all Liabilities of, or relating to, DWA Employees arising out of, or resulting from future, present or former employment with the Animated Motion Picture Business (including any Liabilities relating to, arising out of or resulting from any Plan to the extent they relate to DWA Employees), (d) the Revolver Debt that the Corporation expressly assumes on the Separation Date, (e) all Liability for the Advances (as defined in the Universal Agreement) that the Corporation expressly assumes pursuant to the Universal Interparty Agreement, (f) all Liability for the subordinated debt that the Corporation expressly assumes pursuant to the HBO Loan

9

Agreement, (g) all Liabilities relating to the actions, suits, claims and proceedings listed on Schedule 1.01(d), (h) all Liabilities primarily related to, arising out of or resulting from the merger of PDI and Merger Sub, including, without limitation, any claim brought by or on behalf of a stockholder of PDI, (i) all Liabilities primarily related to the business and operations of PDI, (j) all Liabilities of the LLC under any agreement between the LLC and any of the directors or director nominees of the Corporation entered into prior to the Separation Date that indemnifies such directors or directors nominees for actions taken in their capacity as directors or director nominees of the Corporation (or, in the case of Roger Enrico, as an employee of the Corporation) and (k) all Liabilities that the Corporation expressly assumes pursuant to the Animated Film Assumption Agreement.

“Contribution” has the meaning set forth in the Formation Agreement.

“Contributing Member” has the meaning set forth in the Formation Agreement.

“Copyright Assignments” means the Copyright Assignments, dated as of the Separation Date, between DW Funding and the LLC and between the LLC and the Corporation or DWA LLC.

“Corporation” has the meaning set forth in the preamble hereto.

“Corporation Contracts” means the contracts, agreements and other documents listed or described on Schedule 1.01(e).

“Corporation Credit Facility” means the Credit Agreement to be entered into by the Corporation, as borrower, the agent banks named therein and the other lending banks from time to time party thereto.

“Corporation Group” means the Corporation, each Subsidiary of the Corporation, including PDI, and each other Affiliate of the Corporation before or after the Separation Date (other than the LLC and its Subsidiaries or any Person that controls the Corporation before or after the Separation Date, including, for the avoidance of doubt, Jeffrey Katzenberg, Steven Spielberg, David Geffen and Paul Allen).

“Corporation Indemnitees” has the meaning set forth in Section 5.03.

“Corporation Shared Contract” means those contracts set forth on Schedule 1.01(i) under the caption Corporation Shared Contract.

“Distribution Servicing Agreements” has the meaning set forth in the Film Distribution Agreement.

“DWA LLC Interest” means an interest in DreamWorks Animation L.L.C., a Delaware limited liability company.

“DWA Restricted Stock” means a share of Class A Common Stock granted pursuant to the 2004 Omnibus Incentive Compensation Plan that is subject to certain transfer restrictions, forfeiture provisions and/or other terms and conditions of the applicable award agreement governing such award.

10

“DW Distribution” means the distribution, in accordance with Article VIII of the Sixth Amended and Restated Limited Liability Company Agreement of the LLC, as amended up to and including its third amendment, by the LLC of all of its right, title and interest in and to the DWA LLC Interests held directly by the LLC (other than the amount of DWA LLC Interests to be used for the Preferred Redemptions as set forth on Schedule 2.01(a) of the Formation Agreement) to the members of the LLC listed on Schedule 1.01(f) hereto, in the amounts set forth on Schedule 1.01(f).

“DW Funding” means DW Funding, LLC, a Delaware limited liability company.

“DW Inc” has the meaning set forth in the recitals hereto.

“DWA Employee” means any individual who is (a) either actively employed by, or on a leave of absence from (including short-term or long-term disability), any Person in the Corporation Group on the Separation Date, (b) employed by the Corporation Group following the Separation Date, (c) a DWA Terminated Employee or (d) listed on Schedule 1.01(g).

“DWA Option” means an option to purchase shares of Class A Common Stock granted pursuant to the 2004 Omnibus Incentive Compensation Plan.

“DWA Terminated Employee” means any individual who is (a) a former employee of any Person in the LLC Group whose primary responsibilities were to the Animated Motion Picture Business and who was terminated on or before the Separation Date or (b) a former employee any Person in the Corporation Group, provided, however that a DWA Terminated Employee shall not include any individual who otherwise would be a DWA Terminated Employee, but who is subsequently employed by any Person in the LLC Group prior to the Separation Date.

“DWA LLC” has the meaning set forth in the preamble hereto.

“Employee Equity Participation Plan” means the amended and restated employee equity participation plan of DreamWorks L.L.C. and its subsidiaries for employees and officers of the LLC.

“Escalation Notice” has the meaning set forth in Section 8.02.

“Exercise Price” has the meaning set forth in the 2004 Omnibus Incentive Compensation Plan.

“Exchange Ratio” has the meaning set forth in the PDI Merger Agreement.

“Excluded Insurance” has the meaning set forth in Section 2.05.

11

“Excluded Assets” means (i) all Retained Motion Pictures and (ii) all Assets listed on Schedule 1.01(h) hereto.

“Excluded Liabilities” means (a) all Liabilities arising from any Distribution Servicing Agreements (other than those described in clause (e) and (f) of the definition of Contributed Liability), whether before or after the Separation Date, and all Liabilities of the LLC in its capacity as Distributor under the Film Distribution Agreement, provided that the foregoing shall not in any way abrogate or limit any Liabilities of the Corporation to the LLC under the Film Distribution Agreement, including those specified in Section 10 thereof (which Liabilities shall not be Excluded Liabilities), (b) any indebtedness that the LLC incurs following the Separation Date under the LLC Credit Facility, (c) any Liability of DreamWorks Post-Production LLC that is not primarily related to the Animated Motion Picture Business and (d) any Liability relating to, arising out of or resulting from the operation or conduct by any Person in the LLC Group of any business other than the Animated Motion Picture Business.

“Fair Market Value” has the meaning set forth in the 2004 Omnibus Incentive Compensation Plan.

“Film Assets” means, with respect to any Motion Picture, all of the specified party’s right, title and interest in (i) the Film Property for the Motion Picture, (ii) the Tangible Film Materials relating to such Motion Picture, (iii) all Gross Receipts derived from or in respect of such Motion Picture, and (iv) all other products, proceeds and rights or other interests of whatever nature relating to the Motion Picture.

“Film Distribution Agreement” means the Distribution Agreement, dated as of October 7, 2004, by and between the LLC and the Corporation.

“Film Securitization Facility” means DW Funding’s structured financing facility, which is secured by certain rights in the LLC Group’s film library, including certain Animated Film Assets.

“Film Property” means, with respect to any Motion Picture, all of the specified party’s right, title and interest in and to the following:

(i) all common law and statutory copyrights, rights in copyrights, interests in copyrights, applications for copyrights and renewal and extensions in copyrights, domestic and foreign, from time to time with respect to such Motion Picture and to all Literary Material upon which such Motion Picture is based, including the original screenplay for such Motion Picture, or any part thereof, including without limitation all rights throughout the universe to use, reproduce, distribute, license, sublicense, create derivative works of, publicly perform, publicly display, digitally perform, make, have made, sell, offer for sale, import and in any way exploit such Motion Picture and all Literary Material upon which such Motion Picture is based, in any media now known or hereafter devised;

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(ii) the ownership of and rights to use and sublicense the use of (a) the title of such Motion Picture (to the extent such title is a registered trademark) in any and all print styles and forms and in connection with the distribution, marketing and promotion of such Motion Picture, (b) all trade marks and service marks associated with the Motion Picture, and (c) all goodwill associated therewith or symbolized thereby;

(iii) the license to use, in connection with such Motion Picture, all Literary Material, and all common law and statutory copyrights, and rights and interests in copyrights and renewals and extensions of copyrights, in and to said Literary Material;

(iv) all rights in all agreements and understandings (whether or not evidenced in writing) with third parties primarily relating to such Motion Picture or to any of the elements thereto, and any rights derived therefrom or related thereto, including all rights derived under contract with writers, performers, trademark holders, copyright holders, licensors, licensees, distributors, fulfillment service providers and others with respect to the Picture;

(v) the license to use, in connection with such Motion Picture, all original or licensed music included in the soundtrack of such Motion Picture and all musical material created for such Motion Picture or upon which such Motion Picture is based or to be based, in whole or in part, and all common law and statutory copyrights, and rights and interests in copyrights and renewals and extensions of copyrights, in and to said musical material;

(vi) all titles, designs, artwork, characters, stills, drawings, film materials, computer models, logos, stories, plots and any other intellectual properties and rights in, to, or arising out of the Motion Picture or any element thereof regardless of whether created by the specified party or by any other person on the specified party’s behalf;

(vii) all common law and statutory copyrights, rights in copyrights, interests in copyrights, applications for copyrights and renewal and extensions in copyrights (domestic and foreign) trademarks, service marks and all other proprietary rights in and to all documentary materials (including without limitation “behind-the-scenes” productions and programming, “making-of” productions and programming) and materials commonly termed “bonus materials” on DVD’s (including without limitation deleted scenes, “bloopers”, director’s commentaries, alternate and extended endings, interviews) and all animation created for whatever purpose relating to such Motion Picture (including but not limited to custom animation created in connection with any promotions and merchandising programs) and all rights throughout the universe to use, reproduce, distribute, license, sublicense, create derivative works of, publicly perform, publicly display,

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digitally perform, make, have made, sell, offer for sale, import and in any way exploit such materials and animation, except to the extent that any of the above constitutes “Marketing Materials” as that term is defined in the Film Distribution Agreement;

(viii) joint ownership of all common law and statutory copyrights, rights in copyrights, interests in copyrights, applications for copyrights and renewal and extensions in copyrights (domestic and foreign) trademarks, service marks and all other proprietary rights in and to “Marketing Materials” relating to such Motion Picture as that term is defined in the Film Distribution Agreement; and

(ix) all rights to sue at law or in equity for any infringement, impairment or other unauthorized use or conduct in derogation of the copyrights, trademark rights or other rights described herein, including the right to receive all proceeds and damages therefrom.

“Formation Agreement” means the Formation Agreement, dated as of the Separation Date, by and among the Corporation, the LLC, a limited liability limited partnership to be named and the Members party thereto.

“Founders Shares Awards” means 100 shares of Class A Common Stock, grossed-up for withholding taxes.

“401(k) Plan”, when immediately preceded by “LLC” means the DreamWorks 401(k) Plan. When immediately preceded by “Corporation”, “401(k) Plan” shall mean the corresponding qualified profit-sharing plan, which contains a Code Section 401(k) feature, that the Corporation shall establish, sponsor, and maintain pursuant to this Agreement.

“FSA Plan”, when immediately preceded by “LLC” means the health flexible spending arrangement component of the DreamWorks L.L.C. Section 125 Plan. When immediately preceded by “Corporation,” “FSA Plan” shall mean the corresponding health flexible spending arrangement operating through a plan or other arrangement that satisfies the requirements of Section 125 of the Code that the Corporation shall establish, sponsor and maintain pursuant to this Agreement.

“Governmental Approvals” means any notices, reports or other filings to be made, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority.

“Governmental Authority” means any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

“Grandview Lease” means the Standard Industrial/Commercial Multi-Tenant Lease – Gross, dated as of August 7, 1996, between the LLC and the lessors party thereto, as amended.

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“Gross Receipts” means, with respect to any Motion Picture, all amounts paid or payable in cash to the owner of the Film Property in such Motion Picture.

“Group” means either the LLC Group or the Corporation Group, as the context requires.

“HBO Loan Agreement” means the Subordinated Loan Agreement, dated as of the Separation Date, between Home Box Office, Inc. and the Corporation, and the promissory note related thereto.

“Hybrid Motion Picture” means a Motion Picture that is predominantly live-action, but in which at least two of the four characters with the most screen time, or in which a majority of the characters with speaking roles, are created (non-photorealistically) by an Animation Method. “Who Framed Roger Rabbit,” “Looney Tunes – Back in Action” and “Space Jam” would be Hybrid Motion Pictures.

“Indemnifying Party” has the meaning set forth in Section 5.04(a).

“Indemnitee” has the meaning set forth in Section 5.04(a).

“Indemnity Payment” has the meaning set forth in Section 5.04(a).

“Information” means information in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, films, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

“Insurance Proceeds” means those monies (a) received by an insured from an insurance carrier or (b) paid by an insurance carrier on behalf of the insured, in each such case net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof.

“IPO” means the initial public offering by the Corporation and the selling stockholders identified in the IPO Registration Statement of shares of Class A Common Stock pursuant to the IPO Registration Statement.

“IPO Document” has the meaning set forth in Section 5.02.

“IPO Registration Statement” means the registration statement on Form S-l (File No. 333-117528) filed under the Securities Act, pursuant to which the Class A Common Stock to be issued in the IPO will be registered, together with all amendments thereto.

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“Liabilities” means any and all losses, claims, charges, debts, demands, actions, causes of action, suits, damages, obligations, payments, costs and expenses, reckonings, indemnities and similar obligations, covenants, controversies, guarantees, make whole agreements and similar obligations, and other liabilities and requirements, including all contractual obligations, whether absolute or contingent, matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or unknown, whenever arising, and including those arising under any law, rule, regulation, Action, threatened or contemplated Action (including the costs and expenses of demands, assessments, judgments, settlements and compromises relating thereto and attorneys’ fees and any and all costs and expenses, whatsoever reasonably incurred in investigating, preparing or defending against any such Actions or threatened or contemplated Actions), order or consent decree of any Governmental Authority or any award of any arbitrator or mediator of any kind, and those arising under any contract, commitment or undertaking, including those arising under this Agreement or any Ancillary Agreement, in each case, whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person.

“Literary Material” means written matter, whether published or unpublished, in any form, including a novel, book, article, treatment, outline, poem, screenplay, teleplay, story, manuscript, letter, play or otherwise, which may be included in or upon which a Motion Picture may be based.

“Live Action Motion Picture” means an means a Motion Picture which is not an Animated Motion Picture or a Hybrid Motion Picture, as defined above.

“LLC” has the meaning set forth in the preamble hereto.

“LLC Credit Facility” means the Credit Agreement, dated as of August 22, 2002, between the LLC, JPMorgan Chase Bank, as administrative agent (the “Administrative Agent”, and the other agents and lending banks from time to time party thereto, as may be amended, modified, restated or replaced at any time.

“LLC Employee Distribution” means the distribution of all of the LLC’s right, title and interest in a number of shares of Class A Common Stock held by the LLC having a value (based on the initial public offering price per share appearing on the cover page of the IPO prospectus, without deduction for underwriters’ fees or discounts) necessary for the LLC to make the transfers in respect of the equity-based compensation awards of the LLC described in Sections 2.12(k) and 2.12(l).

“LLC Group” means the LLC, each Subsidiary of the LLC and each other Affiliate of the LLC before or after the Separation Date (other than the Corporation and its Subsidiaries or any Person that controls the LLC before or after the Separation Date including, for the avoidance of doubt, Jeffrey Katzenberg, Steven Spielberg, David Geffen and Paul Allen).

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“LLC Operating Agreement” means the Sixth Amended and Restated Limited Liability Company Agreement, dated as of March 21, 2003, of the LLC, as amended by each amendment up to and including the third amendment thereto.

“LLC Indemnitees” has the meaning set forth in Section 5.02.

“LLC Shared Contract” means those contracts set forth on Schedule 1.01(i) under the caption LLC Shared Contract.

“Material Consents” means the consents listed on Schedule 1.01(j).

“Member” has the meaning set forth in the Formation Agreement.

“Merger Sub” means DWA Acquisition Corp., a Delaware corporation that is wholly owned by the Corporation.

“Motion Picture” means audiovisual product produced and distributed of every kind and character whatsoever, including all present and future technological developments, whether produced by means of any photographic, electrical, electronic, mechanical or other processes or devices now known or hereafter devised, and their accompanying devices and processes whether pictures, images, visual and aural representations are recorded or otherwise preserved for projection, reproduction, exhibition, or transmission by any means or media now known or hereafter devised in such manner as to appear to be in motion or sequence, including computer generated pictures and graphics other than video games.

“Motion Picture Copy” means any tangible physical embodiment of a Motion Picture or any portion thereof, including any negative or positive Motion Picture film in any gauge, any video or electronic recording, whether on magnetic tape, electronic disc or any other physical material or substance of any kind produced by means of any photographic, electrical, electronic, mechanical or other process or device now know or hereafter devised, on or with respect to which a Motion Picture or any part thereof is printed, imprinted, recorded, reproduced, duplicated or otherwise preserved.

“PDI” means Pacific Data Images, Inc., a California corporation.

“PDI Inc Value” has the meaning set forth in Section 2.03.

“PDI Interest” means the limited liability company interest in PDI LLC held by the LLC in the form of Class D Stock (as defined in PDI LLC’s limited liability company agreement) having a participation percentage of 40%.

“PDI LLC” means Pacific Data Images, LLC, a Delaware limited liability company.

“PDI LLC Value” has the meaning set forth in Section 2.03.

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“PDI Merger Agreement” means the Merger Agreement, to be dated as of October 7, 2004, by and between Merger Sub and PDI.

“Person” means an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

“Phantom E Stock” means phantom limited liability company interests in the LLC granted pursuant to the LLC’s Employee Equity Participation Plan.

“Phantom E Options” means a phantom limited liability company option in the LLC granted pursuant to LLC’s Employee Equity Participation Plan.

“Plan” means any plan, policy, program, payroll practice, arrangement, contract, trust, insurance policy, or any agreement or funding vehicle providing compensation or benefits to employees, former employees, directors, consultants or former consultants of the LLC or the Corporation.

“Preferred Contributions” has the meaning set forth in the Formation Agreement.

“Preferred Redemptions” has the meaning set forth in the Formation Agreement.

“Prime Rate” means the rate which JPMorgan Chase Bank (or any successor thereto or other major money center commercial bank agreed to by the parties hereto) announces from time to time as its prime lending rate, as in effect from time to time.

“Prospectus” means each preliminary, final or supplemental prospectus forming a part of the IPO Registration Statement.

“Redwood City Lease” means the Triple Net Space Lease, dated as of May 22, 2002, between Pacific Shores Development LLC, as Lessor, and the LLC, as Lessee.

“Residual DW Distribution” has the meaning set forth in the Formation Agreement.

“Retained Motion Pictures” means any picture released prior to the Separation Date by the LLC under the “Go Fish” label.

“Revolver Debt” means $325 million of indebtedness outstanding immediately prior to the Separation Date under the LLC Credit Facility.

“RSU” means a restricted stock unit award granted pursuant to the 2004 Omnibus Incentive Compensation Plan that represents an unfunded and unsecured promise to deliver Class A Common Stock, cash, other securities, other awards or other property in accordance with the terms of the applicable agreement governing such award.

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“SAR” means a stock appreciation right award granted pursuant to the 2004 Omnibus Incentive Compensation Plan that represents an unfunded and unsecured promise to deliver Class A Common Stock, cash, other securities, other awards or other property equal in value to the excess, if any, of the Fair Market Value per share of Class A Common Stock over the per share Exercise Price of the SAR, subject to the terms of the applicable agreement governing such award.

“Securities Act” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

“Security Interest” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer or other encumbrance of any nature whatsoever.

“Separation” has the meaning set forth in Section 4.01.

“Separation Date” has the meaning set forth in Section 4.01.

“Services Agreement” means the Services Agreement, dated as of October 7, 2004, by and between the LLC and the Corporation.

“Shared Contract Liability” means any Liability related to, arising out of or resulting from a Corporation Shared Contract or an LLC Shared Contract.

“Small Animated Motion Pictures” means an Animated Motion Picture whose acquisition or production cost is equal to or less than $10,000,000.

“Subsidiary” means, when used with respect to any Person, (a) a corporation in which such Person and/or one or more Subsidiaries of such Person, directly or indirectly, owns capital stock having a majority of the total voting power in the election of directors of all outstanding shares of all classes and series of capital stock of such corporation entitled generally to vote in such election; and (b) any other Person (other than a corporation) in which such Person and/or one or more Subsidiaries of such Person, directly or indirectly, has (i) a majority ownership interest or (ii) the power to elect or direct the election of a majority of the members of the governing body of such first-named Person.

“Tangible Film Materials” has the meaning set forth in the Film Distribution Agreement.

“Tax Receivable Agreement” means the Tax Receivable Agreement, dated as of the Separation Date, among the Corporation and an entity controlled by Paul Allen.

“Third Party Claim” has the meaning set forth in Section 5.05(a).

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“Trademark Assignment” means the Trademark Assignment, dated as of the Separation Date, by and between the LLC and the Corporation.

“Trademark License Agreement” means the Trademark License Agreement, dated as of the Separation Date, by and between the LLC and the Corporation, providing for, among other things, the license of the “DreamWorks” trademark by the Corporation to the LLC.

“2004 Omnibus Incentive Compensation Plan” means the Corporation’s 2004 Omnibus Incentive Compensation Plan for any director, officer, employee or consultant of the Corporation or any of its Affiliates.

“Underwriters” means the underwriters for the IPO.

“Underwriting Agreement” means the underwriting agreement to be entered into among the Corporation, the selling stockholders named therein and the Underwriters with respect to the IPO.

“Universal Agreement” means the Master Agreement, amended and restated as of October 31, 2003, between the LLC and Vivendi Universal Entertainment LLLP, as assignee of Universal Studios, Inc.

“Universal Interparty Agreement” means the Interparty Agreement, dated as of the Separation Date, between Vivendi Universal Entertainment LLLP, the LLC and the Corporation.

The Separation

Transfer of Contributed Assets and Assumption of Contributed Liabilities. i.On the Separation Date and subject to Section 2.09 hereof, immediately prior to consummation of the transactions contemplated in Section 2.01(b), the LLC shall acquire from DW Funding all of DW Funding’s right, title and interest in all Animated Film Assets, in each case, free from any encumbrances in connection with the Film Securitization Facility and all related Liabilities.

On the Separation Date and subject to Section 2.09 hereof, (i) the LLC shall contribute, assign, transfer, convey and deliver to DWA LLC, and shall cause its applicable Subsidiaries to contribute, assign, transfer, convey and deliver to DWA LLC, an undivided 99% interest in all of the LLC’s and such Subsidiaries’ respective rights, titles and interests in and to all Contributed Assets not then held by DWA LLC or PDI, (ii) the LLC shall contribute, assign, transfer, convey and deliver to DW Inc, and shall cause its applicable Subsidiaries to contribute, assign, transfer, convey and deliver to DWA LLC, an undivided 1% interest in all of the LLC’s and such Subsidiaries’ respective rights, titles and interests in and to all Contributed Assets not then held by DWA LLC or PDI and (iii) DW Inc shall subsequently contribute, assign, transfer, convey and deliver to DWA LLC its undivided 1% interest in the Contributed Assets received in subparagraph (ii) to DWA LLC.

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On the Separation Date, DWA LLC shall assume, and agree to pay, perform, satisfy and discharge on a timely basis all of the Contributed Liabilities (other than any Excluded Liability) in accordance with their respective terms, regardless of (i) when or where such Liabilities arose or arise, (ii) whether the facts on which they are based occurred on, prior to or subsequent to the Separation Date, (iii) where or against whom such Liabilities are asserted or determined, (iv) whether asserted or determined on, prior to or subsequent to the Separation Date or (v) whether arising from or alleged to arise from negligence, recklessness, violation of law, fraud or misrepresentation by any Person in the LLC Group, provided, however, that the foregoing clause (v) shall not limit the rights of DWA LLC or the Corporation to make a claim against any Person in the LLC Group for Liabilities suffered by any person in the Corporation Group as a direct result of such actions on the part of a Person in the LLC Group after the Separation Date and the Corporation shall be obligated for Shared Contract Liabilities only as set forth in Section 2.01(d). It is mutually agreed by the parties hereto that, solely with respect to the assumption by DWA LLC of the Revolver Debt and the indebtedness assumed by the Corporation pursuant to the Animated Film Assumption Agreement (collectively, the “Revolver Debt Assumption”), the Administrative Agent (on behalf of the lenders party to the LLC Credit Facility) is a third-party beneficiary of this Section 2.01(c) and the provisions of this Section 2.01(c) may not be amended without the prior written consent of the Administrative Agent (on behalf of the lenders party to the LLC Credit Facility).

On and after the Separation Date, the LLC shall make available to the Corporation Group the benefits and rights under each LLC Shared Contract to the extent such benefits and rights have historically been provided to the Animation Motion Picture Business; provided that (i) no Person in the Corporation Group shall take any action, or refrain from taking any action, if (A) such action or inaction is reasonably likely to or does result in a breach on the part of any Person in the LLC Group under any LLC Shared Contract and (B) such Person in the Corporation Group would otherwise be obligated to take or not take such action under the LLC Shared Contract had such Person become severally liable under the LLC Shared Contract on the Separation Date, (ii) each Person in the Corporation Group shall cooperate with the LLC and, at the LLC’s request, take such actions that are reasonably necessary or desirable to ensure that the LLC is able to perform its obligations constituting Shared Contract Liabilities under such LLC Shared Contract and (iii) to the extent any Liability under an LLC Shared Contract is either (x) specifically allocated to the Animated Motion Picture Business or (y) related to the benefits and rights made available to the Corporation Group under such LLC Shared Contract, such Shared Contract Liabilities shall be, as between the LLC and the Corporation, the responsibility of the Corporation. It is understood that, unless otherwise mutually agreed, there will not be a novation or assignment of the Shared Contract Liabilities and that the Corporation shall perform its obligations hereunder by taking all such actions as are reasonably necessary or desirable to ensure that the LLC is able to perform all of the obligations constituting Shared Contract Liabilities under each LLC Shared Contract.

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On and after the Separation Date, the Corporation shall make available to the LLC Group the benefits and rights under each Corporation Shared Contract to the extent such benefits and rights have historically been provided to the LLC Group; provided that (i) no Person in the LLC Group shall take any action, or refrain from taking any action, if (A) such action or inaction is reasonably likely to or does result in a breach on the part of any Person in the Corporation Group under any Corporation Shared Contract and (B) such Person in the LLC Group would otherwise be obligated to take or not take such action under the Corporation Shared Contract had such Person become severally liable under the Corporation Shared Contract on the Separation Date, (ii) each Person in the LLC Group shall cooperate with the Corporation and, at the Corporation’s request, take such actions that are reasonably necessary or desirable to ensure that the Corporation is able to perform its obligations constituting Shared Contract Liabilities under such Corporation Shared Contract and (iii) to the extent any Liability under a Corporation Shared Contract is either (x) specifically allocated to the LLC Group or (y) related to the benefits and rights made available to the LLC Group under such Corporation Shared Contract, such Corporation Shared Contract Liabilities shall be, as between the LLC and the Corporation, the responsibility of the LLC. It is understood that, unless otherwise mutually agreed, there will not be a novation or assignment of the Corporation Shared Contract Liabilities and that the LLC shall perform its obligations hereunder by taking all such actions as are reasonably necessary or desirable to ensure that the Corporation is able to perform all of the obligations constituting Shared Contract Liabilities under each Corporation Shared Contract.

Preferred Transactions and DWA LLC Transactions. On the Separation Date, immediately after effecting the transactions contemplated in Section 2.01 and, in the case of (b), (c) and (d) of this Section 2.02, subject to the effectiveness of the Underwriting Agreement and the execution of the Formation Agreement:

the LLC shall make the DW Distribution;

the applicable Persons shall make the Preferred Contributions;

the LLC shall make the Preferred Redemptions; and

each applicable Person shall make the Contribution.

PDI and Other Transactions. On the Separation Date, immediately after effecting the transactions contemplated in Section 2.02:

the LLC shall contribute, assign, transfer, convey and deliver to the Corporation all its right, title and interest in and to the PDI Interest in exchange for that number of shares of Class A Common Stock determined by:

multiplying $6.50 by the total number of outstanding shares of PDI common stock on the Separation Date (the “PDI Inc Value”) and multiplying the result by 1.66 (the “PDI LLC Value”); and then

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dividing the excess of the PDI LLC Value over the PDI Inc Value by the initial public offering price per share of Class A Common Stock in the IPO, without deduction for underwriter’s discounts or commissions.

the merger of Merger Sub with and into PDI shall be consummated in accordance with the PDI Merger Agreement;

the Corporation shall contribute, assign, transfer, convey and deliver to PDI all its right, title and interest in and to the PDI Interest;

the LLC shall make the LLC Employee Distribution; and

the LLC shall make the Residual DW Distribution.

Termination of Agreements. ii.Except as set forth in Section 2.04(b), in furtherance of the releases and other provisions of Section 5.01 hereof, the Corporation and each Person in the Corporation Group, on the one hand, and the LLC and each Person in the LLC Group, on the other hand, hereby terminate any and all agreements, arrangements, commitments or understandings, whether or not in writing, between or among the Corporation and/or any Person in the Corporation Group, on the one hand, and the LLC and/or any Person in the LLC Group, on the other hand, effective as of the Separation Date. No such terminated agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Separation Date, and the net amount of all intercompany Liabilities owed by the Corporation or any Subsidiary in the Corporation Group to the LLC or any Subsidiary in the LLC Group that do not constitute Contributed Liabilities shall be deemed capital contributions of the LLC to the Corporation. Each party shall, at the reasonable request of any other party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

The provisions of Section 2.04(a) shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof): (i) this Agreement and the Ancillary Agreements (and each other agreement or instrument expressly contemplated by this Agreement or any Ancillary Agreement to be entered into by any of the parties hereto or any Person in their respective Groups); (ii) any agreements, arrangements, commitments or understandings listed or described on Schedule 2.04(b)(ii); (iii) any agreements, arrangements, commitments or understandings to which any Person other than the parties hereto and their respective Affiliates is a party (it being understood that to the extent that the rights and obligations of the parties and the Persons in their respective Groups under any such agreements, arrangements, commitments or understandings constitute Contributed Assets or Contributed Liabilities, they shall be assigned pursuant to Section 2.01); and (iv) any other agreements, arrangements, commitments or understandings that this Agreement or any Ancillary Agreement expressly contemplates will survive the Separation Date.

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Insurance Matters.

The Corporation acknowledges that, following the Separation Date, no Person in the Corporation Group, nor any of their respective officers, directors or employees, will be covered by directors’ and officers’ insurance policies or errors and omissions insurance (collectively, the “Excluded Insurance”); provided that the LLC will maintain the Excluded Insurance for a period of not less than three years from the Separation Date and will assist the Corporation in making any claims thereunder with respect to events occurring prior to the Separation Date to the extent covered thereby. The Corporation acknowledges and agrees that, prior to the Separation Date, it shall obtain its own Excluded Insurance with respect to events occurring prior to the Separation that would not be covered by the LLC’s policies (e.g. IPO-related claims). With respect to all other insurance coverage, as soon as reasonably practicable following the Separation Date, but in no event later than January 1, 2005, the Corporation shall obtain and maintain insurance policies (whether directly or through arrangements made through the LLC’s risk management department) covering its risk of loss and such insurance policies shall be separate and apart from the LLC’s insurance programs. Notwithstanding the foregoing the LLC shall use commercially reasonable efforts to assist the Corporation in the transition to its own separate insurance programs and shall provide the Corporation with any information that is in its possession and is reasonably available and necessary to obtain insurance coverage for the Corporation. In addition, the LLC shall provide risk management services as set forth in, and subject to the terms of, the Services Agreement. Prior to January 1, 2005, the LLC shall, subject to insurance market conditions and other factors beyond its control, maintain policies of insurance (other than Excluded Insurance), including for the benefit of the Corporation or any Person in the Corporation Group, that are comparable to those maintained generally by the LLC. The Corporation acknowledges that such insurance policies are for the benefit of all companies insured by such policies, and policy limits may be eroded or exhausted by insureds other than Persons in the Corporation Group. The Corporation further acknowledges that policy limits are eroded on a “first paid” basis, without regard to when an occurrence or loss takes place or when a claim is filed. The Corporation acknowledges that coverage under such insurance policies will be governed by the policy terms and conditions.

The Corporation shall promptly pay or reimburse the LLC for premium expenses and any costs and expenses which the LLC may incur in connection with the insurance coverage maintained pursuant to this Section 2.05, including but not limited to any subsequent premium adjustments but excluding any costs or expenses related to risk management services. All payments and reimbursements by the Corporation shall be made within thirty days after the Corporations’ receipt of an invoice from the LLC. Any risk management services provided pursuant to the Services Agreement shall be reimbursed solely as set forth in the Services Agreement.

Each of the LLC and the Corporation will share such information as is reasonably necessary in order to permit the other to manage and conduct its insurance matters in an orderly fashion. Each of the LLC and the Corporation, at the request of the other, shall cooperate with and use commercially reasonable efforts to assist the other in recoveries for claims made under any insurance policy for the benefit of any insured party, and neither the LLC nor the Corporation, nor any Person in either of their

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respective Groups, shall take any action which would intentionally jeopardize or otherwise interfere with either party’s ability to collect any proceeds payable pursuant to any insurance policy. After the Separation Date, neither the LLC nor the Corporation shall (and shall ensure that no Person in their respective Groups shall), without the consent of the other, provide any insurance carrier with a release, or amend, modify or waive any rights under any such policy or agreement, if such release, amendment, modification or waiver would materially adversely affect any rights or potential rights of any Person in the other Group thereunder. However, nothing in this Section 2.05(c) shall (i) preclude any Person in any Group from presenting any claim or from exhausting any policy limit, (ii) require any Person in any Group to pay any premium or other amount or to incur any Liability or (iii) require any Person in any Group to renew, extend or continue any policy in force.

The defense of claims, suits or actions giving rise to potential or actual insurance claims in which the Corporation has an interest will be managed (in conjunction with the LLC’s insurers, as appropriate) by the LLC (at its expense) unless the resolution of such claim, suit or action would be reasonably likely to result in a Liability the majority of which would be borne by the Corporation, in which case the Corporation shall bear the expense and may choose to manage such defense.

Documents Relating to Other Transfers of Assets and Assumption of Liabilities. In furtherance of the assignment, transfer and conveyance of Contributed Assets and the assumption of Contributed Liabilities set forth in Section 2.01 on or prior to the Separation Date, (i) the LLC shall execute and deliver, and shall cause its Subsidiaries to execute and deliver, such bills of sale, stock powers, certificates of title, assignments of contracts, copyright assignments and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and assignment of all of the LLC’s and its Subsidiaries’ right, title and interest in and to the Contributed Assets to DWA LLC, (ii) DWA LLC shall execute and deliver, and shall cause its Subsidiaries to execute and deliver, such assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the Contributed Liabilities by DWA LLC and (iii) the Corporation shall execute and deliver, and shall cause its Subsidiaries to execute and deliver, such assumption agreements, credit agreements, security documents, guarantees and other instruments of assumption as and to the extent necessary to evidence assumption or guarantee of the Revolver Debt by the Corporation.

Other Ancillary Agreements. On or prior to the Separation Date, except as provided in Section 2.09, each of the LLC and the Corporation will execute and deliver all Ancillary Agreements to which it is a party.

Disclaimer of Representations and Warranties. Each of the LLC (on behalf of itself and each Person in the LLC Group) and the Corporation (on behalf of itself and each Person in the Corporation Group) understands and agrees that, except as expressly set forth herein or in any Ancillary Agreement, no party to this Agreement, any Ancillary Agreement or any other agreement or document contemplated by this Agreement, any Ancillary Agreement or otherwise, is representing or warranting in any

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way, express or implied, as to the Assets, businesses or Liabilities transferred or assumed as contemplated hereby or thereby, as to any Consents required in connection therewith, as to the value or freedom from any Security Interests of, or any other matter concerning, any Assets of such party, or as to the absence of any defenses or right of setoff or freedom from counterclaim with respect to any claim or other Asset, including any accounts receivable, of any party, or as to the legal sufficiency of any assignment, document or instrument delivered hereunder to convey title to any Asset or thing of value upon the execution, delivery and filing hereof or thereof. Except as may expressly be set forth herein or in any Ancillary Agreement, all such Assets are being transferred on an “as is”, “where is” basis (and, in the case of any real property, by means of a quitclaim or similar form deed or conveyance) and the respective transferees shall bear the economic and legal risks that (i) any conveyance shall prove to be insufficient to vest in the transferee good and marketable title, free and clear of any Security Interest and (ii) any necessary Consents or Governmental Approvals are not obtained or that any requirements of laws or judgments are not complied with.

Governmental Approvals and Consents. iii.To the extent that the Separation requires any Governmental Approvals or Consents, the parties will use their commercially reasonable efforts to obtain any such Governmental Approvals and Consents.

If and to the extent that the valid, complete and perfected transfer or assignment to the Corporation Group of any Contributed Assets would be a violation of applicable laws or require any Consent or Governmental Approval in connection with the Separation, the IPO, the DW Distribution or the Contribution, then, unless the LLC and the Corporation shall otherwise mutually determine, the transfer or assignment to the Corporation Group of such Contributed Assets shall be automatically deemed deferred and any such purported transfer or assignment shall be null and void until such time as all legal impediments are removed and/or such Consents or Governmental Approvals have been obtained and the failure to so transfer or assign any such Contributed Asset shall not be a breach of the LLC’s obligations pursuant to Section 2.01 hereof. Notwithstanding the foregoing, such Asset shall be deemed a Contributed Asset for purposes of determining whether any Liability is a Contributed Liability.

If the transfer or assignment of any Contributed Asset intended to be transferred or assigned hereunder is not consummated on the Separation Date, whether as a result of the provisions of Section 2.09(b) or for any other reason, then, to the extent permitted by applicable law and subject to compliance with Section 2.11(b) by the Person to whom the Contributed Asset was to be transferred, the Person in the LLC Group retaining such Contributed Asset shall thereafter hold such Contributed Asset for the use and benefit insofar as reasonably possible, of the Person entitled thereto (at the expense of the Person entitled thereto). In addition, the Person in the LLC Group retaining such Contributed Asset shall take such other actions as may be reasonably requested by the Person to whom such Contributed Asset is to be transferred in order to place such Person, insofar as reasonably possible, in the same position as if such Contributed Asset had been transferred as contemplated hereby and so that all the benefits and burdens relating to such Contributed Asset including possession, use, risk of loss, potential for gain and

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dominion, control and command over such Assets, are to inure from and after the Separation Date to the Corporation Group. Notwithstanding the foregoing, if following a request from the LLC, the Corporation fails to discharge any due and outstanding Liability related to a Contributed Asset being held by a Person in the LLC Group, or otherwise fails to reasonably assure the LLC that such Liability will be promptly discharged, then such Person in the LLC Group, in addition to any other rights and remedies the LLC may have hereunder, shall no longer be required to hold such Contributed Asset for the benefit of the Corporation and, subject to Section 2.09(d) below, may retain such Contributed Asset for its own use and benefit.

If and when the Consents and/or Governmental Approvals, the absence of which caused the deferral of transfer of any Contributed Asset pursuant to Section 2.09(b), are obtained, the transfer of the applicable Contributed Asset shall be effected in accordance with the terms of this Agreement; provided, however, that the Corporation has satisfied its obligations pursuant to Section 2.11(b).

The Person in the LLC Group retaining a Contributed Asset due to the deferral of the transfer of such Contributed Asset shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced by the Person entitled to the Contributed Asset, other than non-material out-of-pocket administrative expenses, attorneys’ fees and recording or similar fees reasonably necessary to protect the value of a Contributed Asset and where, due to time sensitivity, it is not practicable to first seek advancement of such funds. Such amounts shall be promptly reimbursed by the Person in the Corporation Group entitled to such Contributed Asset.

Novation of Contributed Liabilities. iv.Each of the LLC and the Corporation, at the request of the other, shall use its commercially reasonable efforts to obtain, or to cause to be obtained, any consent, substitution, approval or amendment required to novate or assign to the applicable Person in the Corporation Group all obligations under agreements, leases, licenses and other obligations or Liabilities of any nature whatsoever that constitute Contributed Liabilities (other than any Contributed Liability that constitutes a Shared Contract Liability), or to obtain in writing the unconditional release of all parties to such arrangements other than any Person in the Corporation Group, so that, in any such case, the Corporation and its Subsidiaries will be solely responsible for such Contributed Liabilities; provided, however, that neither the LLC nor the Corporation shall be obligated to pay any consideration therefor to any third party from whom such consents, approvals, substitutions and amendments are requested; provided further, however, that any legal fees or other administrative costs associated with obtaining such consents, approvals substitution and amendments shall be borne by the Corporation.

If the LLC or the Corporation is unable to obtain, or to cause to be obtained, any such required consent, approval, release, substitution or amendment, the applicable Person in the LLC Group shall continue to be bound by such agreements, leases, licenses and other obligations that constitute Contributed Liabilities and, unless not permitted by law or the terms thereof, the Corporation shall, as agent or subcontractor

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for the LLC or such other Person, as the case may be, pay, perform and discharge fully all such obligations or other Liabilities of the LLC or such other Person that constitute Contributed Liabilities, as the case may be, thereunder from and after the Separation Date. The Corporation shall indemnify each LLC Indemnitee, and hold each of them harmless against any Liabilities arising in connection therewith. Subject to the last sentence of Section 2.09(c), the LLC shall, without further consideration, pay or remit, or cause to be paid or remitted, to the Corporation promptly all money, rights and other consideration received by it or any Person in its respective Group in respect of such performance. If and when any such consent, approval, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, the LLC shall thereafter assign, or cause to be assigned, all its rights, obligations and other Liabilities thereunder or any rights or obligations of any Person in its Group to the Corporation without payment of further consideration and the Corporation shall, without the payment of any further consideration, assume such rights and obligations.

Novation of Liabilities other than Contributed Liabilities. v.Each of the LLC and the Corporation, at the request of the other, shall use its commercially reasonable efforts to obtain, or to cause to be obtained, any consent, substitution, approval or amendment required to novate or assign all obligations under agreements, leases, licenses and other obligations or Liabilities of any nature whatsoever that do not constitute Contributed Liabilities, or to obtain in writing the unconditional release of all parties to such arrangements other than any Person in the LLC Group, so that, in any such case, the Persons in the LLC Group will be solely responsible for such Liabilities; provided, however, that neither the LLC nor the Corporation shall be obligated to pay any consideration therefor to any third party from whom such consents, approvals, substitutions and amendments are requested; provided further, however, that any legal fees or other administrative costs associated with obtaining such consents, approvals, substitution and amendments shall be borne by the LLC.

If the LLC or the Corporation is unable to obtain, or to cause to be obtained, any such required consent, approval, release, substitution or amendment, the applicable Person in the Corporation Group shall continue to be bound by such agreements, leases, licenses and other obligations and, unless not permitted by law or the terms thereof, the LLC shall cause a Person in the LLC Group, as agent or subcontractor for such Person in the Corporation Group, to pay, perform and discharge fully all the obligations or other Liabilities of such Person in the Corporation Group thereunder from and after the Separation Date. The LLC shall indemnify each Corporation Indemnitee and hold each of them harmless against any Liabilities arising in connection therewith. The Corporation shall cause each Person in the Corporation Group without further consideration, to pay or remit, or cause to be paid or remitted, to the LLC or to another Person in the LLC Group specified by the LLC promptly all money, rights and other consideration received by it or any Person in the Corporation Group in respect of such performance. If and when any such consent, approval, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, the Corporation shall promptly assign, or cause to be assigned, all its rights, obligations and other

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Liabilities thereunder or any rights or obligations of any Person in the Corporation Group to the LLC or to another Person in the LLC Group specified by the LLC without payment of further consideration and the LLC, without the payment of any further consideration shall, or shall cause such other Person in the LLC Group to, assume such rights and obligations.

Employee Benefit Arrangements. (a) (i) Effective as of the Separation Date, or other later date that the Corporation and the LLC mutually agree upon, the Corporation shall adopt, and shall maintain until June 30, 2005, health and welfare Plans (excluding the Corporation 401(k) Plan and the 2004 Omnibus Incentive Compensation Plan) that, to the extent administratively and financially practicable, are substantially the same as the corresponding health and welfare Plans of the LLC as in effect immediately prior to the Separation Date.

Effective as of the Separation Date, all DWA Employees shall cease to be active participants in any Plan maintained by the LLC or an Affiliate thereof, and no DWA Employee shall be entitled to any additional accruals or any additional coverage under any Plan maintained by the LLC or an Affiliate thereof. Without limiting the generality of any express or implied assumption of Liabilities by the Corporation, the Corporation shall be solely responsible for and shall assume sole and exclusive liability and receive the assets, if any, related to such liabilities for (A) the payment of any termination or severance payments with respect to any DWA Employee except to the extent paid prior to the Separation Date; (B) the provision of any post-retirement health, dental, life insurance, or other welfare benefits to any DWA Employee except to the extent paid prior to the Separation Date; and (C) any claims made or incurred by the DWA Employees and their beneficiaries on or subsequent to the Separation Date under any Plan maintained or sponsored by the Corporation. For purposes of the immediately preceding sentence, a claim will be deemed incurred, in the case of hospital, medical or dental benefits, when the services that are the subject of the claim are performed and, in the case of other benefits (such as disability or life insurance), when an event has occurred that entitles the employee to the benefit.

As of or prior to the Separation Date, the Corporation shall establish or cause to be established the Corporation FSA Plan. Effective as of the Separation Date, each DWA Employee shall cease to be an active participant in the LLC FSA Plan. The Corporation FSA Plan shall take into account the DWA Employees’ salary reduction elections under the LLC FSA Plan as in effect immediately prior to the Separation Date for the remainder of the plan year in which the Separation Date occurs and as if made under the Corporation FSA Plan. As soon as administratively practicable following the Separation Date, the LLC shall cause an amount equal to any and all contributions that have been made by the DWA Employees to the LLC FSA Plan and that have not been reimbursed, or are not payable in connection with reimbursement claims submitted prior to the Separation Date, for eligible reimbursable medical expenses incurred by the DWA Employees prior to the Separation Date to be transferred to the Corporation or its designated vendor, which shall be the vendor in respect of the LLC FSA

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Plan immediately prior to the Separation Date. Such transferred amounts shall be treated as contributions by the DWA Employees under the Corporation FSA Plan. Eligible medical expenses incurred by the DWA Employees on or after the Separation Date, or incurred by the DWA Employees prior to the Separation Date but submitted for reimbursement on or after the Separation Date, shall be subject to reimbursement solely and exclusively under the Corporation FSA Plan and any related liabilities shall be assumed entirely by the Corporation.

Effective as of the Separation Date, or other later date that applies to the particular Corporation Plan established thereafter, the Corporation Plans shall be, with respect to the DWA Employees, in all respects the successors in interest to, and shall not provide benefits that duplicate benefits provided by, the corresponding LLC Plans. The LLC and the Corporation shall agree on methods and procedures, including amending the respective Plan documents, to prevent DWA Employees from receiving duplicate benefits from the LLC Plans and the Corporation Plans.

As of or prior to the Separation Date, the Corporation shall establish, or cause to be established, the Corporation 401(k) Plan, which shall be a new and separate defined contribution plan that satisfies the requirements of Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), and a new and separate trust that shall be tax-exempt under Section 501(a) of the Code. Effective as of the Separation Date, the Corporation 401(k) Plan shall assume and be solely responsible for all Liabilities relating to, arising out of, or resulting from DWA Employees (and all of their beneficiaries and alternate payees pursuant to a qualified domestic relations order, as defined in Section 414(p) of the Code) under the LLC 401(k) Plan. Effective as of the Separation Date, each DWA Employee shall cease to be an active participant in the LLC 401(k) Plan. The LLC shall cause the LLC 401(k) Plan accounts of the DWA Employees (and all of their beneficiaries and alternate payees pursuant to a qualified domestic relations order, as defined in Section 414(p) of the Code) that are held by the LLC 401(k) Plan and its related trust to be transferred, in accordance with Code Section 414(l), to the Corporation 401(k) Plan and its related trust, and the Corporation shall cause such transferred accounts to be accepted by the Corporation 401(k) Plan and its related trust. Unless the LLC and the Corporation agree otherwise, such transfer shall occur on the last business day of a calendar month and shall be in-kind to the maximum extent practicable. As soon as administratively practicable after the Separation Date, the Corporation shall file a request for a favorable determination from the Internal Revenue Service that the Corporation 401(k) Plan is qualified under Section 401(a) of the Code. The Corporation hereby agrees and covenants that the Corporation shall make all amendments required by the Internal Revenue Service to obtain such a favorable determination. The Corporation shall use its commercially reasonable efforts to enter into agreements, effective as of the Separation Date, satisfactory to the LLC to accomplish such assumption and transfer, the maintenance of the necessary participant records and the appointment of a trustee and a record keeper under the Corporation 401(k) Plan.

Except as otherwise provided in subsection (a)(i) hereof, nothing in this Agreement shall preclude the Corporation, at any time after the Separation Date, from amending, merging, modifying, terminating, eliminating, reducing or otherwise altering in any respect any Corporation Plan or any employment or other service arrangement with DWA Employees or vendors (to the extent permitted by law).

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The Corporation shall be solely responsible for providing COBRA continuation coverage under Section 4980B of the Code (for the applicable period of time as required by law) to those DWA Employees and their eligible dependents who become eligible for such coverage prior to, on, or after the Separation Date.

The LLC and the Corporation agree that none of the DWA Employees shall be deemed, by reason of the transfer of their employment from the LLC, or any Affiliate thereof, to the Corporation, or any Affiliate thereof, to have experienced a termination or severance of employment from the LLC or any Affiliate thereof for purposes of any Plan maintained or sponsored by the LLC or any Affiliate thereof that provides for the payment of severance, salary continuation or similar benefits.

Effective as of the Separation Date, the Corporation shall make all contributions to and shall assume all Liabilities under any multiemployer plan (as defined in Section 3(37) of the Employee Retirement Income Security Act of 1974, as amended) in respect of any DWA Employee except to the extent paid prior to the Separation Date.

On or prior to the Separation Date, each DWA Employee who is employed by the LLC Group on such date will be given the opportunity to elect to have any unused vacation days that he or she has accrued prior to the Separation Date for service with the LLC Group transferred to the Corporation, effective as of the Separation Date. In the event that any such DWA Employee elects such a transfer, effective as of the Separation Date, the Corporation shall be solely responsible for and shall assume sole and exclusive liability for any such accrued vacation days. In the event that any such employee does not elect such a transfer, effective as of the Separation Date, such employee shall be entitled to receive a cash payment from the Corporation for his or her unused vacation days accrued prior to the Separation Date.

On or prior to the Separation Date, subject to the approval of the compensation committee of the Board of Directors of the Corporation (the “Compensation Committee”), the LLC shall grant to Ann Daly fully vested Phantom E Stock that, upon the closing of the IPO, shall be exchanged for shares of Class A Common Stock (to be delivered by the Corporation) that have an aggregate value of $5,700,000, as determined on the Separation Date by reference to the initial public offering price per share of Class A Common Stock in the IPO, without deduction for underwriters’ discounts or commissions (or, in lieu of Class A Common Stock, such other form of equity-based compensation as the Compensation Committee may determine). In the event that the closing of the IPO fails to occur for any reason by June 28, 2005, then the Phantom E Stock will be automatically canceled and Ann Daly will not be entitled to any payments or benefits with respect thereto.

The Corporation will make Founders Shares Awards to substantially all active DWA Employees and substantially all active employees of the LLC Group upon the Separation Date. The Corporation will be responsible for payment of withholding

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taxes to the government and W-2 reporting for such DWA Employees. The LLC will be responsible for payment of withholding taxes to the government and W-2 reporting for such employees of the LLC Group.

Pursuant to Section 10 of the Employee Equity Participation Plan, the LLC will transfer shares of Class A Common Stock held by it in retirement of all outstanding vested Actual E Shares upon the Separation Date.

Pursuant to Section 10 of the Employee Equity Participation Plan, the LLC will transfer shares of Class A Common Stock held by it to certain holders of vested Phantom E Stock upon the Separation Date. The LLC will be responsible for withholding taxes from such holders of vested Phantom E Stock who are employees of the LLC Group (without any gross-up), and the Corporation will be responsible for withholding taxes from such holders of vested Phantom E Stock who are DWA Employees of the LLC Group (without any gross-up) and, in each case, remitting such withheld taxes to the government as well as for the W-2 reporting with respect thereto.

Except as provided in Section 2.12(k) and (l) the Corporation shall, upon the Separation Date, pursuant to its 2004 Omnibus Incentive Compensation Plan, make provision for the automatic conversion of all equity and equity-based awards in the LLC (as agreed upon by the LLC and the Corporation) held by DWA Employees or employees (or former employees) of the LLC Group into DWA Options, DWA Restricted Stock, SARs or RSUs of the Corporation. Without limiting the generality of the foregoing:

certain holders of vested Phantom E Stock shall receive vested RSUs or shares of vested Class A Common Stock and holders of unvested Phantom E Stock shall receive unvested RSUs or DWA Restricted Stock, which will vest over the remaining period in which the Phantom E Stock would have vested;

Phantom E Options, whether vested or unvested, shall be converted into vested or unvested DWA Options or SARs, retaining their original vesting status or schedule. Unvested DWA Options or SARs, as applicable, will vest over the remaining period in which the Phantom E Options would have vested; and

holders of unvested Actual E Shares shall receive unvested RSUs or DWA Restricted Stock, which will vest over the remaining period in which the Actual E Shares would have vested.

In general, the conversion of such LLC awards will preserve the value of the holder’s interests based on the IPO date price to the public of Class A Common Stock, without deduction for underwriters’ fees or discounts. In the case of LLC interests that have a notional “exercise price”, such conversions will preserve the “intrinsic value” of the LLC interests through a formula that preserves both the holder’s “spread” and the ratio of the exercise price to the value of the underlying interest. Notwithstanding the foregoing, the terms and conditions of all such conversions and of the Corporation awards into which LLC awards will be converted, and all determinations of value, shall be made by the Compensation Committee.

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In the case of conversions of interests held by employees or former employee of the LLC Group (other than DWA Employees), the LLC will be responsible (upon the conversion or upon vesting, exercise or settlement of the award, as the case may be) for withholding taxes from such employees (without any gross-up) and remitting such withheld taxes to the government as well as for the W-2 reporting with respect thereto. In the case of conversions of interests held by DWA Employees, the Corporation will be responsible (upon the conversion or upon vesting, exercise or settlement of the award, as the case may be) for withholding taxes from such DWA employees (without any gross-up) and remitting such withheld taxes to the government as well as for the W-2 reporting with respect thereto.

Nothing in this Section 2.12, whether express or implied, is intended to or shall confer any rights, benefits or remedies under or by reason of this Section 2.12 on any Persons (including without limitation any DWA Employee or any employee (or former employee) of the LLC Group) other than the parties to this Agreement and their respective successors and permitted assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or Liability of any third party to any party to this Agreement, nor shall any provisions give any third party any right of subrogation over or action against any party to this Agreement.

The IPO and Actions Pending the IPO

The IPO. The LLC and the Corporation shall use their commercially reasonable efforts to consummate the IPO.

Proceeds of the IPO. The IPO will be both a primary and secondary offering of Class A Common Stock, and the net proceeds of the IPO will be retained by the Corporation and the participating selling stockholders as described in the Prospectus.

Charter; Bylaws. Prior to the effectiveness of the IPO Registration Statement, the LLC and the Corporation shall each take all actions that may be required to provide for the adoption by the Corporation of the Restated Certificate of Incorporation of the Corporation substantially in the form attached as Exhibit A and the Amended and Restated Bylaws of the Corporation substantially in the form attached as Exhibit B.

Conditions Precedent to Consummation of Separation Transactions

Separation Date. The closing of the transactions set forth in Article II (the “Separation”) shall take place at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, at 8:00 a.m. New York time on the date (the “Separation Date”) set for the pricing of the IPO, subject, other than in the case of

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Section 2.01 and 2.02(a), which shall not be conditioned on the occurrence of clause (b) below, to:

all Material Consents shall have been obtained or waived by the Corporation;

the execution and delivery of the Formation Agreement.

Mutual Releases; Indemnification

Release of Pre-Closing Claims. vi.Except as provided in Section 5.01(c) and Section 5.03, effective as of the Separation Date, the Corporation does hereby, for itself and for each of its Subsidiaries that is in the Corporation Group as of the Separation Date, release and forever discharge the LLC and each of its Subsidiaries that are in the LLC Group, and all Persons who at any time prior to the Separation Date have been stockholders, directors, officers, agents, managers or members of any Person in the LLC Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed in each case on or before the Separation Date, including in connection with the transactions and all other activities to implement the Separation and the IPO.

Except as provided in Section 5.01(c) and Section 5.02, effective as of the Separation Date, the LLC does hereby, for itself and for each of its Subsidiaries that is in the LLC Group, release and forever discharge the Corporation and each of its Subsidiaries that is in Corporation Group as of the Separation Date, and all Persons who at any time prior to the Separation Date have been stockholders, directors, officers, agents or members of any Person in the Corporation Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed in each case on or before the Separation Date, including in connection with the transactions and all other activities to implement the Separation and the IPO.

Nothing contained in Section 5.01(a) or (b) shall impair any right of any Person to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings that are specified in Section 2.04(b) or the applicable Schedules thereto not to terminate as of the Separation Date or Section 2.06, in

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each case in accordance with its terms. Nothing contained in Section 5.01(a) or (b) shall release any Person from:

any Liability provided in or resulting from any agreement among any Persons in the LLC Group or the Corporation Group that is specified in Section 2.04(b) or the applicable Schedules thereto as not to terminate as of the Separation Date, or any other Liability specified in such Section 2.04(b) as not to terminate as of the Separation Date;

any Liability assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of any Group under, this Agreement or any Ancillary Agreement;

any Liability that the parties may have with respect to indemnification or contribution pursuant to this Agreement for claims brought against the parties by third Persons, which Liability shall be governed by the provisions of this Article V and, if applicable, the appropriate provisions of the Ancillary Agreements; or

any Liability the release of which would result in the release of any Person other than a Person released pursuant to this Section 5.01.

The Corporation shall not make, and shall not permit any Person in the Corporation Group to make, to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against the LLC or any Person in the LLC Group, or any other Person released pursuant to Section 5.01(a), with respect to any Liabilities released pursuant to Section 5.01(a). The LLC shall not make, and shall not permit any Person in the LLC Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification against the Corporation or any Person in the Corporation Group, or any other Person released pursuant to Section 5.01(b), with respect to any Liabilities released pursuant to Section 5.0l(b).

It is the intent of each of the LLC and the Corporation, by virtue of the provisions of this Section 5.01, to provide for a full and complete release and discharge of all Liabilities existing or arising from all acts and events occurring or failing to occur or alleged to have occurred or to have failed to occur and all conditions existing or alleged to have existed in each case on or before the Separation Date, between or among the Corporation or any Person in the Corporation Group, on the one hand, and the LLC or any Person in the LLC Group, on the other hand (including any contractual agreements or arrangements existing or alleged to exist between or among any such Persons on or before the Separation Date), except as expressly set forth in Section 5.01(c). At any time, at the request of any other party, each party shall cause each Person in its respective Group to execute and deliver releases reflecting the provisions hereof.

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Indemnification by the Corporation. Except as provided in Section 5.04, the Corporation shall, and shall cause each of its Subsidiaries that is in the Corporation Group as of the Separation Date, to jointly and severally indemnify, defend and hold harmless the LLC, each Person in the LLC Group and each of their respective members, managers, directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “LLC Indemnitees”), from and against any and all Liabilities of the LLC Indemnitees relating to, arising out of or resulting from any of the following items without duplication and including, without limitation, any such Liabilities asserted by way of setoff, counterclaim or defense or enforcement of any Security Interest:

the failure of the Corporation or any other Person in the Corporation Group or any other Person to pay, perform or otherwise promptly discharge any Contributed Liabilities in accordance with their respective terms, whether prior to or after the Separation Date;

any material breach by the Corporation or any Person in the Corporation Group of this Agreement or any Ancillary Agreement that does not contain its own indemnification provisions;

any untrue statement or alleged untrue statement of a material fact contained in any registration statement (or any amendment thereto) relating to such registration, including all documents incorporated therein by reference, 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 arising out of any untrue statement or alleged untrue statement of a material fact contained in the IPO Registration Statement or Prospectus or any other document filed by the Corporation or any Person in the Corporation Group, including all documents incorporated therein by reference, with the Securities and Exchange Commission or otherwise used in connection with the IPO or the transactions contemplated thereby (collectively, the “IPO Documents”), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. In connection with the foregoing, the Corporation shall, and shall cause each of its Subsidiaries that is in the Corporation Group as of the Separation Date, to jointly and severally indemnify, defend and hold harmless each LLC Indemnitee:

against any and all losses, liabilities, claims, damages, judgments and reasonable expenses whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, investigation or proceeding by any governmental agency or body, commenced or threatened, or of any other claim whatsoever based upon 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 Corporation; and

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against any and all reasonable expense whatsoever, as incurred (including reasonable fees and disbursements of counsel) incurred in investigating, preparing or defending against any litigation, investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not such Person is a party, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (iii) above.

provided, however, that the indemnity contained in this subparagraph (iii) does not apply to any LLC Indemnitee with respect to any loss, liability, claim, damage, judgment or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission (A) made in reliance upon and in conformity with written information furnished to the Corporation by such LLC Indemnitee expressly for use in an IPO Document or (B) if such untrue statement or omission or alleged untrue statement or omission was corrected in an amended or supplemented registration statement or prospectus and the Corporation had furnished copies thereof to the LLC Indemnitee from which the Person asserting such loss, liability, claim, damage, judgment or expense purchased the securities that are the subject thereof on a timely basis prior to the date of sale by such LLC Indemnitee to such Person.

Notwithstanding anything to the contrary herein, in no event will any LLC Indemnitee have the right to seek indemnification from any Person in the Corporation Group with respect to any claim or demand against any Person in the LLC Group for the satisfaction of the Excluded Liabilities.

Indemnification by the LLC. Except as provided in Section 5.04, the LLC shall, and shall cause each of its Subsidiaries that is in the LLC Group as of the Separation Date, to jointly and severally indemnify, defend and hold harmless the Corporation, each Person in the Corporation Group, each shareholder of the Corporation that was a member of the LLC at the time of the Separation, and each of their respective directors, officers, managers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Corporation Indemnitees”), from and against any and all Liabilities of the Corporation Indemnitees relating to, arising out of or resulting from any of the following items (without duplication and including, without limitation, any Liabilities asserted by way of setoff, counterclaim or defense or enforcement of any Security Interest):

the failure of the LLC or any other Person in the LLC Group or any other Person to pay, perform or otherwise promptly discharge any Excluded Liabilities in accordance with their respective terms, whether prior to or after the Separation Date;

any material breach by the LLC or any Person in the LLC Group of this Agreement or any Ancillary Agreement that does not contain its own indemnification provisions.

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Notwithstanding anything to the contrary herein, in no event will any Corporation Indemnitee have the right to seek indemnification from any Person in the Corporation Group with respect to any claim or demand against any Person in the LLC Group for the satisfaction of the Contributed Liabilities.

Indemnification Obligations Net of Insurance Proceeds and Other Amounts; Shared Contract Liabilities. vii.The parties intend that any Liability subject to indemnification or reimbursement pursuant to this Article V will be net of Insurance Proceeds that actually reduce the amount of the Liability. Accordingly, the amount which any party (an “Indemnifying Party”) is required to pay to any Person entitled to indemnification hereunder (an “Indemnitee”) will be reduced by any Insurance Proceeds theretofore actually recovered by or on behalf of the Indemnitee in respect of the related Liability. If an Indemnitee receives a payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds, then the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds had been received, realized or recovered before the Indemnity Payment was made.

An insurer who would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of the indemnification provisions hereof, have any subrogation rights with respect thereto, it being expressly understood and agreed that no insurer or any other third party shall be entitled to a “wind-fall” (i.e., a benefit such insurer or other third party would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification provisions hereof. Nothing contained in this Agreement or any Ancillary Agreement shall obligate any Person in any Group to seek to collect or recover any Insurance Proceeds.

If an indemnification claim is covered by the indemnification provisions of an Ancillary Agreement, the claim shall be made under the Ancillary Agreement to the extent applicable and the provisions thereof shall govern such claim. In no event shall any party be entitled to double recovery from the indemnification provisions of this Agreement and any Ancillary Agreement.

Procedures for Indemnification of Third Party Claims. viii.If an Indemnitee shall receive notice or otherwise learn of the assertion by a Person (including any Governmental Authority) who is not a Person in the LLC Group or the Corporation Group of any claim or of the commencement by any such Person of any Action (collectively, a “Third Party Claim”) with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 5.02 or 5.03, or any other Section of this Agreement, such Indemnitee shall give such Indemnifying Party written notice thereof within 20 days after becoming aware of such Third Party Claim. Any such notice shall describe the Third Party Claim in reasonable detail. Notwithstanding the foregoing, the failure of any Indemnitee or other Person to give notice as provided in this Section 5.05(a) shall not relieve the related Indemnifying Party of its obligations under this Article V, except to the extent that such Indemnifying Party is actually prejudiced by such failure to give notice.

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An Indemnifying Party may elect to defend (and, unless the Indemnifying Party has specified any reservations or exceptions, to seek to settle or compromise, so long as such settlement or compromise contains an unconditional release of each Indemnitee, whether or not a party to such Third Party Claim), at such Indemnifying Party’s own expense and by such Indemnifying Party’s own counsel, any Third Party Claim. Within 30 days after the receipt of notice from an Indemnitee in accordance with Section 5.05(a) (or sooner, if the nature of such Third Party Claim so requires), the Indemnifying Party shall notify the Indemnitee of its election whether the Indemnifying Party will assume responsibility for defending such Third Party Claim, which election shall specify any reservations or exceptions. After notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise or settlement thereof, but the fees and expenses of such counsel shall be the expense of such Indemnitee; provided, however, in the event that (i) the Indemnifying Party has elected to assume the defense of the Third Party Claim but has specified, and continues to assert, any reservations or exceptions in such notice or (ii) the Third Party Claim involves injunctive or equitable relieve, then, in any such case, the reasonable fees and expenses of one separate counsel for all Indemnitees shall be borne by the Indemnifying Party.

If an Indemnifying Party elects not to assume responsibility for defending a Third Party Claim, or fails to notify an Indemnitee of its election as provided in Section 5.05(b), such Indemnitee may defend such Third Party Claim at the cost and expense of the Indemnifying Party.

Unless the Indemnifying Party has failed to assume the defense of the Third Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third Party Claim without the consent of the Indemnifying Party.

No Indemnifying Party shall consent to entry of any judgment or enter into any settlement of any Third Party Claim unless the settlement involves only monetary relief which the Indemnifying Party has agreed to pay and includes a full and unconditional release of the Indemnitee.

Additional Matters. ix.Any claim on account of a Liability which does not result from a Third Party Claim shall be asserted by written notice given by the Indemnitee to the related Indemnifying Party. Such Indemnifying Party shall have a period of 30 days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such 30-day period, such Indemnifying Party shall be deemed to have refused to accept responsibility to make payment. If such Indemnifying Party does not respond within such 30-day period or rejects such claim in whole or in part, such Indemnitee shall be free to pursue such remedies as may be available to such party as contemplated by this Agreement.

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In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other Person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

In the event of an Action in which the Indemnifying Party is not a named defendant, if either the Indemnified Party or Indemnifying Party shall so request, the parties shall endeavor to substitute the Indemnifying Party for the named defendant, if at all practicable. If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Action as set forth in this section, and the Indemnifying Party shall fully indemnify the named defendant against all costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’ fees, experts’ fees and all other external expenses), the costs of any judgment or settlement and the cost of any interest or penalties relating to any judgment or settlement.

Remedies Cumulative. The remedies provided in this Article V shall be cumulative and, subject to the provisions of Article VIII, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

Survival of Indemnities. The rights and obligations of each of the LLC and the Corporation and their respective Indemnitees under this Article V shall survive the sale or other transfer by any party of any Assets or businesses or the assignment by it of any Liabilities.

Certain Business Matters

Certain Business Matters. x.Until the home video release of the last Animated Motion Picture subject to the Film Distribution Agreement, (i) no Person in the LLC Group will develop, produce or exploit Animated Motion Pictures other than (A) the exploitation of the Retained Motion Pictures, (B) the development, production and/or exploitation under the “Go Fish” label of Small Animated Motion Pictures and (C) pursuant to the Film Distribution Agreement, (ii) no Person in the Corporation Group will develop, produce or exploit Live Action Motion Pictures and (iii) Persons in either Group may develop, produce and/or exploit Hybrid Motion Pictures. The LLC and the Corporation agree that this covenant is reasonable with respect to its scope and duration. If, at the time of enforcement of this Section 6.01, a court holds that the restrictions stated herein are unreasonable under the circumstances then existing, the parties hereto agree that the period and scope legally permissible under such circumstances will be substituted for the period and scope stated herein.

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No Person in the Corporation Group or the LLC Group will engage in theme park activities (as described in the Employment Agreement, dated on or about the Separation Date, between the LLC and Steven Spielberg) (other than through Universal Studios, Inc.) until such time as Mr. Spielberg confirms to the LLC in writing (which shall in turn notify the Corporation) that, in his absolute determination and in his absolute discretion, he has ceased to maintain exclusive theme park arrangement(s) with third parties, or until the later of such time as (i) Mr. Spielberg no longer has any contractual relationship with any Person in the Corporation Group or the LLC Group or (ii) Mr. Spielberg, his wife, his or her issue (or trusts for the primary benefit of any of them), his or her siblings (or trusts for the primary benefit of any of them) or a private charitable foundation organized by him and/or his wife no longer own or control, directly or indirectly any (x) shares of the Class A Common Stock of the Corporation issued to him (or entities controlled by him) by the Corporation or received by him (or entities controlled by him) in connection with the Final Allocation (as defined in the Holdco LLLP Agreement) and (y) limited liability company interests in the LLC (and the prohibition contained in this Section 6.01(b) shall not be renewed if Mr. Spielberg, his wife, his or her issue (or trusts for the primary benefit of any of them), his or her siblings (or trusts for the primary benefit of any of them) or a private charitable foundation organized by him and/or his wife subsequently reacquires any Class A Common Stock or limited liability company interests). It is mutually agreed by the parties hereto that Diamond Lane Productions, Inc. and Steven Spielberg are third party beneficiaries of this Section 6.01(b) and that this Section 6.01(b) may not be amended without the prior written consent of Diamond Lane Productions, Inc. and Mr. Spielberg.

Late Payments. Except as expressly provided to the contrary in this Agreement, any amount not paid when due pursuant to this Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within 30 days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 2%.

Exchange of Information; Confidentiality

Agreement for Exchange of Information; Archives. xi.Each of the LLC and the Corporation, on behalf of its respective Group, agrees to provide, or cause to be provided, to the other Group, at any time before or after the Separation Date, as soon as reasonably practicable after written request therefor, any Information in the possession or under the control of such respective Group which the requesting party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting party (including under applicable securities or tax laws) by a Governmental Authority having jurisdiction over the requesting party, (ii) for use in any other judicial, regulatory, administrative, tax or other proceeding or in order to satisfy audit, accounting, regulatory, litigation, tax or other similar requirements, in each case other than claims or allegations that one party to this Agreement has against the other or (iii) subject to the foregoing clause (ii), to comply with its obligations under this Agreement; provided, however, that in the event that any party determines that any

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such provision of Information could be commercially detrimental, violate any law or agreement or waive any attorney-client privilege, the parties shall take all commercially reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence.

Without limiting the obligation of the LLC to transfer the Contributed Assets as provided herein, after the Separation Date, the Corporation or the LLC, as applicable, shall have access during regular business hours (as in effect from time to time) to the documents and objects of historic significance that relate to the animation business that are located in archives retained or maintained by the LLC or that relate to the live-action business that are located in archives retained or maintained by the Corporation, as applicable. The Corporation or the LLC, as applicable, may obtain copies (but not originals) of documents for bona fide business purposes and may obtain objects for exhibition purposes for reasonable periods of time if required for bona fide business purposes; provided, however, that the Corporation or the LLC, as applicable, shall cause any such objects to be returned promptly in the same condition in which they were delivered to such party and shall comply with any rules, procedures or other requirements, and shall be subject to any restrictions (including prohibitions on removal of specified objects) that are then applicable to the providing party. The Corporation or the LLC, as applicable, shall pay the applicable fee or rate per hour for archives research services (subject to increase from time to time to reflect rates then in effect) for the providing party generally. Nothing herein shall be deemed to restrict the access of the providing party to any such documents or objects or to impose any liability on the providing party if any such documents or objects are not maintained or preserved by such party.

After the Separation Date, each of the LLC and the Corporation (i) shall maintain in effect at its own cost and expense adequate systems and controls to the extent necessary to enable the Persons in the other Group to satisfy their respective reporting, accounting, audit and other obligations and (ii) shall provide, or cause to be provided, to the other party (in such form as the providing party retains such information for its own use) all financial and other data and information as such requesting party determines necessary or advisable in order to prepare its financial statements and reports or filings with any Governmental Authority.

Ownership of Information. Any Information owned by one Group that is provided to a requesting party pursuant to Section 7.01 shall be deemed to remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information.

Compensation for Providing Information. The party requesting Information agrees to reimburse the other party for the reasonable costs, if any, of creating, gathering and copying such Information, to the extent that such costs are incurred for the benefit of the requesting party. Except as may be otherwise specifically provided elsewhere in this Agreement, such costs shall be computed in accordance with the providing party’s standard methodology and procedures.

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Record Retention. To facilitate the possible exchange of Information pursuant to this Article VII and other provisions of this Agreement after the Separation Date, the parties agree to use their commercially reasonable efforts to retain all Information in their respective possession or control on the Separation Date in accordance with the policies of the LLC as in effect on the Separation Date or such other policies as may be reasonably adopted by the appropriate party after the Separation Date. No party will destroy, or permit any of its Subsidiaries to destroy, any Information which the other party may have the right to obtain pursuant to this Agreement prior to the third anniversary of the Separation Date without first using its commercially reasonable efforts to notify the other party of the proposed destruction and giving the other party the opportunity to take possession of such information prior to such destruction; provided, however, that in the case of any Information relating to taxes, employee benefits or environmental liabilities, such period shall be extended to the expiration of the applicable statute of limitations (giving effect to any extensions thereof).

Limitations of Liability. Except as otherwise provided in Article V, no party shall have any liability to any other party in the event that any Information exchanged or provided pursuant to this Agreement is found to be inaccurate in the absence of willful misconduct by the party providing such Information. No party shall have any liability to any other party if any Information is destroyed after commercially reasonable efforts by such party to comply with the provisions of Section 7.04.

Other Agreements Providing for Exchange of Information. The rights and obligations granted under this Article VII are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information set forth in any Ancillary Agreement.

Production of Witnesses; Records; Cooperation. xii.After the Separation Date, except in the case of an adversarial Action by one party or Persons in its Group against another party or Person in its Group, each party hereto shall use its commercially reasonable efforts to make available to each other party, upon written request, the then-current directors, officers, employees, other personnel and agents of the Person in its respective Group as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any Action in which the requesting party may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder. The requesting party shall bear all costs and expenses in connection therewith.

If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third Party Claim, the other party shall make available to such Indemnifying Party, upon written request then-current directors, officers, employees, other personnel and agents of the Persons in its respective Group as witnesses and any books, records or other documents within its control, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel

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and agents) or books, records or other documents may reasonably be required in connection with such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be, and shall otherwise reasonably cooperate in such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be.

Without limiting the foregoing, the parties shall cooperate and consult to the extent reasonably necessary with respect to any Actions.

The obligation of the parties to provide witnesses pursuant to this Section 7.07 is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to provide as witnesses employees and other officers without regard to whether the witness or the employer of the witness could assert a possible business conflict (subject to the exception set forth in the first sentence of Section 7.07(a)).

In connection with any matter contemplated by this Section 7.07, the parties will enter into a mutually acceptable joint defense agreement so as to maintain to the extent practicable any applicable attorney-client privilege or work product immunity of any Person in any Group.

Confidentiality. xiii.Subject to Section 7.09, each of the LLC and the Corporation, on behalf of itself and each Person in its respective Group, agrees to hold, and to cause its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives to hold, in strict confidence, with at least the same degree of care that applies to the LLC’s confidential and proprietary information pursuant to policies in effect as of the Separation Date, all Information concerning the other Group that is either in its possession (including Information in its possession prior to the Separation Date) or furnished the other Group or its respective directors, officers, managers, employees, agents, accountants, counsel and other advisors and representatives at any time pursuant to this Agreement or otherwise, and shall not use any such Information other than for such purposes as shall be expressly permitted hereunder or thereunder, except, in each case, to the extent that such Information has been (i) in the public domain through no fault of such party or any Person in such Group or any of their respective directors, officers, managers, employees, agents, accountants, counsel and other advisors and representatives, (ii) later lawfully acquired from other sources by such party (or any Person in such party’s Group) which sources are not themselves bound by a confidentiality obligation or (iii) independently generated without reference to any proprietary or confidential Information of the other party.

Each party agrees not to release or disclose, or permit to be released or disclosed, any Information of the other Group to any other Person, except its directors, officers, employees, agents, accountants, counsel and other advisors and representatives who need to know such Information (who shall be advised of their obligations hereunder with respect to such Information), except in compliance with Section 7.09.

Protective Arrangements. In the event that any party or any Person in its Group either determines on the advice of its counsel that it is required to disclose any

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Information pursuant to applicable law (including pursuant to any rule or regulation of the Securities and Exchange Commission) or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of any other party (or any Person in any other party’s Group) that is subject to the confidentiality provisions hereof, such party shall notify the other party prior to disclosing or providing such Information and shall cooperate at the expense of the such other party in seeking any reasonable protective arrangements (including by seeking confidential treatment of such Information) requested by such other party. Subject to the foregoing, the Person that received such a request or determined that it is required to disclose Information may thereafter disclose or provide Information to the extent required by such law (as so advised by counsel) or by lawful process or such Governmental Authority; provided that such Person provides the other party upon request with a copy of the Information so disclosed.

Dispute Resolution

Disputes. Except as otherwise specifically provided in any Ancillary Agreement, the procedures for discussion, negotiation and mediation set forth in this Article XIII shall apply to all disputes, controversies or claims (whether arising in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with this Agreement, or the transactions contemplated hereby (including all actions taken in furtherance of the transactions contemplated hereby on or prior to the Separation Date), or the commercial or economic relationship of the parties relating hereto or thereto, between or among any Person in the LLC Group and the Corporation Group.

Escalation; Mediation. xiv.It is the intent of the parties to use their respective commercially reasonable efforts to resolve expeditiously any dispute, controversy or claim between or among them with respect to the matters covered hereby that may arise from time to time on a mutually acceptable negotiated basis. In furtherance of the foregoing, any party involved in a dispute, controversy or claim may deliver a notice (an “Escalation Notice”) demanding an in person meeting involving representatives of the parties at a senior level of management of the parties (or if the parties agree, of the appropriate strategic business unit or division within such entity). A copy of any such Escalation Notice shall be given to the General Counsel, or like officer or official, of each party involved in the dispute, controversy or claim (which copy shall state that it is an Escalation Notice pursuant to this Agreement). Any agenda, location or procedures for such discussions or negotiations between the parties may be established by the parties from time to time; provided, however, that the parties shall use their commercially reasonable efforts to meet within 30 days of the Escalation Notice.

If the parties are not able to resolve the dispute, controversy or claim through the escalation process referred to above, then the matter shall be referred to mediation. The parties shall retain a mediator to aid the parties in their discussions and negotiations by informally providing advice to the parties. Any opinion expressed by the

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mediator shall be strictly advisory and shall not be binding on the parties, nor shall any opinion expressed by the mediator be admissible in any other proceeding. The mediator may be chosen from a list of mediators previously selected by the parties or by other agreement of the parties. Costs of the mediation shall be borne equally by the parties involved in the matter, except that each party shall be responsible for its own expenses. Mediation shall be a prerequisite to the commencement of any action by either party.

Court Actions. xv.In the event that any party, after complying with the provisions set forth in Section 8.02 above, desires to commence an Action, such party, subject to Section 11.16, may submit the dispute, controversy or claim (or such series of related disputes, controversies or claims) to any court of competent jurisdiction.

Unless otherwise agreed in writing, the parties will continue to provide, service and honor all other commitments under this Agreement during the course of dispute resolution pursuant to the provisions of this Article XIII, except to the extent such commitments are the subject of such dispute, controversy or claim.

Further Assurances

Further Assurances. xvi.In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties hereto shall use its commercially reasonable efforts, prior to, on and after the Separation Date, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement.

Prior to, on and after the Separation Date, each party hereto shall cooperate with the other party, and without any further consideration, but at the expense of the requesting party, to execute and deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all consents, approvals or authorizations of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any Consents or Governmental Approvals), and to take all such other actions as such party may reasonably be requested to take by such other party hereto from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement and the transfer of the Contributed Assets and the release of Persons in the Corporation Group from Liabilities not constituting Contributed Liabilities and the assignment and assumption of the Contributed Liabilities and the other transactions contemplated hereby. Without limiting the foregoing and without limiting Section 2.09 hereof, the LLC will, at the reasonable request, cost and expense of the Corporation, take such other actions as may be reasonably necessary to vest in the applicable Person in the Corporation Group good and marketable title, free and clear of any Security Interest, if and to the extent it is practicable to do so and so long as no Person in the LLC Group is materially adversely affected by taking such other actions. In

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addition, upon the repayment by the Corporation of the Revolver Debt and the indebtedness incurred by it in connection with the Animated Film Assumption Agreement, the LLC shall assist the Corporation in obtaining a release of the Corporation from all of its obligations under the LLC Credit Facility.

On or prior to the Separation Date, the LLC and the Corporation in their respective capacities as direct and indirect stockholders of their respective Subsidiaries, shall each ratify any actions which are reasonably necessary or desirable to be taken by the LLC, the Corporation or any Subsidiary of the LLC or the Corporation, as the case may be, to effectuate the transactions contemplated by this Agreement.

Prior to the Separation Date, if one or both of the parties identifies any commercial or other service that is needed to assure a smooth and orderly transition of the businesses in connection with the consummation of the transactions contemplated hereby, and that is not otherwise governed by the provisions of this Agreement, the parties will cooperate in determining whether there is a mutually acceptable arm’s-length basis on which the other party will provide such service.

Termination

Termination by Mutual Consent. This Agreement may be terminated at any time prior to the Separation Date by the mutual consent of the LLC and the Corporation.

Effect of Termination. In the event of any termination of this Agreement, no party to this Agreement (or any of its directors or officers) shall have any Liability or further obligation to any other party.

Miscellaneous

Counterparts; Entire Agreement; Corporate Power. xvii.This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

This Agreement, the Ancillary Agreements, the Exhibits, the Schedules and appendices hereto and thereto contain the entire agreement between the parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the parties with respect to such subject matter other than those set forth or referred to herein or therein.

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Each party represents on behalf of itself, the LLC represents on behalf of each other Person in the LLC Group party to this Agreement and the Corporation represents on behalf of each other Person in the Corporation Group party to this Agreement, as follows:

each such Person has the requisite corporate, limited liability company or other power and authority and has taken all corporate, limited liability company or other action necessary in order to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; and

this Agreement has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York, irrespective of the choice of laws principles of the State of New York, except to the extent the substantive laws of the State of Delaware are mandatorily applicable under Delaware law.

Assignability. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns; provided, however, that no party hereto may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other party or parties hereto.

Third Party Beneficiaries. Except for the indemnification rights under this Agreement of any LLC Indemnitee or Corporation Indemnitee in their respective capacities as such, and except as expressly set forth in Section 2.01(c), Section 6.01(b), (a) the provisions of this Agreement are solely for the benefit of the parties and are not intended to confer upon any Person (including employees of the parties hereto) except the parties any rights or remedies hereunder and (b) there are no third party beneficiaries of this Agreement and this Agreement shall not provide any third person (including employees of the parties hereto) with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

Notices. All notices or other communications under this Agreement shall be in writing and shall be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

If to the LLC, to:

DreamWorks L.L.C.

Grandview Building

1000 Flower Street

Glendale, California 91201

Attn:  General Counsel

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If to the Corporation or DWA LLC to:

DreamWorks Animation SKG, Inc.

Grandview Building

1000 Flower Street

Glendale, California 91201

Attn:  General Counsel

Any party may, by notice to the other party, change the address to which such notices are to be given.

Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination, the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.

Force Majeure. No party shall be deemed in default of this Agreement to the extent that any delay or failure in the performance of its obligations under this Agreement results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment. In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.

Publicity. Prior to the Separation, each of the parties shall consult with each other prior to issuing any press releases or otherwise making public statements with respect to the Separation, the IPO or any of the other transactions contemplated hereby and prior to making any filings with any Governmental Authority with respect thereto.

Expenses. Except as expressly set forth in this Agreement, the LLC and the Corporation shall each be responsible for their own internal fees, costs and expenses and fees, costs and expenses of their own counsel. All other third party fees, costs and expenses paid or incurred (a) in connection with the IPO and the Separation shall be paid by the Corporation and (b) in connection with obtaining the complete release and discharge of the Corporation from any obligations with respect to the LLC Credit Facility and the Film Securitization Facility will be paid by the LLC.

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Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Survival of Covenants. The covenants, representations and warranties contained in this Agreement, and liability for the breach of any obligations contained herein, shall survive the Separation and the IPO and shall remain in full force and effect.

Waivers of Default. Waiver by any party of any default by the other party of any provision of this Agreement shall not be deemed a waiver by the waiving party of any subsequent or other default, nor shall it prejudice the rights of the other party.

Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are or are to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived.

Amendments. No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by any party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the party against whom it is sought to enforce such waiver, amendment, supplement or modification.

Interpretation. Words in the singular shall be held to include the plural and vice versa and words of one gender shall be held to include the other genders as the context requires. The terms “hereof”, “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules, Exhibits and Appendices hereto) and not to any particular provision of this Agreement. Article, Section, Exhibit, Schedule and Appendix references are to the Articles, Sections, Exhibits, Schedules and Appendices to this Agreement unless otherwise specified. The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation”, unless the context otherwise requires or unless otherwise specified. The word “or” shall not be exclusive.

Submission to Jurisdiction; Waivers. With respect to any suit, action or proceeding relating to this Agreement (collectively, a “Proceeding”), each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the States of New York and Delaware and any court of the United States located in the Borough of Manhattan in New York City or the State of Delaware; (b) waives any objection which such party may have at any time to the laying of venue of any

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Proceeding brought in any such court, waives any claim that such Proceeding has been brought in an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such party; and (c) consents to the service of process at the address set forth for notices in Section 11.05 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law.

Special Damages. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, AND EXCEPT AS PROVIDED BELOW, IN NO EVENT WILL EITHER PARTY OR ANY PERSON IN ITS GROUP BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS SUFFERED BY AN INDEMNITEE, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH ANY DAMAGES ARISING HEREUNDER OR THEREUNDER; PROVIDED, HOWEVER, THAT TO THE EXTENT AN INDEMNIFIED PARTY IS REQUIRED TO PAY ANY DAMAGES, INCLUDING SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS (OTHER THAN DAMAGES OR LOST PROFITS CONSTITUTING EXCLUDED LIABILITIES), TO A PERSON WHO IS NOT IN EITHER GROUP IN CONNECTION WITH A THIRD PARTY CLAIM, SUCH DAMAGES WILL CONSTITUTE DIRECT DAMAGES AND WILL NOT BE SUBJECT TO THE LIMITATION SET FORTH IN THIS SECTION 11.17.

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IN WITNESS WHEREOF, the parties have caused this Separation Agreement to be executed by their duly authorized representatives.

DREAMWORKS L.L.C.,
By	/s/ Brian Edwards
Name:	Brian Edwards
Title:	VP and General Counsel
DREAMWORKS ANIMATION L.L.C.,
By	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	Assistant Secretary
DREAMWORKS ANIMATION SKG, INC.,
By	/s/ Kristina M. Leslie
Name:	Kristina M. Leslie
Title:	Chief Financial Officer and Chief Accounting Officer

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EX-3.1

EXHIBIT 3.1

RESTATED CERTIFICATE OF INCORPORATION

OF

DREAMWORKS ANIMATION SKG, INC.

The corporation was incorporated under the name “DreamWorks Animation, Inc.” by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on July 13, 2004. This Restated Certificate of Incorporation of the corporation, which both restates and further amends the provisions of the corporation’s 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 and by the written consent of its sole stockholder in accordance with Section 228 of the General Corporation Law of the State of Delaware. The Certificate of Incorporation of the corporation is hereby amended and restated to read in its entirety as follows:

Name

The name of this corporation (hereinafter the “Corporation”) is DreamWorks Animation SKG, Inc.

Address; Registered Agent

The address of the Corporation’s registered office in the State of Delaware, is Capitol Services, Inc., 615 South Dupont Highway, Dover, Kent County, Delaware. The name of the Corporation’s registered agent at such address is Capitol Services, Inc.

Purpose

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “DGCL”).

Capital Stock

Authorized Capital Stock. The total number of shares of capital stock that the Corporation shall have authority to issue is six hundred million and one (600,000,001) shares, consisting of three hundred fifty million (350,000,000) shares of Class A Common Stock, par value of $0.01 per share (“Class A Stock”), one hundred fifty million (150,000,000) shares of Class B Common Stock, par value $0.01 per share (“Class B Stock”), one (1) share of Class C Common Stock, par value $0.01 per share (“Class C Stock” and, together with the Class A Stock and the Class B Stock, “Common Stock”), and one hundred million (100,000,000) shares of Preferred Stock, par value of $0.01 per share (“Preferred Stock”). Subject to Sections 4(c) and 4(d) of this Article IV, the number of authorized shares of any of the Class A Stock, the Class B Stock, the Class C Stock or the Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon irrespective of the provisions of Section 242(b)(2) of the DGCL (or any successor provision thereto), and no vote of the holders of any of the Class A Stock, Class B Stock, Class C Stock or Preferred Stock voting separately as a class shall be required therefor. Upon this Restated Certificate of Incorporation of the Corporation becoming effective pursuant to the DGCL (the “Effective Time”), each share of the Corporation’s common stock, par value $0.01 per share (the “Old Common Stock”), issued and outstanding immediately prior to the Effective Time, shall be automatically reclassified as and converted into one share of Class B Stock. Any stock certificate that, immediately prior to the Effective Time, represented shares of Old Common Stock will, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent the same number of shares of Class B Stock.

Common Stock. i)Except as otherwise provided in this Restated Certificate of Incorporation, the Class A Stock, the Class B Stock and the Class C Stock shall have the same rights and privileges and shall rank equally and share ratably as to all matters.

Subject to Section 2(c) of this Article IV, and subject to the provisions of law and the terms of any outstanding Preferred Stock, dividends or other distributions with respect to the Class A Stock, the Class B Stock and the Class C Stock shall be made in an equal amount per share, at such times and in such amounts as may be determined by the board of directors of the Corporation (the “Board”) and declared out of any funds lawfully available therefor, and shares of Preferred Stock of any series shall not be entitled to share therein except as otherwise expressly provided in the resolution or resolutions of the Board providing for the issue of such series. Dividends and other distributions with respect to the Class A Stock, the Class B Stock and the Class C Stock shall be payable only when, as and if declared by the Board.

Subject to the provisions of law and the terms of any outstanding Preferred Stock, if at any time a dividend or other distribution with respect to the Class A Stock,

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Class B Stock or Class C Stock is to be paid in shares of Class A Stock or Class B Stock or any other securities of the Corporation or any other corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust or legal entity (“Person”) (hereinafter sometimes called a “share distribution”), such share distribution shall be declared and paid only as follows:

a share distribution consisting of shares of Class A Stock (or Convertible Securities that are convertible into, exchangeable for or evidence the right to purchase shares of Class A Stock) with respect to shares of Class A Stock and Class C Stock and, on an equal per share basis, shares of Class B Stock (or Convertible Securities that are convertible into, exchangeable for or evidence the right to purchase shares of Class B Stock) with respect to shares of Class B Stock; and

subject to Section 2(g) of this Article IV, a share distribution consisting of shares of any class or series of securities of the Corporation or any other Person other than Class A Stock, Class B Stock or Class C Stock (and other than Convertible Securities that are convertible into, exchangeable for or evidence the right to purchase shares of Class A Stock, Class B Stock or Class C Stock), on the basis of a distribution of identical securities, on an equal per share basis, with respect to shares of Class A Stock, Class B Stock and Class C Stock; provided, however, that if such share distribution consists of shares of any class or series of securities of the Corporation or any Subsidiary of the Corporation not formed for the purpose of circumventing Section 2(g) of this Article IV, then it shall be declared and paid on the basis of a distribution of one class or series of securities with respect to shares of Class A Stock and another class or series of securities with respect to shares of Class B Stock and another class or series of securities with respect to shares of Class C Stock, and the securities so distributed (and, if applicable, the securities into which the distributed securities are convertible, or for which they are exchangeable, or which the distributed securities evidence the right to purchase) shall differ with respect to, but solely with respect to, their relative voting rights and related differences in conversion and share distribution provisions, and all such differences shall be identical to the corresponding differences in voting rights, conversion and share distribution provisions between the Class A Stock, the Class B Stock and the Class C Stock, so as to preserve the relative voting rights of each Class as in effect immediately prior to such share distribution, and such distribution shall be made on an equal per share basis.

As used herein, the term “Subsidiary” means, when used with respect to any Person, (i) a corporation in which such Person and/or one or more Subsidiaries of such Person, directly or indirectly, owns capital stock having a majority of the total voting power in the election of directors (“Voting Power”) of all outstanding shares of all classes and series of capital stock of such corporation entitled generally to vote in such election (“Voting Stock”); and (ii) any other Person (other than a corporation) in which

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such Person and/or one or more Subsidiaries of such Person, directly or indirectly, has (x) a majority ownership interest or (y) the power to elect or direct the election of a majority of the members of the governing body of such first-named Person.

As used herein, the term “Convertible Securities” shall mean any securities of the Corporation (other than any class of Common Stock) that are convertible into, exchangeable for or evidence the right to purchase any class of Common Stock, whether upon conversion, exercise or exchange, pursuant to anti-dilution provisions of such securities or otherwise.

If the Corporation shall in any manner subdivide or combine the outstanding shares of Class A Stock, Class B Stock or Class C Stock, the outstanding shares of the other classes of Common Stock shall be proportionally subdivided or combined in the same manner and on the same basis as the outstanding shares of Class A Stock, Class B Stock or Class C Stock, as the case may be, that have been subdivided or combined so as to preserve the relative aggregate Voting Power of the outstanding shares of each class and the relative proportion of the equity of the Corporation represented by the outstanding shares of each class and the conversion rights of the outstanding shares of each class, immediately prior to the transaction giving rise to an adjustment pursuant to this paragraph.

Upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, subject to any preferential or other amounts to be distributed to the holders of the Preferred Stock and any other class or series of stock then outstanding, the holders of Class A Stock, Class B Stock and Class C Stock shall be entitled to receive all the assets of the Corporation available for distribution to its stockholders ratably as a single class in proportion to the number of shares held by them.

(i) Each share of Class B Stock and each share of Class C Stock may at any time be converted by the record holder thereof into one fully paid and nonassessable share of Class A Stock. Shares of Class A Stock may be converted into shares of Class B Stock only as set forth in the proviso to subparagraph (vii) of this subsection (f) and in subparagraph (ix) of this subsection (f). Except as set forth in subparagraphs (vii) and (viii) of this subsection (f) and the proviso to Section 3.02 of the Stockholder Agreement, dated as of October 27, 2004, among the Corporation, DWA Escrow LLLP, M&J K B Limited Partnership, M&J K Dream Limited Partnership, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW L.P., DW Investment II, Inc., Jeffrey Katzenberg, David Geffen and Paul Allen (the “Stockholder Agreement”), the conversion right set forth in the first sentence of this subparagraph (i) shall be exercised by the surrender of the certificate representing such share of Class B Stock or Class C Stock to be converted to the Corporation at any time during normal business hours at the principal executive offices of the Corporation, or if an agent for the registration of transfer of shares of Class B Stock or Class C Stock is then duly appointed and acting (said agent being hereinafter called the

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“Transfer Agent”), then at the office of the Transfer Agent, accompanied by a written notice of the election by the record holder thereof to convert and (if so required by the Corporation or the Transfer Agent) by instruments of transfer, in form satisfactory to the Corporation and to the Transfer Agent, duly executed by such holder or such holder’s duly authorized attorney, and together with any necessary transfer tax stamps or funds therefor, if required pursuant to subparagraph (v) of this subsection (f).

(ii) As promptly as practicable after the surrender for conversion (or deemed surrender, as set forth in the proviso to Section 3.02 of the Stockholder Agreement) of a certificate or certificates representing shares of Class B Stock or Class C Stock in the manner provided in paragraph (i) of this subsection (f), or the automatic conversion of a share or shares of Class A Stock, Class B Stock or Class C Stock as set forth in subparagraphs (vii), (viii) and (ix) of this subsection (f), and the payment in cash of any amount required by the provisions of paragraphs (i) and (v) of this subsection (f), the Corporation will deliver or cause to be delivered at the office of the Transfer Agent to or upon the written order of the holder thereof, a certificate or certificates representing the number of full shares of Class A Stock or Class B Stock issuable upon such conversion, issued in such name or names as such holder may direct. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of the surrender (or deemed surrender, as set forth in the proviso to Section 3.02 of the Stockholder Agreement) of the certificates representing shares of Class B Stock or Class C Stock, or the automatic conversion of a share or shares of Class A Stock, Class B Stock or Class C Stock as set forth in subparagraphs (vii), (viii) and (ix) of this subsection (f), and all rights of the holder of such shares as such holder shall cease at such time and the person or persons in whose name or names the certificate or certificates representing the shares of Class A Stock or Class B Stock are to be issued shall be treated for all purposes as having become the record holder or holders of such shares of Class A Stock or Class B Stock at such time; provided, however, if any such surrender or such deemed surrender or such automatic conversion and payment is made on any date when the stock transfer books of the Corporation shall be closed, the person or persons in whose name or names the certificate or certificates representing shares of Class A Stock or Class B Stock are to be issued as the record holder or holders thereof shall be treated for all purposes as having become the record holder or holders of such shares immediately prior to the close of business on the next succeeding day on which such stock transfer books are open.

(iii) No adjustments in respect of dividends shall be made upon the conversion of any share of Class A Stock, Class B Stock or Class C Stock; provided, however, that if a share shall be converted subsequent to the record date for the payment of a dividend or other distribution on shares of Class A Stock, Class B Stock or Class C Stock, as applicable, but prior to such payment, the registered holder of such share at the close of business on such record date shall be entitled to receive the dividend or other distribution payable on such share upon the date set for payment of such dividend or other distribution

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notwithstanding the conversion thereof or the Corporation’s default in payment of the dividend due on such date (provided, however, that if the applicable distribution is a share distribution then the type of security distributed in respect of such share shall be the type that would have been distributed had the conversion been made prior to such record date).

(iv) The Corporation will at all times reserve and keep available, solely for the purpose of issuance upon conversion of the outstanding shares of Class B Stock and Class C Stock, such number of shares of Class A Stock as shall be issuable upon the conversion of all such outstanding shares; provided, however, that nothing contained herein shall be construed to preclude the Corporation from satisfying its obligations in respect of the conversion of the outstanding shares of Class B Stock and Class C Stock by delivery of purchased shares of Class A Stock which are held in the treasury of the Corporation. All shares of Class A Stock and Class B Stock which shall be issued upon conversion of the shares of Class A Stock, Class B Stock and Class C Stock will, upon issue, be fully paid and nonassessable and not subject to any preemptive rights.

(v) The issuance of certificates for shares of Class A Stock and Class B Stock upon conversion of shares of Class A Stock, Class B Stock or Class C Stock shall be made without charge for any stamp or other similar tax in respect of such issuance. However, if any such certificate is to be issued in a name other than that of the holder of the share or shares of Class A Stock, Class B Stock or Class C Stock converted, the person or persons requesting the issuance thereof shall pay to the Corporation the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid.

(vi) Any shares of Class B Stock or Class C Stock which shall have been converted into Class A Stock at any time pursuant to the provisions of this subsection (f) shall, after such conversion, be retired. Any shares of Class A Stock which shall have been converted into Class B Stock at any time pursuant to the provisions of the proviso to subparagraph (vii) or the provisions of subparagraph (ix) of this subsection (f) shall, after such conversion, be retired.

(vii) Following consummation of the Holdco Contribution (as defined in the Formation Agreement), in the event that a holder of Class B Stock, other than DWA Escrow LLLP, (x) is not or ceases to be a Permitted Holder (including upon the death of a Permitted Holder) or (y) Transfers any shares of Class B Stock other than a Transfer to a Permitted Holder or in a Permitted Tender Offer, then such shares of Class B Stock held by such holder or so Transferred, as applicable, shall automatically, without any further act or deed on the part of the Corporation or any other Person, be converted into shares of Class A Stock on a one-for-one basis; provided, however, that if the special call right set forth in Section 2.04 of the Stockholder Agreement, dated as of October 27, 2004, among DWA Escrow LLLP, M&J K B Limited Partnership, M&J K Dream Limited Partnership, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust,

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DG DW L.P., Jeffrey Katzenberg and David Geffen (the “Class B Stockholder Agreement”) is exercised and consummated pursuant to the terms of such Section 2.04 within 45 days following such automatic conversion (as extended to the extent necessary to obtain any required antitrust or other required governmental approvals), then, upon the Transfer to the exercising Principal Holder (as defined in the Class B Stockholder Agreement) or its designee that is also a Permitted Holder, such shares of Class A Stock so Transferred shall automatically, without any further act or deed on the part of the Corporation or any other Person, be converted back into shares of Class B Stock on a one-for-one basis.

(viii) In the event that the holder of Class C Stock (x) is not or ceases to be Paul Allen or a Person Controlled By Paul Allen (including upon the death of Paul Allen) or (y) Transfers any shares of Class C Stock other than a Transfer to Paul Allen or a Person Controlled By Paul Allen, then such shares shall automatically, without any further act or deed on the part of the Corporation or any other Person, be converted into shares of Class A Stock on a one-for-one basis. In addition, on the first date after the Final Allocation that Paul Allen or Persons Controlled By Paul Allen do not continue to own (including upon the death of Paul Allen) at least an aggregate number of shares of Common Stock equal to one-third (1/3) of the sum of the total number of shares of Common Stock (A) held of record by Paul Allen and Persons Controlled By Paul Allen immediately after the Final Allocation and (B) held of record by DWA Escrow LLLP and allocated to Paul Allen or Persons Controlled By Paul Allen in the Final Allocation (as such one-third (1/3) number may be adjusted from time to time to take into account any stock split, reverse stock split, stock dividend or similar transaction), all shares of Class C Stock outstanding at such time shall automatically, without any further act or deed on the part of the Corporation or any other Person, be converted into shares of Class A Stock on a one-for-one basis. The date of conversion of the Class C Stock whether pursuant to this subparagraph (viii) or subparagraph (i) of this subsection (f) is referred to as the “Class C Conversion Date”. Promptly upon becoming aware of the occurrence of the Class C Conversion Date, the Corporation shall notify stockholders of such occurrence in any reasonably practicable manner, including by means of a press release reported by the Dow Jones News Service, Reuters Information Service or any similar or successor newswire service or in a communication distributed generally to stockholders or posted on the Corporation’s Internet website.

(ix) Each share of Class A Stock distributed to a Permitted Holder pursuant to the Residual DW Distribution (as defined in the Formation Agreement) shall automatically, without any further act or deed on the part of the Corporation or any other Person, be converted into one fully paid and nonassessable share of Class B Stock.

As used herein, the term “Control” (including the terms “Controlled By” and “Under Common Control With”), with respect to the relationship between or among two or more Persons, shall mean (A) in the case of a subject Person that is not an Estate Planning Vehicle, both (x) the possession, directly or indirectly, of the power to direct or

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cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise and (y) ownership, directly or indirectly, of a majority of the equity securities or equity interests of such subject Person and (B) in the case of a subject Person that is an Estate Planning Vehicle, the possession, directly or indirectly, of the sole and exclusive power (subject to applicable community property rights or laws and the status of a spouse as a co-trustee of an Estate Planning Vehicle) to direct or cause the direction of the affairs or management of such subject Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise.

As used herein, the term “Estate Planning Vehicle” shall mean a trust or partnership the principal beneficiaries or partners of which include only Jeffrey Katzenberg, his spouse, parents or issue, or issue thereof, and shall include M&J K B Limited Partnership, M&J K Dream Limited Partnership, The JK Annuity Trust, The MK Annuity Trust and Katzenberg 1994 Irrevocable Trust.

As used herein, the term “Final Allocation” shall have the meaning set forth in the Limited Liability Limited Partnership Agreement of DWA Escrow LLLP, dated as of October 27, 2004 (the “Holdco LLLP Agreement”) as in effect on the Closing Date (as hereinafter defined).

As used herein, the term “Formation Agreement” shall mean the Formation Agreement, dated as of October 27, 2004, among the Corporation, DreamWorks L.L.C., DWA Escrow LLLP, General Electric Company, NBC Universal, Inc., CJ Corp., Steven Spielberg, Jeffrey Katzenberg, David Geffen, Paul Allen and the stockholders of the Corporation party thereto.

As used herein, the term “Permitted Holder” shall mean any of Jeffrey Katzenberg, David Geffen or a Person Controlled By either or both of Jeffrey Katzenberg or David Geffen or a Person to whom shares of Class B Stock are Transferred in a Permitted Tender Offer.

As used herein, the term “Permitted Tender Offer” shall mean a bona fide third party tender offer or exchange offer made under Section 14(d) of the Securities Exchange Act of 1934, as amended, (or any successor provision thereto) (x) which is recommended by the Board or which has been publicly endorsed by each of Jeffrey Katzenberg and David Geffen (in each case to the extent he is or Controls a holder of Class B Stock at such time), (y) which is made to all holders of Common Stock and (z) in which Equivalent Consideration is offered in respect of each share of Common Stock.

As used in subparagraphs (vii) and (viii) of this subsection (f), the term “Person” shall include an individual.

As used herein, the term “Transfer” shall mean, directly or indirectly, (i) to sell, transfer, assign or similarly dispose of, whether voluntarily, involuntarily or by operation of law, (ii) to enter into an agreement (other than the Stockholder Agreement, the Class B Stockholder Agreement, the Formation Agreement and the Holdco LLLP

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Agreement) to vote, consent, grant a proxy or power of attorney or deposit shares into a voting trust, or the execution of a written consent, the grant of a proxy or power of attorney or the deposit of shares into a voting trust or (iii) to enter into a contract, option or other arrangement or understanding that upon consummation or foreclosure would effect a sale, transfer, assignment or similar disposition, other than, in each case, a Permitted Transfer (as defined in the Stockholder Agreement).

(g) In the event of any merger, consolidation, share exchange, tender offer, reclassification of the outstanding shares of Class A Stock, Class B Stock or Class C Stock or other reorganization to which the Corporation is a party, in which the shares of Class A Stock, Class B Stock or Class C Stock will be exchanged for or converted into, or will receive a distribution of, cash or other property or securities of the Corporation or any other Person, each share of Common Stock shall be entitled to receive Equivalent Consideration (as defined herein) on a per share basis. As used herein, the term “Equivalent Consideration” shall mean consideration in the same form, in the same amount and with the same voting rights on a per share basis; provided, however, that in the event that securities of the Corporation (or any surviving entity or any direct or indirect parent of the surviving entity) are to be offered or paid with respect to shares of Class A Stock, Class B Stock or Class C Stock in a Control Transaction, then such securities shall only be offered or paid on the basis of one class or series of securities with respect to shares of Class A Stock and another class or series of securities with respect to shares of Class B Stock and another class or series of securities with respect to shares of Class C Stock, and such securities (and, if applicable, the securities into which such securities are convertible, or for which they are exchangeable, or which they evidence the right to purchase) shall differ with respect to, but solely with respect to, their relative voting rights and related differences in conversion and share distribution provisions and, in the case of the Class C Stock, director appointment rights under Section 4(e) of this Article IV, and all such differences shall be identical to the corresponding differences in voting rights, conversion and share distribution provisions and, in the case of the Class C Stock, director appointment rights under Section 4(e) of this Article IV, between the Class A Stock, the Class B Stock and the Class C Stock, so as to preserve the relative voting rights and, in the case of the Class C Stock, director appointment rights under Section 4(e) of this Article IV, of each Class as in effect immediately prior such transaction; and provided further, however, that for the avoidance of doubt, consideration to be paid or received by a holder of Class A Stock, Class B Stock or Class C Stock in connection with any merger, consolidation, share exchange, tender offer, reclassification or other reorganization pursuant to any employment, consulting, severance or other arrangement shall not be deemed to be “consideration” that is included in the determination of “Equivalent Consideration”. As used herein, the term “Control Transaction” shall mean any merger, consolidation, share exchange, tender offer, reclassification or other reorganization to which the Corporation is a party in which the holders of Common Stock of the Corporation immediately prior to consummation of such transaction continue to hold at least a majority of the equity or Voting Power in the Corporation (or any surviving entity or any direct or indirect parent of the surviving entity) immediately after consummation of such transaction.

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(h) The Class A Stock, the Class B Stock and the Class C Stock are subject to all the powers, rights, privileges, preferences and priorities of any series of Preferred Stock as shall be stated and expressed in any resolution or resolutions adopted by the Board, pursuant to authority expressly granted to and vested in it by the provisions of this Article IV. Notwithstanding the foregoing, the issuance of Preferred Stock shall not eliminate or restrict the right of the holder of Class C Stock to elect the Class C Director (as defined below).

Preferred Stock. Subject to Section 4(c) of this Article IV, the Board is hereby expressly authorized, by resolution or resolutions, to provide, out of the unissued shares of Preferred Stock, for series of Preferred Stock and, with respect to each such series, to fix the number of shares constituting such series and the designation of such series, the voting powers (if any) of the shares of such series, and the preferences and relative, participating, optional or other special rights, if any, and any qualifications, limitations or restrictions thereof, of the shares of such series. The powers, preferences and relative, participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding.

Stockholder Voting. ii)Except as otherwise provided in this Restated Certificate of Incorporation or required by law, with respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of any outstanding shares of Class A Stock, the holders of any outstanding shares of Class B Stock and the holders of any outstanding shares of Class C Stock shall vote together without regard to class, and every holder of the outstanding shares of Class A Stock shall be entitled to cast thereon one (1) vote in person or by proxy for each share of Class A Stock standing in such holder’s name, every holder of the outstanding shares of Class B Stock shall be entitled to cast thereon fifteen (15) votes in person or by proxy for each share of Class B Stock standing in such holder’s name and the holder of the outstanding shares of Class C Stock shall be entitled to cast thereon one (1) vote in person or by proxy for each share of Class C Stock standing in such holder’s name.

In addition to any other vote required hereunder or by applicable law, the affirmative vote of the holders of a majority of the Voting Power of all outstanding shares of Class A Stock, voting separately as a class, shall be required for any amendment, alteration, change or repeal of Section 2 of Article IV, other than any amendment to Section 2(g) that (i) is approved by the requisite vote of the holders of Class B Stock and provides for shares of Class B Stock to be offered or paid securities in a Control Transaction that either have lesser voting rights than the shares of Class B Stock or that do not differ in any respect from the securities to be offered or paid with respect to shares of Class A Stock and does not otherwise affect the consideration to be offered or paid with respect to shares of Class A Stock and/or, as applicable, (ii) is approved by the requisite vote of the holder of Class C Stock and provides for shares of Class C Stock to be offered or paid securities in a Control Transaction that do not differ in any respect from the securities to be offered or paid with respect to shares of Class A Stock and does not otherwise affect the consideration to be offered or paid with respect to shares of Class A Stock.

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For so long as shares of Class B Stock are outstanding, and notwithstanding anything herein to the contrary, in addition to any other vote required hereunder or by applicable law, the affirmative vote of the holders of eighty-five percent (85%) of the Voting Power of all outstanding shares of Class B Stock, voting separately as a class, shall be required (i) for the authorization or issuance by the Corporation of shares of Class B Stock (other than pursuant to any dividend payable in shares of Class B Stock pursuant to Section 2(c)(i) of this Article IV or any automatic conversion of shares of Class A Stock into shares of Class B Stock pursuant to the proviso to subparagraph (vii) of Section 2(f) of this Article IV) or Class C Stock or the authorization or issuance by the Corporation of any securities convertible into or exchangeable for shares of Class B Stock or Class C Stock, or options, warrants or other rights to acquire shares of Class B Stock or Class C Stock or any securities convertible into or exchangeable for shares of Class B Stock or Class C Stock, (ii) for the authorization or issuance by the Corporation of shares of any series or class of capital stock (other than Class A Stock, Class B Stock or Class C Stock) having more than one vote per share or having any right to elect directors voting as a separate class or any class voting or consent rights, in each case other than as required by applicable law or the rules or regulations of any stock exchange upon which such series or class of capital stock is to be listed for trading (“Special Vote Stock”), or securities convertible into or exchangeable for shares of Special Vote Stock, or options, warrants or other rights to acquire shares of Special Vote Stock or any securities convertible into or exchangeable for shares of Special Vote Stock, (iii) except as otherwise provided in clause (iv) below, for any amendment, alteration, change or repeal of any provision of this Restated Certificate of Incorporation setting forth any of the rights, powers or preferences of the Class A Stock, Class B Stock or Class C Stock, (iv) for any amendment, alteration, change or repeal of Section 2 of Article IV, other than any amendment to Section 2(g) that is approved by the requisite vote of the holder of Class C Stock and provides for shares of Class C Stock to be offered or paid securities in a Control Transaction that do not differ in any respect from the securities to be offered or paid with respect to shares of Class A Stock and does not otherwise affect the consideration to be offered or paid with respect to shares of Class B Stock and (v) until such time as the outstanding shares of Class B Stock no longer represent at least fifty percent (50%) of the Voting Power of the outstanding Voting Stock (the “Trigger Date”), for the authorization or implementation by the Corporation of what is commonly known as a “poison pill” plan or stockholder rights plan or any similar plan, or the authorization of any series of Preferred Stock or other capital stock or securities of the Corporation for issuance, or the issuance of any such securities, in connection with any such plan. Notwithstanding anything herein to the contrary, the Trigger Date shall not occur as a result of a conversion of shares of Class B Stock into shares of Class A Stock pursuant to Section 2(f)(vii) of this Article IV which results from the death of Jeffrey Katzenberg or David Geffen (as applicable) or a judgment of a governmental entity or other involuntary action unless the special call right set forth in Section 2.04 of the Class B Stockholder Agreement is not exercised and consummated within the time period provided in Section 2(f)(vii) of this Article IV. Promptly upon becoming aware of the occurrence of the Trigger Date, the Corporation shall notify stockholders of such occurrence in any reasonably practicable manner, including by means of a press release reported by the Dow Jones News Service, Reuters Information Service or any similar or successor newswire service or in a communication distributed generally to stockholders or posted on the Corporation’s Internet website.

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For so long as shares of Class C Stock are outstanding, and notwithstanding anything herein to the contrary, in addition to any other vote required hereunder or by applicable law, the affirmative vote of the holder of the outstanding shares of Class C Stock, voting separately as a class, shall be required (i) for any amendment, alteration, change or repeal of Section 2 of Article IV, other than any amendment to Section 2(g) that is approved by the requisite vote of the holders of Class B Stock and provides for shares of Class B Stock to be offered or paid securities in a Control Transaction that either have lesser voting rights than the shares of Class B Stock or that do not differ in any respect from the securities to be offered or paid with respect to shares of Class A Stock and does not otherwise affect the consideration to be offered or paid with respect to shares of Class C Stock, (ii) for the authorization or issuance by the Corporation of shares of Class C Stock or the authorization or issuance by the Corporation of any securities convertible into or exchangeable for shares of Class C Stock, or options, warrants or other rights to acquire shares of Class C Stock or any securities convertible into or exchangeable for shares of Class C Stock or the reduction of the authorized number of shares of Class C Stock and (iii) except as otherwise provided in clause (i) above, for any amendment, alteration, change or repeal of any provision of this Restated Certificate of Incorporation setting forth any of the rights, powers or preferences of the Class C Stock.

Commencing on the first business day (the “Class C Director Date”) following the date of the closing of the initial public offering of Class A Stock (the “Closing Date”) and for so long as shares of Class C Stock are outstanding, and notwithstanding anything herein to the contrary, the holder of the outstanding shares of Class C Stock, voting separately as a class, shall be entitled to elect one director of the Corporation (the “Class C Director”) at each annual meeting of stockholders for the election of directors of the Corporation (or special meeting if called to fill any vacancy in the office of the Class C Director); provided, however, that the initial Class C Director shall be elected by written consent of the holder of record of the outstanding shares of Class C Stock on the Class C Director Date or such later date as selected by the holder of the outstanding shares of Class C Stock. For so long as shares of Class C Stock are outstanding, the Class C Director may be removed, without cause, only by the vote or consent of the holder of record of the outstanding shares of Class C Stock, voting separately as a class. So long as shares of Class C Stock are outstanding, any vacancy resulting from death, resignation, disqualification, removal (including for cause) or other reason in the office of the Class C Director may be filled only by the person elected by the vote of the holder of record of the outstanding shares of Class C Stock, voting separately as a class.

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DGCL Section 203

The Company hereby expressly elects not to be governed by the provisions of Section 203 of the DGCL, and the restrictions and limitations set forth therein.

Directors

Board of Directors. iii)The business and affairs of the Corporation shall be managed by or under the direction of the Board, the exact number of directors comprising the entire Board to be not less than three nor more than twelve (subject to any rights of the holders of Preferred Stock to elect additional directors under specified circumstances) as determined from time to time by resolution adopted by affirmative vote of a majority of the entire Board. As used in this Restated Certificate of Incorporation, the term “entire Board” means the total number of directors that the Corporation would have if there were no vacancies or unfilled newly created directorships.

Directors shall be elected at each annual meeting of stockholders, and each director elected shall hold office until such director’s successor has been elected and qualified, subject, however, to earlier death, resignation or removal from office.

Removal; Filling of Newly Created Directorships and Vacancies. iv)Subject to the rights of the holders of any series of Preferred Stock then outstanding and subject to Section 4(e) of Article IV, any director or the entire Board may be removed, with or without cause, by the affirmative vote of a majority of the combined Voting Power of the outstanding Voting Stock. Notwithstanding the foregoing, whenever holders of outstanding shares of one or more series of Preferred Stock are entitled to elect directors of the Corporation pursuant to the provisions contained in the resolution or resolutions of the Board providing for the establishment of any such series, any such director of the Corporation so elected may be removed in accordance with the provisions of such resolution or resolutions.

Except as otherwise provided for or fixed by or pursuant to the provisions of Article IV of this Restated Certificate of Incorporation relating to the rights of the holders of any series of Preferred Stock and subject to Section 4(e) of Article IV, (A) newly created directorships resulting from any increase in the number of directors shall be filled by the Board by the affirmative vote of a majority of the directors then in office, or by the stockholders by the affirmative vote of the holders of a majority of the combined Voting Power of the Voting Stock, voting together as a single class and (B) any vacancies on the Board resulting from death, resignation, removal or other cause shall be filled by the Board by the affirmative vote of a majority of the remaining directors then in office, even though less than a quorum of the Board, or by a sole remaining director, or by the stockholders by the affirmative vote of the holders of a majority of the combined Voting Power of the Voting Stock, voting together as a single class.

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Advance Notice of Nominations. Subject to Section 2 and Section 3 of Article VIII and Article IX of this Restated Certificate of Incorporation, advance notice of nominations for the election of directors shall be given in the manner and to the extent provided in the By-laws of the Corporation.

Limitation on Director Liability. To the fullest extent that the DGCL or any other law of the State of Delaware as it exists or as it may hereafter be amended permits the limitation or elimination of the liability of directors, no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. No amendment to or repeal of this Section 4 of this Article VI shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

Composition of Certain Committees of the Board. (a) Until the earlier of the Independence Date (as defined below but solely with reference to clause (1) of such definition) and the date that no shares of Class B Stock shall remain outstanding, the nominating and corporate governance committee of the Board shall be composed solely of (i) the director then in office who was designated as the JK Designee under the Stockholder Agreement, (ii) the director then in office who was designated as the DG Designee under the Stockholder Agreement (in each case for so long as the JK Designee and the DG Designee, as applicable, shall be entitled to remain on the Board in accordance with the Stockholder Agreement) and (iii) the Class C Director (unless the Class C Conversion Date shall have occurred). Until the earlier of (x) the date (the “Independence Date”) that (1) the Corporation, in the opinion of counsel to the Corporation, shall be required by law or the rules of any applicable securities exchange to have a nominating and corporate governance committee comprised solely of “independent directors” as defined by the requirements of law or such securities exchange (with no exemptions or exceptions from such law or rules under which the Corporation would qualify (as a result of being “closely held” or otherwise) that would permit the Class C Director to serve on the nominating and corporate governance committee) and (2) the Board determines that the Class C Director is not an “independent director” within the meaning of such law or rules and (y) the Class C Conversion Date, the Class C Director shall be included on the nominating and corporate governance committee of the Board.

(b) In the event that the Board shall form an executive committee, or a committee that performs functions substantially similar to an executive committee, the JK Designee, the DG Designee and the Class C Director (if any) shall be included on such committee of the Board (for so long as such committee shall be in existence and, in the case of the JK Designee and the DG Designee, such Designee shall be entitled to remain on the Board in accordance with the Stockholder Agreement, and, in the case of the Class C Director, the Class C Conversion Date shall not have occurred). For purposes of the preceding sentence, an “executive committee” of the Board shall mean any committee of

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the Board that, to the extent permitted by law, exercises substantially all of the authority of the Board in the management of the business and affairs of the Company when the Board is not in session.

Provisions Relating to the Founding Stockholders

Founding Stockholders. In anticipation that the majority of the capital stock of the Corporation will cease to be owned, directly or indirectly, by Jeffrey Katzenberg, David Geffen and Persons Controlled By them (collectively, the “Founding Stockholders”), but that the Founding Stockholders will remain, directly or indirectly, stockholders of the Corporation, and in anticipation that the Corporation and the Founding Stockholders may engage, directly or indirectly, in the same or similar activities or lines of business and have an interest in the same areas of corporate opportunities, and in recognition of the benefits to be derived by the Corporation through its continued contractual, corporate and business relations with the Founding Stockholders (including potential service of officers, directors, members, stockholders, partners or employees of the Founding Stockholders as officers, directors and employees of the Corporation), the provisions of this Article VII are set forth to regulate, define and guide, to the fullest extent permitted by the DGCL, the conduct of certain affairs of the Corporation as they may involve the Founding Stockholders and their respective officers, directors, members, partners and employees and the powers, rights and duties of the Corporation and the Founding Stockholders and their respective officers, directors, employees, members, stockholders and partners in connection therewith. The following provisions shall be applicable to the maximum extent permitted by applicable Delaware law.

Competition and Corporate Opportunities. None of the Founding Stockholders or any director, officer, member, partner, stockholder or employee of any Founding Stockholder (each a “Specified Party”), independently or with others, shall have any duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation and that might be in direct or indirect competition with the Corporation. In the event that any Founding Stockholder or Specified Party acquires knowledge of a potential transaction or matter that may be a corporate opportunity for any Founding Stockholder or Specified Party, as applicable, and the Corporation, none of the Founding Stockholders or Specified Parties shall have any duty to communicate or offer such corporate opportunity to the Corporation, and any Founding Stockholder and Specified Party shall be entitled to pursue or acquire such corporate opportunity for itself or to direct such corporate opportunity to another person or entity and the Corporation shall have no right in or to such corporate opportunity or to any income or proceeds derived therefrom.

Allocation of Corporate Opportunities. (a) To the maximum extent permitted by applicable Delaware law, in the event that a director, officer or employee of the Corporation who is also a Founding Stockholder or Specified Party acquires knowledge of a potential transaction or matter that may be a corporate opportunity or

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otherwise is then exploiting any corporate opportunity, subject to Section 3(b) of this Article VII, the Corporation shall have no interest in such corporate opportunity and no expectancy that any corporate opportunity be offered to the Corporation, any such interest or expectancy being hereby renounced, so that, as a result of such renunciation, and for the avoidance of doubt, such Specified Party (i) shall have no duty to communicate or present such corporate opportunity to the Corporation, (ii) shall have the right to hold any such corporate opportunity for its own account or to recommend, sell, assign or transfer such corporate opportunity to Persons other than the Corporation and (iii) shall not breach any fiduciary duty to the Corporation by reason of the fact that such Specified Party pursues or acquires any such corporate opportunity for itself or directs, sells, assigns or transfers such corporate opportunity to another Person or does not communicate information regarding such corporate opportunity to the Corporation.

(b) Notwithstanding the provisions of Sections 2 and 3(a) of this Article VII, the Corporation does not renounce any interest or expectancy it may have in any corporate opportunity that is offered to any Founding Stockholder or Specified Party, if such opportunity is expressly offered to such Founding Stockholder or Specified Party solely in, and as a direct result of, his or her capacity as a director, officer or employee of the Corporation.

(c) No amendment or repeal of this Section 3 of this Article VII shall apply to or have any effect on the liability or alleged liability of any Founding Stockholder or Specified Party for or with respect to any corporate opportunity of which such Founding Stockholder or Specified Party becomes aware prior to such amendment or repeal.

(d) Notwithstanding anything to the contrary in this Article VII, if the Chief Executive Officer of the Corporation shall be a Specified Party by virtue of his relationship to DreamWorks L.L.C., then any corporate opportunity offered to such officer shall be deemed to have been offered to such officer in his capacity as an officer of the Corporation (and shall belong to the Corporation) unless such offer clearly and expressly is presented to such officer solely in his capacity as an officer, employee, director or member of DreamWorks L.L.C.

Certain Matters Deemed Not Corporate Opportunities. v)In addition to and notwithstanding the foregoing provisions of this Article VII, a corporate opportunity shall not be deemed to belong to the Corporation, and the Corporation hereby renounces any interest therein, if it is a business opportunity that the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.

For purposes of this Article VII only, (i) the term “Corporation” shall mean the Corporation and all corporations, limited liability companies, partnerships, joint ventures, associations and other entities in which the Corporation beneficially owns (directly or indirectly) fifty percent (50%) or more of the outstanding voting stock, voting power or similar voting interests, except that for purposes of determining those persons

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who are directors of the Corporation, such term shall mean the Corporation without regard to any other entities in which it may hold an interest, and (ii) the term “Founding Stockholder” shall mean a Founding Stockholder and all corporations, limited liability companies, partnerships, joint ventures, associations and other entities (other than, if applicable, the Corporation) in which such Founding Stockholder beneficially owns (directly or indirectly) fifty percent (50%) or more of the outstanding voting stock, voting power or similar interests and shall also include those entities that constitute its corporate members or partners.

Expiration of Certain Provisions. Notwithstanding anything in this Restated Certificate of Incorporation to the contrary, the provisions of this Article VII shall expire as to any Founding Stockholder on (with respect to any corporate opportunity arising on or after) the date that both (i) such Founding Stockholder ceases to own beneficially Common Stock representing at least five percent (5%) of the Voting Power of outstanding shares of Common Stock of the Corporation and (ii) no person is a Specified Party. Notwithstanding anything in this Restated Certificate of Incorporation to the contrary, the provisions of this Article VII shall expire as to any Specified Party on the date that such person ceases to be a Specified Party. Neither the alteration, amendment, change or repeal of any provision of this Article VII nor the adoption of any provision of this Restated Certificate of Incorporation inconsistent with any provision of this Article VII shall eliminate or reduce the effect of this Article VII in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article VII, would accrue or arise, prior to such alteration, amendment, repeal or adoption.

Deemed Notice. Any person or entity purchasing or otherwise acquiring any interest in any shares of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article VII.

Stockholder Meetings

Meetings Generally. Meetings of stockholders may be held within or without the State of Delaware, as the By-laws of the Corporation may provide. The books of the Corporation may be kept (subject to any provision of Delaware law) outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the By-laws of the Corporation. Elections of directors need not be by written ballot unless the By-laws of the Corporation shall so provide.

Special Meetings. Until the Trigger Date, special meetings of the stockholders shall be called only (i) upon the written request of (x) a record holder of Class B Stock or (y) the holders of not less than a majority of the combined Voting Power of the outstanding Voting Stock entitled to vote at such meeting, (ii) upon the request of a majority of the Board or (iii) upon request of the chief executive officer. Effective on and after the Trigger Date, special meetings of the stockholders shall be called only (i) upon the request of a majority of the Board or (ii) upon the written request of a record holder of Class B Stock. Special meetings of the stockholders may be held at

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such time and place as may be stated in the notice of meeting. Notwithstanding anything to the contrary in this Section 2 of this Article VIII, a special meeting of the holder of the outstanding shares of Class C Stock may be called by the record holder of the outstanding shares of Class C Stock at any time following the Closing Date for the purpose of filling any vacancy in the office of the Class C Director and such meeting shall not be subject to the advance notice procedures of the By-laws of the Corporation.

Advance Notice Requirements. So long as the outstanding shares of Class B Stock represent thirty percent (30%) or more of the combined Voting Power of the outstanding Voting Stock, nominations and stockholder proposals by record holders of Class B Stock, as such, shall not be subject to the advance notice procedures of the By-laws of the Corporation. Until the Class C Conversion Date, nomination of the Class C Director by the record holder of the outstanding shares of Class C Stock shall not be subject to the advance notice procedures of the By-laws of the Corporation. Notwithstanding anything herein to the contrary, solely for purposes of this Section 3 of Article VIII, the foregoing thirty percent (30%) requirement shall not cease to be satisfied as a result of a conversion of shares of Class B Stock into shares of Class A Stock pursuant to Section 2(f)(vii) of Article IV which results from the death of Jeffrey Katzenberg or David Geffen (as applicable) or a judgment of a governmental entity or other involuntary action unless the special call right set forth in Section 2.04 of the Class B Stockholder Agreement is not exercised and consummated within the time period provided in Section 2(f)(vii) of Article IV.

Action by Written Consent

Until the Trigger Date, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock of the Corporation having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of stock of the Corporation entitled to vote thereon were present and voted. Effective on and after the Trigger Date, subject to the rights of the holders of any series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders. Notwithstanding anything to the contrary in this Article IX, the record holder of the outstanding shares of Class C Stock may take any action required or permitted to elect or remove the Class C Director without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, shall be signed by the record holder of the outstanding shares of Class C Stock.

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By-laws

In furtherance and not in limitation of the powers conferred upon it by law, the Board is expressly authorized to adopt, repeal, alter or amend the By-laws of the Corporation by the vote of a majority of the entire Board. In addition to any requirements of law and any other provision of this Restated Certificate of Incorporation or any resolution or resolutions of the Board adopted pursuant to Article IV of this Restated Certificate of Incorporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Restated Certificate of Incorporation or any such resolution or resolutions), (i) until the Trigger Date, the affirmative vote of the holders of a majority of the combined Voting Power of the outstanding Voting Stock, voting together as a single class, shall be required for stockholders to adopt, amend, alter or repeal any provision of the By-laws and (ii) on and after the Trigger Date, the affirmative vote of the holders of eighty percent (80%) of the combined Voting Power of the outstanding Voting Stock, voting together as a single class, shall be required for stockholders to adopt, amend, alter or repeal any provision of the By-laws.

Amendment of Certain Articles

Notwithstanding any other provision of this Restated Certificate of Incorporation to the contrary, the provisions set forth in this Article XI and in Article V, Section 3 of Article VI, Article VII, Article VIII, Article IX and the last sentence of Article X may not be amended, altered, changed or repealed in any respect unless such amendment, alteration, change or repeal is approved by the affirmative vote of not less than eighty percent (80%) of the combined Voting Power of the outstanding Voting Stock.

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IN WITNESS WHEREOF, I, Katherine Kendrick, General Counsel and Secretary of DreamWorks Animation SKG, Inc., have executed this Restated Certificate of Incorporation as of the 25th day of October 2004.

	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	General Counsel and Secretary

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EX-3.2

EXHIBIT 3.2

BY-LAWS

OF

DREAMWORKS ANIMATION SKG, INC.

(HEREINAFTER CALLED THE “CORPORATION”)

OFFICES AND AGENT

Registered Office and Agent. The address of the registered office of the Corporation in the State of Delaware is Capitol Services, Inc., 615 South Dupont Highway, Dover, Delaware. The name of its registered agent at such address is Capitol Services, Inc.

Other Offices. The Corporation may also have offices at other places, either within or without the State of Delaware, as the Board of Directors of the Corporation (the “Board”) may from time to time determine or as the business of the Corporation shall require.

MEETINGS OF STOCKHOLDERS

Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such place, if any, either within or without the State of Delaware, as shall be designated from time to time by the Board and stated in the notice of meeting or in a duly executed waiver of notice thereof. Adjournments of meetings may be held at the place at which the meeting adjourned is being held, or at any other place determined by the Board, whether or not a quorum shall have been present at such meeting.

Annual Meetings. To the extent required by applicable law or the Restated Certificate of Incorporation of the Corporation, an annual meeting of the stockholders for the election of directors and the transaction of such other business as may properly come before the meeting shall be held at such time and on such date as shall be determined by the Board and stated in the notice of the meeting.

Special Meetings. Except as otherwise provided by applicable law, special meetings of the stockholders shall be called only in accordance with the provisions of the Restated Certificate of Incorporation of the Corporation. Only such business as is specified in the notice of any special meeting of the stockholders shall come before such meeting.

Notice of Meetings. Except as otherwise provided by applicable law, notice of each meeting of the stockholders, whether annual or special, shall be given not less than ten days nor more than 60 days before the date of the meeting to each stockholder of record entitled to notice of the meeting. If mailed, such notice shall be

deemed given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Each such notice shall state the place, if any, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Notice of any meeting of the stockholders shall not be required to be given to any stockholder who shall waive notice thereof as provided in Section 4 of Article VIII of these By-laws. Notice of adjournment of a meeting of the stockholders need not be given if the time and place to which it is adjourned are announced at such meeting, unless the adjournment is for more than 30 days or, after adjournment, a new record date is fixed for the adjourned meeting.

Quorum; Adjournment. Except as otherwise provided by applicable law or by the Restated Certificate of Incorporation of the Corporation, the holders of a majority in total voting power of the outstanding capital stock of the Corporation entitled to vote at a meeting of the stockholders, present in person or represented by proxy, shall constitute a quorum for the transaction of business at any annual or special meeting of the stockholders; provided, however, that where a separate vote by a class or series of capital stock is required, the holders of a majority in total voting power of the outstanding capital stock of such class or series, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to such vote on such matter. The Chairman of the meeting or the holders of a majority of the votes entitled to be cast by the stockholders who are present in person or by proxy may adjourn the meeting from time to time whether or not a quorum is present. In the event that a quorum does not exist with respect to any vote to be taken by a particular class or series, the Chairman of the meeting or the holders of a majority of the votes entitled to be cast by the stockholders of such class or series who are present in person or by proxy may adjourn the meeting with respect to the vote(s) to be taken by such class or series. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting not less than ten nor more than 60 days before the date of the meeting, unless a different period is prescribed by applicable law.

Proxies. Any stockholder entitled to vote at a meeting of the stockholders may do so in person or by proxy appointed by such stockholder or by such stockholder’s attorney thereto authorized, and bearing a date not more than three years prior to such meeting, unless such instrument provides for a longer period. All proxies must be filed with the Secretary of the Corporation at the beginning of the applicable meeting in order to be counted in any vote at such meeting.

Voting. Except as otherwise provided by the Restated Certificate of Incorporation of the Corporation, these By-laws, the rules or regulations of any stock exchange applicable to the Corporation or its securities or applicable law, and except for the election of directors, any question brought before any meeting of the stockholders at which a quorum is present shall be decided by the affirmative vote of the holders of a majority of the total number of votes of the capital stock present in person or represented by proxy and entitled to vote on the applicable subject matter.

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Organization; Order of Business. i)At every meeting of stockholders, the Chairman of the Board, or in such person’s absence, the Chief Executive Officer, or in the absence of both of them, the Chief Operating Officer or any Vice President, shall act as Chairman of the meeting. In the absence of the Chairman of the Board, the Chief Executive Officer, the Chief Operating Officer and each Vice President, the Board, or if the Board fails to act, the stockholders may appoint any stockholder, director or officer of the Corporation to act as Chairman of any meeting. The Secretary of the Corporation shall act as Secretary of the meeting, but in the absence of the Secretary, the Chairman of the meeting may appoint any person to act as Secretary of the meeting.

(1) Except as otherwise provided in the Restated Certificate of Incorporation of the Corporation, nominations of persons for election to the Board and the proposal of business to be considered by the stockholders may be made at any annual meeting of the stockholders, only (i) pursuant to the Corporation’s notice of meeting (or any supplement thereto), (ii) by or at the direction of the Board or (iii) by any stockholder who is a holder of record at the time of the giving of the notice provided for in this Section 8, who is entitled to vote at the meeting and who complies with the procedures set forth in this Section 8.

Except as otherwise provided in the Restated Certificate of Incorporation of the Corporation, for nominations or business properly to be brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation and any such proposed business other than the nomination of persons for election to the Board must constitute a proper matter for stockholder action. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days earlier or more than 60 days later than such anniversary date, notice by the stockholder to be timely must be so delivered or received not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made; provided further, however, that for the purpose of calculating the timeliness of stockholder notices for the 2005 annual meeting of stockholders, the date of the immediately preceding annual meeting shall be deemed to be May 15, 2004. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. To be in proper written form, a stockholder’s notice to the Secretary of the Corporation shall set forth in writing as to each matter the stockholder proposes to bring before the annual meeting: (i) as to each person whom the stockholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required pursuant to

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Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration) and the reasons for conducting such business at the annual meeting and in the event that such business includes a proposal to amend the by-laws of the Corporation, the language of the proposed amendment; (iii) the name and address, as they appear on the Corporation’s books, of the stockholder proposing such business or nomination and the name and address of the beneficial owner, if any, on whose behalf the nomination or proposal is being made; (iv) the class or series and number of shares of the Corporation which are beneficially owned or owned of record by the stockholder and the beneficial owner; (v) any material interest of the stockholder in such business; (vi) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such annual meeting and intends to appear in person or by proxy at such meeting to propose such business; and (vii) if the stockholder intends to solicit proxies in support of such stockholder’s proposal, a representation to that effect. The foregoing notice requirements shall be deemed satisfied by a stockholder if the stockholder has notified the Corporation of his or her intention to make a nomination or present a proposal at an annual meeting and such stockholder’s nominee or proposal has been included in a proxy statement that has been prepared by management of the Corporation to solicit proxies for such annual meeting; provided, however, that if such stockholder does not appear or send a qualified representative to present such nominee or proposal at such annual meeting, the Corporation need not present such nominee or proposal for a vote at such meeting notwithstanding that proxies in respect of such vote may have been received by the Corporation. For purposes of this Section 8 of Article II, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of such writing or electronic transmission, at the meeting of stockholders. The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a director of the Corporation.

Notwithstanding anything in paragraph (b)(2) above to the contrary, in the event that the number of directors to be elected to the Board at an annual meeting of the stockholders is increased and there is no public announcement naming all of the nominees for directors or specifying the size of the increased Board made by the Corporation at least 90 days prior to the first anniversary of the date of the immediately preceding annual meeting, a stockholder’s notice required by this Section 8 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to or mailed to and received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation; provided, however, that for the purpose of calculating the timeliness of

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public announcements by the Corporation for the 2005 annual meeting of stockholders, the date of the immediately preceding annual meeting shall be deemed to be May 15, 2004.

(c) Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (i) by or at the direction of the Board or (ii) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder who is a holder of record at the time of the giving of notice provided for in this Section 8, who is entitled to vote at the meeting and who complies with the procedures set forth in this Section 8 (except as otherwise provided in the Restated Certificate of Incorporation of the Corporation). In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder has given timely notice thereof in proper written form to the Secretary of the Corporation (except as otherwise provided in the Restated Certificate of Incorporation of the Corporation). To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. To be in proper written form, such notice must meet the requirements of paragraph (b)(2) above.

Except as otherwise provided in the Restated Certificate of Incorporation of the Corporation, only such persons who are nominated in accordance with this Section 8 (including, for avoidance of doubt, pursuant to the fifth sentence of paragraph (b)(2) above) shall be eligible to serve as directors of the Corporation and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 8 (including, for avoidance of doubt, pursuant to the fifth sentence of paragraph (b)(2) above). The Chairman of a meeting shall refuse to permit any business to be brought before the meeting which fails to comply with the foregoing or if a stockholder solicits proxies in support of such stockholder’s nominee or proposal without such stockholder having made the representation required by clause (vii) of paragraph (b)(2) above.

(e) Notwithstanding the foregoing provisions of this Section 8 of Article II, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 8 of Article II. Nothing in this Section 8 of Article II shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals or nominations in the Corporation’s proxy statement pursuant to applicable rules and regulations promulgated

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under the Exchange Act or (ii) of the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Restated Certificate of Incorporation of the Corporation.

Action by Written Consent. Stockholders may act by written consent solely to the extent provided in the Restated Certificate of Incorporation of the Corporation.

Meeting by Remote Communication. If authorized by the Board in its sole discretion, and subject to such guidelines and procedures as the Board may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication, participate in a meeting of stockholders and be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote communication; provided, however, that (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at such meeting by means of remote communication is a stockholder or proxyholder, (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in such meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of such meeting substantially concurrently with such proceedings and (iii) if any stockholder or proxyholder votes or takes other action at such meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

Voting List. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting as required by applicable law. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder of the Corporation who is present.

Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to the identity of the stockholders entitled to examine the list required by Section 10 of this Article II or to vote in person or by proxy at any meeting of stockholders.

Record Date. In order that the Corporation may determine the stockholders entitled to (i) notice of or to vote at any meeting of the stockholders or any adjournment thereof, (ii) unless otherwise provided in the Restated Certificate of Incorporation of the Corporation, express consent to corporate action by written consent without a meeting, (iii) receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or

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exchange of stock, or (iv) for the purpose of any other lawful action, the Board may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which record date shall, unless otherwise required by law, not be: (a) in the case of clause (i) above, more than 60 nor less than ten days before the date of such meeting, (b) in the case of clause (ii) above, more than ten days after the date upon which the resolution fixing the record date was adopted by the Board and (c) in the case of clauses (iii) and (iv), more than 60 days prior to such action. If no record date is fixed: (a) the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (b) the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting (unless otherwise provided in the Restated Certificate of Incorporation of the Corporation), when no prior action by the Board is required under the General Corporation Law of the State of Delaware, as amended from time to time (the “General Corporation Law”), shall be the first day on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded; and when prior action by the Board is required under the General Corporation Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board adopts the resolution taking such prior action; and (c) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

Inspectors of Election. The Corporation may, and at the request of any stockholder or if required by law shall, before or at each meeting of stockholders, appoint one or more inspectors of elections to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the Chairman of the meeting may, and at the request of any stockholder or if required by law shall, appoint one or more inspectors to act at the meeting. Unless otherwise required by law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath to execute faithfully the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector or inspectors so appointed or designated shall (i) ascertain the number of outstanding shares of capital stock of the Corporation and the voting power of each such share, (ii) determine the shares of capital stock of the Corporation represented at the meeting and the validity of proxies and ballots, (iii) count all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors and (v) certify their determination of the number of shares of capital stock of the Corporation represented at the meeting and such inspectors’

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count of all votes and ballots. Such certification and report shall specify such other information as may be required by law. In determining the validity and counting of proxies and ballots cast at any meeting of the stockholders of the Corporation, the inspectors may consider such information as is permitted by applicable law. No person who is a candidate for an office at an election may serve as an inspector at such election.

Public Announcements. For the purpose of Section 8 of this Article II, “public announcement” shall mean disclosure (a) in a press release reported by the Dow Jones News Service, Reuters Information Service or any similar or successor news wire service or (b) in a communication distributed generally to stockholders and in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act or any successor provisions thereto.

BOARD OF DIRECTORS

General Powers. The business of the Corporation shall be managed by or under the direction of the Board. In addition to the powers and authority herein or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of applicable law, the Restated Certificate of Incorporation of the Corporation and these By-laws; provided, however, that no By-laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-laws had not been adopted.

Number of Directors. Subject to any rights of the holders of any series of Preferred Stock of the Corporation outstanding at any time to elect additional directors to the Board, the number of directors of the Corporation shall not be less or more than the range specified in the Restated Certificate of Incorporation of the Corporation, the exact number of directors to be such number as may be set from time to time within the limits set forth above by resolution adopted by affirmative vote of a majority of the entire Board. As used in these By-laws, the term “entire Board” means the total number of directors that the Corporation would have if there were no vacancies or unfilled newly created directorships.

Election of Directors. ii)Except as otherwise required by statute or by the Restated Certificate of Incorporation of the Corporation (including Section 4(e) of Article IV thereof), directors shall be elected by a plurality of the votes cast at a meeting of stockholders by the holders of shares of the Corporation entitled to vote thereon, voting together as a single class.

Unless otherwise determined by the Board, a director shall not be qualified or eligible for re-election to the Board for a subsequent term if such director has failed to attend (in person or by conference telephone) at least seventy-five percent (75%) of the total number of meetings of the Board and any committees of the Board of which he or she is a member (other than such failures attributable to the applicable director’s

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illness, death or illness in such director’s family or similar circumstance) held during the course of such director’s then current term. In the event that the Class C Director then in office shall not be qualified or eligible for re-election to the Board under this Section 3(b), then the holder of the Corporation’s Class C Common Stock, par value $0.01 per share, shall be entitled to elect a replacement Class C Director in accordance with the Restated Certificate of Incorporation of the Corporation.

Majority Independent Directors. Following the first anniversary of the listing of the Corporation’s Class A Common Stock, par value $0.01 per share, on a national securities exchange (the “Listing Date Anniversary”), for so long as any class of capital stock of the Corporation is listed on a national securities exchange, a majority of the directors of the Corporation shall be “independent directors” as defined by the requirements of such national securities exchange (“Independent Directors”). Notwithstanding the foregoing, the holder of the Corporation’s Class C Common Stock, par value $0.01 per share (the “Class C Holder”), shall not be restricted from nominating, electing or maintaining a Class C Director (as defined in the Restated Certificate of Incorporation of the Corporation) who is determined by the Board not to be an Independent Director.

Resignations. Any director of the Corporation may resign at any time, by giving notice in writing or by electronic transmission to the Board, the Chairman of the Board, the Chief Executive Officer or the Secretary of the Corporation. Such resignation shall take effect after receipt of the applicable notice of resignation by the Board, the Chairman of the Board, the Chief Executive Officer or the Secretary of the Corporation at the time specified in such notice or, if no time is specified, immediately upon receipt of such notice by the Board, the Chairman of the Board, the Chief Executive Officer or the Secretary of the Corporation. Unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective.

Removal of Directors. Directors may only be removed as provided in the Restated Certificate of Incorporation of the Corporation.

Newly Created Directorships and Vacancies. Newly created directorships resulting from any increase in the number of directors and any vacancies on the Board resulting from death, resignation, removal or other cause shall only be filled as provided in the Restated Certificate of Incorporation of the Corporation.

Chairman of the Board. The directors shall elect one of their members to be Chairman of the Board. The Chairman of the Board shall perform such duties as may from time to time be assigned by the Board. The Chairman of the Board shall be subject to the control of and may be removed from such office by the Board.

Annual Meetings. The Board shall meet for the election of officers and the transaction of other business as soon as practicable after each annual meeting of the stockholders, and no notice of such meeting shall be necessary in order legally to constitute the meeting; provided, however, that a quorum is present. Such meeting may be held at any other time or place specified in a notice given as hereinafter provided for regular meetings of the Board.

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Regular Meetings. The Board may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board may be held at such time and at such place as may from time to time be determined by the Board. The Secretary, or in his or her absence any other officer of the Corporation, shall give each director notice of the time and place of holding of regular meetings of the Board by mail at least five days before the meeting, or by facsimile, telegram, cable, electronic transmission or personal service at least two days before the meeting, unless such notice requirement is waived in writing or by electronic transmission by such director.

Special Meetings. Special meetings of the Board may be called by the Chairman of the Board or the Chief Executive Officer, and shall be called by the Secretary of the Corporation upon the written request of not less than a majority of the members of the Board then in office. Special meetings of the Board shall be held at such time and place as shall be designated in the notice of the meeting. The Secretary, or in his or her absence any other officer of the Corporation, shall give each director notice of the time and place of holding of special meetings of the Board by mail at least five days before the meeting, or by facsimile, telegram, cable, electronic transmission or personal service at least two days before the meeting, unless such notice requirement is waived in writing or by electronic transmission by such director. Unless otherwise stated in the notice thereof, any and all business shall be transacted at any meeting without specification of such business in the notice.

Quorum. Except as otherwise required by applicable law, the Restated Certificate of Incorporation of the Corporation or these By-laws, at all meetings of the Board, a majority of the entire Board shall constitute a quorum for the transaction of business. If a quorum shall not be present at any meeting of the Board, a majority of those present may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present.

Manner of Acting. Except as otherwise provided by applicable law, the Restated Certificate of Incorporation of the Corporation or these By-laws, all matters presented to the Board (or a committee thereof) shall be approved by the affirmative vote of a majority of the directors present at any meeting of the Board (or such committee) at which there is a quorum (the foregoing is referred to herein as a “simple majority”).

Organization. Meetings shall be presided over by the Chairman of the Board, or in the absence of the Chairman of the Board, by such other person as the directors may select. The Board shall keep written minutes of its meetings. The Secretary of the Corporation shall act as Secretary of the meeting, but in the absence of the Secretary, the Chairman of the meeting may appoint any person to act as Secretary of the meeting.

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Action by Written Consent. Unless otherwise required by the Restated Certificate of Incorporation of the Corporation or these By-laws, any action required or permitted to be taken at any meeting of the Board or of any committee thereof may be taken without a meeting, if all the members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or such electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee thereof in accordance with applicable law.

Meetings by Means of Conference Telephone. Unless otherwise required by the Restated Certificate of Incorporation of the Corporation or these By-laws, members of the Board, or any committee thereof, may participate in a meeting of the Board or such committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this Section 16 shall constitute presence in person at such meeting.

Compensation. Each director (other than the Class C Director), in consideration of such person serving as a director, shall be entitled to receive from the Corporation such amount per annum and such fees (payable in cash or stock-based compensation) for attendance at meetings of the Board or of committees of the Board, or both, as the Board shall from time to time determine. In addition, each director (other than the Class C Director) shall be entitled to receive from the Corporation reimbursement for the reasonable expenses incurred by such person in connection with the performance of such person’s duties as a director. Nothing contained in this Section 17 shall preclude any director (other than the Class C Director) from serving the Corporation or any of its subsidiaries in any other capacity and receiving compensation therefor.

COMMITTEES

Constitution and Powers. (1)Subject to Section 5 of Article VI of the Restated Certificate of Incorporation of the Corporation, and except as otherwise provided by applicable law, the Restated Certificate of Incorporation of the Corporation or these By-laws, the Board may, by resolution of a simple majority of its members, designate one or more committees. Initially, the Corporation shall have the following committees of the Board: the nominating and corporate governance committee (which shall be constituted as provided in Section 5 of Article VI of the Restated Certificate of Incorporation of the Corporation so long as the provisions thereof are applicable thereto), the audit committee and the compensation committee. Each committee shall consist of one or more directors of the Corporation. Except as provided by applicable law, the Restated Certificate of Incorporation of the Corporation or these By-laws, the Board, by a simple majority vote of its members, shall have the right from time to time to delegate to or to remove from any board committee the authority to approve any matters which would not otherwise require a higher vote than a simple majority vote of the Board. Except as required by applicable law, the Restated Certificate of Incorporation of the

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Corporation or these By-laws, for those matters that require a higher vote of the Board than a simple majority vote, the Board, by such requisite higher vote, shall have the right from time to time to delegate to or to remove from any board committee the authority to approve any such matters requiring such requisite higher vote.

The nominating and corporate governance committee shall have the following powers and authority: (i) evaluating, recommending and/or nominating director candidates to the Board, (ii) assessing Board performance annually, (iii) recommending director compensation and benefits policies for the Board, (iv) reviewing individual director performance as issues arise, (v) evaluating and recommending to the Board candidates for Chief Executive Officer, (vi) reviewing and recommending to the Board changes to the size and composition of the Board, (vii) periodically reviewing the Corporation’s corporate governance profile and (viii) performing such other functions as the Board shall determine in accordance with paragraph (a) of this Section 1 of Article IV. At all times following the Listing Date Anniversary, a sufficient number of director-nominees nominated by the nominating and corporate governance committee shall qualify as Independent Directors so that a majority of the Board shall be Independent Directors as required by Section 4 of Article III; provided, however, that the Class C Holder shall not be restricted from nominating, electing or maintaining a Class C Director who is determined by the Board not to be an Independent Director.

Organization of Committees. Except in the case of directors designated as members of the nominating and corporate governance committee and the executive committee, if formed, pursuant to Section 5 of Article VI of the Restated Certificate of Incorporation of the Corporation, (a) the Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee and (b) in the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member. Each committee that may be established by the Board may fix its own rules and procedures. All committees so appointed shall keep regular minutes of the transactions of their meetings and shall be responsible to the Board for the conduct of the enterprises and affairs entrusted to them. Notice of meetings of committees, other than of regular meetings provided for by such rules, shall be given to committee members.

OFFICERS

Officers. The Board shall elect a Chairman of the Board, a Chief Executive Officer, a Chief Operating Officer, one or more Vice Presidents, a Chief Financial Officer, a Treasurer, a Controller and a Secretary. The Chairman of the Board and the Chief Executive Officer shall be or become Directors. The Board may elect from time to time such other officers as, in the opinion of the Board, are desirable for the conduct of the business of the Corporation. Any two or more offices may be held by the same person; provided, however, that no officer shall execute, acknowledge or verify any

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instrument in more than one capacity if such instrument is required by law, the Restated Certificate of Incorporation of the Corporation or these By-laws to be executed, acknowledged or verified by two or more officers.

Chairman of the Board. The Chairman of the Board, if present, shall preside at all meetings of the stockholders and of the Board. The Chairman of the Board may enter into and execute in the name of the Corporation powers of attorney, contracts, bonds and other obligations which implement policies established by the Board. In addition, the Chairman of the Board shall perform such other duties as may from time to time be assigned by the Board. The Chairman of the Board may or may not be a senior officer of the Corporation.

Chief Executive Officer. The Chief Executive Officer shall have supervisory authority over the business, affairs and property of the Corporation, and over the activities of the Chief Operating Officer and other executive officers of the Corporation. The Chief Executive Officer shall have all authority incident to the office of Chief Executive Officer, shall have such other authority and perform such other duties as may from time to time be assigned by the Board and shall report directly to the Board. If so elected by the Board, the Chairman of the Board may be the Chief Executive Officer.

Chief Operating Officer. The Chief Operating Officer shall have general supervision of the daily business, affairs and property of the Corporation. The Chief Operating Officer may enter into and execute in the name of the Corporation powers of attorney, contracts, bonds and other obligations which implement policies established by the Board. The Chief Operating Officer shall have all authority incident to the office of Chief Operating Officer, shall have such other authority and perform such other duties as may from time to time be assigned by the Chief Executive Officer or the Board.

Vice Presidents. The Vice Presidents shall have such powers and shall perform such duties as may from time to time be assigned to them by the Chief Executive Officer or the Board. Without limiting the generality of the foregoing, Vice Presidents may enter into and execute in the name of the Corporation contracts and other obligations pertaining to the regular course of their duties which implement policies established by the Board.

Chief Financial Officer. The Chief Financial Officer shall be the principal financial officer of the Corporation and shall have such powers and perform such duties as may from time to time be assigned by the Chief Executive Officer or the Board. Without limiting the generality of the foregoing, the Chief Financial Officer may sign and execute contracts and other obligations pertaining to the regular course of his or her duties which implement policies established by the Board.

Treasurer. The Treasurer shall, if required by the Chief Executive Officer or the Board, give a bond for the faithful discharge of duties, in such sum and with such sureties as may be so required. Unless the Board otherwise declares by resolution, the Treasurer shall have custody of, and be responsible for, all funds and securities of the

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Corporation; receive and give receipts for money due and payable to the Corporation from any source whatsoever; deposit all such money in the name of the Corporation in such banks, trust companies or other depositories as the Board may designate; against proper vouchers, cause such funds to be disbursed by check or draft on the authorized depositories of the Corporation signed in such manner as shall be determined by the Board, and be responsible for the accuracy of the amounts of all funds so disbursed; regularly enter or cause to be entered in books to be kept by the Treasurer or under the Treasurer’s direction, full and adequate accounts of all money received and paid by the Treasurer for the account of the Corporation; render to the Board, any duly authorized committee of directors or the Chief Executive Officer, whenever they or any of them, respectively, shall require the Treasurer to do so, an account of the financial condition of the Corporation and of all transactions of the Treasurer; and, in general, have all authority incident to the office of Treasurer and such other authority and perform such other duties as may from time to time be assigned by the Chief Executive Officer or the Board. Any Assistant Treasurer shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall have such other duties and have such other powers as the Board may from time to time prescribe.

Controller. The Controller shall be the chief accounting officer of the Corporation. The Controller shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as may from time to time be assigned by the Chief Executive Officer, the Chief Financial Officer or the Board.

Secretary. The Secretary shall act as Secretary of all meetings of the stockholders and of the Board; shall keep the minutes thereof in the proper book or books to be provided for that purpose; shall see that all notices required to be given by the Corporation in connection with meetings of stockholders and of the Board are duly given; shall be the custodian of the seal of the Corporation and shall affix the seal or cause it or a facsimile thereof to be affixed to all certificates for stock of the Corporation and to all documents or instruments requiring the same, the execution of which on behalf of the Corporation is duly authorized in accordance with the provisions of these By-laws; shall have charge of the stock records and also of the other books, records and papers of the Corporation relating to its organization and acts as a corporation, and shall see that the reports, statements and other documents related thereto required by law are properly kept and filed, all of which shall, at all reasonable times, be open to the examination of any director for a purpose reasonably related to such director’s position as a director; and shall, in general, have all authority incident to the office of Secretary and such other authority and perform such other duties as may from time to time be assigned by the Chief Executive Officer or the Board.

Assistant Treasurers, Assistant Controllers and Assistant Secretaries. Any Assistant Treasurers, Assistant Controllers and Assistant Secretaries shall perform such duties as from time to time shall be assigned to them by the Chief Executive Officer or the Board or by the Treasurer, Controller or Secretary, respectively. An Assistant Treasurer, Assistant Controller or Assistant Secretary need not be an officer of the Corporation and shall not be deemed an officer of the Corporation unless elected by the Board.

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Removal. Any officer may be removed, either with or without cause, by the Board at any meeting thereof or by any superior officer upon whom such power may be conferred by the Board.

Resignation. Any officer may resign at any time by giving notice to the Board, the Chairman of the Board, the Chief Executive Officer or the Secretary of the Corporation in writing or by electronic transmission. Any such resignation shall take effect at the time therein specified or if no time is specified, immediately. Unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective.

Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause may be filled at any time by the Board, or if such officer was appointed by the Chief Executive Officer, then by the Chief Executive Officer.

Bank Accounts. In addition to such bank accounts as may be authorized in the usual manner by resolution of the Board, the Chief Financial Officer or the Treasurer, with approval of the Chief Executive Officer or the Chief Operating Officer, may authorize such bank accounts to be opened or maintained in the name and on behalf of the Corporation as the Treasurer shall deem necessary or appropriate; provided, however, that payments from such bank accounts are to be made upon and according to the check of the Corporation as shall be specified in the written instructions of the Chief Financial Officer or the Treasurer or Assistant Treasurer of the Corporation with the approval of the Chief Executive Officer or the Chief Operating Officer.

Voting of Stock Held. Unless otherwise provided in the Restated Certificate of Incorporation of the Corporation or directed by the Board, the Chief Executive Officer may from time to time personally or by an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, cast the votes which the Corporation may be entitled to cast as a stockholder or otherwise in any other corporation, limited liability company, partnership, trust or legal entity (“Person”) any of the stock or securities of which may be held by the Corporation, at meetings of the holders of the stock or other securities of such Person, or consent in writing to any action by any such Person, and may instruct any person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed on behalf of the Corporation and under its corporate seal, or otherwise, such written proxies, consents, waivers or other instruments as the Secretary may deem necessary or proper in the premises; or may attend any meeting of the holders of stock or other securities of any such Person and thereat vote or exercise any or all other powers of the Corporation as the holder of such stock or other securities of such Person.

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CAPITAL STOCK

Form of Certificates. iii)Every holder of stock in the Corporation shall be entitled to have a certificate signed, in the name of the Corporation (i) by the Chairman of the Board or any of the Vice Presidents and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him or her in the Corporation.

For each class or series of stock that the Corporation shall be authorized to issue, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent each class or series of stock; provided, however, that, except as otherwise required by Section 202 of the General Corporation Law, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish without charge to each stockholder that so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights.

Signatures. Any or all signatures on the certificate may be a facsimile. In case an officer, transfer agent or registrar that has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

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

Transfers. Except as otherwise prescribed by applicable law or by the Restated Certificate of Incorporation of the Corporation, and subject to any transfer restrictions applicable thereto and conspicuously noted on the stock certificate, stock of the Corporation shall be transferable in the manner prescribed in these By-laws. Transfers

16

of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person’s duly authorized attorney appointed by a power of attorney duly executed and filed with the Secretary of the Corporation or a transfer agent of the Corporation, and upon surrender of the certificate or certificates for such stock properly endorsed. Every certificate exchanged, returned or surrendered shall be marked “Canceled”, with the date of cancelation, by the Secretary or an Assistant Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation, its stockholders or creditors for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.

Transfer Agent and Registrar. The Board may appoint one or more transfer agents and one or more registrars and may require all certificates for shares to bear the manual or facsimile signature or signatures of any of them.

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

Regulations. Except as otherwise provided by applicable law or in the Restated Certificate of Incorporation of the Corporation, the Board shall have the power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, registration, cancelation and replacement of certificates representing stock of the Corporation.

Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions in the Restated Certificate of Incorporation of the Corporation, may be declared by the Board at any regular or special meeting, and may be paid in cash, in property or in securities of the Corporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board may modify or abolish any such reserve.

INDEMNIFICATION

Directors’ Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may

17

hereafter be amended, any person that was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (collectively, a “Proceeding”), by reason of the fact that such person is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person in connection with such proceeding or any claim made in connection therewith. Such right of indemnification shall inure whether or not the claim asserted is based on matters which antedate the adoption of this Section 1 of Article VII. Subject to the second sentence of the next paragraph, the Corporation shall be required to indemnify or make advances to a person in connection with a Proceeding (or part thereof) initiated by such person only if the initiation of such Proceeding (or part thereof) was authorized by the Board.

The Corporation shall pay the expenses (including attorneys’ fees) incurred by any person that is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or nonprofit entity, in defending any Proceeding in advance of its final disposition; provided, however, that the payment of expenses incurred by such a person in defending any Proceeding in advance of its final disposition shall be made only upon receipt of an undertaking by such person to repay all amounts advanced if it should be ultimately determined that such person is not entitled to be indemnified under this Section 1 of Article VII or otherwise. If a claim for indemnification after the final disposition of the Proceeding is not paid in full within 90 calendar days after a written claim therefor has been received by the Corporation or if a claim for payment of expenses under this Section 1 of Article VII is not paid in full within 20 calendar days after a written claim therefor has been received by the Corporation, the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action, the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

The rights conferred on any person by this Section 1 of Article VII shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, the Restated Certificate of Incorporation, these By-laws, agreement, vote of stockholders or resolution of disinterested directors or otherwise. The Corporation’s obligation, if any, to indemnify any person that was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or nonprofit entity shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, enterprise or nonprofit entity, as applicable.

Any amendment, modification or repeal of the foregoing provisions of this Section 1 of Article VII shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such amendment, modification or repeal.

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Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by or granted pursuant to this Article VII shall continue as to a person who has ceased to be a director, officer, employee or agent of the Corporation or other person indemnified hereunder and shall inure to the benefit of the successors, assigns, heirs, executors and administrators of such person.

GENERAL PROVISIONS

Books and Records. The books and records of the Corporation may be kept at such places within or without the State of Delaware as the Board may from time to time determine.

Seal. The Board shall approve a corporate seal which shall be in the form of a circle and shall bear the name of the Corporation, the year of its incorporation and the word “Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

Fiscal Year. The fiscal year of the Corporation shall be determined and may be changed by resolution of the Board.

Notices and Waivers Thereof. iv)Whenever notice is required by applicable law, the Restated Certificate of Incorporation of the Corporation or these By-laws to be given to any director, member of a committee or stockholder, such notice may be given personally, by mail or as otherwise permitted by law, or in the case of directors or officers, by facsimile transmission or other electronic transmission, addressed to such address as appears on the books of the Corporation. Any notice given by facsimile transmission shall be deemed to have been given upon confirmation of receipt by the addressee.

Whenever any notice is required by applicable law, the Restated Certificate of Incorporation of the Corporation or these By-laws, to be given to any director, member of a committee or stockholder, a waiver thereof given by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors needs to be specified in any waiver of notice unless so required by applicable law, the Restated Certificate of Incorporation of the Corporation or these By-laws.

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Amendments. These By-laws may be amended only as set forth in the Restated Certificate of Incorporation of the Corporation.

Saving Clause. These By-laws are subject to the provisions of the Restated Certificate of Incorporation of the Corporation and applicable law. If any provision of these By-laws is inconsistent with the Restated Certificate of Incorporation of the Corporation or the General Corporation Law, such provision shall be invalid only to the extent of such conflict, and such conflict shall not affect the validity of any other provision of these By-laws.

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EX-4.1

EXHIBIT 4.1

NUMBER

DWA

©SECURITY-COLUMBIAN UNITED STATES BANKNOTE CORPORATION

BLUE LINE IS FOR TRIM POSITION ONLY AND DOES NOT PRINT.

DREAMWORKS

ANIMATION SKG™

SHARES

COMMON SHARES

THIS CERTIFICATE IS TRANSFERABLE

IN NEW YORK, NY

INCORPORATED UNDER THE LAWS

OF THE STATE OF DELAWARE

SEE REVERSE FOR

CERTAIN DEFINITIONS

CUSIP 26153C 10 3

THIS CERTIFIES THAT

IS THE RECORD HOLDER OF

FULLY PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, $0.01 PAR VALUE PER SHARE, OF

DREAMWORKS ANIMATION SKG™

CERTIFICATE OF STOCK

transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned and registered by the Transfer Agent and Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.

Dated:

DREAMWORKS ANIMATION SKG™

CORPORATE

SEAL

DELAWARE

2004

COUNTERSIGNED AND REGISTERED:

THE BANK OF NEW YORK

TRANSFER AGENT AND REGISTRAR

BY

AUTHORIZED SIGNATURE

CHIEF EXECUTIVE OFFICER

SECRETARY

AMERICAN BANK NOTE COMPANY

711 ARMSTRONG LANE

COLUMBIA, TENNESSEE 38401

(931) 388-3003

SALES: J. DICKINSON: 773-429-0698

ETHER 19 / LIVE JOBS / D / DREAMWORKS / 17570 ver. A

PRODUCTION COORDINATOR: MIKE PETERS: 931-490-1714

PROOF OF OCTOBER 21, 2004

DREAMWORKS ANIMATION, SKG

TSB 17570 FACE_version A

OPERATOR:

Ron/TERESA

REV. 1

COLORS SELECTED FOR PRINTING: Background and logo images are 300 dpi; SUITABLE FOR PRINTING; will print in process colors. Intaglio prints in SC-7 dark blue.

COLOR: This proof was printed from a digital file or artwork on a graphics quality, color laser printer. It is a good representation of the color as it will appear on the final product. However, it is not an exact color rendition, and the final printed product may appear slightly different from the proof due to the difference between the dyes and printing ink.

PLEASE INITIAL THE APPROPRIATE SELECTION FOR THIS PROOF: OK AS IS OK WITH CHANGES MAKE CHANGES AND SEND ANOTHER PROOF

The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM — as tenants in common

TEN ENT — as tenants by the entireties

JT TEN — as joint tenants with right of survivorship and not as tenants in common

UNIF GIFT MIN ACT — Custodian

(Cust)

(Minor)

under Uniform Gifts to Minors

Act

(State)

UNIF TRF MIN ACT — Custodian (until age )

(Cust)

under Uniform Transfers

(Minor)

to Minors Act

(State)

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

Shares of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint

Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.

Dated

X

X

NOTICE:

THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

Signature(s) Guaranteed

By

THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

AMERICAN BANK NOTE COMPANY

711 ARMSTRONG LANE

COLUMBIA, TENNESSEE 38401

(931) 388-3003

SALES: J. DICKINSON: 773-429-0698

ETHER 19 / LIVE JOBS / D / DREAMWORKS / 17570 BACK

PRODUCTION COORDINATOR: MIKE PETERS: 931-490-1714

PROOF OF OCTOBER 21, 2004

DREAMWORKS ANIMATION, SKG

TSB 17570 BACK

OPERATOR:

TERESA

NEW

PLEASE INITIAL THE APPROPRIATE SELECTION FOR THIS PROOF: OK AS IS OK WITH CHANGES MAKE CHANGES AND SEND ANOTHER PROOF

EX-4.3

EXECUTION COPY

EXHIBIT 4.3

REGISTRATION RIGHTS AGREEMENT, dated as of October 27, 2004, among DREAMWORKS ANIMATION SKG, INC., a Delaware corporation (the “Company”), DWA ESCROW LLLP, a Delaware limited liability limited partnership (“Holdco”), M&J K Dream Limited Partnership, a Delaware limited partnership (“M&J K”), M&J K B LIMITED PARTNERSHIP, a Delaware limited partnership (“M&J K B”), DG-DW, L.P., a Delaware limited partnership (“DG-DW”), DW LIPS, L.P., a California limited partnership (“DW Lips”), DW INVESTMENT II, INC., a Washington corporation (“DWI II”), and the other holders of Registrable Securities (as defined below) party hereto (together with Holdco, M&J K, M&J K B, DG-DW, DW Lips, DWI II and any Family Group member that agrees with the Company to be bound by the terms of this Agreement (as defined below), the “Holders”).

WHEREAS, DreamWorks L.L.C., a Delaware limited liability company (“DW”), and the Company have entered into a Separation Agreement dated as of October 27, 2004, providing for the separation of the animation business (the “Separation”) from DW;

WHEREAS, after the Separation, the Company intends to sell shares of its Class A Common Stock, par value $0.01 per share (“Class A Stock”), in a public offering (the “Offering”);

WHEREAS, the Company and the Holders are party to the Formation Agreement (as defined below);

WHEREAS, the Contributing Members (as defined in the Formation Agreement) have formed Holdco for the purpose of effecting the Follow-on Offering and/or the Universal Triggered Follow-on Offering (each as defined below);

WHEREAS, the Holders will own Class A Stock, the Company’s Class B Common Stock, par value $0.01 per share (“Class B Stock”), and the Company’s Class C Common Stock, par value $0.01 per share (“Class C Stock”), as applicable; and

WHEREAS, the Holders and the Company desire to make certain arrangements to provide the Holders with registration rights with respect to the Registrable Securities (as defined below);

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows:

SECTION 1.01. Definitions. The following terms shall have the following meanings for purposes of this Agreement:

“Affiliate” of any specified Person means any other Person, directly or indirectly, through one or more intermediaries, Controlling, Controlled By or Under Common Control With such specified Person.

“Agreement” means this Registration Rights Agreement, as it may be amended, supplemented, restated or modified from time to time.

“Business Day” means any day other than a Saturday, a Sunday or a U.S. Federal holiday.

“Class A Stock” is defined in the recitals hereto.

“Class B Stock” is defined in the recitals hereto.

“Class C Stock” is defined in the recitals hereto.

“Company” is defined in the preamble hereto.

“Company Funded Registration” is defined in Section 1.02(a).

“Control” (including the terms “Controlled By” and “Under Common Control With”) is defined in the Restated Certificate of Incorporation of the Company as in effect at consummation of the Offering.

“Demand Holders” means each of (i) Holdco, (ii) M&J K B (on behalf of itself or one or more members of its Family Group), (iii) DG-DW (on behalf of itself or one or more members of its Family Group), (iv) DW Lips (on behalf of itself or one or more members of its Family Group), (v) DWI II and (vi) Universal.

“Demand Request” is defined in Section 1.02(a).

“DG-DW” is defined in the preamble hereto.

“Disadvantageous Condition” is defined in Section 1.02(a).

“DW” is defined in the recitals hereto.

“DW Lips” is defined in the preamble hereto.

“DWI II” is defined in the preamble hereto.

“Estate Planning Vehicle” means a trust or partnership (i) that is the record holder of shares of Class A Stock or Class B Stock and (ii) the principal beneficiaries or partners of which include only Jeffery Katzenberg or Steven Spielberg, their respective spouses, parents, spouse’s parents or issue, or issue of any thereof, and shall include M&J K, M&J K B, The JK Annuity Trust, The MK Annuity Trust and the Katzenberg 1994 Irrevocable Trust.

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“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

“Family Group” means, (a) with respect to M&J K B, Jeffrey Katzenberg, his spouse, any Estate Planning Vehicle that is Controlled By either Jeffrey Katzenberg or David Geffen and any other Person that is Controlled By Jeffrey Katzenberg, (b) with respect to DG-DW, David Geffen and any other Person that is Controlled by David Geffen and (c) with respect to DW Lips, Steven Spielberg, his spouse, any Estate Planning Vehicle that is established by Steven Spielberg, his spouse and any other Person that is Controlled By Steven Spielberg or his spouse, in each case, so long as such Person continues to be so Controlled.

“Final Allocation” is defined in the Holdco Partnership Agreement.

“Follow-on Offering” is defined in the Formation Agreement.

“Formation Agreement” means the Formation Agreement, dated as of October 27, 2004, among the Company, the Holders and the other parties thereto, as it may be amended, supplemented, restated or modified from time to time.

“Group” has the meaning assigned to such term in Section 13(d)(3) of the Exchange Act.

“Holdco” is defined in the preamble hereto.

“Holdco Partnership Agreement” means the Limited Liability Limited Partnership Agreement of Holdco, dated as of October 27, 2004, among the Contributing Members (as defined in the Formation Agreement), as it may be amended, supplemented, restated or modified from time to time.

“Holders” is defined in the preamble hereto.

“Initial DreamWorks Capital” is defined in the Holdco Partnership Agreement.

“Inspectors” is defined in Section 1.04(a)(9).

“M&J K” is defined in the preamble hereto.

“M&J K B” is defined in the preamble hereto.

“Minimum Demand Request” means, (a) in the case of any Requesting Holder other than Universal, on the date a Demand Request is delivered, such number of shares of Class A Stock that have an aggregate minimum market value (based on the closing price on the NYSE on the date preceding the date of the Demand Request) of at least $100 million, before calculation of underwriting discounts and commissions and (b) in the case of Universal as the Requesting Holder, on the date a Demand Request is delivered, such number of Registrable Securities owned by Universal as of such date.

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“Minimum Registration Amount” means not less than the number of shares of Registrable Securities that could be sold by the applicable Holder in a consecutive three month period pursuant to Rule 144 (or any similar provision then in force) under the Securities Act; provided, however, that if the total number of shares of Registrable Securities owned by any Holder as of the date of this Agreement is less than the number of shares of Registrable Securities that could be sold by such Holder in a consecutive three month period pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, then the Minimum Registration Amount solely with respect to such Holder shall be such number of shares of Registrable Securities that have an aggregate minimum market value (based on the closing price on the NYSE on the date preceding the date such Registrable Securities are requested by such Holder to be included in a registration pursuant to this Agreement) of at least $10 million, before calculation of underwriting discounts and commissions; provided further, however, that when the Minimum Registration Amount is being calculated with respect to any Holder that is requesting registration of Registrable Securities on behalf of one or more of its Family Group members, such Minimum Registration Amount shall be the aggregate Minimum Registration Amount for all members of the applicable Family Group participating in the applicable registration.

“NASD” means the National Association of Securities Dealers, Inc.

“Offering” is defined in the recitals hereto.

“Participating Partner” is defined in the Holdco Partnership Agreement.

“Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivisions thereof or any Group comprised of two or more of the foregoing.

“Priority Securities” is defined in Section 1.03(a).

“Proceeding” is defined in Section 1.07(k).

“Records” is defined in Section 1.04(a)(9).

“Registrable Securities” means shares of Class A Stock (including shares of Class A Stock issuable upon conversion of shares of Class B Stock or shares of Class C Stock or any other securities of the Company that are acquired by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization of the Company or similar transaction); provided, however, that a security shall cease to be a Registrable Security if and when (i)

4

a registration statement with respect to such security becomes effective under the Securities Act and such security is disposed of pursuant to such effective registration statement, (ii) such security may be sold without restriction (including volume and manner of sale restrictions) pursuant to Rule 144 (or any similar provision then in force) under the Securities Act (other than in the case of any such security to be sold in the Follow-on Offering or the Universal Triggered Offering), (iii) such security is otherwise transferred (other than to an Affiliate of the Holder), if a new certificate or other evidence of ownership for such security not bearing a legend restricting further transfer and not subject to any stop transfer order or other restrictions on transfer is delivered by the Company and subsequent disposition of such security does not require registration or qualification of such security under the Securities Act, and the Company’s outside counsel provides the Holder with an unqualified opinion to such effect, or (iv) such security ceases to be outstanding; provided further, however, that with respect to Universal only, Registrable Securities shall include only (and all of) such shares of Class A Stock allocated to Universal in the Final Allocation.

“Registration Expenses” means all fees and expenses incident to the Company’s performance of or compliance with this Agreement, consisting of (i) all SEC, stock exchange, NASD and other registration, listing and filing fees and expenses, (ii) fees and expenses of compliance with securities or blue sky laws (including fees and disbursements of one counsel for the Holders who are including Registrable Securities in a registration statement in connection with blue sky qualification of such Registrable Securities and determination of the eligibility of such Registrable Securities for investment under applicable blue sky laws), (iii) rating agency fees, (iv) printing expenses, (v) messenger, telephone and delivery expenses, (vi) fees, expenses and disbursements of counsel for the Company, (vii) fees, expenses and disbursements of one counsel selected by Holders of a majority-in-interest of Registrable Securities to be sold in connection with the relevant registration (up to a maximum limitation on the fees and expenses of such counsel for the Holders of up to $75,000 per registration), (viii) fees, expenses and disbursements of the Company’s independent certified public accountants, (ix) costs of Securities Act liability insurance (if the Company so desires such insurance), (x) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement and (xi) all internal expenses of the Company incurred in connection with the consummation of the transactions contemplated in this Agreement (including all salaries and expenses of its officers and employees performing legal or accounting duties, the expense of any annual audit and the fees and expenses incurred in listing the Registrable Securities on any securities exchange); provided, however, that “Registration Expenses” shall not include any fees, expenses or disbursements of any Holder participating in the relevant registration or those of any underwriters, selling brokers or similar professionals, including any discounts, commissions or fees of such underwriters, selling brokers or similar professionals and including any fees, expenses or disbursements of counsel to any such Holder (except as provided above) or any such underwriter, selling broker or professional.

5

“Requesting Holder” is defined in Section 1.02(a).

“Satisfaction Event” is defined in the Holdco Partnership Agreement.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the United States Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

“Seller” is defined in Section 1.06(a).

“Shelf Registration” means a “shelf” registration statement on an appropriate form pursuant to Rule 415 under the Securities Act (or any successor rule that may be adopted by the SEC).

“Separation” is defined in the recitals hereto.

“Underwriter” is defined in Section 1.06(a).

“Universal” means Vivendi Universal Entertainment LLLP.

“Universal Triggered Offering” is defined in the Formation Agreement.

“Vulcan Repayment Date” means the date on which DWI II has received its Fifty Percent Return (as defined in and in accordance with the Holdco Partnership Agreement) and gross cash proceeds from the sale of Registrable Securities equal to the remainder of DWI II’s Initial DreamWorks Capital.

SECTION 1.02. Certain Demand Registration Rights. (a) General. At any time (x) in respect of Holdco, commencing six months following consummation of the Offering (or, if later, the closing of any overallotment option granted in connection with the Offering) and until the date of the Final Allocation and (y) in respect of any Demand Holder other than Holdco, commencing on the date of the Final Allocation, upon the written request (a “Demand Request”) of any of the Demand Holders (the “Requesting Holder”) requesting that the Company effect the registration under the Securities Act of Registrable Securities of such Requesting Holder (or its Family Group members, if applicable) representing, in the case of a request by any Demand Holder other than Holdco, at least the Minimum Demand Request (which request shall specify the number of shares of Registrable Securities to be offered by such Requesting Holder (and each of its Family Group members, if applicable), subject to reduction to the extent provided herein, and the intended method of disposition thereof), the Company shall promptly (but in no event more than five Business Days after receipt of the applicable Demand Request) deliver written notice of such requested registration to all other Holders of Registrable Securities and shall use its reasonable best efforts to effect, as expeditiously as possible, the registration under the Securities Act of:

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(i) the Registrable Securities which the Company has been so requested to register by the Requesting Holder (which, (x) in the case of Holdco shall include Registrable Securities to be sold by Holdco or the Participating Partners in the Follow-on Offering or the Universal Triggered Offering, as applicable, pursuant to the Holdco Partnership Agreement and (y) in the case of M&J K B, DG-DW and DW Lips, may include Registrable Securities held of record by the Family Group members of such Requesting Holder to the extent such Family Group members and the number of Registrable Securities requested to be sold thereby are specified in the applicable Demand Request); and

(ii) unless Holdco is the Requesting Holder, all other Registrable Securities which the Company has been requested to register by any other Holder (or Family Group member) thereof by written request received by the Company within 15 days after the giving of such written notice by the Company (which request shall specify the number of shares of Registrable Securities to be offered by such Holder (or Family Group member), subject to reduction as provided herein, and the intended method of disposition thereof); provided, however, that the number of shares of Registrable Securities requested to be offered by each such Holder (or Family Group member) shall not be less than the Minimum Registration Amount for such Holder (or Family Group member);

all to the extent necessary to permit the disposition (in accordance with the intended methods thereof as aforesaid) of the Registrable Securities so to be registered; provided, however, that (A) notwithstanding any other provision of this Agreement, (i) the Company shall not allow a registration statement with respect to Class A Stock to be declared effective within a period of six months after consummation of the Follow-on Offering (or, if later, consummation of any overallotment option granted in connection with the Follow-on Offering) and (ii) with respect to all other registration requests under this Agreement, the Company shall not be required to file a registration statement relating to a registration request under this Section 1.02 within a period of six months after the effective date of any other registration statement of the Company with respect to Class A Stock (other than in the case of clause (i) or (ii) above any registration statement relating to equity securities issuable upon exercise of employee stock or similar options or in connection with any employee benefit or similar plan of the Company or in connection with an acquisition by the Company of another entity), (B) with respect to any registration statement filed, or to be filed, pursuant to this Section 1.02, if there is (i) material non-public information regarding the Company which the Company’s Board of Directors reasonably determines to be significantly disadvantageous for the Company to disclose and which the Company is not otherwise required to disclose at such time, (ii) there is a significant business opportunity (including the acquisition or disposition of assets (other than in the ordinary course of business) or any merger, consolidation, share exchange, tender offer or other similar transaction) available to the Company which the Board

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reasonably determines to be significantly disadvantageous for the Company to disclose or (iii) there is any other event or condition of similar significance to the Company that the Board reasonably determines to be significantly disadvantageous for the Company to disclose and which the Company is not otherwise required to disclose at such time (each, a “Disadvantageous Condition”), and the Company shall furnish to the Requesting Holder (and the Participating Partners if Holdco is the Requesting Holder) a resolution of the Board of Directors stating that the Company is deferring such registration pursuant to this Section 1.02(a)(B) and setting forth in reasonable detail the Disadvantageous Condition (giving due regard to any confidentiality or competitive considerations), its reasons for such judgment and an approximation of the anticipated delay, then the Company shall be entitled to cause such registration statement to be withdrawn and the effectiveness of such registration statement terminated (and, in the case of a Shelf Registration, the Company shall not be required to file any amendment or supplement thereto required to maintain the effectiveness of such Shelf Registration), or, in the event no registration statement shall have been filed, shall be entitled not to file any such registration statement, until the earlier of (x) 180 days following the date such resolution was delivered to the Requesting Holder and (y) the date such Disadvantageous Condition no longer exists (notice of which the Company shall promptly deliver to the Requesting Holder and the other Holders of Registrable Securities) and upon receipt of any such notice of a Disadvantageous Condition such Requesting Holder and any other Holders of Registrable Securities selling securities pursuant to an effective registration statement shall discontinue use of the prospectus contained in such registration statement and, if so directed by the Company, each such Holder shall deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the prospectus then covering such Registrable Securities current at the time of receipt of such notice, and, in the event no registration statement shall have been filed, all drafts of the prospectus covering such Registrable Securities, (C) the Company shall only be obligated to effect a total of two registrations requested by Holdco (provided, however, that (i) the Company shall not be obligated to effect a registration in respect of a Universal Triggered Offering if such registration shall have been converted into a Follow-on Offering pursuant to the Formation Agreement (in which case the Company shall effect such Follow-on Offering pursuant to the terms of this Agreement and Holdco shall not be entitled to any additional Demand Requests) and (ii) in the event that a registration requested by Holdco is not consummated because it would not have resulted in a Satisfaction Event with respect to the Participating Partners as provided in Section 3.05 or 4.01 of the Formation Agreement, then Holdco shall be deemed not to have used a registration request in respect of such registration), a total of one registration requested by M&J K B, a total of one registration requested by DG-DW, a total of one registration requested by DW Lips, a total of three registrations requested by DWI II and a total of one registration requested by Universal pursuant to this Section 1.02 and (D) the Company shall not be required to, and shall not, allow a registration statement relating to a registration request under this Section 1.02 to be declared effective prior to the date that is six months after consummation of the Offering (or, if later, six months after consummation of any overallotment option granted in connection with the Offering). Each registration under this Section 1.02 shall be at the

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Company’s own expense as provided in Section 1.02(c) (each such registration, a “Company Funded Registration”). Promptly after the expiration of the 15-day period referred to in clause (ii) above, the Company shall notify all the Holders to be included in the registration of the identity of each such Holder (or Family Group member, as applicable) and the number of shares of Registrable Securities requested to be included therein. The Company shall be permitted to satisfy its obligations under this Section 1.02 by amending (to the extent permitted by applicable law) any Shelf Registration previously filed by the Company under the Securities Act so that such Shelf Registration (as amended) shall permit the disposition of all of the Registrable Securities for which a registration request under this Section 1.02 shall have been made. Notwithstanding the foregoing, the Company shall have no obligation under this Agreement to file any Shelf Registration. The Requesting Holder may, at any time prior to the effective date of the registration statement relating to the relevant registration, revoke such request, without liability (except as set forth in Section 1.02(b)) to any other Holders of Registrable Securities requested to be registered pursuant to Section 1.02(a)(ii), by providing a written notice to the Company revoking such request. In the event that the Company shall give any notice of the withdrawal of, or delay in filing, a registration statement contemplated by clause (B) above, the Company shall, following the end of the period specified in Section 1.02(a)(B), file the delayed registration statement with the SEC and such registration statement shall be maintained effective for such time as may be necessary so that the period of effectiveness of such new registration statement, when aggregated with the period during which such initial registration statement was effective, if any, shall be equal to the 180 days that a registration statement is required to be kept effective pursuant to Section 1.04(a)(2). The Company may not withdraw or suspend the effectiveness or availability of a registration statement pursuant to this Section 1.02(a) for more than 180 consecutive days. Within 20 days after receiving a notice contemplated in clause (B) above, the Requesting Holder may withdraw its Demand Request by giving written notice thereof to the Company. If withdrawn, such Demand Request shall be deemed not to have been made for purposes of this Agreement.

(b) Expenses. The Company shall pay all Registration Expenses in connection with each Company Funded Registration which is requested and becomes effective, or which is withdrawn prior to effectiveness by the Company, pursuant to this Section 1.02. The Company shall not be liable for Registration Expenses in connection with a registration that shall not have become effective due to a revocation by the Holders requesting such registration under this Section 1.02 (other than pursuant to the last sentence of Section 1.02(a)), (x) unless such Holders agree that such revoked registration counts as one of the Company Funded Registrations which may be requested by such Holders pursuant hereto or (y) unless such revocation relates to a registration of a Follow-on Offering or a Universal Triggered Offering and results from the inability to generate a Satisfaction Event. Except as provided in clause (y) above, if such Holders have not agreed to count such revoked registration as one of the Company Funded Registrations, the obligation to pay the Registration Expenses in connection with such further registration or such revoked registration shall be due and payable by the Holders

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who participated in such registration or who initially requested and revoked such registration, and such expenses shall be borne by them in proportion to the number of shares of Registrable Securities requested by them to be registered. The Company’s obligation to pay all Registration Expenses in connection with each Company Funded Registration under this paragraph (b) shall not be reduced by any such revoked registration unless the Holders so elect as provided above.

(c) Effective Registration Statement. A registration requested pursuant to this Section 1.02 shall not be deemed to have been effected unless the registration statement relating thereto (i) has become effective under the Securities Act and, except in the case of a Shelf Registration, any of the Registrable Securities of the Requesting Holder (or its Family Group members, if applicable) included in such registration have actually been sold thereunder and (ii) except in the case of a Shelf Registration, has remained effective for a period of at least that specified in Section 1.04(a)(2); provided, however, that if any effective registration statement requested pursuant to this Section 1.02 is discontinued in connection with a Disadvantageous Condition, such registration statement shall be at the sole expense of the Company and shall not be included as one of the Company Funded Registrations which may be requested pursuant to this Section 1.02; provided further, however, that if, after any registration statement requested pursuant to this Section 1.02 becomes effective, such registration statement is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court solely due to the actions or omissions to act of the Company, such registration statement shall be at the sole expense of the Company and shall not be included as one of the Company Funded Registrations which may be requested at the cost of the Company pursuant to this Section 1.02.

(d) Selection of Underwriters. The Company shall have the right to select the underwriters for each registration made pursuant to Section 1.02(a); provided, however, that (i) the Holder selling a majority-in-interest of Registrable Securities to be sold in connection with the relevant registration shall have the right to select one (of a maximum of three) joint lead bookrunning underwriter (but not the joint lead bookrunning underwriter that will be on the left of the cover page of any offering materials related to such registration or the stabilization agent), which joint lead bookrunning underwriter shall have participation in pricing and bookbuilding and shall be subject to the reasonable approval of the Company, and (ii) the Company shall be entitled to select no more than two additional joint lead bookrunning underwriters; provided further, however, that, if (x) Holdco is the Requesting Holder in respect of a Follow-on Offering or a Universal Triggered Offering or (y) DWI II is the Requesting Holder (for the avoidance of doubt, whether directly or by means of clause (x) above, Section 1.02(h) or Section 4.01(b) of the Formation Agreement), DWI II (instead of Holdco) (or, in the case of a Universal Triggered Offering, Universal instead of Holdco, provided, that DWI II does not exercise its rights under Section 4.01(b) of the Formation Agreement) shall have the right to select a joint lead bookrunning underwriter (with participation in pricing and bookbuilding) pursuant to clause (i) of this Section 1.02(d) and all such joint lead bookrunning underwriters shall be entitled to receive equivalent compensation in their role as joint lead bookrunning underwriters in such offering.

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(e) Pro Rata Participation in Demand Registrations. If a requested registration pursuant to this Section 1.02 involves an underwritten offering and a majority of the joint lead bookrunning underwriters selected in accordance with Section 1.02(d) shall advise the Company that, in their good faith view (based primarily upon prevailing market conditions), the number of securities requested to be included in such registration (including securities which the Company requests to be included) exceeds the largest number of securities which can be sold without having a significant negative effect on the price at which such securities can be sold in such offering, the Company shall include the following Registrable Securities in the following order:

(i) all Registrable Securities requested to be registered by the Requesting Holder pursuant to Section 1.02(a)(i);

(ii) to the extent that the number of Registrable Securities requested to be included in such registration pursuant to Section 1.02(a)(i) is less than the number of securities which the Company has been advised can be sold in such offering without having the negative effect referred to above, all Registrable Securities requested to be included in such registration pursuant to Section 1.02(a)(ii) that are not otherwise included in Section 1.02(e)(i) (provided, however, that if the number of Registrable Securities requested to be included in such registration pursuant to Section 1.02(a)(ii), together with the Registrable Securities requested to be included in such registration pursuant to Section 1.02(a)(i), exceeds the number which the Company has been advised can be sold in such offering without having the negative effect referred to above, the number of such Registrable Securities included in such registration pursuant to this Section 1.02(e)(ii) shall be that number of securities which the Company has been advised it can sell in excess of the number of Registrable Securities being included in such registration pursuant to Section 1.02(a)(i), allocated first, to Universal on the basis of the shares of Registrable Securities Universal has requested to be included in such registration and second, pro rata among the other Holders referred to in this Section 1.02(e)(ii) on the basis of the shares of Registrable Securities each such other Holder has requested to be included in such registration); and

(iii) to the extent that the number of Registrable Securities requested to be included in such registration pursuant to Sections 1.02(a)(i) and 1.02(a)(ii) is, in the aggregate, less than the number of securities which the Company has been advised can be sold in such offering without having the significant negative effect on pricing referred to above, any equity securities proposed to be sold by the Company

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(provided, however, that if the number of securities proposed to be sold by the Company, together with the number of Registrable Securities to be included in such registration pursuant to Sections 1.02(a)(i) and 1.02(a)(ii), exceeds the number which the Company has been advised can be sold in such offering without having the negative effect referred to above, the number of such securities included in such registration pursuant to this Section 1.02(e)(iii) shall be that number of securities which the Company has been advised it can sell in excess of the number of Registrable Securities being included in such registration pursuant to Sections 1.02(a)(i) and 1.02(a)(ii)).

(f) Additional Registration. If at least 75% of the Registrable Securities requested to be registered by the Requesting Holder in one of the Company Funded Registrations are not included in such registration, then such Requesting Holder may request that the Company effect an additional registration under the Securities Act of all or part of such Requesting Holder’s Registrable Securities in accordance with the provisions of this Section 1.02, and the Company shall effect, and pay the Registration Expenses in connection with, such additional registration (in addition to the Company Funded Registrations referred to in Section 1.02(a)) requested pursuant to this Section 1.02(f).

(g) No-Cutbacks. Notwithstanding anything to the contrary in this Agreement, and for the avoidance of doubt, with respect to any Requesting Holder, all Registrable Securities of such Requesting Holder requested to be included in a registration pursuant to Section 1.02(a)(i) shall be included in such registration (regardless of whether the underwriters agree that inclusion of all such securities would have a significant negative effect on the price at which such securities can be sold in such offering); provided, however, that in the case of a Follow-on Offering or a Universal Triggered Offering requested by Holdco, this paragraph (g) shall apply only to the amount of Registrable Securities necessary to cause a Satisfaction Event for the Participating Partners.

(h) Vulcan Demand Request. Notwithstanding anything to the contrary in this Agreement, if DWI II shall not have previously delivered the maximum number of Demand Requests to which it is entitled under this Section 1.02 and a Demand Request is delivered to the Company by any Holder other than Holdco or DWI II (or an entity Controlled By Paul Allen) at any time prior to the Vulcan Repayment Date and, within five Business Days of the receipt of a copy of such Demand Request from the Company under Section 1.02, DWI II shall deliver a Demand Request to the Company under Section 1.02 (which shall specify the number of securities requested to be included in such registration), then DWI II shall be deemed to be the Requesting Holder for all purposes of this Agreement, including Section 1.02(a)(i), Section 1.02(a)(i)(C) and Section 1.02(e) (and such Demand Request shall be treated as a Demand Request of DWI II and not the initial Requesting Holder for all purposes). The failure to exercise such right shall not affect DWI II’s rights to participate in the offering requested by the Requesting Holder under Section 1.02(a)(ii).

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SECTION 1.03. Certain Piggyback Registration Rights. (a) General. If the Company at any time proposes to register any of its equity securities (the “Priority Securities”) under the Securities Act (other than a registration (i) on Form S-8 or S-4 or any successor or similar forms, (ii) relating to equity securities issuable upon exercise of employee stock or similar options or in connection with any employee benefit or similar plan of the Company, (iii) in connection with an acquisition by the Company of another entity or (iv) pursuant to a registration under Section 1.02), whether or not for sale for its own account (but not for the account of any Holder or Family Group member), in a manner which would permit registration of Registrable Securities for sale to the public under the Securities Act, it shall each such time, subject to the provisions of Section 1.03(b), give written notice to all Holders of record of Registrable Securities of its intention to do so and of such Holders’ rights under this Section 1.03 at least 10 days prior to the anticipated filing date of the registration statement relating to such registration. Such notice shall offer all such Holders the opportunity to include in such registration statement such number of Registrable Securities as each such Holder may request, but in no event shall any Holder request inclusion of less than the Minimum Registration Amount. Upon the written request of any such Holder made within 10 days after the receipt of the Company’s notice (which request shall specify the number of Registrable Securities intended to be disposed of by such Holder, subject to reduction as provided herein, and the intended method of disposition thereof), the Company shall use its reasonable best efforts to effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holders thereof, to the extent required to permit the disposition (in accordance with such intended methods thereof) of the Registrable Securities so to be registered; provided, however, that (A) if such registration involves an underwritten offering, all Holders of Registrable Securities requesting to be included in the Company’s registration must sell their Registrable Securities to the underwriters selected by the Company on the same terms and conditions as apply to the Company or the original selling holders for whose account the registration has been made; provided, however, that in respect of any offering under this Agreement (whether under Section 1.02 or this Section 1.03 or otherwise) no Holder or any of its Affiliates (other than, for the avoidance of doubt, the Company) shall be required to directly or indirectly make any representations or warranties to, or agreements with, the Company or the underwriters (including agreements with respect to indemnification) other than representations, warranties or agreements regarding such Holder or its Affiliates, its ownership of and title to the Registrable Securities and its intended method of distribution, and any liability of such Holder or its Affiliates to any underwriter or other Person under such underwriting agreement shall be limited to liability arising from breach of its representations and warranties and shall be limited to an amount equal to the total price at which the securities sold by such Holder or its Affiliates were offered to the public (net of discounts and commissions paid by such Holder or its Affiliates in connection with such underwritten offering) and (B) if, at any

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time after giving written notice of its intention to register any securities pursuant to this Section 1.03(a) and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company shall give written notice to all Holders of Registrable Securities and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (without prejudice, however, to rights of Holders under Section 1.02). If a registration pursuant to this Section 1.03(a) involves an underwritten public offering, any Holder of Registrable Securities requesting to be included in such registration may elect, in writing prior to the effective date of the registration statement filed in connection with such registration, not to register such securities in connection with such registration. No registration effected under this Section 1.03 shall relieve the Company of its obligations to effect registrations upon request under Section 1.02. The Company shall pay all Registration Expenses in connection with each registration of Registrable Securities pursuant to this Section 1.03. Nothing contained in this Section 1.03 shall create any liability on the part of the Company to the Holders if the Company should for any reason decide not to file a registration statement for which piggyback registration rights are available or withdraw such registration statement subsequent to its filing, regardless of any action Holders may have taken, whether as a result of the issuance by the Company of any notice hereunder or otherwise.

(b) Priority in Piggyback Registrations. If a registration pursuant to this Section 1.03 involves an underwritten offering and a majority of the joint lead bookrunning underwriters shall advise the Company that, in their good faith view (based primarily upon prevailing market conditions), the number of securities (including all Registrable Securities) which the Company, the Holders and any other Persons intend to include in such registration exceeds the largest number of securities which can be sold without having a significant negative effect on the price at which such securities can be sold in such offering, the Company will include in such registration in the following order: (i) all the Priority Securities (including any to be sold for the Company’s own account or for other holders of Priority Securities (other than for the account of any Holders)), on a pro rata basis, and (ii) to the extent that the number of securities which the Company proposes to sell for its own account or for other holders of Priority Securities pursuant to Section 1.03(a) is less than the number of securities which the Company has been advised can be sold in such offering without having the negative effect referred to above, all Registrable Securities requested to be included in such registration by the Holders pursuant to Section 1.03(a) (provided, however, that if the number of Registrable Securities requested to be included in such registration by the Holders pursuant to Section 1.03(a), together with the number of Priority Securities to be included in such registration pursuant to clause (i) of this Section 1.03(b), exceeds the number which the Company has been advised can be sold in such offering without having the negative effect referred to above, the number of such Registrable Securities requested to be included in such registration by the Holders pursuant to Section 1.03(a) shall be allocated first, to Universal on the basis of the shares of Registrable Securities Universal has

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requested to be included in such registration and second, pro rata among all such other requesting Holders on the basis of the number of Registrable Securities each such other Holder has requested to be included in such registration).

SECTION 1.04. Registration Procedures. (a) If and whenever the Company is required to use its reasonable best efforts to effect or cause the registration under the Securities Act as provided in this Agreement of any Registrable Securities, the Company shall, as expeditiously as possible:

(1) use its reasonable best efforts to prepare and file, or cause to be prepared and filed as soon as practicable but in any event within 90 days of receipt of a request for registration, a registration statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, and use its reasonable best efforts to cause such registration statement to become and remain (for the period specified in paragraph (2) below) effective; provided, however, that at least ten days before filing with the SEC a registration statement or prospectus and at least two days before filing with the SEC any amendments or supplements thereto, the Company shall (A) furnish to the underwriters, if any, and to one counsel selected by Holders of a majority-in-interest of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comments of the underwriters and such counsel (provided, however, that the determination to accept any such comments not relating to the underwriters or such selling stockholders shall be in the Company’s sole discretion), and (B) notify each Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the SEC and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered;

(2) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 180 days (subject to blackouts upon the good faith declaration of any Disadvantageous Condition in accordance with Section 1.02(a)) or such shorter period which shall terminate when all Registrable Securities covered by such registration statement have been sold (but not before the expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable), and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

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(3) notify each Holder of Registrable Securities covered by such registration statement when such registration statement or any amendment thereto has been filed or becomes effective;

(4) notify each Holder of Registrable Securities covered by such registration statement of any notice from the SEC that there will be a review of such registration statement and promptly provide such Holders with a copy of any SEC comments received by the Company in connection therewith;

(5) furnish, without charge, to each Holder and each underwriter, if any, of Registrable Securities covered by such registration statement such number of copies of such registration statement, each amendment and supplement thereto (including one conformed copy to each Holder and one signed copy to each joint lead bookrunning underwriter and in each case including all exhibits thereto), and the prospectus included in such registration statement (including each preliminary prospectus), in conformity with the requirements of the Securities Act, and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder;

(6) use its reasonable best efforts to register or qualify the Registrable Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as any underwriter of Registrable Securities covered by such registration statement reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable each Holder and each underwriter to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided, however, that the Company shall not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (6), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction;

(7) use its reasonable best efforts to cause the Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the Holder or Holders thereof to consummate the disposition of such Registrable Securities;

(8) immediately notify each of the joint lead bookrunning underwriters, if any, and each Holder of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event which comes to the Company’s attention if as a result of such event the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company shall promptly prepare and

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file with the SEC such amendment or supplement to such registration statement or prospectus and furnish to such Holder a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading;

(9) use its reasonable best efforts to cause all Registrable Securities covered by such registration statement to be listed on the national securities exchange or national market interdealer quotation system on which the Class A Stock is then listed, and enter into such customary agreements including a supplemental listing application and indemnification agreement in customary form (provided, however, that the applicable listing requirements are satisfied), and to provide a transfer agent and registrar for such Registrable Securities covered by such registration statement no later than the effective date of such registration statement;

(10) enter into such customary agreements (including an underwriting agreement in customary form) and take all such other actions as the underwriters reasonably request in order to expedite or facilitate the disposition of such Registrable Securities, including customary indemnification;

(11) make available for inspection by any Holder of Registrable Securities covered by such registration statement, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such Holder or underwriter (collectively, the “Inspectors”), those financial and other records, organizational documents and properties of the Company and its controlled entities (collectively, “Records”), and cause the Company’s and its controlled entities’ officers, directors and employees to supply that information and respond to those inquiries reasonably requested by any such Inspector in connection with such registration statement, in each case under this paragraph (11) only to the extent reasonably necessary, as mutually determined by the Company and the underwriters or Holders, to enable such underwriters or Holders to conduct their due diligence investigation;

(12) use its reasonable best efforts to furnish to any underwriter participating in any disposition pursuant to such registration statement a signed counterpart of a “cold comfort” letter from the Company’s independent public accountants who have audited the Company’s financial statements included or incorporated by reference in such registration statement (and prospectus included therein), in customary form and covering such matter of the type customarily covered by “cold comfort” letters delivered in connection with underwritten public offerings of securities (including with respect to events subsequent to the date of such financial statements) as the underwriters reasonably request (and dated the dates such comfort letters are customarily dated);

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(13) use its reasonable best efforts to furnish to each underwriter participating in any disposition pursuant to such registration statement a signed counterpart of an opinion and negative assurance letter of counsel from the Company’s outside counsel in customary form and covering such matters of the type customarily covered in opinions and negative assurance letters of counsel delivered in connection with underwritten public offerings of securities;

(14) cooperate with each seller of Registrable Securities and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings with the NASD;

(15) in the case of a Demand Request with respect to a proposed offering in excess of $150 million or any Demand Request made by Holdco, make available its officers, employees and personnel and otherwise provide reasonable assistance to the underwriters in their marketing of Registrable Securities as the underwriters shall reasonably request, including, in the case of a Demand Request with respect to a proposed offering in excess of $200 million or any Demand Request made by Holdco, participation in “roadshow” presentations or such other selling efforts as the underwriters shall reasonably request; and

(16) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC, and make available or cause to be made available, as applicable, to the Holders of Registrable Securities sold under such registration statement, as soon as reasonably practicable, an earnings statement covering a period of at least 12 months, beginning with the first month after the effective date of the registration statement (as the term “effective date” is defined in Rule 158(c) under the Securities Act), which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.

(b) It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Agreement in respect of the Registrable Securities which are to be registered at the request of any Holder thereof that such Holder shall furnish to the Company such information regarding the Registrable Securities held by such Holder and the intended method of disposition thereof as the Company shall reasonably request and as shall be reasonably required in connection with the action taken by the Company.

(c) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 1.04(a)(8), such Holder shall discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 1.04(a)(8), and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies (including any and all drafts), other than permanent file copies, then in such Holder’s possession, of the prospectus covering such Registrable Securities, current at the time of receipt of such notice. In the event the Company shall give any

18

such notice, the period referred to in Section 1.04(a)(2) shall be extended by the greater of (i) 180 days and (ii) the number of days during the period from and including the date of the giving of such notice pursuant to Section 1.04(a)(8) to and including the date when each Holder of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 1.04(a)(8).

SECTION 1.05. Holdback Agreements. (a) If any registration of Registrable Securities shall be in connection with an underwritten public offering, each Holder of Registrable Securities agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144, or any successor provision, under the Securities Act, of any Registrable Securities and not to effect any such public sale or distribution of any other equity security of the Company or of any security convertible into or exchangeable or exercisable for any equity security of the Company or publicly announce an intention to do any of the foregoing (in each case, other than as part of such underwritten public offering) during the seven days prior to, and during the 90-day period which begins on, the effective date of such registration statement (which 90-day period shall be tolled to the extent of any blackouts upon the good faith declaration of any Disadvantageous Conditions in accordance with Section 1.02(a)) (except as part of such registration) and agrees further to enter into a customary lock-up with the underwriters of such offering (not to exceed six months from the date of consummation of such offering); provided, however, that such Holder of Registrable Securities has received written notice of such registration at least 15 days prior to the anticipated beginning of the seven-day period referred to above.

(b) If any registration of Registrable Securities shall be in connection with an underwritten public offering, the Company agrees not to effect any public sale or distribution of any of its equity securities or of any security convertible into or exchangeable or exercisable for any equity security of the Company (other than any such sale or distribution of such securities in connection with any merger or consolidation by the Company or any subsidiary of the Company or the acquisition by the Company or a subsidiary of the Company of the capital stock or substantially all the assets of any other Person or in connection with an employee stock ownership or other benefit plan) during the seven days prior to, and during the 90-day period which begins on, the effective date of such registration statement (which 90-day period shall be tolled to the extent of any blackouts upon the good faith declaration of any Disadvantageous Conditions in accordance with Section 1.02(a)) (except as part of such registration) and agrees further to enter into a customary lock-up with the underwriters of such offering (not to exceed six months from the date of consummation of such offering).

(c) During the term of this Agreement, each certificate evidencing Registrable Securities held of record or beneficially owned by a Holder shall bear the following legend:

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE

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SUBJECT TO AND TRANSFERABLE ONLY UPON COMPLIANCE WITH THE PROVISIONS OF A REGISTRATION RIGHTS AGREEMENT, DATED AS OF OCTOBER 27, 2004, AMONG DREAMWORKS ANIMATION SKG, INC. AND THE STOCKHOLDERS PARTY THERETO. A COPY OF SUCH REGISTRATION RIGHTS AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF DREAMWORKS ANIMATION SKG, INC. AT GRANDVIEW BUILDING, 1000 FLOWER STREET, GLENDALE, CALIFORNIA 91201.”

(d) Upon a Person ceasing to have rights and obligations under this Agreement pursuant to the terms hereof or upon termination of this Agreement, such Person may surrender to the Company any certificates held of record by such Person and bearing the legend set forth in Section 1.05(c), and upon surrender of such certificates, the Company shall reissue such certificates without such legend.

SECTION 1.06. Indemnification and Contribution. (a) To the fullest extent permitted by applicable law, the Company shall indemnify and hold harmless each Person who participates as an underwriter (any such Person being an “Underwriter”), each Holder of Registrable Securities to be sold in connection with the relevant registration (each such Holder being a “Seller”, and in the event Holdco is the “Seller”, each partner in Holdco who will receive cash proceeds from the sale of such securities under such registration statement shall also be deemed a “Seller” for purposes of this Section 1.06) and their respective partners, directors, officers and employees and each Person, if any, who controls any Seller or Underwriter (including, if Holdco is a Seller, the general and limited partners thereof) within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act as follows:

(i) against any and all losses, liabilities, claims, damages, judgments and reasonable expenses whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any registration statement (or any amendment thereto) relating to such registration, including all documents incorporated therein by reference, 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 arising out of any untrue statement or alleged untrue statement of a material fact contained in any prospectus (or any amendment or supplement thereto) relating to such registration, including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(ii) against any and all losses, liabilities, claims, damages, judgments and reasonable expenses whatsoever, as incurred, to the extent

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of the aggregate amount paid in settlement of any litigation, investigation or proceeding by any governmental agency or body, commenced or threatened, or of any other claim whatsoever based upon 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 reasonable expense whatsoever, as incurred (including, subject to Section 1.06(c), fees and disbursements of counsel) incurred in investigating, preparing or defending against any litigation, investigation or proceeding by any governmental agency or body, commenced or threatened, in each case whether or not such Person is a party, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above;

provided, however, that this indemnity agreement does not apply to any Seller or Underwriter with respect to any loss, liability, claim, damage, judgment or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission (A) made in reliance upon and in conformity with written information furnished to the Company by such Seller or Underwriter expressly for use in a registration statement (or any amendment thereto) or any related prospectus (or any amendment or supplement thereto) or (B) if such untrue statement or omission or alleged untrue statement or omission was corrected in an amended or supplemented registration statement or prospectus and the Company had furnished copies thereof to the Underwriter or Seller from which the Person asserting such loss, liability, claim, damage, judgment or expense purchased the securities that are the subject thereof on a timely basis prior to the date of sale by such Underwriter or Seller to such Person.

(b) Each Seller shall severally indemnify and hold harmless the Company, each Underwriter and the other Sellers, and each of their respective partners, directors, officers and employees (including each director and officer of the Company who signed the relevant registration statement) and each Person, if any, who controls the Company, any Underwriter or any other Seller within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all losses, liabilities, claims, damages, judgments and expenses described in the indemnity contained in Section 1.06(a) (provided, however, that any settlement of the type described therein is effected with the written consent of such Seller) as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in a registration statement or any related prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Seller expressly for use in such registration statement (or any amendment thereto) or such prospectus (or any amendment or supplement thereto); provided, however, that an indemnifying Seller shall not be required to provide indemnification in any amount in excess of the amount by which (x) the total price at which the securities sold by such

21

indemnifying Seller and its affiliated indemnifying Sellers and distributed to the public were offered to the public (net of discounts and commissions paid by the indemnifying Seller in connection with such offering) exceeds (y) the amount of any damages which such indemnifying Seller has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Company shall be entitled, to the extent customary, to receive indemnification and contribution from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution, to the same extent as provided above with respect to information so furnished in writing by such Persons specifically for inclusion in any prospectus or registration statement.

(c) Each indemnified party or parties shall give reasonably prompt notice to each indemnifying party or parties of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party or parties shall not relieve it or them from any liability which it or they may have under this indemnity agreement, except to the extent that the indemnifying party is materially prejudiced by such failure to give notice. If the indemnifying party or parties so elects within a reasonable time after receipt of such notice, the indemnifying party or parties may assume the defense of such action or proceeding at such indemnifying party’s or parties’ expense with counsel chosen by the indemnifying party or parties and approved by the indemnified party defendant in such action or proceeding, which approval shall not be unreasonably withheld; provided, however, that, if such indemnified party or parties reasonably determine that a conflict of interest exists and that therefore it is advisable for such indemnified party or parties to be represented by separate counsel or that, upon advice of counsel, there may be legal defenses available to it or them which are different from or in addition to those available to the indemnifying party, then the indemnifying party or parties shall not be entitled to assume such defense and the indemnified party or parties shall be entitled to separate counsel (limited in each jurisdiction to one counsel for all Underwriters and another counsel for all other indemnified parties under this Agreement) at the indemnifying party’s or parties’ expense. The indemnified party or parties shall have the right to engage separate counsel and participate in the defense of any action, but, except as stated above, the fees and expenses of such counsel shall be the expense of such indemnified party or parties. If any indemnifying party or parties are not so entitled to assume the defense of such action or do not assume such defense, after having received the notice referred to in the first sentence of this paragraph, the indemnifying party or parties will pay the reasonable fees and expenses of counsel for the indemnified party or parties (limited in each jurisdiction to one counsel for all Underwriters and another counsel for all other indemnified parties under this Agreement). In such event, however, no indemnifying party or parties will be liable for any settlement effected without the written consent of such indemnifying party or parties (which consent shall not be unreasonably withheld or delayed); provided, however, that if at any time the indemnified party or parties shall have requested the indemnifying party or parties to reimburse the indemnified party or parties for fees and expenses of counsel as contemplated by this paragraph, the indemnifying party or parties

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shall be liable for any settlement of any proceeding effected without the written consent of such indemnifying party or parties if (x) such settlement is entered into more than 15 business days after receipt by such indemnifying party or parties of the aforesaid request accompanied by supporting documents reasonably satisfactory to the indemnifying party or parties and (y) such indemnifying party or parties shall not have reimbursed the indemnified party or parties in accordance with such request prior to the date of such settlement. No indemnifying party or parties shall, without the prior written consent of the indemnified party or parties, effect any settlement of any action in respect of which any indemnified party or parties is a party, unless such settlement includes an unconditional release of such indemnified party or parties from all liability on claims that are the subject matter of such action. If an indemnifying party is entitled to assume, and assumes, the defense of such action or proceeding in accordance with this paragraph, such indemnifying party or parties shall not, except as otherwise provided in this subsection (c), be liable for any fees and expenses of counsel for the indemnified parties incurred thereafter in connection with such action or proceeding.

(d) (i) In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in this Section 1.06 is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms in respect of any losses, liabilities, claims, damages, judgments and expenses suffered by an indemnified party referred to therein, each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, liabilities, claims, damages, judgments and expenses in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and of the liable Sellers or Underwriters (including, in each case, that of their respective officers, directors, employees and agents), as the case may be, on the other in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages, judgments or expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the liable Sellers or Underwriters (including, in each case, that of their respective officers, directors, employees and agents), as the case may be, on the other 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, on the one hand, or by or on behalf of the Sellers or Underwriters, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, liabilities, claims, damages, judgments and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 1.06(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

(ii) The Company and each Seller agree that it would not be just and equitable if contribution pursuant to this Section 1.06 were determined

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by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in sub-paragraph (i) above. Notwithstanding anything in this Section 1.06(d) to the contrary, in the case of distributions to the public, an indemnifying Seller shall not be required to contribute any amount in excess of the amount by which (A) the total price at which the securities sold by such indemnifying Seller and its affiliated indemnifying Sellers and distributed to the public were offered to the public (net of discounts and commissions paid by the indemnifying Seller in connection with such offering) exceeds (B) the amount of any damages which such indemnifying Seller 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 Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

(iii) For purposes of this Section, each Person, if any, who controls a Seller or an Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Seller or Underwriter; and each director of the Company, each officer of the Company who signed the relevant registration statement, and each Person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, shall have the same rights to contribution as the Company.

SECTION 1.07. Miscellaneous.

(a) No Inconsistent Agreements. Neither the Company nor the Holders have, as of the date hereof, entered into, nor shall they, on or after the date hereof, enter into, any agreement with respect to the Registrable Securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof.

(b) Complete Agreement. This Agreement shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof and shall supercede all prior agreements and understandings, whether written or oral, between or among the parties with respect to such subject matter.

(c) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, without the prior written consent of the Company, DWI II, M&J K B, DG-DW and Holders of a majority-in-interest of the Registrable Securities; provided, however, that no amendment shall affect any rights or obligations of a Holder without the consent of such Holder.

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(d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier or air courier guaranteeing overnight delivery:

(i) if to a Holder other than DWI II, at the most current address indicated for such Holder in the Company’s stock transfer records;

(ii) if to the Company, at:

DreamWorks Animation SKG, Inc.

Grandview Building

1000 Flower Street

Glendale, California 91201

Attention: Katherine Kendrick, General Counsel

Telecopier: (818) 659-6123

with a copy to:

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, NY 10019

Attention: Faiza J. Saeed, Esq.

Telecopier: (212) 474-3700

(iii) if to DWI II, at:

DW Investment II, Inc.

505 Fifth Avenue South

Suite 900

Seattle, WA 98104

Attention: W. Lance Conn, Executive Vice President, Investment Management; and Executive Vice President, Legal

Telecopier: (206) 342-3000

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue, Suite 3400

Los Angeles, CA 90071

Attention:  Nicholas P. Saggese, Esq.

                    David C. Eisman, Esq.

Telecopier: (213) 687-5600

All such notices and communications shall be deemed to have been duly given when received.

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The Holders or the Company by notice to the other parties may designate additional or different addresses for subsequent notices or communications.

(e) Successors and Assigns. This Agreement shall be binding on and inure to the benefit of and be enforceable by the parties hereto and, with respect to the Company, its successors and assigns.

(f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(g) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(h) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to applicable principles of conflicts of laws, except to the extent the substantive laws of the State of Delaware are mandatorily applicable under Delaware law.

(i) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law.

(j) No Third Party Beneficiaries. Except as provided in Section 1.06, this Agreement is not intended to confer any rights or remedies hereunder upon, and shall not be enforceable by, any Person other than the parties hereto.

(k) Submission to Jurisdiction; Waivers. With respect to any suit, action or proceeding relating to this Agreement (collectively, a “Proceeding”), each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the State of New York and the State of Delaware and any court of the United States located in the Borough of Manhattan in New York City or the State of Delaware; (b) waives any objection which such party may have at any time to the laying of venue of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought in an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such party; (c) consents to the service of process at the address set forth for notices in Section 1.07(d) herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law; and (d) waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in connection with any Proceeding.

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(l) Enforcement. (i) Each party hereto acknowledges that the other parties would not have an adequate remedy at law for money damages in the event that any of the covenants or agreements of any of the other parties to this Agreement were not performed in accordance with its terms, and it is therefore agreed that each party hereto, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach and enforcing specifically the terms and provisions hereof, and each party hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief.

(ii) All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

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IN WITNESS HEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first written above.

DREAMWORKS ANIMATION SKG, INC.,
By	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	Vice President
DWA ESCROW LLLP,
By	DG-DW, L.P., General Partner
	By	/s/ Richard Sherman
	Name:	Richard Sherman
	Title:	CFO
M&J K DREAM LIMITED PARTNERSHIP,
By	M&J K DREAM CORP., General Partner
	By	/s/ Jeffrey Katzenberg
	Name:	Jeffrey Katzenberg
	Title:	President
M&J K B LIMITED PARTNERSHIP,
By	M&J K DREAM CORP., General Partner
	By	/s/ Jeffrey Katzenberg
	Name:	Jeffrey Katzenberg
	Title:	President

THE JK ANNUITY TRUST,
By	/s/ Jeffrey Katzenberg
Name:	Jeffrey Katzenberg
Title:	Authorized Signatory
THE MK ANNUITY TRUST,
By	/s/ Jeffrey Katzenberg
Name:	Jeffrey Katzenberg
Title:	Authorized Signatory
KATZENBERG 1994 IRREVOCABLE TRUST,
By	/s/ David Geffen
Name:	David Geffen
DG-DW, L.P.,
By	DG-DW, INC., General Partner
	By	/s/ Richard Sherman
	Name:	Richard Sherman
	Title:	CFO

2

DW LIPS, L.P.,
By	DW SUBS. INC., General Partner
	By	/s/ Michael Rutman
	Name:	Michael Rutman
	Title:	Treasurer
DW INVESTMENT II, INC.,
By	/s/ W. Lance Conn
Name:	W. Lance Conn
Title:	Vice President
LEE ENTERTAINMENT, L.L.C.,
By	/s/ Gyeong C. Park
Name:	Gyeong C. Park
Title:	Authorized Person
CHEMICAL INVESTMENTS, INC.,
By	/s/ Jeffrey C. Walker
Name:	Jeffrey C. Walker
Title:	President
MICROSOFT CORPORATION,
By	/s/ George Zinn
Name:	George Zinn
Title:	Treasurer

3

ZIFF INVESTORS PARTNERSHIP, L.P. IIA,
By	Ziff Investment Management, LLC, General Partner
	By	/s/ Mark Beaudoin
	Name:	Mark Beaudoin
	Title:	Treasurer
CARL O. ROSENDAHL,
	/s/ Carl O. Rosendahl
VIVENDI UNIVERSAL ENTERTAINMENT LLLP,
By	/s/ Karen Randall
Name:	Karen Randall
Title:	Executive Vice President and General Counsel
THOMSON INC.,
By	/s/ Brian Kelly
Name:	Brian Kelly
Title:	Authorized Signer
KADOKAWA ENTERTAINMENT U.S. INC.,
By	/s/ Yasushi Shiina
Name:	Yasushi Shiina
Title:	President

4

EX-10.1

EXHIBIT 10.1

DREAMWORKS ANIMATION SKG, INC.

2004 OMNIBUS INCENTIVE COMPENSATION PLAN

Purpose. The purpose of this DreamWorks Animation SKG, Inc., 2004 Omnibus Incentive Compensation Plan is to promote the interests of DreamWorks Animation SKG, Inc., and its stockholders by (a) attracting and retaining exceptional directors, officers, employees and consultants (including prospective directors, officers, employees and consultants) of the Company and its Affiliates and (b) enabling such individuals to participate in the long-term growth and financial success of the Company.

Definitions. As used in the Plan, the following terms shall have the meanings set forth below:

“Affiliate” means (a) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Company and/or (b) any entity in which the Company has a significant equity interest, in either case as determined by the Committee.

“Award” means any award that is permitted under Section 6 and granted under the Plan.

“Award Agreement” means any written agreement, contract or other instrument or document evidencing any Award, which may, but need not, require execution or acknowledgment by a Participant.

“Board” means the Board of Directors of the Company.

“Cash Incentive Award” shall have the meaning specified in Section 6(g).

“Change of Control” shall (a) have the meaning set forth in an Award Agreement or (b) if there is no definition set forth in an Award Agreement, mean the occurrence of any of the following events, not including any events occurring prior to or in connection with an initial public offering of Shares (including the occurrence of such initial public offering):

(i) during any period of 14 consecutive calendar months, individuals who were directors of the Company on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a director subsequent to the first day of such period whose election, or nomination for election, by the Company’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as

such term is used in Section 13(d) of the Exchange Act) (each, a “Person”), in each case other than the management of the Company, the Board or the holders of the Company’s Class B common stock, $0.01 par value;

(ii) the consummation of (A) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) the Company or (y) any of its Subsidiaries, but in the case of this clause (y) only if Company Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the assets of the Company to an entity that is not an Affiliate (a “Sale”) if such Reorganization or Sale requires the approval of the Company’s stockholders under the law of the Company’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of the Company in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the individuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the Shares or other securities eligible to vote for the election of the Board (“Company Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including, without limitation, a corporation that as a result of such transaction owns the Company or all or substantially all the Company’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Company Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than the Company), (2) no Person (excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation, (y) Jeffrey Katzenberg and (z) David Geffen) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale;

(iii) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company; or

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(iv) any Person, corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or an Affiliate or (C) any company owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of the voting power of the Company Voting Securities) becomes the beneficial owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company Voting Securities but only if the percentage so owned exceeds the aggregate percentage of the combined voting power of the Company Voting Securities then owned, directly or indirectly, by Jeffrey Katzenberg and David Geffen; provided, however, that for purposes of this subparagraph (iv), the following acquisitions shall not constitute a Change of Control: (x) any acquisition directly from the Company or (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or an Affiliate.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.

“Committee” means the compensation committee of the Board, or such other committee of the Board as may be designated by the Board to administer the Plan.

“Company” means DreamWorks Animation SKG, Inc., a corporation organized under the laws of Delaware, together with any successor thereto.

“Deferred Share Unit” means a deferred share unit Award that represents an unfunded and unsecured promise to deliver Shares in accordance with the terms of the applicable Award Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute thereto.

“Exercise Price” means (a) in the case of Options, the price specified in the applicable Award Agreement as the price-per-Share at which Shares may be purchased pursuant to such Option or (b) in the case of SARs, the price specified in the applicable Award Agreement as the reference price-per-Share used to calculate the amount payable to the Participant.

“Fair Market Value” means (a) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee and (b) with respect to the Shares, as of any date, (i) the mean between the high and low sales prices of the Shares (A) as reported by the NYSE for such date or (B) if the Shares are listed on a national stock exchange, as reported on the stock exchange composite tape for securities traded on such stock exchange for such date or, with respect to each of clauses (A) and (B), if there were no sales on such date, on the closest preceding date on which there were sales of Shares or (ii) in the event there shall be no public market for the Shares on such date, the fair market value of the Shares as determined in good faith by the Committee.

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“Incentive Stock Option” means an option to purchase Shares from the Company that (a) is granted under Section 6 of the Plan and (b) is intended to qualify for special Federal income tax treatment pursuant to Sections 421 and 422 of the Code, as now constituted or subsequently amended, or pursuant to a successor provision of the Code, and which is so designated in the applicable Award Agreement.

“Independent Director” means a member of the Board who is neither (a) an employee of the Company nor (b) an employee of any Affiliate, and who, at the time of acting, is a “Non-Employee Director” under Rule 16b-3.

“IRS” means the Internal Revenue Service or any successor thereto and includes the staff thereof.

“Nonqualified Stock Option” means an option to purchase Shares from the Company that (a) is granted under Section 6 of the Plan and (b) is not an Incentive Stock Option.

“NYSE” means the New York Stock Exchange.

“Option” means an Incentive Stock Option or a Nonqualified Stock Option or both, as the context requires.

“Participant” means any director, officer, employee or consultant (including any prospective director, officer, employee or consultant) of the Company or its Affiliates who is eligible for an Award under Section 5 and who is selected by the Committee to receive an Award under the Plan or who receives a Substitute Award pursuant to Section 4(c).

“Performance Compensation Award” means any Award designated by the Committee as a Performance Compensation Award pursuant to Section 6(e) of the Plan.

“Performance Criteria” means the criterion or criteria that the Committee shall select for purposes of establishing the Performance Goal(s) for a Performance Period with respect to any Performance Compensation Award under the Plan.

“Performance Formula” means, for a Performance Period, the one or more objective formulas applied against the relevant Performance Goal to determine, with regard to the Performance Compensation Award of a particular Participant, whether all, some portion but less than all, or none of the Performance Compensation Award has been earned for the Performance Period.

“Performance Goal” means, for a Performance Period, the one or more goals established by the Committee for the Performance Period based upon the Performance Criteria.

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“Performance Period” means the one or more periods of time as the Committee may select over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participant’s right to and the payment of a Performance Compensation Award.

“Performance Unit” means an Award under Section 6(f) of the Plan that has a value set by the Committee (or that is determined by reference to a valuation formula specified by the Committee), which value may be paid to the Participant by delivery of such property as the Committee shall determine, including without limitation, cash or Shares, or any combination thereof, upon achievement of such Performance Goals during the relevant Performance Period as the Committee shall establish at the time of such Award or thereafter.

“Plan” means this DreamWorks Animation, Inc., 2004 Omnibus Incentive Compensation Plan, as in effect from time to time.

“Restricted Share” means a Share delivered under the Plan that is subject to certain transfer restrictions, forfeiture provisions and/or other terms and conditions specified herein and in the applicable Award Agreement.

“RSU” means a restricted stock unit Award that is designated as such in the applicable Award Agreement and that represents an unfunded and unsecured promise to deliver Shares, cash, other securities, other Awards or other property in accordance with the terms of the applicable Award Agreement.

“Rule 16b-3” means Rule 16b-3 as promulgated and interpreted by the SEC under the Exchange Act or any successor rule or regulation thereto as in effect from time to time.

“SAR” means a stock appreciation right Award that represents an unfunded and unsecured promise to deliver Shares, cash, other securities, other Awards or other property equal in value to the excess, if any, of the Fair Market Value per Share over the Exercise Price per Share of the SAR, subject to the terms of the applicable Award Agreement.

“SEC” means the Securities and Exchange Commission or any successor thereto and shall include the staff thereof.

“Shares” means shares of Class A Common Stock of the Company, $0.01 par value, or such other securities of the Company (a) into which such shares shall be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar transaction or (b) as may be determined by the Committee pursuant to Section 4(b).

“Subsidiary” means any entity in which the Company, directly or indirectly, possesses fifty percent (50%) or more of the total combined voting power of all classes of its stock.

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“Substitute Awards” shall have the meaning specified in Section 4(c).

“Substituted Options” shall have the meaning specified in Section 6(c)(v).

“Substitution SARs” shall have the meaning specified in Section 6(c)(v).

Administration. a)Composition of Committee. The Plan shall be administered by the Committee, which shall be composed of two or more directors, all of whom shall be Independent Directors and all of whom shall (i) qualify as “outside directors” under Section 162(m) of the Code and (ii) meet the independence requirements of the NYSE; provided, however, that, prior to the date of the consummation of the initial public offering of Shares, the Committee shall be composed of one or more members of the Board, as determined by the Board.

Authority of Committee. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have sole and plenary authority to administer the Plan, including, but not limited to, the authority to (i) designate Participants, (ii) determine the type or types of Awards to be granted to a Participant, (iii) determine the number of Shares to be covered by, or with respect to which payments, rights or other matters are to be calculated in connection with, Awards, (iv) determine the terms and conditions of any Awards, (v) determine the vesting schedules of Awards and, if certain performance criteria must be attained in order for an Award to vest or be settled or paid, establish such performance criteria and certify whether, and to what extent, such performance criteria have been attained, (vi) determine whether, to what extent and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended, (vii) determine whether, to what extent and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee, (viii) interpret, administer, reconcile any inconsistency in, correct any default in and/or supply any omission in, the Plan and any instrument or agreement relating to, or Award made under, the Plan, (ix) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan , (x) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, Awards, (xi) amend an outstanding Award or grant a replacement Award for an Award previously granted under the Plan if, in its sole discretion, the Committee determines that (A) the tax consequences of such Award to the Company or the Participant differ from those consequences that were expected to occur on the date the Award was granted or (B) clarifications or interpretations of, or changes to, tax law or regulations permit Awards to be granted that have more favorable tax consequences than initially anticipated and (xii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

Committee Decisions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect

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to the Plan or any Award shall be within the sole and plenary discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award and any stockholder.

Indemnification. No member of the Board, the Committee or any employee of the Company (each such person, a “Covered Person”) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award hereunder. Each Covered Person shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and (ii) any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person; provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding, and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Restated Certificate of Incorporation or Restated Bylaws. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company’s Restated Certificate of Incorporation or Restated Bylaws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.

Delegation of Authority to Senior Officers. The Committee may delegate, on such terms and conditions as it determines in its sole and plenary discretion, to one or more senior officers of the Company the authority to make grants of Awards to officers (other than executive officers), employees and consultants of the Company and its Affiliates (including any prospective officer, employee or consultant).

Awards to Independent Directors. Notwithstanding anything to the contrary contained herein, the Board may, in its sole and plenary discretion, at any time and from time to time, grant Awards to Independent Directors or administer the Plan with respect to such Awards. In any such case, the Board shall have all the authority and responsibility granted to the Committee herein.

Shares Available for Awards. b)Shares Available. Subject to adjustment as provided in Section 4(b), (i) the aggregate number of Shares that may be delivered pursuant to Awards granted under the Plan shall be 15,000,000, of which the maximum

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number of Shares that may be delivered pursuant to Incentive Stock Options granted under the Plan shall be 5,000,000 and (ii) the maximum number of Shares with respect to which Awards may be granted to any Participant in any fiscal year of the Company shall be 2,000,000. If, after the effective date of the Plan, any Award granted under the Plan is forfeited, or otherwise expires, terminates or is canceled without the delivery of Shares, then the Shares covered by such forfeited, expired, terminated or canceled Award shall again become available to be delivered pursuant to Awards under the Plan. If Shares issued upon exercise, vesting or settlement of an Award, or Shares owned by a Participant (which are not subject to any pledge or other security interest and which have been owned by the Participant for at least six months), are surrendered or tendered to the Company in payment of the Exercise Price of an Award or any taxes required to be withheld in respect of an Award, in each case, in accordance with the terms and conditions of the Plan and any applicable Award Agreement, such surrendered or tendered Shares shall again become available to be delivered pursuant to Awards under the Plan; provided, however, that in no event shall such Shares increase the number of Shares that may be delivered pursuant to Incentive Stock Options granted under the Plan.

Adjustments for Changes in Capitalization and Similar Events. In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee in its discretion to be appropriate or desirable, then the Committee shall, (i) in such manner as it may deem equitable or desirable, adjust any or all of (A) the number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted, including (1) the aggregate number of Shares that may be delivered pursuant to Awards granted under the Plan, as provided in Section 4(a) and (2) the maximum number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted to any Participant in any fiscal year of the Company and (B) the terms of any outstanding Award, including (1) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards or to which outstanding Awards relate and (2) the Exercise Price with respect to any Award or (ii) if deemed appropriate or desirable, make provision for a cash payment to the holder of an outstanding Award in consideration for the cancelation of such Award, including, in the case of an outstanding Option or SAR, a cash payment to the holder of such Option or SAR in consideration for the cancelation of such Option or SAR in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the Shares subject to such Option or SAR over the aggregate Exercise Price of such Option or SAR (it being understood that, in such event, any Option or SAR having a per Share Exercise Price equal to, or in excess of, the Fair Market Value of a Share subject to such Option or SAR may be canceled and terminated without any payment or consideration therefor).

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Substitute Awards. Awards may, in the discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or any of its Affiliates or a company acquired by the Company or with which the Company combines (“Substitute Awards”). The number of Shares underlying any Substitute Awards shall be counted against the aggregate number of Shares available for Awards under the Plan; provided, however, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding awards previously granted by an entity that is acquired by the Company or any of its Affiliates through a merger or acquisition shall not be counted against the aggregate number of Shares available for Awards under the Plan; provided further, however, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding stock options intended to qualify for special tax treatment under Sections 421 and 422 of the Code that were previously granted by an entity that is acquired by the Company or any of its Affiliates through a merger or acquisition shall be counted against the aggregate number of Shares available for Incentive Stock Options under the Plan.

Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.

Eligibility. Any director, officer, employee or consultant (including any prospective director, officer, employee or consultant) of the Company or any of its Affiliates shall be eligible to be designated a Participant.

Awards. c)Types of Awards. Awards may be made under the Plan in the form of (i) Options, (ii) SARs, (iii) Restricted Shares, (iv) RSUs, (v) Performance Units, (vi) Cash Incentive Awards, (vii) Deferred Share Units and (viii) other equity-based or equity-related Awards that the Committee determines are consistent with the purpose of the Plan and the interests of the Company. Awards may be granted in tandem with other Awards. No Incentive Stock Option (other than an Incentive Stock Option that may be assumed or issued by the Company in connection with a transaction to which Section 424(a) of the Code applies) may be granted to a person who is ineligible to receive an Incentive Stock Option under the Code.

Options. d)Grant. Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, whether the Option will be an Incentive Stock Option or a Nonqualified Stock Option and the conditions and limitations applicable to the vesting and exercise of the Option. In the case of Incentive Stock Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code and any regulations related thereto, as may be amended from time to time. All Options granted under the Plan shall be Nonqualified Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. If an Option is intended to be an Incentive Stock Option, and if for any reason such Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Nonqualified

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Stock Option appropriately granted under the Plan, provided that such Option (or portion thereof) otherwise complies with the Plan’s requirements relating to Nonqualified Stock Options.

Exercise Price. Except as otherwise established by the Committee at the time an Option is granted and set forth in the applicable Award Agreement, the Exercise Price of each Share covered by an Option shall be not less than 100% of the Fair Market Value of such Share (determined as of the date the Option is granted); provided, however, that (A) except as otherwise established by the Committee at the time an Option is granted and set forth in the applicable Award Agreement, the Exercise Price of each Share covered by an Option that is granted effective as of the Company’s initial public offering of Shares shall be the initial public offering price per Share and (B) in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of such Option, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Affiliate, the per Share Exercise Price shall be no less than 110% of the Fair Market Value per Share on the date of the grant. Options are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code.

Vesting and Exercise. Each Option shall be vested and exercisable at such times, in such manner and subject to such terms and conditions as the Committee may, in its sole and plenary discretion, specify in the applicable Award Agreement or thereafter. Except as otherwise specified by the Committee in the applicable Award Agreement, an Option may only be exercised to the extent that it has already vested at the time of exercise. Except as otherwise specified by the Committee in the Award Agreement, Options shall become vested and exercisable with respect to one-fourth of the Shares subject to such Options on each of the first four anniversaries of the date of grant. An Option shall be deemed to be exercised when written or electronic notice of such exercise has been given to the Company in accordance with the terms of the Award by the person entitled to exercise the Award and full payment pursuant to Section 6(b)(iv) for the Shares with respect to which the Award is exercised has been received by the Company. Exercise of an Option in any manner shall result in a decrease in the number of Shares that thereafter may be available for sale under the Option and, except as expressly set forth in Section 4(c), in the number of Shares that may be available for purposes of the Plan, by the number of Shares as to which the Option is exercised. The Committee may impose such conditions with respect to the exercise of Options, including, without limitation, any relating to the application of Federal or state securities laws, as it may deem necessary or advisable.

Payment. i)No Shares shall be delivered pursuant to any exercise of an Option until payment in full of the aggregate Exercise Price therefor is received by the Company, and the Participant has paid to the Company an amount equal to any Federal, state, local and foreign income and employment taxes required to be withheld. Such payments may be made in cash (or its equivalent) or, in the Committee’s sole and plenary discretion, (1) by exchanging Shares owned by the Participant (which are not the subject of any pledge or other security interest and which have been owned by such Participant for at least six months) or (2) if there shall be a public market for the Shares at

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such time, subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the aggregate Exercise Price, or by a combination of the foregoing; provided that the combined value of all cash and cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the date of such tender is at least equal to such aggregate Exercise Price and the amount of any Federal, state, local or foreign income or employment taxes required to be withheld, if applicable.

Wherever in the Plan or any Award Agreement a Participant is permitted to pay the Exercise Price of an Option or taxes relating to the exercise of an Option by delivering Shares, the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares, in which case the Company shall treat the Option as exercised without further payment and shall withhold such number of Shares from the Shares acquired by the exercise of the Option.

Expiration. Except as otherwise set forth in the applicable Award Agreement, each Option shall expire immediately, without any payment, upon the earlier of (A) the tenth anniversary of the date the Option is granted and (B) 90 days after the date the Participant who is holding the Option ceases to be a director, officer, employee or consultant of the Company or one of its Affiliates. In no event may an Option be exercisable after the tenth anniversary of the date the Option is granted.

Buyout. The Committee may, in its sole and plenary discretion, at any time buy out for a payment in cash or the delivery of Shares or other property (including another Award), an Option previously granted, based on such terms and conditions as the Committee shall establish and communicate to the holder of the Option at the time that such offer is made. If the Committee so determines, the consent of the affected Participant shall not be required to effect such buyout.

SARs. e)Grant. Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine the Participants to whom SARs shall be granted, the number of Shares to be covered by each SAR, the Exercise Price thereof and the conditions and limitations applicable to the exercise thereof. SARs may be granted in tandem with another Award, in addition to another Award or freestanding and unrelated to another Award. SARs granted in tandem with, or in addition to, an Award may be granted either at the same time as the Award or at a later time.

Exercise Price. Except as otherwise established by the Committee at the time a SAR is granted and set forth in the applicable Award Agreement, the Exercise Price of each Share covered by a SAR shall be not less than 100% of the Fair Market Value of such Share (determined as of the date the SAR is granted). SARs are intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code.

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Exercise. A SAR shall entitle the Participant to receive an amount equal to the excess, if any, of the Fair Market Value of a Share on the date of exercise of the SAR over the Exercise Price thereof. The Committee shall determine, in its sole and plenary discretion, whether a SAR shall be settled in cash, Shares, other securities, other Awards, other property or a combination of any of the foregoing.

Other Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine, at or after the grant of a SAR, the vesting criteria, term, methods of exercise, methods and form of settlement and any other terms and conditions of any SAR. Any such determination by the Committee may be changed by the Committee from time to time and may govern the exercise of SARs granted or exercised thereafter. The Committee may impose such conditions or restrictions on the exercise of any SAR as it shall deem appropriate or desirable.

Substitution SARs. Only in the event the Company is not accounting for equity compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, the Committee shall have the ability to substitute, without the consent of the affected Participant or any holder or beneficiary of SARs, SARs settled in Shares (or SARs settled in Shares or cash in the Committee’s discretion) (“Substitution SARs”) for outstanding Nonqualified Stock Options (“Substituted Options”); provided that (A) the substitution shall not otherwise result in a modification of the terms of any Substituted Option, (B) the number of Shares underlying the Substitution SARs shall be the same as the number of Shares underlying the Substituted Options and (C) the Exercise Price of the Substitution SARs shall be equal to the Exercise Price of the Substituted Options. If, in the opinion of the Company’s auditors, this provision creates adverse accounting consequences for the Company, it shall be considered null and void.

Restricted Shares and RSUs. f)Grant. Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine the Participants to whom Restricted Shares and RSUs shall be granted, the number of Restricted Shares and RSUs to be granted to each Participant, the duration of the period during which, and the conditions, if any, under which, the Restricted Shares and RSUs may vest or may be forfeited to the Company and the other terms and conditions of such Awards.

Transfer Restrictions. Restricted Shares and RSUs may not be sold, assigned, transferred, pledged or otherwise encumbered except as provided in the Plan or as may be provided in the applicable Award Agreement; provided, however, that the Committee may in its discretion determine that Restricted Shares and RSUs may be transferred by the Participant. Certificates issued in respect of Restricted Shares shall be registered in the name of the Participant and deposited by such Participant, together with a stock power endorsed in blank, with the Company or such other custodian as may be designated by the Committee or the Company, and shall be held by the Company or other custodian, as applicable, until such time as the restrictions applicable to such Restricted Shares lapse. Upon the lapse of the restrictions applicable to such Restricted Shares, the Company or other custodian, as applicable, shall deliver such certificates to the Participant or the Participant’s legal representative.

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Payment/Lapse of Restrictions. Each RSU shall have a value equal to the Fair Market Value of a Share. RSUs shall be paid in cash, Shares, other securities, other Awards or other property, as determined in the sole and plenary discretion of the Committee, upon the lapse of restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement. If a Restricted Share or an RSU is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, all requirements set forth in Section 6(e) must be satisfied in order for the restrictions applicable thereto to lapse.

Performance Compensation Awards. i) General. The Committee shall have the authority, at the time of grant of any Award, to designate such Award (other than Options and SARs) as a Performance Compensation Award in order to qualify such Award as “qualified performance-based compensation” under Section 162(m) of the Code. Options and SARs granted under the Plan shall not be included among Awards that are designated as Performance Compensation Awards under this Section 6(e).

Eligibility. The Committee shall, in its sole discretion, designate within the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period. However, designation of a Participant eligible to receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period. The determination as to whether or not such Participant becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section 6(e). Moreover, designation of a Participant eligible to receive an Award hereunder for a particular Performance Period shall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder shall not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period.

Discretion of Committee with Respect to Performance Compensation Awards. With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such Performance Period, the type(s) of Performance Compensation Awards to be issued, the Performance Criteria that will be used to establish the Performance Goal(s), the kind(s) and/or level(s) of the Performance Goals(s) that is (are) to apply to the Company or any of its Subsidiaries, Affiliates, divisions or operational units, or any combination of the foregoing, and the Performance Formula. Within the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence and record the same in writing.

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Performance Criteria. Notwithstanding the foregoing, the Performance Criteria that will be used to establish the Performance Goal(s) shall be based on the attainment of specific levels of performance of the Company or any of its Subsidiaries, Affiliates, divisions or operational units, or any combination of the foregoing, and shall be limited to the following: (A) net income before or after taxes, (B) earnings before or after taxes (including earnings before interest, taxes, depreciation and amortization), (C) operating income, (D) earnings per share, (E) return on shareholders’ equity, (F) return on investment, (G) return on assets, (H) level or amount of acquisitions, (I) share price, (J) profitability/profit margins, (K) market share, (L) revenues or sales (based on units and/or dollars), (M) costs, (N) cash flow, (O) working capital and (P) completion of production or stages of production within specified time and/or budget parameters. Such performance criteria may be applied on an absolute basis and/or be relative to one or more peer companies of the Company or indices or any combination thereof. To the extent required under Section 162(m) of the Code, the Committee shall, within the first 90 days of the applicable Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), define in an objective fashion the manner of calculating the Performance Criteria it selects to use for such Performance Period.

Modification of Performance Goals. The Committee is authorized at any time during the first 90 days of a Performance Period (or, if shorter, within the maximum period allowed under Section 162(m) of the Code), or any time thereafter (but only to the extent the exercise of such authority after such 90-day period (or such shorter period, if applicable) would not cause the Performance Compensation Awards granted to any Participant for the Performance Period to fail to qualify as “qualified performance-based compensation” under Section 162(m) of the Code), in its sole and plenary discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period to the extent permitted under Section 162(m) of the Code (A) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development affecting the Company, or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal) or (B) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal), or the financial statements of the Company or any of its Affiliates, Subsidiaries, divisions or operating units (to the extent applicable to such Performance Goal), or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles, law or business conditions.

Payment of Performance Compensation Awards. (1)Condition to Receipt of Payment. A Participant must be employed by the Company on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for such Performance Period. Notwithstanding the foregoing, in the discretion of the Committee, Performance Compensation Awards may be paid to Participants who have retired or whose employment has terminated after the beginning of the Performance Period for which a Performance Compensation Award is made, or to the designee or estate of a Participant who died prior to the last day of a Performance Period.

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Limitation. A Participant shall be eligible to receive payments in respect of a Performance Compensation Award only to the extent that (1) the Performance Goal(s) for such period are achieved and certified by the Committee in accordance with Section 6(e)(vi)(C) and (2) the Performance Formula as applied against such Performance Goal(s) determines that all or some portion of such Participant’s Performance Compensation Award has been earned for the Performance Period.

Certification. Following the completion of a Performance Period, the Committee shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Period have been achieved and, if so, to calculate and certify in writing that amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall then determine the actual size of each Participant’s Performance Compensation Award for the Performance Period and, in so doing, may apply negative discretion as authorized by Section 6(e)(vi)(D).

Negative Discretion. In determining the actual size of an individual Performance Compensation Award for a Performance Period, the Committee may, in its sole and plenary discretion, reduce or eliminate the amount of the Award earned in the Performance Period, even if applicable Performance Goals have been attained.

Timing of Award Payments. The Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively possible following completion of the certifications required by Section 6(e)(vi)(C), unless the Committee shall determine that any Performance Compensation Award shall be deferred.

Discretion. In no event shall any discretionary authority granted to the Committee by the Plan be used to (1) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained, (2) increase a Performance Compensation Award for any Participant at any time after the first 90 days of the Performance Period (or, if shorter, the maximum period allowed under Section 162(m)) or (3) increase a Performance Compensation Award above the maximum amount payable under Sections 4(a) or 6(g) of the Plan.

Performance Units. ii)Grant. Subject to the provisions of the Plan, the Committee shall have sole and plenary authority to determine the Participants to whom Performance Units shall be granted.

Value of Performance Units. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met during a Performance Period, will determine the number and/or value of Performance Units that will be paid out to the Participant.

15

Earning of Performance Units. Subject to the provisions of the Plan, after the applicable Performance Period has ended, the holder of Performance Units shall be entitled to receive a payout of the number and value of Performance Units earned by the Participant over the Performance Period, to be determined by the Committee, in its sole and plenary discretion, as a function of the extent to which the corresponding Performance Goals have been achieved.

Form and Timing of Payment of Performance Units. Subject to the provisions of the Plan, the Committee, in its sole and plenary discretion, may pay earned Performance Units in the form of cash or in Shares (or in a combination thereof) that has an aggregate Fair Market Value equal to the value of the earned Performance Units at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions in the applicable Award Agreement deemed appropriate by the Committee. The determination of the Committee with respect to the form and timing of payout of such Awards shall be set forth in the applicable Award Agreement. If a Performance Unit is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, all requirements set forth in Section 6(e) must be satisfied in order for a Participant to be entitled to payment.

Cash Incentive Awards. Subject to the provisions of the Plan, the Committee, in its sole and plenary discretion, shall have the authority to grant Cash Incentive Awards. The Committee shall establish Cash Incentive Award levels to determine the amount of a Cash Incentive Award payable upon the attainment of Performance Goals. No Cash Incentive Award under the Plan shall exceed $6,000,000 during any Performance Period. If a Cash Incentive Award is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code, all requirements set forth in Section 6(e) must be satisfied in order for a Participant to be entitled to payment.

Other Stock-Based Awards. Subject to the provisions of the Plan, the Committee shall have the sole and plenary authority to grant to Participants other equity-based or equity-related Awards (including, but not limited to, Deferred Share Units and fully-vested Shares) in such amounts and subject to such terms and conditions as the Committee shall determine, provided that any such Awards must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and applicable law.

Dividend Equivalents. In the sole and plenary discretion of the Committee, an Award, other than an Option or SAR or a Cash Incentive Award, may provide the Participant with dividends or dividend equivalents, payable in cash, Shares, other securities, other Awards or other property, on a current or deferred basis, on such terms and conditions as may be determined by the Committee in its sole and plenary discretion, including, without limitation, payment directly to the Participant, withholding of such amounts by the Company subject to vesting of the Award or reinvestment in additional Shares, Restricted Shares or other Awards.

Amendment and Termination. g)Amendments to the Plan. Subject to any government regulation, to any requirement that must be satisfied if the Plan is intended to

16

be a shareholder approved plan for purposes of Section 162(m) of the Code and to the rules of the NYSE or any successor exchange or quotation system on which the Shares may be listed or quoted, the Plan may be amended, modified or terminated by the Board without the approval of the stockholders of the Company except that stockholder approval shall be required for any amendment that would (i) increase the maximum number of Shares for which Awards may be granted under the Plan or increase the maximum number of Shares that may be delivered pursuant to Incentive Stock Options granted under the Plan; provided, however, that any adjustment under Section 4(b) shall not be increases for purposes of this Section 7(a) or (ii) change the class of employees or other individuals eligible to participate in the Plan. No modification, amendment or termination of the Plan may, without the consent of the Participant to whom any Award shall theretofore have been granted, materially and adversely affect the rights of such Participant (or his or her transferee) under such Award, unless otherwise provided by the Committee in the applicable Award Agreement.

Amendments to Awards. The Committee may waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate any Award theretofore granted, prospectively or retroactively; provided, however, that, except as set forth in Section 6(e)(vi)(D), unless otherwise provided by the Committee in the applicable Award Agreement, any such waiver, amendment, alteration, suspension, discontinuance, cancelation or termination that would materially and adversely impair the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective without the consent of the impaired Participant, holder or beneficiary.

Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(b) hereof or the occurrence of a Change of Control) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, accounting principles or law (i) whenever the Committee, in its sole and plenary discretion, determines that such adjustments are appropriate or desirable, including, without limitation, providing for a substitution or assumption of Awards, accelerating the exercisability of, lapse of restrictions on, or termination of, Awards or providing for a period of time for exercise prior to the occurrence of such event and (ii) if deemed appropriate or desirable by the Committee, in its sole and plenary discretion, by providing for a cash payment to the holder of an Award in consideration for the cancelation of such Award, including, in the case of an outstanding Option or SAR, a cash payment to the holder of such Option or SAR in consideration for the cancelation of such Option or SAR in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the Shares subject to such Option or SAR over the aggregate Exercise Price of such Option or SAR (it being understood that, in such event, any Option or SAR having a per Share Exercise Price equal to, or in excess of, the Fair Market Value of a Share subject to such Option or SAR may be canceled and terminated without any payment or consideration therefor).

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Change of Control. Unless otherwise provided in the applicable Award Agreement, in the event of a Change of Control after the date of the adoption of the Plan, unless provision is made in connection with the Change of Control for (a) assumption of Awards previously granted or (b) substitution for such Awards of new awards covering stock of a successor corporation or its “parent corporation” (as defined in Section 424(e) of the Code) or “subsidiary corporation” (as defined in Section 424(f) of the Code) with appropriate adjustments as to the number and kinds of shares and the Exercise Prices, if applicable, (i) any outstanding Options or SARs then held by Participants that are unexercisable or otherwise unvested shall automatically be deemed exercisable or otherwise vested, as the case may be, as of immediately prior to such Change of Control, (ii) all Performance Units and Cash Incentive Awards shall be paid out as if the date of the Change of Control were the last day of the applicable Performance Period and “target” performance levels had been attained and (iii) all other outstanding Awards (i.e., other than Options, SARs, Performance Units and Cash Incentive Awards) then held by Participants that are unexercisable, unvested or still subject to restrictions or forfeiture, shall automatically be deemed exercisable or vested and all restrictions and forfeiture provisions related thereto shall lapse as of immediately prior to such Change of Control.

General Provisions. 2)Nontransferability. Except as otherwise specified in the applicable Award Agreement, during the Participant’s lifetime each Award (and any rights and obligations thereunder) shall be exercisable only by the Participant, or, if permissible under applicable law, by the Participant’s legal guardian or representative, and no Award (or any rights and obligations thereunder) may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that (i) the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance and (ii) the Board or the Committee may permit further transferability, on a general or specific basis, and may impose conditions and limitations on any permitted transferability; provided, however, that Incentive Stock Options granted under the Plan shall not be transferable in any way that would violate Section 1.422-2(a)(2) of the Treasury Regulations. All terms and conditions of the Plan and all Award Agreements shall be binding upon any permitted successors and assigns.

No Rights to Awards. No Participant or other Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not such Participants are similarly situated.

Share Certificates. All certificates for Shares or other securities of the Company or any Affiliate delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, the applicable Award Agreement or the rules, regulations and other requirements of the SEC, the NYSE or any other stock

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exchange or quotation system upon which such Shares or other securities are then listed or reported and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

Withholding. (i) Authority to Withhold. A Participant may be required to pay to the Company or any Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant, the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding taxes in respect of an Award, its exercise or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of such taxes.

(ii) Alternative Ways to Satisfy Withholding Liability. Without limiting the generality of clause (i) above, a Participant may satisfy, in whole or in part, the foregoing withholding liability by delivery of Shares owned by the Participant (which are not subject to any pledge or other security interest and which have been owned by the Participant for at least six months) having a Fair Market Value equal to such withholding liability or by having the Company withhold from the number of Shares otherwise issuable pursuant to the exercise of the Option or SAR, or the lapse of the restrictions on any other Awards (in the case of SARs and other Awards, if such SARs and other Awards are settled in Shares), a number of Shares having a Fair Market Value equal to such withholding liability.

Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement, which shall be delivered to the Participant and shall specify the terms and conditions of the Award and any rules applicable thereto, including, but not limited to, the effect on such Award of the death, disability or termination of employment or service of a Participant and the effect, if any, of such other events as may be determined by the Committee.

No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of options, restricted stock, shares and other types of equity-based awards (subject to stockholder approval if such approval is required), and such arrangements may be either generally applicable or applicable only in specific cases.

No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained as a director, officer, employee or consultant of or to the Company or any Affiliate, nor shall it be construed as giving a Participant any rights to continued service on the Board. Further, the Company or an Affiliate may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

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No Rights as Stockholder. No Participant or holder or beneficiary of any Award shall have any rights as a stockholder with respect to any Shares to be distributed under the Plan until he or she has become the holder of such Shares. In connection with each grant of Restricted Shares, except as provided in the applicable Award Agreement, the Participant shall not be entitled to the rights of a stockholder in respect of such Restricted Shares. Except as otherwise provided in Section 4(b), Section 7(c) or the applicable Award Agreement, no adjustments shall be made for dividends or distributions on (whether ordinary or extraordinary, and whether in cash, Shares, other securities or other property), or other events relating to, Shares subject to an Award for which the record date is prior to the date such Shares are delivered.

Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws provisions thereof.

Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be construed or deemed stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

Other Laws. The Committee may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole and plenary discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole and plenary discretion has determined that any such offer, if made, would be in compliance with all applicable requirements of the U.S. Federal and any other applicable securities laws.

No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate, on one hand, and a Participant or any other Person, on the other. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate.

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No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

Requirement of Consent and Notification of Election Under Section 83(b) of the Code or Similar Provision. No election under Section 83(b) of the Code (to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code) or under a similar provision of law may be made unless expressly permitted by the terms of the applicable Award Agreement or by action of the Committee in writing prior to the making of such election. If an Award recipient, in connection with the acquisition of Shares under the Plan or otherwise, is expressly permitted under the terms of the applicable Award Agreement or by such Committee action to make such an election and the Participant makes the election, the Participant shall notify the Committee of such election within ten days of filing notice of the election with the IRS or other governmental authority, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code or other applicable provision.

Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code. If any Participant shall make any disposition of Shares delivered pursuant to the exercise of an Incentive Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions) or any successor provision of the Code, such Participant shall notify the Company of such disposition within ten days of such disposition.

Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

Term of the Plan. a)Effective Date. The Plan shall be effective as of the date of its adoption by the Board; provided, however, that no Incentive Stock Options may be granted under the Plan unless it is approved by the Company’s stockholders within twelve (12) months before or after the date the Plan is adopted.

Expiration Date. No Award shall be granted under the Plan after the tenth anniversary of the date the Plan is approved under Section 10(a). Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award granted hereunder may, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award or to waive any conditions or rights under any such Award shall, nevertheless continue thereafter.

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EX-10.2

EXECUTION COPY

EXHIBIT 10.2

FORMATION AGREEMENT

Among

DREAMWORKS ANIMATION SKG, INC.,

DREAMWORKS L.L.C.,

DWA ESCROW LLLP

and

THE STOCKHOLDERS AND OTHER PERSONS PARTY HERETO

Dated As Of October 27, 2004

TABLE OF CONTENTS

		Page
ARTICLE I
Definitions
Section 1.01.	Certain Defined Terms	1
Section 1.02.	Other Definitional Provisions	6
ARTICLE II
Distribution and Contribution; Holdco Transactions
Section 2.01.	Contributions and Redemptions of Preferred Interests; Distribution of DWA LLC Interests; Execution of Amended LLC Agreement	7
Section 2.02.	Contribution of the DWA LLC Interests to the Company; Issuance of Common Stock by the Company	7
Section 2.03.	Residual DW Distribution	7
Section 2.04.	Formation of Holdco; Contribution of Common Stock to Holdco	8
Section 2.05.	IPO	8
Section 2.06.	Pledge Arrangements	8
ARTICLE III
Follow-on Offering
Section 3.01.	Initial Follow-on Offering	10
Section 3.02.	Pricing Period	10
Section 3.03.	Subsequent Follow-on Offering	11
Section 3.04.	Registration Rights	11
Section 3.05.	Size of Follow-on Offering	12
Section 3.06.	Anti-Manipulation	12
ARTICLE IV		14
Universal Triggered Offering
Section 4.01.	Universal Triggered Offering	14
ARTICLE V
Additional Agreements; Further Assurances
Section 5.01.	Certain Holdco Expenses	15

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Section 5.02.	Further Assurances	15
ARTICLE VI
Representations and Warranties; Indemnification
Section 6.01.	Representations and Warranties of Each Party	16
Section 6.02.	Tax Representation	17
Section 6.03.	Representation and Warranty of the Company	17
Section 6.04.	Survival	17
Section 6.05.	Indemnification	17
ARTICLE VII
General Provisions
Section 7.01.	Notices	19
Section 7.02.	Counterparts	20
Section 7.03.	Entire Agreement; No Third Party Beneficiaries	20
Section 7.04.	Governing Law	20
Section 7.05.	Severability	20
Section 7.06.	Assignment; Amendments	21
Section 7.07.	Enforcement	21
Section 7.08.	Titles and Subtitles	21
Section 7.09.	Submission to Jurisdiction; Waivers	21

ii

FORMATION AGREEMENT, dated as of October 27, 2004, among DREAMWORKS ANIMATION SKG, INC., a Delaware corporation (the “Company”), DREAMWORKS L.L.C., a Delaware limited liability company (“DW”), DWA ESCROW LLLP, a Delaware limited liability limited partnership (“Holdco”), and the stockholders and other persons party hereto.

WHEREAS, DW, the Company and DreamWorks Animation L.L.C., a Delaware limited liability company (“DWA LLC”), have entered into a Separation Agreement dated as of the date hereof, providing for the separation of the animation business from DW;

WHEREAS, on the Separation Date (as defined below) immediately prior to effectiveness of the Underwriting Agreement (as defined below), DW made a distribution-in-kind to certain of its members (in accordance with Article VIII of the Sixth Amended and Restated Limited Liability Company Agreement of DW) of its interest in DWA LLC;

WHEREAS, the distributed DWA LLC interests will be contributed to the Company in exchange for Common Stock (as defined below);

WHEREAS, each Contributing Member (as defined below) desires to form Holdco and to contribute any shares of Common Stock received from the Company, other than as set forth in Section 2.04(b), to Holdco;

WHEREAS, the Contributing Members desire to provide for the sale, in a follow-on secondary offering, of all or a portion of the shares of Common Stock held directly by the Contributing Members and the shares of Common Stock contributed to Holdco by the Contributing Members; and

WHEREAS, the Company, Holdco and certain other parties hereto have entered into a Registration Rights Agreement, dated as of the date hereof (the “Registration Rights Agreement”), that, among other things, provides for certain procedures with respect to the Follow-on Offering and the Universal Triggered Offering (each as defined below);

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

Definitions

Section 1.01. Certain Defined Terms. As used in this Agreement:

“Agreement” means this Formation Agreement, as it may be amended, supplemented, restated or modified from time to time.

“Amended LLC Agreement” means the Seventh Amended and Restated Limited Liability Company Agreement of DW, dated as of October 27, 2004, as it may be amended, supplemented, restated or modified from time to time.

“Asserted Liability” has the meaning assigned to such term in Section 6.05(d).

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in The City of New York.

“Charter” means the Restated Certificate of Incorporation of the Company, as amended or restated from time to time.

“Claiming Member” has the meaning assigned to such term in Section 2.06(b).

“Claims” has the meaning assigned to such term in Section 6.05(a).

“Claims Notice” has the meaning assigned to such term in Section 6.05(d).

“Class A Stock” means the Company’s Class A Common Stock, par value $0.01 per share.

“Class B Stock” means the Company’s Class B Common Stock, par value $0.01 per share.

“Class C Stock” means the Company’s Class C Common Stock, par value $0.01 per share.

“Class B Stockholder Agreement” means the Stockholder Agreement, dated as of October 27, 2004, among Holdco, M&J K, M&J K B, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, Jeffrey Katzenberg and David Geffen, as in effect on the date hereof.

“Class T/T Interests” means Class T/T limited liability company interests in DW.

“Class U Interests” means Class U limited liability company interests in DW.

“Common Stock” means the Class A Stock, Class B Stock and Class C Stock.

“Company” has the meaning assigned to such term in the preamble hereto.

“Contribution” has the meaning assigned to such term in Section 2.02.

“Contributing Members” means M&J K, M&J K B, DG-DW, DW Lips, DWI II, Lee Entertainment, L.L.C. and Universal.

“Contributor” has the meaning assigned to such term in Section 2.06(b).

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“Control” (including the terms “Controlled By” and “Under Common Control With”) has the meaning assigned to such term in the Charter as in effect at consummation of the IPO.

“DG-DW” means DG-DW, L.P., a Delaware limited partnership.

“DW” has the meaning assigned to such term in the preamble hereto.

“DW Distribution” has the meaning assigned to such term in the Separation Agreement.

“DWA LLC” has the meaning assigned to such term in the recitals hereto.

“DWA LLC Interest” means a limited liability company interest in DWA LLC.

“DWI” means DW Investment Inc., a Washington corporation.

“DWI II” means DW Investment II, Inc., a Washington corporation.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

“Final Allocation” has the meaning assigned to such term in the Holdco Partnership Agreement as in effect on the Separation Date.

“Follow-on Offering” means either the Initial Follow-on Offering or the Subsequent Follow-on Offering, as applicable.

“Group” has the meaning assigned to such term in Section 13(d)(3) of the Exchange Act.

“Holdco” has the meaning assigned to such term in the preamble hereto.

“Holdco Contribution” has the meaning assigned to such term in Section 2.04.

“Holdco Obligations” has the meaning assigned to such term in Section 5.01(b).

“Holdco Partnership Agreement” means the Limited Liability Limited Partnership Agreement of Holdco, dated as of October 27, 2004, among the Contributing Members, as in effect on the Separation Date.

“Indemnitee” has the meaning assigned to such term in Section 6.05(d).

“Indemnitor” has the meaning assigned to such term in Section 6.05(d).

“Initial Follow-on Offering” has the meaning assigned to such term in Section 3.01(a).

“Initial Period” has the meaning assigned to such term in Section 3.01(a).

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“IPO” means the initial public offering by the Company and the selling stockholders identified in the IPO Registration Statement of shares of Class A Stock pursuant to the IPO Registration Statement.

“IPO Price” means the gross public offering price per share (calculated before deduction of any underwriting discounts or commissions) in the IPO.

“IPO Registration Statement” means the registration statement on Form S-1 (File No. 333-117528) filed under the Securities Act, pursuant to which the Class A Stock to be issued in the IPO will be registered, together with all amendments thereto.

“IPO Sale Shares” means, with respect to any Contributing Member, the number of shares of Class A Stock to be sold in the IPO for the account of such Contributing Member pursuant to the IPO Registration Statement in accordance with Section 2.05.

“JK/DG Trigger Notice” has the meaning assigned to such term in Section 3.01(a).

“JK/DG Triggered Follow-on Offering” means an Initial Follow-on Offering initiated by M&J K B and DG-DW, acting together, pursuant to Section 3.01(a) or converted to such pursuant to Section 3.01(b).

“Liens” has the meaning assigned to such term in Section 6.01.

“Losses” has the meaning assigned to such term in Section 6.05(a).

“M&J K” means M&J K Dream Limited Partnership, a Delaware limited partnership.

“M&J K B” means M&J K B Limited Partnership, a Delaware limited partnership.

“Member” means each member of DW listed on Schedule 2.02.

“Minimum Registrable Amount” has the meaning assigned to such term in Section 3.05.

“Parent” means each of Steven Spielberg, Jeffrey Katzenberg, David Geffen, Paul Allen, NBC Universal, Inc. and CJ Corp.

“Participating Partner” has the meaning assigned to such term in the Holdco Partnership Agreement.

“Person” has the meaning assigned to such term in the Charter (as modified in Section 2(f) of Article IV thereof) as in effect at consummation of the IPO.

“Pledged Common Stock” has the meaning assigned to such term in the Vulcan Stockholder Agreement as in effect at consummation of the IPO.

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“Preferred Contributions” has the meaning assigned to such term in Section 2.01(a).

“Preferred Redemptions” has the meaning assigned to such term in Section 2.01(a).

“Pricing Period” means the 20 consecutive trading days on The New York Stock Exchange beginning on the date specified in the Pricing Period Notice.

“Pricing Period Notice” has the meaning assigned to such term in Section 3.02(a).

“Pricing Period Price” has the meaning assigned to such term in Section 3.02(b).

“Proceeding” has the meaning assigned to such term in Section 7.09.

“Ratable Amount” has the meaning assigned to such term in Section 2.06(b).

“Refinancing Credit Facility” has the meaning assigned to such term in Section 2.06(a).

“Registration Rights Agreement” has the meaning assigned to such term in the recitals hereto.

“Residual DW Distribution” has the meaning assigned to such term in Section 2.03(a).

“Revolving Credit Facility” means the revolving credit facility, dated as of October 27, 2004, among DW and the lenders party thereto (or any refinancing thereof that does not extend the term thereof).

“Satisfaction Event” has the meaning assigned to such term in the Holdco Partnership Agreement. For the avoidance of doubt, all references in this Agreement to a Satisfaction Event resulting from a Follow-on Offering or a Universal Triggered Offering shall require that the Satisfaction Event result from such offering without requiring the exercise of any overallotment option in such offering.

“Securities Act” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.

“Separation Agreement” means the Separation Agreement, dated as of October 27, 2004, among DW, DWA LLC and the Company, as in effect on the Separation Date.

“Separation Date” has the meaning assigned to such term in the Separation Agreement.

“Subsequent Follow-on Offering” has the meaning assigned to such term in Section 3.03(a).

“Subsequent Period” has the meaning assigned to such term in Section 3.03(a).

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“Subsequent Vulcan Trigger Notice” has the meaning assigned to such term in Section 3.03(a).

“Thomson” means Thomson Inc.

“Underwriting Agreement” has the meaning assigned to such term in the Separation Agreement.

“Universal” means Vivendi Universal Entertainment LLLP.

“Universal Period” has the meaning assigned to such term in Section 4.01(a).

“Universal Trigger Notice” has the meaning assigned to such term in Section 4.01(a).

“Universal Triggered Offering” has the meaning assigned to such term in Section 4.01(a).

“Volume Weighted Average Price” over any period means, with respect to the Class A Stock, the volume weighted average price per share for the entire applicable period on the principal national securities market or exchange on which the Class A Stock is listed or quoted.

“Vulcan Stockholder Agreement” means the Stockholder Agreement, dated as of October 27, 2004, among the Company, Holdco, M&J K, M&J K B, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, DWI II, Jeffrey Katzenberg, David Geffen and Paul Allen, as it may be amended, supplemented, restated or modified from time to time.

“Vulcan Trigger Notice” has the meaning assigned to such term in Section 3.01(a).

“Vulcan Triggered Follow-on Offering” means an Initial Follow-on Offering initiated by DWI II pursuant to Section 3.01(a) unless converted into a JK/DG Triggered Follow-on Offering pursuant to Section 3.01(b).

Section 1.02. Other Definitional Provisions. (a) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article and Section references are to this Agreement unless otherwise specified. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

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ARTICLE II

Distribution and Contribution; Holdco Transactions

Section 2.01. Contributions and Redemptions of Preferred Interests; Distribution of DWA LLC Interests; Execution of Amended LLC Agreement. (a) On the Separation Date, after consummation of the transactions contemplated in Section 2.01 of the Separation Agreement, (x) Thomson shall contribute 33 ¹/3% of the Class T/T Interests to the Company in exchange for the number of shares of Common Stock set forth on Schedule 2.02 and (y) Universal shall contribute 50% of the Class U Interests to the Company in exchange for the number of shares of Common Stock set forth on Schedule 2.02 (the “Preferred Contributions”). For the avoidance of doubt, the number of shares of Common Stock received in exchange for the Preferred Contributions shall be equal to (i) in the case of Universal, $75 million divided by the IPO Price and (b) in the case of Thomson, $50 million divided by the IPO Price. Immediately after consummation of the Preferred Contributions, DW shall redeem such Class T/T Interests and such Class U Interests from the Company in exchange for (i) all of DW’s 100% interest in the capital stock of DreamWorks Inc. and (ii) the number of DWA LLC Interests set forth in Schedule 2.01(a) (the “Preferred Redemptions”). DW acknowledges that it will treat the Preferred Redemptions as a liquidating distribution with respect to the Class T/T Interests and Class U Interests so redeemed and shall report the Preferred Redemptions as such under Section 732(b) of the Internal Revenue Code.

(b) On the Separation Date, immediately after consummation of the DW Distribution, each Member (other than the Contributing Members, Universal and Thomson) shall execute and deliver a pledge agreement in favor of the lenders under the Revolving Credit Facility, which pledge agreements shall provide for the pledge of the applicable number of shares of Common Stock set forth on Schedule 2.01(b).

Section 2.02. Contribution of the DWA LLC Interests to the Company; Issuance of Common Stock by the Company. On the Separation Date, after consummation of the DW Distribution and following effectiveness of the Underwriting Agreement, each Member (or DWI II, in the case of DW Investment Inc.), other than Universal and Thomson, shall contribute all its right, title and interest in and to the DWA LLC Interests to the Company in exchange for the number of shares of Class A Stock, Class B Stock or Class C Stock, as applicable, set forth on Schedule 2.02 (the “Contribution”). The Company hereby acknowledges that it intends to continue the existence of DWA LLC as a partnership for Federal income tax purposes.

Section 2.03. Residual DW Distribution. (a) On the Separation Date, immediately after consummation of the PDI Merger (as defined in the Separation Agreement), DW shall distribute (in accordance with Article VIII of the Sixth Amended and Restated Limited Liability Company Agreement of DW) all its right, title and interest in and to all shares of Class A Stock then held by DW (after giving effect to the LLC Employee Distribution (as defined in the Separation Agreement)) to the Members listed on Schedule 2.03(a) hereto, in the amounts set forth on Schedule 2.03(a) (the “Residual DW Distribution”).

(b) On the Separation Date, immediately after consummation of the Residual DW Distribution, the Members shall execute and deliver the Amended LLC Agreement.

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Section 2.04. Formation of Holdco; Contribution of Common Stock to Holdco. (a) Immediately prior to the Holdco Contribution (as defined below), each Contributing Member shall execute and deliver the Holdco Partnership Agreement, and the Contributing Members shall form Holdco.

(b) On the Separation Date, immediately after the formation of Holdco, (i) Holdco shall execute and deliver a pledge agreement in favor of the lenders under the Revolving Credit Facility, which pledge agreement shall be in substitution for the pledge of the shares of Common Stock that would have been pledged by the Contributing Members (other than Universal) pursuant to Section 2.01(b) if such Contributing Members were subject to Section 2.01(b) and (ii) each Contributing Member shall contribute all its right, title and interest in and to the Common Stock received by such Contributing Member in any of the Contribution, the Preferred Contributions or the Residual DW Distribution, as applicable (other than (x) in the case of each Contributing Member, the respective number of shares of Class A Stock or Class B Stock set forth on Schedule 2.04(b)(x) and (y) in the case of DWI II, the one share of Class C Stock) to Holdco, and in exchange therefor shall receive the interests in Holdco as set forth in the Holdco Partnership Agreement (the “Holdco Contribution”).

(c) Each Contributing Member shall, to the extent it has not already done so, appoint an agent for service of process in the State of Delaware.

(d) Each Continuing Partner (as defined in the Holdco Partnership Agreement) agrees (for itself and its permitted transferees) that (i) it shall remain a partner in Holdco for at least six months after the Vulcan GP Date (as defined in the Holdco Partnership Agreement), (ii) such Continuing Partner shall not amend or modify the Holdco Partnership Agreement or take or cause to be taken any action in each case which would effect the dissolution of Holdco prior to the end of such six month period (it being understood that distributions to such Continuing Partners of shares of Common Stock not constituting Continuing Partner Minimum Ownership Shares (as defined in the Holdco Partnership Agreement) shall not constitute such actions) and (iii) such Continuing Partner shall not amend or modify the definition of “Final Allocation” in the Holdco Partnership Agreement.

(e) Holdco agrees to convert shares of Class B Stock held by it into shares of Class A Stock at the time required by the terms of the Holdco Partnership Agreement.

Section 2.05. IPO. The Members shall be entitled to participate in the secondary sale of shares of Class A Stock in the IPO (and the overallotment option relating to the IPO, if exercised) pro rata in proportion to the percentages set forth on Schedule 2.05.

Section 2.06. Pledge Arrangements. (a) Each Member (other than (i) Universal, (ii) Thomson and (iii) each Contributing Member (but only until such Contributing Member has received a distribution of Pledged Common Stock from Holdco)) and Holdco (for so long as it holds Pledged Common Stock) shall keep in effect a pledge agreement (substantially in the form of the Guarantee and Pledge Agreement attached to the Revolving Credit Facility or such other form of agreement as may be acceptable to the Administrative Agent under the Revolving Credit Facility or any Refinancing Credit Facility) pursuant to which such Holder grants a first-priority pledge of its Pledged Common Stock for the benefit of the Administrative Agent (and the other

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Lenders (as defined in the Revolving Credit Facility or any Refinancing Credit Facility)) under the Revolving Credit Facility (or any Refinancing Credit Facility) so long as the Obligations (as defined in the Revolving Credit Facility or any Refinancing Credit Facility) thereunder remain outstanding (including in circumstances where the stated maturity date of the Revolving Credit Facility or any Refinancing Credit Facility has occurred). Notwithstanding the foregoing, if DW and the Lenders agree to extend the stated maturity date of the Revolving Credit Facility or any Refinancing Credit Facility to a date that is later than November 1, 2009, the requirement to keep a pledge agreement in effect as provided above shall, as to Holdco and each Member subject to such requirement, automatically lapse at the close of business on November 1, 2009, unless (i) Holdco or such Member, as applicable, has given its prior written consent to such extension of such stated maturity date, (ii) an event of default pursuant to Section 8.1(f) of the Revolving Credit Facility shall have occurred and shall be continuing with respect to DW or (iii) any other event of default under the Revolving Credit Facility or any Refinancing Credit Facility shall have occurred and be continuing and either (A) the Administrative Agent or the Lenders are exercising remedies with respect thereto in good faith or (B) the Lenders have agreed to forbear action with respect thereto. As used in this Section 2.06(a), (i) the term “Refinancing Credit Facility” means any credit facility that refinances or otherwise replaces the Revolving Credit Facility (or any Refinancing Credit Facility) so long as the stated maturity date of such credit facility is, at the execution of the documentation relating to such credit facility, not later than November 1, 2009 and (ii) the term “Revolving Credit Facility” has the meaning assigned to such term in Section 1.01, without giving effect to the parenthetical at the end of such definition.

(b) Holdco and each Member agree that in the event a payment shall be made by Holdco or any Member (Holdco or such Member being the “Claiming Member”) under the Guarantee and Pledge Agreement to which such Claiming Member is a party, or the Collateral (as defined therein) shall be foreclosed upon or otherwise applied against any obligations of such Claiming Member thereunder, to satisfy a claim of the Administrative Agent on behalf of the Lenders and such payment is greater than the amount equal to (a) the aggregate amount of all payments made to the Administrative Agent by Holdco and all Members plus the value of the Collateral under each Guarantee and Pledge Agreement foreclosed upon or otherwise so applied in satisfaction of such claim multiplied by (b) the Claiming Member’s Participation Percentage (as defined in the Amended LLC Agreement) as of the date hereof or, in the case of Holdco, the aggregate Participation Percentages of the Contributing Members (such product being the “Ratable Amount”), then Holdco (if Holdco is not the Claiming Member) and each other Member that is a party to a Guarantee and Pledge Agreement (each a “Contributor”) shall contribute to the Claiming Member an amount in cash or Pledged Common Stock that is equal to such Contributor’s pro rata share (calculated based on the relative Participation Percentages of the Contributors as of the date hereof, with Holdco’s deemed Participation Percentage calculated as described above) of the difference between (x) the amount actually paid by the Claiming Member or otherwise so applied by the Administrative Agent to satisfy such claim of the Administrative Agent and (y) the Claiming Member’s Ratable Amount. For the avoidance of doubt, this Section 2.06(b) shall have no application with respect to either Universal or Thomson.

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ARTICLE III

Follow-on Offering

Section 3.01. Initial Follow-on Offering. (a) At any time during the period beginning on the date that is six months after consummation of the IPO and prior to May 31, 2006 (the “Initial Period”), either of (i) M&J K B and DG-DW, acting together, or (ii) DWI II, shall have the right to cause Holdco to effect one Follow-on Offering (the “Initial Follow-on Offering”), in either case by causing Holdco to exercise Holdco’s demand registration rights pursuant to Section 1.02 of the Registration Rights Agreement by delivering written notice (the “JK/DG Trigger Notice” or the “Vulcan Trigger Notice”, as applicable) thereof (which notice shall also specify the number of shares of Class A Stock proposed to be sold in such Initial Follow-on Offering (assuming the maximum number of Participating Partners), which number shall comply with the terms of Section 3.05) to Holdco during the Initial Period (with a copy of such notice concurrently delivered to each other Contributing Member). Upon receipt by Holdco of either a JK/DG Trigger Notice or a Vulcan Trigger Notice, the general partners of Holdco in their capacity as such shall, within three Business Days of the date of such receipt, deliver a Demand Request (as defined in the Registration Rights Agreement) to the Company (with a copy of such notice concurrently delivered to each Contributing Member notifying each Contributing Member of its right to participate in such offering) requesting that the Company register such shares of Class A Stock as soon as practicable pursuant to Section 1.02 of the Registration Rights Agreement.

(b) In the event that the Initial Follow-on Offering is a Vulcan Triggered Follow-on Offering, M&J K B and DG-DW shall have the right at any time at or prior to the pricing of such Initial Follow-on Offering to convert such Initial Follow-on Offering from a Vulcan Triggered Follow-on Offering to a JK/DG Triggered Follow-on Offering by delivering written notice of such conversion to Holdco and DWI II at or prior to such pricing. Upon receipt by Holdco of such notice, such Initial Follow-on Offering shall be treated solely as a JK/DG Triggered Follow-on Offering for purposes of Article VII of the Holdco Partnership Agreement.

Section 3.02. Pricing Period. (a) If a Vulcan Triggered Follow-on Offering is consummated, M&J K B and DG-DW, acting together, shall, on the date selected by them during the period beginning on the date of consummation of the Vulcan Triggered Follow-on Offering (excluding any exercise of an overallotment option granted to the underwriters of such offering, if any) and ending on May 31, 2006, deliver an irrevocable written notice (the “Pricing Period Notice”) to the other Contributing Members specifying the date of commencement of the Pricing Period. The Pricing Period shall in no event end later than May 31, 2006 unless there are fewer than 20 trading days between the date of such consummation of such Vulcan Triggered Follow-on Offering (or any overallotment option exercise in respect of such offering, if later) and May 31, 2006, in which case the Pricing Period shall end on the twentieth trading day after the date of such consummation of such offering or overallotment option, as the case may be. The Pricing Period Notice shall be delivered pursuant to this Section 3.02(a) at least three trading days prior to the first day of the Pricing Period. Notwithstanding anything herein to the contrary, in no event shall the Pricing Period end earlier than the date of consummation of the overallotment option, if any, relating to such Vulcan Triggered Follow-on Offering.

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(b) The “Pricing Period Price” shall be the Volume Weighted Average Price of the Class A Stock over the Pricing Period.

Section 3.03. Subsequent Follow-on Offering. (a) If an Initial Follow-on Offering shall not have been consummated on or prior to May 31, 2006, then at any time during the period from and including June 1, 2006 to December 1, 2007 (June 1, 2008, in the event that a Universal Triggered Offering shall have been consummated) (the “Subsequent Period”), DWI II shall have the sole right to cause Holdco to effect a Follow-on Offering (the “Subsequent Follow-on Offering”) by causing Holdco to exercise Holdco’s demand registration rights pursuant to Section 1.02 of the Registration Rights Agreement by delivering written notice (the “Subsequent Vulcan Trigger Notice”) thereof (which notice shall also specify the number of shares of Class A Stock proposed to be sold in the Subsequent Follow-on Offering (assuming the maximum number of Participating Partners), which number shall comply with the terms of Section 3.05) to Holdco during the Subsequent Period (with a copy of such notice concurrently delivered to each other Contributing Member). Upon receipt by Holdco of the Subsequent Vulcan Trigger Notice, the general partners of Holdco in their capacity as such shall, within three Business Days of the date of such receipt, deliver a Demand Request to the Company (with a copy of such notice concurrently delivered to each Contributing Member notifying each Contributing Member of its right to participate in such offering) requesting that the Company register such shares of Class A Stock as soon as practicable pursuant to Section 1.02 of the Registration Rights Agreement.

(b) If an Initial Follow-on Offering shall not have been consummated on or prior to May 31, 2006 and DWI II shall not have delivered the Subsequent Vulcan Trigger Notice prior to December 1, 2007 (June 1, 2008, in the event that a Universal Triggered Offering shall have been consummated) then, on or after December 1, 2007, the general partners of Holdco, in such capacity, shall have the right, no later than December 31, 2007 (June 30, 2008, in the event that a Universal Triggered Offering shall have been consummated) to cause Holdco to initiate the Subsequent Follow-on Offering by delivering a Demand Request to the Company (with a copy of such notice concurrently delivered to each Contributing Member notifying each Contributing Member of the number of shares of Class A Stock proposed to be sold in such offering, which number shall comply with the terms of Section 3.05, and notifying each Contributing Member of its right to participate in such offering) requesting that the Company register such shares of Class A Stock as soon as practicable pursuant to Section 1.02 of the Registration Rights Agreement.

(c) Notwithstanding anything to the contrary in this Agreement, neither DWI II nor the general partners of Holdco shall deliver a notice triggering a Subsequent Follow-on Offering pursuant to this Section 3.03 if a Universal Trigger Notice shall have been delivered pursuant to Section 4.01(a) (and shall not have been revoked or converted pursuant to Section 4.01(b)) and such Universal Triggered Offering shall not have been consummated; provided, that if any such notice shall remain outstanding as provided in the last sentence of Section 4.01(a) or Section 4.01(b), it shall continue to be subject to conversion pursuant to Section 4.01(b).

Section 3.04. Registration Rights. (a) Holdco shall not exercise its demand or piggyback registration rights pursuant to the Registration Rights Agreement for any purpose other than (i) effecting the Follow-on Offering that will result in a Satisfaction Event with respect to each Participating Partner or (ii) effecting a Universal Triggered Offering that will result in a Satisfaction Event with respect to Universal.

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(b) If a Follow-on Offering is a JK/DG Triggered Follow-on Offering, then M&J K B and DG-DW, acting together, shall have the sole right to cause Holdco to exercise its right to revoke or delay its requested registration pursuant to the Registration Rights Agreement.

(c) If the Follow-on Offering is either a Vulcan Triggered Follow-on Offering or the Subsequent Follow-on Offering triggered by DWI II, then DWI II shall have the sole right to cause Holdco to exercise its right to revoke or delay its requested registration pursuant to the Registration Rights Agreement.

(d) If a Follow-on Offering is the Subsequent Follow-on Offering triggered as set forth in Section 3.03(b) or a Subsequent Follow-on Offering that has not been consummated on or prior to December 1, 2007 (June 1, 2008, in the event that a Universal Triggered Offering shall have been consummated), then DWI II, M&J K B and DG-DW, acting together, shall have the sole right to cause Holdco to exercise its right to revoke or delay its requested registration pursuant to the Registration Rights Agreement.

(e) With respect to a Universal Triggered Offering, Universal shall have the sole right to cause Holdco to exercise its right to revoke or delay its requested registration pursuant to the Registration Rights Agreement.

Section 3.05. Size of Follow-on Offering. The minimum number of shares to be registered on behalf of the Participating Partners in a Follow-on Offering shall be such number of shares required to cause a Satisfaction Event with respect to each Participating Partner upon consummation of such offering (such minimum number of shares being the “Minimum Registrable Amount”). The Company shall, to the extent practicable, cause at least the Minimum Registrable Amount of shares of Common Stock to be sold in an Initial Follow-on Offering in accordance with the terms of the Registration Rights Agreement. The Company shall also use its commercially reasonable best efforts to increase the size of a JK/DG Triggered Follow-on Offering (to the extent requested by DWI II) beyond the Minimum Registrable Amount (subject to the restrictions set forth in Section 7.02(b) of the Holdco Partnership Agreement); provided, that a majority of the joint lead bookrunning underwriters for such Follow-on Offering agree that such increase will not have a significant negative effect on pricing of such Follow-on Offering, and so advise the Company and DWI II. The Company shall not reduce the size of a Follow-on Offering below the Minimum Registrable Amount and shall comply with all of its obligations under the Registration Rights Agreement with respect to a Follow-on Offering and a Universal Triggered Offering, as applicable. If a Follow-on Offering cannot be consummated because of its failure to satisfy the requirements of this Section 3.05 as a result of market conditions or other Company-related issues, then the party or parties that triggered such Follow-on Offering shall have all of their rights under this Article III reinstated, as if the notice triggering such offering had never been delivered.

Section 3.06. Anti-Manipulation. (a) During the period from the date of this Agreement until the Final Allocation, except pursuant to a Follow-on Offering or a Universal Triggered Offering in conformity with this Agreement, the Registration Rights Agreement and

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the Holdco Partnership Agreement, each Contributing Member agrees that it shall not, and each Parent of a Contributing Member agrees that such Parent shall not and such Parent shall cause Persons Controlled By such Parent not to, sell or enter into a put transaction or engage in any similar transaction, including any constructive sale or put, or hedging, derivative, short sale or other transaction with the same or similar effect, or enter into any contract, option or other arrangement in respect thereof, or publicly announce an intention or plan to engage in any of the foregoing, with respect to any Common Stock, any securities convertible into or exchangeable for Common Stock or any options, warrants or other rights to acquire Common Stock; provided, that, except in the case of Universal, this Section 3.06(a) shall not prohibit any such sale or other transaction between or among Persons Controlled By such Contributing Members and such Contributing Members or the exercise and consummation of the right of offer pursuant to Section 2.03 of the Class B Stockholder Agreement or the special call right pursuant to Section 2.04 of the Class B Stockholder Agreement.

(b) During the period from the date of this Agreement until the Final Allocation, the Company shall not repurchase, redeem or otherwise acquire, or enter into a call transaction or engage in any similar transaction, including any constructive purchase or call, or hedging, derivative or other transaction with the same or similar effect, or enter into any contract, option or other arrangement in respect thereof, or publicly announce an intention to take any of the foregoing actions with respect to any Common Stock, any securities convertible into or exchangeable for Common Stock or any options, warrants or other rights to acquire Common Stock; provided, that this Section 3.06(b) shall not prohibit any such purchase or acquisition pursuant to an employee or director stock ownership or other benefit plan of the Company.

(c) During the period from the date of this Agreement until the Final Allocation, each Contributing Member agrees that it shall not, and each Parent of a Contributing Member agrees that such Parent shall not and such Parent shall cause Persons Controlled By such Parent not to purchase or otherwise acquire or enter into a call transaction or engage in any similar transaction, including any constructive purchase or call, or hedging, derivative or other transaction with the same or similar effect, or enter into any contract, option or other arrangement in respect thereof, or publicly announce an intention to take any of the foregoing actions with respect to any Common Stock, any securities convertible into or exchangeable for Common Stock or any options, warrants or other rights to acquire Common Stock; provided, that this Section 3.06(c) shall not prohibit any such purchase, acquisition or other transaction between or among any Person Controlled By Jeffrey Katzenberg, David Geffen or Steven Spielberg or any receipt of shares or stock options (or option exercises) pursuant to an employee or director stock ownership or other benefit plan of the Company or the exercise and consummation of the right of first offer pursuant to Section 2.03 of the Class B Stockholder Agreement or the special call right pursuant to Section 2.04 of the Class B Stockholder Agreement.

(d) General Electric Company shall not engage in the conduct described in Sections 3.06(a) and 3.06(c) for the purpose of impacting, or with the intent to impact, the amount or timing of any distribution of shares of Common Stock that any Contributing Member is entitled to receive under Article VII of the Holdco Partnership Agreement.

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ARTICLE IV

Universal Triggered Offering

Section 4.01. Universal Triggered Offering. (a) If a Follow-on Offering shall not have been consummated on or prior to November 30, 2006, then at any time during the period from and including December 1, 2006 to February 28, 2007 (the “Universal Period”), unless a Subsequent Follow-on Offering shall have theretofore been triggered and not revoked, Universal shall have the right to cause Holdco to initiate a registered offering (the “Universal Triggered Offering”) by causing Holdco to exercise Holdco’s demand registration rights pursuant to Section 1.02 of the Registration Rights Agreement by delivering written notice (the “Universal Trigger Notice”) thereof (which notice shall also specify the number of shares of Class A Stock proposed to be sold in the Universal Triggered Offering, which number shall be the estimated number of shares required to be sold to cause a Satisfaction Event with respect to Universal) to Holdco during the Universal Period (with a copy of such notice concurrently delivered to each other Contributing Member). Upon receipt by Holdco of the Universal Trigger Notice, the general partners of Holdco in their capacity as such shall, within three Business Days of the date of such receipt, deliver a Demand Notice to the Company requesting that the Company register such shares of Class A Stock as soon as practicable pursuant to Section 1.02 of the Registration Rights Agreement. In no event shall the Universal Triggered Offering be larger than that necessary to cause a Satisfaction Event with respect to Universal. If a Universal Triggered Offering cannot be consummated because it would not result in a Satisfaction Event with respect to Universal as a result of market conditions or other Company-related issues, then the Universal Trigger Notice shall be deemed to remain outstanding.

(b) DWI II shall have the right at any time on or prior to the fourth day preceding the date on which the underwriters propose the printing of the “red herring” prospectuses in respect of such Universal Triggered Offering to convert such Universal Triggered Offering from a Universal Triggered Offering to a Subsequent Follow-on Offering by delivering written notice of such conversion to Holdco and each Contributing Member at or prior to such pricing. Upon receipt by Holdco of such notice, such Universal Triggered Offering shall be treated solely as a Subsequent Follow-on Offering for all purposes and the number of shares registered in such offering shall comply with the terms of Section 3.05. If, following such conversion, such Subsequent Follow-on Offering shall not be consummated for any reason, then such offering shall proceed as a Universal Triggered Offering and if it still cannot be consummated because it would not result in a Satisfaction Event with respect to Universal as a result of market conditions or other Company-related issues, then the Universal Trigger Notice shall be deemed to remain outstanding.

(c) If a Subsequent Follow-on Offering shall have been triggered on or prior to November 30, 2006 but not consummated, then Universal shall have the right (exercised as set forth below) to convert such Subsequent Follow-on Offering from a Subsequent Follow-on Offering to a Universal Triggered Offering if such Subsequent Follow-on Offering cannot be consummated in accordance with Section 3.05. At its election, Universal shall exercise such right by delivering written notice thereof to each of Holdco, M&J K B, DG-DW and DWI II during the Universal Period.

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ARTICLE V

Additional Agreements; Further Assurances

Section 5.01. Certain Holdco Expenses. (a) DW shall pay or reimburse (i) all reasonable out-of-pocket third party expenses incurred by the Tax Matters Partner (as defined in the Holdco Partnership Agreement) under the Holdco Partnership Agreement while acting in such capacity and (ii) all reasonable out-of-pocket third party expenses incurred by the General Partners (as defined in the Holdco Partnership Agreement) under the Holdco Partnership Agreement in performing their duties as the General Partners, in each case to the extent arising from events occurring prior to the Final Allocation. In addition, prior to the Final Allocation, DW shall make available to Holdco and the General Partners any personnel reasonably necessary to assist such Persons in the performance of such duties. Notwithstanding anything to the contrary in this Agreement, none of DW, M&J K, M&J K B, The JK Annuity Trust, the MK Annuity Trust, Katzenberg 1994 Trust, DG-DW, DW Lips, DWI, DWI II, Jeffrey Katzenberg, David Geffen, Steven Spielberg or Paul Allen, or any of their respective Affiliates, shall be entitled to any other fee or compensation (other than applicable indemnity payments) from Holdco, DW, any Member or any partner of Holdco for any actions taken on behalf of, or services rendered to, Holdco pursuant to this Agreement or the Holdco Partnership Agreement.

(b) DW hereby fully, absolutely, irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety, (i) the due and punctual payment of each payment required to be made by Holdco under Section 10.03 of the Holdco Partnership Agreement, when and as due, and (ii) the due and punctual performance and observance of, and compliance with, all covenants, agreements, obligations and liabilities of Holdco under Section 10.03 of the Holdco Partnership Agreement, in each case to the extent arising from events occurring prior to the Final Allocation (all such obligations referred to the in the preceding clauses (i) and (ii) being collectively referred to as the “Holdco Obligations”). DW further agrees that the Holdco Obligations may be extended, amended, modified or renewed, in whole or in part, in each case to the extent arising from events occurring prior to the Final Allocation, without notice to or further assent from DW and that DW will remain bound by the guarantee set forth in this Section 5.01(b) notwithstanding any extension, amendment, modification or renewal of any Holdco Obligation.

Section 5.02. Further Assurances. (a) In addition to the actions specifically provided for elsewhere in this Agreement, each of the parties hereto shall use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement.

(b) Without limiting the foregoing, each party hereto shall cooperate with each other party, and without any further consideration, to execute and deliver, or use its reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of contribution, exchange and transfer and to take all such other actions as such party may reasonably be requested to take by any such other party hereto from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement.

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ARTICLE VI

Representations and Warranties; Indemnification

Section 6.01. Representations and Warranties of Each Party. Each of the parties hereto hereby represents and warrants, severally and not jointly, to each of the other parties hereto as of the date hereof as follows:

(i) Such party (other than in the case of a natural person) is duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, is qualified to do business in each jurisdiction where such qualification is required (except for such qualifications the absence of which, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the ability of such party to perform its obligations under this Agreement and, to the extent a party thereto, the Registration Rights Agreement, the Holdco Partnership Agreement, the Class B Stockholder Agreement, the Vulcan Stockholder Agreement and the Separation Agreement) and has the requisite power and authority to enter into this Agreement and, to the extent a party thereto, the Registration Rights Agreement, the Holdco Partnership Agreement and the Separation Agreement and to consummate the transactions contemplated hereby and thereby.

(ii) To the extent such party is making a Preferred Contribution pursuant to Section 2.01(a), a Contribution pursuant to Section 2.02 or a Holdco Contribution pursuant to Section 2.04, such party will have good and valid title to the interests or shares, as applicable, to be contributed, free and clear of all liens, security interests, charges, options, claims, restrictions or encumbrances of any kind, except, (x) for the pledges being entered into in accordance with Section 2.01(b) and (y) in the case of the Class T/T Interests, for any of the foregoing in respect of accrued but unpaid dividends (collectively, “Liens”), and upon the applicable contribution, good and valid title to such interests or shares will pass to the Company or Holdco, as applicable, free and clear of any Liens, other than Liens arising from actions of the Company or Holdco, as applicable.

(iii) The execution and delivery of each of this Agreement and, to the extent a party thereto, the Registration Rights Agreement, the Holdco Partnership Agreement and the Separation Agreement and the consummation of the transactions contemplated hereby and thereby have, other than in the case of a natural person, been duly authorized by all necessary action on the part of such party. Each of this Agreement and, to the extent a party thereto, the Registration Rights Agreement, the Holdco Partnership Agreement, the Class B Stockholder Agreement, the Vulcan Stockholder Agreement and the Separation Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any

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proceeding therefor may be brought. The spousal consents being executed by the persons listed on Exhibit A hereto are enforceable against such persons in accordance with their terms.

(iv) The execution, delivery and performance of this Agreement and, to the extent a party thereto, the Registration Rights Agreement, the Holdco Partnership Agreement, the Class B Stockholder Agreement, the Vulcan Stockholder Agreement and the Separation Agreement and the consummation of the transactions contemplated hereby and thereby and compliance with the terms hereof and thereof shall not conflict with or result in a breach or violation of (i) other than in the case of a natural person, such party’s articles or certificate of incorporation (or similar constitutive document) or by-laws or (ii) any material contract, agreement or instrument to which such party or any of its subsidiaries is a party or by which any of them are bound, or license, judgment, order, decree, statute, law, rule or regulation, domestic or foreign, applicable to such party or any of its subsidiaries or their respective properties or assets.

(v) In the case of each Member, such party is an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act.

Section 6.02. Tax Representation. Each Person that received DWA LLC Interests in the DW Distribution or the Residual DW Distribution (and DWI II, on behalf of DWI) represents that (i) it will treat the DW Distribution and the Residual DW Distribution as other than in liquidation of its interest in DW (and, in the case of DWI II, DWI II will cause DWI to treat the DW Distribution and the Residual DW Distribution as other than in liquidation of DWI’s interest in DW) and (ii) its interest in the DWA LLC Interests immediately following the DW Distribution and the Residual DW Distribution will have a tax basis determined under Section 732(a) of the Internal Revenue Code (and, in the case of DWI II, DWI’s interest in the DWA LLC Interests immediately following the DW Distribution and the Residual DW Distribution will have a tax basis determined under Section 732(a) of the Internal Revenue Code).

Section 6.03. Representation and Warranty of the Company. The Company hereby represents and warrants to each of the other parties hereto as of the date hereof that the Common Stock to be issued as consideration for the Contribution and the Preferred Contributions will have been duly authorized and, when issued and delivered in accordance with this Agreement, will be validly issued, fully paid and nonassessable.

Section 6.04. Survival. The representations and warranties in this Article VI shall survive the consummation of the transactions contemplated in this Agreement and shall not terminate.

Section 6.05. Indemnification. (a) Each party shall indemnify, defend and hold harmless each other party (and each such other party’s directors, officers, employees, affiliates, successors and assigns) from and against all actions, suits, claims, complaints, demands, litigation or legal, administrative or arbitral proceedings or investigations (collectively, “Claims”), losses, liabilities, damages, deficiencies, judgments, assessments, fines, settlements, costs or expenses (including interest, penalties and reasonable fees, expenses and disbursements

17

of attorneys, experts, personnel and consultants incurred by the indemnified party in any action or proceeding between the indemnifying party and the indemnified party or between the indemnified party and any third party, or otherwise) (collectively, “Losses”) to the extent resulting from any breach of any representation or warranty of such party contained in Section 6.01.

(b) Each Person that received DWA LLC Interests in the DW Distribution (and DWI II, on behalf of DWI) shall indemnify, defend and hold harmless DW and the other Members (and their respective directors, officers, employees, affiliates, successors and assigns) from and against all Claims and Losses, including any effect resulting from the application of Section 743(b)(2) of the Internal Revenue Code, to the extent resulting from any breach by such Person of the representation contained in Section 6.02.

(c) The Company shall indemnify, defend and hold harmless each other party (and each such other party’s directors, officers, employees, affiliates, successors and assigns) from and against all Claims and Losses to the extent resulting from any breach of the representation and warranty of the Company contained in Section 6.03.

(d) The Person making a claim under this Section 6.05 is referred to as the “Indemnitee” and the party subject to providing indemnification in respect of such claim is referred to as the “Indemnitor”. All claims by any Indemnitee under this Section 6.05 shall be asserted and resolved as follows:

Promptly after receipt by the Indemnitee of notice of any Claim or circumstances which, with the lapse of time, would or might give rise to a Claim or Loss or the commencement (or threatened commencement) of a Claim or any action, proceeding or investigation that may result in a Loss (including a claim of a Loss that does not involve a third-party claim) (an “Asserted Liability”), the Indemnitee shall give notice thereof (the “Claims Notice”) to the Indemnitor; provided, that failure to give a Claims Notice in the context of a third-party claim shall in no way diminish the Indemnitor’s obligations hereunder, except to the extent such failure is finally determined by a court of competent jurisdiction to have actually and materially prejudiced the Indemnitor. The Claims Notice shall describe the Asserted Liability in reasonable detail and shall indicate the amount (estimated, if necessary and to the extent feasible) of the Loss that has been or may be suffered by the Indemnitee.

(e) The Indemnitor may elect to defend (and, unless the Indemnitor has specified any reservations or exceptions, to seek to settle or compromise, so long as such settlement or compromise contains an unconditional release of each Indemnitee, whether or not a party to the applicable third party claim), at its own expense and by its own counsel reasonably acceptable to the Indemnitee, any Asserted Liability arising from a third-party claim. If the Indemnitor elects to compromise or defend such Asserted Liability, it shall within 30 days (or sooner, if the nature of the Asserted Liability so requires) notify the Indemnitee of its intent to do so, and the Indemnitee shall cooperate, at the expense of the Indemnitor, in the compromise of, or defense against, such Asserted Liability. Should the Indemnitor make such election, the Indemnitor shall not be liable to the Indemnitee for legal expenses subsequently incurred by the Indemnitee in connection with the compromise of, or defense against, such Asserted Liability. If the

18

Indemnitor elects not to compromise or defend the Asserted Liability, fails to notify the Indemnitee of its election as herein provided or contests its obligation to indemnify under this Agreement, the Indemnitee may pay, compromise or defend such Asserted Liability. Notwithstanding the foregoing, neither the Indemnitor nor the Indemnitee may settle or compromise any Asserted Liability over the objection of the other; provided, that consent to settlement or compromise shall not be unreasonably withheld in the case of a settlement or compromise which involves only monetary relief which the Indemnitor has agreed to pay and which includes a full and unconditional release of the Indemnitee. In any event, the Indemnitee and the Indemnitor may participate, at their own expense, in the defense of such Asserted Liability. If the Indemnitor chooses to defend any Asserted Liability, the Indemnitee shall make available to the Indemnitor any books, records or other documents within its control that are necessary or appropriate for such defense, and, if the Indemnitee chooses to defend any Asserted Liability, the Indemnitor shall make available to the Indemnitee any books, records or other documents within its control that are necessary or appropriate for such defense.

ARTICLE VII

General Provisions

Section 7.01. Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

(i) if to the Company, to:

DreamWorks Animation SKG, Inc.

Grandview Building

1000 Flower Street

Glendale, California 91201

Fax: (818) 659-6123

Attention: Katherine Kendrick, General Counsel

with a copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019-7475

Fax: (212) 474-3700

Attention: Faiza J. Saeed

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(ii) if to DWI II, to:

DW Investment II, Inc.

505 Fifth Avenue South

Suite 900

Seattle, WA 98104

Fax: (206) 342-3000

Attention: W. Lance Conn, Executive Vice President, Investment Management; and Executive Vice President, Legal

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue, Suite 3400

Los Angeles, CA 90071

Fax: (213) 687-5600

Attention: Nicholas P. Saggese

David C. Eisman

(iii) if to any other party hereto, to the address of such party specified on the signature page hereto.

Section 7.02. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective (a) when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart or (b) if later, immediately after effectiveness of the Underwriting Agreement.

Section 7.03. Entire Agreement; No Third Party Beneficiaries. (a) This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

(b) This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, other than as set forth in Section 6.05, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 7.04. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York without giving effect to applicable principles of conflict of laws, except to the extent the substantive laws of the State of Delaware are mandatorily applicable under Delaware law.

Section 7.05. Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in

20

good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Section 7.06. Assignment; Amendments. (a) Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors and assigns.

(b) No amendment to this Agreement shall be effective unless it shall be in writing and signed by each of the Company, DW, Holdco, M&J K B, DG-DW, DWI II and Contributing Members (including M&J K B, DG-DW and DWI II) owning at least a majority-in-interest of the Interests (as defined in the Holdco Partnership Agreement) then outstanding (based on their Adjusted DreamWorks Participation Percentages (as defined in the Holdco Partnership Agreement)); provided, that no amendment shall affect the rights or obligations of a party hereto without the consent of such party. The parties acknowledge and agree that the provisions of Articles III and IV hereof are solely for the benefit of the Contributing Members, the Company and Holdco.

Section 7.07. Enforcement. (a) Each party hereto acknowledges that the other parties would not have an adequate remedy at law for money damages in the event that any of the covenants or agreements of any of the other parties in this Agreement were not performed in accordance with its terms, and it is therefore agreed that each party hereto, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such actual or potential breach and enforcing specifically the terms and provisions hereof, and each party hereto hereby waives (i) any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief and (ii) the need to post any bond that may be required in connection with the granting of such an injunction or other equitable relief.

(b) All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

Section 7.08. Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Section 7.09. Submission to Jurisdiction; Waivers. With respect to any suit, action or proceeding relating to this Agreement (collectively, a “Proceeding”), each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the States of New York and the Court of Chancery of the State of Delaware and any court of the United States located in the Borough of Manhattan in New York City; (b) waives any objection

21

which such party may have at any time to the laying of venue of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought in an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such party; (c) consents to the service of process at the address set forth for notices in Section 7.01 herein; provided, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law and (d) waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in connection with any Proceeding.

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IN WITNESS HEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first written above.

DREAMWORKS ANIMATION SKG, INC.,
By	/s/ Katherine Kendrick
Name:		Katherine Kendrick
Title:		Vice President
Address:

DREAMWORKS L.L.C.,
By	/s/ Brian Edwards
Name:		Brian Edwards
Title:		Vice President
Address:

DWA ESCROW LLLP,
By	/s/ Richard Sherman
Name:	Richard Sherman
Title:	CFO
Address:

M&J K DREAM LIMITED PARTNERSHIP,
By	M&J K DREAM CORP., General Partner
	By	/s/ Jeffrey Katzenberg
	Name:	Jeffrey Katzenberg
	Title:	President
Address:

23

M&J K B LIMITED PARTNERSHIP,
By	M&J K DREAM CORP., General Partner
	By	/s/ Jeffrey Katzenberg
	Name:	Jeffrey Katzenberg
	Title:	President
Address:

THE JK ANNUITY TRUST,
By	/s/ Jeffrey Katzenberg
Name:	Jeffrey Katzenberg
Title:	Authorized Signatory
Address:

THE MK ANNUITY TRUST,
By	/s/ Jeffrey Katzenberg
Name:	Jeffrey Katzenberg
Title:	Authorized Signatory
Address:

KATZENBERG 1994 IRREVOCABLE TRUST,
By	/s/ David Geffen
Name: Title:	David Geffen
Address:

24

DG-DW, L.P.,
By	DG-DW, INC., General Partner
	By	/s/ Richard Sherman
	Name: Title:	Richard Sherman CFO
Address:

DW LIPS, L.P.,
By	DW SUBS. INC., General Partner
	By	/s/ Michael Rutman
	Name: Title:	Michael Rutman Treasurer
Address:

DW INVESTMENT II, INC.,
By	/s/ W. Lance Conn
Name: Title:	W. Lance Conn Vice President

LEE ENTERTAINMENT, L.L.C.,
By	/s/ Gyeong C. Park
Name: Title:	Gyeong C. Park Authorized Person
Address:
with a copy to:

25

CHEMICAL INVESTMENTS, INC.,
By	/s/ Jeffrey C. Walker
Name: Title:	Jeffrey C. Walker President
Address:

MICROSOFT CORPORATION,
By	/s/ George Zinn
Name: Title:	George Zinn Treasurer
Address:

ZIFF INVESTORS PARTNERSHIP, L.P. IIA,
By	Ziff Investment Management, LLC, General Partner
	By	/s/ Mark Beaudoin
	Name: Title:	Mark Beaudoin Treasurer
Address:

CARL O. ROSENDAHL,
	/s/ Carl O. Rosendahl
Address: 315 Fletcher Dr
Atherton, CA 94027

26

VIVENDI UNIVERSAL ENTERTAINMENT LLLP,
By	/s/ Karen Randall
Name:	Karen Randall
Title:	Executive Vice President and General Counsel
Address:

THOMSON INC.,
By	/s/ Brian Kelly
Name: Title:	Brian Kelly Authorized Signer
Address: 3233 East Mission Oaks Blvd. Camarillo, CA 93012

27

KADOKAWA ENTERTAINMENT U.S. INC.,
By	/s/ Yasushi Shiina
Name: Title:	Yasushi Shiina President
Address:

28

GENERAL ELECTRIC COMPANY,
By	/s/ Richard Cotton
Name: Title:	Richard Cotton Executive Vice President and General Counsel
Address: 3135 Easton Turnpike, W3 Fairfield, Connecticut 06431

NBC UNIVERSAL, INC.,
By	/s/ Richard Cotton
Name: Title:	Richard Cotton Executive Vice President and General Counsel
Address: 30 Rockefeller Plaza New York, New York 10112

CJ CORP.,
By	/s/ Jae-Ho Lee
Name: Title:	Jae-Ho Lee CFO
Address:

Steven Spielberg,
	/s/ Steven Spielberg
Address:

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JEFFREY KATZENBERG,
	/s/ Jeffrey Katzenberg
Address:

DAVID GEFFEN,
	/s/ David Geffen
Address:

PAUL ALLEN,
	/s/ Paul Allen
Address:

30

EX-10.3

EXECUTION COPY

EXHIBIT 10.3

STOCKHOLDER AGREEMENT

Among

DWA ESCROW LLLP,

M&J K B LIMITED PARTNERSHIP,

M&J K DREAM LIMITED PARTNERSHIP,

THE JK ANNUITY TRUST,

THE MK ANNUITY TRUST,

KATZENBERG 1994 IRREVOCABLE TRUST,

DG-DW, L.P.,

JEFFREY KATZENBERG

and

DAVID GEFFEN

Dated As Of October 27, 2004

TABLE OF CONTENTS

	Page
ARTICLE I
Definitions
Section 1.01. Certain Defined Terms	1
Section 1.02. Other Definitional Provisions	5
ARTICLE II
Transfer and Conversion of Class B Stock
Section 2.01. Restrictions on Transfer and Conversion of Class B Stock	6
Section 2.02. De Minimis Transfers	6
Section 2.03. Right of First Offer	7
Section 2.04. Special Call Right	8
Section 2.05. Permitted Transferees	8
Section 2.06. Notice of Transfer	9
Section 2.07. Compliance with Transfer Provisions	9
Section 2.08. Legend	9
ARTICLE III
Term
Section 3.01. Term	9
ARTICLE IV
General Provisions
Section 4.01. Notices	10
Section 4.02. Counterparts	10
Section 4.03. Entire Agreement; No Third Party Beneficiaries	10
Section 4.04. Governing Law	10
Section 4.05. Severability	10
Section 4.06. Assignment; Amendments	10
Section 4.07. Enforcement	11
Section 4.08. Titles and Subtitles	11
Section 4.09. Submission to Jurisdiction; Waivers	11
Section 4.10. Certain Actions	11

i

STOCKHOLDER AGREEMENT, dated as of October 27, 2004, among DWA ESCROW LLLP, a Delaware limited liability limited partnership (“Holdco”), M&J K B LIMITED PARTNERSHIP, a Delaware limited partnership (“M&J K B”), M&J K DREAM LIMITED PARTNERSHIP, a Delaware limited partnership (“M&J K”), THE JK ANNUITY TRUST, a California grantor retained annuity trust (“JK GRAT”), THE MK ANNUITY TRUST, a California grantor retained annuity trust (“MK GRAT” and, together with JK GRAT, the “M&J K GRATs”), KATZENBERG 1994 IRREVOCABLE TRUST, a California irrevocable trust (the “1994 Irrevocable Trust”), DG-DW, L.P., a Delaware limited partnership (“DG-DW”), JEFFREY KATZENBERG and DAVID GEFFEN.

WHEREAS, DreamWorks L.L.C., a Delaware limited liability company (“DW”), and DreamWorks Animation SKG, Inc., a Delaware corporation (the “Company”), together with other parties, have entered into a Separation Agreement dated as of October 27, 2004 (the “Separation Agreement”), providing for the separation of the animation business (the “Separation”) from DW;

WHEREAS, after the Separation, the Company intends to sell shares of its Class A Common Stock, par value $0.01 per share (“Class A Stock”), in a public offering (the “Offering”);

WHEREAS, immediately following consummation of the Offering, Holdco, M&J K B, M&J K and DG-DW will own in the aggregate all of the Company’s issued and outstanding Class B Common Stock, par value $0.01 per share (“Class B Stock” and, together with the Class A Stock and the Company’s Class C Common Stock, par value $0.01 per share, the “Common Stock”);

WHEREAS, each of the Stockholders (as defined below) will own Class B Stock either prior to or following the Final Allocation (as defined below); and

WHEREAS, each of the parties desires to enter into this Agreement (as defined below) in order to establish certain rights and obligations of the parties hereto and their transferees as holders of Common Stock;

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

Definitions

Certain Defined Terms. As used in this Agreement:

“Acquisition Agreement” means an agreement to which the Company is a party providing for a merger, consolidation, share exchange, tender offer or similar transaction

involving the Company or any of its subsidiaries (i) which is recommended by the Board at the time it is entered into, (ii) which is available to all holders of Common Stock and (iii) in which Equivalent Consideration (as defined in the Charter as in effect at consummation of the Offering) is offered in respect of each share of Common Stock.

“Agreement” means this Stockholder Agreement, as it may be amended, supplemented, restated or modified from time to time.

“Beneficial Owner” or “Beneficially Own” has the meaning assigned to such term in Rule 13d-3 under the Exchange Act and a Person’s beneficial ownership of Common Stock shall be calculated in accordance with the provisions of such Rule.

“Board” means the Board of Directors of the Company.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in The City of New York.

“By-laws” means the By-laws of the Company, as amended or restated from time to time.

“Charter” means the Restated Certificate of Incorporation of the Company, as amended or restated from time to time.

“Class B Holder” means any Person who shall hold of record shares of Class B Stock.

“Control” (including the terms “Controlled By” and “Under Common Control With”) has the meaning assigned to such term in the Charter as in effect at consummation of the Offering.

“Current Market Value” means, with respect to any security, the average of the daily closing prices on the principal exchange or market on which such security may be listed or may trade for such security for the 20 consecutive trading days commencing on the 22nd trading day prior to the date with respect to which the Current Market Value is being determined. The closing price for each day shall be the closing price, if reported, or, if the closing price is not reported, the average of the closing bid and asked prices as reported by such principal exchange or market.

“De Minimis Transfer” means a Transfer of less than 5,000 shares of Class A Stock (as such number may be adjusted from time to time to take into account any stock split, reverse stock split, stock dividend or similar transaction).

“Director” means any member of the Board.

“DW” has the meaning assigned to such term in the recitals hereto.

“Estate Planning Vehicle” has the meaning assigned to such term in the Charter as in effect at consummation of the Offering.

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“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Family Group” means, (a) with respect to M&J K B and the Katzenberg Stockholders, Jeffrey Katzenberg, any Estate Planning Vehicle that is Controlled by either Jeffrey Katzenberg or David Geffen and any other Person that is Controlled by Jeffrey Katzenberg, in each case, so long as such Person continues to be so Controlled and (b) with respect to DG-DW and the Geffen Stockholders, David Geffen and any other Person that is Controlled by David Geffen, in each case, so long as such Person continues to be so Controlled.

“Final Allocation” has the meaning assigned to such term in the Holdco LLLP Agreement as in effect at consummation of the Offering.

“Formation Agreement” means the Formation Agreement, dated as of October 27, 2004, among the Company, DW, Holdco, General Electric Company, NBC Universal, Inc., CJ Corp., Steven Spielberg, Jeffrey Katzenberg, David Geffen, Paul Allen and the Holdco partners party thereto, as it may be amended, supplemented, restated or modified from time to time.

“Geffen Stockholders” means DG-DW and any other Family Group member of DG-DW that becomes a Class B Holder, in each case, for so long as it is both a Class B Holder and a Family Group member.

“Group” has the meaning assigned to such term in Section 13(d)(3) of the Exchange Act.

“Holdco LLLP Agreement” means the limited liability limited partnership agreement of Holdco, dated as of October 27, 2004, as it may be amended, supplemented, restated or modified from time to time.

“Involuntary Conversion” means a conversion pursuant to Section 2(f)(vii) of Article IV of the Charter which results from the death of a Principal or a judgment of a governmental entity or other involuntary action.

“Katzenberg Employment Agreement” means the Employment Agreement, dated as of October 8, 2004, between Jeffrey Katzenberg and the Company, as it may be amended, supplemented, restated or modified from time to time.

“Katzenberg Stockholders” means M&J K B, M&J K and any other Family Group member of M&J K B that becomes a Class B Holder, in each case, for so long as it is both a Class B Holder and a Family Group member.

“Permitted Pledge” means a bona fide pledge of Common Stock to a financial institution to secure bona fide recourse borrowings so long as (i) the pledgor notifies the Company and each Class B Holder of its intention to enter into such pledge at least 5 days prior thereto, (ii) the pledgor retains the sole right to vote and act by written consent with respect to the pledged Common Stock and (iii) in the case of a pledge of Class B Stock, the pledgee agrees in writing with the pledgor in an agreement that expressly provides that (w) each Principal Holder is a third party beneficiary thereof, entitled to enforce such agreement directly against the pledgee, (x) such agreement cannot be amended or modified without the prior written consent of

3

each Principal Holder, (y) any Transfer of the pledged Common Stock (by foreclosure, by operation of law or otherwise) shall first be subject to the right of first offer provisions of Section 2.03 and (z) if any such right of first offer is exercised, the pledgee shall release its lien on the pledged Common Stock upon payment of the purchase price therefor directly to the pledgee (it being agreed that each Class B Holder who pledges any Class B Stock hereby authorizes payment in such manner), regardless of whether the purchase price is sufficient to discharge the debt secured by the pledge.

“Permitted Transfer” means (i) the entry into an agreement to vote, consent, grant a proxy or power of attorney or the execution of a written consent, proxy or power of attorney, in each case, in favor of any Person that has entered into an Acquisition Agreement providing for shares of Common Stock to be voted in favor of or consenting to the transactions contemplated in the Acquisition Agreement and against actions that would frustrate or prevent such transactions, (ii) the entry into a contract, option or other arrangement or understanding with any Person that has entered into an Acquisition Agreement providing for an option to purchase shares of Common Stock or a profit-sharing relating to the sale of shares of Common Stock, provided, however, that the consummation of any such option or profit-sharing shall not constitute a Permitted Transfer, (iii) delivery of a revocable proxy or a written consent to (A) the Chief Executive Officer or other officer specified by the Company in connection with a proxy or consent solicitation by the Company or (B) a Principal Holder in connection with a proxy or consent solicitation by a Principal Holder or in which a Principal Holder is a participant, (iv) the pledge of the Pledged Common Stock pursuant to the Pledge Documents and any Pledged Share Event and (v) a Permitted Pledge.

“Person” has the meaning assigned to such term in the Charter (as modified in Section 2(f) of Article IV thereof) as in effect at consummation of the Offering.

“Pledge Documents” means the Guarantee and Pledge Agreements entered into in connection with the Revolving Credit Facility.

“Pledged Common Stock” means, at any time, the shares of Common Stock then pledged as collateral for the Revolving Credit Facility.

“Pledged Share Event” means, with respect to any Stockholder, a conversion and Transfer of shares of Pledged Common Stock pursuant to a foreclosure under the applicable pledge agreement between such Stockholder and the lenders under the Revolving Credit Facility.

“Principal” means either of Jeffrey Katzenberg or David Geffen.

“Principal Holder” means any Person other than Holdco, for so long as (x) such Person shall hold of record shares of Class B Stock and is not required to convert all of such shares into Class A Stock under the Vulcan Stockholder Agreement and (y) such Person is either a Principal or one or more Principals shall Control such Person.

“Private Placement” means one or a series of related privately negotiated Transfers to any Person or Transfers to any Person that is exempt from registration under the Securities Act pursuant to Rule 144A or Regulation S under the Securities Act or any similar provisions under U.S. or foreign law.

4

“Revolving Credit Facility” means the revolving credit facility, dated as of October 27, 2004, among DW and the lenders party thereto (or any refinancing thereof that does not extend the term thereof).

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Separation Date” has the meaning assigned to such term in the Separation Agreement.

“Stockholder” means Holdco, the Katzenberg Stockholders and the Geffen Stockholders.

“Transfer” means, directly or indirectly, (i) to sell, transfer, assign or similarly dispose of, whether voluntarily, involuntarily or by operation of law, (ii) to enter into an agreement (other than this Agreement, the Vulcan Stockholder Agreement, the Formation Agreement and the Holdco LLLP Agreement) to vote, consent, grant a proxy or power of attorney or deposit shares into a voting trust, or the execution of a written consent, the grant of a proxy or power of attorney or the deposit of shares into a voting trust or (iii) to enter into a contract, option or other arrangement or understanding that upon consummation or foreclosure would effect a sale, transfer, assignment or similar disposition, other than, in each case, a Permitted Transfer.

“Unrestricted Transfer” means (i) a De Minimis Transfer, (ii) a Transfer to Holdco permitted or required under the Formation Agreement or a Transfer by Holdco permitted or required under the Holdco LLLP Agreement (including Transfers in accordance with the Final Allocation), (iii) a Pledged Share Event, (iv) a Transfer by DG-DW of Class A Stock to a charitable foundation, a charity or a not-for-profit organization, (v) a Transfer to any other Class B Holder that is a Principal Holder, (vi) a Transfer to any Principal, (vii) a Transfer to a Family Group member, so long as the transferee is or becomes a party to this Agreement and the Vulcan Stockholder Agreement and, after giving effect to the Transfer, would be a Principal Holder, (viii) a Transfer pursuant to an Acquisition Agreement or (ix) a Transfer pursuant to a Permitted Tender Offer (as defined in the Charter as in effect at consummation of the Offering).

“Vulcan Stockholder Agreement” means the Stockholder Agreement, dated as of October 27, 2004, among the Company, Holdco, M&J K B, M&J K, the M&J K GRATs, the 1994 Irrevocable Trust, DG-DW, DW Investment II, Inc., Jeffrey Katzenberg, David Geffen and Paul Allen as it may be amended, supplemented, restated or modified from time to time.

Other Definitional Provisions. i)The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article and Section references are to this Agreement unless otherwise specified. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

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Transfer and Conversion of Class B Stock

Restrictions on Transfer and Conversion of Class B Stock. ii)Without the prior written consent of each Principal Holder, each Stockholder agrees not to:

(i) Transfer, other than pursuant to Section 2.03 (or Section 2.04, if applicable), any shares of Class B Stock (or shares of Class A Stock into which such shares of Class B Stock have been converted) held of record by such Stockholder, except, subject to Section 2.01(b) and Section 2.01(c), an Unrestricted Transfer; or

(ii) convert any shares of Class B Stock held of record by such Stockholder into shares of Class A Stock, except (x) subject to Section 2.01(b) and Section 2.01(c), pursuant to an Unrestricted Transfer and (y) in the case of an Involuntary Conversion, subject to compliance with Section 2.04.

Notwithstanding Section 2.01(a) or Section 2.02, for so long as Jeffrey Katzenberg is the Chief Executive Officer of the Company, without the prior written consent of the Katzenberg Stockholders, the Geffen Stockholders agree not to convert any shares of Class B Stock or Transfer any shares of Common Stock held of record by them (other than in connection with an Unrestricted Transfer pursuant to clause (viii) or (ix) of the definition of “Unrestricted Transfer”) if such conversion or Transfer would result in the Voting Power (as defined in the Charter as in effect at consummation of the Offering) of the Common Stock held of record by the Geffen Stockholders, including shares held of record by Holdco on behalf of the Geffen Stockholders (after giving effect to such conversion or Transfer), together with the Voting Power of the Common Stock then held of record by the Katzenberg Stockholders immediately after the Final Allocation, including shares held of record by Holdco on behalf of the Katzenberg Stockholders (disregarding any Transfers by the Katzenberg Stockholders prior to such time) plus any additions thereto, falling below 51% of the Voting Power of all classes of the Company’s Voting Stock (as defined in the Charter as in effect at consummation of the Offering).

Notwithstanding Section 2.01(b) above, each Stockholder agrees that upon any permitted conversion or Transfer of Common Stock held of record by the Katzenberg Stockholders (other than to another Katzenberg Stockholder), the Geffen Stockholders may, at any time thereafter, convert and/or Transfer Common Stock representing up to the same percentage of the Voting Power as had been converted or Transferred by the Katzenberg Stockholders prior to such time.

(d) As a condition to any Transfer of any Common Stock by a Stockholder to a Person Controlled by a Principal, such Stockholder shall cause such transferee to comply with Section 3.03 of the Vulcan Stockholder Agreement.

De Minimis Transfers. Following the date that is one year after consummation of the Offering or, if later, following the Final Allocation, subject to Section 2.01(b) and Section 2.01(c) and applicable securities laws and any applicable lock-up agreements entered

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into in connection with any underwritten offering of Class A Stock, each Stockholder shall be entitled to make one or more De Minimis Transfers; provided, however, that with respect to any Stockholder, the aggregate number of shares of Class A Stock Transferred pursuant to De Minimis Transfers by such Stockholder during any three month period shall not exceed 25,000.

Right of First Offer. iii)Except as otherwise provided in Section 2.01, any Transfer or voluntary or mandatory conversion (other than an Involuntary Conversion) of shares of Class B Stock will be subject to the right of first offer provisions of this Section 2.03.

Prior to effecting any Transfer or conversion (other than an Involuntary Conversion) of shares of Class B Stock, the transferring Stockholder shall deliver a written notice (the “Offer Notice”) to each Principal Holder, which Offer Notice shall specify (i) the number of shares of Common Stock intended to be Transferred or converted and (ii) if applicable, the Specified Price (as defined below). The Offer Notice shall constitute an irrevocable offer to such non-transferring Principal Holders, for the period of time described below, to sell to such non-transferring Principal Holders all (but not less than all) of such Common Stock (allocated among such non-transferring Principal Holders as they may agree, or if they shall not otherwise agree, allocated pro rata among such non-transferring Principal Holders based on the number of shares held of record) at (i) the price set by the transferring Stockholder in the Offer Notice (the “Specified Price”), in the case of a proposed private placement, (ii) the Current Market Value as of the Specified Date (as defined in the Vulcan Stockholder Agreement), in the case of a mandatory conversion pursuant to Section 3.02(a) of the Vulcan Stockholder Agreement or (iii) the Current Market Value as of the date of the Offer Notice, in all other cases.

If such non-transferring Principal Holders elect to purchase all of the offered Class B Stock at the price described in Section 2.03(b), they shall give joint irrevocable notice thereof to the transferring Stockholder within five Business Days of their receipt of the Offer Notice. If such non-transferring Principal Holders shall deliver such a notice, it shall constitute a binding obligation, subject to obtaining any governmental and other similar required approvals, to purchase the offered Class B Stock, which notice shall include the date set for the closing of such purchase, which date shall be no later than 30 days following the delivery of such election notice, subject to extension to the extent necessary to obtain any required antitrust or other required governmental approvals, which the transferring Stockholder and such non-transferring Principal Holders shall use their respective reasonable best efforts to obtain as promptly as practicable (the “Determination Date”). To the extent that the closing of any such purchase has not occurred by the Determination Date, the transferring Stockholder may terminate the relevant agreement to sell the Class B Stock to such non-transferring Principal Holders and sell the Class B Stock in the form of Class A Stock (with conversion effected immediately prior to Transfer) or convert the Class B Stock, as applicable.

If such non-transferring Principal Holders do not respond to the Offer Notice within the required response time period or elect not to purchase the offered Class B Stock, the transferring Stockholder shall be free to Transfer the offered Class B Stock in the form of Class A Stock (with conversion effected immediately prior to Transfer) or convert the Class B Stock, as applicable; provided, however, that in the case of a Transfer (x) such Transfer is closed within 60 days from the date of the Offer Notice, subject to extension to the extent necessary to

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obtain required governmental approvals and other required approvals, which the transferring Stockholder and such non-transferring Principal Holders shall use their respective reasonable best efforts to obtain as promptly as practicable and (y) the per share price at which the Class A Stock or Class B Stock, as applicable, is Transferred is equal to or higher than the Specified Price, in the case of a Private Placement.

Special Call Right. iv)Immediately following (i) any Involuntary Conversion of shares of Class B Stock into shares of Class A Stock or (ii) the Final Allocation, if there shall have occurred prior to the Final Allocation any event which (x) would have caused an Involuntary Conversion with respect to the shares of Class B Stock which the applicable Principal Holder would have been entitled to receive pursuant to the Holdco LLLP Agreement and (y) results in the conversion of such shares into shares of Class A Stock, in each case, such shares of Class A Stock will be subject to the special call right provisions of this Section 2.04.

Following any event described in clause (i) or (ii) of Section 2.04(a), the remaining Principal Holders shall have the right to purchase, and if such right is exercised, the holder of such shares of Class A Stock (the “Converting Holder”) shall be obligated to sell, all or a portion of such shares of Class A Stock for cash in an amount equal to the Current Market Value of such shares of Class A Stock as of the date of the Call Notice (as defined below); provided, that if any such shares of Class A Stock shall be purchased pursuant to this Section 2.04 following the Final Allocation as described above, then such shares shall be purchased for cash in an amount equal to their Current Market Value determined as if the Call Notice were dated the date of the event referred to in Section 2.04(a)(ii). If any remaining Principal Holder(s) elect to purchase such Class A Stock at the price described in the immediately preceding sentence, such Principal Holder(s) shall give joint irrevocable notice thereof (the “Call Notice”) to the Converting Holder within 5 Business Days of the date of such Involuntary Conversion or the Final Allocation, as applicable (such period being the “Call Period”), which Call Notice shall specify the number of shares of Class A Stock intended to be purchased and shall give rise to an obligation of the Converting Holder to sell all or such portion of such Class A Stock to such Principal Holder(s) (allocated among such Principal Holders as they may agree, or if they shall not otherwise agree, allocated pro rata among such Principal Holders based on the number of shares held of record). In addition, the Call Notice shall include the date set for the closing of such purchase, which date shall be no later than 30 days following the delivery of such Call Notice, subject to extension to the extent necessary to obtain any required antitrust or other required governmental approvals, which the Converting Holder and such Principal Holders shall use their respective reasonable best efforts to obtain as promptly as practicable (the “Special Determination Date”). To the extent that the closing of any such purchase has not occurred by the Special Determination Date, the Converting Holder shall not be obligated to sell such Class A Stock to such Principal Holders.

During the Call Period, the Converting Holder shall not Transfer such Class A Stock other than pursuant to a Call Notice. If the remaining Principal Holders do not deliver the Call Notice during the Call Period, the Converting Holder shall not be obligated to offer or sell such shares of Class A Stock to the remaining Principal Holders.

Permitted Transferees. Any Family Group member that becomes a record holder of Common Stock shall be subject to the terms and conditions of this Agreement. Prior to the

8

initial acquisition of record ownership of any Common Stock by any Family Group member, and as a condition thereto, the transferring holder agrees to cause such Family Group member to agree in writing with the Company to be bound by the terms and conditions of this Agreement. To the extent a Family Group member which holds of record Common Stock ceases to qualify as a Family Group member, such Person shall be deemed to have Transferred the Common Stock held by it upon so ceasing to qualify and such Transfer shall be subject to the transfer restrictions of Section 2.01, to the extent applicable to a Transfer of Common Stock.

Notice of Transfer. To the extent any Stockholder proposes to Transfer or shall be deemed to Transfer any Common Stock, such Stockholder shall, prior to consummation of such Transfer or deemed Transfer, deliver notice thereof to the other Stockholders stating the number (and class) of shares to be Transferred, the identity of the transferee and the manner of Transfer.

Compliance with Transfer Provisions. Any Transfer or deemed Transfer or attempted Transfer or deemed Transfer of Common Stock in violation of any provision of this Agreement shall be void as set forth in the Vulcan Stockholder Agreement.

Legend. v)During the term of this Agreement, each certificate evidencing Common Stock held of record or Beneficially Owned by a Stockholder shall bear the following legend:

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND TRANSFERABLE ONLY UPON COMPLIANCE WITH THE PROVISIONS OF A STOCKHOLDER AGREEMENT, DATED AS OF OCTOBER 27, 2004, AMONG DWA ESCROW LLLP, M&J K B LIMITED PARTNERSHIP, M&J K DREAM LIMITED PARTNERSHIP, THE JK ANNUITY TRUST, THE MK ANNUITY TRUST, KATZENBERG 1994 IRREVOCABLE TRUST, DG-DW, L.P., JEFFREY KATZENBERG AND DAVID GEFFEN. A COPY OF SUCH STOCKHOLDER AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF DREAMWORKS ANIMATION SKG, INC. AT GRANDVIEW BUILDING, 1000 FLOWER STREET, GLENDALE, CALIFORNIA 91201.”

Upon a Person ceasing to have rights and obligations under this Agreement pursuant to the terms hereof or upon termination of this Agreement, such Person may surrender to the Company any certificates held of record by such Person and bearing the legend set forth in Section 2.08(a), and upon surrender of such certificates, the Company shall reissue such certificates without such legend as set forth in the Vulcan Stockholder Agreement.

Term

Term. This Agreement shall become effective on the Separation Date and shall continue in effect until the date that all outstanding shares of Class B Stock have been converted to Class A Stock in accordance with the terms of this Agreement; provided, however, that except as otherwise provided in Section 2.04, the rights and obligations of each Stockholder hereunder shall terminate upon the date on which such Stockholder ceases to hold of record any shares of Class B Stock in accordance with the terms of this Agreement.

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General Provisions

Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered to the address of the applicable Stockholder specified on the signature page hereto, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

Entire Agreement; No Third Party Beneficiaries. vi)This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, other than the Vulcan Stockholder Agreement, the Charter and the By-laws of the Company.

This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York without giving effect to applicable principles of conflict of laws, except to the extent the substantive laws of the State of Delaware are mandatorily applicable under Delaware law.

Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Assignment; Amendments. vii)Except as provided in Section 2.05, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of

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the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors (including any executor or administrator of a party’s estate) and permitted assigns.

No amendment to this Agreement shall be effective unless it shall be in writing and signed by each Stockholder.

Enforcement. viii)Each Stockholder acknowledges that the other parties would not have an adequate remedy at law for money damages in the event that any of the covenants or agreements of any of the other parties in this Agreement were not performed in accordance with its terms, and it is therefore agreed that each Stockholder, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such actual or potential breach and enforcing specifically the terms and provisions hereof, and each Stockholder hereby waives (i) any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief and (ii) the need to post any bond that may be required in connection with the granting of such an injunction or other equitable relief.

All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Submission to Jurisdiction; Waivers. With respect to any suit, action or proceeding relating to this Agreement (collectively, a “Proceeding”), each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the States of New York and the Court of Chancery of the State of Delaware and any court of the United States located in the Borough of Manhattan in New York City; (b) waives any objection which such party may have at any time to the laying of venue of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought in an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such party; (c) consents to the service of process at the applicable address set forth for notices on the signature page hereto; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law; and (d) waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in connection with any Proceeding.

Certain Actions. Actions taken by the Principals and their Family Groups pursuant to and in accordance with this Agreement shall be taken solely in their capacity as stockholders of the Company and not in any capacity as a director, officer, employee, member, consultant, manager or partner, as applicable, of the Company, Holdco or DW.

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IN WITNESS WHEREOF, Holdco, M&J K B, M&J K, the M&J K GRATs, the 1994 Irrevocable Trust, DG-DW, Jeffrey Katzenberg and David Geffen have duly executed this Stockholder Agreement as of the date first written above.

DWA ESCROW LLLP,
By	DG-DW, L.P., General Partner
	By	/s/ Richard Sherman
	Name:	Richard Sherman
	Title:	CFO
Address:

M&J K B LIMITED PARTNERSHIP,
By	M&J K DREAM CORP., General Partner
	By	/s/ Jeffrey Katzenberg
	Name:	Jeffrey Katzenberg
	Title:	President
Address:

M&J K DREAM LIMITED PARTNERSHIP,
By	M&J K DREAM CORP., General Partner
	By	/s/ Jeffrey Katzenberg
	Name:	Jeffrey Katzenberg
	Title:	President
Address:

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THE JK ANNUITY TRUST,
By	/s/ Jeffrey Katzenberg
Name:	Jeffrey Katzenberg
Title:	Trustee
Address:

THE MK ANNUITY TRUST,
By	/s/ Jeffrey Katzenberg
Name:	Jeffrey Katzenberg
Title:	Trustee
Address:

KATZENBERG 1994 IRREVOCABLE TRUST,
By	/s/ David Geffen
Name:	David Geffen
Address:

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DG-DW, L.P.,
By	DG-DW, INC., General Partner
	By	/s/ Richard Sherman
	Name:	Richard Sherman
	Title:	CFO
Address:

JEFFREY KATZENBERG
	/s/ Jeffrey Katzenberg
Address:

DAVID GEFFEN
	/s/ David Geffen
Address:

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EX-10.4

EXECUTION COPY

EXHIBIT 10.4

STOCKHOLDER AGREEMENT

Among

DREAMWORKS ANIMATION SKG, INC.,

DWA ESCROW LLLP,

M&J K B LIMITED PARTNERSHIP,

M&J K DREAM LIMITED PARTNERSHIP,

THE JK ANNUITY TRUST,

THE MK ANNUITY TRUST,

KATZENBERG 1994 IRREVOCABLE TRUST,

DG-DW, L.P.,

DW INVESTMENT II, INC.,

JEFFREY KATZENBERG,

DAVID GEFFEN

and

PAUL ALLEN

Dated As Of October 27, 2004

TABLE OF CONTENTS

	Page
ARTICLE I
Definitions
Section 1.01. Certain Defined Terms	2
Section 1.02. Other Definitional Provisions	7
ARTICLE II
Corporate Governance
Section 2.01. Proxy Statement	7
Section 2.02. Class C Director	7
Section 2.03. Board Composition	8
Section 2.04. Certain Actions	10
ARTICLE III
Transfer of Shares
Section 3.01. Restrictions on Transfer by the Vulcan Stockholders	10
Section 3.02. Agreement to Convert	11
Section 3.03. Permitted Transferees	11
Section 3.04. Notice of Transfer	11
Section 3.05. Compliance with Transfer Provisions	11
Section 3.06. Legend	12
ARTICLE IV
Standstill
Section 4.01. Limitation on Acquisitions	12
Section 4.02. Other Restrictions	13
Section 4.03. Exceptions to Standstill	15
ARTICLE V
Term
Section 5.01. Term	16

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ARTICLE VI
General Provisions
Section 6.01. Notices	16
Section 6.02. Counterparts	17
Section 6.03. Entire Agreement; No Third Party Beneficiaries	17
Section 6.04. Governing Law	17
Section 6.05. Severability	17
Section 6.06. Assignment; Amendments	17
Section 6.07. Enforcement	18
Section 6.08. Titles and Subtitles	18
Section 6.09. Submission to Jurisdiction; Waivers	18

ii

STOCKHOLDER AGREEMENT, dated as of October 27, 2004, among DREAMWORKS ANIMATION SKG, INC., a Delaware corporation (the “Company”), DWA ESCROW LLLP, a Delaware limited liability limited partnership (“Holdco”), M&J K B LIMITED PARTNERSHIP, a Delaware limited partnership (“M&J K B”), M&J K DREAM LIMITED PARTNERSHIP, a Delaware limited partnership (“M&J K”), THE JK ANNUITY TRUST, a California grantor retained annuity trust (“JK GRAT”), THE MK ANNUITY TRUST, a California grantor retained annuity trust (“MK GRAT” and, together with JK GRAT, the “M&J K GRATs”), KATZENBERG 1994 IRREVOCABLE TRUST, a California irrevocable trust (the “1994 Irrevocable Trust”), DG-DW, L.P., a Delaware limited partnership (“DG-DW”), DW INVESTMENT II, INC., a Washington corporation (“DWI II”), JEFFREY KATZENBERG, DAVID GEFFEN and PAUL ALLEN.

WHEREAS, DreamWorks L.L.C., a Delaware limited liability company (“DW”), and the Company, together with other parties, have entered into a Separation Agreement dated as of October 27, 2004, providing for the separation of the animation business (the “Separation”) from DW;

WHEREAS, after the Separation, the Company intends to sell shares of its Class A Common Stock, par value $0.01 per share (“Class A Stock”), in a public offering (the “Offering”);

WHEREAS, immediately following the consummation of the Offering, Holdco, M&J K B, M&J K and DG-DW will own in the aggregate all of the Company’s issued and outstanding Class B Common Stock, par value $0.01 per share (“Class B Stock”);

WHEREAS, immediately following the consummation of the Offering, DWI II will own the Company’s issued and outstanding Class C Common Stock, par value $0.01 per share (“Class C Stock” and, together with the Class A Stock and the Class B Stock, the “Common Stock”); and

WHEREAS, each of the parties desires to enter into this Agreement (as defined below) in order to establish certain rights and obligations of the parties and their transferees as holders of Common Stock;

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

Definitions

Certain Defined Terms. As used in this Agreement:

“Acquisition Agreement” means an agreement to which the Company is a party providing for a merger, consolidation, share exchange, tender offer or similar transaction involving the Company or any of its subsidiaries (i) which is recommended by the Board at the time it is entered into, (ii) which is available to all holders of Common Stock and (iii) in which Equivalent Consideration (as defined in the Charter as in effect at consummation of the Offering) is offered in respect of each share of Common Stock.

“Additional Shares” has the meaning assigned to such term in Section 3.01.

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled By or is Under Common Control With, such specified Person.

“Agreement” means this Stockholder Agreement, as it may be amended, supplemented, restated or modified from time to time.

“Beneficial Owner” or “Beneficially Own” has the meaning assigned to such term in Rule 13d-3 under the Exchange Act and a Person’s beneficial ownership of Common Stock shall be calculated in accordance with the provisions of such Rule.

“Board” means the Board of Directors of the Company.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in The City of New York.

“By-laws” means the By-laws of the Company, as amended or restated from time to time.

“Charter” means the Restated Certificate of Incorporation of the Company, as amended or restated from time to time.

“Class B Holder” means any Person who shall hold of record shares of Class B Stock.

“Class B Stockholder Agreement” means the Stockholder Agreement, dated as of October 27, 2004, among Holdco, M&J K B, M&J K, the M&J K GRATs, the 1994 Irrevocable Trust, DG-DW, Jeffrey Katzenberg and David Geffen, as it may be amended, supplemented, restated or modified from time to time.

“Class C Conversion Date” has the meaning assigned to such term in the Charter as in effect at consummation of the Offering.

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“Class C Director” has the meaning assigned to such term in the Charter as in effect at consummation of the Offering.

“Control” (including the terms “Controlled By” and “Under Common Control With”) has the meaning assigned to such term in the Charter as in effect at consummation of the Offering.

“DG Designee” has the meaning assigned to such term in Section 2.03(a)(iv).

“Director” means any member of the Board.

“DW” has the meaning assigned to such term in the recitals hereto.

“Estate Planning Vehicle” has the meaning assigned to such term in the Charter as in effect at consummation of the Offering.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Family Group” means, (a) with respect to M&J K B and the Katzenberg Stockholders, Jeffrey Katzenberg, any Estate Planning Vehicle that is Controlled By either Jeffrey Katzenberg or David Geffen and any other Person that is Controlled By Jeffrey Katzenberg, in each case, so long as such Person continues to be so Controlled and (b) with respect to DG-DW and the Geffen Stockholders, David Geffen and any other Person that is Controlled By David Geffen, in each case, so long as such Person continues to be so Controlled.

“Final Allocation” has the meaning assigned to such term in the Holdco LLLP Agreement as in effect at consummation of the Offering.

“Formation Agreement” means the Formation Agreement, dated as of October 27, 2004, among the Company, DW, Holdco, General Electric Company, NBC Universal, Inc., CJ Corp., Steven Spielberg, Jeffrey Katzenberg, David Geffen, Paul Allen and the Holdco partners party thereto, as it may be amended, supplemented, restated or modified from time to time.

“Geffen Stockholders” means DG-DW and any other Family Group member of DG-DW that becomes a Class B Holder, in each case, for so long as it is both a Class B Holder and a Family Group member.

“Group” has the meaning assigned to such term in Section 13(d)(3) of the Exchange Act.

“Holdco Contribution” has the meaning set forth in the Formation Agreement.

“Holdco LLLP Agreement” means the limited liability limited partnership agreement of Holdco, dated as of October 27, 2004, as it may be amended, supplemented, restated or modified from time to time.

“Independent Director” means a Director who qualifies as an “independent director” of the Company under (a) NYSE Rule 303A(2), as such Rule may be amended,

3

supplemented or replaced from time to time or (b) if the Class A Stock is not listed for quotation on the NYSE, any comparable rule or regulation of the primary securities exchange or quotation system on which the Class A Stock is listed or quoted.

“Involuntary Conversion” means a conversion pursuant to Section 2(f)(vii) of Article IV of the Charter which results from the death of a Principal or a judgment of a governmental entity or other involuntary action.

“JK Designee” has the meaning assigned to such term in Section 2.03(a)(iii).

“Katzenberg Stockholders” means M&J K B, M&J K and any other Family Group member of M&J K B that becomes a Class B Holder, in each case, for so long as it is both a Class B Holder and a Family Group member.

“KG Termination Date” means the first date after the Final Allocation on which the shares of Common Stock held of record by the Katzenberg Stockholders and the Geffen Stockholders, including shares held of record by Holdco on behalf of the Katzenberg Stockholders and the Geffen Stockholders, represent less than 32.5% of the total Voting Power of the outstanding Voting Stock (each as defined in the Charter as in effect at consummation of the Offering) of the Company.

“NYSE” means The New York Stock Exchange, Inc.

“Original Non-Capital Shares” means the shares of Common Stock held of record by the Vulcan Stockholders immediately after the Final Allocation, including shares held of record by Holdco on behalf of the Vulcan Stockholders, which are in excess of the shares of Common Stock that are required to reduce DWI II’s Unreturned DreamWorks Capital (as defined in the Holdco LLLP Agreement) at that time to zero (based on the final valuation of shares in the Final Allocation).

“Permitted Pledge” means a bona fide pledge of Common Stock to a financial institution to secure bona fide recourse borrowings so long as (i) the pledgor notifies the Company and each Class B Holder of its intention to enter into such pledge at least 5 days prior thereto, (ii) the pledgor retains the sole right to vote and act by written consent with respect to the pledged Common Stock and (iii) in the case of a pledge of Class B Stock, the pledgee agrees in writing with the pledgor in an agreement that expressly provides that (w) each Principal Holder is a third party beneficiary thereof, entitled to enforce such agreement directly against the pledgee, (x) such agreement cannot be amended or modified without the prior written consent of each Principal Holder, (y) any Transfer of the pledged Common Stock (by foreclosure, by operation of law or otherwise) shall first be subject to the right of first offer provisions of the Class B Stockholder Agreement and (z) if any such right of first offer is exercised, the pledgee shall release its lien on the pledged Common Stock upon payment of the purchase price therefor directly to the pledgee (it being agreed that each Class B Holder who pledges any Class B Stock hereby authorizes payment in such manner), regardless of whether the purchase price is sufficient to discharge the debt secured by the pledge.

“Permitted Transfer” means (i) the entry into an agreement to vote, consent, grant a proxy or power of attorney or the execution of a written consent, proxy or power of attorney, in

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each case, in favor of any Person that has entered into an Acquisition Agreement providing for shares of Common Stock to be voted in favor of or consenting to the transactions contemplated in the Acquisition Agreement and against actions that would frustrate or prevent such transactions, (ii) the entry into a contract, option or other arrangement or understanding with any Person that has entered into an Acquisition Agreement providing for an option to purchase shares of Common Stock or a profit-sharing relating to the sale of shares of Common Stock, provided, however, that the consummation of any such option or profit-sharing shall not constitute a Permitted Transfer, (iii) the delivery of a revocable proxy or a written consent to (A) the Chief Executive Officer or other officer specified by the Company or (B) a Principal Holder in connection with a proxy or consent solicitation by a Principal Holder or in which a Principal Holder is a participant, (iv) the pledge of the Pledged Common Stock pursuant to the Pledge Documents and any Pledged Share Event and (v) a Permitted Pledge.

“Person” has the meaning assigned to such term in the Charter (as modified in Section 2(f) of Article IV thereof) as in effect at consummation of the Offering.

“Pledge Documents” means the Guarantee and Pledge Agreements entered into in connection with the Revolving Credit Facility.

“Pledged Common Stock” means, at any time, the shares of Common Stock then pledged as collateral for the Revolving Credit Facility.

“Pledged Share Event” means, with respect to any pledgor of Pledged Common Stock, a conversion and Transfer of shares of Pledged Common Stock pursuant to a foreclosure under the applicable pledge agreement between such pledgor and the lenders under the Revolving Credit Facility.

“Principal” means either of Jeffrey Katzenberg and David Geffen.

“Principal Holder” means any Person other than Holdco, for so long as (i) such Person shall hold of record shares of Class B Stock and is not required to convert all of such shares into Class A Stock under this Agreement and (ii) such Person is either a Principal or one or more Principals shall Control such Person.

“Revolving Credit Facility” means the revolving credit facility, dated as of October 27, 2004, among DW and the lenders party thereto (or any refinancing thereof that does not extend the term thereof).

“SEC” means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Separation Date” has the meaning assigned to such term in the Separation Agreement.

“Stockholders” has the meaning assigned to such term in Section 2.03(b).

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“Threshold Date” means the first date on which the total number of outstanding shares of Class B Stock is less than 50% of the number of shares of Class B Stock outstanding immediately following the Final Allocation and the conversion in respect thereof pursuant to Section 7.06(a) of the Holdco LLLP Agreement (excluding in each case any conversion of Pledged Common Stock pursuant to a Pledged Share Event), as such 50% number may be adjusted from time to time to take into account any stock split, reverse stock split, stock dividend or similar transaction; provided, that the Threshold Date shall not occur as a result of an Involuntary Conversion unless the special call right set forth in Section 2.04 of the Class B Stockholder Agreement is not exercised within the time period provided therein or the purchase in respect thereof is not consummated within the time period provided in the Charter as in effect at consummation of the Offering.

“Threshold Number” means, with respect to (i) the Katzenberg Stockholders, 50% of the number of shares of Class B Stock held of record by the Katzenberg Stockholders, including shares held of record by Holdco and allocated to the Katzenberg Stockholders in the Final Allocation (but excluding any conversion of Pledged Common Stock pursuant to a Pledged Share Event), immediately following the Final Allocation; and (ii) the Geffen Stockholders, 50% of the number of shares of Class B Stock held of record by the Geffen Stockholders, including shares held of record by Holdco and allocated to the Geffen Stockholders in the Final Allocation (but excluding any conversion of Pledged Common Stock pursuant to a Pledged Share Event), immediately following the Final Allocation, in each case, as each such number may be adjusted from time to time to take into account any stock split, reverse stock split or stock dividend or similar transaction.

“Transfer” means, directly or indirectly, (i) to sell, transfer, assign or similarly dispose of, whether voluntarily, involuntarily or by operation of law, (ii) to enter into an agreement (other than this Agreement, the Class B Stockholder Agreement, the Formation Agreement and the Holdco LLLP Agreement) to vote, consent, grant a proxy or power of attorney or deposit shares into a voting trust, or the execution of a written consent, the grant of a proxy or power of attorney or the deposit of shares into a voting trust or (iii) to enter into a contract, option or other arrangement or understanding that upon consummation or foreclosure would effect a sale, transfer, assignment or similar disposition, other than, in each case, a Permitted Transfer.

“Vulcan Party” means Paul Allen, the Vulcan Stockholders and their respective Affiliates.

“Vulcan Permitted Transferee” means Paul Allen and any Person that is Controlled By Paul Allen, so long as such Person continues to be Controlled By Paul Allen, or any bona fide employee equity incentive plan of Vulcan Inc. or any of its Affiliates (provided, that any Transfer of Common Stock to any such plan is not intended to circumvent any restriction in this Agreement).

“Vulcan Stockholders” means DWI II and any Vulcan Permitted Transferee, in each case for so long as such Person shall both hold of record shares of Common Stock and be a Vulcan Permitted Transferee.

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Other Definitional Provisions. i)The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article and Section references are to this Agreement unless otherwise specified. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

Corporate Governance

Proxy Statement. The Company agrees to use its best efforts to cause (i) the individuals designated in accordance with Section 2.03 as the JK Designee and the DG Designee and (ii) the individual designated as the Class C Director in accordance with the Charter to be included in management’s slate of nominees and as such, each such designee shall be included in the proxy statement prepared by management of the Company in respect of the applicable annual meeting or other applicable vote or action by written consent with respect to the election of Directors, whether or not the notice required by Section 2.03(d) (in respect of the JK Designee and the DG Designee) or by Section 2.02(c) (in respect of the Class C Director designee) complies with Section 8 of Article II of the Company’s By-laws.

Class C Director. i)Commencing on the first date on which the holder of Class C Stock may elect the Class C Director under the Charter, each Vulcan Stockholder agrees to vote or act by written consent with respect to (or cause to be voted or acted upon by written consent) all Class C Stock then held of record by such Vulcan Stockholder solely in favor of Paul Allen as the Class C Director; provided, however, that if in Paul Allen’s reasonable determination (i) he is not able to serve as the Class C Director or (ii) serving as the Class C Director would cause him any economic detriment, then each Vulcan Stockholder agrees to vote or act by written consent with respect to (or cause to be voted or acted upon by written consent) all Class C Stock then held of record by such Vulcan Stockholder solely in favor of a replacement Class C Director and each subsequent Class C Director identified by the Vulcan Stockholders to the Company in writing. The Vulcan Stockholders agree to consult with the then Chairman of the Company’s Board regarding the identity and credentials of the replacement Class C Director prior to the election of such individual as a Board member (it being understood that the Vulcan Stockholders shall have the sole and exclusive right to select the individual who will serve as the replacement Class C Director and each subsequent Class C Director).

Each Class B Holder, each Vulcan Stockholder and the Company agree to take all reasonable actions (including, to the extent necessary, calling a special meeting of the Board and/or Company stockholders) in order to ensure that the composition of the Board is as set forth in Section 2.03(a) (including taking all reasonable actions to cause any replacement Class C Director designated by the Vulcan Stockholders in accordance with Section 2.02(a) and the Charter to fill any vacancy in the office of the Class C Director as promptly as practicable).

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Unless Paul Allen will be the Class C Director designee, at least 60 days before each annual meeting of stockholders of the Company, and at least five days before any other stockholder vote or action by written consent with respect to the election of Directors, DWI II shall notify the Company and each other party hereto in writing of the individual who will be the Class C Director designee.

Board Composition. i)The Board shall consist of a number of Directors determined in accordance with the Charter, and shall be composed as follows:

the Chief Executive Officer of the Company;

the Class C Director (if any shares of Class C Stock are issued and outstanding) in accordance with the Charter;

for so long as any Katzenberg Stockholder shall be a Principal Holder, one individual designated for election to the Board by the Katzenberg Stockholders (the “JK Designee”); provided, however, that for so long as Jeffrey Katzenberg shall be the Chief Executive Officer of the Company and a Director, he shall be deemed to be the JK Designee;

for so long as any Geffen Stockholder shall be a Principal Holder, one individual designated for election to the Board by the Geffen Stockholders (the “DG Designee”); and

such number of individuals selected by the Nominating and Corporate Governance Committee (or, in the event of any vacancy in the office of Director as a result of a vote or action of the Stockholders (as defined below) pursuant to the second proviso to Section 2.03(b), then as selected in accordance with the second sentence of Section 2.03(c)) for nomination to the Board as shall bring the total number of designees and nominees pursuant to this Section 2.03(a) to the number of Directors that constitute the “entire Board” (as defined in the Charter, but subject to any rights of holders of Preferred Stock (as defined in the Charter) to elect additional Directors under specified circumstances); provided, however, that at all times following the first anniversary of the listing of the Class A Stock on a national securities exchange a sufficient number of the Director-nominees nominated by the Nominating and Corporate Governance Committee shall qualify as Independent Directors so that a majority of the Board shall be Independent Directors as required by the By-laws; provided further, however, that the holder of the Class C Stock shall not be restricted from nominating, electing or maintaining a Class C Director who is determined by the Board not to be an Independent Director.

Each of Holdco, the Katzenberg Stockholders, the Geffen Stockholders and the Vulcan Stockholders (collectively, the “Stockholders”) agrees to vote or act by written consent with respect to (or cause to be voted or acted upon by written consent) all shares of Common Stock then held of record by such Stockholder (x) in favor of the election to the Board of those individuals designated or nominated in accordance with Section 2.03(a) and (y) against the election to the Board of any individual not designated or nominated in accordance with

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Section 2.03(a); provided, however, that at the written request of any of the Katzenberg Stockholders or the Geffen Stockholders with respect to a Director designated by such Stockholder pursuant to Section 2.03(a)(iii) or Section 2.03(a)(iv), each other Stockholder hereby agrees to vote or act by written consent with respect to (or cause to be voted or acted upon by written consent) all shares of Common Stock then held of record by such Stockholder in favor of the removal from office of such Director at any meeting or upon any action by written consent called or taken for the purpose of removing such Director from office (and, except as further provided below or in Section 2.03(e), otherwise shall not vote or act by written consent to cause the removal of the JK Designee or DG Designee, as applicable, without cause); provided further, however, that at any time, if the Principal Holder or Principal Holders that hold of record shares of Common Stock representing a majority of the total voting power of the Common Stock held of record by the Principal Holders at such time shall so direct in writing, each Stockholder hereby agrees to vote or act by written consent with respect to (or cause to be voted or acted upon by written consent) all shares of Common Stock then held of record by such Stockholder in favor of the removal from office of the applicable Director or Directors as so directed by such Principal Holders (other than, except for cause, the Class C Director) at any meeting or upon any action by written consent called or taken for the purpose of removing such Director or Directors from office and otherwise shall not vote or act by written consent to remove or cause the removal of any Director or Directors (except for cause).

In the event of any vacancy in the office of Director of the DG Designee or the JK Designee, each Stockholder agrees to vote or act by written consent with respect to (or cause to be voted or acted upon by written consent) all shares of Common Stock then held of record by such Stockholder in favor of the election to the Board of an individual designated in writing by the Geffen Stockholders or the Katzenberg Stockholders, as applicable, and against the election to the Board of any individual not designated by the Geffen Stockholders or the Katzenberg Stockholders, as applicable. In the event of any vacancy in the office of Director as a result of a vote or action of the Stockholders pursuant to the second proviso to Section 2.03(b) above (other than a vacancy in the office of the Class C Director, which vacancy shall be filled by the holder of the Class C Stock in accordance with the Charter), each Stockholder agrees to vote or act by written consent with respect to (or cause to be voted or acted upon by written consent) all shares of Common Stock then held of record by such Stockholder (x) for the filling of such vacancy as the Principal Holder or Principal Holders that hold of record shares of Common Stock representing a majority of the total voting power of the Common Stock held of record by the Principal Holders at such time shall so direct in writing, but following the composition requirements set forth in Section 2.03(a) and in the case of the filling of vacancies in offices described in Section 2.03(a)(v), after consultation with the Class C Director (if any shares of Class C Stock are issued and outstanding) and (y) against the election to the Board of any individual not so named.

At least 60 days before each annual meeting of stockholders of the Company, and at least 5 days before any other stockholder vote or action by written consent with respect to the election of Directors, the Geffen Stockholders (and the Katzenberg Stockholders if Jeffrey Katzenberg shall not then be the Chief Executive Officer of the Company) shall notify the Company and each other Stockholder in writing of such Stockholder’s designee, if any, pursuant to Section 2.03(a)(iii) or Section 2.03(a)(iv), as applicable.

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If the Class C Conversion Date shall have occurred, the Vulcan Stockholders shall use their best efforts to cause the Class C Director to resign from the Board as promptly as possible and in any event no later than the second day after the Class C Conversion Date. If, at any time, all of the Katzenberg Stockholders or all of the Geffen Stockholders cease to be Principal Holders (any such holder, a “Non-Controlled Holder”), such Non-Controlled Holders shall use their best efforts to cause the JK Designee or the DG Designee, as applicable, to resign from the Board as promptly as possible and in any event no later than the second day after such applicable Stockholder first ceases to be a Principal Holder; provided, however, that if the Katzenberg Stockholders shall fail to be Principal Holders at a time when Jeffrey Katzenberg is deemed to be the JK Designee by virtue of his role as Chief Executive Officer of the Company and a Director, the Katzenberg Stockholders shall not be required to comply with the provisions of this Section 2.03(e) for so long as Jeffrey Katzenberg is the Chief Executive Officer of the Company.

(f) Actions taken by the Stockholders pursuant to and in accordance with this Agreement shall be taken solely in their capacity as stockholders of the Company and not in any capacity as a director, officer, employee, member, consultant, manager or partner, as applicable, of the Company, Holdco or DW.

Certain Actions. Prior to the Final Allocation, without the consent of each Stockholder, neither the Company nor any Stockholder will take or cause to be taken any action that would require the consent or approval of the holders of Class A Stock voting separately as a class pursuant to Section 4(b) of Article IV of the Charter.

Transfer of Shares

Restrictions on Transfer by the Vulcan Stockholders. In the event that any Vulcan Party shall, directly or indirectly, acquire or agree to acquire by purchase or otherwise ownership of any additional shares (“Additional Shares”) of Common Stock or other voting securities of the Company other than shares of Common Stock (including Pledged Common Stock) owned by any Vulcan Party, including shares held by Holdco on behalf of any Vulcan Party, immediately after the Final Allocation, then without the prior written consent of the Company, each of the Vulcan Stockholders agrees not to Transfer (other than to the Company or to any Class B Holder or to any Vulcan Permitted Transferee) any Additional Shares or Original Non-Capital Shares if the ultimate purchaser would (to such Vulcan Stockholder’s knowledge after reasonable due inquiry) Beneficially Own more than 5% of the then issued and outstanding Common Stock, after giving effect to such Transfer; provided, that any Vulcan Stockholder shall be permitted to Transfer Additional Shares or Original Non-Capital Shares to (i) a “qualified institutional buyer” as defined in Rule 144A under the Securities Act of 1933, as amended (regardless of whether Rule 144A is applicable to such Transfer), if, after giving effect to such Transfer, such “qualified institutional buyer” represents to such Vulcan Stockholder that it would be eligible to report its ownership of Common Stock on Schedule 13G pursuant to Rule 13d-1 under Section 13 of the Exchange Act (or any successor provision thereto) and (ii) any Person who, upon consummation of such Transfer, enters into (and agrees not to transfer such Common Stock except to permitted transferees that enter into) a “standstill agreement” with the Company

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and the Class B Holders on the terms set forth in Article IV (or less restrictive terms that are agreed to by the Company). As a condition to any Transfer of any Common Stock by a Vulcan Stockholder to a Person Controlled by Paul Allen, such Vulcan Stockholder shall cause such transferee to comply with Section 3.03.

Agreement to Convert. Each Class B Holder (other than Holdco) agrees that from and after the Threshold Date, on the first date (the “Specified Date”) that such Class B Holder together with its applicable Family Group cease to hold of record, in the aggregate, at least their Threshold Number of shares of Class B Stock, such Class B Holder (together with its applicable Family Group) (x) shall Transfer any shares of Class B Stock held of record by such Class B Holder to any other Class B Holder who (together with its applicable Family Group) at the Specified Date continues to hold of record at least such other Class B Holder’s Threshold Number of shares of Class B Stock and who exercises its right of first offer, in accordance with the right of first offer provisions of the Class B Stockholder Agreement, and (y) following compliance with the right of first offer provisions of the Class B Stockholder Agreement, shall immediately convert the remaining shares of Class B Stock held of record by it (and its applicable Family Group) not so Transferred in accordance with clause (x) above to Class A Stock in accordance with the Charter; provided, however, that if any applicable Class B Holder (or Family Group member) shall fail to surrender such Class B shares for conversion as so required by the close of business on the Business Day following such compliance, the Company on behalf of such holder (or Family Group member) shall cause such conversion to occur as of such date, and each party hereto consents to treating such Class B shares as having been surrendered for conversion in accordance with Section 2(f) of Article IV of the Charter as of such date.

Permitted Transferees. Any Vulcan Permitted Transferee and any Family Group member that becomes a record holder of Common Stock shall be subject to the terms and conditions of this Agreement. Prior to the initial acquisition of record ownership of any Common Stock by any Vulcan Permitted Transferee or Family Group member, and as a condition thereto, the transferring holder agrees to cause such Vulcan Permitted Transferee or Family Group member, as applicable, to agree in writing with the Company to be bound by the terms and conditions of this Agreement. To the extent a Vulcan Permitted Transferee or Family Group member that holds of record Common Stock ceases to qualify as a Vulcan Permitted Transferee or Family Group member, such Person shall be deemed to have Transferred the Common Stock held by it upon so ceasing to qualify and such Transfer shall be subject to the transfer restrictions of Section 3.01 of this Agreement and Section 2.01 of the Class B Stockholder Agreement, to the extent applicable to a Transfer of Common Stock.

Notice of Transfer. To the extent any party hereto other than DWI II (except in the case of a Transfer pursuant to which the restrictions in Section 3.01 apply) proposes to Transfer or shall be deemed to Transfer any Common Stock, such party shall, prior to consummation of such Transfer or deemed Transfer, deliver notice thereof to the Company stating the number (and class) of shares to be Transferred, the identity of the transferee and the manner of Transfer.

Compliance with Transfer Provisions. Any Transfer or deemed Transfer or attempted Transfer or deemed Transfer of Common Stock in violation of any provision of this

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Agreement or the Class B Stockholder Agreement shall be void, and the Company shall not record such Transfer or deemed Transfer on its books or treat any purported transferee of such Common Stock as the owner of such Common Stock for any purpose.

Legend. i)During the term of this Agreement, each certificate evidencing Class C Stock held of record or Beneficially Owned by a Vulcan Stockholder and each certificate evidencing Class B Stock held of record or Beneficially Owned by a Class B Holder shall bear the following legend (and, in the case of Class B Stock, the legend set forth in Section 2.08 of the Class B Stockholder Agreement):

“THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND TRANSFERABLE ONLY UPON COMPLIANCE WITH THE PROVISIONS OF A STOCKHOLDER AGREEMENT, DATED AS OF OCTOBER 27, 2004, AMONG DREAMWORKS ANIMATION SKG, INC., DWA ESCROW LLLP, M&J K B LIMITED PARTNERSHIP, M&J K DREAM LIMITED PARTNERSHIP, THE JK ANNUITY TRUST, THE MK ANNUITY TRUST, KATZENBERG 1994 IRREVOCABLE TRUST, DG-DW, L.P., DW INVESTMENT II, INC., JEFFREY KATZENBERG, DAVID GEFFEN AND PAUL ALLEN. A COPY OF SUCH STOCKHOLDER AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF DREAMWORKS ANIMATION SKG, INC. AT GRANDVIEW BUILDING, 1000 FLOWER STREET, GLENDALE, CALIFORNIA 91201.”

Upon a Person ceasing to have rights and obligations under this Agreement pursuant to the terms hereof or upon termination of this Agreement (or the Class B Stockholder Agreement, as applicable), such Person may surrender to the Company any certificates held of record by such Person and bearing the legend set forth in Section 3.06(a) (or in Section 2.08 of the Class B Stockholder Agreement, as applicable), and upon surrender of such certificates, the Company shall reissue such certificates without such legend.

Standstill

Limitation on Acquisitions. Each of Paul Allen and each Vulcan Stockholder covenants and agrees with the Company and each Principal Holder that they (x) shall not, (y) shall cause each of their respective Affiliates Controlled By any of them (other than any such Affiliate that is listed on a national securities exchange) not to and (z) shall use their reasonable best efforts to cause each of their respective Affiliates not Controlled By any of them (other than any such Affiliate that is listed on a national securities exchange) not to, in each case, prior to the earlier of (i) the fifth anniversary of the date of this Agreement and (ii) the KG Termination Date, directly or indirectly, acquire, or agree to acquire, by purchase or otherwise (including by purchasing or otherwise acquiring or entering into a call transaction or engaging in any similar transaction, including any constructive purchase or call or hedging, derivative or other transaction with the same or similar effect), ownership of any additional shares of Common Stock or other voting securities of the Company (except such shares of Common Stock (including shares of Pledged Common Stock) received pursuant to the Formation Agreement or

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the Holdco LLLP Agreement or by way of stock dividends, stock reclassifications or other distributions made to holders of Common Stock generally); provided, that Paul Allen and the Vulcan Stockholders shall be permitted to acquire, or agree to acquire, by purchase or otherwise (including by purchasing or otherwise acquiring or entering into a call transaction or engaging in any similar transaction, including any constructive purchase or call or hedging, derivative or other transaction with the same or similar effect), Beneficial Ownership of additional shares of Common Stock or other voting securities of the Company so long as the percentage of the aggregate number of shares of Common Stock and other voting securities of the Company owned by Paul Allen, the Vulcan Stockholders and their respective Affiliates (other than any such Affiliate that is listed on a national securities exchange) does not exceed the greater of (x) 33% of the outstanding shares of Common Stock and other voting securities of the Company and (y) such percentage of the number of such outstanding shares of Common Stock or other voting securities owned by all of the Class B Holders in the aggregate, it being understood that in no event shall Paul Allen or any Vulcan Stockholder be in breach of this Section 4.01 or be required to sell or otherwise dispose of any shares of Common Stock or other voting securities of the Company solely because of a decrease in the percentage described in clause (y) above. Each of Paul Allen and each Vulcan Stockholder covenants and agrees with the Company and each Principal Holder that they shall not cause any of their respective Affiliates that are listed on a national securities exchange to take any of the actions prohibited by this Section 4.01 and will not vote any securities of any such Affiliate in favor of the taking of such actions (in each case, as if this Section 4.01 applied to such Affiliates).

Other Restrictions. Each of Paul Allen and each Vulcan Stockholder covenants and agrees with the Company that they (x) shall not, (y) shall cause each of their respective Affiliates Controlled By any of them (other than any such Affiliate that is listed on a national securities exchange) not to and (z) shall use their reasonable best efforts to cause each of their respective Affiliates not Controlled By any of them (other than any such Affiliate that is listed on a national securities exchange) not to, in each case, prior to the earlier of (i) the fifth anniversary of the date of this Agreement and (ii) the KG Termination Date, directly or indirectly, alone or in concert with others, unless specifically requested in writing by a Principal Holder or by a resolution of a majority of the Directors or pursuant to a transaction (x) in which the Company has entered into a definitive agreement or (y) the Board has recommended in favor of, take any of the actions set forth below (or take any action that would require the Company to make an announcement regarding any of the following):

effect, seek, offer, engage in, propose (whether publicly or otherwise) or cause or participate in, or assist any other Person to effect, seek, engage in, offer or propose (whether publicly or otherwise) or participate in:

any tender or exchange offer, merger, consolidation, share exchange, business combination, recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction involving the Company or any of its subsidiaries or any material portion of its or their business or any purchase of all or any substantial part of the assets of the Company or any of its subsidiaries or any material portion of its or their business; or

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any “solicitation” of “proxies” (as such terms are used in the proxy rules of the SEC but without regard to the exclusion set forth in Section 14a-1(1)(2)(iv) from the definition of “solicitation”) with respect to the Company or any of its Affiliates or any action resulting in Paul Allen, DWI II, any Affiliate of Paul Allen or DWI II or such other Person becoming a “participant” in any “election contest” (as such terms are used in the proxy rules of the SEC) with respect to the Company or any of its subsidiaries;

propose any matter for submission to a vote of stockholders of the Company or call or seek to call a meeting of the stockholders of the Company;

seek election to, seek to place a representative on or seek the removal of any Director, except the Class C Director pursuant to the Charter; provided, however, that nothing in this Section 4.02(c) shall restrict the manner in which a Vulcan Stockholder may vote its shares of Common Stock;

grant any proxy with respect to any Common Stock (other than to a Principal Holder, the Chief Executive Officer of the Company or a bona fide financial institution in connection with a bona fide recourse borrowing);

execute any written consent with respect to any Common Stock other than in respect of the election or removal of the Class C Director or at the request of a Principal Holder or the Chief Executive Officer of the Company;

form, join or participate in a Group with respect to any Common Stock or deposit any Common Stock in a voting trust or subject any Common Stock to any arrangement or agreement with respect to the voting of such Common Stock or other agreement having similar effect (in each case except with the Class B Holders);

except pursuant to the Charter as it relates to the Class C Director, take any other action to seek to affect the control of the management or Board of the Company or any of its Affiliates, including publicly suggesting or announcing its willingness to engage in or have another Person engage in a transaction that could reasonably be expected to result in a transaction of the type described in Section 4.02(a)(i); provided, however, that nothing in this Section 4.02(g) shall restrict the manner in which a Vulcan Stockholder may vote its shares of Common Stock;

enter into any discussions, negotiations, arrangements or understandings with any Person with respect to any of the foregoing, or advise, assist, encourage or seek to persuade others to take any action with respect to any of the foregoing (in each case except with the Class B Holders);

disclose to any Person, or otherwise induce, encourage, discuss or facilitate, any intention, plan or arrangement inconsistent with the foregoing or with the restrictions on transfer set forth in Article III or which would result in the Company or any of its Affiliates or any Class B Holder or any Affiliates of any Class B Holder being required to make any such disclosure in any filing with a governmental entity or being required to make a public announcement with respect thereto;

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bring any action or otherwise act to contest the validity of this Article IV (including this Section 4.02) or seek a release from the restrictions contained in this Article IV; or

request the Company or any of its Affiliates, directors, officers, employees, representatives, advisors or agents, or any party hereto, directly or indirectly, to amend or waive this Article IV, the Charter or the Restated By-laws (or similar constituent documents) of the Company or any of its Affiliates (except for such amendments and waivers relating to the rights, powers or preferences of the Class C Stock or the Class C Director).

Each of Paul Allen and each Vulcan Stockholder covenants and agrees with the Company that they shall not cause any of their respective Affiliates that are listed on a national securities exchange to take any of the actions prohibited by this Section 4.02 and will not vote any securities of any such Affiliate in favor of the taking of such actions (in each case, as if this Section 4.01 applied to such Affiliates).

Notwithstanding anything herein to the contrary, nothing in Section 4.01 or this Section 4.02 shall in any way restrict Paul Allen or any Vulcan Stockholder or the Class C Director, in their capacity as a director or board committee member of the Company or any non-wholly owned Affiliate, from exercising their fiduciary duties in such capacity (including voting in their capacity as a director or board committee member) as they deem to be in the best interest of the Company or such non-wholly owned Affiliate, as applicable. For purposes hereof, the term “non-wholly owned Affiliate” shall mean an Affiliate of Paul Allen or any Vulcan Stockholder any portion of the equity of which is owned by a Person that is not a Vulcan Party or any officer, director, employee or other representative of a Vulcan Party.

Exceptions to Standstill. Notwithstanding Section 4.01 or Section 4.02, none of Paul Allen nor any Vulcan Stockholder shall be subject to any of the restrictions set forth therein if (a) the Company shall have entered into a definitive agreement providing for, or, in the case of clause (ii) below, the Board of Directors of the Company shall have recommended in favor of, (i) any direct or indirect acquisition or purchase by any Person or Group of a majority of the Common Stock of the Company, (ii) any tender offer or exchange offer that if consummated would result in any Person or Group acquiring a majority of the Common Stock of the Company or (iii) any merger, consolidation, share exchange or other business combination involving the Company which, if consummated, would result in the stockholders of the Company immediately prior to the consummation of such transaction ceasing to own at least a majority of the equity interests in the surviving entity (or any direct or indirect parent of such surviving entity); (b) any Person or Group (other than the Company, any Class B Holder, any Vulcan Party or any Group that includes a Vulcan Party or a Class B Holder) acquires 25% or more of the number of then outstanding shares of Common Stock or other voting securities of the Company having the right to vote generally in the election of Directors; (c) any Class B Holder, Principal, Family Group Member or any of their respective Affiliates commences (x) a “going private” transaction subject to Rule 13e-3 under Section 13(e) of the Exchange Act involving the Company or any of its material subsidiaries or (y) a transaction of the type contemplated in clause (a) above; or (d) the KG Termination Date shall have occurred.

15

Term

Term. This Agreement shall become effective on the Separation Date and shall continue in effect until the later of (i) such time as all outstanding shares of Class B Stock shall have been converted to Class A Stock and (ii) the fifth anniversary hereof; provided, however, that this Agreement shall terminate as to each of Paul Allen and each Vulcan Stockholder at such time, following the Final Allocation, as the Vulcan Stockholders shall cease to Beneficially Own in the aggregate at least 5% of the issued and outstanding Common Stock.

General Provisions

Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

if to the Company, to:

DreamWorks Animation SKG, Inc.

Grandview Building

1000 Flower Street

Glendale, California 91201

Fax: (818) 659-6123

Attention: Katherine Kendrick, General Counsel

with a copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019-7475

Fax: (212) 474-3700

Attention: Faiza J. Saeed

if to DWI II, to:

DW Investment II, Inc.

505 Fifth Avenue South

Suite 900

Seattle, WA 98104

Fax: (206) 342-3000

Attention: W. Lance Conn, Executive Vice President, Investment

Management; and Executive Vice President, Legal

16

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue, Suite 3400

Los Angeles, CA 90071

Fax: (213) 687-5600

Attention: Nicholas P. Saggese

  David C. Eisman

if to any other party hereto, to the address of such party specified on the signature page hereto.

Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

Entire Agreement; No Third Party Beneficiaries. ii)This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, other than the Class B Stockholder Agreement, the Charter and the By-laws of the Company.

This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York without giving effect to applicable principles of conflict of laws, except to the extent the substantive laws of the State of Delaware are mandatorily applicable under Delaware law.

Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Assignment; Amendments. iii)Except as provided in Section 3.03, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of

17

the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors (including any executor or administrator of a party’s estate) and permitted assigns.

No amendment to or waiver of this Agreement shall be effective unless it shall be in writing and signed by the Company and each of the parties hereto.

Enforcement. iv)Each of the Company and each party hereto acknowledges that the other parties would not have an adequate remedy at law for money damages in the event that any of the covenants or agreements of any of the other parties in this Agreement were not performed in accordance with its terms, and it is therefore agreed that each of the Company and each party hereto, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such actual or potential breach and enforcing specifically the terms and provisions hereof, and each of the Company and each party hereto hereby waives (i) any and all defenses they may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief and (ii) the need to post any bond that may be required in connection with the granting of such an injunction or other equitable relief.

All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Submission to Jurisdiction; Waivers. With respect to any suit, action or proceeding relating to this Agreement (collectively, a “Proceeding”), each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the States of New York and the Court of Chancery of the State of Delaware and any court of the United States located in the Borough of Manhattan in New York City; (b) waives any objection which such party may have at any time to the laying of venue of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought in an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such party; (c) consents to the service of process at the address set forth for notices in Section 6.01 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law; and (d) waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in connection with any Proceeding.

18

IN WITNESS WHEREOF, the Company, Holdco, M&J K B, M&J K, the M&J K GRATs, the 1994 Irrevocable Trust, DG-DW, DW Investment II, Inc., Jeffrey Katzenberg, David Geffen and Paul Allen have duly executed this Stockholder Agreement as of the date first written above.

DREAMWORKS ANIMATION SKG, INC.,
By	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	Vice President

	DWA ESCROW LLLP,
	By	/s/ Richard Sherman
	Name:	Richard Sherman
	Title:	CFO
Address:

M&J K B LIMITED PARTNERSHIP,
	By	M&J K DREAM CORP., General Partner
		By	/s/ Jeffrey Katzenberg
		Name:	Jeffrey Katzenberg
		Title:	President
Address:

19

M&J K DREAM LIMITED PARTNERSHIP,
By	M&J K DREAM CORP., General Partner
	By	/s/ Jeffrey Katzenberg
	Name:	Jeffrey Katzenberg
	Title:	President

THE JK ANNUITY TRUST
By	/s/ Jeffrey Katzenberg
Name:	Jeffrey Katzenberg
Title:	Trustee
Address:

THE MK ANNUITY TRUST,
By	/s/ Jeffrey Katzenberg
Name:	Jeffrey Katzenberg
Title:	Trustee
Address:

KATZENBERG 1994 IRREVOCABLE TRUST,
By	/s/ David Geffen
	Name:	David Geffen

20

DG-DW, L.P.,
By	DG-DW, INC., General Partner
	By	/s/ Richard Sherman
	Name:	Richard Sherman
	Title:	CFO
Address:

DW INVESTMENT II, INC.,
By	/s/ W. Lance Conn
Name:	W. Lance Conn
Title:	Vice President

JEFFREY KATZENBERG
	/s/ Jeffrey Katzenberg
Address:

DAVID GEFFEN
	/s/ David Geffen
Address:

PAUL ALLEN
	/s/ Paul Allen
Address:

21

EX-10.5

Exhibit 10.5

DISTRIBUTION AGREEMENT

between

DREAMWORKS L.L.C.

and

DREAMWORKS ANIMATION SKG, INC.

dated as of October 7, 2004

SECTION 1.	DEFINITIONS AND USAGE	1
SECTION 2.	GRANT OF RIGHTS; PERIOD OF DISTRIBUTION	18
SECTION 3.	DEVELOPMENT, PRODUCTION, ACQUISITION, PAYMENT OBLIGATIONS AND DELIVERY	20
SECTION 4.	DISTRIBUTION	24
SECTION 5.	DISTRIBUTION EXPENSES — APPROVALS AND CONTROLS	39
SECTION 6.	DISTRIBUTION EXPENSES ACCOUNTING	41
SECTION 7.	DISTRIBUTION FEES	42
SECTION 8.	GROSS RECEIPTS	43
SECTION 9.	REPRESENTATIONS, WARRANTIES AND AGREEMENTS	55
SECTION 10.	INDEMNITY	58
SECTION 11.	DEFAULT; REMEDIES AND TERMINATION	60
SECTION 12.	MUTUAL SECURITY AGREEMENTS AND DOCUMENTS	65
SECTION 13.	COPYRIGHT	67
SECTION 14.	OWNERSHIP	68
SECTION 15.	INVENTORY OF MATERIALS	68
SECTION 16.	FORCE MAJEURE	69
SECTION 17.	ASSIGNMENT	70
SECTION 18.	STANDARD OF CARE	70
SECTION 19.	DISTRIBUTOR DISTRIBUTION CREDIT	71
SECTION 20.	OTHER ACTIVITIES	71
SECTION 21.	EXERCISE OF DISCRETION	72
SECTION 22.	NO PARTNERSHIP OR THIRD PARTY BENEFIT	72
SECTION 23.	INTEGRATION/FORMALITIES	72
SECTION 24.	DISPUTE RESOLUTION	72
SECTION 25.	SEVERABILITY OF PROVISIONS	74
SECTION 26.	WAIVER	74
SECTION 27.	GOVERNING LAW	74
SECTION 28.	CONFIDENTIALITY	74
SECTION 29.	NOTICE OF REPRESENTATIVES	75
SECTION 30.	PARAGRAPH HEADINGS	75
SECTION 31.	INTELLECTUAL PROPERTY LICENSE	75
SECTION 32.	DISCLOSURE, COMPLIANCE AND REPORTING OBLIGATIONS	75
SECTION 33.	LIMITATIONS ON DISTRIBUTOR RESPONSIBILITY	76
SECTION 34.	NOTICES	76
SECTION 35.	COUNTERPARTS	77
SCHEDULE 1	DISTRIBUTION SERVICING AGREEMENTS	1

SCHEDULE 2	MAJOR INTERNATIONAL TERRITORIES	1
SCHEDULE 3	DELIVERY REQUIREMENTS	1
SCHEDULE 4	RELEASE DATES - PRIOR PICTURES	1
SCHEDULE 5	THIRD PARTY SERVICE AGREEMENTS	1
EXHIBIT A	INSTRUMENT OF TRANSFER	1

DISTRIBUTION AGREEMENT dated as of October 7, 2004 (this “Agreement”), by and between DreamWorks Animation SKG, Inc. (“DWA”) and DreamWorks L.L.C. (“Distributor”).

WHEREAS DWA is principally devoted to developing, producing and acquiring feature-length theatrical animated motion pictures and other animated productions;

WHEREAS Distributor is engaged, inter alia, in the business of distributing feature length theatrical motion pictures and other productions in all media throughout the world; and

WHEREAS DWA desires to grant to Distributor a license to distribute and exploit Licensed Pictures (as defined hereunder), and Distributor desires to enter into such license on the terms and conditions contained herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, DWA and Distributor hereby agree as follows:

Section 1. Definitions and Usage

1.1 Definitions:

Accepted Additional Picture(s) shall mean an Additional Picture with respect to which Distributor has licensed certain Distribution Rights pursuant to Section 2.1.c. below.

Additional Picture(s) shall mean (i) all Animated Motion Pictures and Hybrid Motion Pictures intended for initial Theatrical Exhibition (a) that do not fully satisfy each of the specifications set forth in Section 3.2.b. below, but (b) that are either (1) produced by DWA or any controlled Affiliate (solely or in conjunction with another entity) and available for Delivery prior to expiration of the Output Term, or (2) acquired by DWA or any controlled Affiliate, available for Delivery prior to expiration of the Output Term and for which any Distribution Rights have been obtained by DWA for the Territory; (ii) all DTV Productions (a) that do not fully satisfy each of the specifications set forth in Section 3.2.c. below, but (b) that are either (1) produced by DWA or any controlled Affiliate (solely or in conjunction with another entity) and available for Delivery prior to expiration of the Output Term, or (2) acquired by DWA or any controlled Affiliate, available for Delivery prior to expiration of the Output Term and for which any Distribution Rights have been obtained by DWA for the Territory; and (iii) any Motion Pictures or other audiovisual programs that Distributor is required to license or otherwise provide rights to a party to a DWA-approved Distribution Servicing Agreement.

Control when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

Affiliate of Any Person shall mean any other Person controlling, controlled by or under common control with such Person. For purposes of this Agreement, Distributor and DWA are not Affiliates of each other.

Animated Motion Picture(s) shall mean any Motion Picture that is created predominantly by one or more non-live action production methods (e.g., hand-drawn animation [such as Prince of Egypt], CGI [such as Shrek], stop-motion [such as Chicken Run] and/or motion capture [such as Polar Express]) (each, an “Animation Method”). However, a Motion Picture shall not be deemed to be an Animated Motion Picture if digital Animation Method(s) are used, in whole or in part, to create photorealistic characters that interact with live-action characters in live-action settings. (Photorealistic characters include both “real world” characters modified by an Animation Method [e.g., Babe the pig in Babe] and characters that are invented but which are depicted in a “real world” manner by an Animation Method [e.g., Yoda in Star Wars II: Attack of the Clones, Gollum in Lord of the Rings, the dinosaurs in Jurassic Park, the robots in I, Robot, the toy soldiers in Small Soldiers].)

Business Day shall mean a day other than a Saturday, Sunday or other day on which financial institutions in Los Angeles, California are authorized or required by law to close.

CJ Agreement shall mean collectively the Theatrical Distribution Agreement, amended and restated as of February 10, 1999, between Distributor and Cheil Jedang Corporation (“Cheil”), the Home Video Fulfillment Services Agreement, amended and restated as of February 10, 1999, between Distributor and Cheil, each as may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof, and all related agreements with respect to one or more Licensed Pictures between Distributor and Cheil or CJ Entertainment, Inc. (together with Cheil collectively “CJ Entertainment”).

Commercial Tie-in and Promotional Rights shall mean, with respect to each Licensed Picture, the right to use or license the use of characters, designs, visual representations, names, logos, props, physical properties or other elements appearing or used in or in connection with such Licensed Picture or all or any part of the Literary Material in connection with (i) the advertising, publicizing, marketing, promotion and/or packaging of merchandise, products or services and/or (ii) premiums or promotions.

Contingent Compensation shall mean, with respect to each Licensed Picture, contractually required payments to or on behalf of any Person providing rights or services, or otherwise involved in the production of such Licensed Picture, payable in respect of such Licensed Picture, which (i) are dependent in whole or in part on box office, gross receipts, net receipts, or a percentage of such gross receipts or net receipts, and are payable in a fixed or allocable amount or as a percentage of such receipts, and/or (ii) are payable in a fixed amount upon the occurrence of a specified event such as receipt of an Academy Award or the sale of a specified number of Video Devices.

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Copyright Revenue shall mean, with respect to each Licensed Picture, all royalties, fees and other revenue that DWA, or the registered copyright owner, is otherwise entitled to collect by reason of any statute, governmental regulation or operation of law, based upon or in connection with, in whole or in part, or directly or indirectly, any use of such Licensed Picture from time to time pursuant to any exercise of the Distribution Rights and Licensed Marks, including the retransmission of the signal embodying the Television Exhibition of any such Licensed Picture, commonly referred to as retransmission royalties and/or the sale of blank cassettes and/or recording apparatus for the purpose of recording the signal embodying the Television Exhibition of any such Licensed Picture, commonly referred to as private copy levies and/or from the rental of pre-recorded Video Devices to consumers, commonly referred to as video rental right levies, provided that Copyright Revenue shall in no event include any of the foregoing royalties, fees or revenue arising from the Retained Rights unless any such Retained Rights are required to be included in the Distribution Rights pursuant to any DWA-approved Distribution Servicing Agreement.

Delivery shall mean delivery to Distributor of all items referenced in Section 3.2.a. hereof. A Licensed Picture shall be deemed to be Delivered hereunder only upon Distributor’s receipt of all such items (the “Delivery Date”).

Distribution Expenses shall mean, with respect to each Licensed Picture, the sum of:

All actual, direct out-of-pocket costs, charges and expenses (other than Distributor’s overhead expenses) accrued (i.e. 45 days after being accrued, provided such costs, charges and expenses are paid no more than 30 days thereafter), or otherwise when paid by Distributor or any Affiliate arising out of the exhibition, exploitation and use of such Licensed Picture, and the distribution, advertising, marketing, publicity, promotion, market exploitation, and turning to account of such Licensed Picture whether directed to the public or to exhibitors, retailers or wholesalers dealing with such Licensed Picture in or for any and all Distribution Rights throughout the Territory, including all direct out-of-pocket costs, charges and expenses for:

(i) Marketing Materials (as defined in Section 4.4);

(ii) advertising space in any print or electronic media;

(iii) film festivals, premieres, preview screenings and other “special events” promoting the Licensed Picture, sales presentations, local or regional marketing conventions and marketing presentations for a designated Licensed Picture (or an allocable portion of such costs if other Motion Pictures are also included), talent touring, and all associated expenses incurred in connection with the foregoing, such as travel, living expenses and accommodations of talent or

3

any of Distributor’s employees (excluding straight time regular salaries but including overtime salaries) and subject to DWA’s prior approval, such expenses of any territory managers and marketing managers of Subdistributors charged as Distribution Expenses pursuant to applicable DWA-approved Distribution Servicing Agreements;

(iv) prints, Video Devices or any other similar devices, including for creation, manufacture, editing dubbing, subtitling, rescoring, delivery and use of the foregoing or any other means of exploitation now known or hereafter devised;

(v) freight, shipping, transportation and storage costs for all prints, Video Devices and Marketing Materials;

(vi) checking and collection of Gross Receipts;

(vii) trade dues and assessments by trade organizations;

(viii) taxes and government fees;

(ix) remittance and conversion of Gross Receipts;

(x) license fees, duties, other fees or any other amounts paid to permit use of the Licensed Picture;

(xi) a proportionate share of errors and omissions insurance in accordance with Section 10.b. below;

(xii) transaction fees imposed on credit card charges purchasing admission to view the Licensed Picture;

(xiii) Home Video Distribution Expenses;

(xiv) the distribution of the Licensed Pictures incurred at the direction of DWA, including any incremental costs to provide DWA-requested distribution services or Information (as defined in Section 4.1.c.) not available in Distributor’s normal course of business;

(xv) the prosecution, defense or settlement of any action directly relating to Distributor’s Exhibition or use of the Licensed Pictures or any element thereof in accordance with the terms of this Agreement, including any interest and penalties, provided that all amounts recovered pursuant to any of the aforementioned shall be included in Gross Receipts pursuant to Section 8.1.f. below; and

4

(xvi) anti-piracy and security measures specific and incremental to Licensed Pictures, such as security guards at prerelease screenings and night-vision equipment charges.

“Distribution Expenses” shall not include (x) any of the foregoing costs, charges, fees and expenses relating to the Retained Rights, except to the extent such Retained Rights are required to be included in the Distribution Rights pursuant to any DWA-approved Distribution Servicing Agreement, (y) Additional Distribution Expenses (as defined in Section 5.2.), and (z) Residuals and Contingent Compensation. Except for Distribution Expenses incurred in connection with Retained Rights required to be included in the Distribution Rights pursuant to any DWA-approved Distribution Servicing Agreement and Residuals (as more fully set forth in Section 6.2.), Distributor shall have no responsibility for any costs referenced in the foregoing clauses (x), (y) and (z). Distribution Expenses shall be reduced by the net amount of any insurance recoveries attributable thereto to the extent received by Distributor.

Distribution Rights shall mean the following rights, collectively, with respect to a Motion Picture:

a. The right to release, distribute, Exhibit, collect receipts with respect to, and exploit, such Motion Picture during the applicable License Term, throughout the applicable Territory or, with respect to any Motion Picture acquired for Exhibition, in the territories and for the time periods set forth in any applicable acquisition agreement, and in all media and by whatever means whether now known or hereafter devised or created (including Internet Rights, but excluding the Retained Rights), including in each case above with respect to such Motion Picture and trailers thereof and excerpts and clips therefrom and featurettes based thereon, in any and all languages and versions, including dubbed, subtitled and narrated version, in any form and including:

(i) in connection with the marketing, distribution and exploitation of such Motion Picture from time to time, the right: (A) to use and to authorize others to use the title of such Motion Picture or to change such title (as approved by DWA, except as otherwise provided in Section 4.2.d. below); (B) to use and perform and to authorize others to use and perform any musical material contained in such Motion Picture; and (C) subject to the requirements and restrictions set forth in Section 4.2.d., any applicable acquisition agreement and agreements with talent, including actors, producers and directors with respect to any Motion Picture, to cut, edit, dub, subtitle and alter such Motion Picture or any parts thereof as necessary for the effective marketing, distribution and exploitation of such Motion Picture or to conform to censorship, import permit and other legal requirements or to conform to time segment or exhibition standards of distributors and exhibitors or to create foreign language versions;

(ii) for purposes of advertising and publicizing such Motion Picture from time to time in connection with the marketing, distribution and exploitation of such Motion Picture, the right on a not for sale basis (other than customary “for-sale” programs, e.g. customary souvenir programs in connection with Theatrical Exhibition in

5

Japan): (A) to publish and license and authorize others to publish in any language, in any media and in such form as any distributors and exhibitors deem advisable, synopses, summaries, adaptations, resumes and stories of and excerpts from such Motion Picture and from any literary, dramatic or musical material in such Motion Picture or upon which such Motion Picture is based; (B) subject to any applicable acquisition agreement and any agreements with talent with respect to such Motion Picture, to use and authorize others to use the name, voice and likeness (and any simulation or reproduction thereof) of any person appearing in or rendering services in connection with such Motion Picture; (C) to exhibit and authorize others to exhibit in any language by any media, including radio and television, excerpts and clips from such Motion Picture and from any literary, dramatic or musical material in such Motion Picture or upon which such Motion Picture is based; and (D) subject to DWA’s prior approval (not to be unreasonably withheld) and licenses granted to any Person in connection with the exploitation of DWA’s Commercial Tie-In and Promotional Rights, to use and authorize others to use the rights described above and Licensed Marks in the manufacture and distribution of t-shirts, sweatshirts, posters and postcards and other items for theatrical and other media promotions and publicity purposes only; and

(iii) the right to use and authorize others to use all Tangible Film Materials or, with respect to a Motion Picture acquired for Exhibition, all Tangible Film Materials owned or otherwise available to DWA under the applicable acquisition agreement;

b. The right to receive all Copyright Revenue, and the right to receive or to arrange for the collection of Copyright Revenue resulting from the secondary transmission or retransmission of such Motion Picture; and

c. All distribution rights required to be granted to any Person pursuant to a DWA-approved Distribution Servicing Agreement or subject to the requirements of a DWA-approved Third Party Service Agreement.

Distribution Servicing Agreement(s) shall mean any agreements or arrangements between Distributor or a Distributor Affiliate, as one party, and any Person, including any Subdistributor or licensee, as the other party, with respect to (i) the Exhibition of one or more Licensed Pictures, (ii) the exploitation of any Distribution Rights in a Licensed Picture, or (iii) the exploitation of any Retained Rights as authorized or permitted by DWA with respect to one or more Licensed Pictures, as such agreements may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

Distributor Affiliate shall mean any Person that qualifies as a controlled Affiliate of Distributor pursuant to the definitions of Affiliate and Control set forth above.

DTV Production(s) shall mean all Animated Motion Pictures or Hybrid Motion Pictures intended for initial Home Video Exhibition.

6

DWA – approved Distribution Servicing Agreement shall mean the Cheil Agreement, the Kadokawa Agreement, the Universal Agreement and each agreement set forth on Schedule 1 hereto, as such agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

DWA-approved Third Party Service Agreement shall mean each agreement set forth on Schedule 5 hereto, as such agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

Effective Date shall mean the first day of the calendar quarter preceding the Closing Date as defined in the Separation Agreement, or such other date as mutually agreed between DWA and Distributor.

Exhibit shall mean transmit, display, exhibit or perform. “Exhibiting” and “Exhibition” shall have correlative meanings.

Financial Benefit shall mean any and all advances, volume and prompt payment discounts, laboratory and other vendor rebates or adjustments and any other economic consideration or financial advantages offered to or accepted by Distributor in connection with any transaction that relates to the services of Distributor in connection with (i) the Licensed Pictures, (ii) the Licensed Pictures and other Motion Pictures produced or distributed by Distributor, or (iii) the exploitation of the DWA Distribution Rights hereunder.

Good Faith Dispute shall mean any amount or provision that is the subject in a bona fide disagreement between the parties.

Gross Receipts shall mean with respect to each Licensed Picture, the amounts set forth in Section 8. below, subject to the adjustments and exclusions as provided therein.

Home Video Distribution Expenses shall mean with respect to each Licensed Picture, the aggregate of all actual, direct out-of-pocket costs, charges and expenses (other than Distributor’s overhead expenses) arising from the manufacture, duplication, replication, sales, marketing, promotion and other costs associated with exploitation and distribution of Video Devices. As used in this definition:

(i) Manufacturing costs include the manufacture, packaging and shipping of Video Devices, including costs with respect to re-editing, dubbing, subtitling, closed captioning and narration for the deaf and blind, mastering, duplication, replication, anti-piracy devices and anti-copy protection, raw material costs including tape, disc, shell, box, label, sleeves, containers, stickers, packaging materials and services including plastic wrapping, “pick, pack and ship” and other physical distribution and handling services, freight, transportation, warehousing, storage, processing of returns, degaussing and disposal.

7

(ii) Sales and marketing costs include selling, advertising, and promotion of Video Devices, including design, production, and manufacture (for the purposes of Home Video Exhibition) of marketing and advertising materials, press kits, advertising funding and rebates including co-operative advertising and regional marketing funds, wholesale rebates, direct-to-consumer rebates, display and point-of-purchase advertising, trailers, screening Video Devices, media purchases, artwork graphics, fulfillment, promotions, mass merchant advertising, advertising agency and consultant fees, sales incentive programs, anti-piracy costs including an allocable portion of the dues and assessments payable with respect to industry anti-piracy programs relating to Video Devices, research, public relations fees, trade show and entertainment costs, commercial tie-ins, mailers and sales commissions.

Home Video Exhibition shall mean all existing and future forms of home entertainment, including the right to manufacture, package, market, sell, rent, lease, Exhibit, distribute and otherwise exploit all forms of home video, including videocassettes, cartridges, laserdiscs, videograms, tapes, CD-Rom, CD-I, DVD, VCD, near video-on-demand, subscription-video-on-demand, video-on-demand and any other format, platform or device (collectively “Video Devices”), now known or hereafter devised, intended primarily for use in the home in conjunction with a reproduction apparatus or delivery system that causes a visual image (whether or not synchronized with sound) to be viewed on the screen of a television receiver, television monitor, computer or comparable device now known or hereafter devised, including future methods and means of delivering Video Devices into the home.

Hybrid Motion Picture(s) shall mean any Motion Picture that is predominantly live-action, but in which at least two of the four characters with the most screen time, or in which a majority of the characters with speaking roles, are created (non-photorealistically) by an Animation Method. Who Framed Roger Rabbit, Looney Tunes - Back in Action and Space Jam would be Hybrid Motion Pictures.

Interactive Rights shall mean the interactive use of any portion or element of the Licensed Picture in any packaged product in digital electronic entertainment software formats and configurations only in which the user interacts with the game for amusement purposes (as opposed to informational or educational purposes), including: (a) in video game or activity formats, including those designed or created for handheld electronic devices (e.g., Game Boy Color), or for platforms such as personal computers, personal digital assistants, console game machines, PC based games, games playable via DVD and similar micro-processor based devices, and all other handheld electronic devices and all other platforms now known or hereafter devised, and (b) in games, activities or other content available for use on a generally accessible or proprietary network such as the Internet and other digital delivery systems (e.g., online shopping, online gaming, multi-player gaming), or a delivery service over cable lines, telephone lines, microwave signals, radio waves, satellite, wireless or any other service or method now known or hereafter invented available for the delivery or transmission of interactive entertainment software products.

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Internet Rights shall mean the exclusive right, under copyright and otherwise, to distribute, Exhibit, broadcast and otherwise exploit the Licensed Picture by means of one or more wired and wireless electronic or electromagnetic networks (including fiber optic, microwave, twisted pair copper wires, coaxial cable, satellite, cellular networks and any combinations thereof) and collections thereof now or hereafter existing for the transmission of digital and/or optical data (e.g., text information, graphics, audio, video and combinations thereof) through the use of any protocols or standards now existing or hereafter devised (including Transmission Control Protocol/Internet Protocol or other architecture, and any subsequent extensions, modifications and refinements to the foregoing, from or to electronic devices (e.g., computers, set-top boxes, handheld devices, cable modems, personal digital assistants, cellular telephones, televisions) capable of receiving digital and/or optical data or information wherever located, whether open or proprietary, public or private and whether or not a fee is charged or a subscription or membership is required in order to access such networks. The Internet includes the computer network comprising inter-connected networks commonly referred to as the “Internet” and the “World Wide Web”, whether using means, methods, processes, media or technology now or hereafter existing. It is specifically acknowledged and agreed that Internet Rights shall include the right to “download” (as such term is used in the Internet industry) the Licensed Picture as well as the right to “stream” (as such term is used in the Internet industry) the Licensed Picture, whether at a time determined by the end user or any third party.

Kadokawa Agreement shall mean the Master Agreement dated as of April 22, 2004 among Distributor, Kadokawa Entertainment Inc. (“Kadokawa”) and Kadokawa Holdings Inc., as Guarantor, including Exhibits A, B, C and D attached thereto, as the same may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

Legitimate Stage Rights shall mean the right to present Literary Material upon the spoken stage with live performers appearing and speaking in the immediate presence of the viewing audience. The right to present Literary Material upon the spoken stage with live performers appearing and speaking, whether or not in the immediate presence of a viewing audience, for the primary purpose of photographing and recording such presentation for use in or in connection with a Licensed Picture or for the promotion or publicity of a Licensed Picture is an exercise of rights with respect to such Licensed Picture and not an exercise of Legitimate Stage Rights.

License Term shall mean:

a. With respect to Qualified Pictures Delivered to Distributor during the Output Term, the period commencing on the date such Qualified Picture is Delivered to Distributor and ending the earlier of (i) sixteen (16) years after the Qualified Picture’s Release Date in the Domestic Territory, or (ii) seventeen (17) years after Delivery of the Qualified Picture;

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b. With respect to Prior Pictures, the period commencing on the Effective Date and ending on the date that is sixteen (16) years after each Prior Picture’s Release Date in the Domestic Territory, as such Release Dates are set forth on Schedule 4;

c. With respect to Accepted Additional Pictures (excluding DTV Productions licensed as Accepted Additional Pictures hereunder) Delivered to Distributor during the Output Term, the period commencing on the date such Accepted Additional Picture is Delivered to Distributor and ending on the date which is the earlier of (i) sixteen (16) years after the Accepted Additional Picture’s Release Date in the Domestic Territory, or (ii) seventeen (17) years after the Delivery of the Accepted Additional Picture; or (iii) the full term of Distribution Rights owned or controlled by DWA or any controlled Affiliate and licensed to Distributor hereunder with respect to such Accepted Additional Picture;

d. With respect to Accepted Additional Pictures that are also DTV Productions Delivered to Distributor during the Output Term, the period commencing on the date such DTV Production is Delivered to Distributor and ending on the date which is the earlier of (i) ten (10) years after such DTV Production’s HV Release Date in the Domestic Territory, or (ii) 126 months after such DTV Production is Delivered to Distributor, or (iii) the full term of Distribution Rights owned or controlled by DWA or any controlled Affiliate and licensed to Distributor hereunder with respect to such DTV Production.

e. With respect to Qualified DTV Productions, (i) if the HV Release Date for such Qualified DTV Production occurred prior to the Effective Date, the period commencing on the Effective Date and ending ten (10) years thereafter, or (ii) if such Qualified DTV Production is Delivered on or after the Effective Date, the period commencing on the Delivery Date and ending the earlier of (A) ten (10) years after such Qualified DTV Production’s HV Release Date in the Domestic Territory, or (B) 126 months after such Qualified DTV Production is Delivered to Distributor.

Notwithstanding the foregoing, the License Term shall be subject to earlier termination in accordance with the terms hereof; provided that, subject to Section 11.2.c. below, (i) the License Term and this Agreement, as and to the extent they pertain to such Distribution Rights licensed to Distributor that are also subject to any DWA-approved Distribution Servicing Agreement or the requirements of a DWA-approved Third Party Service Agreement, as applicable, shall continue, and (ii) such Distribution Rights (and only such Distribution Rights) shall continue to be licensed to Distributor in accordance with the terms of this Agreement until the expiration or termination of each such DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement, as applicable, in accordance with the terms thereof.

Licensed Marks shall mean, with respect to each Licensed Picture from time to time, to the extent related to the Distribution Rights and to the extent of DWA’s rights in the Licensed Marks in the Territory, the right to use and sublicense the use of (i) the title of such Licensed Picture (to the extent such title is a registered trademark) from time to time in any and all print styles and forms in connection with the distribution, marketing and promotion of such Licensed Picture, and all goodwill

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associated therewith or symbolized thereby, and (ii) the DreamWorks Marks listed and depicted in Schedule A to the Trademark License Agreement solely in connection with (x) the exploitation of the Distribution Rights to such Licensed Picture, and (y) the distribution, marketing and promotion of such Licensed Picture in accordance with the terms hereof; provided the foregoing shall not permit or authorize the use of the title of such Licensed Picture or the DreamWorks Marks in connection with the exploitation of the Retained Rights.

Licensed Picture(s) shall mean the Qualified Picture(s), the Prior Picture(s), the Qualified DTV Production(s) and the Accepted Additional Picture(s).

Literary Material shall mean written matter, whether published or unpublished, in any form, including a novel, book, article, treatment, outline, poem, screenplay, teleplay, story, manuscript, letter, play or otherwise, which may be included in or upon which a Licensed Picture may be based in whole or in part.

Literary Publishing Rights shall mean, with respect to each Licensed Picture, the right to publish, distribute and sell to the public hardcover or soft-cover printed publications (and electronic copies of such printed publications) of all or any part of the Literary Material or other material (excluding music and/or lyrics) created for or produced in connection with such Licensed Picture, including artwork, logos or photographic stills (but solely to the extent that the right to make such use of such other material has been separately obtained from the owner thereof), other than the publications included within Merchandising Rights.

Merchandising Rights shall mean, with respect to each Licensed Picture, the right to license, manufacture, distribute and sell articles of merchandise and/or products (including toys, board and video games, novelties, trinkets, souvenirs, wearing apparel, fabric, foods, beverages and cosmetics) and the right to license, distribute and sell services that embody on or in such merchandise, products or services Licensed Marks, characters, designs, visual representations, names, likenesses and/or characteristics of actors, physical properties or other materials appearing or used in or in connection with such Licensed Picture or all or any part of the Literary Material and the right to publish, distribute, and sell souvenir programs, picture books, comic books, sing-along records and books, post cards, novelizations, photo novels, illustration books, and activity books or booklets which embody on or in the foregoing any or all of the characters, designs, visual representations, names, likenesses and/or characteristics of actors, physical properties or other materials appearing or used in or in connection with such Licensed Picture or all or any part of the Literary Material.

Motion Picture(s) shall mean audiovisual product produced and distributed of every kind and character whatsoever, including all present and future technological developments, whether produced by means of any photographic, electrical, electronic, mechanical or other processes or devices now known or hereafter devised, and their accompanying devices and processes whether pictures, images, visual and aural representations are recorded or otherwise preserved for projection, reproduction, exhibition, or transmission by any means or media now known or hereafter devised in such manner as to appear to be in motion or sequence, including computer generated pictures and graphics other than video games.

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Music Publishing Rights shall mean, with respect to each Licensed Picture, the right to register (in the name of the copyright owner) the copyright of musical compositions created for such Licensed Picture, copy, publish, distribute, license or sell the music and/or lyrics of musical compositions and to license the right to make Sound Records of musical compositions and to make Sound Records of musical compositions in synchronization or timed relation with motion pictures and to license the performance of musical compositions.

New Media Rights shall mean, with respect to each Licensed Picture, the right to exploit such Licensed Picture in linear form, or any part thereof in connection with advertising, marketing or promotion of such Licensed Picture for distribution or exploitation, by any means, methods, processes, media or technology now known (if not generally available or used as a means of distribution to the general public) or hereafter developed as a means of Exhibition or transmission in any form. For avoidance of doubt, Internet Rights are not within the scope of New Media Rights.

Non-Theatrical Exhibition shall mean, with respect to each Licensed Picture, all forms of non-theatrical distribution, including the right to Exhibit such Licensed Picture (i) on airplanes, trains, ships and other common carriers, (ii) in schools, colleges and other educational institutions, libraries, governmental agencies, business and services organizations and clubs, churches and other religious oriented groups, museums, and film societies (including transmission of such Licensed Picture by closed circuit within the immediate area of the origin of such exhibition), and (iii) in permanent or temporary military installations, shut-in institutions, prisons, retirement centers, industrial sites, offshore drilling rigs, logging camps, and remote forestry and construction camps (including transmission of such Licensed Pictures by closed circuit within the immediate area of the origin of such exhibition).

Output Term shall mean the period commencing on the Effective Date and continuing until the later of (i) Delivery of twelve (12) Qualified Pictures to Distributor, and (ii) December 31, 2010. The Output Term shall be subject to earlier termination in accordance with the terms hereof; provided, however, subject to Section 11.2.c. below, the Output Term for Motion Pictures produced or acquired by DWA or any controlled Affiliate shall extend as and to the extent required pursuant to any DWA-approved Distribution Servicing Agreement or the requirements of any DWA-approved Third Party Service Agreement, and the Distribution Rights to such Motion Pictures, including the Licensed Pictures hereunder, shall continue to be licensed to Distributor in accordance with the terms of this Agreement as and to the extent Distributor is required to provide such Motion Pictures to any Person pursuant to any DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement, as applicable, until the expiration or termination thereof.

Outright Sale shall mean a license from Distributor to a Person to Exhibit a Licensed Picture for a specified period of time in excess of one year, without any obligations on the part of such Person to account to Distributor for revenue and expenses received or incurred by such Person.

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Person shall mean any individual, corporation, limited liability company, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

Prior Picture(s) shall mean the following Animated Motion Pictures: Antz; The Prince of Egypt; The Road to Eldorado; Chicken Run; Shrek; Spirit: Stallion of the Cimarron; Sinbad: Legend of the Seven Seas; and Shrek 2.

Qualified DTV Production(s) shall mean all Animated Motion Pictures or Hybrid Motion Pictures intended for initial Home Video Exhibition (i) released prior to the Effective Date and designated as a Qualified DTV Production hereunder, or that will be initially released or available for release during the Output Term, (ii) that are either (A) financed or produced by DWA or any controlled Affiliate (solely or in conjunction with another Person) and available for Delivery prior to expiration of the Output Term, or (B) acquired by DWA or any controlled Affiliate, available for Delivery prior to expiration of the Output Term and for which DWA or any controlled Affiliate has obtained any Distribution Rights in the Territory, and (iii) fully satisfy all of the specifications set forth in Section 3.2.c. below. Joseph: King of Dreams is designated as a Qualified DTV Production hereunder.

Qualified Picture(s) shall mean all Animated Motion Pictures and Hybrid Motion Pictures intended for initial Theatrical Exhibition that (i) are either (a) produced by DWA or any controlled Affiliate (solely or in conjunction with another entity) and available for Delivery prior to the expiration of the Output Term, or (b) acquired by DWA or any controlled Affiliate and available for Delivery prior to expiration of the Output Term and for which any Distribution Rights have been obtained for the Territory; and (ii) fully satisfy all of the specifications set forth in Section 3.2.b. below. Distributor and DWA acknowledge and agree that the Animated Motion Picture currently entitled Shark Tale shall constitute one of the twelve (12) Qualified Pictures hereunder.

Radio Rights shall mean the right to transmit sound alone by means of radio devices.

Rent-a-System Picture shall mean an Animated Motion Picture or Hybrid Motion Picture with respect to which DWA acquires only a license to exercise certain rights pursuant to an arms-length agreement with an unaffiliated third party, the applicable license agreement does not obligate DWA to pay an advance or minimum guarantee for such Motion Picture and under the license agreement DWA is entitled to receive or retain a customary rent-a-system distribution fee and such unaffiliated third party is obligated either to advance, guarantee or to pay on a full recourse basis all distribution expenses which may be incurred by DWA.

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Residuals shall mean, with respect to each Licensed Picture, payments to third parties required (i) pursuant to collective bargaining, union or guild agreements applicable to DWA for the exploitation of such Licensed Picture, including residuals, pension, health and welfare payments, and employer share of taxes, or (ii) for performance, synchronization, recording, re-use and video levies, patent, trademark and similar licenses as governmental requirements, incurred for the distribution or turning to account of such Licensed Picture, or rights derived therefrom, in the case of each of clauses (i) and (ii) above, for use of such Licensed Picture in any and all media, including Theatrical Exhibition, Television Exhibition and Home Video Exhibition or any format or version of such Licensed Picture, throughout the Territory.

Retained Rights shall mean, with respect to each Licensed Picture, (i) the exclusive ownership rights set forth in Section 14. below, including all pre-existing DWA characters, properties or other elements owned or controlled by DWA or any controlled Affiliates; (ii) rights in acquired Licensed Pictures retained by the previous owners and/or producers thereof or previously granted to third parties; (iii) all rights to Subsequent Productions, unless and until any such Subsequent Production becomes a Licensed Picture hereunder in accordance with the terms hereof; (iv) Commercial Tie-in and Promotional Rights (subject to Section 4.14. below); (v) Merchandising Rights; (vi) Interactive Rights; (vii) Literary Publishing Rights; (viii) Music Publishing Rights and Soundtrack Recording Rights, provided in connection with the Distribution Rights, Distributor shall have an irrevocable license during the License Term of each Licensed Picture to exploit musical works solely as embodied in such Licensed Picture, and as may be reasonably necessary to market, advertise and promote the Licensed Picture; (ix) Radio Rights, provided in connection with the Distribution Rights, Distributor shall have the right during the License Term of each Licensed Picture to transmit sound alone excerpts from the Licensed Picture by means of radio devices solely for purposes of advertising, publicizing, marketing and promoting the Licensed Picture; (x) Legitimate Stage Rights; (xi) Theme Park Rights (subject to Section 4.15. below); (xii) all rights not expressly granted to Distributor pursuant to this Agreement; and (xiii) in the case of DTV Productions licensed hereunder, Theatrical Exhibition, which shall not be exploited by DWA during the applicable License Term without Distributor’s prior written consent. Notwithstanding the foregoing, if the Distributor is required to license or otherwise provide rights that would otherwise constitute Retained Rights hereunder to a party to a DWA-approved Distribution Servicing Agreement, then DWA shall license to Distributor such rights solely and to the most limited extent required under such DWA-approved Distribution Servicing Agreement.

Separation Agreement shall mean the agreement dated as of             , 2004 by and among Distributor, DWA and DreamWorks Animation L.L.C. regarding the principal corporate transactions required to effect DWA’s separation from Distributor.

Services Agreement shall mean the agreement dated as of             , 2004 between Distributor and DWA whereby (i) Distributor has agreed to provide DWA with various corporate and administrative support services as enumerated therein, and such additional services that Distributor and DWA may identify from time to time in the future, and (ii) DWA has agreed to provide Distributor with certain support services as enumerated therein.

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Sound Records shall mean sound recordings and reproductions of every kind and character, including all present and future developments of the sound recording and motion picture industries, whether produced by means of any electrical, electronic, mechanical or other process or device now known or hereafter devised, and any accompanying process or device whereby sound may be recorded for later transmission or playback, whether or not simultaneously or in synchronization or timed relation with Licensed Pictures.

Soundtrack Recording Rights shall mean, with respect to each Licensed Picture, the right to license, manufacture, distribute or sell (i) Sound Records made from the soundtrack of such Licensed Picture or (ii) Sound Records embodying re-recordings of score and/or musical compositions contained on the soundtrack of the Licensed Picture and marketed to the public with the works “contains music from” or “inspired by” with respect to such Licensed Picture, or similar wording, which records are not the official soundtrack recordings from the Licensed Picture. Soundtrack Recording Rights also includes the right to select the record distributor that will release any soundtrack albums derived from the Licensed Picture.

Subsequent Productions shall mean, with respect to each Licensed Picture, any Motion Picture (i) based upon or derived from some portion of the plot or story line from the Licensed Picture, or (ii) in which one or more of the principal characters or elements appearing in the Motion Picture is taken from the Licensed Picture, whether or not the Motion Picture depicts the same or new and different events and situations as depicted in the Licensed Picture, including any prequels, sequels and remakes of the Licensed Picture.

Subdistributor shall mean a Person, other than an Affiliate of Distributor, licensed by Distributor to render services appropriate for the distribution of one or more Licensed Pictures for a limited period of time in territories, country, or media who, pursuant to such license from Distributor, has an obligation to account to Distributor on a revenue and expenses basis with respect to the Licensed Picture(s) (as opposed to accounting on a royalty or similar basis). A Subdistributor for purposes only of this Agreement shall be deemed to include (i) a sales agent (provided that such sales agent accounts for revenue and expenses to Distributor in accordance with the foregoing) and (ii) a fulfillment services provider, i.e., a Person, other than an Affiliate of Distributor, licensed by Distributor, who has an obligation to account to Distributor on a revenue and expenses basis with respect to Video Devices of one or more Licensed Pictures and is responsible under Distributor’s supervision for services in the manufacturing, advertising, promotion, securing and fulfillment of orders, the collection of revenue and the shipping of Video Devices of such Picture(s).

Subsidiary shall mean, as to any Person, a corporation, limited liability company, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests

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having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, limited liability company, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.

Tangible Film Materials shall mean, with respect to each Licensed Picture (excluding property used exclusively in connection with the exploitation of Retained Rights and any sets, costumes, props, scenery, vehicles and equipment) and only to the extent it exists (whether coming into existence before or after such Licensed Picture is Delivered) with respect to such Licensed Picture, (i) all tangible physical embodiments of every kind or nature of or relating to such Licensed Picture and all versions thereof, including the YCM separations, master prints, exposed film, developed film, positives, negatives, prints, answer prints, special effects, preprint materials (including interpositives, negatives, videotapes, duplicate negatives, internegatives, color reversals, intermediates, lavenders, fine grain master prints and matrices, video masters and all other forms of preprint elements which may be necessary or useful to produce prints or other copies or additional preprint elements, whether now known of hereafter devised), sound tracks, recordings, audio and video tapes and discs of all types and gauges, cutouts, timers, credit-lists, music licenses, and any and all other physical properties of every kind and nature relating to each such Licensed Picture in whatever state of completion, and all duplicates, drafts, versions, variations and copies of each thereof and (ii) to the extent related to or derived from the delivery, exhibition, distribution or other exploitation of any Licensed Picture, all documents of title, including any bill of lading, dock warrant or dock receipt, all rights under any laboratory pledgeholder agreement, laboratory access agreement, warehouse receipt or order for the delivery of inventory, and also any other document or receipt which in the regular course of business or financing is treated as adequately evidencing that the Person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers.

Television Exhibition shall mean, with respect to each Licensed Picture, all existing and future forms of television, regardless of the delivery system or payment system (if any) involved, including all rights to transmit, broadcast and Exhibit the Licensed Picture by means of free, toll, pay and subscription television, Community Antenna Systems, Telstar-type, all other forms of satellite and relay television, pay-per-view television, any and all other kinds of open or closed circuit systems and electronic or digital delivery systems, including all future methods and means of delivery analogous to the transmission, retransmission, broadcast or exhibition of the Licensed Picture on the screen of a television receiver, monitor or comparable devices now known or hereafter devised. For avoidance of doubt, Television Exhibition shall not include near-video-on-demand, subscription-video-on-demand, or video-on-demand, all of which are included in Home Video Exhibition as more fully set forth above, and shall not include any transmission or broadcast by open or closed circuits to any theatre or other place where an admission fee is charged to view the broadcast or transmission of the Licensed Picture.

Term shall mean the period commencing on the Effective Date and continuing until expiration or earlier termination of the License Term of all Licensed Pictures; provided, however, if the Effective Date does not occur on or before December 31, 2005 this Agreement shall terminate without taking effect.

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Territory shall mean the entire universe.

(i) The “Domestic Territory” shall mean the territorial United States and its possessions, territories and commonwealths, including the U.S. Virgin Islands, Puerto Rico, Guam, and the U.S. Trust Territories of the Pacific Islands, including the Carolina Islands, the Marshall Islands and the Mariana Islands, Saipan and American Samoa; the Dominican Republic, the British Virgin Islands, Nassau, Bahamas, Bermuda, Saba Island, St. Eustatius Island, St. Kitts Island, St. Maarten Island, and Freeport; the Dominion of Canada and its possessions, territories and commonwealths; and all Army, Navy, Air Force, Red Cross and other national or governmental installations, diplomatic posts, camps, bases and reservations of the above mentioned countries, as well as oil rigs (including Aramco sites) and maritime facilities (and other commercial and/or industrial installations of the above mentioned countries and territories), wherever any of the aforementioned facilities or installations are located, to the extent that sales are made and/or servicing thereof is performed within the geographical areas set forth above, and all airlines and ships flying the flag of, or having the registry of, or whose principal office is located in the United States, Canada or Bermuda and other possessions, territories and commonwealths within the Domestic Territory.

(ii) The “International Territory” shall mean all geographical areas outside of the Domestic Territory.

Theatrical Exhibition shall mean, with respect to each Licensed Picture, all forms of theatrical distribution, including the right to rent, lease, Exhibit, distribute or otherwise exploit the Licensed Picture and any trailers thereof in commercial motion picture theatres and other venues where persons view the Licensed Picture for an admission fee.

Theme Park Rights shall mean the right to use characters and other elements from the Licensed Pictures in any theme park activities, including theme, amusement, tour and/or similar tourist park attractions.

Third Party Service Agreement(s) shall mean any and all agreements or arrangements between Distributor or an Affiliate of Distributor and any Person, as a vendor or supplier of goods and/or services, such as an overall laboratory agreement or advertising agency arrangement, that facilitate the distribution or exploitation of Motion Pictures produced or distributed by Distributor, as such agreements may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof.

Trademark License Agreement shall mean the License Agreement effective as of October 1, 2004 between DWA and Distributor with respect to the DreamWorks Marks as specified therein.

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Universal Agreement shall mean the DW/Universal Studios, Inc. Master Agreement (Amended and Restated as of October 31, 2003), between Distributor, Universal Studios, Inc. (“Universal”) and Vivendi Universal Entertainment LLLP, as assignee of Universal, including the Agreement Modules (as defined therein) attached as Exhibits A, B and D thereto, but excluding the Agreement Module attached as Exhibit C, as the same may be amended, restated, supplemented or otherwise modified from time to time, in accordance with the terms hereof.

1.2 Terms and Usage Generally.

The definitions in Section 1.1. as used herein shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Sections and Schedules shall be deemed to be references to Sections of, and Schedules to, this Agreement unless the context shall otherwise require. All Schedules attached hereto shall be deemed incorporated herein as if set forth in full herein. The words “include”, “includes” and “including” herein and in any Exhibit and Schedule hereto shall be deemed to be followed by the phrase “without limitation”. All accounting terms not defined in this Agreement shall have the meanings determined by United States generally accepted accounting principles as in effect from time to time. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to a Person are also to its permitted successors and permitted assigns. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.

Section 2. Grant of Rights; Period of Distribution

2.1 Grant of Rights:

a. Subject to the terms and conditions hereof, DWA grants, licenses, and assigns to Distributor, to the full extent of the rights owned or controlled by DWA or any controlled Affiliate thereof in and to each Licensed Picture, the sole and exclusive right and license under copyright, during the License Term with respect to such Licensed Picture, throughout the Territory to exploit the Distribution Rights, including all rights of Theatrical Exhibition, Non-Theatrical Exhibition, Home Video Exhibition, Television Exhibition, Internet Rights and New Media Rights. As between Distributor and DWA, all rights not expressly granted to Distributor pursuant to this Agreement, including the Retained Rights, shall remain vested in DWA.

b. The license herein granted with respect to each Prior Picture and Qualified DTV Production released prior to the Effective Date shall commence and vest in Distributor as of the Effective Date. The license herein granted with respect to all other Licensed Pictures shall commence and vest in Distributor upon the Delivery Date of each such Licensed Picture.

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c. During the Output Term, DWA shall submit to Distributor for possible license to Distributor, in accordance with Section 2.1.a above, all Additional Pictures that DWA or any controlled Affiliate intends to produce or acquire for distribution. DWA’s submission to Distributor shall occur prior to any sale, license or other alienation of any Distribution Rights to such Additional Picture and shall include no less than the following with respect to each Additional Picture: (i) a current script, storyboards, cast, production plan and schedule; (ii) for acquired Additional Pictures, a print, other working copy, or any available film footage if production has not been completed; (iii) a description of the Distribution Rights to be owned or controlled by DWA or any controlled Affiliate upon Delivery; (iv) estimated production budget or acquisition cost; and (v) any other information reasonably requested by Distributor (collectively, the “Submission Materials”). Within ten (10) Business Days of DWA’s provision of the Submission Materials to Distributor, Distributor shall prepare and submit to DWA a preliminary good faith estimate of proposed initial expenditures for prints and advertising (“P&A Spend”) for the initial Theatrical Exhibition of the Additional Picture in the Domestic Territory. If DWA disapproves and no agreement can be reached between DWA and Distributor within five (5) Business Days thereafter, DWA shall have the right to license the Distribution Rights to such Additional Picture to third parties, subject to the Changed Elements provisions set forth in Section 2.1.d. below and to DWA’s obligation to resubmit all rights initially offered to the Additional Picture to Distributor if DWA is unable to obtain a binding P&A Spend commitment from a third party distributor which is 110% or more than the P&A Spend proposed by Distributor. If DWA approves the P&A Spend, Distributor shall have the right, but not the obligation, within five (5) Business Days after DWA’s approval of the P&A Spend, to license all of the available Distribution Rights in and to such Additional Picture by providing written notice to DWA of its intent to so license. If Distributor provides such notice and elects to license the Distribution Rights in and to the Additional Picture, then such Additional Picture shall constitute an Accepted Additional Picture to the extent of the Distribution Rights licensed to Distributor, and Distributor shall distribute such Accepted Additional Picture in accordance with the terms and conditions of this Agreement. If Distributor elects not to license all of the available Distribution Rights in and to an Additional Picture then, subject to the Changed Elements provisions set forth in Section 2.1.d. below, DWA shall be free to license the Distribution Rights to such Additional Picture to third parties, without further obligation to Distributor with respect to such Additional Picture.

d. Notwithstanding Section 2.1.c. above, at any time prior to DWA entering into a firm binding commitment with one or more third parties who commit to acquire any of the Distribution Rights to any Additional Picture rejected by Distributor, DWA shall have the continuing obligation to re-submit such Additional Picture to Distributor for consideration if there is any material change, deletion or addition to the Submission Materials (“Changed Elements”). DWA shall promptly notify Distributor of any Changed Elements and Distributor shall have the right, but not the obligation, by providing notice to DWA given within ten (10) Business Days from receipt of notice

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from DWA, in which to accept said re-submission and license all of the Distribution Rights available at the time of the first submission of such Additional Picture to Distributor hereunder. If the Distributor provides such notice and elects to license such Distribution Rights, then the applicable Additional Picture shall constitute an Accepted Additional Picture to the extent of the Distribution Rights licensed to Distributor. DWA’s obligation to notify Distributor with respect to any Changed Elements for any Additional Picture and Distributor’s right to accept such re-submission under this Agreement shall be repeated each time there are any Changed Elements to such Additional Picture prior to DWA entering into a firm binding commitment with one or more third parties who commit to acquire any of the Distribution Rights to such Additional Picture.

2.2 Period of Distribution: With respect to each Licensed Picture, Distributor shall have the right and obligation to exploit the Distribution Rights granted pursuant to Section 2.1 above during the applicable License Term.

Section 3. Development, Production, Acquisition, Payment Obligations and Delivery

3.1 Development, Production and Acquisition; Payment Obligations:

a. As between DWA and Distributor, DWA shall be solely responsible for the development, production or acquisition of the Licensed Pictures, including the payment of all acquisition and productions costs, and subject to the provisions of Section 6.2. below, DWA shall be solely responsible for the cost of all Residuals and Contingent Compensation. DWA retains the exclusive right in its sole discretion to make all decisions and to initiate any action with respect to the development, production or acquisition of each Licensed Picture, including (i) the right at any time in DWA’s sole discretion to abandon the development or production of each Licensed Picture, and (ii) the right to control all creative matters, including the right to exercise final cut or to delegate final cut to the director of any Licensed Picture.

b. Neither DWA nor any controlled Affiliate shall sell, license or otherwise alienate any Distribution Rights in and to any Animated Motion Picture, Hybrid Motion Picture or DTV Production (i) produced or acquired by DWA or any controlled Affiliate, (ii) scheduled or available for Delivery during the Output Term, and (iii) which (A) would otherwise fully satisfy all of the specifications for a Qualified Picture or Qualified DTV Production (each a “Prospective Qualified Picture”) or (B) has been accepted by Distributor as an Accepted Additional Picture; provided, however, notwithstanding the foregoing, DWA shall have the right to dispose of its right, title and interest in and to any Prospective Qualified Picture or an Accepted Additional Picture that has been acquired by DWA after development thereof has been completed (e.g., completion of screenplay, storyboards and visual development), at any time prior to the initial exploitation of the Distribution Rights so long as neither DWA nor any controlled Affiliate retains any ownership rights therein, or retains any financial interest in such

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Prospective Qualified Picture or such Accepted Additional Picture. Without limiting the foregoing, DWA shall not sell, license or otherwise alienate any Distribution Rights to any Prospective Qualified Picture in order to obtain co-financing for the production or acquisition of a Prospective Qualified Picture; provided, upon request from DWA specifying the terms of any proposed co-financing arrangement, Distributor shall give good faith consideration to permitting DWA to enter into such co-financing arrangement, but Distributor’s good faith business judgment not to permit such co-financing arrangement shall be final and binding. DWA hereby waives, and shall not assert, any claim against Distributor based upon any alleged failure of Distributor to consider such request in good faith, or rejection by Distributor of, DWA’s request to enter into a co-financing arrangement. In no event shall any sale, license or other alienation under this Section 3.1.b. cause a Prospective Qualified Picture to fail to meet the Qualified Picture specifications set forth in Section 3.2.b. below or the Qualified DTV Production specifications set forth in Section 3.2.c. below. The foregoing provisions of this Section 3.1.b. shall not affect, impair or otherwise limit the terms of any agreements between DWA and Aardman Animations Ltd. in effect as of the Effective Date. Subject to Section 11.2.c. below, under no circumstances shall DWA divest itself of any Distribution Rights or other rights in and to a Prospective Qualified Picture or any other Motion Picture hereunder to the extent such divestiture would cause Distributor to be in violation of any DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement.

c. Notwithstanding the provisions of Section 3.1.b. hereof, Distributor acknowledges and agrees that DWA or any controlled Affiliate shall have the right in connection with any current or future financing arrangements, including tax advantaged financing, so-called sale-leaseback transactions, or off-balance sheet financing requirements to mortgage, pledge, grant or assign as security, all or any portion of DWA’s right, title and interests or the right, title and interests of any controlled Affiliate of DWA in and to any Motion Pictures hereunder for the benefit of its lenders and financiers, provided such lenders and financiers execute customary nondisturbance agreements with respect to the covered Distribution Rights in form and substance consistent with prior nondisturbance agreements obtained by Distributor from lenders or financiers and otherwise reasonably acceptable to Distributor.

3.2 Delivery Requirements:

a. Tangible Film Materials. Subject to Section 8.9. below, DWA shall Deliver each Licensed Picture to Distributor at DWA’s sole cost and expense. All Tangible Film Materials set forth on Schedule 3-Delivery Requirements shall be delivered to Distributor consistent with the past conduct and practices of DWA and Distributor in delivering the Prior Pictures, provided DWA shall deliver the requisite Tangible Film Materials in sufficient time to enable Distributor to (i) make full and timely delivery of the Licensed Pictures and elements thereof to third parties, (ii) satisfy the marketing and distribution plan as approved pursuant to this Agreement, and (iii) meet all Release Dates and HV Release Dates. Prior to Delivery of each Licensed Picture and upon Distributor’s timely notice of its proposed prerelease schedule for advertising, publicity and promotional campaigns, DWA will provide Distributor with any then-available

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Tangible Film Materials, as may be reasonably required by Distributor, to enable Distributor to timely prepare customary advertising, publicity and promotional materials (e.g., teasers, trailers, television spots, electronic press kits, one-sheets and teaser print ads). Any so-called “bonus materials” and “DVD Extras”, which DWA in its sole discretion elects to make available on Video Devices embodying the Licensed Pictures, shall be delivered to Distributor at DWA’s sole cost and expense. To the extent that any materials required to be delivered to Distributor hereunder are held by a laboratory or storage facility, DWA will deliver to Distributor a fully-executed access letter for each Licensed Picture. To the extent that DWA itself maintains possession of any Tangible Film Materials, Distributor shall have the same right of access thereto as it would have under the above-referenced laboratory or storage-facility access letter had such Tangible Film Material been held at a laboratory or storage facility. Upon reasonable notice, DWA agrees to either deliver to Distributor, or provide access to, such then-available Tangible Film Materials sufficient to manufacture screening prints for marketing purposes. Prior to completion of Delivery, DWA agrees to deliver to Distributor with respect to each Licensed Picture hereunder a duly executed Instrument of Transfer in substantially the form of Exhibit “A” hereto.

b. Qualified Picture Specifications: For a Motion Picture to qualify as a Qualified Picture hereunder, such Motion Picture must fully satisfy each of the following:

(i) General. Be in color (using 35mm film) and sound, and in the English language;

(ii) Running Time. Have a running time of not less than 75 minutes (including main and end titles) and not more than the maximum running time, if any, specified in the DWA-approved Distribution Servicing Agreements;

(iii) Format/Production Value. Be an Animated Motion Picture or a Hybrid Motion Picture of comparable production values and animation quality on an overall basis as the Prior Pictures; provided, that if the proposed Motion Picture is a Hybrid Motion Picture, then such Motion Picture must be of comparable production values and animation quality as those Hybrid Motion Pictures previously released by Distributor (e.g. Small Soldiers) or previously released by senior management of DWA (e.g., Who Framed Roger Rabbit);

(iv) Rating. Qualify for a rating of “G”, “PG” or “PG-13” (or equivalent substitute rating) from the Rating Code Administrator of the Motion Picture Association of America (“MPAA”);

(v) Title. Have a title designated by DWA, subject only to legal requirements and clearance by the Title Registration Bureau of the MPAA;

(vi) Minimum Rights. The Distribution Rights owned or controlled by DWA or any controlled Affiliate that will be licensed to Distributor hereunder shall include, at a minimum, the following rights (collectively, the “Minimum

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Rights”): Theatrical Exhibition, Home Video Exhibition and Television Exhibition rights in the Domestic Territory or Theatrical Exhibition, Home Video Exhibition and Television Exhibition rights in not less than ten (10) of the Major International Territories (as identified on and adjusted in accordance with Schedule 2);

(vii) Minimum License Term. The Minimum Rights will be owned or controlled by DWA or any controlled Affiliate (and licensed to Distributor hereunder) for a period of not less than the full contemplated License Term for a “Qualified Picture”, as set forth in Section 1.1. above (not taking into consideration any early termination);

(viii) Theatrical Release. The Motion Picture, at the time of its license to Distributor hereunder, is intended and available for initial Theatrical Exhibition in the Territory;

(ix) No Universal Rejection. Universal has not refused to provide fulfillment services in connection with the distribution of the Motion Picture in the Domestic Territory or to distribute the Motion Picture in a substantial portion of the International Territory pursuant to the terms of the Universal Agreement; and

(x) Rent-a-System Picture. The Motion Picture is not a Rent-a-System Picture.

Any disputes as to whether a Motion Picture satisfies each of the aforementioned specifications shall be subject to the provisions of Section 24 below.

c. Qualified DTV Productions Specifications: For a Motion Picture to qualify as a Qualified DTV Production hereunder, such Motion Picture must fully satisfy each of the following:

(i) General. Be in color and sound, and in the English language;

(ii) Resolution. Have a resolution equal to or greater than D-5 high definition and filmed with an aspect ratio of 16:9;

(iii) Running Time. Have a running time between 70-75 minutes (including main and end titles);

(iv) Format/Production Value. Be an Animated Motion Picture or a Hybrid Motion Picture of comparable production values and animation quality on an overall basis as (A) Joseph: King of Dreams if the Animation Method is hand-drawn animation, (B) “Father of the Pride” television episodes if the Animation Method is computer generated animation, (C) “A Grand Day Out”, “The Wrong Trousers” and “A Close Shave” shorts produced by Aardman Animations Limited if the Animation Method is stop-motion animation, and (D) other equivalent first-class DTV Productions in the marketplace and released by U.S. major motion picture studios if the Animation Method is any other form of animation;

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(v) Rating. Qualify or be capable of qualifying for a rating of “G”, “PG” or “PG-13” (or equivalent substitute rating) from the Rating Code Administrator of the MPAA;

(vi) Title. Have a title designated by DWA, subject only to legal requirements;

(vii) Minimum Rights. The Distribution Rights owned or controlled by DWA or any controlled Affiliate that will be licensed to Distributor hereunder shall include, at a minimum, Home Video Exhibition in the Domestic Territory (“Minimum DTV Rights”);

(viii) Minimum License Term. The Minimum DTV Rights will be owned or controlled by DWA or any controlled Affiliate (and licensed to Distributor hereunder) for a period of not less than the full contemplated License Term for Qualified DTV Productions, as set forth in Section 1.1. above (not taking into consideration any early termination);

(ix) Home Video Release. The Motion Picture at the time of its license to Distributor hereunder, is intended and available for initial Home Video Exhibition in a portion of the Territory sufficient to satisfy Minimum DTV Rights;

(x) No Universal Rejection. Universal has not refused to provide fulfillment services in connection with the distribution of the Motion Picture in the Domestic Territory or a substantial portion of the International Territory pursuant to the terms of the Universal Agreement; and

(xi) Rent-a-System Picture. The Motion Picture is not a Rent-a-System Picture.

Any disputes as to whether a Motion Picture satisfies each of the aforementioned specifications shall be subject to the provisions of Section 24. below.

Section 4. Distribution

4.1 Obligation to Exploit: Distributor, during the applicable License Term for each Licensed Picture, shall have the right and obligation to advertise, publicize, promote, distribute and exploit each Licensed Picture and the applicable Distribution Rights thereto in accordance with Distributor’s past practices used to service the distribution of comparable Prior Pictures, and to the extent, and as long as, applicable and a higher standard, each Licensed Picture shall be distributed consistent with Distributor’s prevailing and commercially reasonable practices as applied generally to Motion Pictures produced or distributed by Distributor under similar circumstances in the applicable territories and media, in each case taking into account differences in production budgets, cast, genre, rating, prerelease audience surveys and test results, theatrical box office and other performance metrics, local tastes and other established factors that Distributor uses in good faith on a nondiscriminatory basis to make determinations in connection with the exploitation of Motion Pictures produced or

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distributed by Distributor, excluding in each case, any Motion Pictures produced or directed by Steven Spielberg. Distributor shall not have the right to decline to distribute a Licensed Picture hereunder if such action would constitute a breach under any DWA-approved Distribution Servicing Agreements, provided that Distributor shall be obligated to timely notify DWA of its intention not to distribute a Licensed Picture in a specific country in sufficient time to enable DWA to cause the distribution of such Licensed Picture on the date contemplated for initial release in the applicable country, or to promptly notify DWA following Distributor’s receipt of notice from a party to a DWA-approved Distribution Servicing Agreement that such party does not intend to release such Licensed Picture in the applicable country. Notwithstanding the foregoing: (x) solely with respect to each Qualified Picture and any unexploited Distribution Rights to each Prior Picture, Distributor shall provide DWA with a minimum level of distribution support and services, including publicity, promotion, marketing and advertising support and services, comparable on an overall basis in quality, level, priority and quantity to the provision of distribution support and services provided in connection with the exploitation of Distribution Rights to the four (4) most recent Qualified Pictures (or until such time as there are four [4] Qualified Pictures, a combination of the four [4] most recent Qualified Pictures and Prior Pictures) initially released by Distributor for Theatrical Exhibition), taking into account differences in production budgets, cast, genre, rating, prerelease audience surveys and test results, theatrical box office and other performance metrics, local tastes and other established factors that Distributor uses in good faith on a nondiscriminatory basis to make determinations in connection with the exploitation of Motion Pictures produced or distributed by Distributor, excluding in each case, any Motion Pictures produced or directed by Steven Spielberg; provided, Distribution Expenses shall be determined in accordance with Section 5. below; and (y) solely with respect to each Qualified DTV Production, Distributor shall provide DWA with a minimum level of distribution support and services, including sales and marketing expenditures, comparable on an overall basis to such distribution support and services provided in connection with the Home Video Exhibition of DTV Productions produced or distributed by Distributor and for which Distributor projected (by using its then customary forecast methodology, including prospective retail orders) gross shipments of Video Devices equivalent to or substantially commensurate with projected gross shipments of Video Devices embodying the Qualified DTV Production.

In furtherance of the foregoing, and expressly subject to the applicable terms and conditions of the Universal Agreement in connection with Theatrical Exhibition in the International Territory and Home Video Exhibition in the Territory, Distributor shall:

a. Theatrical Distribution. In accordance with past practices used to service the distribution of comparable Prior Pictures, timely prepare for the Domestic Territory and for the Major International Territories (as designated on Schedule 2) and such other countries as reasonably requested by DWA, a country-by-country marketing and distribution plan and budget for each Licensed Picture intended for initial Theatrical Exhibition, including proposed exhibition dates. Each marketing and distribution plan and budget shall be prepared in full consultation with DWA for DWA’s approval; provided, however, Distributor and DWA shall mutually determine

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Distribution Expenses and in the event of disagreement regarding the budget and such Distribution Expenses, Distributor’s decision shall prevail, subject in the case of each Qualified Picture to the requirements of Section 5. below. Distribution of each Licensed Picture shall be in accordance with the approved marketing and distribution plan and budget; it being acknowledged that such plans and budgets may require change due to the performance of each Licensed Picture. All material changes in the marketing and distribution plan and budget shall require DWA’s approval; provided, however, in the event of any disagreement regarding any such change in the budget, Distributor’s decision shall prevail subject to the requirements of Section 5. below.

b. Home Video Distribution. In accordance with past practices used to service the distribution of comparable Prior Pictures, timely prepare and recommend, in full consultation with DWA, distribution and marketing plans and budgets, product pricing and sales policies and all other elements of Distributor’s distribution obligations hereunder as requested from time to time by DWA for DWA’s approval; provided, however, Distributor and DWA shall mutually determine Home Video Distribution Expenses and in the event of disagreement regarding such Home Video Distribution Expenses, Distributor’s decision shall prevail, subject to the requirements of Section 5. below. Propose, and upon DWA’s timely approval, implement street date, pricing, period of availability and applicable sales, credit, rebate, bonus and return policies on behalf of DWA Video Devices. Recommendations shall be on a Licensed Picture-by-Licensed Picture, country-by-country basis and shall be subject to DWA’s timely approval. Distributor shall procure, supervise and develop all artwork, ads, point of sale and any other sales or promotional materials, implement the usage thereof pursuant to the marketing plans approved by DWA, and update such materials from time to time as reasonably directed by DWA. Distributor’s failure to strictly conform to the distribution and marketing plans and budgets shall not constitute a breach of this Agreement by Distributor.

c. Information. Subject to the requirements of applicable law, timely provide to DWA all pertinent materials and Information with respect to the marketing and distribution of each Licensed Picture to enable DWA to timely exercise its consultation and approval rights hereunder. Such Information shall include:

(i) All Information pertaining to the Licensed Pictures to the extent such Information is available to Distributor, and all Information pertaining to the Licensed Pictures to the extent similar Information is available to Distributor with respect to Motion Pictures produced or distributed by Distributor;

(ii) All Information pertaining to the release of other Motion Pictures in the Territory to the extent such Information is available to Distributor, provided such Information shall not be furnished to DWA if in Distributor’s good-faith business judgment, such disclosure would constitute a violation of any third party right, a violation of any applicable law, decree or government regulation, or an inappropriate business practice;

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(iii) All Information as to Motion Pictures produced or distributed by Distributor, to the extent similar Information is available to Distributor with respect to the Licensed Pictures; provided such Information (A) shall only be furnished upon written request from DWA; (B) shall be restricted to Information required by DWA for a bona fide business purpose under this Agreement (e.g. optimal release scheduling, verification of most favorable terms as specified in this Agreement, including terms related to services, pricing, costs, comparable accounts and collection of revenue therefrom, etc.) and (C) shall not be furnished to DWA if in Distributor’s good-faith business judgment, such disclosure would constitute a violation of any third party right, a violation of any applicable law, decree or government regulation, or an inappropriate business practice;

(iv) All Information as to the Licensed Pictures that is available to any Subdistributor from Distributor or all Information that Distributor receives from any Subdistributor (subject always to Section 4.1.c.(iii)(C));

(v) All other Information as may be reasonably required by DWA (subject always to Section 4.1.c.(iii)(C)), including trade association publications and reports (unless distribution to DWA is prohibited by such trade association), access to all data for each Licensed Picture on a country-by-country basis, daily box office reports, competitive release dates, advertising expenses, copies of all outsourced market surveys, updates and analysis, marketing reports (setting forth all marketing terms and conditions relating to DWA Video Devices), sales reports (setting forth sales of DWA Video Devices on a Licensed Picture-by-Licensed Picture, country-by-country basis, specifying quantity, price, rental or sell-through, and retail account), and expense reports (setting forth all expenses paid by Distributor comparing budgeted and actual expenses on a Licensed Picture-by-Licensed Picture and country-by-country basis), and legal reports or information (setting forth home video security interests imposed on third parties or reports of audits and the audit itself conducted directly or indirectly by Distributor, with respect to which Distributor, upon DWA’s request, shall include DWA Licensed Pictures or Video Devices). The Information shall be provided to DWA consistent with the frequency and timeliness with which the Information (or similar material) is created by, or supplied to, Distributor or by Distributor to any Subdistributor, or otherwise as DWA shall reasonably request. If any Information provided by Distributor is insufficient or inadequate for DWA to exercise its approval rights, then Distributor shall provide additional or revised Information to the extent available, as DWA reasonably requests; and

(vi) As used herein, “Information” shall mean all tangible information, data, reports, agreements and other documents whether distributed on paper, electronically and/or through other means.

(vii) Notwithstanding anything in this Section 4.1.c. to the contrary, in no instance shall Information include (and Distributor shall not be required to provide) (A) internal financial information of Distributor not related to Licensed Pictures, or (B) Information that is not related to the exploitation and performance of Motion Pictures or the costs of distribution, or (C) Information that is

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withheld from Distributor or otherwise not available to Distributor under DWA-approved Distribution Servicing Agreements or DWA-approved Third Party Service Agreements, provided DWA shall have the right (at DWA’s expense) to cause Distributor to take such reasonable action as DWA deems reasonably necessary to attempt to obtain such withheld Information.

(viii) If Distributor is required to incur any new additional direct-out-of-pocket costs or expenses (of which Distributor notifies DWA in advance) solely in order to furnish any additional information that heretofore was not provided by Distributor in connection with the distribution of the Prior Pictures, or to furnish information more frequently or expeditiously than such information is customarily supplied with respect to the Licensed Pictures or Motion Pictures produced or distributed by Distributor, Distributor shall not be required to furnish such information, or to furnish such information more frequently or expeditiously, as applicable, unless DWA preapproves such costs and expenses and agrees to reimburse Distributor therefor (subject to appropriate reduction, to be mutually agreed, if and to the extent Distributor uses such additional information, or increase in the frequency of supplying such information, or the expediting of such information in connection with the exploitation of other Motion Pictures produced or distributed by Distributor).

4.2 Distribution Approvals and Controls: Notwithstanding anything in this Agreement to the contrary, all DWA approvals and controls in this Agreement with respect to Theatrical Exhibition in the International Territory and Home Video Exhibition in the Territory are expressly subject to the terms and conditions of the Universal Agreement. For the avoidance of doubt, to the extent either (a) Distributor is not contractually entitled to exercise certain approvals or controls over the activities of Universal; or (b) if, as a matter of custom and practice and historical course of dealing, Distributor does not exercise certain approval or controls to which it is contractually entitled under the Universal Agreement, Distributor shall not be required to attempt to amend the Universal Agreement to expand its contractual approval or control rights to be consistent with those set forth herein, nor shall Distributor be required to alter its custom and practice and historical course of dealing with Universal under the Universal Agreement to comply with the approvals and controls afforded to DWA hereunder. In either event, Distributor’s only obligation to DWA with respect thereto shall be to exercise its contractual rights with respect to the Licensed Pictures in accordance with Distributor’s past practices used to service the distribution of comparable Prior Pictures, and to the extent, and as long as, applicable in a manner consistent with the exercise of such rights with respect to comparable Motion Pictures produced or released by Distributor under similar circumstances in the applicable territories.

a. Release Date/Theatrical Exhibition: DWA shall have the right to designate and approve the initial Theatrical Exhibition release date (“Release Date”) for each Qualified Picture in the Domestic Territory and shall approve the Release Date for each Qualified Picture in each of the Major International Territories (it being agreed that Release Dates already scheduled by Distributor for any Qualified Pictures as of the Effective Date are preapproved by DWA), provided, however, if not more than two (2) Qualified Pictures are scheduled for initial Theatrical Exhibition in the Domestic

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Territory within a calendar year, then DWA shall not schedule more than one Release Date in the Domestic Territory during each of (i) the annual holiday period (between November 1^st and December 31^st) and (ii) the summer period (between May 15^th and September 15^th). If DWA schedules more than two (2) Qualified Pictures for initial Theatrical Exhibition in the Domestic Territory within a calendar year, the additional Release Date(s) shall be mutually approved by Distributor and DWA taking into consideration the following periods, which historically have generated optimal theater box office performance: (i) spring; (ii) mid-May through May 31^st; (iii) late June through early July; (iv) early October; and (v) mid-November. DWA shall keep Distributor fully advised of the anticipated Delivery Date of each Qualified Picture and shall provide Distributor with not less than twelve (12) months prior notice of the designated Release Date in the Domestic Territory. Release Dates are subject to postponement and extension due to events of Force Majeure or DWA implemented creative changes that delay Delivery of the Qualified Picture or otherwise substantially and materially affect the orderly release schedule of the Qualified Picture. In the event a Release Date is postponed due to an event of Force Majeure or creative changes, DWA shall propose two (2) alternative Release Dates that shall not cause Distributor to be in breach of the holdback restrictions set forth in Section 4.2.c. below as they pertain to any theatrical Motion Picture then scheduled for Theatrical Exhibition by Distributor. Distributor shall have the option of selecting either Release Date and scheduling the Picture for Theatrical Exhibition on such Release Date.

b. Release Dates/Home Video Exhibition: DWA shall have the right to designate and approve the dates (“HV Release Dates”) on which Video Devices embodying the Qualified Pictures, Qualified DTV Productions and any Prior Pictures that have not yet had their initial HV Release Dates are made available for Home Video Exhibition in the Domestic Territory and shall approve the HV Release Dates in each of the Major International Territories (it being agreed that HV Release Dates already scheduled as of the Effective Date by Distributor for any Qualified Pictures, Qualified DTV Productions or Prior Pictures subject to this Section 4.2.b. are hereby preapproved by DWA). DWA shall provide Distributor with not less than twelve (12) months notice of the provisional HV Release Date in the Domestic Territory and in each of the Major International Territories for each Qualified Picture, Qualified DTV Production and Prior Picture subject to this Section 4.2.b. (or such shorter period if the provisional HV Release Date is within twelve [12] months from the Effective Date). Distributor shall be kept fully informed of any proposed or scheduled change in any provisional HV Release Date and shall receive not less than four (4) months notice of the designated HV Release Date in the Domestic Territory and in each of the Major International Territories. HV Release Dates are subject to postponement and extension due to Events of Force Majeure that delay the production, manufacturing, duplication or replication of the applicable Video Devices or otherwise substantially and materially affect any scheduled HV Release Dates.

c. Holdbacks: As additional consideration for the Distribution Rights: (i) Distributor agrees not to commence or authorize the commencement of the initial Theatrical Exhibition of any “Similar Theatrical Motion Picture” in the Domestic Territory and in each of the Major International Territories

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during the period one (1) week either side of the applicable Release Date of each Qualified Picture in the Domestic Territory and in each of the Major International Territories, respectively; and (ii) Distributor agrees not to commence or authorize the commencement of the initial Home Video Exhibition of any Similar Theatrical Motion Picture or “Similar DTV Production” in the Domestic Territory and in each of the Major International Territories during the “HV Release Week” in which the applicable HV Release Date occurs for each Qualified Picture or each Qualified DTV Production in the Domestic Territory and in each of the Major International Territories. HV Release Week with respect to HV Release Dates shall mean the period Monday through Sunday, inclusive. Similar Theatrical Motion Picture shall mean any theatrical Motion Picture rated “PG” or a less restrictive rating. Similar DTV Production shall mean any DTV Production that is rated (or is capable of obtaining a) “PG” or less restrictive rating. One week either side of the applicable Release Date shall mean seven (7) days before and seven (7) days after, without including the applicable Release Date in the seven (7) day period, e.g., release on a Friday, May 28^th would preclude a release on Friday May 21^st and Friday June 4^th. DWA acknowledges that in certain countries within the International Territory, such holdback restrictions may be inappropriate or impracticable to enforce due to differences in ratings’ categories, or the contractual rights of third parties pursuant to DWA-approved Distribution Servicing Agreements or DWA-approved Third Party Service Agreements, or the inability of Distributor to enforce such holdbacks because of established custom and practice and historical course of dealing under DWA-approved Distribution Servicing Agreements or DWA-approved Third Party Services Agreements, as applicable. In such event, Distributor shall keep DWA fully informed of all proposed release dates for its Similar Theatrical Motion Pictures and Similar DTV Productions, if applicable, to enable DWA to schedule Release Dates and HV Release Dates for its Qualified Pictures and Qualified DTV Productions in the International Territory. In addition, DWA further acknowledges that the holdback restrictions applicable to the HV Release Date in the Domestic Territory may be inappropriate or impracticable to enforce because of the contractual rights of third parties pursuant to DWA-approved Distribution Servicing Agreements or DWA-approved Third Party Service Agreements, as applicable, or the inability of Distributor to enforce such holdbacks because of established custom and practice and historical course of dealing under DWA-approved Distribution Servicing Agreements or DWA-approved Third Party Service Agreements, as applicable. In such event, Distributor shall keep DWA fully informed of all proposed home video release dates for its Similar Theatrical Motion Pictures and Similar DTV Productions, if applicable, to enable DWA to schedule HV Release Dates for its Qualified Pictures and Qualified DTV Productions in the Domestic Territory. Notwithstanding the foregoing, in the event Distributor designates and notifies DWA in accordance with Section 34. below as to a planned release date for the initial Theatrical Exhibition or initial Home Video Exhibition, as applicable, of one of its Similar Theatrical Motion Pictures or Similar DTV Productions in either the Domestic Territory or the International Territory, as applicable, prior to DWA designating a Release Date or HV Release Date, as applicable, for a Qualified Picture or Qualified DTV Production in such territory(ies), (i) Distributor shall not be required to change a previously designated release date(s) for its Similar Theatrical Motion Picture or Similar DTV Production and the initial release by Distributor during the above described

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holdback periods of any such Similar Theatrical Motion Picture or Similar DTV Production shall not violate the provisions of this Section 4.2.c. and or otherwise constitute a breach of this Agreement by Distributor; and (ii) DWA shall not schedule a Release Date for a Qualified Picture on the “weekend” of such Release Date or schedule a HV Release Date for a Qualified Picture or Qualified DTV Production, as applicable, during the applicable HV Release Week. Weekend for purposes of scheduling a Release Date shall mean the period Wednesday through Sunday, inclusive, encompassing the Release Date.

d. No Editing: Except as set forth below and subject to each DWA-approved Distribution Servicing Agreement and DWA-approved Third Party Service Agreement, Distributor shall not have the right to cut, alter, edit or change any Licensed Picture (or its title) for United States English language Theatrical Exhibition (except in order to secure the required rating) without the prior consent of DWA. Subject to any third party contractual restrictions and applicable guild requirements, Distributor may alter or edit each Licensed Picture and its title solely to the extent necessary to comply with (i) import, censorship or legal requirements in each country or region in the Territory, and (ii) further subject to DWA’s prior approval in each case (a) to comply with applicable distribution or exhibition requirements in each country or region in the Territory, (b) to meet television or other exhibition standards and practices or requirements, (c) to satisfy running time requirements, including the insertion of commercial breaks, and (d) subject to Section 8.9.d. below, to make foreign language dubbed or subtitled versions. DWA shall have first opportunity to alter or edit each Licensed Picture and shall exercise its approval rights hereunder in a manner not to frustrate the exploitation of all Distribution Rights licensed to Distributor hereunder. Nothing herein shall require Distributor or any Subdistributor to violate any applicable law, or governmental regulation anywhere in the Territory. In no event shall Distributor delete contractual credits or the Licensed Picture’s copyright notice.

e. Cuts/Previews: DWA shall have the right to preview and screen each Licensed Picture and to cut, alter, edit or change each Licensed Picture as DWA determines in its sole discretion. Upon reasonable prior written notice, Distributor shall be obligated to obtain the theaters designated by DWA for each preview and shall advance all actual, direct out-of-pocket costs, charges and expenses incurred in connection with such previews. Distributor shall be entitled to recoup such preview costs, charges and expenses as Distribution Expenses. A reasonable number of Distributor’s distribution and marketing executives and personnel shall be entitled to attend each preview.

f. Theatrical Exhibition. For each Licensed Picture, if and to the extent Theatrical Exhibition is licensed to Distributor hereunder, DWA shall have the right to timely approve: the initial period of Theatrical Exhibition of each Licensed Picture in each country in the Territory; any re-release; the withdrawal or withholding of any Licensed Picture from Theatrical Exhibition; marketing plans, distribution plans; the dates and terms of initial bookings of the Licensed Pictures; any decision to create, and any final version of, any altered versions of any Licensed Pictures; distribution and release patterns; dubbing and subtitling; theaters and circuits, including the selection and

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number of theaters and screens in the Domestic Territory and the Major International Territories; suppliers, vendors and service providers; laboratories; the placement of the Licensed Pictures in film festivals; and the date, nature, number, location and guest list of all premieres and advanced screenings.

With respect to the Domestic Territory, DWA’s approval rights shall include the deal parameters to be established with exhibitors and circuits, such as minimum engagement length, percentage splits, floors and minimums, number of prints, screens and daily showings for multi-screen venues, auditorium selection, etc. Thereafter, Distributor shall have the right to enter into exhibition booking contracts with exhibitors on terms no less favorable to Distributor than the DWA-approved deal parameters. DWA shall have the right to approve any non-conforming exhibition booking contracts.

g. Home Video Exhibition. For each Licensed Picture, if and to the extent Home Video Exhibition is licensed to Distributor hereunder, DWA shall have the right to approve: distribution and marketing plans; product pricing and sales policies; street date, period of availability and applicable sales, credit, rebate, bonus and return policies; packaging; arrangement with third party suppliers, such as laboratory, dubbing, duplication, manufacturing, advertising, marketing, publicity and packaging arrangements, printers, designers, production houses and related vendors and suppliers; and compression and authoring. DWA shall be solely responsible for the creation, production and timely delivery to Distributor of all bonus material.

h. Television Exhibition. For each Licensed Picture, if and to the extent Television Exhibition is licensed to Distributor hereunder, DWA shall have the right to approve: the terms of all licenses, including barter arrangements, any advertising and/or promotional material extracting or excerpting any portion of a Licensed Picture.

i. Multiple Pictures Agreements. DWA shall have the right to approve any joint, multiple pictures or package sales or licenses that include one or more Licensed Pictures. Distributor shall fully consult with DWA prior to commencing negotiations for any such sales or licenses.

j. Outright Sales. No Outright Sale of any Distribution Rights is permitted hereunder without DWA’s prior consent.

k. Exercise of DWA Approvals: Notwithstanding anything to the contrary contained in this Agreement, including this Section 4, once DWA provides its approval over a certain matter (whether related to an agreement, deal parameters, release methodology, release date, release pattern, budget, edit, cut, preview, version, sales policy, supplier, marketing or promotional campaign, or otherwise), Distributor shall have the right to fully rely on such approval (unless prior to such reliance DWA notifies Distributor in accordance with Section 34 below that such approval is withdrawn), and Distributor shall not be deemed in breach of this Agreement for any act or omission of Distributor (or any Affiliate, Subdistributor or licensee) that is materially consistent with any approval provided by DWA.

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4.3 Advertising and Credits: To the extent credits are used in publicity and advertising under the control of Distributor in connection with a Licensed Picture, Distributor agrees to accord credit to those Persons to which DWA is contractually obligated to accord credit, in such form as DWA may direct consistent with applicable guild and union requirements; provided, credits for each Licensed Picture shall include all credits required pursuant to the DWA-approved Distribution Servicing Agreements and DWA-approved Third Party Service Agreements. Distributor agrees to honor and to use commercially reasonable best efforts to cause to its Subdistributors and licensees to honor and comply with all such contractual credit obligations. Subject to Section 19. below, Distributor shall not alter the credits on the Licensed Pictures without DWA’s prior written approval.

4.4 Trailers and Publicity Materials: Distributor shall be solely responsible for the creation and preparation of all theatrical and home video trailers and television spots, and all other advertising, marketing, publicity and promotional materials (“Marketing Materials”) for the Licensed Pictures. All basic Marketing Materials, including all key-art, creative campaigns and content thereof, coop media plans and advertising, media buys, ads, point of sale and any other sales and promotional materials, and all communications to the press and press releases, shall be submitted to DWA for its timely suggestions and approvals. Distributor shall not be liable for any losses, claims or damages suffered by DWA as a direct result of DWA’s failure to timely provide such suggestions and approvals. Distributor agrees that DWA shall have the right to access and use such Marketing Materials, without charge, for such use as DWA may reasonably request in connection with its reporting to investors, institutional publicity and similar matters and in connection with exploitation of the Retained Rights; provided, that DWA shall reimburse Distributor for the direct incremental costs of additional copies of such Marketing Materials arising from such request that Distributor would not otherwise have incurred. Distributor shall secure copyright in the name of DWA and Distributor (or a Distributor Affiliate designated by Distributor) for Marketing Materials prepared by Distributor and/or any Distributor Affiliate for any Licensed Picture. DWA retains the exclusive right to produce and exploit documentary films and other Motion Pictures relating to DWA or to the Licensed Pictures, including “making of” and “behind the scenes” productions or programming relating to the Licensed Pictures and to incorporate excerpts from the Licensed Pictures therein. Notwithstanding the foregoing: (i) Distributor may authorize the production of so-called “specials” or other similar audio-visual productions as part of its promotional arrangements with media companies (such as MTV International) provided, DWA shall have the right to approve the content of such productions; and (ii) if any DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement requires Distributor to deliver and license any such productions to a third party, DWA shall produce and deliver such productions to Distributor for delivery and license pursuant to the terms of such DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement. DWA shall approve the use of trailers from the Licensed Pictures on other Motion Pictures distributed by Distributor.

4.5 Marketing Restrictions: Without DWA’s prior consent, Distributor shall not engage in any cross-marketing, cross-promotion, cross-merchandising, joint

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advertising, joint marketing, Commercial Tie-In and Promotional Rights arrangements, product placement or joint distribution activities (including with respect to home video incentive programs or home video marketing programs) (collectively “Cross-Promotional Campaigns”) in connection with any element of a Licensed Picture and any other Motion Picture or product owned or distributed by Distributor or by any third party. Notwithstanding the foregoing, Distributor, its Subdistributors and licensees shall have the right (i) to include the Licensed Pictures in Cross-Promotional Campaigns consistent with prior distribution practices, e.g., marketing reels, trade conventions and trade promotions such as those involving the Prior Pictures, and (ii) to employ Cross-Promotional Campaigns solely in connection with two (2) or more Licensed Pictures. In addition to the foregoing, Distributor shall not use any elements or characters from the Licensed Pictures for Distributor’s corporate promotional purposes or to advertise or promote any business or activity of the Distributor not directly related to the Licensed Pictures without DWA’s prior written approval.

4.6 Subdistribution:

a. Distributor may distribute the Licensed Pictures either directly, through Distributor Affiliates or subject to DWA’s prior written approval (not to be unreasonably withheld) in each instance, through Subdistributors and licensees; provided that Distributor agrees that it will not engage a Subdistributor or licensee for the initial general theatrical release of any Licensed Picture in the United States, except as provided in Section 17.(b) below. The Subdistributors and licensees listed on Schedule 1 are preapproved by DWA. If, pursuant to a DWA-approved Distribution Servicing Agreement, a Licensed Picture is not designated for distribution in any portion of the Territory (e.g., is determined not to be financially viable for release in a specific country), Distributor shall attempt in good faith to engage a substitute Subdistributor or licensee to distribute the Licensed Picture in the applicable portion of the Territory; provided, however, the terms of such Distribution Servicing Agreement shall be subject to DWA’s prior approval.

b. DWA shall have the right to approve the duration and terms of any and all Subdistribution and license agreements entered into by Distributor, whether with a Distributor Affiliate or any other Person. Subject to Section 4.13. below, the CJ Agreement, the Kadokawa Agreement, the Universal Agreement and the Distribution Servicing Agreements with Subdistributors and licensees listed on Schedule 1 are preapproved by DWA.

c. For the avoidance of doubt, no breach by a Subdistributor or licensee (or any successor to any Subdistributor or licensee) of any DWA-approved Distribution Servicing Agreement shall constitute a breach by Distributor of this Agreement; provided, however, DWA shall have the right to take such action as set forth in Section 4.13 below with respect to such breach by a Subdistributor or licensee.

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4.7 Costs of Distribution: Except as expressly provided herein, including Section 5.2 with respect to Additional Distribution Expenses and Section 6.2 with respect to Residuals and Contingent Compensation, Distributor shall be solely responsible for advancing all costs of advertising, promoting, marketing and distributing the Licensed Pictures, including all distribution fees paid to Subdistributors and all Distribution Expenses.

4.8 DWA Consultation Rights: Distributor shall fully consult with and give due consideration to the reasonable requests of DWA concerning advertising, marketing, publicity and distribution matters in connection with each Licensed Picture. The foregoing consultation rights and conditions are in addition to and do not derogate, impair, restrict or otherwise adversely affect any of DWA’s approvals and controls set forth in this Agreement. All distribution and licensing arrangements with respect to the Licensed Pictures shall be made in a manner consistent with Distributor’s good faith business practices as applied generally to comparable Motion Pictures produced or distributed by Distributor under similar circumstances in the applicable territories and media, taking into account differences in production budgets, cast, genre, rating, prerelease audience surveys and test results, theatrical box office and other performance metrics, local tastes and other established factors that Distributor uses in good faith on a nondiscriminatory basis to make determinations in connection with the exploitation of Motion Pictures produced or distributed by Distributor, excluding in each case, any Motion Pictures directed by Steven Spielberg.

4.9 DWA Distribution Representative: DWA shall have the right to appoint one or more individuals to serve as a distribution representative (the “DWA Representative[s]”) to: (i) monitor the marketing and distribution of the Licensed Pictures and the expenditure of Distribution Expenses; (ii) access and review Distributor’s books and records relating to the marketing and distribution of the Licensed Pictures; (iii) monitor Distributor’s compliance with DWA’s approvals, consultation rights, designations and controls; (iv) meet regularly with Distributor’s marketing and distribution personnel; (v) attend regularly scheduled marketing meetings related to the Licensed Pictures; and (vi) engage in related activities. Distributor will provide DWA Representatives with periodic briefings on marketing matters and upon request, shall provide DWA Representatives with full and complete information relating to anticipated Gross Receipts, marketing costs and budgets, expenditures of Distribution Expenses and market research studies relating to the Licensed Pictures. Distributor shall provide the DWA Representatives with suitable offices at Distributor’s company facilities without charge to DWA. DWA shall be solely responsible for the salary, fringes and expenses of the DWA Representatives. DWA shall not appoint more than five (5) individuals to concurrently serve as the DWA Representatives without obtaining Distributor’s prior consent.

4.10 Direct Access to Personnel. DWA and the DWA Representatives shall have the right to access and to communicate directly with (i) all of Distributor’s officers, management staff and employees engaged in any aspect of the marketing, distribution, licensing and exhibition of the Licensed Pictures or exercise of the Distribution Rights anywhere in the Territory, and (ii) to the same extent as Distributor

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and subject to the terms of each applicable DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement, as applicable, all officers, management staff and employees of Subdistributors, licensees or third party service providers engaged in any aspect of marketing, distribution, licensing and exhibition of the Licensed Pictures or exercise of the Distribution Rights anywhere in the Territory, including in each case any personnel or representatives based in local, regional or international exchanges or offices in all regions of the Domestic Territory and in each country in the International Territory (collectively “Distribution Personnel”). Distributor shall endeavor to cause the Distribution Personnel (x) to be available to consult with DWA and the DWA Representatives at reasonable times for purposes of formulating, coordinating and implementing the marketing, distribution, licensing, exhibition and other exploitation plans and strategies pertaining to the Licensed Pictures, (y) to cooperate fully with DWA and the DWA Representatives and (z) to provide DWA with all Information available to such Distribution Personnel pursuant (and subject) to Section 4.1.c. DWA will endeavor in good faith to keep Distributor fully informed of, and involved in, all direct communications with Subdistributors, licensees or third party service providers.

4.11 Vendor/Supplier Arrangements: Distributor shall have the right and (to the extent entitled to do so pursuant to the applicable third-Person contracts) obligation to cause the Licensed Pictures to be included in any DWA-approved Third Party Service Agreement. DWA shall have the right of prior reasonable approval of the duration and terms of each Third Party Service Agreement as they pertain to the Licensed Pictures. The Third Party Service Agreements (and the duration and terms thereof) listed on Schedule 5 are preapproved by DWA. Any amendment or modification of a DWA-approved Third Party Service Agreement that materially affects one or more Licensed Pictures, and any extension of a DWA-approved Third Party Service Agreement that includes one or more Licensed Pictures shall require DWA’s prior written approval. Subject to the foregoing, the Licensed Pictures shall be included in such DWA-approved Third Party Service Agreements on a non-discriminatory basis as compared to comparable Motion Pictures produced or distributed by Distributor under similar circumstances in the applicable territories, excluding only Motion Pictures directed or produced by Steven Spielberg. Any allocations between Distributor’s Motion Pictures and the Licensed Pictures shall be made in accordance with and pursuant to Section 8.5.c. below.

4.12 Distribution Arrangements: Subject to the terms and conditions of the Universal Agreement (but only in connection with Theatrical Exhibition in the International Territory and Home Video Exhibition in the Territory), Distributor will use its commercially reasonable best efforts to cause all business arrangements between Distributor and (i) exhibitors or circuits, (ii) retailers, wholesalers or intermediary suppliers of Video Devices, or (iii) television licensees, pertaining in whole or in part to the Licensed Pictures to be no less favorable generally than the terms and conditions applicable to Motion Pictures produced or distributed by Distributor, which generate (or at the time such business relationship[s] were made, were projected based on established forecast methodology to generate) comparable theatrical box office revenue or otherwise produce comparable revenue under similar circumstances in the applicable territories.

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All such business arrangements shall be applied to the Licensed Pictures on a nondiscriminatory basis. Motion Pictures directed or produced by Steven Spielberg are excluded from the foregoing requirements, as are premiums, or other consideration applicable to specific categories of Motion Pictures set forth in any DWA-approved Distribution Servicing Agreements or DWA-approved Third Party Service Agreements, as applicable. Distributor shall not be in breach of this Agreement if it is unable to (x) obtain the number of theaters or screens designated by DWA or obtain orders or other terms for the number of Video Devices designated by DWA, or (y) obtain comparable terms for television licenses pertaining to the Licensed Pictures, provided Distributor used its commercially reasonable best efforts commensurate with its past conduct and practices in distributing comparable Prior Pictures to obtain the foregoing designated objectives in each case.

4.13 Distribution Servicing Agreement: Distributor shall have the right to enter into Distribution Servicing Agreements and to include the Licensed Pictures in any such arrangement; provided subject to Section 7.5. below, DWA shall have the right of prior reasonable approval of the duration and terms of each Distribution Servicing Agreement as it pertains to the Licensed Pictures. DWA hereby approves the CJ Agreement, the Kadokawa Agreement, the Universal Agreement and the Distribution Servicing Agreements listed on Schedule 1, including the duration and terms of each such Distribution Servicing Agreement. Any amendment or modification of a DWA-approved Distribution Servicing Agreement that materially affects one or more Licensed Pictures, and any extension of a DWA-approved Distribution Servicing Agreement that includes one or more Licensed Pictures shall require DWA’s prior written approval. Distributor shall not be responsible for any third party breach of a DWA-approved Distribution Servicing Agreement; provided that any claims, losses or causes of action (collectively “Claims”) arising from such breach and related to a Licensed Picture shall, subject to the terms of the applicable DWA-approved Distribution Servicing Agreement, be assigned to DWA, or DWA shall have the right (at DWA’s expense) to cause Distributor to take such action as DWA deems reasonably necessary to resolve such Claims. Distributor shall notify DWA of any breach or alleged breach of any DWA-approved Distribution Servicing Agreement and any bankruptcy filings of any party to a DWA-approved Distribution Servicing Agreement, promptly following Distributor becoming aware of any such event. Any recoveries (net of expenses) from the prosecution or settlement of any Claims that would have been accounted for pursuant to the terms of a DWA-approved Distribution Servicing Agreement shall be included in Gross Receipts, provided no Distribution Fees shall be charged on any recoveries (e.g. punitive damages) that would not otherwise constitute revenue derived from distribution of the Licensed Pictures. In connection with each Licensed Picture and subject to the terms of each DWA–approved Distribution Servicing Agreement, DWA and Distributor shall jointly exercise any approval and consultation rights available to Distributor under such DWA-approved Distribution Servicing Agreement; provided, the foregoing shall not impair, restrict or derogate from the rights of Distributor as set forth in this Agreement, including Distributor’s right to mutually approve (and its tie-breaker rights with respect to) Distribution Expenses hereunder. In connection with each Licensed Picture and subject to the terms of each DWA-approved Distribution Servicing Agreement; (i) in accordance with Section 4.10 above, DWA shall have the right to communicate directly with, and

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have full access to, all officers, appropriate management employees, staff and personnel engaged in any aspect of distribution as provided to Distributor under each DWA-approved Distribution Servicing Agreement; (ii) DWA shall receive in a timely fashion all distribution information and other materials pertaining in whole or in part to the Licensed Pictures that are received by Distributor from Subdistributors and other parties to the DWA-approved Distribution Servicing Agreements; and (iii) Distributor, in the exercise of its good faith business discretion, shall use commercially reasonable best efforts to audit the accountings or financial records provided or available under each DWA-approved Distribution Servicing Agreement and the reasonable out-of-pocket audit costs shall be charged as Distribution Expenses hereunder; provided, in the event such audit involves one or more Licensed Pictures and other Motion Pictures produced or distributed by Distributor, DWA shall only bear its proportionate share of the costs thereof. Distributor shall have the right to appropriately redact from any information provided to DWA under this Agreement (including under this Section 4.13) information relating to any Motion Pictures other than the Licensed Pictures. The foregoing does not limit Distributor’s obligation to issue Payment Reports, Interim Reports or make payments to DWA, as more fully set forth in Section 8.6. DWA shall cooperate with Distributor and, at Distributor’s request and expense, shall take such actions that are reasonably necessary or desirable to ensure that Distributor is able to perform its obligations relating to the Licensed Pictures under the DWA-approved Distribution Servicing Agreements and the DWA-approved Third Party Service Agreements.

4.14 Exploitation of Commercial Tie-In and Promotional Rights: DWA retains the right to exploit Commercial Tie-In and Promotional Rights in connection with each Licensed Picture; provided, that in furtherance of Distributor’s exploitation of the Distribution Rights, DWA shall undertake commercially reasonable efforts in full consultation with Distributor to consummate Commercial Tie-In and Promotional Rights arrangements for each Licensed Picture. In addition to the foregoing, DWA shall undertake to consummate Commercial Tie-In and Promotional Rights arrangements for each Qualified Picture that on an overall basis shall be consistent with the marketing and promotion of the four (4) most recent Qualified Pictures (or until such time as there are four [4] Qualified Pictures, a combination of the four [4] most recent Qualified Pictures and Prior Pictures). Notwithstanding DWA’s retention of Commercial Tie-In and Promotional Rights, DWA acknowledges that in connection with Theatrical Exhibition in the International Territory and Home Video Exhibition, Distributor, its Subdistributors and licensees shall have the right to negotiate and consummate Commercial Tie-In and Promotional Rights arrangements for each Licensed Picture on a country-by-country or regional basis, provided that Distributor, its Subdistributors and licensees shall be obligated to obtain DWA’s prior written approval of any such Commercial Tie-In and Promotional Rights arrangements, which approval shall not be unreasonably withheld. Distributor shall endeavor in good faith, and commensurate with its past conduct and practices in distributing comparable Prior Pictures, to cause such arrangements to be on an overall basis comparable to the marketing and promotion of the four (4) most recent Prior Pictures and in each case, subject to the prior Commercial Tie-In and Promotional Rights arrangements consummated by DWA in connection with the applicable Licensed Picture. Any amounts received by Distributor pursuant to arrangements entered into by Distributor in connection with such Commercial Tie-In and Promotional Rights arrangements shall be deemed Gross Receipts.

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4.15 Exploitation of Theme Park Rights: Notwithstanding DWA’s retention of Theme Park Rights hereunder, DWA acknowledges and confirms that as and to the extent DWA owns or controls Theme Park Rights to Licensed Pictures, such rights are subject to the terms and conditions of Exhibit D to the Universal Agreement. DWA consents to the terms and conditions of Exhibit D to the Universal Agreement insofar as they pertain to the Licensed Pictures, provided that (i) Distributor’s exercise of all rights, approvals and controls pertaining to the Licensed Pictures and granted to or retained by Distributor pursuant to the terms of said Exhibit D shall be subject to DWA’s prior approval (not to be unreasonably withheld) and (ii) the financial and other benefits derived by Distributor thereunder from exploitation of Theme Park Rights to any Licensed Picture shall inure to the account of DWA as provided herein. Commencing on the Effective Date, any exclusivity fee or other form(s) of advance payments not directly related to an Eligible DW Property (as defined in Exhibit D to the Universal Agreement), or any element thereof, shall be prorated (for any year including the Effective Date), and thereafter apportioned and payable as follows: (i) 10% thereof to each of Distributor and DWA as consideration for the exclusive rights granted pursuant to said Exhibit D; (ii) the remaining 80% to Distributor and DWA, as applicable, calculated for each year of the term of said Exhibit D in proportion to the total annual additional fees earned and attributable to Eligible DW Properties of Distributor and Eligible DW Properties of DWA. For the avoidance of doubt, no amounts paid or payable to Distributor or DWA pursuant to this Section 4.15 shall constitute Gross Receipts.

4.16 MPAA Rating: Distributor shall be responsible for obtaining the MPAA rating certificate, if applicable, for each Licensed Picture and MPAA title clearances on DWA’s behalf in connection with each Licensed Picture. DWA shall cooperate with and assist Distributor in obtaining the MPAA rating certificate and clearing the title for each Licensed Picture. Such cooperation and assistance shall be at DWA’s sole cost and expense.

Section 5. Distribution Expenses — Approvals and Controls

5.1 Expenditure Commitment: Distributor and DWA shall mutually determine the amount of Distribution Expenses to be incurred with respect to (i) the initial Theatrical Exhibition of each Licensed Picture in the Domestic Territory and in each of the Major International Territories, including all print and trailer costs, advertising campaign creation costs, media buys, including remainder media buys, and (ii) the initial Home Video Exhibition of each Licensed Picture in the Domestic Territory and in each of the Major International Territories; provided that in the event of disagreement, Distributor’s decisions shall prevail. Notwithstanding the foregoing, unless otherwise agreed between Distributor and DWA, the aggregate amount of Distribution Expenses to be incurred by Distributor to release each Qualified Picture hereunder throughout the Territory for initial Theatrical Exhibition and initial Home Video Exhibition shall not be less than eighty percent (80%) of the average amount of Distribution Expenses incurred by Distributor to release the four (4) most recent

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Qualified Pictures (or until such time as there are four [4] Qualified Pictures, a combination of the four [4] most recent Qualified Pictures and Prior Pictures) throughout the Territory for initial Theatrical Exhibition and initial Home Video Exhibition (such amounts, “Minimum Distribution Expenses”); provided, however, that the Minimum Distribution Expenses may be adjusted by Distributor on a Qualified Picture-by-Qualified Picture basis taking into consideration (i) the Domestic Territory and International Territory box office performance of the two (2) most recent Qualified Pictures (or until such time as there are two [2] Qualified Pictures, a combination of the two [2] most recent Qualified Pictures and Prior Pictures) released by Distributor, (ii) the Distribution Rights available for exploitation and the portion of the Territory for which such Distribution Rights have been obtained (i.e., Minimum Distribution Expenses shall be reduced to the extent Distributor has not obtained all Distribution Rights from which Gross Receipts are derived in the entire Territory), (iii) minimum release requirements set forth in applicable DWA-approved Distribution Servicing Agreements, (iv) the prerelease forecast for the applicable Qualified Picture, (v) post release performance of the Qualified Picture, (vi) Distributor’s projections for gross shipments of Video Devices embodying the Qualified Picture and (vii) Distributor’s good faith business judgment based on empirical projections and established forecast methodology that Gross Receipts will be less than the cumulative Distribution Fee and Distribution Expenses for the applicable Qualified Picture. The aggregate amount of Distribution Expenses to be incurred by Distributor to release each Qualified DTV Production throughout the Territory shall be determined in accordance with Section 4.1. above.

5.2 DWA Distribution Expenses: In the event DWA determines in its good faith business judgment that Gross Receipts of a Licensed Picture will be materially enhanced by expending additional Distribution Expenses in excess of the amount determined pursuant to Section 5.1., then DWA may cause Distributor to expend such additional Distribution Expenses (“Additional Distribution Expenses”), provided that DWA shall be solely responsible for all Additional Distribution Expenses and shall pay to Distributor all Additional Distribution Expenses in advance of Distributor incurring such Additional Distribution Expenses. If DWA does not promptly advance such amounts, Distributor shall have the right, but not the obligation, to incur such Additional Distribution Expenses, and DWA shall reimburse Distributor for such Additional Distribution Expenses within five (5) Business Days after receipt of Distributor’s invoice therefor. If such amount remains unpaid ten (10) Business Days after DWA’s receipt of Distributor’s invoice therefor and notwithstanding any prohibition against cross-collateralization or offset contained in this Agreement, upon prior notice to DWA, Distributor shall have the right (without limiting any of it other rights hereunder, at law or in equity) to offset such amounts, including interest thereon, against any amounts otherwise due to DWA hereunder.

5.3 Standard of Compliance: Notwithstanding anything to the contrary contained in Section 4, Section 5 or elsewhere in this Agreement, it is understood and agreed that Distributor shall not be in breach or default hereof with respect to compliance with approved marketing and distribution plans and budgets as long as Distributor substantially complies with the DWA approved marketing and distribution plans and budgets. For purposes of example and without limitation, it is understood and agreed that

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because of the difficulty in stopping the amount of Distribution Expenses expended at a specific level, Distributor shall not be in default or otherwise in breach hereof if the amount of Distribution Expenses actually expended by Distributor does not conform to or exceeds the budget therefor and all such Distribution Expenses shall be fully recoupable by Distributor out of applicable Gross Receipts.

5.4 Subdistributor Distribution Expenses: For purposes of this Section 5., Distribution Expenses shall include all costs, charges and expenses of distribution (excluding distribution fees) charged to, and undisputed by, Distributor in its accountings with Subdistributors with respect to the applicable Licensed Picture(s).

Section 6. Distribution Expenses Accounting

6.1 Calculation of Distribution Expenses: Distribution Expenses shall be deducted on a Licensed Picture-by-Licensed Picture basis by Distributor from Gross Receipts and shall be calculated after taking into account the following items to the extent they are directly attributable to the Licensed Pictures: all discounts, rebates and refunds actually received that serve to reduce the amount of Distribution Expenses. For the avoidance of doubt, Distribution Expenses shall be reduced by any tax credits, refunds or rebates received or utilized by, or credited to, Distributor directly attributable to the Licensed Pictures, such as rebates for any remittance or withholding taxes. No item of cost shall be included more than once in calculating Distribution Expenses. Distribution Expenses incurred in respect of Licensed Pictures which are exhibited and/or licensed with trailers or short subjects and which are subject to allocations of revenue pursuant to Section 8.5.c. shall be allocated in the same manner as revenue thereunder where appropriate. Distribution costs, charges and expenses accrued and paid by Distributor prior to the Effective Date shall not be recognized or charged as Distribution Expenses hereunder. Distribution costs, charges and expenses accrued but not paid by Distributor until on or after the Effective Date shall be recognized and charged as Distribution Expenses hereunder.

6.2 Payment of Residuals and Contingent Compensation:

a. Residuals: As an accommodation to DWA on a Licensed Picture-by-Licensed Picture basis, Distributor will advance all Residuals arising from the exploitation of the Distribution Rights, and provided DWA timely supplies Distributor with all necessary information, Distributor will calculate all Residuals, act as paymaster on behalf of DWA and will advance all Residuals arising from DWA’s exploitation of the Retained Rights. Prior to the date Residuals are due, Distributor will timely invoice DWA for all amounts then due and owing, and DWA shall have not less than ten (10) Business Days after receipt of Distributor’s invoice to advance such amounts to Distributor. If DWA fails to timely advance Residuals to Distributor, then notwithstanding any prohibition against cross-collateralization or offset contained in this Agreement, Distributor shall have the right (without limiting any of it other rights hereunder, at law or in equity) upon payment of outstanding Residuals to offset such amounts, including interest thereon, against any amounts due to DWA hereunder. Distributor shall execute customary assumption agreements with respect to the licensed Distribution Rights if required pursuant to any collective bargaining agreements applicable to the Licensed Pictures.

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b. Contingent Compensation: As an accommodation to DWA on a Licensed Picture-by-Licensed Picture basis, and provided DWA timely supplies Distributor with all necessary information, Distributor shall prepare consolidated Contingent Compensation statements in accordance with third party agreements (provided DWA has timely provided such agreements and other necessary information to Distributor) and shall deliver such statements to DWA for its review and approval. DWA shall be solely responsible for issuing the approved Contingent Compensation statements to third parties and for paying all Contingent Compensation amounts due and owning to such third parties.

c. No Distributor Liability: Distributor shall have no liability for any claims, losses, etc., to the extent caused by DWA’s failure to timely deliver information or to approve consolidated Contingent Compensation statements (as referenced above) or otherwise related to Distributor’s accommodations to DWA under this Section 6.2. For avoidance of doubt, DWA’s indemnity obligations to Distributor (as more fully set forth in Section 10) shall apply to any third-party claim against Distributor arising out of Distributor acting as Residual paymaster or preparing consolidated Contingent Compensation statements pursuant to this Section 6.2., unless such claim is determined to have arisen from the gross negligence or intentional misconduct or omission of Distributor, or Distributor’s failure to timely advance Residuals when due in accordance with Section 6.2.a above.

Section 7. Distribution Fees

7.1 Distribution Fees: As consideration for the distribution services and obligations of Distributor hereunder in respect of the Licensed Pictures, Distributor shall be entitled to retain on a Licensed Picture-by-Licensed Picture basis off-the-top distribution fees (“Distribution Fees”) of an amount equal to eight percent (8%) of one hundred percent (100%) of the Gross Receipts (as defined in Section 8. below); provided, with respect to Gross Receipts received from Subdistributors and in lieu of calculating the foregoing Distribution Fees on such Gross Receipts, Distributor shall retain Distribution Fees in an amount equal to eight percent (8%) of one hundred percent (100%) of the Subdistributor’s gross revenue reported to, and undisputed by, Distributor in such Subdistributor’s accountings to Distributor. Similarly, if fees or commissions of sales agents are deducted from Gross Receipts, such amounts shall be added back (without duplication of amounts added back pursuant to Section 8.1.h. below) to Gross Receipts for the purpose of calculating the amount of Distribution Fees to be retained by Distributor hereunder. For avoidance of doubt, the Distribution Fees retained by Distributor shall be inclusive of any and all (x) distribution fees that are charged to, and undisputed by, Distributor in its accountings with any Subdistributor and (y) any fees or commissions retained by or payable to any sales agent, and the fees and commissions in clauses (x) and (y) herein shall be subject to Section 8.1.h. below.

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7.2 Calculation of Distribution Fee: No Distribution Fees shall be payable to Distributor until concurrent payment to DWA of the Gross Receipts, if any, upon which such Distribution Fees are charged. In the event of any adjustment as provided in Section 8. below, the Distribution Fees shall be similarly recalculated and adjusted.

7.3 No Cross-Collateralization: The Gross Receipts, Distribution Fees and Distribution Expenses relating to each Licensed Picture shall not be cross-collateralized or offset against the Gross Receipts, Distribution Fees and Distribution Expenses relating to any other Licensed Picture.

7.4 Additional Distribution Fees: In the event (i) DWA is in default pursuant to the terms of this Agreement, (ii) such DWA default causes Distributor to be in default pursuant to the terms of any DWA-approved Distribution Servicing Agreement, and (iii) as a result of such default there is an increase in the distribution fees paid to or deducted by a Subdistributor, sales agent or licensee under the applicable DWA-approved Distribution Servicing Agreement, then Distributor also shall be entitled to retain from Gross Receipts the amount of additional distribution fees paid to the Subdistributor.

7.5 Substitution of DWA- approved Distribution Servicing Agreements: In the event the Distribution Rights to one or more Licensed Pictures are not exploited pursuant to a DWA-approved Distribution Servicing Agreement governing the exploitation of such Distribution Rights, and such failure to exploit is not the result of Distributor’s breach or default under the terms of the applicable DWA-approved Distribution Servicing Agreement, Distributor shall have the right (and obligation) in accordance with the terms of this Agreement to attempt in good faith to enter into a substitute Distribution Servicing Agreement with respect to the applicable Distribution Rights for such Licensed Picture(s). DWA shall have the right to approve the substitute or replacement Subdistributor or licensee, and any terms of the substitute Distribution Servicing Agreement that do not conform to prevailing industry standards shall be subject to DWA’s reasonable approval. Any substitute Distribution Servicing Agreement entered into by Distributor in accordance with this Section 7.5. shall constitute a DWA-approved Distribution Servicing Agreement.

Section 8. Gross Receipts

8.1 Gross Receipts: Gross Receipts consist of:

a. Theatrical Exhibition: All amounts received by Distributor or any Distributor Affiliate from any Person, including Subdistributors, for the right to exhibit or distribute the Licensed Pictures (including returnable and non-returnable advances) or as subsidies, prizes or aid, and all receipts directly from the distribution of the Licensed Pictures in the case of so called “four wall engagements and/or road shows”.

b. Non-Theatrical Exhibition: All amounts (including returnable and non-returnable advances) received by Distributor or any Distributor Affiliate from any Person, including Subdistributors, for the right to distribute, exhibit or license the exhibition of the Licensed Pictures in Non-Theatrical venues.

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c. Home Video Exhibition: All amounts received by Distributor or any Distributor Affiliate from any Person, including a Subdistributor, in connection with Home Video Exhibition of the Licensed Pictures, including advances, minimum guarantees and other remittances or credits.

d. Television Exhibition: (i) All amounts, including advances, signing bonuses and security deposits, received by Distributor or any Distributor Affiliate from any Person, including a Subdistributor, in connection with the business of licensing one or more Licensed Pictures for Television Exhibition less refunds, credits, allowances and adjustments granted to Persons licensed to exhibit such Licensed Picture(s); and (ii) barter receipts from the direct sale of commercial time controlled by Distributor or a Distributor Affiliate less (a) advertising agency commissions payable and (b) refunds, credits, allowances, or adjustments (including “make goods”) granted in connection with the sale of such commercial time.

e. Copyright Revenue: All amounts constituting Copyright Revenue received by Distributor or any Distributor Affiliate from any Person, including any Subdistributor, in connection with the exercise of the Distribution Rights and the Licensed Marks in and to the Licensed Pictures, excluding only Copyright Revenue derived from the Retained Rights.

f. Recoveries: All amounts received by Distributor from any Person with respect to claims or infringement of rights involving the Licensed Pictures, including copyright infringement, trademark infringement, piracy, misappropriation, unfair competition and similar claims brought by Distributor, a Distributor Affiliate or any Person pursuant to a DWA-approved Distribution Servicing Agreement, less all permitted costs and expenses.

g. All Other Sources: All amounts received by Distributor or any Distributor Affiliate from any Person derived from the exploitation of any Distribution Rights not enumerated above, including Internet Rights, New Media Rights and Theme Park Rights (subject to Section 4.15. above) and all other sources not specifically excluded pursuant to Section 8.2.

h. Addback of Subdistributor Fees, Sales Agent Fees and Commissions: Distribution Fees that are charged to, and undisputed by, Distributor in its accountings with any Subdistributors and the fees or commissions retained by or payable to any sales agents shall be deemed Gross Receipts hereunder and notwithstanding retention by, or payment to, the Subdistributor or sales agent, such distribution fees of Subdistributors and such fees or commissions of sales agents shall constitute Gross Receipts for all purposes hereunder. In no event shall any such distribution fees payable to or retained by a Subdistributor or any such fees or commissions retained by or payable to any sales agent reduce or otherwise be deducted from Gross Receipts hereunder.

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i. Deemed Receipts: Amounts received by the Distributor shall be deemed to include any amounts that Distributor does not receive in respect of exploitation of the Licensed Pictures from Subdistributors, sales agents or licensees as the result of the deduction of any amounts referred to in Section 8.1.h. above or to pay Distribution Expenses or any deductions, offsets or reductions not related to the exploitation of the Licensed Pictures.

j. Gross Receipts Adjustments:

(i) Distributor shall give DWA prompt written notice of all adjustments (e.g. bad debt) or other changes in any receivables on the books and records of Distributor or any Distributor Affiliate that affect Gross Receipts hereunder. DWA shall have the right to approve all adjustments, settlements, rebates, credits, allowances or refunds granted by Distributor to any Person, which reduce Gross Receipts.

(ii) Notwithstanding the foregoing, in the event that (A) the amount of cumulative Gross Receipts reported and paid to DWA with respect to a Licensed Picture is determined by Distributor to be overstated for any reason (e.g., returns of Video Devices, refund of advances or security deposits previously included in Gross Receipts) and (B) Distributor is either required to repay or refund such overstated Gross Receipts or an amount equal to such overstated Gross Receipts is deducted from any amounts otherwise payable to Distributor by a third party, DWA shall be solely responsible for reimbursing Distributor for such overstated Gross Receipts. Distributor shall have the right to deduct the amount of such overstated Gross Receipts from any amounts otherwise due to DWA hereunder. If Gross Receipts otherwise due and payable to DWA in the accounting period in which such overstated Gross Receipts are refunded or repaid by, or deducted from, Distributor are insufficient to recoup the full amount of such overstated Gross Receipts, then DWA shall promptly repay Distributor for any such unrecouped amounts (less the amount of any Distribution Fees previously deducted by Distributor thereon) within five (5) Business Days after receipt of Distributor’s invoice therefor.

8.2 Exclusions: Notwithstanding anything herein to the contrary, the following shall be excluded from Gross Receipts:

(i) Amounts collected as taxes or for payment of taxes such as admission, sales, use or value added taxes;

(ii) Receipts from Retained Rights; and

(iii) Amounts collected or received by Distributor prior to the Effective Date.

8.3 Short Subjects: It is understood and agreed that, except as set forth below, all revenue derived from the exploitation of trailers or short subjects exhibited and/or licensed with any Licensed Picture, and all proceeds therefrom paid to Distributor, any Distributor Affiliate or Subdistributor obligated to report such proceeds to Distributor, shall be included in Gross Receipts of such Licensed Pictures. No portion of

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revenue from any Licensed Picture licensed and/or exhibited with a trailer or short subject shall be deemed to be derived from any trailer or short subject with a running time of 15 minutes or less, except where inclusion of such a trailer or short subject is made necessary by Distributor’s, any Distributor Affiliate’s or any Subdistributor’s obligation to supply a supporting program for minimum playing time. In the case of any trailer or short subject not excluded by the preceding sentence, the allocation of revenue therefrom shall be made in accordance with and subject to the provisions of Section 8.5.c. below. For the avoidance of doubt, any costs or expenses incurred by Distributor in connection with the exploitation of trailers or short subjects accompanying Licensed Pictures shall be deemed Distribution Expenses.

8.4 Reserves:

a. Except as otherwise expressly provided in Section 8.4.b. below, no reserves of any kind may be established by Distributor in connection with Gross Receipts, Distribution Fees, Distribution Expenses, Residuals and Contingent Compensation or for any other reason.

b. Beginning in the last six (6) months of the License Term for each Licensed Picture, Distributor shall have the right to establish reasonable reserves for Distribution Expenses reasonably anticipated to be incurred by Distributor during the remainder of the applicable License Term and for a reasonable period thereafter, including costs reasonably anticipated to be incurred in connection with the transition and return of materials to DWA (each an “End of Term Reserve”). All such End of Term Reserves shall be liquidated and paid pursuant to the Final Accounting Statement in accordance with Section 8.6.d. below, together with accrued interest on such amount, if any, of End of Term Reserves paid to DWA, computed from inception of the End of Term Reserve at the rate specified in Section 8.6.e. below.

8.5 Finance/Audits:

a. Advances/Rebates: Distributor shall disclose to DWA and include in Gross Receipts all Financial Benefit accorded Distributor by any Person, which results from or is related to Distributor’s services in connection with the Licensed Pictures or the exploitation of the Distribution Rights hereunder, whether or not specifically allocated to the Licensed Pictures, including any amounts received for or in connection with the distribution of Motion Pictures, including the Licensed Pictures, which are not specifically allocated or credited to the distribution of specific Licensed Pictures consistent with this Agreement, provided, however, Distributor shall not be obligated to disclose any Financial Benefit from transactions that do not involve any Licensed Picture(s) hereunder. All such Financial Benefit will be allocated to the Licensed Pictures on a fair and reasonable basis, and in Distributor’s good faith business judgment taking into account, if applicable, one or more factors such as, among others, box office performance, cast, and genre. All allocations shall be made on a nondiscriminatory basis as to the Licensed Pictures, and Distributor shall not change any current allocation methodology without obtaining DWA’s prior consent. DWA acknowledges and confirms its agreement to all allocations on the books and records of

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Distributor as of the Effective Date or set forth in the DWA-approved Distribution Servicing Agreements and DWA-approved Third Party Service Agreements. DWA shall have full access to any agreement that provides for any such Financial Benefit, subject to the confidentiality restrictions contained in any such agreement.

b. Local Currency: Other than amounts which cannot legally be remitted from the country in which they are earned (“Blocked Currency”), all amounts payable hereunder shall be paid in the same manner as Distributor receives revenue from Motion Pictures produced or distributed by Distributor, in either U.S. currency or the currency of the country where such Gross Receipts are received by Distributor. Foreign currency amounts received by Distributor and subsequently paid to DWA in U.S. currency shall be converted, using the same exchange rate for Distribution Expenses and Gross Receipts, on specified dates of which Distributor shall notify DWA on an ongoing basis and which shall be the same dates and rates used for Motion Pictures produced or distributed by Distributor; provided, if amounts are not converted directly from the foreign currency in which they were received to U.S. currency (e.g., if intermediary conversion to any other currency[ies] is utilized), then Distributor shall bear all risk from fluctuation of such intermediary currencies unless such intermediary conversion was undertaken at DWA’s direction. Notwithstanding the foregoing, DWA shall have absolute approval over any currency hedging contracts applicable to the Licensed Pictures entered into by Distributor or any Subdistributor, and DWA shall have the right to enter into foreign currency hedging contracts with respect to amounts due hereunder. In the case of Blocked Currency, DWA shall have the right to elect from time to time whether to receive some or all of the Blocked Currency, as it becomes payable hereunder, in the country where it is located or to make any other arrangements with respect to some or all of the Blocked Currency as are available to Distributor in the applicable country. To facilitate DWA’s management of Blocked Currency, Distributor shall specify on each “Payment Report” (as defined below) all Gross Receipts that are in Blocked Currency; and upon written instructions from DWA (subject to any and all limitations, restrictions, laws, rules and regulations affecting such transaction), Distributor shall deposit Blocked Currency into a bank designated by DWA in the applicable country, or pay Blocked Currency to any Person designated by DWA in such country. Such deposits or payments to or for DWA shall constitute due remittance to DWA, and Distributor shall have no further responsibility therefor. At DWA’s election, Distributor shall convert Blocked Currency into U.S. dollars to the same extent and in the same manner and proportion that Distributor is permitted to convert Blocked Currency derived from Motion Pictures produced or distributed by Distributor. Solely for purposes of this Section 8.5.b., Licensed Pictures shall not constitute Motion Pictures produced or distributed by Distributor.

c. Allocations:

(i) Without DWA’s prior written approval, Distributor shall not license a Licensed Picture in a group with other Motion Pictures for Television Exhibition. If Distributor proposes to include one or more Licensed Pictures in a group with other Motion Pictures for Television Exhibition and DWA objects to the terms applicable to the Licensed Picture(s), then notwithstanding DWA’s objection, Distributor

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shall have the right to consummate such transaction, provided DWA may elect to exclude the Licensed Picture(s) therefrom. Whenever Distributor makes an allocation of revenue hereunder with respect to one or more Licensed Pictures and/or other Motion Pictures, DTV Productions, television programs, trailers or short subjects, Distributor shall make such allocation in its good faith business judgment and shall take into account one or more factors such as, among others, box office performance, cast, prior television allocation and genre, and in the case of a revenue allocation to trailers and/or short subjects as set forth in Section 8.3 above, Distributor shall make such allocation taking into account such factors as, among others, cost and running time.

(ii) All allocations of revenue and expenses shall be made on a nondiscriminatory basis as to the Licensed Pictures, and Distributor shall not change any current allocation methodology without obtaining DWA’s prior consent. DWA acknowledges and confirms its agreement to all allocations on the books and records of Distributor as of the Effective Date or set forth in the DWA-approved Distribution Servicing Agreements.

d. Bonuses:

(i) “Bonus Plan” means the payment of any bonuses, compensation or consideration of any kind (including discretionary bonuses) based upon, tied or related in any fashion, in whole or in part, directly or indirectly, to revenue generation in connection with the distribution of Motion Pictures.

(ii) “Bonus Plan Participants” means (i) Distributor’s staff and other employees, and (ii) any other persons or entities rendering services on or in connection with the distribution of Motion Pictures in general produced or distributed by Distributor, which persons and entities are eligible to participate in the Bonus Plan.

(iii) To the extent Distributor institutes, maintains or participates in a Bonus Plan, such Bonus Plan shall be designed and implemented so as not to have an unfair or harmfully discriminatory impact on the Licensed Pictures, as compared to Motion Pictures produced or distributed by Distributor. Payments made pursuant to any Distributor Bonus Plan to any employees of Distributor shall not constitute Distribution Expenses hereunder and shall be the sole responsibility of Distributor.

e. Electronic Reporting: All revenue and expenses on a per Licensed Picture basis shall be reported electronically, and DWA shall have full access to all data pertaining to or generated in connection with the Licensed Pictures, including all raw data (i.e. data not processed or reduced) whether segregated as to the Licensed Pictures or generated in connection with data pertaining to other Motion Pictures. As soon as practicable after the Effective Date, Distributor shall make available to DWA access to such Information and data as is required to be provided to DWA pursuant to this Agreement, including access to daily reports, if any, regarding box office and weekly reports relating to box office receipts and projected ultimate performance.

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f. Withholding and Corporate Taxes: Distributor shall be entitled to charge withholding taxes and deduct withholding taxes as a Distribution Expense, provided, however, in the event Distributor actually receives a rebate of or reimbursement for any such withholding taxes, Distributor shall be obligated to credit such amount to Distribution Expenses in the calendar month received. DWA shall not be responsible for, and Distributor shall indemnify DWA from, any corporate-level tax or other tax liability which may arise from Distributor’s distribution of Licensed Pictures in the Territory (other than DWA’s own income tax liabilities).

g. Distributor Owned Businesses: With respect to the distribution of Licensed Pictures pursuant to this Agreement, any agreement with any theater or theater chain, or any supplier or other business or entity owned in whole or in part, directly or indirectly, by Distributor, or any Distributor Affiliate, shall be fair and reasonable in the marketplace and on an arms-length basis. All such agreements shall be subject to the accounting, access and audit rights provisions set forth in Sections 8.6 and 8.7 below.

8.6 Accountings:

a. On a cumulative and continuous basis, with respect to each Licensed Picture, Distributor shall first deduct and retain Distribution Fees from Gross Receipts, as provided in Section 7, and thereafter recoup Distribution Expenses from Gross Receipts, as provided in Section 6. Distributor shall pay any remaining Gross Receipts to DWA on a monthly basis no later than the date due and issuance of the applicable Payment Report (as defined below). Distributor shall furnish to DWA, on a monthly basis, within 30 days from the end of each calendar month, revenue and payment detail reports (the “Payment Reports”) in a format approved by DWA, which format may change from time to time in DWA’s good faith discretion. Gross Receipts, Distribution Fees, Distribution Expenses and all other revenue and payment detail shall be reported on an inception-to-date basis, including all prior inceptions to date information to support current Payment Reports. Payment Reports shall be dated as of the “Report Closing Date”. Report Closing Date means the end of the calendar month prior to the date the Payment Report is due to DWA. The Payment Reports shall, among other things, indicate with specificity on a country-by-country basis (to the extent available from Subdistributors) all Gross Receipts received by Distributor for each Licensed Picture, all Distribution Fees retained from Gross Receipts, all Distribution Expenses paid for each Licensed Picture and the remaining Gross Receipts due and payable to DWA. Gross Receipts, Distribution Fees and Distribution Expenses shall be stated in U.S. Dollars. Each Licensed Picture shall be separately accounted for hereunder, and the Gross Receipts, Distribution Fees and Distribution Expenses relating to each Licensed Picture shall not be cross-collateralized or applied against the Gross Receipts, Distribution Fees and Distribution Expenses relating to any other Licensed Picture hereunder. Gross Receipts, Distribution Fees and Distribution Expenses relating to any Subdistribution

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shall be designated separately. Payment Reports may be corrected, adjusted or supplemented by Distributor from time to time to reflect adjustments, uncollectible amounts and errors.

b. In addition to the Payment Reports, Distributor shall furnish to DWA, on a monthly basis, within three (3) Business Days from the end of each calendar month, revenue reports sufficiently detailed including all pertinent Information pertaining to Distribution Fees and Distribution Expenses to enable DWA to record Picture revenue on an accrual basis in accordance with GAAP. Such accrual based revenue reports shall include all pertinent Information from the DWA-approved Distribution Servicing Agreements received by Distributor through the second Business Day of the month, but in no event shall Distributor be required to include in such accrual based revenue reports Information that is not available to Distributor under the DWA-approved Distribution Servicing Agreements.

c. Concurrently with DWA’s receipt of each Payment Report, Distributor will pay to DWA in immediately available funds the amount indicated thereon to be due to DWA. Gross Receipts received by Distributor or any Distributor Affiliate from a Subdistributor and received at any time preceding the last three (3) Business Days of each calendar month shall be accounted for on an interim basis (each an “Interim Report”). Distributor shall issue each Interim Report within three (3) Business Days after receipt of the applicable Gross Receipts from a Subdistributor, and shall concurrently with each Interim Report pay to DWA amounts, if any, then due after reconciliation of such Interim Report with the last Payment Report issued to DWA.

d. Within one-hundred eighty (180) days following the expiration or termination of the License Term for a given Licensed Picture, Distributor will prepare and render to DWA a report (the “Final Payment Report”) for such Licensed Picture setting forth, in the same form and level of detail as the periodic Payment Reports provided by Distributor over the course of the License Term for such Licensed Picture, the following information: (i) the cumulative final Gross Receipts, Distribution Fees and Distribution Expenses for such Licensed Picture, (ii) the amount of any unliquidated End of Term Reserve for such Licensed Picture; and (iii) the net amount payable by Distributor to DWA (or DWA to Distributor, if applicable) (the “Final Payment Amount”). If the Final Payment Amount is payable by Distributor to DWA, Distributor shall make payment of such amount to DWA at the time the Final Payment Report is rendered. If the Final Payment Amount is payable by DWA to Distributor, DWA shall make payment of such amount within ten (10) Business Days following delivery of the Final Payment Report.

e. All payments hereunder to DWA or Distributor, as the case may be, shall be made by wire transfer or such other method as DWA or Distributor, as the case may be, shall approve. Payments to DWA shall be to DWA or any entity designated from time to time by DWA. Interest shall be charged on any amount which is not paid when due (from the date due until the date of payment) hereunder by either party at the 30-day LIBOR from time to time in effect, plus 100 basis points but shall be waived if payment of the amount owing is made within five (5) Business Days after the due date. Such interest shall be paid at the same time as the associated principal payment shall be made.

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f. DWA shall be entitled to all audit results respecting the Licensed Pictures as and when received by Distributor, including original audit reports and supporting materials. Distributor shall audit the Pictures on not less than the same basis and frequency as it audits Motion Pictures produced or distributed by Distributor, as performed by internal and external auditors.

g. If Distributor is required to incur any new additional direct out-of-pocket costs or expenses (of which Distributor notifies DWA in advance) solely in order to re-format any Payment Reports to DWA’s specifications, Distributor shall not be required to furnish such re-formatted Payment Reports unless DWA preapproves such costs and expenses and agrees to reimburse Distributor for all such costs and expenses (subject to appropriate reduction, to be mutually agreed, if and to the extent the revised format is used for similar reports provided to any Person other than DWA).

8.7 Access and Audit Rights:

a. Distributor shall keep full, true and complete records and books of accounts together with all supporting vouchers, invoices, books of account, computer or data base information, correspondence and documents relating to the distribution of the Licensed Pictures hereunder (collectively, “Records”), and maintain, for a period of seven years following DWA’s receipt of a Payment Report all Records relevant thereto. Notwithstanding the foregoing, Distributor shall in any event keep and maintain (or deliver to DWA) all of the above mentioned materials for any longer period required to complete an open audit for which DWA gives notice or in the event of an unresolved dispute with any participant or third party related to a Licensed Picture for which DWA gives notice.

b. Distributor grants DWA and its agents, employees and representatives the right, from time to time at all times during the Term and for a period of thirty-six (36) months after the later of (i) the expiration of the Term and (ii) the delivery of the last Payment Report hereunder, upon reasonable prior notice to Distributor, to examine, audit and take excerpts from and make copies of any such Records and all other documents related to the distribution of the Licensed Pictures or to the calculation of amounts due to or from DWA hereunder; provided, however, transactions will not be subject to audit more than five (5) years after delivery to DWA of the Payment Report in which such transactions are initially reported. Notwithstanding the foregoing, DWA shall only be entitled to confidential third party information to the extent the same is reasonably necessary to resolve an issue(s) under audit. DWA’s audit rights hereunder shall include the right to examine and inspect (a) Records pertaining to theatrical Motion Pictures and DTV Productions produced or distributed by Distributor in order for DWA to verify the fair and reasonable allocation of any Financial Benefit to the Licensed Pictures, and (b) all inventory of the Licensed Pictures in the possession or control of Distributor and any Subdistributors and/or the duplication, printing and storage facilities used by Distributor. DWA shall have the right (a) to conduct any audit at

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Distributor’s corporate headquarters and/or at Distributor’s branch offices, and (b) to obtain supporting documentation through Distributor’s corporate headquarters’ staff and/or Distributor’s branch offices. DWA shall be solely responsible for all costs and expenses in connection with such audits, except as further provided in Section 8.7.c. below.

c. If an audit discloses any inaccuracies or discrepancies in the Records with respect to the distribution of the Licensed Pictures hereunder or the amounts payable to or from DWA (and either Distributor agrees with the audit findings or the findings are confirmed by the arbitrator pursuant to Section 24 below), then Distributor shall cure such inaccuracies and discrepancies within thirty (30) calendar days following notice thereof. In the event an audit shall uncover a deficiency (and either Distributor agrees with the audit findings or the findings are confirmed by the arbitrator pursuant to Section 24 below), as of the end of the period audited, or for any period of at least six (6) months during the period audited, in each case equal to or greater than five percent (5%) of the net amount paid to DWA for the period audited, Distributor shall immediately pay DWA (i) said deficiency in full, together with interest thereon, with interest computed at the 30-day LIBOR plus 100 basis points as of the applicable Payment Report date, computed from the date such amounts were otherwise due and (ii) all costs and expenses in connection with such audit, including auditor fees, hotel and travel expenses.

d. Subject in all cases to Distributor’s confidentiality obligations, DWA shall have the right at DWA’s sole expense, to elect (i) to require Distributor to audit, to the extent of Distributor’s right to conduct such audit, or (ii) to audit directly, where Distributor may grant such right and to the extent of Distributor’s right to conduct such audit, the records of any Subdistributor or party to a DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement pertaining to the Licensed Pictures, provided that such right may not be assigned to any other Person.

e. In the event of an audit, Distributor shall provide DWA and its agents, employees and representatives with reasonable and suitable physical conditions in which to conduct such audit, including a desk and chair, telephone, adequate lighting and suitable ventilation, as well as a copying machine with which to make copies. Subject to the applicable DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement, Distributor shall cause each Subdistributor or party to a DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement to comply with the foregoing.

f. Each of Distributor, any Subdistributor or party to a DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement and DWA shall use reasonable efforts to conduct any audit in an expeditious manner. DWA and Distributor shall mutually agree on an audit schedule pertaining to the Licensed Pictures. Any audit settlement including the Licensed Pictures shall be subject to DWA’s prior written approval.

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8.8 Tax Reporting:

a. General: Distributor shall supply DWA with such information and/or documentation available to Distributor as DWA may require in order to take advantage of any tax credits, deductions, exclusions and/or reductions, including the Extra-territorial Income Exclusion (“EIE”) that may be available to DWA in any jurisdiction of the Territory. Distributor shall have no liability hereunder to DWA with respect to or arising out of such information and/or documentation or DWA’s ability or inability to take advantage of any such tax credits, deductions, exclusions and/or reductions, and DWA’s indemnification of Distributor and related parties set forth in Section 10 below shall apply to any third party claims by reason of any such tax credits, deductions, exclusions and/or reductions.

b. Records: Distributor shall maintain and provide DWA with access to any books and records necessary to prepare any federal, state and foreign, if any, tax filings.

c. Tax Filings: Distributor shall be responsible for any foreign tax filings, such as withholding tax, VAT, etc., and shall indemnify and hold DWA harmless from any interest, penalties or similar assessments resulting from errors and/or failures to file any required tax returns.

d. Other Tax Information: To the extent such information is in Distributor’s possession or is available to Distributor, and provided that Distributor is not prohibited from providing such information to DWA by law, regulation or contract, Distributor will provide DWA with such additional information as DWA any request with respect to tax matters, including information required to take advantage of tax credits and related matters. Such information will be provided to DWA within five (5) Business Days following DWA’s request therefor.

e. Tax Information/Additional Costs: If DWA requires any information and/or documentation pursuant to this Section 8.8 that is not reasonably available to Distributor, Distributor shall not be required to supply such information and/or documentation unless DWA agrees to reimburse Distributor for any additional direct out-of-pocket costs preapproved by DWA and incurred by Distributor to supply such information and/or documentation.

8.9 Operations:

a. Secured Locations: Distributor shall maintain all prints and transfers of the Licensed Pictures, all other related Tangible Film Materials and all intellectual property of DWA under Distributor’s control in a secure location at all times during the Term. At all times hereunder, as between DWA and Distributor, DWA shall retain sole and exclusive ownership of the copyrights and all other intellectual property rights in and to the Licensed Pictures and all Tangible Film Materials, provided Distributor shall own the physical items constituting Tangible Film Materials created by Distributor in accordance with this Agreement. Tangible Film Materials shall be held in

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Distributor’s name for the benefit of DWA at each secured location and laboratory, and DWA shall have unfettered and unrestricted access to any Tangible Film Materials wherever located, including the right to access such Tangible Film Materials and any Marketing Materials created or produced by Distributor to exploit DWA’s Retained Rights.

b. Prints/Video Devices: Distributor shall catalog and track (in a manner acceptable to DWA) all prints, Video Devices, trailers and other advertising material and implement with DWA’s approval print storage and retrieval procedures and procedures for the destruction of prints and Video Devices and for issuance of a certificate of destruction evidencing same.

c. Laboratories: DWA shall comply with Distributor’s existing film and laboratory agreements with Eastman Kodak Company and Technicolor Inc. and Affiliates, respectively. The Licensed Pictures shall be included in the foregoing agreements on a nondiscriminatory basis. Such agreements constitute DWA-approved Third Party Service Agreements and, as such, are subject to the provisions of Section 4.11. above.

d. Dubbing/Subtitling: DWA shall determine in its sole discretion which Licensed Pictures, if any, shall be subtitled and/or dubbed and shall approve the key creative elements (e.g., cast and star talent approvals, translations of the English language version) of dubbing and subtitling the Licensed Pictures and trailers thereof. Distributor shall manage, implement and service all dubbing and/or subtitling, including the negotiation and execution of all talent agreements.

e. Documentation: To the extent Tangible Film Materials, Marketing Materials or any versions of the Licensed Pictures are in the possession of any Person, Distributor shall provide DWA with any written authorizations, access letters and permissions required to allow DWA to fully access such materials.

f. Security/Anti-Piracy Measures: Except as may be provided in the Universal Agreement (but only in connection with Theatrical Exhibition in the International Territory and Home Video Exhibition in the Territory), Distributor shall maintain (and shall use commercially reasonable efforts to cause or obligate its Subdistributors to maintain) security and anti-piracy measures consistent with the highest level of security and anti-piracy measures maintained for theatrical Motion Pictures and DTV Productions distributed by Distributor in the applicable portions of the Territory to prevent unauthorized distribution or copying, or infringement of any of DWA’s rights. If DWA desires security and anti-piracy measures beyond those provided by Distributor (or its Subdistributors) per the preceding sentence, it may require Distributor to provide same (or DWA may make its own third party arrangements for such services) at DWA’s sole cost and expense. Each party shall immediately notify the other of any unauthorized copying, distribution, exhibition or other exploitation of the Licensed Pictures and of any of the infringements or violations of DWA’s copyrights, trademarks and other rights in the Licensed Pictures of which such party has knowledge. DWA shall take such actions as it deems appropriate with respect thereto. To the extent appropriate, Distributor may

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join in any actions and cooperate (at DWA’s expense) in any litigation or other proceedings to protect the Licensed Pictures and to prevent unauthorized distribution or copying, or infringement of any of DWA’s rights. If DWA elects to proceed alone directly through its own counsel, DWA shall bear the costs thereof, and DWA shall be entitled to retain any recovery. If DWA does not elect to proceed as provided in the preceding sentence, Distributor shall have the right, but not the obligation, to proceed either in DWA’s name or in Distributor’s name, in which event all recovery reasonably allocated to the Licensed Pictures shall be included in Gross Receipts and all reasonable, actual direct third party expenses reasonably allocated to protecting the Licensed Pictures shall be a Distribution Expense. DWA shall cooperate fully therewith, and if recovery is through MPAA or MPA actions, any financial recovery shall be applied consistent with MPAA or MPA practices. To the extent Distributor pays direct additional costs related to piracy, copyright or trademark infringement or other violations of DWA’s rights in the Licensed Pictures, such costs (to the extent pre-approved by DWA), including anti-piracy print coding, MPAA piracy programs, and other anti-infringement activities, shall be payable by DWA. Notwithstanding the foregoing, DWA may elect not to have the Licensed Pictures included in such MPAA, MPA, piracy, copyright or trademark infringement or other actions.

g. Deductibility of Section 8 Costs and Expenses: For the avoidance of doubt, all actual, direct out-of-pocket costs and expenses incurred by Distributor in connection with the matters described in this Section 8 shall constitute Distribution Expenses deductible against applicable Gross Receipts hereunder.

Section 9. Representations, Warranties and Agreements

a. DWA represents, warrants and agrees that:

(i) As of the dates Distributor (A) commences to advertise and/or distribute each Licensed Picture and (B) commences fulfillment services in connection with the Home Video Exhibition of each Licensed Picture, there shall be no claims, liens, encumbrances or licenses in or to the Licensed Picture that would limit or interfere with the rights hereby granted.

(ii) All negatives and other materials to be delivered or made available to Distributor will be of a quality suitable for the manufacturing of technically acceptable positive release prints of the Licensed Pictures and trailers thereof.

(iii) Unless DWA notifies Distributor in writing to the contrary, there will be no restrictions that would prevent Distributor from distributing the Licensed Pictures consistent with the provisions of this Agreement. Subject to Distributor’s paymaster obligations with respect to Residuals, there will not be any payments which must be made by Distributor to any actors, musicians, directors, writers or other persons who participated in the Licensed Pictures, or to any union, guild or other labor organization for any right to exhibit the Licensed Pictures or as compensation in connection with such exhibition or for any other use of the Licensed Pictures or any of the rights therein and thereto; provided, that DWA shall not be obligated to supply any

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performing rights license (e.g., SESAC) which may be required in connection with exhibition of any Licensed Picture, except only to the extent as customary in the motion picture business for so-called “major” studios. Applicable payments to performing rights societies (e.g., SESAC), which Distributor is required to pay, shall be charged as Distribution Expenses hereunder. If DWA has not supplied all music licenses necessary to Exhibit a Licensed Picture, then Distributor shall have the option of obtaining the required licenses (and charge the cost thereof as Distribution Expenses) or to forego distribution of the Licensed Picture in the affected portion of the Territory until such licenses are obtained by DWA.

(iv) The Licensed Pictures (including any elements thereof) and any material supplied by DWA to Distributor will not violate or infringe any trademark, trade name, contract, agreement, copyrights (whether common law or statutory), patent, literary, artistic, dramatic, personal, private, civil, property, or privacy right or “moral rights of authors” or any other right, or slander or libel any Person; provided, that the foregoing shall not apply to any material which is created by or supplied by Distributor, except to the extent such material created by or supplied by Distributor incorporates elements from any Licensed Picture or any elements supplied by DWA to Distributor.

(v) It has the full right, power, and authority to enter into and fully perform this Agreement and to comply with all of its obligations hereunder; DWA is and will be duly organized and validly existing under the laws of its state of formation, and is and will be duly qualified to transact business under the laws of each state where the failure to do so would have a material adverse effect on either the conduct of its business or its ability to perform this Agreement. DWA has or at all relevant times hereunder shall have the full, complete and unfettered rights, power and authority to bind conclusively any and all of its controlled Affiliates to each and every term, covenant and condition of this Agreement relating to or involving any of its controlled Affiliates.

(vi) All actions taken by DWA in connection with this Agreement shall be taken in full compliance with all applicable statutory, administrative and/or court-made laws, rules and regulations of any jurisdiction, and those of any other governmental body (including those relating or pertaining to the manufacture, production, distribution, exhibition, sale, advertising, promotion and other use of intellectual properties and/or consumer products or services).

(vii) As of the Effective Date, no litigation, proceeding or claim is pending or threatened against DWA that is reasonably likely to have a material adverse effect on DWA’s ability to perform its obligations under this Agreement or any Distribution Rights relating to the Licensed Pictures.

b. Distributor represents, warrants and agrees that:

(i) Distributor will not suffer or authorize any lien, encumbrance, pledge or mortgage (each, a “Lien” hereunder) to attach to any Licensed Picture, including any Distribution Rights, or to any materials furnished by DWA relating

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to the Licensed Pictures, provided the foregoing shall not apply to any Lien created, authorized or caused by DWA, including those pursuant to or contemplated by Section 12. below and any Lien created pursuant to the terms of any DWA-approved Distribution Servicing Agreement or DWA-approved Third Party Service Agreement.

(ii) No material (including advertising, publicity, promotional, trailers, etc.) added to the Licensed Pictures or used in connection therewith by Distributor violates or will violate, or infringes or will infringe, any trademark, trade name, contract, agreement, copyright (whether common law or statutory), patent, literary, artistic, dramatic, personnel, private, civil, property, or privacy right or “moral rights of authors” or any other right, or slander or libel any Person, provided that the foregoing shall not apply to any material that is created by or supplied by DWA or incorporates elements from any Licensed Picture.

(iii) Distributor has or will have written agreements with each Subdistributor hereunder to comply with the terms and conditions of this Agreement. The foregoing shall not apply to the CJ Agreement, the Kadokawa Agreement, the Universal Agreement or any of the DWA-approved Distribution Servicing Agreements listed on Schedule 1 hereto, nor to any DWA-approved Third Party Service Agreement or any Distribution Servicing Agreement that DWA later approves and which does not contain such a requirement. Such agreements will be made available to DWA promptly upon its request.

(iv) Distributor has the full right, power, and authority to enter into and fully perform this Agreement and to comply with all of its obligations hereunder; Distributor is and will be duly organized and validly existing under the laws of its state of formation, and is and will be duly qualified to transact business under the laws of each state where the failure to do so would have a material adverse effect on either the conduct of its business or its ability to perform this Agreement. Distributor has or at all relevant times hereunder shall have the full, complete and unfettered rights, power and authority to bind conclusively any and all of its controlled Affiliates to each and every term, covenant and condition of this Agreement relating to or involving any of its controlled Affiliates.

(v) Distributor has not sold, assigned, transferred or conveyed, and will not in the future sell, assign, transfer or convey to any person any rights, title or interest in or to any of DWA’s Retained Rights or that is adverse to or in derogation of any of the Distribution Rights. Distributor has not authorized, and will not in the future authorize, any person to exercise any of DWA’s Retained Rights, except as permitted by any DWA-approved Distribution Servicing Agreement or any DWA-approved Third Party Service Agreement. Distributor has not exercised any right or taken any action, and will not in the future exercise any right or take any action, that might derogate from or unfairly compete with any of DWA’s Retained Rights or the quiet and peaceful possession and enjoyment of DWA’s Retained Rights. In the exercise of the Distribution Rights and otherwise in the fulfillment of Distributor’s obligations pursuant to this Agreement, Distributor will not engage in any act that violates any law, rule, act or regulations of any governmental authority. All actions taken by Distributor in

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connection with this Agreement shall be taken in full compliance with all applicable statutory, administrative and/or court-made laws, rules and regulations of any jurisdiction, and those of any other governmental body (including those relating or pertaining to the manufacture, production, distribution, exhibition, sale, advertising, promotion and other use of intellectual properties and/or consumer products or services).

(vi) All consideration to be provided by Distributor pursuant to each third party business arrangement, including the DWA-approved Distribution Servicing Agreements and DWA-approved Third Party Service Agreements, to which Distributor is a party and all of the terms, covenants and conditions provided to be kept or performed by Distributor pursuant to each such third party business arrangement will be paid, kept, performed and discharged in full by Distributor unless excused by the other party thereto or by operation of law. There currently is no breach or other act of default, and in the future there will be no breach or other act of default by Distributor under any of such third party business arrangements, that would have a material adverse affect on Distributor’s business or its ability to perform under this Agreement. Subject to any limitations and restrictions contained in the DWA-approved Distribution Servicing Agreements or the DWA-approved Third Party Service Agreements, Distributor is not a party to any third party business arrangement that will conflict with any of DWA’s approval rights, and Distributor has the full right, power and authority in all of its third party business arrangements to comply fully with all of DWA’s approvals and rights as set forth in this Agreement.

(vii) As of the Effective Date, no litigation, proceeding or claim is pending or threatened against Distributor that is reasonably likely to have a material adverse effect on Distributor’s ability to perform its obligations under this Agreement, the Distribution Rights with respect to the Licensed Pictures, or on any of DWA’s Retained Rights.

Section 10. Indemnity.

a. Indemnity Obligations: Each party (“Indemnitor”) shall at its own cost and expense indemnify, defend and hold the other party, its and their parents and affiliates, and their respective employees, agents, managers, subdistributors, directors and shareholders (collectively, “Indemnitee”) harmless from and against any and all loss, liability or expense resulting from any claim, demand or suit which may be made or brought against Indemnitee by reason of any claim by any third party that (a) (i) a Licensed Picture, or any element thereof, including the sound and music synchronized therewith; (ii) any material (including advertising, publicity, promotional trailers, etc.) added to the Licensed Picture or used in connection therewith, to the extent any of the above are supplied by or at the request or direction of or on behalf of Indemnitor, or to the extent any of the above are added by the Indemnitor without Indemnitee’s knowledge, violates or infringes upon the trademark, trade name, patent, copyright, literary, dramatic, musical, artistic, personal, private, publicity, civil, property or contract right, right of privacy, the moral rights of authors or any other right of any Person; or (b) notwithstanding anything to the contrary contained in Section 11.1.e., a breach of any representation, warranty or agreement by the Indemnitor hereunder. Notwithstanding the

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foregoing, DWA shall so indemnify Distributor and the other Distributor Indemnitees as set forth above with respect to third party claims arising out of material created by or supplied by Distributor to the extent such claims are based upon elements from any Licensed Picture incorporated in such material, or any material supplied by DWA to Distributor and used by Distributor in a manner authorized by DWA. Distributor will not be entitled to any indemnity hereunder to the extent that losses arise or result because Distributor fails to withdraw any Licensed Picture which is the basis of any such claim from distribution promptly as, when and to the extent so instructed by DWA; however, Distributor will be entitled to an indemnity hereunder if Distributor honored an instruction from DWA not to withdraw such Licensed Picture from distribution. Notwithstanding the foregoing, (a) in no event will DWA or any DWA Indemnitor be required to indemnify Distributor or any Distributor Indemnitee, for any claim, demand or suit which may be made or brought against Distributor or any Distributor Indemnitee for the satisfaction of any of the following: (i) the Advance (as defined in the Universal Agreement) owed by Distributor to Universal under the Universal Agreement, including any Advance amounts scheduled to be forgiven by Universal that are not forgiven, but excluding any portion of the Advance, including any Animation Advance Amount, expressly assumed by DWA pursuant to the Interparty Agreement dated as of             , 2004 among Distributor, DWA and Universal, (ii) resulting from the acceleration of the Distributor’s Class U, Class T/T or Class K limited liability company interests, or (iii) related to subordinated debt issued by Distributor to Home Box Office that is not expressly assumed by DWA as scheduled in the Separation Agreement (collectively, the “Distributor Excluded Liabilities”), and (b) in no event will Distributor or any Distributor Indemnitor be required to indemnify DWA or any DWA Indemnitee for any claim, demand or suit which may be made or brought against DWA or any DWA Indemnitee for the satisfaction of any of the following: (i) any portion of the Advance, including any Animation Advance Amount, expressly assumed by DWA, or (ii) any portion of the subordinated debt issued by Distributor to Home Box Office that is expressly assumed by DWA (as scheduled in the Separation Agreement)(collectively, the “DWA Excluded Liabilities”).

b. Insurance: DWA shall maintain and cause Distributor to be added as an additional insured (without responsibility for premiums or deductibles) with respect to the Licensed Pictures under DWA’s Errors and Omissions policy (to the extent commercially available) pertinent to exhibition of the Licensed Pictures in the Territory. Such policy shall be for a term, in amounts and containing a deductible and notice provision as is customary in the motion picture industry. All such insurance coverage shall be primary to any other coverage maintained by Distributor. Upon request by Distributor, DWA shall promptly forward to Distributor Certificates of Insurance evidencing DWA’s coverage. Notwithstanding the foregoing, DWA may elect in its sole discretion to self-insure. Distributor shall be fully responsible for the loss or destruction of any Licensed Pictures, Tangible Film Materials or Marketing Materials in Distributor’s possession or control, unless and to the extent that the negligent or wrongful conduct of DWA and/or a third party with whom DWA contracts directly results in such loss or destruction (and further provided that such negligent or wrongful conduct is not of the type for which Distributor would be responsible under industry customs). The Licensed Pictures shall be covered, and DWA shall be added as an additional insured (without

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responsibility for premiums or deductibles), under Distributor’s property, casualty and liability insurance; and, with respect to advertising materials created by Distributor, Distributor shall maintain errors and omissions insurance (to the extent commercially available), and the proportionate cost of such errors and omissions insurance shall be a Distribution Expense hereunder. All such insurance coverage shall be primary to any other coverage maintained by DWA. Upon request by DWA, Distributor shall promptly forward to DWA Certificates of Insurance evidencing Distributor’s coverage.

Section 11. Default; Remedies and Termination

11.1 Default: A party shall be deemed in default of this Agreement upon the happening of any of the following:

a. Such party fails to make any payment when due hereunder or to render any statement when required hereunder. The defaulting party shall have five (5) Business Days to cure such default after receiving written notice from or on behalf of the non-defaulting party that such payment or statement has not been made or rendered within the required time;

b. Such party, or any Affiliate of such party: (i) commences a voluntary case or proceeding with respect to any or all of its assets or business under any Bankruptcy Law; (ii) is the subject of an involuntary case or petition with respect to any or all of its assets or business under any Bankruptcy Law and the involuntary case or petition is not dismissed or withdrawn within 30 days after its filing; (iii) consents to the commencement or pendency of a case or proceeding with respect to any or all of its assets or business under any Bankruptcy Law; (iv) seeks the appointment of a trustee, receiver, liquidator or other custodian of any or all of its assets or business under any Bankruptcy Law; (v) consents to the appointment of a trustee, receiver, liquidator or other custodian of any or all of its assets or business under any Bankruptcy Law; (vi) is the subject of an order of any court, agency or other governmental authority directing the appointment of a trustee, receiver, liquidator or other custodian of any or all of its assets or business under any Bankruptcy Law; (vii) seeks an order from any court, agency or other governmental authority directing the liquidation, sale, rehabilitation, reorganization or other disposition of any or all of its assets or business; (viii) is the subject of any order of a court, agency or other governmental authority directing the liquidation, sale rehabilitation, reorganization or other disposition of any or all of its assets or business; (ix) is, or admits that it is, generally not paying its debts as the debts become due; (x) is, or admits that it is, insolvent; or (xi) makes an assignment of any or all of its assets or business for the benefit of its creditors. For purposes of this paragraph, “Bankruptcy Law” means: the United States Bankruptcy Code (11 U.S.C. § 101 et seq); and all other liquidation, dissolution, rehabilitation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, extension, rearrangement, receivership, insolvency, reorganization or any other similar debtor relief laws of any applicable jurisdiction from time-to-time in effect that affects the rights of creditors generally;

c. Any Licensed Picture or any material portion thereof is attached or levied upon as a consequence of the action or inaction of such party in violation of its representations or warranties hereunder, and such attachment or levy has a material adverse effect on the licensing, distribution or exploitation of the Licensed Picture, and the same is not released or dissolved within thirty (30) days thereafter;

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d. Substantially all of the assets of such party are attached or levied upon and the same is not released or dissolved within thirty (30) days thereafter;

e. Such party otherwise is in breach of a material provision of this Agreement, including a breach of any material representation or warranty hereunder that has a material adverse effect on the licensing, distribution or exploitation of the Licensed Pictures hereunder. For the avoidance of doubt, violation of a third party right (as set forth in Sections 9.a.(iv) and 9.b.(ii), or violation of any other representation or warranty in Section 9. above that does not have a material adverse effect on the licensing, distribution or exploitation of the Licensed Pictures hereunder, shall not constitute a default pursuant to this Section 11., provided the indemnity obligations in Section 10.a. shall be fully applicable to the representations, warranties and covenants set forth in Section 9. The party in breach shall have five (5) Business Days to cure such breach after receiving written notice of such breach from or on behalf of the non-breaching party or, if a cure cannot reasonably be effected within such period, such party must begin to cure such breach within five (5) Business Days and to prosecute the same diligently thereafter;

f. In the case of Distributor: Distributor is in breach or default under any DWA-approved Distribution Servicing Agreement or a Third Party Service Agreement, and such breach or default has or will have a material adverse affect on Distributor’s ability to distribute the Licensed Pictures in accordance with this Agreement; or

g. In the case of DWA: If DWA fails to Deliver an Accepted Additional Picture or a Prospective Qualified Picture solely due to the fact that such Motion Picture was either abandoned by DWA or sold, licensed or otherwise alienated in accordance with and as permitted by Section 3.1.b. above and Distributor had theretofor incurred Distribution Expenses or bona fide binding commitments for Distribution Expenses in connection with such Motion Picture, provided that Distributor’s sole remedy for DWA’s failure to Deliver in the aforementioned circumstances shall be to require DWA (and DWA shall be obligated) to repay to Distributor all such Distribution Expenses, together with interest on such paid amounts calculated at the rate specified in Section 8.6.e. If DWA fails to Deliver such Accepted Additional Picture, or Prospective Qualified Picture, DWA shall retain all Distribution Rights thereto subject to the terms of this Agreement, including Distributor’s right to obtain an exclusive license of the Distribution Rights in accordance herewith.

Notwithstanding anything to the contrary contained in this Section 11., if there is any matter giving rise to a right of termination hereunder which is then the subject of a Good Faith Dispute, (i) no party shall be considered in default of this Agreement with respect to such matter during the pendency thereof, (ii) no party shall attempt to terminate this Agreement or any of the Distribution Rights licensed hereunder during the pendency thereof with respect to such matter, (iii) each party shall continue to perform its obligations in accordance with the terms hereof, and (iv) the cure periods provided herein above shall toll and be available following the resolution of such Good Faith Dispute (whether resolved by mutual agreement, arbitration or otherwise).

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11.2 Remedies and Termination:

a. DWA Termination Right.

(i) In the event of a default by Distributor (as determined pursuant to Section 11.1. above), DWA shall have the right to terminate this Agreement, including the right (but not obligation) (x) to order the immediate cessation of any or all distribution of the Licensed Pictures and the immediate return of any or all Tangible Film Materials (in accordance with Section 15 below), or (y) at DWA’s election, to terminate the Output Term but require Distributor to continue distribution in accordance with the terms of this Agreement (subject to Sections 11.2.c. and 11.2.d. below) of some or all Licensed Pictures previously delivered and either in release or ready for release as and for the duration of the applicable License Term. In the event Distributor is permitted to continue distributing some or all of the previously delivered Licensed Pictures, Distributor will remain obligated to make all accountings and payments set forth herein with respect to such Licensed Pictures, and Distributor and DWA shall continue to perform all of their respective other obligations hereunder with respect to such Licensed Pictures.

(ii) In the event:

(A) Both David Geffen and Steven Spielberg cease to be employees of Distributor and cease to be meaningfully involved (whether as an employee, consultant, or otherwise) in the management or oversight of Distributor’s Motion Picture distribution business (the “Principals Departure”); or

(B) A “Distributor Change of Control” occurs as hereinafter defined. Distributor Change of Control means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, of equity interests in Distributor representing more than 35% of either the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding equity interests in Distributor, whether pursuant to merger, consolidation, issuances by Distributor of equity securities or otherwise by any Person or group (within the meaning of Section 13(d) (3) or 14 (d) (2) of the Securities Exchange Act of 1934, as amended), (b) the sale of all or substantially all of the property, business or assets of Distributor or of its Motion Picture studio division to any Person (excluding internal reorganizations and transactions effected to reconstitute Distributor as a corporation), or (c) the liquidation of Distributor;

then, except in the case of an assignment to Universal or to a Successor Entity pursuant to Section 17. below, upon notice to Distributor, DWA shall have the right to terminate this Agreement as provided in Section 11.2.a.(i) above. Such termination notice must be served within sixty (60) days from DWA obtaining knowledge of such event and shall be effective thirty (30) days after service thereof, provided that with respect to the occurrence of the Principals Departure, Distributor shall have a minimum of fifteen (15)

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days to suggest a replacement of comparable stature in the theatrical Motion Picture industry to fulfill the duties then being rendered by such departed persons. DWA shall have the absolute right in its sole discretion to reject the suggested replacement and terminate this Agreement in accordance with the terms hereof.

b. Distributor Termination Right.

(i) In the event of a default by DWA (as determined pursuant to Section 11.1. above), Distributor shall have the right to terminate this Agreement, including the right (but not the obligation) to immediately cease distribution and exploitation of the Licensed Pictures and to immediately deliver to DWA any and all Tangible Film Materials (in accordance with Section 15 below) relating thereto to DWA, at DWA’s sole cost and expense.

(ii) In the event DWA fails to Deliver to Distributor three (3) Qualified Pictures during the initial five (5) years of the Output Term, six (6) Qualified Pictures during the initial ten (10) years, if applicable, of the Output Term, nine (9) Qualified Pictures during the initial fifteen (15) years, if applicable, of the Output Term, or twelve (12) Qualified Pictures during the initial twenty (20) years, if applicable, of the Output Term, then Distributor shall have the right to (A) terminate this Agreement, including the right (but not the obligation) to immediately cease distribution and exploitation of the Licensed Pictures and to immediately deliver to DWA any and all Tangible Film Materials (in accordance with Section 15 below) relating thereto to DWA, at DWA’s sole cost and expense; provided, in the event of such termination, unrecouped Distribution Expenses as of the date of termination shall remain nonrecourse as to DWA and shall be recouped by Distributor solely from Gross Receipts in accordance with this Agreement, or (B) terminate only the Output Term and continue the distribution (in accordance with the terms of this Agreement) of Licensed Pictures Delivered prior to the date of termination.

c. Existing Third Party Agreements. Subject to the provisions of this Section 11.2.c., notwithstanding the expiration or termination of this Agreement, or the Output Term or the License Term of each Licensed Picture hereunder, Distributor shall have the right to honor all then-existing contractual commitments with respect to current and prospective Licensed Pictures. DWA shall cooperate with Distributor and, at Distributor’s request and expense, shall take such actions that are reasonably necessary or desirable to ensure that Distributor is able to perform its obligations under all then-existing contractual commitments with respect to current and prospective Licensed Pictures. Notwithstanding any other provision in this Agreement, the continuation of this Agreement or any such extension of this Agreement, or the Output Term or the License Term of any Licensed Picture as contemplated by this Agreement in connection with any DWA-approved Distribution Servicing Agreements and Third Party Service Agreements shall be expressly subject to and conditioned upon Distributor continuing to pay DWA all amounts required to be paid to DWA pursuant to this Agreement and Distributor continuing to perform all of its other obligations hereunder in accordance with the terms hereof with respect to such DWA-approved contractual commitments. Subject to the foregoing:

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(i) Irrespective of any termination pursuant to this Section 11, this Agreement, solely as it relates to those Distribution Rights subject to DWA-approved Distribution Servicing Agreements and Third Party Service Agreements, shall remain in place and such Distribution Rights shall continue to be licensed to Distributor hereunder and in accordance with the terms of this Agreement until the expiration of each DWA-approved Distribution Servicing Agreement or Third Party Service Agreement, as applicable; provided, Distributor may elect to waive its Distribution Fee, in which event the last sentence of Section 7.1 above shall not apply. Distributor shall have the right to endeavor to cause its Subdistributors and any Person to release Distributor from its obligations under the applicable DWA-approved Distribution Servicing Agreement(s) and Third Party Service Agreement(s) with respect to the Licensed Picture and to enter into a direct agreement(s) with DWA with respect thereto. If any such Subdistributor or Person is willing to enter into a direct agreement with DWA, on terms and conditions no less favorable to DWA than those contained in the DWA–approved Distribution Servicing Agreement or Third Party Service Agreement, as applicable, DWA shall be obligated to enter into such agreement with such Subdistributor or Person.

(ii) The parties acknowledge that the termination of this Agreement shall not automatically terminate the DWA-approved Distribution Servicing Agreements or the Third Party Service Agreements then in effect, including licenses authorizing Television Exhibition during the License Term. Each DWA-approved Distribution Servicing Agreement and Third Party Service Agreement shall terminate with respect to the Licensed Pictures and the Distribution Rights subject thereto in accordance with the terms thereof, unless any such agreement terminates by its terms concurrently with termination of this Agreement.

d. Continuation of Distribution Fees and Distribution Expenses. For the avoidance of doubt, Distributor shall remain entitled to charge its Distribution Fees and recoup its Distribution Expenses on Licensed Picture(s) for any period during which the subject Distribution Rights are licensed to and serviced by Distributor.

e. Further Documents. On expiration or other termination of each License Term, or the Term, Distributor will immediately execute such quitclaims and other documents as DWA’s counsel deems necessary or advisable to evidence the termination of the Distribution Rights with respect to each Licensed Picture.

f. Remedies Not Exclusive. The foregoing rights and remedies are in addition to and not in lieu of or in derogation of the rights and remedies otherwise available to Distributor or to DWA in the event of default by the other party.

11.3 Special Termination Right: In the event (i) the Universal Agreement expires or is terminated by either party thereto; or (ii) Distributor ceases to be engaged in the theatrical distribution business in the Domestic Territory (and therefore ceases to directly release for Theatrical Exhibition Motion Pictures produced or acquired by Distributor) and Theatrical Exhibition rights in the Domestic Territory to Licensed

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Pictures hereunder are not assigned or sublicensed to Universal pursuant to Section 17. below, then, in either event, each of DWA and Distributor shall have the right to terminate this Agreement (subject to the applicable provisions of Section 11.2.c. above) upon the provision of notice to the other party as hereinafter provided.

a. In the case of clause (i) above, to be effective, such notice must be given within (90) days of the termination of the Universal Agreement, and notwithstanding termination of this Agreement by either party, DWA shall have the right (but not the obligation) to order the immediate cessation of any or all distribution of the Licensed Pictures (subject to Section 11.2.c.) and the immediate return of all Tangible Film Material and Marketing Materials or, at DWA’s election, require Distributor to continue distribution (subject to Sections 11.2.c. and 11.2.d.) of some or all of the Licensed Pictures delivered to Distributor and either in release or scheduled for release as of the date of such notice (and actually released within 180 days of such notice), as and for the duration of the initial period of Theatrical Exhibition and for the initial period of Home Video Exhibition (not to exceed 180 calendar days) in each country within the Territory, subject to all times to all otherwise applicable provisions of this Agreement regarding the replacement or substitution of a DWA-approved Distribution Servicing Agreement.

b. In the case of clause (ii) above, Distributor shall be obligated to provide DWA with not less than 180 calendar days notice of Distributor’s intention to cease operating its theatrical distribution business in the Domestic Territory and terminate this Agreement effective upon expiration of the notice period. DWA shall have the right at any time after receipt of such notice from Distributor to terminate this Agreement and shall have the right (but not the obligation) to order the immediate cessation of any or all distribution of the Licensed Pictures (subject to Section 11.2.c.) and the immediate return of all Tangible Film Material and Marketing Materials or, at DWA’s election, require Distributor to continue distribution (subject to Sections 11.2.c. and 11.2.d.) of some or all of the Licensed Pictures delivered to Distributor and either in release or scheduled for release as of the date of such notice, as and for the duration of the initial period of Theatrical Exhibition and for the initial period of Home Video Exhibition (not to exceed 180 calendar days) in each country within the Territory, provided Distributor’s obligation to so continue to exploit the Licensed Pictures shall cease upon expiration of the aforementioned 180 calendar days’ notice period.

c. Any termination of this Agreement pursuant to Section 11.2.a.(ii), Section 11.2.b.(ii) or this Section 11.3 shall not constitute a breach of, or default under, this Agreement and neither party shall have any liability to the other solely on account of such termination.

Section 12. Mutual Security Agreements and Documents.

12.1. Security Interest to Distributor: Subject to the terms and conditions hereof, DWA will grant and assign to Distributor, pursuant to a security agreement to be executed concurrently herewith, a security interest in and to, and copyright mortgage on, (a) the Distribution Rights in and to the Licensed Pictures, (b) all of DWA’s rights

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hereunder with respect to the Licensed Pictures (including the right to receive monies, but specifically excluding the Retained Rights), and (c) each of the following, but only to the extent necessary for Distributor to Exploit the Distribution Rights in accordance with this Agreement: (i) Tangible Film Materials, (ii) Marketing Materials, (iii) underlying literary and music materials, (iv) the Licensed Marks, and (v) the copyright and all registrations, renewals and extensions thereof, (the “DWA Collateral”) in order to secure the performance of DWA’s obligations and Distributor’s rights under this Agreement (the “DWA Secured Obligations”). The security interest and copyright mortgage granted by DWA hereunder will be entitled to priority over all other security interests in the DWA Collateral, subject to the security interests in favor of lenders or financial institutions providing financing for DWA’s general corporate purposes and the security interest of HBO in the United States pay television rights to certain Licensed Pictures (each, a “DWA Senior Secured Party”). DWA will execute and file or record, as appropriate, any other security agreements, UCC financing statements, copyright mortgages and other documents, instruments or agreements reasonably necessary to evidence, perfect, and preserve the security interest and copyright mortgage granted to Distributor hereunder, and Distributor will have all rights and remedies of a secured party pursuant to applicable law. The granting of the security interest and copyright mortgage hereunder by DWA does not violate the rights of any third party under any agreement with DWA, judgment, statute or otherwise, and does not require the prior consent of any third party, except each DWA Senior Secured Party. DWA will endeavor in good faith to obtain the requisite consent of each DWA Senior Secured Party. For the avoidance of doubt, the granting of the security interest and copyright mortgage hereunder by DWA shall not alter or amend the provisions of Section 6.1 that require Distributor to recoup Distribution Expenses on a Licensed Picture-by-Licensed Picture basis or otherwise alter or amend the Licensed Picture-by-Licensed Picture accounting obligations under Section 8; provided, however, the foregoing shall not in any way alter, impair, amend, abrogate or otherwise affect any of Distributor’s rights and remedies as a secured party hereunder or under applicable law in the event of any breach by DWA of any DWA Secured Obligation. The grant of the security interest and copyright mortgage by DWA hereunder with respect to any Licensed Picture shall be effective upon the later of (i) the first date upon which the requisite consent of each DWA Senior Secured Party shall have been obtained, and (ii) commencement of the License Period with respect to such Licensed Picture.

12.2 Security Interest to DWA: Distributor will grant and assign to DWA, pursuant to a security agreement to be executed concurrently herewith, a security interest in and to, and copyright mortgage on, the Distribution Rights in and to each Licensed Picture and Distributor’s rights in and to the Gross Receipts, Distribution Fees, Distribution Expenses, the Tangible Film Materials, the Marketing Materials, the DWA-approved Distribution Servicing Agreements and Third Party Service Agreements and related assets (collectively, the “Distributor Collateral”) in order to secure all of Distributor’s obligations to DWA hereunder. The security interest and copyright mortgage granted hereby will be entitled to priority over all other security interests in the Distributor Collateral, including the security interests in favor of the lenders providing financing for Distributor’s general corporate purposes pursuant to the Credit Agreement among Distributor and such lenders dated as of October     , 2004 (except to the extent the security interests in favor of such lenders relate to the Distribution Fees and

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Distribution Expenses owed to the Distributor), but excluding (i) the security interest of HBO in the United States pay television rights to certain of the Licensed Pictures, and (ii) the security interest, if any, in favor of Steven Spielberg, Amblin’ Entertainment, Inc. and other entities owned or controlled by Steven Spielberg in the Distributor Collateral, to secure Distributor’s performances of certain indemnity obligations thereto. Distributor will execute and file or record, as appropriate, any other security agreements, UCC financing statements, copyright mortgages and other documents, instruments or agreements reasonably necessary to evidence, perfect, and preserve the security interest and copyright mortgage granted to DWA hereunder, and DWA will have all rights and remedies of a secured party pursuant to applicable law. The granting of the security interest and copyright mortgage hereunder by Distributor does not violate the rights of any third party under any agreement with Distributor, judgment, statute or otherwise, and does not require the prior consent of any third party, except HBO (“Distributor Senior Secured Party”). Distributor will endeavor in good faith to obtain the requisite consent of the Distributor Senior Secured Party. The grant of the security interest and copyright mortgage by Distributor hereunder with respect to any Licensed Picture shall be effective upon the later of (i) the first date upon which the requisite consent of the Distributor Senior Secured Party shall have been obtained, and (ii) commencement of the License Period with respect to such Licensed Picture.

12.3 Intercreditor Arrangements: DWA and Distributor will endeavor in good faith to cause each DWA Senior Secured Party and the Distributor Senior Secured Party to enter into appropriate intercreditor agreements among DWA, Distributor, each DWA Senior Secured Party and the Distributor Senior Secured Party with respect to their respective security interests in the DWA Collateral and the Distributor Collateral.

Section 13. Copyright.

13.1 Protection and Notice: DWA at its sole expense shall take all actions reasonably sufficient to secure copyright protection for the Licensed Pictures. Distributor will cooperate as reasonably required by DWA in connection with actions undertaken by DWA to protect and enforce copyrights, trademarks, etc. DWA shall include in the Licensed Pictures as delivered to Distributor a copyright notice in conformity with the laws of the United States and the Universal Copyright Convention designating as copyright proprietor such entity as DWA shall determine. As a condition to the right of public distribution licensed to Distributor hereunder, such copyright notice shall appear on all copies of any Licensed Picture distributed hereunder.

13.2 Notice of Claims; Infringements: Distributor and DWA shall promptly notify the other of any claims against or violations or infringement of any of Distribution Rights hereunder, or of any claim against any copyright with respect to any Licensed Picture, which come to such party’s attention. Distributor, at DWA’s instruction and at DWA’s sole cost and expense, shall take all reasonable steps by action at law or otherwise to prevent any unauthorized exhibition or distribution of the Licensed Pictures in violation of the rights granted to Distributor hereunder or to prevent impairment, encumbrance or infringement of any Distribution Rights hereunder or of the copyright.

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Section 14. Ownership. Subject to the rights expressly licensed to Distributor herein, as between DWA and Distributor, DWA shall be the sole and exclusive owner of all rights, title and interest in and to the Licensed Pictures at all times. DWA’s ownership includes all copyrights, trademarks, patents, titles, designs, artwork, characters, stills, drawings, literary material, film materials, computer models, logos, stories, plots and any other intellectual properties and rights in, to, or arising out of the Licensed Pictures or any element thereof regardless of whether created by DWA or by any other person on DWA’s behalf. Distributor shall not have any ownership or security interest in, lien on, or other creditor’s rights with respect to the Licensed Pictures, any elements or components thereof (excluding only Distributor’s ownership of the Tangible Film Materials created or produced by Distributor in accordance with this Agreement), the Retained Rights and any revenue derived from exploitation of the Retained Rights, any of the literary, dramatic, musical or other materials upon which the Licensed Pictures are based or which are contained in the Licensed Pictures, or any of the copyrights, trademarks, computer models, design patents, technology or similar or analogous rights in or to the Licensed Pictures or any of the foregoing.

Section 15. Inventory of Materials.

15.1 Return / Destruction of Tangible Film Materials. Subject to Section 15.2. below, upon expiration or termination of (i) each License Term, or (ii) this Agreement, all Tangible Film Materials relating to the applicable Distribution Rights and Licensed Picture(s) shall become the property of DWA, free and clear of all claims, liens, encumbrances or other interests. Within sixty (60) days after the expiration or termination of each License Term, Distributor shall furnish DWA with a complete written inventory with respect to each Territory, listing all Tangible Film Materials then in the possession or under the control of Distributor, a Distributor Affiliate, a Subdistributor or any Person pursuant to a DWA-approved Distribution Servicing Agreement or Third Party Service Agreement. Within thirty (30) days following DWA’s receipt of the foregoing written inventory, DWA shall notify Distributor in writing regarding which of the Tangible Film Materials listed in such written inventory are to be delivered to DWA and which of the Tangible Film Materials listed in such written inventory are to be destroyed. Further in this regard:

a. If designated by DWA, Distributor shall deliver to DWA (within thirty [30] days following receipt of notice from DWA as set forth above) all Tangible Film Materials that are then within the possession or under the control of Distributor, a Distributor Affiliate, a Subdistributor or any Person pursuant to a DWA-approved Distribution Servicing Agreement. Distributor’s direct third party costs of complying with this Section 15.1.a. shall be included in Distribution Expenses, provided such delivery shall be at Distributor’s sole cost and expense in the event of termination for a Distributor default.

b. Unless designated otherwise by DWA, all or any portion of the Tangible Film Materials set forth in Distributor’s written inventory that DWA has not instructed Distributor to deliver to DWA shall be destroyed. Distributor shall furnish DWA (within thirty [30] days following receipt of notice from DWA as set forth above)

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with an affidavit of such destruction, and shall furnish such additional verification of such destruction as DWA shall designate. Distributor’s direct costs of complying with this Section 15.1.b. shall be included in Distribution Expenses, provided such destruction shall be at Distributor’s cost and expense in the event of termination for a Distributor default.

c. With respect to Distributor’s then existing inventory of Video Devices, DWA shall have the option, in its sole discretion, to either: (i) permit Distributor to sell off its then-existing inventory of DWA Video Devices upon the same terms and conditions as provided herein for a period not to exceed 180 calendar days following such termination date (subject to appropriate adjustments to outside date for Distributor’s provision of the Final Payment Report for the applicable Licensed Picture); (ii) require Distributor to deliver its then-existing inventory of DWA Video Devices and all related materials to DWA (such delivery to be at Distributor’s sole cost and expense in the event of a termination for a Distributor default, otherwise such delivery shall be at DWA’s sole cost and expense); (iii) immediately destroy or demagnetize Distributor’s then-existing inventory of DWA Video Devices (such destruction to be at Distributor’s cost and expense in the event of a termination for a Distributor default, otherwise such destruction shall be at DWA’s sole cost and expense), in which event Distributor shall promptly (but in no event more than ten (10) Business Days following destruction or demagnetization) furnish DWA with certificates of destruction or proof of demagnetization, as the case may be; or (iv) any reasonable combination of the foregoing. In addition, Distributor shall promptly provide DWA with a list of all outstanding orders for DWA Video Devices.

15.2 Post License Term Collections / Returns: Notwithstanding the expiration of the License Term for a given Licensed Picture, for a period of six (6) months thereafter Distributor shall continue to use its commercially reasonable best efforts to continue to collect all Gross Receipts and shall process and administer any returns of Video Devices of such Licensed Picture sold to video suppliers and/or video retailers but returned during such period. For the avoidance of doubt, Distributor shall remain entitled to take a Distribution Fee on, and recoup its Distribution Expenses in connection with, any such Gross Receipts and shall be entitled to recoup its Distribution Expenses in connection with returns of Video Devices. DWA and Distributor shall cooperate fully and in good faith with each other to achieve a smooth transition at the end of the License Term, and DWA shall request that any successor distributor do so as well.

Section 16. Force Majeure. Neither party shall be liable to the other because of any failure to perform hereunder caused by any cause beyond its control, including fire, earthquake, flood, epidemic, accident, explosion, casualty, strike, lockout, labor controversy, riot, civil disturbance, act of a public enemy, embargo, war, act of God or law, except as expressly provided herein to the contrary; provided, that Distributor shall in no event be required to accede to or to cause any Distributor Affiliate to accede to the demands of any guild, union or similar organization in order to bring to an end a strike, lockout or labor controversy, or to accede to the demands of any suppliers or others not a party hereto which Distributor considers unreasonable. This Section 16. shall not diminish or impair the payment obligations of either party hereunder.

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Section 17. Assignment. This Agreement may not be assigned by Distributor or DWA without the prior written consent of the other party, except that (a) without securing the prior written consent of DWA but subject to Section 4.6. above, Distributor may (without diminishing its obligations hereunder) from time to time assign or delegate any or all of its rights and obligations hereunder to one or more Distributor Affiliates, (b) if Distributor ceases to operate its theatrical distribution business in the Domestic Territory, then, with respect to all Licensed Pictures hereunder, Distributor may assign or sublicense to Universal Theatrical Exhibition in the Domestic Territory on the same terms and conditions as set forth in this Agreement, and if required by the terms of the Universal Agreement, such additional Distribution Rights then subject to the Universal Agreement, including certain Non-Theatrical Exhibition in the International Territory and Home Video Exhibition throughout the Territory, and (c) Distributor may assign to a Successor Entity (as defined below) all of its rights hereunder in the event Distributor is acquired by or merged into another entity, or in connection with a sale or assignment of all or substantially all of its theatrical distribution business to another entity (each, a “Successor Entity”); provided, that in the case of (c) above (i) Distributor and such assignee shall have executed such instruments, agreements or documents as DWA may reasonable request to ensure the legal and binding assumption by the assignee of Distributor’s obligations hereunder, (ii) such assignee shall have granted to DWA an equivalent security interest in and lien on the Distribution Rights and related assets as granted by Distributor to DWA hereunder and (iii) Distributor shall remain liable for all of its obligations hereunder. Nothing contained in this Section 17. shall (i) prohibit or limit Distributor’s right to assign or delegate any or all of its responsibilities hereunder to one or more Distributors Affiliates or to engage Subdistributors, or otherwise exploit the rights granted to Distributor hereunder, or (ii) prohibit or limit Distributor’s sale or transfer of its assets (other than its rights under this Agreement) in the ordinary course of business. Distributor shall remain liable for all of its obligations hereunder notwithstanding any such assignment, unless such assignment is to Universal or to another U.S. major motion picture studio or other financially responsible Person approved by DWA.

Section 18. Standard of Care. Except as otherwise specifically directed or approved in writing by DWA and subject to the terms and conditions of the Universal Agreement (but only in connection with Theatrical Exhibition in the International Territory and Home Video Exhibition in the Territory), in all actions under this Agreement, Distributor shall act, in accordance with at least that standard of care that it exercises with respect to the distribution of comparable Motion Pictures produced or distributed by Distributor under similar circumstances in the applicable territories and media, taking into account differences in production budgets, cast, genre, rating, prerelease audience surveys and test results, theatrical box office and other performance metrics, local tastes and other established factors that Distributor uses in good faith on a nondiscriminatory basis to make determinations in connection with the exploitation of Motion Pictures produced or distributed by Distributor, excluding in each case, any Motion Picture produced or directed by Steven Spielberg. Without limiting the generality of the foregoing, Distributor will use its commercially reasonable best efforts to ensure that the services provided to DWA hereunder by Distributor will be no less than substantially equivalent in overall quantity, level and priorities (including priorities in

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booking theaters, circuits and booking dates) to the services provided by Distributor under similar circumstances in connection with the distribution of comparable Motion Pictures produced or distributed by Distributor with similar Domestic Territory theatrical box office grosses (or, as applicable, were anticipated to have similar box office grosses at the time any such services were contracted for or provided), excluding in each case, any Motion Pictures produced or directed by Steven Spielberg.

Section 19. Distributor Distribution Credit. Distributor shall have the right to accord itself its customary distribution credit (with integrated logo) for each Licensed Picture on screen in the end titles consistent with placement on the Prior Pictures and in advertising for each Licensed Picture in reasonable and customary position and size. No other Distributor logo shall appear on screen or in advertising. Each Subdistributor or licensee shall have the right to accord itself a distribution credit (and logo) on screen and in advertising for each Licensed Picture in reasonable and customary position and size as provided in the applicable DWA-approved Distribution Servicing Agreement. DWA shall have the right to designate all other credits on the Licensed Pictures, provided credits for the Licensed Pictures shall include all credits to be accorded pursuant to the DWA-approved Distribution Servicing Agreements and Third Party Service Agreements. Each agreement with a Subdistributor or licensee shall provide that such Subdistributor or licensee is contractually bound to abide by all such credit obligations.

Section 20. Other Activities. Subject to the provisions hereof and Section 6 of the Separation Agreement, nothing herein shall limit in any way the right of DWA, Distributor or Distributor Affiliate to engage in business activities or endeavors of any kind or nature, including:

(i) Motion Picture production, distribution and related businesses;

(ii) Television production and merchandising (including video and computer games) exploiting the Licensed Pictures by DWA

(iii) Advertising;

(iv) Publishing;

(v) Interactive Media;

(vi) The sale or license of designs, stories, characters, trademarks, trade names or other rights or properties;

(vii) Ancillary market activities;

(viii) The co-financing or co-production or acquisition of any other interest of any nature in any Motion Picture or other property; and

(ix) The exercise of any right not expressly granted hereunder.

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Section 21. Exercise of Discretion. Any consultations, consents and approvals between the parties shall be performed in good faith and no party shall unreasonably withhold, condition or delay any approval or consent hereunder; provided, however, any determinations, discretion, designations, elections, instructions and approvals granted to or retained by DWA solely with respect to creative matters relating to the development, production and distribution of the Licensed Pictures, including any and all Marketing Materials (such as trailer and advertising content, key artwork, bonus materials for Video Devices, clips to be included in any product reels), may be exercised by DWA in its sole and absolute discretion.

Section 22. No Partnership or Third Party Benefit. This Agreement does not constitute Distributor and DWA as partners, joint venturers, or as each other’s agents or representatives (except as may be herein otherwise expressly provided). This Agreement is not for the benefit of any third party and shall not give any right or remedy to any such third party whether or not referred to hereunder.

Section 23. Integration/Formalities. This Agreement contains the entire agreement and understanding between the parties relating to the subject matter hereof and supersedes, cancels and replaces any prior understanding, writing or agreement between the parties relating to such subject matter. This Agreement may not be amended, modified or altered except by an instrument in writing duly executed by the parties. The parties acknowledge that each was represented by counsel in the negotiation and execution of this Agreement. No provision herein shall be construed against any party by virtue of the activity of that party, through its counsel or otherwise, in negotiating and drafting this Agreement.

Section 24. Dispute Resolution.

a. The parties agree that any dispute to interpret or enforce, or otherwise arising out of or relating to, this Agreement shall be determined by binding arbitration according to the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), provided always that: (a) the arbitration shall be conducted before a single neutral arbitrator with at least ten (10) years experience in the theatrical Motion Picture industry, appointed by mutual agreement of the parties within five (5) business days from the date the notice of arbitration is delivered by the petitioning party; (b) the parties shall be entitled to discovery as provided in California Code of Civil Procedure sections 1283.05 and 1283.1; (c) in deciding any such matter, the arbitrator shall follow the substantive law of the State of California as it would be applied by California courts; (d) either party may, without waiving its right to arbitration, seek preliminary or interlocutory relief from a court of competent jurisdiction; (e) all arbitration proceedings (including any discovery and other evidence in connection therewith) shall be closed to the public and shall remain confidential; and (f) arbitration awards hereunder may be entered and enforced as provided in California Code of Civil Procedure sections 1285 et seq. If the arbitrator is not selected by mutual consent within five (5) business days from the date the notice of arbitration is delivered by the petitioning party, the rules of the AAA with respect to the selection of an arbitrator shall apply. Notwithstanding the foregoing, before proceedings are initiated hereunder, the Chief Executive Officer or Chief Operating Officer of DWA and Distributor, or their designated representatives shall meet and in good faith attempt to resolve the dispute.

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b. Notwithstanding the foregoing:

(i) Any payment disputes submitted to binding arbitration pursuant to Section 24.a above shall commence within ten (10) business days from the date the notice is delivered by the petitioning party and the arbitrator shall rule not later than thirty (30) days after the date the notice is delivered. The hearing shall be conducted by the arbitrator for as many days as the arbitrator determines to allow; provided, that the hearing shall conclude, and the arbitrator shall rule, not later than thirty (30) days after the date the notice is delivered. The arbitrator shall rule as to whether or not amounts are owed to the petitioning party, and if so, the exact amount owed to the petitioning party (taking into account the default interest and other provisions contained in the Agreement). In such event, the non-petitioning party shall have five (5) Business Days from the date of the arbitrator’s ruling to make such payment. In the event such payment is not made within the aforementioned period, such failure shall constitute a breach of this Agreement and the petitioning party may exercise all rights and remedies available under Section 11 above.

(ii) Any disputes submitted to binding arbitration pursuant to Section 24.a. above that affect the timely release of a Licensed Picture for initial Theatrical Exhibition or initial Home Video Exhibition shall commence within seven (7) Business Days from the date the notice is delivered by the petitioning party and the arbitrator shall rule not later than ten (10) Business Days after the date the notice is delivered. The hearing shall be conducted by the arbitrator for as many days as the arbitrator determines to allow; provided, that the hearing shall conclude, and the arbitrator shall rule, not later than ten (10) Business Days after the date the notice is delivered.

c. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, AND EXCEPT AS PROVIDED BELOW, IN NO EVENT WILL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS SUFFERED BY AN INDEMNITEE, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH ANY DAMAGES ARISING HEREUNDER; PROVIDED, HOWEVER, THAT TO THE EXTENT EITHER PARTY IS REQUIRED TO PAY (A) ANY AMOUNT ARISING OUT OF THE INDEMNITY SET FORTH IN SECTION 10 AND/OR (B) ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS, IN EACH CASE, TO A THIRD PARTY IN CONNECTION WITH A THIRD PARTY CLAIM, SUCH DAMAGES WILL CONSTITUTE DIRECT DAMAGES AND WILL NOT BE SUBJECT TO THE LIMITATION SET FORTH IN THIS SECTION 24.c.; PROVIDED FURTHER IN NO EVENT SHALL DWA BE LIABLE FOR ANY DISTRIBUTOR EXCLUDED LIABILITIES, AND IN NO EVENT SHALL DISTRIBUTOR BE LIABLE FOR ANY DWA EXCLUDED LIABILITIES.

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Section 25. Severability of Provisions. If any provision in this Agreement shall be held by any court of competent jurisdiction to be illegal, invalid or unenforceable, such provision shall be of no force or effect while such infirmity shall exist, but such infirmity shall have no effect whatsoever upon the binding force or effectiveness of any other provisions hereof unless the parties otherwise agree. The parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provision with a valid provision the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provision.

Section 26. Waiver. No delay or failure to exercise any right hereunder shall constitute a waiver of such right except in those instances where this Agreement provides for specific notice and a period of time thereafter within which to exercise a right, in which case failure to exercise such right within the specified time period shall constitute a waiver thereof.

Section 27. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the state of California, applicable to contracts entered into and to be fully performed in said state by residents thereof. For purposes of enforcing, confirming or vacating an award under Section 24. above, or in the event the provisions of Section 24. shall be held invalid or unenforceable, only the California courts (state and federal) shall have jurisdiction over controversies regarding or arising under this Agreement, and if there is any matter which might be subject either to state or federal jurisdiction, the parties agree that the matter shall be submitted to federal jurisdiction. The parties specifically agree that the Superior Court of the State of California, County of Los Angeles and the United States District Court for the Central District of California shall have the personal jurisdiction over them, and each of them, notwithstanding the fact that they may be citizens of other states or countries. In this regard the parties agree that Los Angeles County is a convenient forum.

Section 28. Confidentiality. Except as may be required by law or NASD or stock exchange rules, each party shall keep confidential all terms and conditions contained herein. Distributor and DWA acknowledge that they will, during the Term hereof, have access to, and acquire knowledge from, materials, data and other information which is not accessible or known to the general public (“Confidential Information”). Except as required by law or NASD or stock exchange rules, or as may be required for the preparation of tax returns or other government or legally required documents, or as reasonable necessary to employees, agents, lawyers, accountants, auditors, bankers, consultants, representative or investors of Distributor or DWA or their Affiliates for a bona fide business purpose (who shall be similarly bound by these confidentiality provisions), neither the Confidential Information nor any knowledge acquired by Distributor or DWA, as the case may be, from such Confidential Information or otherwise through its engagement hereunder shall be used, publicized or divulged by the other to any other Person without the prior written consent of the applicable party obtained in advance and in each instance. Nothing herein shall prevent a party, or any employees, agents, lawyers, accountants, auditors, bankers, consultants, representatives or investors of such party or its Affiliates (the “Receiving Party”) from using, disclosing, or authorizing the disclosure of any information it receives in the course of performance of the Agreement which:

a. was known to the Receiving Party prior to its disclosure by the other party;

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b. is or becomes publicly available without default hereunder by the Receiving Party;

c. is lawfully acquired by the Receiving Party from a source which is not an agent or representative of the Receiving Party and is not under any obligation to the other party regarding disclosure of such information;

d. is independently developed by the Receiving Party without use of any of the other party’s confidential information; or

e. is disclosed by the applicable party hereto to unaffiliated third parties without confidential undertakings.

For the avoidance of doubt, Confidential Information as defined in this Section 28. shall not include any Information that the applicable party is obligated to make available to any third party(ies) in the course of fulfilling its obligations under this Agreement (e.g., Contingent Compensation statements).

Section 29. Notice of Representatives. DWA will give Distributor reasonable notice of DWA’s appropriate contact person(s). Distributor will give DWA reasonable notice of Distributor’s appropriate contact person(s).

Section 30. Paragraph Headings. Paragraph headings and titles are solely for convenience of reference and are not a part of this Agreement, nor are they intended to aid or govern the interpretation of this Agreement.

Section 31. Intellectual Property License. DWA acknowledges and agrees that the rights licensed to Distributor hereunder constitute “intellectual property” as such term is defined in the Bankruptcy Code and that Distributor is entitled to all of the rights of a licensee of intellectual property under Section 365(n) of the Bankruptcy Code with respect to all of such licensed rights.

Section 32. Disclosure, Compliance and Reporting Obligations. Distributor shall provide DWA with such information, records or documentation as DWA may reasonably request to permit DWA to comply with applicable laws (including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act of 2002 and rules and regulations promulgated under such Acts or any successor provisions) (including such information, records and documentation and testing thereof as may be necessary for Distributor and its management to comply with Section 404, entitled “Management’s Assessment of Internal Controls”, of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder or any successor provisions).

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Distributor shall provide to the independent public accountants of DWA such information, records or documentation as DWA or such independent public accountants may reasonably request (to the extent in Distributor’s possession or otherwise generally available to Distributor) to allow such independent public accountants to complete audits and limited reviews of the financial statements and other accounting or financial data or information of DWA (including such information, records and documentation and testing thereof as may be necessary for such independent public accountants to provide the attestation to, and report on, the internal control assessment made by DWA and its management required under the Sarbanes-Oxley Act of 2002, the rules and regulations promulgated thereunder or any successor provisions and the rules of the Public Company Accounting Oversight Board).

Distributor shall correct as promptly as practicable any deficiencies in books and records and associated controls and procedures relating to the services provided hereunder that are identified by DWA in writing in reasonable detail in connection with any internal control assessment, audit or similar review or report conducted or to be conducted by DWA, its management or its independent public accountants pursuant to the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder or any successor provisions. If at any time DWA reasonably determines that any changes are needed to be made to Distributor’s internal controls, and identifies such changes in reasonable detail in writing, then Distributor shall work diligently to make such changes as promptly as practicable. Distributor shall have no responsibility for determining what changes or corrections are necessary and shall follow instructions provided by DWA.

All direct and indirect costs and expenses relating to any of the foregoing provisions of this Section 32. (including employee time required to compile information or otherwise comply with this Section 32., changes to systems maintained by Distributor to provide information in a specific format, fees and expenses charged by auditors or other third parties, etc.) and all actions required to be taken by Distributor pursuant to this Section 32. shall be at the expense of DWA, except to the extent such action is required for Distributor to be in compliance with the other terms of this Agreement.

The provisions of this Section 32. are subject to Section 4.1. of the Services Agreement.

Section 33. Limitations on Distributor Responsibility. If the Distributor is unable to perform its obligations hereunder because it does not have the necessary assets because such assets were contributed to DWA pursuant to the Separation Agreement, the parties hereto shall determine a mutually acceptable arrangement to provide Distributor with the necessary access to such assets and, until such access is provided, the Distributor’s failure to perform the applicable obligations hereunder shall not constitute a breach of this Agreement.

Section 34. Notices. All notices hereunder shall be in writing and shall be served by private delivery services, and shall be deemed given on the date delivered to the following addresses (or such other addresses as such party may hereafter designate in writing):

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(i) If to DWA:

DreamWorks Animation SKG, Inc.

1000 Flower Street

Glendale, California 91201

Attention: General Counsel

(ii) If to Distributor:

DreamWorks L.L.C.

1000 Flower Street

Glendale, California 91201

Attention: General Counsel

Section 35. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument, which may be sufficiently evidenced by one counterpart.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above.

DREAMWORKS L.L.C.
By	/s/ Brian Edwards
Its	Vice President and General Counsel
DREAMWORKS ANIMATION SKG, INC.
By	/s/ Katherine Kendrick
Its	Vice President and General Counsel

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EX-10.6

Exhibit 10.6

SERVICES AGREEMENT

between

DREAMWORKS L.L.C.

and

DREAMWORKS ANIMATION SKG, INC.

Dated as of October 7, 2004

SERVICES AGREEMENT

This Services Agreement, dated as of October 7, 2004, is by and between DreamWorks L.L.C., a Delaware limited liability company (“Studio”), and DreamWorks Animation SKG, Inc., a Delaware corporation (the “DWA”).

RECITALS

A. DWA is currently a wholly owned subsidiary of Studio.

B. Along with DreamWorks Animation, L.L.C., a Delaware limited liability company, Studio and DWA have entered into that certain Separation Agreement, dated as of October 7, 2004 (the “Separation Agreement”), pursuant to which Studio’s animation business will be separated from the rest of Studio’s business (the “Separation”).

C. In connection with the Separation, the parties agree to the mutual covenants set forth in this Agreement.

D. During the Term (defined below), the parties have agreed that Studio will continue to provide certain services to DWA and its Subsidiaries (defined below) and that DWA will provide certain services to Studio and its Subsidiaries, each on the terms and conditions set forth herein.

AGREEMENT

In consideration of the foregoing Recitals, the mutual promises and covenants set forth below and the transactions contemplated by the Separation Agreement, the receipt and sufficiency of which are acknowledged, the parties hereby mutually agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions. For purposes of this Agreement, in addition to the words and phrases that are defined throughout the body of this Agreement, the following words and phrases will have the following meanings:

“Actual Cost” will have the meaning set forth in Section 2.4(a).

“Additional Service” will have the meaning set forth in Section 2.1(b).

“Affiliate” will have the meaning set forth in the Separation Agreement.

“Agreement” means this Services Agreement dated as of October 7, 2004, and includes the Exhibits.

“Ancillary Agreement” means any agreement between Studio and DWA including the Distribution Agreement and the Separation Agreement.

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“Distribution Agreement” means the Distribution Agreement dated October 7, 2004, between Studio and DWA.

“Due Date” will have the meaning set forth in Section 2.4(b).

“DWA” will have the meaning set forth in this Agreement’s introductory paragraph.

“Escalation Notice” will have the meaning set forth in Section 4.11(b).

“Estimated Cost” will have the meaning set forth in Section 2.4(a).

“Force Majeure Conditions” will have the meaning set forth in Section 2.3(a).

“Governmental Authority” means any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

“Group” will have the meaning set forth in the Separation Agreement.

“Information” means information in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, films, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.

“Initial Service” will have the meaning set forth in Section 2.1(a).

“Law” means any law, statute, rule, regulation or other requirement imposed by a Governmental Authority.

“Output Term” will have the meaning set forth in the Distribution Agreement.

“Person” will have the meaning set forth in the Separation Agreement.

“Prime Rate” means the rate which [JPMorgan Chase Bank] (or any successor thereto or other major money center commercial bank agreed to by the parties) announces from time to time as its prime lending rate, as in effect from time to time.

“Providing Party” means with respect to any particular Service, the entity or entities identified on the applicable Exhibit as the party to provide such Service.

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“Providing Party Personnel” will have the meaning set forth in Section 2.1(e).

“Receiving Party” means with respect to any particular Service, the entity or entities identified on the applicable Exhibit as the party to receive such Service.

“Resident Jurisdiction” will have the meaning set forth in Section 3.1(a).

“Separation” will have the meaning set forth in this Agreement’s recitals.

“Separation Agreement” will have the meaning set forth in this Agreement’s recitals.

“Service” means each Initial Service and each Additional Service.

“Studio” will have the meaning set forth in this Agreement’s introductory paragraph.

“Subsidiary” will have the meaning set forth in the Separation Agreement.

“System” means the software, hardware, data store or maintenance and support components or portions of such components of a set of information technology assets identified in an Exhibit.

“Tax” will have the meaning set forth in Section 3.1(a).

“Term” will have the meaning set forth in Section 2.5.

“Termination Notice” will have the meaning set forth in Section 2.6(a).

“True-Up Due Date” will have the meaning set forth in Section 2.4(a).

“VAT” will have the meaning set forth in Section 3.1(d).

“Work Product” will have the meaning set forth in Section 2.1(f).

1.2 General Rules of Construction. For all purposes of this Agreement and the Exhibits delivered pursuant to this Agreement: (i) the terms defined in Section 1.1 have the meanings assigned to them in Section 1.1 and include the plural as well as the singular; (ii) all accounting terms not otherwise defined herein have the meanings assigned under GAAP; (iii) all references in this Agreement to designated “Sections”, “Articles”, “Exhibits”, and other subdivisions are to the designated Sections, Articles, Exhibits, and other subdivisions of the body of this Agreement; (iv) pronouns of either gender or neuter will include, as appropriate, the other pronoun forms; (v) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision; (vi) ”or” is not exclusive; (vii) ”including” and “includes” will be deemed to be followed by “but not limited to” and “but is not limited to,” respectively; (viii) ”may not” is prohibitive and not permissive; (ix) ”party” or “parties” refer to a party or parties to this Agreement unless

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otherwise indicated; (x) any definition of or reference to any law, agreement, instrument or other document herein will be construed as referring to such law, agreement, instrument or other document as from time to time amended, supplemented or otherwise modified; and (xi) any definition of or reference to any statute will be construed as referring also to any rules and regulations promulgated thereunder.

ARTICLE II

SERVICES

2.1 Services.

(a) Initial Services. Except as otherwise provided herein, during the Term, the Providing Party will provide or cause to be provided to the Receiving Party, and the Receiving Party will accept and pay for, each of the following services identified, and as more fully described, in the Exhibits (“Initial Services”):

(i) Corporate Affairs Services (Exhibit 1);

(ii) Human Resources Services (Exhibit 2);

(iii) Payroll Services (Exhibit 3);

(iv) Information Technology Services (Exhibit 4);

(v) Studio Legal and Business Affairs Services (Exhibit 5);

(vi) Corporate Aircraft Services (Exhibit 6);

(vii) Tax Services (Exhibit 7);

(viii) Risk Management Services (Exhibit 8);

(ix) Archiving Services (Exhibit 9);

(x) Story Department Services (Exhibit 10);

(xi) Information Technology Equipment Purchasing (Exhibit 11);

(xii) Other Purchasing Services (Exhibit 12);

(xiii) Facility Security Services (Exhibit 13);

(xiv) Special Events Services (Exhibit 14);

(xv) Casting Services (Exhibit 15);

(xvi) Film Music Services (Exhibit 16);

(xvii) Office Space and Related Services (Exhibit 17);

(xviii) Other Legal Services (Exhibit 18); and

(xix) Engineering Services (Exhibit 19).

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(b) Additional Services. From time to time during the Term, the parties may identify additional services that the Providing Party may provide to the Receiving Party in accordance with the terms of this Agreement (the “Additional Services”). If the parties agree to add any Additional Service(s), the parties will mutually create an Exhibit or amend an existing Exhibit for each such Additional Service, setting forth a description of the Service, the time period during which the Service will be provided, the Estimated Cost for the Service and the formula for calculating the Actual Cost of such Service, and any other terms applicable thereto. In order to become a part of this Agreement, such amendment to the applicable Exhibit must be executed by a duly authorized representative of each party, at which time such Additional Service will, together with the Initial Services, be deemed to constitute a “Service” for the purposes hereof and will be subject to the terms and conditions of this Agreement. The parties may, but will not be required to, agree on Additional Services during the Term. Notwithstanding anything to the contrary in the foregoing or anywhere else in this Agreement, any service actually performed by the Providing Party upon written or oral request by the Receiving Party in connection with this Agreement will be deemed to constitute a “Service” for the purposes of Sections 2.4 and 2.7, but such “Service” shall only be incorporated into the Agreement by an amendment as set forth in this Section. To facilitate determination of whether Additional Services should be scheduled, and generally to further the orderly performance of this Agreement, the parties shall undertake a bi-annual review of the Services described in each Exhibit, including a review of the Estimated Costs associated therewith at such time of DWA’s annual budgeting process, as well as six (6) months before and after such time.

(c) Changes in Services. The parties agree and acknowledge that the Providing Party may make changes from time to time in the manner of performing the Services if the Providing Party is making similar changes in performing similar services for itself or other third parties for which the Providing Party is providing substantially similar Services. The Providing Party will furnish to the Receiving Party substantially the same notice that the Providing Party provides such third parties, if any, respecting such changes. In addition to, and without limiting the immediately preceding two sentences in any way, and notwithstanding any provision of this Agreement to the contrary, the Providing Party may make any of the following changes without obtaining the prior consent of the Receiving Party: (i) changes to the process of performing a particular Service that do not adversely affect the benefits to the Receiving Party of the Providing Party’s provision or quality of such Service in any material respect or materially increase the Actual Cost for such Service; (ii) emergency changes on a temporary and short-term basis; and/or (iii) changes to a particular Service in order to comply with applicable law or regulatory requirements.

(d) Services Performed by Others. Nothing in this Agreement will prevent the Providing Party from using third parties to perform all or any part of a Service hereunder. The Providing Party will remain fully responsible for the performance of its obligations under this Agreement in accordance with its terms, including any obligations it performs through third parties, and the Providing Party will be solely responsible for payments due any such third parties. If Providing Party uses a third party to perform all or any part of a Service hereunder, Providing Party may charge

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Receiving Party the actual amount charged to Providing Party by such third party for providing such applicable Service plus an uplift equal to 5% of the amount so charged by such third party; provided, however, that if Providing Party uses a third party to perform all or any part of a Service hereunder which such Service Providing Party continues to perform for itself and the quantity or capacity level of the Service requested by Receiving Party and actually performed by Providing Party is substantially the same as the level requested by Receiving Party as of the date of this Agreement, notwithstanding anything to the contrary herein, Providing Party will not charge any uplift on the amount so charged by such third party.

(e) Responsibility for Personnel. All personnel employed, engaged or otherwise furnished by the Providing Party in connection with its rendering of the Services will be the Providing Party’s employees, agents or subcontractors, as the case may be (collectively, “Providing Party Personnel”). The Providing Party will have the sole and exclusive responsibility for Providing Party Personnel, will supervise Providing Party Personnel and will cause Providing Party Personnel to cooperate with the Receiving Party in performing the Services in accordance with the terms and conditions of Section 2.2. The Providing Party will pay and be responsible for the payment of any and all premiums, contributions and taxes for workers’ compensation insurance, unemployment compensation, disability insurance, and all similar provisions now or hereafter imposed by any governmental entity with respect to or measured by wages, salaries or other compensation paid or to be paid by the Providing Party to Providing Party Personnel.

(f) Services Rendered as a Work-For-Hire; Return of Equipment; Internal Use; No Sale, Transfer, Assignment; Copies. All materials, software, tools, data, inventions, works of authorship, documentation, and other innovations of any kind, including any improvements or modifications to the Providing Party’s proprietary computer software programs and related materials, that the Providing Party, or personnel working for or through the Providing Party, may make, conceive, develop or reduce to practice, alone or jointly with others, in the course of performing Services or as a result of such Services, whether or not eligible for patent, copyright, trademark, trade secret or other legal protection (collectively the “Work Product”), as between the Providing Party and the Receiving Party, will be solely owned by the Providing Party. Notwithstanding the foregoing sentence, DWA will have the right to use on a non-exclusive basis, any and all (A) Studio-owned finance systems software, and (B) enhancements made and owned by Studio to any such finance systems software, which, in either case, are or (to the extent still in existence) were used by Studio to render Services to DWA hereunder; in connection therewith, DWA will have the right to any information about DWA contained on any such finance systems software, which will be transferred to DWA as set forth below. The Providing Party will have full and complete ownership rights to use (except as explicitly set forth in the preceding sentence), license and sell any and all of the Work Product. Upon the termination of any of the Services, (i) the Receiving Party will return to the Providing Party, as soon as practicable, any equipment or other property of the Providing Party relating to such terminated Services which is owned or leased by the Providing Party and is or was in the Receiving Party’s possession or control; and (ii) the Providing Party will transfer to the Receiving Party, as soon as practicable, any and all Receiving Party supporting, back-up or organizational data or information used in

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supplying the Service to Receiving Party. In addition, the parties will use good faith efforts at the termination of this Agreement or any specific Service provided hereunder, to ensure that all user IDs and passwords related thereto, if any, are canceled, and that any other data (as well as any and all back-up of that data) pertaining solely to the other party and related to such Service will be returned to such other party and/or deleted or removed from the applicable computer systems. All systems, procedures and related materials provided to Receiving Party are for Receiving Party’s internal use only and only as related to the Services or any of the underlying Systems used to provide the Services and unless Providing Party gives its prior written consent in each and every instance (in its sole discretion), the Receiving Party may not sell, transfer, assign or otherwise use the Services provided hereunder, in whole or in part, for the benefit of any person other than a Subsidiary of the Receiving Party. Receiving Party shall not copy, modify, reverse engineer, decompile or in any way alter Systems without Providing Party’s express written consent (in its sole discretion).

2.2 General Obligations; Standard of Care.

(a) Standard of Care. The Providing Party will use its commercially reasonable efforts to provide the Services in accordance with the same policies, procedures and practices in effect immediately prior to the date hereof, and will exercise the same care and skill it exercises in performing similar services for itself; provided, however, that nothing in this Agreement will require the Providing Party to favor the Receiving Party over any third parties or any of the Providing Party’s business operations. The Providing Party will be required to provide the Services only to the extent and only at the locations such Services are being provided by the Providing Party for the Receiving Party immediately prior to the date hereof unless Providing Party agrees otherwise in its sole discretion. The Initial Services provided by the Providing Party will be available only for purposes of conducting the business of the Receiving Party substantially in the manner it was conducted immediately prior to the date hereof, and Additional Services provided by the Providing Party will be available only for purposes of conducting the business of the Receiving Party in a reasonable manner; and the Providing Party will provide the Services described on Exhibits 11, 13, 17, 18 and 19 notwithstanding the fact that such Services were not provided by the Providing Party for the Receiving Party immediately prior to the date hereof. Further, the Receiving Party acknowledges that the Providing Party’s obligation to provide the Services is contingent upon the Receiving Party (i) providing all information, documentation, materials, resources and access requested by the Providing Party in a timely manner and (ii) making timely decisions, approvals and acceptances and taking such other actions requested by the Providing Party in a timely manner, in each case that Providing Party (in its reasonable business judgment) believes is necessary to enable the Providing Party to provide the Services, provided that the Providing Party requests such approvals, information, materials or services with reasonable prior notice to the extent practicable. Notwithstanding anything to the contrary herein, the Providing Party shall not be responsible for any failure to provide any Service in the event that the Receiving Party has not fully complied with the immediately preceding sentence. The parties acknowledge and agree that nothing contained in any Exhibit will be deemed to (i) increase or decrease the standard of care imposed on the Providing Party, (ii) except to

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the extent that an Exhibit references a Service that was not provided immediately prior to the date of this Agreement, expand the scope of the Services to be provided as set forth in Section 2, or (iii) limit the waiver of warranties by the Providing Party or the limitation on liability provisions contained herein.

(b) Additional Resources. In providing the Services, except to the extent necessary to maintain the level of Service provided on the date hereof (or with respect to any Additional Service, the agreed-upon level), the Providing Party will not be obligated to: (i) hire any additional employees or (ii) purchase, lease or license any additional equipment, software or other assets; and in no event shall the Providing Party be obligated to (i) maintain the employment of any specific employee or (ii) pay any costs related to the transfer or conversion of the Receiving Party’s data to the Providing Party or any alternate supplier of Services. Further, the Providing Party will have the right to designate which personnel it will assign to perform Services, and it will have the right to remove and replace any such personnel at any time or designate any of its Affiliates or a third party provider at any time to perform Services. At the Receiving Party’s request, the Providing Party will consult in good faith with the Receiving Party regarding the specific personnel to provide any particular Service(s); provided, however, that Providing Party’s decision shall control and be final and binding.

(c) Responsibility for Errors. The Providing Party’s sole responsibility to the Receiving Party for errors or omissions committed by the Providing Party in performing the Services will be to correct such errors or omissions in the Services at no additional cost to the Receiving Party; provided, however, that the Receiving Party must promptly advise the Providing Party of any such error or omission of which it becomes aware after having used commercially reasonable efforts to detect any such errors or omissions.

(d) Good Faith Cooperation; Consents. The parties will use good faith efforts to cooperate with each other in all matters relating to the provision and receipt of the Services. Such cooperation will include exchanging information, providing electronic access to systems used in connection with Services, performing true-ups and adjustments and obtaining or granting all consents, licenses, sublicenses or approvals necessary to permit each party to perform its obligations hereunder. The Receiving Party will be solely responsible for paying for the costs of obtaining such consents, licenses, sublicenses or approvals. Either party providing electronic access to systems used in connection with Services may limit the scope of access to the applicable requirements of the relevant matter through any reasonable means available, and any such access shall be subject to the terms of Section 4.7. The exchange of information or records (in any format, electronic or otherwise) related to the provision of Services under this Agreement shall be made to the extent that (i) such records/information exist in the ordinary course, (ii) do not involve the incurrence of any material expense and (iii) are reasonably necessary by any such party to comply with its obligations hereunder or under applicable Law. Subject to the foregoing terms, the parties will cooperate with each other in making information available as needed in the event of a tax audit or in connection with statutory or governmental compliance issues, whether in the United States or any other country, provided that the provision of such information will be without representation or

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warranty as to the accuracy or completeness of such information. (For avoidance of doubt, and without limiting any privilege or protection that now or hereafter may be shared by Providing Party and Receiving Party, neither party shall be required to provide any document if the party who would provide such document reasonably believes that doing so would waive a privilege or protection [e.g., attorney-client privilege] applicable to such document.)

(e) Providing Information to DWA. Without limiting or derogating from the provisions and terms of Sections 2.7(a) and 4.1, below, Studio and DWA agree that:

(i) Studio shall provide DWA with such information, records or documentation as DWA may reasonably request (to the extent in Studio’s possession or otherwise generally available to Studio) to permit DWA to comply with applicable Laws (including, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act of 2002 and rules and regulations promulgated under such Acts or any successor provisions) (including, such information, records and documentation and testing thereof as may be reasonably requested of Studio and its management for DWA to comply with Section 404, entitled “Management’s Assessment of Internal Controls”, of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder or any successor provisions).

(ii) Studio shall provide to the independent public accountants of DWA such information, records or documentation as DWA or such independent public accountants may reasonably request (to the extent in Studio’s possession or otherwise generally available to Studio) to allow such independent public accountants to complete audits and limited reviews of the financial statements and other accounting or financial data or information of DWA (including, without limitation, such information, records and documentation and testing thereof as may be necessary for such independent public accountants to provide the attestation to, and report on, the internal control assessment made by DWA and its management required under the Sarbanes-Oxley Act of 2002, the rules and regulations promulgated thereunder or any successor provisions and the rules of the Public Company Accounting Oversight Board).

(iii) Studio shall correct as promptly, as practicable, any deficiencies in books and records and associated controls and procedures relating to the information provided under this Section 2.2(e) that are identified by DWA in writing in reasonable detail in connection with any internal control assessment, audit or similar review or report conducted or to be conducted by DWA, its management or its independent public accountants pursuant to the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder or any successor provisions. If at any time DWA reasonably determines that any changes are needed to be made to Studio’s internal controls and identifies such changes in reasonable detail in writing then Studio shall work diligently to make such changes as promptly as practicable. Studio shall have no responsibility for determining what changes or corrections are necessary and shall follow only those instructions provided by DWA.

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(iv) All direct and indirect costs and expenses relating to any of the requests made by DWA of Studio under and pursuant to this Section 2.2(e) (including employee time required to compile information or otherwise comply with this Section 2.2(e), changes to systems maintained by Studio to provide information in a specific format, fees and expenses charged by auditor or other third parties) shall be at the expense of DWA, unless (A) Studio prepares the same exact information for itself in its ordinary course of business, in which case the cost shall be a nominal processing fee, or (B) Studio provides the same exact information or report to DWA as a Service hereunder, in which case the cost shall be covered by the applicable Exhibit’s cost calculation(s). The intent of the parties is not to double charge for any Service or other work performed by one party for the other hereunder.

(f) Alternatives. If the Providing Party reasonably believes it is unable to provide any Service because of a failure to obtain necessary consents (e.g., third-party approvals or instructions or approvals from the Receiving Party required in the ordinary course of providing a Service), licenses, sublicenses or approvals pursuant to Section 2.2(d), such shall not constitute a breach hereof by Providing Party and the parties will cooperate to determine the best alternative approach; provided, however, that in no event will the Providing Party be required to provide such Service until an alternative approach satisfactory to the Providing Party is found or the consents, licenses, sublicenses or approvals have been obtained.

2.3 Limitations on Provision of Services.

(a) Force Majeure.

(i) Except with respect to any party’s obligation to make payments hereunder, in no event will any party be liable to any other party for any delay or other failure to perform hereunder that is due to occurrences or circumstances beyond such party’s reasonable control (including epidemic, riot, unavailability of resources due to national defense priorities, war, armed hostilities, strike, walkouts, civil disobedience, embargo, fire, flood, drought, storm, pestilence, lightning, explosion, power blackout, earthquake, volcanic eruption or any foreseeable or unforeseeable act of God, act of a public enemy, act of terrorism, act of sabotage, act or omission of carriers, or other natural catastrophe or civil disturbance), in each case during the period and to the extent that such extraordinary condition delays, impairs or prevents such party’s performance (collectively, “Force Majeure Conditions”); and any such failure to perform shall not be a breach hereof by Providing Party. If any party does not perform any of its obligations hereunder as a result of a Force Majeure Condition, and any other party’s performance of its obligations hereunder is conditioned upon the first party’s performance,

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then notwithstanding anything in this Agreement to the contrary, the other party’s performance will be excused (including payment obligations) until such time as the first party has performed those obligations prevented by the Force Majeure Condition.

(ii) The party claiming excusable delay will notify the other party of the Force Majeure Condition and will use commercial reasonable efforts to mitigate the effects of the Force Majeure Condition giving rise to the delay so as to continue performing as required hereunder as expeditiously as reasonably possible.

(b) Necessary Assets. If the Providing Party is unable to provide a Service hereunder because it does not have the necessary assets because such asset was, in the case of Studio, transferred to DWA, or in the case of DWA, not transferred to DWA, the parties shall determine a mutually acceptable arrangement to provide the necessary access to such asset and until such time as access is provided, the Providing Party’s failure to provide such Service shall not be a breach of this Agreement.

(c) Compliance With Law. Notwithstanding anything to the contrary contained herein, this Agreement will not constitute an agreement for the Providing Party to provide Services to the Receiving Party to the extent that the provision of any such Services would not be in compliance with applicable Laws.

2.4 Charges and Payment.

(a) Charges. The Receiving Party will pay the Providing Party, as consideration for each of the Services provided hereunder, the amount set forth on the Exhibit applicable to the relevant Services (the “Estimated Cost”), as such amount may be adjusted pursuant to Section 2.4(c)(i) hereof. The Receiving Party acknowledges and agrees that the Estimated Cost is an estimate of the actual cost, which will be calculated as set forth in the applicable Exhibit (the “Actual Cost”). On a periodic basis to be mutually agreed but no less frequently than semi-annually, the Providing Party will notify the Receiving Party in writing of the difference between the Actual Cost and the Estimated Cost for each Service that has been provided and to the extent the Actual Cost or the Estimated Cost exceeds the other, the parties will mutually agree to settle the difference, in each case, within 30 days after such written notification is delivered to the Receiving Party (the “True-up Due Date”). If the parties determine that any such difference will be paid by one party to another, any amount not paid by the True-Up Due Date will be considered past due and will bear interest in accordance with the provisions of Section 2.4(b)(i).

(b) Invoices And Payment.

(i) Charges for Services (based on the Estimated Cost) will be billed monthly as of the end of each month by the Providing Party with a subsequent true-up as provided in Section 2.4(a). If any Service commences or terminates on a date prior to the end of a calendar month,

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the amount due will be pro rated proportionately based on the number of days elapsed in such month following commencement or prior to termination. All items on an invoice will be payable by the Receiving Party within 30 days after the Providing Party delivers the invoice to the Receiving Party (the “Due Date”), by wire transfer, in immediately available funds, to an account specified by the Providing Party in writing. Any amount not paid by the Due Date will be considered past due and will bear interest at the Prime Rate, commencing upon the first calendar day following the Due Date through the date of the Providing Party’s receipt of payment.

(ii) All billing disputes or requests for billing adjustments by the Receiving Party must be in good faith and submitted to the Providing Party in writing on or prior to the Due Date or the True-Up Due Date, as applicable, with adequate written documentation supporting the basis for the claim, and must be accompanied by payment of all undisputed amounts due. Upon receipt of any such billing dispute or request for billing adjustments, the Providing Party and the Receiving Party will promptly address and attempt to resolve the claim pursuant to Section 4.11. Each party, in its reasonable discretion, may request additional supporting documentation with respect to such billing dispute. Without limiting the foregoing, the Receiving Party, upon 30 days written notice, may, at its own expense, audit the applicable records at the place where the Providing Party maintains same in order to verify such, and any such audit may be conducted by a reputable firm of certified public accountants or accountants who are employees of the Receiving Party, whose selection in either case is subject to Providing Party’s reasonable prior approval, during reasonable business hours and in such manner as not to interfere with Providing Party’s normal business activities. If it is ultimately determined through the dispute resolution procedures set forth herein that the disputed portion of an invoice is (x) a valid charge, Receiving Party will pay such amount including any accrued interest calculated in accordance with Section 2.4(a) or 2.4(b)(i), as applicable, or (y) an invalid charge or that other credits or adjustments are appropriate, the Providing Party will make appropriate adjustments.

(iii) If the Receiving Party fails to pay or dispute in good faith any invoiced amount as required by this Section 2.4 by the relevant Due Date or True-Up Due Date, as applicable, the Providing Party will have the right upon written notice to the receiving Party to discontinue the provision of those Services in dispute until such time as all such payments (including interest accrued thereon as calculated in accordance with Section 2.4(a) or 2.4(b)(i), as applicable) have been made, in addition to the right to pursue any other remedies available at law. Such suspension of Services will not be deemed a breach of the Providing Party’s obligations under this Agreement.

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(c) Pricing Adjustments.

(i) Given the extended length of the Term, the parties acknowledge and agree that the Actual Cost of providing Services hereunder is expected to increase and/or decrease several times during the Term, and, accordingly, the Estimated Cost will be adjusted from time to time in accordance herewith. At any time upon a determination that the Estimated Costs of any Service differs significantly from the Actual Cost of such Service, the Providing Party will use commercially reasonable efforts to provide to the Receiving Party within 30 days of such determination, prior written notice of the change to the Estimated Cost of such Service (to be determined based on the Providing Party’s estimate of the Actual Cost for such Service, taking into consideration things such as outsourcing of such Service, increases/decreases in salaries or benefits of employees providing Services, increases/decreases in out-of-pocket expenses, additional cost components to providing such Service, changes in third-party fees, etc.). Upon the Receiving Party’s receipt of any such notice, Receiving Party shall have 15 days to opt to eliminate such Service from this Agreement. Upon the effective date of any increase or decrease, the Exhibit relating to such Service will automatically be deemed to have been amended to reflect such increase or decrease in Estimated Cost without any further action or consent required by any party.

(ii) In the event of a tax audit adjustment relating to the pricing of any or all Services provided pursuant to this Agreement in which it is determined by a taxing authority that any of the charges, individually or in combination, did not result in an arm’s-length payment (as determined under internationally accepted arm’s-length standards) for the Actual Cost of the Services as described above, then the parties will agree to make a corresponding adjustment to the Actual Cost in question for such period to the extent necessary to achieve arm’s-length pricing; and if any interest or penalties are imposed by a taxing authority in connection therewith, the Receiving Party shall be responsible and liable for the payment thereof. Any adjustment made pursuant to this Section 2.4(c)(ii) will be reflected in the parties’ official books and records, and the resulting overpayment or underpayment will create an obligation to be paid in the manner specified in Section 2.4(b).

2.5 Term. The term of this Agreement (the “Term”) will commence on the date hereof and will remain in effect through [the date of expiration of the Output Term] (“Expiration Date”), unless earlier terminated in accordance with Section 2.6. The parties may agree on an earlier expiration date with respect to a specific Service by specifying such earlier date on the Exhibit for that Service. The Term may be extended by the parties in a writing signed by both parties, either in whole or with respect to one or more of the Services; provided, however, that such extension shall only apply to the Service for which the Term was extended.

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2.6 Termination.

(a) Termination by the Receiving Party. As provided in the Exhibits (regarding the required number of days written notice), the Receiving Party may terminate this Agreement with respect to either all or any one or more of the Services, at any time and from time to time (except in the event such termination will constitute a breach by Providing Party or Receiving Party of a third party agreement related to providing such Service(s)), by giving the required written notice to the Providing Party of such termination (each, a “Termination Notice”). As soon as reasonably practicable after its receipt of a Termination Notice, the Providing Party will advise the Receiving Party as to whether termination of such Service(s) will (i) require the termination or partial termination, or otherwise effect the provision of, certain other Services (it being understood that Receiving Party shall not be entitled to terminate IT Services unless the Human Resources Services, Payroll Services and/or IT Equipment Purchasing Services corresponding thereto are also terminated), or (ii) result in any early termination costs, including those costs related to third party providers, but excluding costs related to the termination of any particular Providing Party employee(s) in connection with such termination of Service(s) unless (to the extent Section 2.2(b) is not applicable regarding maintaining an existing level of Service as more fully stated above) the Receiving Party was notified in writing that such particular employee(s) was/were being engaged in order for Providing Party to provide such Service(s) and Receiving Party agreed to such engagement, provided that if such engagement is not agreed to, Studio will not be obligated to provide the applicable Service. If either will be the case, the Receiving Party may withdraw its Termination Notice within five business days. If the Receiving Party does not withdraw the Termination Notice within such period, such termination will be final and the Receiving Party will be deemed to have agreed to cancel such other Services and to pay any such early termination costs.

(b) Termination by the Providing Party. As provided in the Exhibits (regarding the required number of days written notice), the Providing Party may terminate this Agreement with respect to either all or any one or more of the Services, at any time and from time to time, by giving the required written notice to the Receiving Party of such termination, if at such time the Providing Party does not perform such Service for itself or its Subsidiaries. Additionally, the Providing Party may terminate this Agreement by giving written notice of such termination to the Receiving Party, if the Receiving Party breaches any material provision of this Agreement (including a failure to timely pay an invoiced amount); provided, however, that the Receiving Party will have 30 days after receiving such written notice to cure any breach which is curable before the termination becomes effective; provided further, that this termination right will not be available as a result of a failure to timely pay an invoiced amount while such failure to pay is being properly disputed pursuant to the terms of Section 2.4(b).

(c) Effect of Termination of Services. In the event of any termination with respect to one or more, but less than all, of the Services, this Agreement will continue in full force and effect with respect to any Services not so terminated. Upon the termination of any or all of the Service(s), the Providing Party will cease, or cause its applicable Affiliates or third-party providers to cease, providing the terminated

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Service(s). Upon each such termination, the Receiving Party will promptly (i) pay to the Providing Party all fees accrued through the effective date of the Termination Notice pursuant to Section 2.4(a) and (ii) reimburse the Providing Party for the termination costs actually incurred by the Providing Party resulting from the Receiving Party’s early termination of such Service(s), if any, including those costs owed to third party providers as provided in Section 2.6(a), but excluding costs related to the termination of any particular Providing Party employee(s) in connection with such termination of Service(s) (including wrongful termination claims) unless the Receiving Party was notified in writing that such particular employee(s) was/were being engaged in order for Providing Party to provide such Service(s).

2.7 Disclaimer of Warranties, Limitation of Liability and Indemnification.

(a) DISCLAIMER OF WARRANTIES. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, THE PROVIDING PARTY MAKES NO AND DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT, WITH RESPECT TO THE SERVICES. THE PROVIDING PARTY MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE QUALITY, SUITABILITY OR ADEQUACY OF THE SERVICES FOR ANY PURPOSE OR USE.

(b) Limitation of Liability; Indemnification.

(i) Each party acknowledges and agrees that the obligations of the other party hereunder are exclusively the obligations of such other party and are not guaranteed directly or indirectly by such other party’s stockholders, members, managers, officers, directors, agents or any other person. Except as otherwise specifically set forth in a separate agreement, and subject to the terms of this Agreement, each party will look only to the other party and not to any manager, director, officer, employee or agent for satisfaction of any claims, demands or causes of action for damages, injuries or losses sustained by any party as a result of the other party’s action or inaction.

(ii) Notwithstanding (A) the Providing Party’s agreement to perform the Services in accordance with the provisions hereof, or (B) any term or provision of the Exhibits to the contrary, the Receiving Party acknowledges that performance by the Providing Party of Services pursuant to this Agreement will not subject the Providing Party, any member of its Group or their respective members, stockholders, managers, directors, officers, employees or agents to any liability whatsoever, except as directly caused by the willful misconduct or gross negligence on the part of the Providing Party or any of its members, stockholders, managers, directors, officers, employees and agents; provided, however, that the Providing Party’s liability as a result of such willful misconduct or gross negligence will be limited to the amount of Actual Costs it has actually received pursuant to Section 2.4 in connection with the Service(s) at issue.

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(iii) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, IN NO EVENT WILL ANY MEMBER OF EITHER GROUP BE LIABLE FOR ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS SUFFERED BY ANY MEMBER OF THE OTHER GROUP, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH ANY DAMAGES ARISING HEREUNDER; PROVIDED, HOWEVER, THAT TO THE EXTENT A MEMBER OF EITHER GROUP IS REQUIRED TO PAY (1) ANY AMOUNT ARISING OUT OF THE INDEMNITY SET FORTH IN SECTION 2.7(B)(IV) AND/OR (2) ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS TO A THIRD PARTY WHO IS NOT A MEMBER OF EITHER GROUP, IN EACH CASE IN CONNECTION WITH A THIRD PARTY CLAIM, SUCH DAMAGES WILL CONSTITUTE DIRECT DAMAGES OF THE INDEMNIFIED PARTY AND WILL NOT BE SUBJECT TO THE LIMITATION SET FORTH IN THIS SECTION 2.7(B)(III).

(iv) The Receiving Party agrees to indemnify and hold harmless the Providing Party, each member of its Group and their respective members, stockholders, managers, directors, officers, employees and agents with respect to any claims or liabilities (including reasonable attorneys’ fees) (“Claims”) which may be asserted or imposed against the Providing Party or such persons by a third-party who is not a member of either Group, as a result of (A) the provision of Services pursuant to this Agreement, or (B) the material breach by Receiving Party of a third party agreement that causes or constitutes a material breach of that same agreement by Providing Party, except (with respect to both of the foregoing) for any claims which are directly caused by the willful misconduct or gross negligence of the Providing Party or such persons. Each party as indemnitee (“Indemnitee”) will give the other party as indemnitor (“Indemnitor”) prompt written notice of any Claims. If Indemnitor does not notify Indemnitee within a reasonable period after Indemnitor’s receipt of notice of any Claim that Indemnitor is assuming the defense of Indemnitee, then until such defense is assumed by Indemnitor, Indemnitee shall have the right to defend, contest, settle or compromise such Claim in the exercise of its reasonable judgment and all costs and expenses of such defense, contest, settlement or compromise (including reasonable outside attorneys’ fees and expenses) shall be reimbursed to Indemnitee by Indemnitor. Upon assumption of the defense of any such Claim, Indemnitor shall, as its own cost and expense, select legal counsel, conduct and control the defense and/or settlement of any suit or action

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which is covered by Indemnitor’s indemnity. Indemnitee shall render all cooperation and assistance reasonably requested by the Indemnitor and Indemnitor shall keep Indemnitee fully apprised of the status of any Claim. Notwithstanding the foregoing, Indemnitee may, at its election and sole expense, be represented in such action by separate counsel and Indemnitee may, at its election and sole expense, assume the defense of any such action, if Indemnitee hereby waives Indemnitor’s indemnity hereunder. Unless Indemnitee waives the indemnity hereunder, in no event shall Indemnitee, as part of the settlement of any claim or proceeding covered by this indemnity or otherwise, stipulate to, admit or acknowledge any liability or wrongdoing (whether in contract, tort or otherwise) of any issue which may be covered by this indemnity without the consent of the Indemnitor (such consent not to be unreasonably withheld).

(c) Subrogation of Rights Vis-à-Vis Third Party Contractors. In the event any liability arises from the performance of Services hereunder by a third party contractor, the Receiving Party will be subrogated to such rights, if any, as the Providing Party may have against such third party contractor with respect to the Services provided by such third party contractor to or on behalf of the Receiving Party.

ARTICLE III

TAXES

3.1 Allocation of Taxes.

(a) The Receiving Party will bear all taxes, duties, levies and similar charges (and any related interest and penalties) (“Tax” or “Taxes”), however designated, imposed as a result of the provision by the Providing Party of Services under this Agreement, except

(i) any Tax based on net income or gross income that is imposed on the Providing Party by its jurisdiction of formation or incorporation (such as U.S. federal income Tax and related state income Taxes) (“Resident Jurisdiction”);

(ii) any Tax based on net income or gross income that is imposed on the Providing Party by jurisdictions other than its Resident Jurisdiction if such tax is based on a permanent establishment of the Providing Party; and

(iii) any Tax that is recoverable by the Providing Party in the ordinary course of business such as Value Added Tax (“VAT”, as more fully defined in Section 3.1(d) below), Goods & Services Tax (“GST”) and similar taxes.

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(b) If the Receiving Party is required to bear a tax, duty, levy or similar charge pursuant to the preceding paragraph, the Receiving Party will pay such tax, duty, levy or similar charge and any additional amounts as are necessary to ensure that the net amounts received by the Providing Party hereunder after all such payments or withholdings equal the amounts to which the Providing Party is otherwise entitled under this Agreement as if such tax, duty, levy or similar charge did not exist.

(c) The Providing Party will not collect an otherwise applicable tax if the Receiving Party’s purchase is exempt from the Providing Party’s collection of such tax and a valid tax exemption certificate is furnished by the Receiving Party to the Providing Party.

(d) If Section 3.1(a)(iii) does not apply, all Cost associated with a Service is exclusive of value added taxes, turnover taxes, sales taxes or similar taxes, including any related interest and penalties (hereinafter all referred to as “VAT”). In the event that any VAT is payable on a Service supplied by the Providing Party to the Receiving Party under this Agreement, this VAT will be added to the Actual Cost and will be for the account of (and reimbursable to the Providing Party by) the Receiving Party. If VAT on the supplies of the Providing Party is payable by the Receiving Party under a reverse charge procedure (i.e., shifting of liability, accounting or payment requirement to recipient of supplies), the Receiving Party will ensure that the Providing Party will not effectively be held liable for this VAT by the relevant taxing authorities or other parties. Where applicable, the Providing Party will use its reasonable commercial efforts to ensure that its invoices to the Receiving Party are issued in such a way that these invoices meet the requirements for deduction of input VAT by the Receiving Party, if the Receiving Party is permitted by law to do so.

ARTICLE IV

MISCELLANEOUS

4.1 Compliance with Law and Governmental Regulations. The Receiving Party will be solely responsible for (a) compliance with all Laws affecting its business and (b) any use the Receiving Party may make of the Services to assist it in complying with such Laws. Without limiting any other provisions of this Agreement, the parties agree and acknowledge that neither party has any responsibility or liability for advising the other party with respect to, or ensuring the other party’s compliance with, any public disclosure, compliance or reporting obligations of such other party (including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act of 2002 and rules and regulations promulgated under such Acts or any successor provisions), regardless of whether any failure to comply results from information provided hereunder.

4.2 No Partnership or Joint Venture; Independent Contractor. Nothing contained in this Agreement will constitute or be construed to be or create a partnership or joint venture between DWA, Studio or any of their respective affiliates, successors or assigns. The parties understand and agree that this Agreement does not make either of them an agent or legal representative of the other for any purpose whatsoever. No party

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is granted, by this Agreement or otherwise, any right or authority to assume or create any obligation or responsibilities, express or implied, on behalf of or in the name of any other party, or to bind any other party in any manner whatsoever. The parties expressly acknowledge that the Providing Party is an independent contractor with respect to the Receiving Party in all respects, including with respect to the provision of the Services.

4.3 Successors and Assigns; No Third Party Beneficiaries. This Agreement is binding upon and will inure to the benefit of each party and its successors or assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other person (including employees of any party) or governmental entity any rights or remedies of any nature whatsoever under or by reason of this Agreement.

4.4 Expenses. Except as otherwise provided herein, the parties will each pay their own expenses incident to the negotiation, preparation and performance of this Agreement, including the fees, expenses and disbursements of their respective investment bankers, accountants and counsel.

4.5 Representation by Counsel; Interpretation. Each of the parties acknowledges that it has been represented by counsel in connection with this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived. The provisions of this Agreement will be interpreted in a reasonable manner to effect the intent of the parties.

4.6 Further Assurances. From time to time, each party will use its commercially reasonable efforts to take or cause to be taken, at the cost and expense of the requesting party, such further actions as may be reasonably necessary to consummate or implement the transactions contemplated hereby or to evidence such matters.

4.7 Confidentiality.

(a) Subject to Section 4.7(c), each of Studio and DWA, on behalf of itself and each member of its respective Group, agrees to hold, and to cause its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives to hold, in strict confidence, with at least the same degree of care that applies to Studio’s confidential and proprietary information pursuant to policies in effect as of the date hereof, all Information concerning the other Group that is either in its possession (including Information in its possession prior to the date hereof) or furnished by the other Group or its respective directors, officers, managers, employees, agents, accountants, counsel and other advisors and representatives at any time pursuant to this Agreement or otherwise, and will not use any such Information other than for such purposes as will be expressly permitted hereunder or thereunder, except, in each case, to the extent that such Information has been (i) in the public domain through no fault of such party or any member of such Group or any of their respective directors, officers, managers, employees, agents, accountants, counsel and other advisors and representatives, (ii) later lawfully acquired from other sources by such party (or any member of such party’s Group) which sources are not themselves bound by a confidentiality obligation or (iii) independently generated without reference to any proprietary or confidential Information of the other party.

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(b) Each party agrees not to release or disclose, or permit to be released or disclosed, any Information of the other Group to any other Person, except its directors, officers, employees, agents, accountants, counsel and other advisors and representatives who need to know such Information (who will be advised of their obligations hereunder with respect to such Information), except in compliance with Section 4.7(c); provided, however, that any Information may be disclosed to third parties retained by the Providing Party as the Providing Party reasonably deems necessary to perform the Services.

(c) In the event that any party or any member of its Group either determines on the advice of its counsel that it is required to disclose any Information pursuant to applicable law (including pursuant to any rule or regulation of the Securities and Exchange Commission) or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of any other party (or any member of any other party’s Group) that is subject to the confidentiality provisions hereof, such party will notify the other party prior to disclosing or providing such Information and will cooperate at the expense of such other party in seeking any reasonable protective arrangements (including by seeking confidential treatment of such Information) requested by such other party. Subject to the foregoing, the Person that received such a request or determined that it is required to disclose Information may thereafter disclose or provide Information to the extent required by such law (as so advised by counsel) or by lawful process or such Governmental Authority; provided, however, that such Person provides the other party upon request with a copy of the Information so disclosed.

4.8 Inconsistency. In the event of any inconsistency between the terms of this Agreement and any of the Exhibits, the terms of this Agreement (other than charges for Services) will control.

4.9 Assignment. No party may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other party; provided, however, that the Providing Party may perform its obligations through third parties so long as the Providing Party remains fully responsible for the performance of its obligations under this Agreement in accordance with its terms, as contemplated by Section 2.1(d).

4.10 Entire Agreement. This Agreement, the Ancillary Agreements, the Exhibits, the Schedules and appendices hereto and thereto contain the entire agreement between the parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter and there are no agreements or understandings between the parties with respect to such subject matter other than those set forth or referred to herein or therein.

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4.11 Dispute Resolution.

(a) The procedures for discussion, negotiation and mediation set forth in this Section 4.11 will apply to all disputes, controversies or claims (whether arising in contract, tort or otherwise) that may arise out of or relate to, or arise under or in connection with this Agreement, or the transactions contemplated hereby (including all actions taken in furtherance of the transactions contemplated hereby on or prior to the date hereof), or the commercial or economic relationship of the parties relating hereto or thereto, between or among any of the parties and/or their respective Affiliates.

(b) It is the intent of the parties to use their respective commercially reasonable efforts to resolve expeditiously any dispute, controversy or claim between or among them with respect to the matters covered hereby that may arise from time to time on a mutually acceptable negotiated basis. In furtherance of the foregoing, any party involved in a dispute, controversy or claim may deliver a notice (an “Escalation Notice”) demanding an in person meeting involving representatives of the parties at a senior level of management of the parties (or if the parties agree, of the appropriate strategic business unit or division within such entity). A copy of any such Escalation Notice will be given to the General Counsel, or like officer or official, of each party involved in the dispute, controversy or claim (which copy will state that it is an Escalation Notice pursuant to this Agreement). Any agenda, location or procedures for such discussions or negotiations between the parties may be established by the parties from time to time; provided, however, that the parties will use their commercially reasonable efforts to meet within 10 days of the Escalation Notice.

(c) If the representatives of the parties do not meet within 10 days of the Escalation Notice or are unable to reach a mutually satisfactory resolution within 20 days following the date of the Escalation Notice, or any mutually agreed extension thereof, either party may initiate arbitration in accordance with the procedures set forth in clause (d) below. Nothing contained herein shall be construed to limit the right of either party to seek preliminary or interlocutory relief from a court of competent jurisdiction if it believes that such action is necessary to preserve its rights pending arbitration in accordance with clause (d) below.

(d) The parties agree that any dispute arising out of or relating to this Agreement, including but not limited to any dispute concerning the negotiation, interpretation, performance, enforcement and validity hereof, that is not resolved after compliance with the provisions set forth in Sections 4.11(a), (b) and/or (c), above, shall be determined by final and binding arbitration in Los Angeles, California in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in force at the time such arbitration is commenced; provided that: (i) the arbitration shall be conducted before a single neutral arbitrator experienced in the motion picture industry (“Arbitrator”) who shall be appointed by mutual agreement of the parties, or by the AAA in accordance with its Rules if the parties are not able to agree on a single arbitrator within [30] days of the commencement of arbitration; provided that if the parties are unable to mutually agree on an arbitrator, one shall be

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appointed by the AAA; (ii) the parties shall be entitled to discovery as provided in California Code of Civil Procedure sections 1283.05 and 1283.1; (iii) in deciding any such matter, the arbitrator(s) shall follow the substantive law of the State of California as it would be applied by California courts; (iv) either party may, without waiving its right to arbitration, seek preliminary or interlocutory relief from a court of competent jurisdiction if it believes that such action is necessary to preserve its rights pending arbitration; (v) all arbitration proceedings (including any discovery and other evidence in connection therewith) shall be closed to the public and shall remain confidential; (vi) arbitration awards hereunder may be entered and enforced as provided in California Code of Civil Procedure sections 1285 et seq. and (vii) no party shall seek damages prohibited by Section 2.7 of this Agreement.

(e) Unless otherwise agreed in writing, the parties will continue to provide, service and honor all other commitments under this Agreement during the course of dispute resolution pursuant to the provisions of this Section 4.11, except to the extent such commitments are the subject of such dispute, controversy or claim

4.12 Severability of Provisions. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and will in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination, the parties will negotiate in good faith in an effort to agree upon such a suitable and equitable provision to affect the original intent of the parties.

4.13 Waiver. Waiver by any party of any default by the other party of any provision of this Agreement will not be deemed a waiver by the waiving party of any subsequent or other default, nor will it prejudice the rights of the other party.

4.14 Governing Law. This Agreement will be governed by and construed and interpreted in accordance with the laws of the State of California, irrespective of the choice of laws principles of the State of California, except to the extent the substantive laws of the State of Delaware are mandatorily applicable under Delaware law.

4.15 Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.

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4.16 Notices. All notices or other communications under this Agreement will be in writing and will be deemed to be duly given when (a) delivered in person or (b) deposited in the United States mail or private express mail, postage prepaid, addressed as follows:

If to Studio, to:

DreamWorks L.L.C.

Grandview Building

1000 Flower Street

Glendale, California 91201

Attn: General Counsel

If to DWA or DWA LLC to:

DreamWorks Animation SKG, Inc.

Grandview Building

1000 Flower Street

Glendale, California 91201

Attn: General Counsel

Any party may, by notice to the other party, change the address to which such notices are to be given.

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4.17 Counterparts. This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement, and will become effective when one or more counterparts have been signed by each of the parties and delivered.

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed on its behalf by its duly authorized individual as of the date first written above.

DREAMWORKS L.L.C.		DREAMWORKS ANIMATION SKG, INC.
By:	/s/ Brian Edwards	By:	/s/ Katherine Kendrick
Its:	Vice President and General Counsel	Its:	Vice President and General Counsel

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EX-10.7

Exhibit 10.7

ASSIGNMENT OF TRADEMARKS AND SERVICE MARKS

WHEREAS, DreamWorks L.L.C., a limited liability company organized and existing under the laws of the State of Delaware (“Assignor”), is the owner of the entire right, title and interest in and to the trademarks and service marks set forth in Schedule A attached hereto and incorporated by reference herein, together with the goodwill of the business associated therewith; and

WHEREAS, pursuant to that certain Separation Agreement dated as of October 27, 2004 between and among Assignor, DreamWorks Animation LLC, a limited liability company organized and existing under the laws of the State of Delaware (“Assignee”) and DreamWorks Animation SKG, Inc., a corporation organized and existing under the laws of the State of Delaware, Assignor has sold to Assignee, and Assignee has purchased, certain assets of the business of Assignor to which the marks pertain; and

WHEREAS, Assignee desires to acquire all right, title and interest in and to the trademarks and service marks set forth in Schedule A throughout the world, together with the goodwill of the business associated therewith.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Assignor, Assignor hereby irrevocably assigns sells, and transfers to Assignee all of Assignor’s right, title, and interest in and to the trademarks and service marks set forth in Schedule A throughout the world, together with the goodwill of its business associated therewith, and the right to sue in Assignee’s own name on all aims for past damages and all other legal and equitable relief for infringement or dilution of an of such marks, or unfair competition pertaining to any of such marks, that may have accrued to Assignor prior to the date of this assignment.

Assignor hereby covenants and agrees that it will execute and deliver to Assignee such additional documents, and perform such further acts, as are necessary to enable Assignee to record the assignment of such marks, or otherwise to perfect or confirm this assignment and Assignee’s rights in the assigned marks.

IN WITNESS WHEREOF, Assignor has caused this instrument to be sign by its duly authorized officer as shown below.

Dated: October 27, 2004	DREAMWORKS L.L.C.,
	By:	/s/ Brian Edwards
	Its:	VP and General Counsel

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ASSIGNMENT OF TRADEMARKS AND SERVICE MARKS

WHEREAS, DreamWorks L.L.C., a limited liability company organized and existing under the laws of the State of Delaware (“Assignor”), is the owner of the entire right, title and interest in and to the United States trademarks and service marks set forth in Schedule A attached hereto and incorporated by reference herein, together with the goodwill of the business associated therewith; and

WHEREAS, pursuant to that certain Separation Agreement dated as of October 27, 2004 between and among Assignor, DreamWorks Animation LLC, a limited liability company organized and existing under the laws of the State of Delaware (“Assignee”) and DreamWorks Animation SKG, Inc., a corporation organized and existing under the laws of the State of Delaware, Assignor has sold to Assignee, and Assignee has purchased, certain assets of the business of Assignor; and

WHEREAS, with respect to those trademarks and service marks set forth in Schedule A attached hereto that are the subject of pending intent-to-use applications in the United States Patent and Trademark Office, Assignee is the successor, pursuant to the Separation Agreement, to the portion of Assignor’s business to which the marks pertain, and such portion is ongoing and existing;

WHEREAS, Assignee desires to acquire all right, title and interest in and to the trademarks and service marks set forth in Schedule A, together with the goodwill of the business associated therewith.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Assignor, Assignor hereby irrevocably assigns, sells, and transfers to Assignee all of Assignor’s right, title, and interest in and to the trademarks and service marks set forth in Schedule A in the United States, together with the goodwill of its business associated therewith, and the right to sue in Assignee’s own name on all claims for past damages and all other legal and equitable relief for infringement or dilution of any of such marks, or unfair competition pertaining to any of such marks, that may have accrued to Assignor prior to the date of this assignment.

Assignor hereby covenants and agrees that it will execute and deliver to Assignee such additional documents, and perform such further acts, as are necessary to enable Assignee to record the assignment of such marks, or otherwise to perfect or confirm this assignment and Assignee’s rights in the assigned marks.

IN WITNESS WHEREOF, Assignor has caused this instrument to be signed by its duly authorized officer as shown below.

Dated: October 27, 2004	DREAMWORKS L.L.C.,
	By:	/s/ Brian Edwards
	Its:	VP and General Counsel

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EX-10.8

Exhibit 10.8

LICENSE AGREEMENT

This License Agreement (the “License Agreement”) is made effective this 27th day of October, 2004 (the “Effective Date”), by and between DreamWorks Animation LLC, a Delaware limited liability company with offices at 1000 Flower Street, Glendale, California 91201 (“DWA”), on the one hand, and DreamWorks L.L.C., a Delaware limited liability company with offices at 1000 Flower Street, Glendale, California 91201 (“DreamWorks Studios”), on the other hand, and is made with reference to the following facts.

RECITALS

A. DreamWorks Studios has been engaged in the business of producing and distributing various entertainment properties, including live action and animated motion pictures, television programs, music, and other entertainment-related goods and services, under and in connection with the mark and name “DREAMWORKS” and various marks and names containing “DREAMWORKS” (collectively the “DreamWorks Marks”).

B. By virtue of that certain Separation Agreement by and among DreamWorks Studios, DWA and DreamWorks Animation SKG, Inc. (“DWA SKG”) dated as of October 27, 2004 (the “Separation Agreement”), DWA is the successor to all of the assets of DreamWorks Studios’ animated motion picture business, and by virtue of that certain “Assignment of Trademarks and Service Marks” between DreamWorks Studios and DWA dated as of October 27, 2004 (the “Assignment”), DWA is the successor to all of DreamWorks Studios’ right, title, and interest in and to the DreamWorks Marks worldwide, together with all registrations of and applications to register the DreamWorks Marks, and the goodwill of the business pertaining thereto.

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C. Pursuant to the Separation Agreement, DreamWorks Studios desires to use the DreamWorks Marks in connection with the production and distribution of certain non-animated motion pictures and related goods and services, and, pursuant to a separate license in that certain Distribution Agreement between DWA SKG and DreamWorks Studios dated as of October     , 2004 (the “Distribution Agreement”), the distribution of certain motion pictures on behalf of DWA, and in certain other manners described more fully herein. DWA is willing to grant to DreamWorks Studios a license to use the DreamWorks Marks on the terms and conditions set forth herein, and DreamWorks Studios is willing to accept such a license.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and promises set forth below, and for other good and valuable consideration, DWA and DreamWorks Studios hereby agree as follows:

TERMS AND CONDITIONS

1. Definitions.

The following terms shall have the following meanings in this License Agreement:

(a) “Licensed Marks” means the DreamWorks Marks listed and depicted in Schedule A attached hereto, and incorporated by reference herein as if set forth in full, as Schedule A may be amended from time to time in the manner set forth in paragraphs 2(c) and 8(d) below.

(b) “Licensed Goods” means those goods set forth on Schedule B attached hereto, and incorporated by reference herein as if set forth in full, as Schedule B may be amended from time to time in the manner set forth in paragraph 2(c) and 8(d) below.

(c) “Licensed Services” means those services set forth in Schedule C attached hereto, and incorporated by reference therein as if set forth in full, as Schedule C may be amended from time to time in the manner set forth in paragraph 2(c) and 8(d) below.

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(d) “Territories” means those jurisdictions set forth on Schedule A attached hereto, and incorporated by reference herein as if set forth in full, in which DWA owns registrations of, or applications to register, one or more of the Licensed Marks as of the Effective Date of this License Agreement, as Schedule A may be amended from time to time in the manner set forth in paragraphs 2(c) and 8(d) below.

(e) “Term” means the initial period commencing on the Effective Date of this License Agreement and continuing for a period of 20 years, and all subsequent renewals of such periods as provided in paragraph 3 below, unless sooner terminated as provided in paragraph 3 below.

(f) “Live Action Motion Picture” shall have the meaning given to that term in the Separation Agreement.

(g) “Hybrid Motion Picture” shall have the meaning given to that term in the Distribution Agreement with the further limitation in this License Agreement to Hybrid Motion Pictures produced or acquired by or for DreamWorks Studios or any affiliate of DreamWorks Studios.

(h) “Live Stage Performances” shall mean the exercise of Legitimate Stage Rights, which are defined in the Distribution Agreement.

(i) “DTV Product” shall have the meaning given to the term “Direct-to-Video (DTV) Productions” in the Distribution Agreement.

2. Grant of Rights; Amendment; Etc.

(a) DWA hereby grants to DreamWorks Studios, and DreamWorks Studios hereby accepts, a royalty-free right and license to use the Licensed Marks, on the terms and conditions set forth herein, during the Term: (i) on and in connection with Licensed Goods and Licensed Services; provided, however, that in connection with use of the Licensed Marks on or in

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connection with the Licensed Goods identified in Schedule B as pre-recorded compact discs and audio tapes containing sound tracks from Live Action Motion Pictures and Hybrid Motion Pictures, and pre-recorded audio tapes containing music from Live Action Motion Pictures and Hybrid Motion Pictures, DreamWorks Studios shall only use the Licensed Marks in connection with the words “Pictures,” “Films,” or other words that are suggestive of motion pictures or audiovisual works and provided further that DreamWorks Studios shall never use the Licensed Marks containing “Animation” and “PDI” as trademarks or trade names except in connection with the distribution of motion pictures pursuant to the separate license in the Distribution Agreement; (ii) as part of DreamWorks Studios’ corporate names and trade names, including, without limitation, use of the trade names on stationery, business documents, and business cards; (iii) in one or more domain names, including the domain name dreamworks.com, used in connection with Licensed Goods and Licensed Services; and (iv) in the other manners set forth herein. The right and license granted to DreamWorks Studios hereunder shall be exclusive as to the use of the Licensed Marks on or in connection with (i) the Licensed Goods featuring scenes and/or characters from Live Action Motion Pictures, live action television programs, and live action DTV Products and (ii) the Licensed Services relating to Live Action Motion Pictures, live action television programs, and live action DTV Products. The right and license granted to DreamWorks Studios hereunder shall be non-exclusive as to all other Licensed Goods and Licensed Services.

(b) DreamWorks Studios shall have the right during the Term to sub-license to third parties (“Sub-Licensees”), through written sub-licenses (“Sub-Licenses”), the Licensed Marks on and in connection with all Licensed Goods and Licensed Services. DreamWorks Studios agrees that each Sub-Licensee shall be a reputable company capable of performing the Licensed

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Services and/or of producing the Licensed Goods bearing the Licensed Marks under its Sub-License of the same general level of quality as under license agreements between DreamWorks Studios and third parties prior to the Effective Date of this Agreement. If a Sub-Licensee will be manufacturing goods or rendering services that fall within the natural zone of expansion of the Licensed Goods and Licensed Services, then DreamWorks Studios will provide DWA with the name and address of the Sub-Licensee and the subject matter of the Sub-License. DreamWorks Studios agrees that it shall incorporate provisions into each Sub-License providing that in the event of the termination of this License Agreement by DWA in the manner set forth in paragraph 3 below, each Sub-License will immediately terminate.

(c) This License Agreement shall be automatically amended to add countries (with respect to the Licensed Goods and the Licensed Services only) other than the Territories, in the event that DWA obtains additional rights in the Licensed Marks through new registrations in countries other than the Territories, or through other manners provided under the law of a particular Territory. DreamWorks Studios may request in writing DWA’s agreement to amend the Licensed Goods in Schedule B to goods other than those in the natural zone of expansion, and such agreement will not be unreasonably withheld. Upon any amendment, DreamWorks Studios may cause all pertinent Sub-Licenses to be amended to reflect any additions to Schedules A and/or B.

(d) Subject to the terms and conditions hereof and in consideration for the Assignment, DWA will grant and assign to DreamWorks Studios a security interest to be executed concurrently herewith in and to the Licensed Marks and registrations thereof, but only to the extent necessary to secure DWA’s obligations under this License Agreement of permitting DreamWorks Studios to use such Licensed Marks in accordance with the terms hereof. The

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security interest granted by DWA hereunder will be subject to the approval of DWA SKG’s lead revolver lender. DWA will execute and file or record, as appropriate, any other security agreements with the relevant trademark registration authorities and UCC financing statements, and such other documents as are reasonably necessary to evidence, perfect, and preserve the security interest granted to DreamWorks Studios hereunder, and DreamWorks Studios will have all rights and remedies of a secured party pursuant to applicable law. The granting of the security interest hereunder by DWA does not violate the rights of any third party under any agreement with DWA, judgment, statute or otherwise, and does not require the prior consent of any third party, except DWA’s lead revolver lender. DWA will endeavor in good faith to obtain the requisite consent. The grant of the security interest by DWA hereunder with respect to any Licensed Mark shall be effective upon the commencement of the Term.

3. Extension of Term; Termination, Etc.

(a) The initial Term of this License Agreement shall be automatically extended for successive 20-year Terms following the completion of the initial 20-year Term unless DWA and DreamWorks Studios agree in writing, within six months prior to the expiration of any such 20-year Term, to terminate this License Agreement in its entirety, or unless DWA terminates this License Agreement in its entirety in the manner set forth in sub-paragraph 3(b) below.

(b) This License Agreement may be terminated in its entirety by DWA (i) upon a material breach by DreamWorks Studios that remains uncured for a period of 90 days after DWA provides written notice to DreamWorks Studios of such claimed material breach in the manner set forth in paragraph 11(a) below, and the material breach is either admitted in a writing signed by the admitting party or determined in an arbitration proceeding in the manner set forth in paragraph 11(b) below, or (ii) in the event that both Steven Spielberg and David Geffen cease to be employees or otherwise render services to DreamWorks Studios as employees or

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consultants and neither Steven Spielberg nor David Geffen has the authority to veto the production or acquisition of any motion picture, and DWA provides written notice of termination to DreamWorks Studios within sixty (60) days of the occurrence of such event. In the event of termination of this License Agreement in its entirety by DWA under this sub-paragraph, DreamWorks Studios agrees that it will use commercially reasonable efforts to cause all Sub-Licenses to terminate immediately pursuant to their terms, that it will cease all further use of the Licensed Marks except as expressly permitted hereunder, and that it will take such steps as are necessary to change its corporate names and trade names to ones that do not include any Licensed Mark, to cease use of any domain names containing any Licensed Mark, and to delete all listings of its corporate names and trade names in directories, databases, indices, and other public and private listings, all as soon after termination as commercially possible. In the event that the License terminates because DreamWorks Studios sells, transfers, or assigns all or substantially all of its assets to a third party, DWA agrees that DreamWorks Studios’ successor(s)-in-interest may use the Licensed Marks in connection with motion pictures that were produced, acquired and/or distributed by DreamWorks Studios or to which DreamWorks Studios has an agreement to acquire or co-produce prior to such sale, transfer, or assignment (“Completed Films”), in the manners set forth in sub-paragraph 3(c)(i)-(v) below.

(c) Nothing contained herein shall prohibit DreamWorks Studios, following termination of this License Agreement for any reason under this paragraph 3 and subject to DreamWorks Studios’ obligations following termination under sub-paragraph 3(b) above, from doing any of the following: (i) distributing or exhibiting any Completed Film; (ii) releasing or re-releasing any Completed Film; (iii) editing any Completed Film for television exhibition, DVD exhibition, or exhibition in any other media, now know or hereafter derived, or for

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purposes of territorial distribution, and dubbing or sub-titling any Completed Film into a different language, or for reasons of public taste, or for legal reasons, including but not limited to in the event a claim or the threat of a claim that distribution without such change might infringe the rights of any third party, and then releasing, distributing, and exhibiting such Completed Film; (iv) advertising and promoting any Completed Film by using the Licensed Marks to reference the fact that such Completed Film was produced and/or distributed by DreamWorks Studios; and (v) continuing to distribute, advertise and promote any merchandising, soundtrack or publication, or exploit any other ancillary rights based upon any such Completed Film and distributing, advertising and promoting any merchandising, soundtrack or publication, or any other ancillary rights based upon any such Completed Film pursuant to license agreements entered into prior to such termination and approved as provided hereunder, or (vi) using and authorizing the use of phrases such as “Based on the Film                      Produced [or presented] by DreamWorks Studios” for attribution purposes in connection with distribution, advertising and promotion of any merchandising, soundtrack or publication, or exploit any other ancillary rights based upon any such Completed Film.

4. Attribution Notice.

DreamWorks Studios agrees that in connection with any use of the Licensed Marks under this License Agreement, it will use, and will cause all Sub-Licensees to use, such notices regarding DWA’s ownership of the Licensed Marks, and their use under this License Agreement or any Sub-License, as DWA may reasonably require. DreamWorks Studios agrees that it will include in any Sub-License a requirement that all Sub-Licensees will use such notices as may be reasonably required by DWA.

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5. Further Assurances, Etc.

(a) DWA shall take such steps as are necessary under the laws of the various jurisdictions in the Territories, as the Territories may be amended from time to time in the manner set forth in paragraphs 2(c) and 8(d), to perfect, confirm, acknowledge, or record this License Agreement, at DWA’s sole expense, for the benefit of DreamWorks Studios and to enable DWA to enforce the Licensed Marks to the maximum extent possible under paragraph 8 below.

(b) DreamWorks Studios agrees to execute such documents and to take such steps, at DreamWorks Studios’ sole expense, including making available to DWA and its counsel documents, information, and witnesses, as may be required by DWA to perfect, confirm, acknowledge, or record this License Agreement in any Territory, to enforce the Licensed Marks as provided in paragraph 8 below, or otherwise to effectuate the purposes of this License Agreement.

6. Acknowledgement of DWA’s Ownership of Licensed Marks, Etc.

(a) DreamWorks Studios acknowledges and agrees that DWA owns the Licensed Marks, that DreamWorks Studios will acquire no ownership interest in or to the Licensed Marks under this License Agreement, and that DreamWorks Studios’ interest in the Licensed Marks is limited solely to the license interest conferred by the license grant under this License Agreement. DreamWorks Studios further acknowledges and agrees that all uses of the Licensed Marks by it under this License Agreement and by all Sub-Licensees under all Sub-Licenses inure and shall inure to the benefit of DWA and that the goodwill in the Licensed Marks is owned by DWA.

(b) DreamWorks Studios agrees that it will not file, and that it will cause all Sub-Licensees not to file, any applications to register the Licensed Marks, or any other mark that consists of, colorably imitates, or is confusingly similar to any of the Licensed Marks, in the Territories or elsewhere in the world.

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(c) DreamWorks Studios agrees that, except as specifically permitted hereunder, it will make no use, and will cause all Sub-Licensees to make no use, of any other mark that consists of, colorably imitates, or is confusingly similar to, any of the Licensed Marks.

(d) DreamWorks Studios agrees that during the Term of this License Agreement, and thereafter, it will not challenge, or assist any third party, including any Sub-Licensee, to challenge, the validity of the Licensed Marks. DreamWorks Studios agrees that it will include in each Sub-License a provision that each Sub-Licensee will not challenge, or assist any third party to challenge, the validity of the Licensed Marks.

7. Quality Control.

(a) DreamWorks Studios agrees that it will use, and will cause all Sub-Licensees to use, the Licensed Marks in connection with Licensed Goods and Licensed Services of a quality at least equal to that of Licensed Goods and Licensed Services provided by or under license from DreamWorks Studios prior to the Separation Agreement.

(b) DreamWorks Studios agrees to use the Licensed Marks under this License Agreement substantially in the manner set forth in Schedule D attached hereto and incorporated by reference herein as if set forth in full, as Schedule D may be amended by DWA from time to time through written notice to DreamWorks Studios in the manner set forth in paragraph 11(a) below. In the event that DreamWorks Studios wishes to use the Licensed Marks in a manner that deviates materially from the manner set forth in Schedule D attached hereto, it shall seek approval from DWA in writing for such use, which approval shall not be unreasonably withheld, conditioned or delayed by DWA.

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(c) DWA shall have the right to approve the quality of all Licensed Goods manufactured and sold by DreamWorks Studios or under all Sub-Licenses. DreamWorks Studios agrees to conform its uses, and to use reasonable commercial efforts to cause all Sub-Licensees to conform their uses, of the Licensed Marks on Licensed Goods to the manner set forth in Schedule D attached hereto. DreamWorks Studios agrees to submit to DWA for review and approval, as may be requested by DWA from time to time, a representative sample of Licensed Goods manufactured by DreamWorks Studios or under all Sub-Licenses, which approval shall not be unreasonably withheld by DWA. DWA’s failure to disapprove a sample in writing within 10 business days of receipt shall be deemed approval. DWA agrees to specify in writing the reasons for its disapproval of any such sample.

(d) DreamWorks Studios agrees that upon approval of any samples pursuant to this paragraph 7(c), it will not materially deviate from, and will cause all Sub-Licensees not to materially deviate from, the quality of Licensed Goods approved by DWA.

8. Enforcement; Expansion of Rights; Etc.

(a) DreamWorks Studios agrees to advise DWA promptly and in writing of any instances of possible infringement or dilution of, or unfair competition or cybersquatting regarding, the Licensed Marks in the Territories or elsewhere in the world (collectively “Infringements”) that come to the attention of DreamWorks Studios. Upon receipt of such notification, DWA may take such action as it deems appropriate, after consultation in good faith with DreamWorks Studios, to protect the Licensed Marks, including criminal, civil, or administrative litigation, through counsel reasonably acceptable to DreamWorks Studios. Where litigation by DWA against an Infringement involves only claims regarding the Licensed Marks, the attorneys’ fees and other expenses of such litigation (collectively “Expenses”), and any sums obtained by way of judgment or settlement from such litigation (a “Recovery”), shall be

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allocated as follows: (i) if the Infringement involves Licensed Goods and/or Licensed Services as to which DreamWorks Studios has an exclusive license of the Licensed Marks and DreamWorks Studios agrees that such action should be taken, DreamWorks Studios shall reimburse DWA for all documented Expenses and shall keep any Recovery; and (ii) if the Infringement involves Licensed Goods and/or Licensed Services as to which DreamWorks Studios has a non-exclusive license of the Licensed Marks, or if DreamWorks Studios does not agree to take such action with respect to the exclusively licensed Licensed Goods and/or Licensed Services, DWA shall bear all Expenses and shall keep any Recovery. Where litigation by DWA against an Infringement also includes claims by DWA (or by both DWA and DreamWorks Studios through separate counsel) based upon intellectual property rights or other rights in addition to the Licensed Marks, DWA, or DWA and DreamWorks Studios both, as the case may be, shall bear the Expenses and shall keep any Recovery that pertain to the claims asserted by that party, unless DWA and DreamWorks Studios elect to assert their respective claims through the same counsel, in which case they shall agree in good faith regarding the allocation of Expenses and Recovery.

(b) DreamWorks Studios agrees to be and, as necessary, to remain, the sole party or a joint party with DWA, in any litigation involving a claim based upon the Licensed Marks in the event that the substantive law of a particular Territory requires DreamWorks Studios to be a party because of the status of the recordation of the Assignment or any related documents in that Territory as of the time of the commencement of such litigation does not permit DWA to be the sole party or a party, or for any other reason. The allocation of Expenses and Recovery in litigation in which DreamWorks Studios must be a joint party with DWA, or a sole party, shall also be governed by sub-paragraphs 8(a)(i) and (ii) above.

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(c) DWA and DreamWorks Studios agree that in connection with any litigation by DWA to which sub-paragraph 8(a)(i) above applies, DWA shall prosecute and compromise the litigation only after good faith consultation with DreamWorks Studios, and that in any litigation by DWA to which sub-paragraph 8(a)(ii) above applies, DWA may prosecute and compromise the litigation in its sole discretion.

(d) DreamWorks Studios may request DWA to file applications to register the Licensed Marks for the Licensed Goods and Licensed Services in countries other than the Territories, to register the Licensed Marks in the Territories for goods and services in addition to the Licensed Goods and Licensed Services, and to register domain names containing the Licensed Marks. In response to any such request, DWA shall decide whether to file such applications for trademark and service mark registration, and to register such domain names, in the exercise of its reasonable business judgment. The attorneys’ fees and expenses in connection with the filing and prosecution of such applications, or the registration of such domain names, shall be shared equally by DWA and DreamWorks Studios. DWA agrees to prosecute any such applications for trademark or service mark registration to registration or final refusal, or upon agreement of the parties through appeal, and to maintain all existing and future registrations of the Licensed Marks in the Territories, and domain name registrations, unless DWA and DreamWorks Studios agree in writing to abandon any such applications or not to renew any such registrations.

9. Representations and Warranties.

(a) DWA represents and warrants to DreamWorks Studios that: (i) DWA has the right, power, and authority to enter into and fully perform its obligations under this License Agreement; and (ii) this License Agreement is a binding agreement as to DWA that is enforceable against DWA according to its terms.

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(b) DreamWorks Studios represents and warrants to DWA that: (i) DreamWorks Studios will use commercially reasonable efforts throughout the Term of this License Agreement to maintain sufficient control over all Sub-Licensees to fulfill DreamWorks Studios’ obligations to cause all Sub-Licensees to take or refrain from taking the actions specified hereunder; (ii) DreamWorks Studios’ use of the Licensed Marks, and the conduct of its business under the trade names and corporate names “DreamWorks L.L.C.” and other DreamWorks formatives shall at all relevant times be in accordance with all applicable laws, (iii) DreamWorks Studios has the right, power, and authority to enter into and fully perform its obligations under this License Agreement; and (ii) this License Agreement is a binding agreement as to DreamWorks Studios that is enforceable against DreamWorks Studios according to its terms.

10. Indemnification.

(a) DWA agrees to indemnify, defend, and hold DreamWorks Studios and any Sub-Licensees harmless from and against any claim, demand, cause of action, or suit for trademark, service mark, or tradename infringement, dilution, cybersquatting, and unfair competition that is asserted against DreamWorks Studios or any Sub-Licensee by a third party during the Term, or thereafter solely on the basis of DreamWorks Studios’ or any Sub-Licensee’s use of the Licensed Marks under this License Agreement (each a “Trademark Claim”). DreamWorks Studios agrees that upon receipt of notice of any Trademark Claim, it will promptly tender such Trademark Claim in writing to DWA in the manner set forth in paragraph 11(a) below, and DWA agrees that it will defend DreamWorks Studios and any Sub-Licensee against such Trademark Claim at DWA’s expense and through counsel of DWA’s choosing. DWA may defend, or compromise any Trademark Claim with the approval of DreamWorks Studios, which approval shall not be unreasonably withheld, and agrees to pay any judgment or settlement on any Trademark Claim. DreamWorks Studios agrees that it will cooperate fully with, and will cause any Sub-Licensee to

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cooperate fully with, DWA and its counsel in DWA’s defense of any Trademark Claim. DWA agrees to carry such insurance as may be reasonable to insure the fulfillment of DWA’s indemnity obligations with respect to Trademark Claims.

(b) DreamWorks Studios agrees to indemnify, defend, and hold DWA harmless, and to obligate each Sub-Licensee to indemnify, defend, and hold DWA harmless, from and against any claim, demand, cause of action, or suit, that is asserted against DWA by a third party during the Term or thereafter, arising out of DreamWorks Studios’ or any Sub-Licensee’s manufacture, advertisement, promotion, marketing, offering for sale, sale, or distribution of Licensed Goods during the Term, and DreamWorks Studios’ or any Sub-Licensee’s advertisement, promotion, marketing, offering for sale, sale, or rendition of Licensed Services during the Term, where such claim, demand, cause of action, or suit is not a Trademark Claim (each a “Non-Trademark Claim”). Non-Trademark Claims include, without limitation, all claims, demands, causes of action, or suits for copyright infringement, libel, violation or infringement of the right of publicity, violation or invasion of the right of privacy, disparagement, theft of ideas, patent infringement, breach of contract, negligence, strict liability, and product liability arising out of DreamWorks Studios’ or any Sub-Licensee’s manufacture, advertisement, promotion, marketing, offering for sale, sale, or distribution of Licensed Goods during the Term, and DreamWorks Studios’ or any Sub-Licensee’s advertisement, promotion, marketing, offering for sale, sale, or rendition of Licensed Services during the Term (except where such claims, demands, causes of action, or suits are based solely upon DreamWorks Studios’ or any Sub-Licensee’s use of the Licensed Marks as permitted under this License Agreement). DWA agrees that upon receipt of any Non-Trademark Claim, it will promptly tender such claim in writing to DreamWorks Studios in the manner set forth in paragraph 11(a) below, and DreamWorks Studios agrees that it will

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defend DWA against such Non-Trademark Claim at DreamWorks Studios’ expense and through counsel of DreamWorks Studios’ choosing. DreamWorks Studios may defend or compromise any Non-Trademark Claim in its sole discretion, and agrees to pay any judgment or settlement on any Non-Trademark Claim. DWA agrees that it will cooperate fully with DreamWorks Studios and its counsel in DreamWorks Studios’ defense of any Non-Trademark Claim. DreamWorks Studios agrees to carry such insurance, and to cause all Sub-Licensees to carry such insurance, as may be reasonable to insure the fulfillment of DreamWorks Studios’ indemnity obligations with respect to Non-Trademark Claims. Nothing in this subparagraph 10(b) affects either party’s rights or obligations under the Distribution Agreement, that certain Services Agreement dated as of October 1, 2004, and that certain Merchandise and Promotion Ancillary Services Agreement dated as of October 1, 2004.

11. Miscellaneous.

(a) Any notices required or which may be given hereunder shall be in writing and shall be delivered personally, or sent by certified mail, return receipt requested, by facsimile (with confirmation of receipt), or by e-mail (with confirmation of receipt), to the addresses set forth above, or such other addresses as may be designated by the parties from time to time in writing under this License Agreement. All notices sent to DWA and DreamWorks Studios shall be sent to the attention of the General Counsel. All notices are effective upon confirmed receipt.

(b) The parties shall attempt to resolve all claims, disputes, or disagreements arising out of the interpretation, performance, or breach of this License Agreement, through good faith negotiation between DWA and DreamWorks Studios. If such good faith negotiations do not resolve the dispute, the dispute shall be resolved through arbitration in the manner set forth in Section 24 of the Distribution Agreement, with each party having the rights and obligations set forth therein; provided, however, that in any arbitration hereunder, the neutral arbitrator selected by the parties, or by the American Arbitration Association, as the case may be, shall have a minimum of 10 years’ experience in the trademark licensing business.

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(c) DreamWorks Studios may assign this License Agreement or its rights hereunder only with the written consent of DWA, which consent shall not be unreasonably withheld; provided, however, that DreamWorks Studios shall have the right to assign this License Agreement only in the event either Steven Spielberg or David Geffen is engaged by DreamWorks Studios as an employee or consultant, or that Steven Spielberg or David Geffen otherwise renders services to DreamWorks Studios. In the event of any assignment hereunder, the assignee must assume in writing all of DreamWorks Studios’ obligations under this License Agreement.

(d) This License Agreement shall be governed by, and construed in accordance with, the laws of the State of California.

(e) This License Agreement, together with the Schedules thereto, constitutes the entire agreement between DWA and DreamWorks Studios with respect to its subject matter, and supersedes any prior agreement, understanding, representation, promise, or negotiations, between the parties, whether oral or written, express or implied.

WHEREFORE, the parties have executed this License Agreement as of the Effective Date by the signature below of their duly-authorized representatives.

Dated: October 27, 2004	DREAMWORKS ANIMATION LLC
	By:	/s/ Katherine Kendrick

Dated: October 27, 2004	DREAMWORKS L.L.C.
	By:	/s/ Brian Edwards

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EX-10.9

EXECUTION COPY

EXHIBIT 10.9

TAX RECEIVABLE AGREEMENT (this “Agreement”), dated as of October 27, 2004, by and among DreamWorks Animation SKG, Inc., a Delaware corporation (“DWA”) and DW Investment II, Inc., a Washington subchapter S corporation (“DWI II”).

WHEREAS, on October 27, 2004, DW Investment I, Inc., a subchapter S corporation (“DWI I”), distributed its entire interest in DreamWorks Animation LLC, a Delaware limited liability company (“DWA LLC”), to Paul G. Allen (“Allen”), its sole shareholder, in a transaction taxable under Section 311 of the Code (the “Vulcan Transaction”).

WHEREAS, on October 27, 2004, after the Vulcan Transaction, Allen contributed his entire interest in DWA LLC to DWI II and DWA acquired such interest in DWA LLC from DWI II by contribution (the “Contribution”) in a transaction described in Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”).

WHEREAS, this Agreement was issued by DWA to DWI II as partial consideration for the DWA LLC interest transferred to DWA by DWI II in the Contribution and shall be treated as “other property” received by DWI II for purposes of Section 351(b) of the Code.

WHEREAS, DWA LLC shall have in effect an election under Section 754 of the Code for the Taxable Year in which the Vulcan Transaction occurs, which will result in an adjustment to the tax basis of the assets owned by DWA LLC as of the Closing Date (such assets and any asset whose tax basis is determined, in whole or in part, by reference to the adjusted basis of any such asset, the “Original Assets”) by reason of the Vulcan Transaction and the issuance of this Agreement to DWI II as partial consideration in the Contribution.

WHEREAS, on October 27, 2004, DWA acquired all the remaining interests in DWA LLC from the holders of such interests, other than an interest in DWA LLC held by DreamWorks, Inc., a Delaware corporation (“DW Inc.”).

WHEREAS, on October 27, 2004, after the Vulcan Transaction, DWA acquired all the outstanding stock of DW Inc.

WHEREAS, DWA is the common parent of the DWA Affiliated Group and DW Inc. is a member of the DWA Affiliated Group.

WHEREAS, 100% of the interests in DWA LLC are held by members of the DWA Affiliated Group and, as a result, the income, gain, loss, expense and other Tax items of DWA LLC will be reported by the DWA Affiliated Group on the DWA Consolidated Returns.

WHEREAS, the income, gain, loss, expense and other Tax items of DWA LLC may be affected by the Basis Adjustment and the Imputed Interest.

WHEREAS, the parties to this Agreement desire to make certain arrangements with respect to the effect of the Basis Adjustment and Imputed Interest on the actual liability for Covered Taxes of the DWA Affiliated Group.

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

Definitions

Definitions. As used in this Agreement, the terms set forth in this Article I shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined).

“Advisory Firm” means the Person identified on Schedule 1.01 to this Agreement or a nationally recognized accounting or law firm that is nationally recognized as being expert in Covered Tax matters that is agreed to by DWA and DWI II as its replacement.

“Advisory Firm Letter” shall mean a letter from the Advisory Firm stating that the relevant schedule, notice or other information to be provided by DWA to DWI II and all supporting schedules and work papers were prepared in a manner consistent with the terms of this Agreement and, to the extent not expressly provided in this Agreement, on a reasonable basis in light of the facts and law in existence on the date such schedule, notice or other information is delivered to DWI II.

“Agreed Rate” means, LIBOR plus 200 basis points.

“Agreement” is defined in the preamble.

“Agreement Value” is defined in Section 2.01 of this Agreement.

“Amended Tax Benefit Schedule” is defined in Section 2.03(b) of this Agreement.

“Applicable Treasury Rate” means a rate equal to (1) if an Early Termination Notice is delivered prior to the third anniversary of the Closing Date    , 4.001% or (2) the yield to maturity as of the date an Early Termination Notice is delivered of United States Treasury securities with a constant maturity (the “Applicable Maturity”) (as compiled and published in the most recent Federal Reserve Statistical Release H 15 (519)) equal to (a) if such Early Termination Notice is delivered on or after the third anniversary of the Closing Date but prior to the fifth anniversary of the Closing Date, 10 years, (b) if such Early Termination Notice is delivered on or after the fifth anniversary of the Closing Date but prior to the fifteenth anniversary of the Closing Date, the number of years from the date such Early Termination Notice is delivered through the fifteenth anniversary of the Closing Date, or (c) if such Early Termination Notice is delivered on or after the fifteenth anniversary of the Closing Date, two years. If there are no United States Treasury securities with a constant maturity equal to the Applicable Maturity, the yield to maturity shall be interpolated from the United States Treasury securities with constant maturities that are most nearly longer than and shorter than the Applicable Maturity.

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“Basis Adjustment” means the increase or decrease to the tax basis of an Original Asset (i) under Sections 743(b) and 754 of the Code and comparable sections of the California Revenue and Taxation Code as a result of the Vulcan Transaction and (ii) under Section 362(a) of the Code and the comparable section of the California Revenue and Taxation Code as a result of the receipt by DWI II of this Agreement as partial consideration in the Contribution, as shown on the Basis and Agreement Value Schedule. The Basis Adjustment shall include only the increase or decrease to the tax basis of any Original Asset made as of the Closing Date and for the reasons described in (i) and (ii) above, provided however that if there is a relevant Determination that all or part of the Basis Adjustment described in (ii) above occurred after the Closing Date by reason of the accrual or payment of any amount due to DWI II under this Agreement, then the increase or decrease in the basis of the Original Assets described in (ii) above shall include all such adjustments as they occur after the Closing Date in a manner consistent with such Determination.

“Basis and Agreement Value Schedule” is defined in Section 2.02(a) of this Agreement.

“Business Day” means any calendar day that is not a Saturday, Sunday or other calendar day on which banks are required or authorized to be closed in the City of New York.

“California State Income Tax” means any income, franchise or similar tax imposed by the state of California (including, without limitation, the Corporation Tax Law under the California Revenue and Taxation Code Section 23001 et. seq.), and any interest, additions to tax or penalties applicable or related to such tax.

“Change of Control Event” means the occurrence of any of the following events, not including any events occurring prior to or in connection with an initial public offering of Shares (as defined below), including the occurrence of such initial public offering:

(i) during any period of 14 consecutive calendar months, individuals who were directors of DWA on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board of Directors of DWA (the “Board”); provided, however, that any individual becoming a director subsequent to the first day of such period whose election, or nomination for election, by DWA’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as such term is used in Section 13(d) of the Exchange Act), in each case other than the management of DWA, the Board or the holders of DWA’s Class B common stock, $0.01 par value;

(ii) the consummation of (A) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) DWA or (y) any of its Subsidiaries, but in the case of this clause (y) only if DWA Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter

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referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the assets of DWA to an entity that is not an affiliate of DWA (a “Sale”) if such Reorganization or Sale requires the approval of DWA’s stockholders under the law of DWA’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of DWA in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the individuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the shares of Class A Common Stock of DWA, $0.01 par value, or such other securities of DWA into which such shares shall be changed by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or other similar transaction (the “Shares”) or other securities eligible to vote for the election of the Board (together, “DWA Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including, without limitation, a corporation that as a result of such transaction owns DWA or all or substantially all DWA’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding DWA Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than DWA), (2) no “person” (as such term is used in Section 13(d) of the Exchange Act), excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation, (y) Jeffrey Katzenberg and (z) David Geffen, beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale;

(iii) the stockholders of DWA approve a plan of complete liquidation or dissolution of DWA; or

(iv) any “person” (as such term is used in Section 13(d) of the Exchange Act), corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) DWA, (B) any trustee or other fiduciary holding securities under an employee benefit plan of DWA or an affiliate of DWA or (C) any company owned, directly or indirectly, by the stockholders of DWA in substantially the same proportions as their ownership of the voting power of the DWA Voting Securities) becomes the beneficial owner, directly or indirectly, of securities of DWA representing 20% or more of the combined voting power of the DWA Voting Securities but only if the percentage so owned exceeds the aggregate percentage of the combined voting power of the DWA

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Voting Securities then owned, directly or indirectly, by Jeffrey Katzenberg and David Geffen; provided, however, that for purposes of this subparagraph (iv), the following acquisitions shall not constitute a Change of Control: (x) any acquisition directly from DWA or (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by DWA or an affiliate of DWA.

“Change of Control Termination Payment” is defined in Section 4.03(c) of this Agreement.

“Closing Date” means October 27, 2004.

“Code” is defined in the recitals.

“Contribution” is defined in the recitals.

“Covered Taxable Year” means any Taxable Year of the DWA Affiliated Group ending after the Closing Date and on or before the end of the Taxable Year including the date which is the twentieth (20^th) anniversary of the Closing Date.

“Covered Taxes” means Federal Income Taxes and California State Income Taxes.

“Determination” shall have the meaning ascribed to such term in Section 1313(a) of the Code or similar provision of the California Revenue and Taxation Code, as applicable.

“DWA” is defined in the preamble.

“DWA Affiliated Group” means the affiliated group of domestic corporations within the meaning of Section 1504(a) of the Code or the unitary combined group of corporations within the meaning the California Revenue and Taxation Code, as applicable, of which DWA is a member from time to time.

“DWA Consolidated Return” means the consolidated Federal income tax return or California unitary combined tax return, as applicable, of the DWA Affiliated Group filed with respect to any Taxable Year.

“DWA Group” means (i) the corporations that are members of the DWA Affiliated Group and (ii) the corporations that would be members of the DWA Affiliated Group but for the fact they are not includible corporations under Section 1504(b) of the Code.

“DWA Payment” is defined in Section 5.01 of this Agreement.

“DWA LLC” is defined in the recitals.

“DWA Senior Obligations” means indebtedness of DWA (including and together with all monetary obligations in respect of the five-year $200 million revolving credit facility entered into among DWA, JP Morgan Chase Bank and certain other lenders (the “Credit Agreement”), and interest, whether or not allowable, accruing on indebtedness incurred pursuant

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to the Credit Agreement after the filing of a petition initiating any proceeding under any bankruptcy, insolvency or similar law or that would have accrued but for such filing) arising under the Credit Agreement or that, by the terms of the instrument creating or evidencing such indebtedness, is expressly designated “senior debt” and made senior in right of payment to any other of the indebtedness of DWA; provided, that in no event shall DWA Senior Obligations include (i) indebtedness to any Subsidiary of DWA or any officer, director or employee of DWA or any of its Subsidiaries (other than indebtedness that is required to be pledged to the lenders under the Credit Agreement) or (ii) indebtedness to trade creditors.

“DWI I” is defined in the recitals.

“DWI II” is defined in the preamble.

“DWI II Certification Noncompliance” is defined in Section 7.04.

“DW Inc.” is defined in the recitals.

“DW LLC” means DreamWorks L.L.C., a Delaware limited liability company.

“Early Termination Notice” is defined in Section 4.02 of this Agreement.

“Early Termination Payment” is defined in Section 4.03(b) of this Agreement.

“Early Termination Rate” means the Applicable Treasury Rate plus 300 basis points.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute thereto.

“Federal Income Tax” means any tax imposed under Subtitle A of the Code or any other provision of United States Federal income tax law (including, without limitation, the taxes imposed by Sections 11, 55, 59A, and 1201(a) of the Code), and any interest, additions to tax or penalties applicable or related to such tax.

“Governmental Entity” means any Federal, state, local, provincial or foreign government or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, whether domestic or foreign.

“Holdco” means DWA Escrow LLLP, a Delaware limited liability limited partnership.

“Hypothetical Tax Basis” means, with respect to any asset at any time, the tax basis that such asset would have at such time if no Basis Adjustment had been made.

“Hypothetical Tax Liability” means, with respect to any Covered Taxable Year, the liability for Covered Taxes of the DWA Affiliated Group using the same methods, elections, conventions and similar practices used on the relevant DWA Consolidated Return, but using the Hypothetical Tax Basis instead of the actual tax basis of each relevant asset and excluding any deduction attributable to the Imputed Interest.

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“Imputed Interest” shall mean any interest imputed under Section 1272, 1274 or 483 or other provision of the Code and the similar section of the California Revenue and Taxation Code with respect to DWA’s payment obligations under this Agreement.

“Indemnity Agreement” means the Indemnity Agreement, dated as of October 27, 2004, among M&J K B Limited Partnership, a Delaware limited partnership, M&J K Dream Limited Partnership, a Delaware limited partnership, DG-DW, L.P., a Delaware limited partnership, DW LIPS, L.P., a California limited partnership, and DWI II.

“Initial Value” shall mean the weighted average trading price of DWA Class A common stock on the date of its initial public offering, as reported on the New York Stock Exchange consolidated tape.

“IRS” means the United States Internal Revenue Service.

“Liabilities” means liabilities or obligations of any nature.

“LIBOR” means, for each month (or portion thereof) during any period, an interest rate per annum equal to the rate per annum reported, on the date two days prior to the first day of such month, on the Telerate Page 3750 (or if such screen shall cease to be publicly available, as reported on Reuters Screen page “LIBO” or by any other publicly available source of such market rate) for London interbank offered rates for United States dollar deposits for such month (or portion thereof).

“Net Asset Valuation Date” means each March 31, June 30, September 30 and December 31.

“Net Asset Valuation Statement” is defined in Section 7.03 of this Agreement.

“Original Assets” is defined in the recitals.

“Person” means and includes any individual, firm, corporation, partnership (including, without limitation, any limited, general or limited liability partnership), company, limited liability company, trust, joint venture, association, joint stock company, unincorporated organization or similar entity or Governmental Entity.

“Proceeding” is defined in Section 8.08 of this Agreement.

“Realized Tax Benefit” means, for a Covered Taxable Year, the excess, if any, of the Hypothetical Tax Liability over the actual liability for Covered Taxes of the DWA Affiliated Group for such Covered Taxable Year. If all or a portion of the actual tax liability for Covered Taxes for the Covered Taxable Year arises as a result of an audit by a Taxing Authority of any Covered Taxable Year, such liability shall not be included in determining the Realized Tax Benefit or the Realized Tax Detriment unless and until there has been a Determination.

“Realized Tax Detriment” means, for a Covered Taxable Year, the excess, if any, of the actual liability for Covered Taxes of the DWA Affiliated Group over the Hypothetical Tax Liability for such Covered Taxable Year. If all or a portion of the actual tax liability for Covered

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Taxes for the Covered Taxable Year arises as a result of an audit by a Taxing Authority of any Covered Taxable Year, such liability shall not be included in determining the Realized Tax Benefit or Realized Tax Detriment unless and until there has been a Determination.

“Reconciliation Procedures” shall mean those procedures set forth in Section 7.09 of this Agreement.

“Scheduled Termination Date” shall mean the date on which this Agreement would terminate in the absence of an Early Termination Notice.

“Specified Assets” means (i) cash and cash equivalents, (ii) debt securities with an initial maturity of ten years or less that are traded on a national securities exchange registered under Section 6 of the Exchange Act (an “Exchange”), (iii) equity securities that are traded on an Exchange, (iv) partnership interests in Holdco, and (v) investment funds, provided that any amounts invested in the fund may be withdrawn, without penalty, within a period of 12 months or less.

“Statutory Rate” means the October 2004 long-term applicable federal rate.

“Subsidiary” means any entity in which DWA, directly or indirectly, possesses fifty percent (50%) or more of the total combined voting power of all classes of its stock.

“Tax Benefit Payment” is defined in Section 3.01 of this Agreement.

“Tax Benefit Schedule” is defined in Section 2.03(a) of this Agreement.

“Taxable Year” means a taxable year as defined in Section 441(b) of the Code or comparable section of the California Revenue and Taxation Code, as applicable, (and, therefore, for the avoidance of doubt, may include a period of less than 12 months for which a Tax Return is made).

“Taxes” means (i) all forms of taxation or duties imposed, or required to be collected or withheld, including, without limitation, charges, together with any related interest, penalties or other additional amounts, (ii) liability for the payment of any amount of the type described in the preceding clause (i) as a result of being a member of an affiliated, consolidated, combined or unitary group, and (iii) liability for the payment of any amounts as a result of being party to any tax sharing agreement (other than this Agreement) or as a result of any express or implied obligation to indemnify any other person with respect to the payment of any amount described in the immediately preceding clauses (i) or (ii) (other than an obligation to indemnify under this Agreement).

“Tax Return” means any return, filing, report, questionnaire, information statement or other document required to be filed, including amended returns that may be filed, for any taxable period with any Taxing Authority (whether or not a payment is required to be made with respect to such filing).

“Taxing Authority” means the IRS and any other state, local, foreign or other Governmental Entity responsible for the administration of Taxes.

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“Treasury Regulations” means the final, temporary and proposed regulations under the Code promulgated from time to time (including corresponding provisions of succeeding provisions) as in effect for the relevant taxable period.

“Valuation Assumptions” shall mean, as of any Valuation Date, the assumptions that (1) in each Covered Taxable Year ending after such Valuation Date DWA will have taxable income sufficient to fully utilize the deductions arising from the Basis Adjustment and the Imputed Interest during such Covered Taxable Year and (2) the Federal Income Tax rates and California State Income Tax rates that will be in effect for each such Covered Taxable Year will be those specified for each such Covered Taxable Year by the Code and by the California Revenue and Taxation Code as in effect on the Valuation Date.

“Valuation Date” means the Closing Date for purposes of determining the Agreement Value or the date of an Early Termination Notice for purposes of determining an Early Termination Payment or Change of Control Termination Payment.

“Vulcan Transaction” is defined in the recitals.

Determination of Realized Tax Benefit or Realized Tax Detriment

Closing Date Basis Adjustment. DWA and DWI II hereby agree to treat the issuance of this Agreement as property received by DWI II as partial consideration for the Contribution on the Closing Date for all Tax purposes. DWA and DWI II further agree that as a result of the issuance of the Agreement, DWI II shall recognize gain on the Closing Date in an amount not to exceed the value of the Agreement on the Closing Date (the “Agreement Value”) under Section 351(b) of the Code and the comparable section of the California Revenue and Taxation Code and the basis in the Original Assets shall be increased by the amount of such gain recognized under Section 362(a) of the Code and the comparable section of the California Revenue and Taxation Code (in addition to any basis increase occurring as a result of the Vulcan Transaction). DWA and DWI II shall treat such gain and basis adjustment as occurring entirely on the Closing Date unless there is a Determination to the contrary. For all Tax purposes, DWA and DWI II hereby agree that the Agreement Value shall equal the present value, discounted at the Statutory Rate, of all Tax Benefit Payments that would be required to be paid by DWA to DWI II during the period from the Closing Date through the Scheduled Termination Date based on the Valuation Assumptions. The Valuation Assumptions are to be applied in a manner consistent with the illustrative example attached as Appendix A hereto.

i) Basis and Agreement Value Schedule. Within 120 calendar days after the Closing Date, DWA shall deliver to DWI II a schedule (the “Basis and Agreement Value Schedule”) that shows, in reasonable detail, for Covered Tax purposes (i) the actual tax basis as of the Closing Date of each Original Asset, (ii) the Basis Adjustment with respect to each Original Asset and (iii) a calculation of the Agreement Value consistent with the Basis Adjustment and the methodology set forth in Section 2.01. The aggregate tax basis of the Original Assets as of the Closing Date shall equal the aggregate Initial Value of the common stock of DWA received by DWI II in the Contribution plus the Agreement Value. At the time DWA delivers the Basis and Agreement Value Schedule to DWI II it shall (x) deliver to DWI II

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schedules and work papers providing reasonable detail regarding the preparation of the Basis and Agreement Value Schedule and an Advisory Firm Letter supporting such Basis and Agreement Value Schedule and (y) allow DWI II reasonable access to the appropriate representatives at DWA and the Advisory Firm in connection with its review of such schedule. The Basis and Agreement Value Schedule shall become final and binding on the parties unless DWI II, within 30 calendar days after receiving such Basis and Agreement Value Schedule, provides DWA with notice of a material objection to such Basis and Agreement Value Schedule made in good faith. If the parties, using their best efforts, are unable to successfully resolve the issues raised in such notice within 60 calendar days after such Basis and Agreement Value Schedule was delivered to DWI II, DWA and DWI II shall employ the Reconciliation Procedures.

(b) Amended Basis and Agreement Value Schedule. The Basis and Agreement Value Schedule may be amended from time to time by DWA (i) in connection with a Determination, (ii) to correct inaccuracies in the original Basis and Agreement Value Schedule identified after the Closing Date as a result of the receipt of additional information relating to facts or circumstances on or prior to the Closing Date or (iii) to comply with the expert’s determination under the Reconciliation Procedures. At the time DWA delivers such amended Basis and Agreement Value Schedule to DWI II it shall (x) deliver to DWI II schedules and work papers providing reasonable detail regarding the preparation of the amended Basis and Agreement Value Schedule and an Advisory Firm Letter supporting such amended Basis and Agreement Value Schedule and (y) allow DWI II reasonable access to the appropriate representatives at DWA and the Advisory Firm in connection with its review of such schedule. The amended Basis and Agreement Value Schedule shall become final and binding on the parties unless DWI II, within 30 calendar days after receiving such amended Basis and Agreement Value Schedule, provides DWA with notice of a material objection to such amended Basis and Agreement Value Schedule made in good faith. If the parties, using their best efforts, are unable to successfully resolve the issues raised in such notice within 60 calendar days after such amended Basis and Agreement Value Schedule was delivered to DWI II, DWA and DWI II shall employ the Reconciliation Procedures.

(a) Tax Benefit Schedule. Within 10 calendar days after filing the Federal income tax return of DWA for the relevant Covered Taxable Year, DWA shall provide to DWI II a schedule showing, in reasonable detail, the calculation of the Realized Tax Benefit or the Realized Tax Detriment for such Covered Taxable Year (the “Tax Benefit Schedule”). At the time DWA delivers the Tax Benefit Schedule to DWI II it shall (i) deliver to DWI II schedules and work papers providing reasonable detail regarding the preparation of the Tax Benefit Schedule and an Advisory Firm Letter supporting such Tax Benefit Schedule and (ii) allow DWI II reasonable access to the appropriate representatives at DWA and the Advisory Firm in connection with its review of such schedule. The Tax Benefit Schedule shall become final and binding on the parties unless DWI II, within 30 calendar days after receiving such Tax Benefit Schedule, provides DWA with notice of a material objection to such Tax Benefit Schedule made in good faith. If the parties, using their best efforts, are unable to successfully resolve the issues raised in such notice within 60 calendar days after such Tax Benefit Schedule was delivered to DWI II, DWA and DWI II shall employ the Reconciliation Procedures.

(b) Amended Tax Benefit Schedule. The Tax Benefit Schedule for any Covered Taxable Year may be amended from time to time by DWA (i) in connection with a

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Determination affecting such Tax Benefit Schedule, (ii) to correct inaccuracies in the original Tax Benefit Schedule identified as a result of the receipt of additional factual information relating to a Covered Taxable Year after the date the Tax Benefit Schedule was provided to DWI II, (iii) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Covered Taxable Year attributable to a carryback or carryforward of a loss or other tax item to such Covered Taxable Year, (iv) to reflect a change in the Realized Tax Benefit or Realized Tax Detriment for such Covered Taxable Year attributable to an amended tax return filed for such Covered Taxable Year (provided, however, that such a change attributable to an audit of a Tax Return by an applicable Taxing Authority shall not be taken into account on an Amended Tax Benefit Schedule unless and until there has been a Determination with respect to such change) or (v) to comply with the expert’s determination under the Reconciliation Procedures. At the time DWA delivers such an amended Tax Benefit Schedule pursuant to this Section 2.03(b) (an “Amended Tax Benefit Schedule”) to DWI II it shall (x) deliver to DWI II schedules and work papers providing reasonable detail regarding the preparation of the Amended Tax Benefit Schedule and an Advisory Firm Letter supporting such Amended Tax Benefit Schedule and (y) allow DWI II reasonable access to the appropriate representatives at DWA and the Advisory Firm in connection with its review of such schedule. Such Amended Tax Benefit Schedule shall become final and binding on the parties unless DWI II, within 30 calendar days after receiving such Amended Tax Benefit Schedule, provides DWA with notice of a material objection to such Amended Tax Benefit Schedule made in good faith. If the parties, using their best efforts, are unable to successfully resolve the issues raised in such notice within 60 calendar days after such Amended Tax Benefit Schedule was delivered to DWI II, DWA and DWI II shall employ the Reconciliation Procedures.

(c) Applicable Principles. The Realized Tax Benefit or Realized Tax Detriment for each Covered Taxable Year is intended to measure the decrease or increase in the actual Covered Tax liability of the DWA Affiliated Group for such Covered Taxable Year attributable to the Basis Adjustment and Imputed Interest, determined using a “with and without” methodology. Carryovers or carrybacks of any tax item attributable to the Basis Adjustment and Imputed Interest (determined using such “with and without” methodology) shall be considered to be subject to the rules of the Code and the Treasury Regulations or the California Revenue and Taxation Code, as applicable, governing the use, limitation and expiration of carryovers or carrybacks of the relevant type. If a carryover or carryback of any tax item includes a portion that is attributable to the Basis Adjustment or Imputed Interest and another portion that is not, such portions shall be considered to be used in the order determined using such “with and without” methodology. Appendix B to this Agreement provides illustrative examples of the applicable principles described in this Section 2.03(c) of this Agreement.

Tax Benefit Payments

Payments. (a) Within 3 calendar days of the delivery of the Tax Benefit Schedule to DWI II for any Covered Taxable Year (a) DWA shall pay to DWI II an amount equal to 85% of the Realized Tax Benefit (if any) for such Covered Taxable Year and (b) DWI II shall pay to DWA an amount equal to 85% of the Realized Tax Detriment (if any) for such Covered Taxable Year, in each case with interest calculated at the Agreed Rate from the due date (without extensions) for filing the Tax Return with respect to Covered Taxes for such Covered Taxable

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Year. Each such payment (a “Tax Benefit Payment”) shall be made by wire transfer of immediately available funds to a bank account of the recipient previously designated by it to the other party. For the avoidance of doubt, no Tax Benefit Payment shall be made in respect of estimated tax payments, including, without limitation, Federal Income Tax payments.

(b) Within 3 calendar days of the delivery of an Amended Tax Benefit Schedule to DWI II for any Covered Taxable Year, DWA shall pay to DWI II, or DWI II shall pay to DWA, as appropriate, an amount equal to the difference between the Realized Tax Benefit or the Realized Tax Detriment reflected on such Amended Tax Benefit Schedule and the Realized Tax Benefit or the Realized Tax Detriment reflected on the Tax Benefit Schedule or prior amended Tax Benefit Schedule for the relevant Covered Taxable Year.

No Duplicative Payments. No duplicative payment of any amount (including interest) will be required under this Agreement.

Termination

Early Termination of Agreement. DWA may terminate this Agreement at any time by paying to DWI II the Early Termination Payment as of the date of the Early Termination Notice. DWA may terminate this Agreement upon the occurrence of a Change of Control Event by paying to DWI II the Change of Control Termination Payment as of the date of the Early Termination Notice. Upon payment of the Early Termination Payment or the Change of Control Termination Payment by DWA, neither DWI II nor DWA shall have any further payment obligations under this Agreement, other than for any (a) Tax Benefit Payment agreed to by DWA and DWI II as due and payable but unpaid as of the Early Termination Notice and (b) Tax Benefit Payment due for the Covered Taxable Year ending with or including the date of the Early Termination Notice (except to the extent that the amount described in clause (a) or (b) is included in the Early Termination Payment or Change of Control Termination Payment).

Early Termination Notice. If DWA chooses to exercise its right of early termination under Section 4.01 above, DWA shall deliver to DWI II a notice (the “Early Termination Notice”) specifying DWA’s intention to exercise such right and showing in reasonable detail the calculation of the Early Termination Payment or the Change of Control Termination Payment, as the case may be. At the time DWA delivers the Early Termination Notice to DWI II it shall (a) deliver to DWI II schedules and work papers providing reasonable detail regarding the calculation of the Early Termination Payment or the Change of Control Termination Payment, as the case may be, in a manner consistent with the guidelines set forth in Section 4.03 of this Agreement and an Advisory Firm Letter supporting such Early Termination Notice and (b) allow DWI II reasonable access to the appropriate representatives at DWA and the Advisory Firm in connection with its review of such Early Termination Notice. Such Early Termination Notice shall become final and binding on the parties unless DWI II, within 30 calendar days after receiving such Early Termination Notice, provides DWA with notice of a material objection to such Early Termination Notice made in good faith. If the parties, using their best efforts, are unable to successfully resolve the issues raised in such notice within 60 calendar days after such Early Termination Notice was delivered to DWI II, DWA and DWI II shall employ the Reconciliation Procedures.

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Payment upon Early Termination. (a) Within 3 calendar days of the delivery to DWI II of the Early Termination Notice or any amendment to the Early Termination Notice, DWA shall pay to DWI II an amount equal to the Early Termination Payment or the Change of Control Termination Payment, as the case may be. Such payment shall be made by wire transfer of immediately available funds to a bank account designated by the relevant party.

(b) The Early Termination Payment as of the date of an Early Termination Notice shall equal the present value, discounted at the Early Termination Rate, of all Tax Benefit Payments that would be required to be paid by DWA to DWI II during the period from the date of the Early Termination Notice through the Scheduled Termination Date assuming (1) the Valuation Assumptions are applied and (2) any loss carryovers generated by the Basis Adjustment or the Imputed Interest and available as of the date of the Early Termination Notice will be utilized by DWA on pro rata basis from the date of the Early Termination Notice through the Scheduled Termination Date. For the avoidance of doubt, the Early Termination Payment would be equal to the Agreement Value if the Early Termination Notice were delivered as of the Closing Date and the Early Termination Rate were equal to the Statutory Rate.

(c) The Change of Control Termination Payment as of the date of an Early Termination Notice shall equal the Early Termination Payment as of such date multiplied by 70%.

No Other Right of Early Termination. For the avoidance of doubt, DWI II shall not be entitled to cause an early termination of this Agreement.

Subordination and Late Payments

Subordination. Notwithstanding any other provision of this Agreement to the contrary, any Tax Benefit Payment, Early Termination Payment or Change of Control Termination Payment required to be made by DWA to DWI II under this Agreement (a “DWA Payment”) shall rank subordinate and junior in right of payment to any principal, interest or other amounts due and payable in respect of any DWA Senior Obligations and shall rank pari passu with all current or future unsecured obligations of DWA that are not DWA Senior Obligations.

Late Payments by DWA. The amount of all or any portion of a DWA Payment not made to DWI II when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Agreed Rate and commencing from the date on which such DWA Payment was due and payable.

Late Payments by DWI II. The amount of all or any portion of a Tax Benefit Payment required to be made by DWI II to DWA under this Agreement that is not made to DWA when due under the terms of this Agreement shall be payable together with any interest thereon, computed at the Agreed Rate and commencing from the date on which such Tax Benefit Payment was due and payable.

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No Disputes; Consistency; Cooperation

DWI II Participation In DWA Tax Matters. Except as otherwise provided herein, DWA shall have full responsibility for, and sole discretion over, all Tax matters concerning any member of the DWA Group, including without limitation the preparation, filing or amending of any Tax Return and defending, contesting or settling any issue pertaining to Taxes. Notwithstanding the foregoing, DWA shall notify DWI II of, and keep DWI II reasonably informed with respect to, and DWI II shall have the right to participate in and monitor (but, for the avoidance of doubt, not to control) the portion of any audit of the DWA Group by a Taxing Authority the outcome of which is reasonably expected to affect DWI II’s rights and obligations under this Agreement, and shall provide to DWI II reasonable opportunity to provide information and other input to DWA and its advisors concerning the conduct of any such portion of such audits. No member of the DWA Group shall settle or otherwise resolve any audit or other challenge by a Taxing Authority relating to the basis of the Original Assets or the deduction of Imputed Interest without the consent of DWI II, which DWI II shall not unreasonably withhold, condition or delay. Nothing in this Agreement shall alter DWI I’s full responsibility for, and sole discretion over, any audit of DWI I or any of its affiliates relating to the Vulcan Transaction.

Consistency. Unless there is a Determination to the contrary, DWA, on its own behalf and on behalf of each member of the DWA Group, and DWI II, on its own behalf and on behalf of each of its affiliates, agree to report and cause to be reported for all purposes, including Federal, state and local Tax purposes and financial reporting purposes, all Tax-related items (including without limitation the Basis Adjustment and each Tax Benefit Payment) in a manner consistent with that specified by DWA in any schedule, letter or certificate required to be provided by or on behalf of DWA under this Agreement. In the event that an Advisory Firm is replaced with another firm acceptable to DWA and DWI II, such replacement Advisory Firm shall be required to perform its services under this Agreement using procedures and methodologies consistent with the previous Advisory Firm, unless otherwise required by law or DWA and DWI II agree to the use of other procedures and methodologies.

Cooperation. DWI II shall (and shall cause its affiliates to) (a) furnish to DWA in a timely manner such information, documents and other materials as DWA may reasonably request for purposes of making any determination or computation necessary or appropriate under this Agreement, preparing any Tax Return or contesting or defending any audit, examination or controversy with any Taxing Authority, (b) make its employees available to DWA and its representatives to provide explanations of documents and materials and such other information as the DWA or its representative may reasonably request in connection with any of the matters described in clause (a) above, and (c) reasonably cooperate in connection with any such matter.

Minimum Net Asset Requirement

Minimum Asset Value. (a) At all times, DWI II shall own, legally and beneficially, Specified Assets that have an aggregate value (as determined under paragraph (b)) equal to the sum of (i) the amount of any payments made by DWA to DWI II in the current year and during the lesser of (A) the preceding six (6) Covered Taxable Years and (B) the taxable

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years of DWA with respect to which the applicable statute of limitations (giving effect to any waiver, mitigation or extension thereof) has not expired, (ii) $10 million, and (iii) the amount of any Liabilities incurred by DWI II, other than Liabilities under this Agreement or the Indemnity Agreement.

(b) For purposes of paragraph (a), the value of (i) any equity securities described in clause (iii) of the definition of Specified Assets shall be equal to 80% of their fair market value, (ii) any partnership interest in Holdco shall be equal to the value (subject to clause (i)) of property held by Holdco that was contributed by DWI II to Holdco, (iii) any other Specified Asset shall be its fair market value. The fair market value of a particular Specified Asset shall be determined based on generally accepted market practices, as reasonably determined by DWI II.

Liabilities. DWI II shall not incur any Liabilities other than (i) Liabilities under this Agreement or the Indemnity Agreement or (ii) Liabilities, of an aggregate amount not to exceed $250,000, incurred in the ordinary course of business of DWI II.

Net Asset Valuation Statement. Within 45 Business Days after each Net Asset Valuation Date, DWI II shall deliver to DWA a statement (the “Net Asset Valuation Statement”) setting forth the amount, as of the relevant Net Asset Valuation Date, of (i) Specified Assets owned, legally and beneficially, by DWI II, and (ii) any Liabilities incurred by DWI II, other than Liabilities under this Agreement or the Indemnity Agreement, with reasonable detail as to the calculation of such amounts. The Net Asset Valuation Statement shall be certified by the Person employed by DWI II (or one of its affiliates) and responsible for the financial accounting of DWI II.

Withholding of Payments. If DWI II fails to provide a Net Asset Valuation Statement at the times and in the manner provided in Section 7.03 indicating DWI II’s compliance with Sections 7.01 and 7.02 (subject to Section 7.05) (a “DWI II Certification Noncompliance”) and DWI II has received notice from DWA of such DWI II Certification Noncompliance, DWA shall not be obligated to make any payments to DWI II under Section 3.01 or Section 5.02; provided that DWA shall make such payments to DWI II promptly after DWI II establishes, to the reasonable satisfaction of DWA, that DWI II has cured the DWI II Certification Noncompliance.

Guarantee. DWI II shall have no obligations under Section 7.01, Section 7.02 or Section 7.03, and Section 7.04 shall not apply, to the extent that Paul G. Allen (i) fully, absolutely, irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety, (A) the due and punctual payment of each payment required to be made by DWI II under this Agreement, when and as due, including payments in respect of interest thereon and (B) the due and punctual performance and observance of, and compliance with, all covenants, agreements, obligations and liabilities of DWI II under or pursuant to this Agreement, and (ii) agrees that the obligations described in clause (i) may be extended, amended, modified or renewed, in whole or in part, without notice to or further assent from him, and that he will remain bound upon his guarantee notwithstanding any extension, amendment, modification or renewal of any such obligation.

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General Provisions

Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

if to DWA, to:

DreamWorks Animation SKG, Inc.

Grandview Building

1000 Flower Street

Glendale, California 91201

Fax: (818) 659-6123

Attention:  Katherine Kendrick, Esq.

                  General Counsel

with a copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019-7475

Fax: (212) 474-3700

Attention:  Stephen L. Gordon, Esq.

if to DWI II, to:

Vulcan, Inc.

505 Fifth Avenue South, Suite 900

Seattle, WA 98104

Fax: (206) 342-2330

Attention:  Joe Franzi

                  Vice President, Tax, Risk and Asset Management

with a copy to:

Skadden Arps Meagher & Flom LLP

Four Times Square

New York, New York 10036

Fax: (212) 735-2000

Attention:  Nicholas Saggese, Esq. and David Rievman, Esq.

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Any party may change its address or fax number by giving the other party written notice of its new address or fax number in the manner set forth above.

Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Delivery of an executed signature page to this Agreement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Agreement.

Entire Agreement; No Third Party Beneficiaries. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without giving effect to applicable principles of conflict of laws.

Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Successors; Assignment; Amendments. DWI II may not assign this Agreement to any person without the prior written consent of DWA, which consent shall not be unreasonably withheld, conditioned or delayed; provided, however, (i) DWI II may pledge some or all of its rights, interests or entitlements under this Agreement to any U.S. money center bank in connection with a bona fide loan or other indebtedness, (ii) DWI II may assign some or all its rights, interests or entitlements under this Agreement to any related entity within the meaning of Section 267(b) or 707(b) of the Code and (iii) DWI II may assign its obligations under this Agreement to any related entity within the meaning of Section 267(b) or 707(b) of the Code provided, that, DWI II and its assignee certify that the assignee satisfies the requirements of Section 7.01 and Section 7.02, subject to Section 7.05, in each case without the prior written consent of DWA. DWA may not assign any of its rights, interests or entitlements under this Agreement without the consent of DWI II, not to be unreasonably withheld or delayed. Subject to each of the two immediately preceding sentences, this Agreement will be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors and assigns including any acquiror of all or substantially all of the assets of DWA. In the event that DWA ceases to be the common parent of the DWA Affiliated Group, the successor common parent of such group shall assume all of DWA’s rights and obligations under this Agreement.

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No amendment to this Agreement shall be effective unless it shall be in writing and signed by DWA and DWI II.

Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Submission to Jurisdiction; Waivers. With respect to any suit, action or proceeding relating to this Agreement (collectively, a “Proceeding”), each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the States of New York and Delaware and any court of the United States located in the Borough of Manhattan in New York City or the State of Delaware; (b) waives any objection which such party may have at any time to the laying of venue of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought in an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such party; (c) consents to the service of process at the address set forth for notices in Section 8.01 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law; and (d) waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in connection with any Proceeding.

Reconciliation. In the event that DWA and DWI II are unable to resolve a disagreement within the relevant period designated in this Agreement, the matter shall be submitted for determination to a nationally recognized expert in the particular area of disagreement mutually acceptable to both parties. The expert shall be employed by a nationally recognized accounting firm or a law firm (other than the Advisory Firm), and the expert shall not, and the firm that employs the expert shall not, have any material relationship with either DWA or DWI II or other actual or potential conflict of interest. If the matter is not resolved before any payment that is the subject of a disagreement is due or any Tax Return reflecting the subject of a disagreement is due, such payment shall be made on the date prescribed by this Agreement and such Tax Return may be filed as prepared by DWA or its affiliate, subject to adjustment or amendment upon resolution. The costs and expenses relating to the engagement of such expert or amending any return shall be borne by the party who did not have the prevailing position, or if a compromise is reached by the DWA and DWI II, the costs and expenses shall be borne equally by the parties. The expert shall determine which party prevails. The determinations of the expert pursuant to this Section 8.09 shall be binding on DWA and DWI II absent manifest error.

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IN WITNESS WHEREOF, DWA and DWI II have duly executed this Agreement as of the date first written above.

DREAMWORKS ANIMATION SKG, INC.,
By	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	VP and General Counsel
Address:

DW INVESTMENT II, INC.,
By	/s/ W. Lance Conn
Name:	W. Lance Conn
Title:	Vice President
Address:

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Appendix A

[To be finalized.]

Appendix B

[To be finalized.]

EX-10.10

Exhibit 10.10

INTERPARTY AGREEMENT

between

DREAMWORKS L.L.C.

and

DREAMWORKS ANIMATION SKG, INC.

and

VIVENDI UNIVERSAL ENTERTAINMENT LLLP

dated as of October 7, 2004

FINAL            

TABLE OF CONTENTS

			Page
Section 1.	Definitions and Usage		2
	1.1	Definitions	2
	1.2	Terms and Usage Generally	6
Section 2.	Confirmation of Universal’s Rights to Prior Pictures		6
	2.1	Prior Picture Rights Acquired by DWA Subject to the Universal Agreement	6
	2.2	Relation Between DWA, DW Studios and Universal as to Prior Pictures	6
	2.3	Transfer of Benefits; Retransfer	7
Section 3.	Grant of Rights; Period of Distribution		7
	3.1	Grant of Rights	7
	3.2	Period of Distribution	7
	3.3	Clarification	7
Section 4.	Rights and Obligations With Respect to DW Distributed Pictures and Prior Pictures		8
	4.1	DWA Approval of Universal Exploitation Agreements	8
	4.2	Universal Not Bound by DW Distribution Agreement	8
	4.3	Universal’s Rights of Collection, Deduction and Recoupment	8
	4.4	Laboratory and Storage Access Letters	9
Section 5.	Animation Advance and Related Payment Obligations		9
	5.1	Animation Advance	9
Section 6.	No Adverse Amendment of DW Distribution Agreement; No DW Studios Assignment		9
	6.1	No Adverse Amendment of DW Distribution Agreement	9
	6.2	No Assignment of DW Distribution Agreement by DW Studios	10

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Table of Contents

(Continued)

			Page
Section 7.	Representations, Warranties and Agreements		10
	7.1	DWA	10
	7.2	Universal	10
	7.3	DW Studios	10
	7.4	Amblin Projects	10
	7.5	Bank Consent and Non-Disturbance Agreement	10
Section 8.	Rights Under Universal Agreement		11
	8.1	DW Studios – Sole Claimant	11
Section 9.	Termination; Disputes		11
	9.1	Termination Rights	11
	9.2	Disputes Under Universal Agreements	11
Section 10.	Grant of Rights (Theme Parks)		12
Section 11.	UIP Amendment		12
Section 12.	Ownership		12
Section 13.	Force Majeure		13
Section 14.	Assignment		13
Section 15.	Distributor Distribution Credit		13
Section 16.	Other Activities		13
Section 17.	No Partnership or Third Party Benefit		14
Section 18.	Integration/Formalities		14
Section 19.	Dispute Resolution		14
Section 20.	Severability of Provisions		16
Section 21.	Waiver		16

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Table of Contents

(Continued)

		Page
Section 22.	Governing Law	16
Section 23.	Confidentiality	16
Section 24.	Notice of Representatives	17
Section 25.	Paragraph Headings	17
Section 26.	Intellectual Property License	17
Section 27.	Disclosure, Compliance and Reporting Obligations	17
Section 28.	Notices	18
Section 29.	Counterparts	19
Section 30.	Effect of Subsequent Event	19
Schedule 1.1	Table of Definitions
Schedule 5.1	Provisions Related to Advances

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INTERPARTY AGREEMENT

between

DREAMWORKS L.L.C.

and

DREAMWORKS ANIMATION SKG, INC.

and

VIVENDI UNIVERSAL ENTERTAINMENT LLLP

dated as of October 7, 2004

THIS INTERPARTY AGREEMENT dated as of October 7, 2004 (this “Agreement”), is entered into by and among DreamWorks Animation SKG, Inc. (“DWA”), DreamWorks L.L.C. (“DW Studios”) and Vivendi Universal Entertainment LLLP (“Universal”).

WHEREAS DW Studios and Universal (as assignee of Universal Studios, Inc.) are parties to that certain Master Agreement (Amended and Restated as of October 31, 2003) (the “Master Agreement”), which includes certain other agreements as Exhibits A, B, C and D thereto (collectively, the Master Agreement and the other agreements attached as Exhibits A, B, C and D thereto are the “Universal Agreement”);

WHEREAS pursuant to Exhibit A of the Universal Agreement (the “Theatrical Distribution Agreement”) Universal has certain exclusive international theatrical distribution rights and obligations with respect to certain motion pictures (as more fully described and set forth in the Theatrical Distribution Agreement);

WHEREAS, pursuant to Exhibit B of the Universal Agreement (the “Home Video Fulfillment Services Agreement”) Universal has certain exclusive domestic and international home video fulfillment services rights and obligations with respect to certain motion pictures (as more fully described and set forth in the Home Video Fulfillment Services Agreement);

WHEREAS, pursuant to Exhibit C of the Universal Agreement (the “Amblin Agreement”), Universal and DW Studios agreed to certain procedures and allocations of rights to certain projects developed at least in part by Amblin Entertainment, Inc. and set forth on schedules to the Amblin Agreement (collectively, all such projects listed in schedules to the Amblin Agreement, the “Amblin Projects”);

WHEREAS, pursuant to Exhibit D of the Universal Agreement (the “Theme Park Agreement”) Universal has an exclusive option to acquire certain rights to exploit certain motion pictures in theme parks (as more fully described and set forth in the Theme Park Agreement);

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WHEREAS, as part of the separation of DW Studios and DWA pursuant to the Separation Agreement dated as of the date hereof (“Separation Agreement”) by and among DW Studios, DreamWorks Animation L.L.C. and DWA, DW Studios and DWA have agreed to enter into a Distribution Agreement dated as of the date hereof (the “DW Distribution Agreement”); and

WHEREAS, the parties hereto have agreed to set forth herein the parties’ respective rights, privileges and obligations under the Universal Agreement and DW Distribution Agreement, and to enter into certain other agreements;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, DWA, DW Studios and Universal hereby agree as follows:

Section 1. Definitions and Usage.

1.1 Definitions:

a. The following terms shall have the same meaning as in the DW Distribution Agreement:

Accepted Additional Picture(s).

Affiliate of Any Person; provided, however, that for purposes of this Agreement, none of DWA, DW Studios and Universal are Affiliates of any other party to this Agreement.

Animated Motion Picture(s).

Bankruptcy Code

Business Day.

Control.

Delivery.

Distribution Rights.

Exhibit, Exhibition.

Good Faith Dispute.

Internet Rights.

Person.

Qualified Pictures.

Retained Rights.

Subdistributor; provided, however, that for purposes of this Agreement a “Subdistributor” shall not include an Affiliate of DW Studios or of Universal.

Tangible Film Materials.

Television Exhibition.

b. The following terms shall have the meanings set forth below:

Animation Advance shall mean the $75 million amount advanced by Universal to DW Studios under the Master Agreement with respect to Animated Motion Pictures, which $75 million amount on the Effective Date shall be contributed by DW Studios to DWA pursuant to the Separation Agreement, as such $75 million amount may be adjusted pursuant to Section 5 of this Agreement.

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Domestic Territory shall mean the territorial United States and its possessions, territories and commonwealths, including the U.S. Virgin Islands, Puerto Rico, Guam, and the U.S. Trust Territories of the Pacific Islands, including the Carolina Islands, the Marshall Islands and the Mariana Islands, Saipan and American Samoa; the Dominican Republic, the British Virgin Islands, Nassau, Bahamas, Bermuda, Saba Island, St. Eustatius Island, St. Kitts Island, St. Maarten Island, and Freeport; the Dominion of Canada and its possessions, territories and commonwealths; and all Army, Navy, Air Force, Red Cross and other national or governmental installations, diplomatic posts, camps, bases and reservations of the above mentioned countries, as well as oil rigs (including Aramco sites) and maritime facilities (and other commercial and/or industrial installations of the above mentioned countries and territories), wherever any of the aforementioned facilities or installations are located, to the extent that sales are made and/or servicing thereof is performed within the geographical areas set forth above, and all airlines and ships flying the flag of, or having the registry of, or whose principal office is located in the United States, Canada or Bermuda and other possessions, territories and commonwealths within the Domestic Territory.

DW Distributed Pictures shall mean Qualified Pictures and Accepted Additional Pictures.

Effective Date shall have the same meaning as the term “Separation Date” in the Separation Agreement.

Home Video Exhibition shall mean the Exhibition of Videograms.

Home Video Fulfillment Services Rights shall mean the right and obligation to provide fulfillment services under the Home Video Fulfillment Services Agreement.

Home Video Territory shall mean the territory in which fulfillment services are to be performed pursuant to the Home Video Fulfillment Services Agreement, excluding only (i) South Korea and North Korea to the extent and for the period licensed to DW Studios’ “Korean Shareholder” (as defined in the Home Video Fulfillment Services Agreement), and (ii) either (a) Japan or (b) The Federal Republic of Germany, the Republic of Austria, and German–language rights in Switzerland, Lichtenstein, Luxembourg and Alto Adige.

LLC Agreement shall mean the Limited Liability Limited Partnership Agreement of Holdco, dated as of October 7, 2004, by and among M&J K Dream Limited Partnership, M&J K B Limited Partnership, DG-DW, L.P., DW Lips, L.P., DW Investment II, Inc., Lee Entertainment, L.L.C. and Vivendi Universal Entertainment LLLP.

Licensed Picture has the meaning set forth in the DW Distribution Agreement as in effect on the Effective Date.

Motion Picture(s) (a) with respect to Theatrical Distribution Rights, shall mean all live-action and animated motion pictures (and combinations thereof), and (b) with

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respect to Home Video Exhibition and Home Video Fulfillment Services Rights shall mean a theatrical motion picture, one or more television programs, television movies, television episodic series or direct-to-video motion picture.

Non-Theatrical Exhibition shall mean, with respect to each Prior Picture, DW Distributed Picture or Universal Licensed Picture, the right to exhibit a Picture as set forth in paragraph 2.a of Schedule A-TC to the Theatrical Distribution Agreement.

Prior Picture(s) shall mean the following Animated Motion Pictures: Antz; The Prince of Egypt; The Road to Eldorado; Chicken Run; Shrek; Spirit: Stallion of the Cimarron; Sinbad: Legend of the Seven Seas; Shrek 2; and Shark Tale.

Term shall mean the period commencing on the Effective Date and continuing until expiration or earlier termination of the Universal Term; provided, however, if the Effective Date does not occur on or before December 31, 2005 this Agreement shall terminate without taking effect.

Termination Amounts shall have the meaning set forth in the definition of Universal Term.

Theatrical Distribution Rights shall mean the right and obligation to distribute Pictures pursuant to the Theatrical Distribution Agreement. Theatrical Distribution Rights include Non-Theatrical Exhibition rights but do not include any other rights including Television Exhibition, Internet Rights, or any other form of distribution, exhibition or other method of exploitation of Motion Pictures, now known or hereafter devised.

Theatrical Exhibition shall mean all forms of Exhibition which are subject to the Theatrical Distribution Agreement.

Theatrical Territory shall mean the “Territory” as defined in the Theatrical Distribution Agreement.

Theme Park Rights shall have the same meaning as “Theme Park Rights” in paragraph 3 of the Theme Park Agreement.

Theme Park Supplemental Agreements shall mean, collectively, (i) the letter agreement dated as of January 20, 2000 between DW Studios and Universal Studios, Inc. relating to the exploitation of Chicken Run at the Universal Studios theme parks, (ii) the letter agreement dated as of February 27, 2001 between DW Studios and Universal Studios, Inc. relating to the exploitation of Shrek at the Universal Studios theme parks and adjacent Universal CityWalk locations, (iii) the letter agreement dated as of January 15, 2002 between DW Studios and Universal Studios, Inc. captioned “Universal-DreamWorks Theme Park Issues”, and (iv) the agreement dated as of March 12, 2002 between PDI/Dreamworks L.L.C. and Universal City Studios LLLP entitled “Shrek 4D Attraction at Universal Studios”, as amended by letter agreement dated as of March 13, 2002 and as assigned effective as of March 13, 2002 by PDI/Dreamworks L.L.C. to DreamWorks Animation LLC.

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UIP shall mean United International Pictures, B.V. and its successors and assigns.

Universal Affiliate shall mean any Person that qualifies as an Affiliate of Universal pursuant to the definition of Affiliate set forth above.

Universal Exploitation Agreements shall mean the Master Agreement, the Theatrical Distribution Agreement and the Home Video Fulfillment Services Agreement only.

Universal Licensed Picture(s) shall mean any Motion Picture released after the Effective Date and during the Universal Term (A) for which DWA has acquired (i) Theatrical Distribution Rights in any portion of the Theatrical Territory, or (ii) Home Video Exhibition rights in any portion of the Home Video Territory (and Universal expressly acknowledges and agrees that all Home Video Exhibition rights are not “licensed” to Universal, and instead Universal is providing fulfillment services with respect thereto), or (iii) Theme Park Rights in any territory(ies), and (B) where some or all of such Theatrical Distribution Rights, Home Video Exhibition rights or Theme Park Rights have not been granted by DWA to DW Studios or as to which DW Studios no longer holds such rights, in each case for any reason including, without limitation, because DW Studios has declined or surrendered such rights, DW Studios no longer performs the distribution services in whole or in part as required under the DW Distribution Agreement, or the DW Distribution Agreement has expired or been terminated, in whole or in part.

Universal Term shall mean the period commencing on the Effective Date and terminating on the first date on which all of the following have occurred: (i) termination of the Theatrical Distribution Agreement, (ii) termination of the Home Video Fulfillment Services Agreement and (iii) the Advance Amounts, Animation Advance Amounts, Additional Amounts, Animation Additional Amounts, DW Adjustment amounts, DWA Animation Adjustment amounts and Special Termination Fee (as defined in the Master Agreement) (if applicable) have been paid in full; the Class U Preferred Stock together with all accrued and unpaid cash and non-cash distributions thereon, is redeemed and the redemption price paid in full in cash; and the Satisfaction Event with respect to Universal (as defined in the LLC Agreement) has occurred (the aggregate of the payments required pursuant to this clause (iii), the “Termination Amounts”).

Videogram(s) shall mean videocassettes, laserdiscs, Digital Versatile Discs (“DVD”) or video CDs intended for in-home use by members of the public and physically transported to the home for such use that is sold or rented and physically embodies (without need for further transfer of data or further activation or other authorization from outside the home) a Motion Picture for exhibition by a playback device which causes a visual image of the Motion Picture to be seen, in a linear fashion, as such Motion Picture is made available by the producer of such Motion Picture for video distribution, and which Motion Picture appears on the screen of a television receiver or other monitor in the home. CD-ROM, CD-I products, video games, and interactive products (including, but not limited to, DVD interactive products containing a Motion Picture[s]) or interactive pictures of any type, are not Videograms.

Certain other terms are defined elsewhere in this Agreement, as noted on Schedule 1.1.

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1.2 Terms and Usage Generally.

The definitions in Section 1.1. and Schedule 1.1. as used herein shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. All references herein to Sections and Schedules shall be deemed to be references to Sections of, and Schedules to, this Agreement unless the context shall otherwise require. All Schedules attached hereto shall be deemed incorporated herein as if set forth in full herein. The words “include”, “includes” and “including” herein and in any Exhibit and Schedule hereto shall be deemed to be followed by the phrase “without limitation”. All accounting terms not defined in this Agreement shall have the meanings determined by United States generally accepted accounting principles as in effect from time to time. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. References to a Person are also to its permitted successors and permitted assigns. Unless otherwise expressly provided herein, any agreement, instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement, instrument or statute as from time to time amended, modified or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and references to all attachments thereto and instruments incorporated therein.

Section 2. Confirmation of Universal’s Rights to Prior Pictures.

2.1 Prior Picture Rights Acquired by DWA Subject to the Universal Agreement. The Prior Pictures conveyed by DW Studios to DWA pursuant to the Separation Agreement have been conveyed subject to the Universal Agreement. DWA and DW Studios acknowledge and agree that certain exclusive distribution or other exploitation rights to each Prior Picture have been licensed or granted to Universal by DW Studios prior to the Effective Date under the Universal Exploitation Agreements, Theme Park Agreement and the Theme Park Supplemental Agreements and that such rights are unaffected by the Separation Agreement, the DW Distribution Agreement, or the transactions contemplated thereby. With respect to each Prior Picture, Universal shall have the rights and obligations to exploit the applicable Theatrical Distribution Rights and Home Video Fulfillment Services Rights as set forth in the Universal Exploitation Agreements during the Universal Term. Any sale, transfer, assignment, license, pledge or other encumbrance of a Prior Picture during the Universal Term shall be expressly subject to the Universal Agreement as and to the extent required by the Universal Agreement, and to the consent of Universal to such sale, transfer, assignment, license, pledge or other encumbrance if such consent is required pursuant to the Universal Agreement.

2.2 Relation Between DWA, DW Studios and Universal as to Prior Pictures. Notwithstanding anything to the contrary set forth in the DW Distribution Agreement, and subject to the further provisions of this Agreement, as to all Prior Pictures, DWA, DW Studios and Universal agree: (i) as between DWA and DW Studios, each Prior Picture shall be deemed to be a Licensed Picture under the DW Distribution Agreement, (ii) as between DW Studios and Universal, Universal retains all the rights to each Prior Picture granted under (including pursuant to Section 10 below), and is obligated to exploit such Prior Picture subject to the terms and conditions of, the Universal Exploitation Agreements; and (iii) as between DWA and Universal,

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Universal shall have no duty or obligations to DWA with respect to the Prior Pictures or their distribution or other exploitation, and DWA shall not be a third party beneficiary of the Universal Exploitation Agreements, provided that to the extent any Prior Picture is not licensed by DWA to DW Studios under the DW Distribution Agreement, Universal shall distribute such Prior Picture directly for DWA, as if Sections 3.1 and 3.2 of this Agreement applied to such Prior Picture.

2.3 Transfer of Benefits; Retransfer. Subject to the other terms and conditions of this Agreement, Universal hereby approves the transfer from DW Studios to DWA of all of DW Studios’ benefits under the Universal Agreement with respect to the Prior Pictures, subject to the following: (a) DW Studios and DWA hereby agree that such transfer has no effect on Universal’s rights in the Prior Pictures pursuant to the Universal Agreement (as more fully set forth in Section 2.2.(ii), above); and (b) DWA hereby acknowledges and agrees that all such benefits are being retransferred from DWA to DW Studios pursuant to the Distribution Agreement (and accordingly, Section 2.2.(iii), above, applies as between DW Studios, DWA and Universal).

Section 3. Grant of Rights; Period of Distribution. The following shall apply only as and to the extent that a given Motion Picture constitutes a Universal Licensed Picture hereunder:

3.1 Grant of Rights. Subject to the terms and conditions hereof, DWA grants, licenses, and/or assigns (as applicable) to Universal, to the extent of the rights owned or controlled by DWA or any Affiliate Controlled by DWA thereof in and to each Universal Licensed Picture, the following rights: (i) throughout the Theatrical Territory, to exploit the Theatrical Distribution Rights on its initial theatrical release (as referenced in paragraph 1.a. of the Theatrical Distribution Agreement); and (ii) throughout the Home Video Territory, to exploit the Home Video Fulfillment Services Rights if DWA designates such Motion Picture for release as a Videogram. As between Universal and DWA, all rights to Universal Licensed Pictures not expressly granted or licensed (as applicable) to Universal pursuant to this Agreement, including the Retained Rights, shall remain vested in DWA. If and to the extent that DWA has licensed or granted (as applicable) rights to a Universal Licensed Picture to Universal pursuant to the first sentence of this Section 3.1., Universal and DWA shall each have the rights and obligations with respect to such Universal Licensed Picture set forth in the Theatrical Distribution Agreement and the Home Video Fulfillment Services Agreement, with DWA having all the rights and obligations of DW Studios to Universal under such agreements with respect to the Universal Licensed Picture, and Universal having all the rights and obligations to DWA as Universal would have to DW Studios under such agreements with respect to the Universal Licensed Pictures.

3.2 Period of Distribution. With respect to each Universal Licensed Picture, Universal shall have the rights and obligations to exploit the applicable Theatrical Distribution Rights and Home Video Fulfillment Services Rights granted pursuant to Section 3.1 above during the Universal Term (subject to the terms of the Universal Exploitation Agreements).

3.3 Clarification. For avoidance of doubt, in no event shall Universal have any right to exercise any rights with respect to any given Motion Picture pursuant to this Section

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3, nor shall there be any executory obligations from DWA to Universal or from Universal to DWA hereunder with respect to such Motion Picture, so long as such Motion Picture constitutes a DW Distributed Picture pursuant to Section 4, below.

Section 4. Rights and Obligations With Respect to DW Distributed Pictures and Prior Pictures.

4.1 DWA Approval of Universal Exploitation Agreements. DWA hereby irrevocably approves the terms and conditions of the Universal Exploitation Agreements, which approval may not hereafter be withdrawn, terminated, qualified or conditioned.

4.2 Universal Not Bound by DW Distribution Agreement. The parties hereto acknowledge and agree that as to all DW Distributed Pictures and Prior Pictures, Universal shall have the rights to distribute and provide such fulfillment services therefor as set forth in the Universal Exploitation Agreements; that Universal’s sole obligations as to such DW Distributed Pictures and Prior Pictures are those it is required to render to DW Studios as set forth in the Theatrical Distribution Agreement and the Home Video Fulfillment Services Agreement; and that neither Universal nor any of its Affiliates, nor UIP, is bound by the provisions of the DW Distribution Agreement. Without limitation of the foregoing, and regardless of the provisions of the DW Distribution Agreement, Universal shall not be required to render services, or provide information, approval, consultation, access, audit or other rights to DWA with respect to DW Distributed Pictures or Prior Pictures. DWA and DW Studios acknowledge and agree that Universal is required to take instructions exclusively from, and is entitled to rely exclusively on all instructions of DW Studios with respect to such DW Distributed Pictures and Prior Pictures, regardless of any instructions by DWA, and that DW Studios may not delegate, transfer or assign any of its rights or obligations under the Universal Exploitation Agreements to DWA with respect to DW Distributed Pictures or such Prior Pictures. Universal’s (i) rights under the Theatrical Distribution Agreement apply to DW Distributed Pictures on the commencement of their theatrical distribution in the Domestic Territory, and (ii) rights under the Home Video Fulfillment Services Agreement apply to DW Distributed Pictures DW Studios distributes for DWA as Videograms during the Universal Term or within *** following the Motion Picture’s initial general U.S. theatrical release, which release occurs during the Universal Term.

4.3 Universal’s Rights of Collection, Deduction and Recoupment. DWA acknowledges that Universal has the right to collect receipts, deduct fees, and recoup expenses and other amounts (if any) with respect to the DW Distributed Pictures and Prior Pictures all as set forth in the Universal Exploitation Agreements. For so long as the DW Distribution Agreement is in effect, Universal shall pay over all amounts required to be remitted by it in respect of DW Distributed Pictures and Prior Pictures solely to DW Studios, and shall have no liability to DWA in respect of such payments. Notwithstanding the foregoing, Universal agrees that it shall make payments to DW Studios in respect of DW Distributed Pictures and Prior Pictures without setoff, counterclaim or defense except (a) for setoffs, counterclaims or defenses

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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related to DW Distributed Pictures and Prior Pictures, (b) if any Motion Pictures later become Universal Licensed Pictures hereunder, for setoffs, counterclaims or defenses related to such Universal Licensed Pictures or (c) for the obligations of DWA to Universal under Section 5 of this Agreement. DWA, DW Studios and Universal agree that if any and all fees or expenses related to DW Distributed Pictures and Prior Pictures and owed to Universal under the Universal Exploitation Agreements for any reason are not paid when due, Universal shall be entitled to recoup such amounts from all amounts collected by it related to the DW Distributed Pictures and Prior Pictures, together with interest on amounts due and owing as provided in the applicable Universal Exploitation Agreements.

4.4 Laboratory and Storage Access Letters. To the extent required for the exercise of Universal’s Theatrical Distribution Rights and Home Video Fulfillment Services Rights with respect to Licensed Pictures, Universal Licensed Pictures or Prior Pictures, DWA shall provide Universal with fully-executed access letters in reasonable and customary form for each laboratory or storage facility in which Tangible Film Materials for such Motion Pictures are held upon Universal’s request therefor from time to time. To the extent that DWA or DW Studios maintains possession of any Tangible Film Materials required for the exercise of Universal’s Theatrical Distribution Rights and Home Video Fulfillment Services Rights with respect to Licensed Pictures, Universal Licensed Pictures or Prior Pictures, Universal shall have the same right of access thereto as it would have under the above-referenced laboratory or storage-facility access letter had such Tangible Film Materials been held at a laboratory or storage facility.

Section 5. Animation Advance and Related Payment Obligations.

5.1 Animation Advance.

a. Article VIII of the Master Agreement is hereby deleted and amended to read as set forth in Schedule 5.1 to this Agreement, and incorporated herein as if fully set forth.

b. Universal, DW Studios and DWA agree that DWA shall be solely responsible for the payment of the Animation Advance Amount and all Animation Additional Amounts as and when due under the Universal Agreement. DWA acknowledges and agrees that such amounts may become due and payable in full due to the action or inaction of DW Studios, and that Universal is entitled to exercise against DWA any and all of its remedies under Section 5.1.a if and when such Animation Advance Amount or Animation Additional Amounts are due and payable, including rights of offset and recoupment and is entitled to Theatrical Distribution and Home Video Fulfillment Services Rights to all Licensed Pictures and Universal Licensed Pictures unless and until all amounts required to be paid to Universal by DW Studios or DWA pursuant to the Master Agreement have been repaid.

Section 6. No Adverse Amendment of DW Distribution Agreement; No DW Studios Assignment.

6.1 No Adverse Amendment of DW Distribution Agreement. DW Studios and DWA shall not at any time during the Universal Term, without the consent of Universal (not

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to be unreasonably withheld), amend or modify the license granted to DW Studios under the DW Distribution Agreement or the transfer of “Animated Film Assets” as defined in and pursuant to the Separation Agreement in any manner that would have an adverse effect on Universal under the Universal Agreement and this Agreement.

6.2 No Assignment of DW Distribution Agreement by DW Studios. DW Studios may not at any time during the Universal Term assign any of its Theatrical Exhibition, Home Video Exhibition or Theme Park Rights under the DW Distribution Agreement if such assignment would result in a loss of any or all of Universal’s Home Video Fulfillment Services Rights, Theatrical Distribution Rights or Theme Park Rights.

Section 7. Representations, Warranties and Agreements. Each of the parties, severally and as of the Effective Date, represents and warrants as follows:

7.1 DWA. DWA makes the same representations and warranties with respect to this Agreement as made by DW Studios in Section XII.4 of the Master Agreement. If and when DWA licenses and/or grants rights to Universal Licensed Pictures to Universal, it will make the representations and warranties, and provide such indemnities to Universal with respect to such Universal Licensed Pictures as are set forth in the Universal Exploitation Agreements for DW Studios.

7.2 Universal. Universal makes the same representations and warranties with respect to this Agreement that it (or its predecessors in interest) made in Section XII.4 of the Master Agreement. If and when Universal is granted a license and/or rights to Universal Licensed Pictures, it will make the representations and warranties, and provide such indemnities to DWA with respect to such Universal Licensed Pictures as are set forth in the Universal Exploitation Agreements for Universal.

7.3 DW Studios. DW Studios makes the same representations and warranties with respect to this Agreement that it made in Section XII.4 of the Master Agreement. For purposes of clarity, DW Studios makes the same representations and warranties as to, and provides the same indemnities to Universal with respect to Prior Pictures and DW Distributed Pictures as DW Studios makes as to “Pictures” in the Theatrical Distribution Agreement and “DW Videograms” in the Home Video Fulfillment Services Agreement.

7.4 Amblin Projects. No Amblin Projects or any of DW Studios’ rights under the Amblin Agreement have been conveyed to DWA.

7.5 Bank Consent and Non-Disturbance Agreement. Neither DW Studios nor DWA shall convey, pledge or otherwise encumber Prior Pictures, DW Distributed Pictures or the Universal Licensed Pictures unless (i) all rights sufficient to grant Universal’s Theatrical Distribution Rights, Home Video Fulfillment Services Rights and Theme Park Rights are retained by DWA and DW Studios, or (ii) such conveyance or encumbrance is expressly subject to the rights and obligations of Universal under this Agreement and (to the extent applicable) the Universal Exploitation Agreements. In the event of a conveyance or encumbrance subject to clause (ii), effective no later than such transfer or encumbrance, the applicable transferee or encumbrance holder shall provide Universal with an acknowledgement of Universal’s rights

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under this Agreement and (to the extent applicable) the Universal Exploitation Agreements and an agreement not to disturb, interfere or seek to terminate Universal’s rights under this Agreement or (to the extent applicable) the Universal Exploitation Agreements, such acknowledgement and agreement not to disturb to be in a form reasonably satisfactory to Universal.

Section 8. Rights Under Universal Agreement.

8.1 DW Studios – Sole Claimant. Except with respect to Universal Licensed Pictures (if any) and any Prior Pictures to which the last clause of Section 2.2 above applies, only DW Studios shall, as between DW Studios and DWA, have the right to bring any claim, action, or proceeding against Universal by reason of any actual or alleged breach of the Universal Agreement. (The foregoing is not intended to limit the scope of remedies available to DW Studios or Universal for any such breach.)

Section 9. Termination; Disputes.

9.1 Termination Rights. Except as set forth in Section 11, nothing in this Agreement shall limit or expand DW Studios’ or Universal’s rights to terminate the Theatrical Distribution Agreement or the Home Video Fulfillment Services Agreement, or (except as expressly set forth in this Section 9.1) their respective rights or obligations with respect to and following such termination, in each case in accordance with such agreements’ terms. DWA shall not have any right to terminate any of the Universal Exploitation Agreements unless DW Studios would have such right and has exercised it (or is no longer a party to the Universal Exploitation Agreements). DW Studios, DWA and Universal each acknowledge and agree that no termination of this Agreement, the Theatrical Distribution Agreement or the Home Video Fulfillment Services Agreement shall be effective against either or both of DW Studios or DWA unless and until the Termination Amounts are paid in full. Universal, DW Studios and DWA agree that notwithstanding the foregoing, (i) DWA shall not be liable for the payment of the Advance, Additional Amounts, DW Adjustment amounts, Special Termination Fee, or the redemption of the Class U Preferred Stock of DW Studios or distributions or other payments thereof, and (ii) DW Studios shall not be liable for the payment of the Animation Advance, Animation Additional Amounts, DWA Animation Adjustment amounts or Satisfaction Event as to Universal.

9.2 Disputes Under Universal Agreements. Notwithstanding anything to the contrary in the Universal Agreement, any dispute arising out of or relating to the Universal Agreement, or hereunder, shall be resolved as set forth in Section 19, below. With respect to any claim arising out of or relating to this Agreement, a party asserting such claim shall give the applicable other party written notice of such claim and a reasonable opportunity (not less than ***, nor more than ***) to cure prior to commencing proceedings in accordance with Section 19 below.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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Section 10. Grant of Rights (Theme Parks). By its execution and delivery of this Agreement, DWA and Universal acknowledge and agree that Sections 1 (other than 1.D.), 3, 4.B, 5, 6, 7, and 9 of the Theme Park Agreement, and the first sentence of paragraph C of that certain Theme Park Supplemental Agreement dated as of January 15, 2002 between DW Studios and Universal Studios, Inc. captioned “Universal-DreamWorks Theme Park Issues”, shall apply to all “Eligible DWA Properties,” which are: (i) all Prior Pictures, and (ii) Motion Pictures initially released or initially broadcast by DWA during the Universal Term, or any other product which is released by DWA to the general public (e.g., interactive games or devices distributed to the public) during the Universal Term. Sections 1 (other than 1.D), 3, 4.B, 5, 6, 7 and 9 of the Theme Park Agreement and the first sentence of paragraph C of that certain Theme Park Supplemental Agreement dated as of January 15, 2002 between DW Studios and Universal Studios, Inc. captioned “Universal-DreamWorks Theme Park Issues”, are incorporated herein as if fully set forth, with the following changes: (i) each use of the phrase “Eligible DW Property” or “Eligible DW Properties” shall be deemed amended to read “Eligible DWA Property” or “Eligible DWA Properties,” as applicable, and (ii) each use of the word “DW” (alone or when used in another definition or phrase) shall be deemed amended to read “DWA”. Other than as set forth in Sections 4.B and 5 of the Theme Park Agreement, Universal shall have no payment obligations to DWA under the Theme Park Agreement; for avoidance of doubt, the “Exclusivity Fee” shall be payable to DW Studios as provided in the Universal Agreement (and the “Term” of the Theme Park Agreement is extended) until the earlier of (i) December 31, 2010 and (ii) the date on which the Theatrical Distribution Agreement terminates. The provisions of the first sentence of paragraph C of that certain Theme Park Supplemental Agreement dated as of January 15, 2002 between DW Studios and Universal Studios, Inc. captioned “Universal-DreamWorks Theme Park Issues” shall be applicable to, and credited against, any fees payable by Universal to DWA under the Theme Park Agreement notwithstanding the fact that the annual exclusivity fee payable by Universal pursuant to Section 4A. of the Theme Park Agreement is payable to DW Studios, not DWA.

Section 11. UIP Amendment. Notwithstanding anything in the Universal Exploitation Agreements to the contrary, on a UIP “restructure” (as defined in Section 10.a.(ii) of the Theatrical Distribution Agreement), DW Studios shall have the right (but not the obligation) to terminate (i) the Theatrical Distribution Agreement and (ii) (if the Theatrical Distribution Agreement is terminated pursuant to the immediately preceding clause (i)) Universal’s home video fulfillment services under the Home Video Fulfillment Services Agreement but only with respect to the “Foreign Territory” as defined in Schedule B-TC of the Home Video Fulfillment Services Agreement. Such termination(s) shall be effective only if and when the Termination Amounts are paid in full, provided that nothing herein shall affect the rights and obligations of the parties thereto which survive termination under the Universal Exploitation Agreements.

Section 12. Ownership. Except for the rights expressly licensed and/or granted to Universal herein or under the Universal Agreements, as between DWA and Universal, DWA shall be the sole and exclusive owner of all rights, title and interest in and to the Licensed Pictures, Universal Licensed Pictures and Prior Pictures at all times. DWA’s ownership includes all copyrights, trademarks, patents, titles, designs, artwork, characters, stills, drawings, literary material, film materials, computer models, logos, stories, plots and any other intellectual properties and rights in, to, or arising out of the Licensed Pictures, Universal Licensed Pictures and Prior Pictures or any element thereof regardless of whether created by DWA or by any other

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person on DWA’s behalf. Universal shall not have any ownership or security interest in, lien on, or other creditor’s rights with respect to the Licensed Pictures, Universal Licensed Pictures or Prior Pictures, or any elements or components thereof, the Retained Rights and any revenue derived from exploitation of the Retained Rights, any of the literary, dramatic, musical or other materials upon which the Licensed Pictures, Universal Licensed Pictures, Prior Pictures are based or which are contained in the Licensed Pictures, Universal Licensed Pictures, Prior Pictures or any of the copyrights, trademarks, computer models, design patents, technology or similar or analogous rights in or to the Licensed Pictures, Universal Licensed Pictures, Prior Pictures or any of the foregoing.

Section 13. Force Majeure. No party shall be liable to any other because of any failure to perform hereunder caused by any cause beyond its control, including fire, earthquake, flood, epidemic, accident, explosion, casualty, strike, lockout, labor controversy, riot, civil disturbance, act of a public enemy, embargo, war, act of God or law, except as expressly provided herein to the contrary; provided, that Universal shall in no event be required to accede to or to cause any Universal Affiliate to accede to the demands of any guild, union or similar organization in order to bring to an end a strike, lockout or labor controversy, or to accede to the demands of any suppliers or others not a party hereto which Universal considers unreasonable. This Section 13. shall not diminish or impair the payment obligations of any party hereunder.

Section 14. Assignment. This Agreement may not be assigned by any party without the prior written consent of each of the other parties, including in the event of a merger, reorganization, or transaction in which another party succeeds to all or substantially all of the assigning party’s assets, except that (a) without securing the prior written consent of DWA or DW Studios except as required under the Universal Exploitation Agreements, Universal may from time to time assign or delegate any or all of its rights and obligations hereunder to one or more Universal Affiliates or to subdistributors, and (b) if DW Studios ceases to operate its theatrical distribution business in the Domestic Territory, then, with respect to all DW Distributed Pictures, DW Studios may assign or sublicense to Universal (and Universal shall accept such assignment or sublicense of) Theatrical Exhibition in the Domestic Territory on the same terms and conditions as set forth in the DW Distribution Agreement, and such additional Distribution Rights then subject to the Universal Agreement, including certain Non-Theatrical Exhibition in the International Territory and Home Video Fulfillment Services Rights throughout the Territory. Nothing contained in this Section 14 shall prohibit or limit DWA’s, DW Studios’ or Universal’s sale or transfer of its assets (other than its rights under this Agreement) in the ordinary course of business.

Section 15. Distributor Distribution Credit. Universal shall have such right to accord itself its customary distribution credit (with integrated logo) for each Prior Picture, DW Distributed Picture and Universal Licensed Picture as and to the extent (if any) provided in the applicable Universal Exploitation Agreement. Each agreement with a Subdistributor or licensee shall provide that such Subdistributor or licensee is contractually bound to abide by all such credit obligations.

Section 16. Other Activities. Subject to the provisions hereof nothing herein shall limit in any way the right of DWA, DW Studios, Universal or their respective Affiliates to engage in business activities or endeavors of any kind or nature, including:

(i) Motion Picture production, distribution and related businesses;

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(ii) Television production and merchandising (including video games and computer games) exploiting the Licensed Pictures by DWA;

(iii) Advertising;

(iv) Publishing;

(v) Interactive Media;

(vi) The sale or license of designs, stories, characters, trademarks, trade names or other rights or properties;

(vii) Ancillary market activities;

(viii) The co-financing or co-production or acquisition of any other interest of any nature in any Motion Picture or other property; and

(ix) The exercise of any right not expressly granted hereunder.

Section 17. No Partnership or Third Party Benefit. This Agreement does not constitute DWA, DW Studios or Universal as partners, joint venturers, or as each other’s agents or representatives (except as may be herein otherwise expressly provided). This Agreement is not for the benefit of any third party and shall not give any right or remedy to any such third party whether or not referred to hereunder.

Section 18. Integration/Formalities. This Agreement contains the entire agreement and understanding between the parties relating to the subject matter hereof and supersedes, cancels and replaces any prior understanding, writing or agreement between the parties relating to such subject matter. This Agreement may not be amended, modified or altered except by an instrument in writing duly executed by the parties. The parties acknowledge that each was represented by counsel in the negotiation and execution of this Agreement. No provision herein shall be construed against any party by virtue of the activity of that party, through its counsel or otherwise, in negotiating and drafting this Agreement. Notwithstanding the foregoing or anything to the contrary in this Agreement, except as expressly set forth herein, nothing in this Agreement amends, modifies or terminates the DW Distribution Agreement, the Universal Agreement or the Theme Park Supplemental Agreements, which shall continue in full force and effect in accordance with their respective terms as between DW Studios, Universal and DWA (as applicable).

Section 19. Dispute Resolution.

a. The parties agree that any dispute to interpret or enforce, or otherwise arising out of or relating to, this Agreement shall be determined by binding arbitration according to the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), provided always that: (a) the arbitration shall be conducted before a single neutral

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arbitrator with at least ten (10) years experience in the theatrical Motion Picture industry, appointed by mutual agreement of the parties within five (5) business days from the date the notice of arbitration is delivered by the petitioning party; (b) the parties shall be entitled to discovery as provided in California Code of Civil Procedure sections 1283.05 and 1283.1; (c) in deciding any such matter, the arbitrator shall follow the substantive law of the State of California as it would be applied by California courts; (d) either party may, without waiving its right to arbitration, seek preliminary or interlocutory relief from a court of competent jurisdiction; (e) all arbitration proceedings (including any discovery and other evidence in connection therewith) shall be closed to the public and shall remain confidential; and (f) arbitration awards hereunder may be entered and enforced as provided in California Code of Civil Procedure sections 1285 et seq. If the arbitrator is not selected by mutual consent within five (5) business days from the date the notice of arbitration is delivered by the petitioning party, the rules of the AAA with respect to the selection of an arbitrator shall apply. Notwithstanding the foregoing, before proceedings are initiated hereunder, the Chief Executive Officer or Chief Operating Officer of DWA, DW Studios and Universal, or their designated representatives shall meet and in good faith attempt to resolve the dispute.

b. Notwithstanding the foregoing:

(i) Any payment disputes submitted to binding arbitration pursuant to Section 19.a above shall commence within ten (10) business days from the date the notice is delivered by the petitioning party and the arbitrator shall rule not later than thirty (30) days after the date the notice is delivered. The hearing shall be conducted by the arbitrator for as many days as the arbitrator determines to allow; provided, that the hearing shall conclude, and the arbitrator shall rule, not later than thirty (30) days after the date the notice is delivered. The arbitrator shall rule as to whether or not amounts are owed to the petitioning party, and if so, the exact amount owed to the petitioning party (taking into account the default interest and other provisions contained in the Agreement). In such event, the non-petitioning party shall have five (5) Business Days from the date of the arbitrator’s ruling to make such payment. In the event such payment is not made within the aforementioned period, such failure shall constitute a breach of this Agreement and the petitioning party may exercise all rights and remedies available under Section 9 above.

(ii) Any disputes submitted to binding arbitration pursuant to Section 19.a. above that affect the timely release of a Licensed Picture, Universal Licensed Picture or Prior Picture for initial Theatrical Exhibition or initial Home Video Exhibition shall commence within seven (7) Business Days from the date the notice is delivered by the petitioning party and the arbitrator shall rule not later than ten (10) Business Days after the date the notice is delivered. The hearing shall be conducted by the arbitrator for as many days as the arbitrator determines to allow; provided, that the hearing shall conclude, and the arbitrator shall rule, not later than ten (10) Business Days after the date the notice is delivered.

c. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, AND EXCEPT AS PROVIDED BELOW, IN NO EVENT WILL ANY PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS SUFFERED BY AN INDEMNITEE, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH ANY DAMAGES ARISING HEREUNDER; PROVIDED, HOWEVER, THAT TO THE

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EXTENT ANY PARTY IS REQUIRED TO PAY (A) ANY AMOUNT ARISING OUT OF THE INDEMNITY SET FORTH IN SECTION 7 AND/OR (B) ANY SPECIAL, INCIDENTAL, INDIRECT, COLLATERAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS, IN EACH CASE, TO A THIRD PARTY IN CONNECTION WITH A THIRD PARTY CLAIM, SUCH DAMAGES WILL CONSTITUTE DIRECT DAMAGES AND WILL NOT BE SUBJECT TO THE LIMITATION SET FORTH IN THIS SECTION 19.c.

Section 20. Severability of Provisions. If any provision in this Agreement shall be held by any court of competent jurisdiction to be illegal, invalid or unenforceable, such provision shall be of no force or effect while such infirmity shall exist, but such infirmity shall have no effect whatsoever upon the binding force or effectiveness of any other provisions hereof unless the parties otherwise agree. The parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provision with a valid provision the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provision.

Section 21. Waiver. No delay or failure to exercise any right hereunder shall constitute a waiver of such right except in those instances where this Agreement provides for specific notice and a period of time thereafter within which to exercise a right, in which case failure to exercise such right within the specified time period shall constitute a waiver thereof.

Section 22. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the state of California, applicable to contracts entered into and to be fully performed in said state by residents thereof. For purposes of enforcing, confirming or vacating an award under Section 19 above, or in the event the provisions of Section 19 shall be held invalid or unenforceable, only the California courts (state and federal) shall have jurisdiction over controversies regarding or arising under this Agreement, and if there is any matter which might be subject either to state or federal jurisdiction, the parties agree that the matter shall be submitted to federal jurisdiction. The parties specifically agree that the Superior Court of the State of California, County of Los Angeles and the United States District Court for the Central District of California shall have the personal jurisdiction over them, and each of them, notwithstanding the fact that they may be citizens of other states or countries. In this regard the parties agree that Los Angeles County is a convenient forum.

Section 23. Confidentiality. Except as may be required by law or NASD or stock exchange rules, each party shall keep confidential all terms and conditions contained herein. DWA, DW Studios and Universal acknowledge that they will, during the Term hereof, have access to, and acquire knowledge from, materials, data and other information which is not accessible or known to the general public (“Confidential Information”). Except as required by law or NASD or stock exchange rules, or as may be required for the preparation of tax returns or other government or legally required documents, or as reasonable necessary to employees, agents, lawyers, accountants, auditors, bankers, consultants, representative or investors of DWA, DW Studios and Universal or their Affiliates for a bona fide business purpose (who shall be similarly bound by these confidentiality provisions), neither the Confidential Information nor any knowledge acquired by DWA, DW Studios and Universal, as the case may be, from such Confidential Information or otherwise through its engagement hereunder shall be used, publicized or divulged by the other to any other Person without the prior written consent of the applicable party obtained in advance and in each instance. Nothing herein shall prevent a party,

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or any employees, agents, lawyers, accountants, auditors, bankers, consultants, representatives or investors of such party or its Affiliates (the “Receiving Party”) from using, disclosing, or authorizing the disclosure of any information it receives in the course of performance of the Agreement which:

a. was known to the Receiving Party prior to its disclosure by the other party;

b. is or becomes publicly available without default hereunder by the Receiving Party;

c. is lawfully acquired by the Receiving Party from a source which is not an agent or representative of the Receiving Party and is not under any obligation to the other party regarding disclosure of such information;

d. is independently developed by the Receiving Party without use of any of the other party’s confidential information; or

e. is disclosed by the applicable party hereto to unaffiliated third parties without confidential undertakings.

For the avoidance of doubt, Confidential Information as defined in this Section 23. shall not include any Information that the applicable party is obligated to make available to any third party(ies) in the course of fulfilling its obligations under this Agreement (e.g., contingent compensation statements).

Section 24. Notice of Representatives. Each party will give the other parties reasonable notice of its appropriate contact person(s).

Section 25. Paragraph Headings. Paragraph headings and titles are solely for convenience of reference and are not a part of this Agreement, nor are they intended to aid or govern the interpretation of this Agreement.

Section 26. Intellectual Property License. DWA and DW Studios acknowledge and agree that the Theatrical Distribution Rights licensed to Universal constitute “intellectual property” as such term is defined in the Bankruptcy Code and that Universal is entitled to all of the rights of a licensee of intellectual property under Section 365(n) of the Bankruptcy Code with respect to all of such licensed rights.

Section 27. Disclosure, Compliance and Reporting Obligations. Universal agrees to supply information and reports to DWA (at DWA’s expense) in the form and manner requested by DWA and access to Universal’s books and records and internal controls, with respect to DWA’s public disclosure, compliance or reporting obligations, including those under Section 404 and the other provisions under the Sarbanes-Oxley Act of 2002 and the rules and regulations of the Securities and Exchange Commission and the Public Company Accounting Oversight Board, and to modify (at DWA’s expense) any such internal controls as are reasonably requested by DWA to comply with such obligations, provided however, such information,

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reports, access and controls apply only to Universal’s direct obligations to DWA hereunder. Universal shall have no responsibility for determining what changes or corrections are necessary, if any, for DWA’s purposes.

Section 28. Notices. All notices hereunder shall be in writing and shall be served by private delivery services, and shall be deemed given on the date delivered to the following addresses (or such other addresses as such party may hereafter designate in writing):

(i) If to DWA:

DreamWorks Animation SKG, Inc.

1000 Flower Street

Glendale, California 91201

Attention: General Counsel

With copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, New York 10019

Telecopy: (212) 474-3700

Attention: Faiza J. Saeed, Esq.

(ii) If to DW Studios:

DreamWorks L.L.C.

1000 Flower Street

Glendale, California 91201

Attention: General Counsel

(iii) If to Universal:

Vivendi Universal Entertainment LLLP

100 Universal City Plaza

Universal City, CA 91067

Attention: General Counsel

With a copy to:

Gibson, Dunn & Crutcher LLP

333 S. Grand Avenue

Los Angeles, CA 90071-3197

Telecopy: (213) 229-7520

Attention: Ruth E. Fisher

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Section 29. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument, which may be sufficiently evidenced by one counterpart.

Section 30. Effect of Subsequent Event. If the Effective Date occurs, but the closing of the IPO does not occur within *** of the Effective Date, then the parties to this Agreement agree that this Agreement and the DW Distribution Agreement shall terminate and be of no further force or effect, and DWA shall become a signatory to each of the Universal Agreements other than the Amblin Agreement, as a result of which (but subject to the further provisions of this Section 30): (i) Universal shall have the same rights and obligations under the Universal Agreements vis-à-vis each of DW Studios and DWA and their respective pictures, as it currently has with respect to DW Studios, (ii) DW Studios and DWA shall collectively have the rights and obligations provided for DW Studios under the Universal Agreements (other than, as to DWA, the Amblin Agreement) as DW Studios currently holds except that each of DW Studios and DWA shall have such rights only as to its own Motion Pictures, and this provision shall not be deemed to require duplicative payments, (iii) each of DW Studios and DWA shall be jointly and severally liable for all obligations of DW Studios or DWA to Universal under such Universal Agreements (other than, as to DWA, the Amblin Agreement), and (iv) DWA shall be entitled to the benefits accorded DW Studios under Section 8.q. of the Amblin Agreement.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first written above.

DREAMWORKS L.L.C.
By	/s/ Brian Edwards
	VP and General Counsel
Its
DREAMWORKS ANIMATION SKG, INC.
By	/s/ Katherine Kendrick
	VP and General Counsel
Its
VIVENDI UNIVERSAL ENTERTAINMENT LLLP
By	/s/ Karen Randall
	Executive Vice President
Its

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SCHEDULE 1.1.

Table of Definitions

Term	Defined
Advance Amounts	Schedule 5.1
Additional Amounts	Schedule 5.1
Agreement	Preamble
Amblin Agreement	Whereas
Amblin Projects	Whereas
Animation Advance Amount	Schedule 5.1
Animation Additional Amounts	Schedule 5.1
Confidential Information	23
DW Distribution Agreement	Whereas
DW Studios	Preamble
DWA	Preamble
Eligible DWA Properties	Section 3.2
Home Video Fulfillment Services Agreement	Whereas
Master Agreement	Whereas
Receiving Party	23
Theatrical Distribution Agreement	Whereas
Theme Park Agreement	Whereas
Universal	Preamble
Universal Agreement	Whereas

FINAL            

SCHEDULE 5.1

I. Definitions

Capitalized terms used in this Schedule 5.1 but not referenced below or otherwise defined herein shall have the meanings assigned thereto elsewhere in this Interparty Agreement between DW, DWA and Universal dated as of October 7, 2004. Definitions used in this Schedule 5.1 which vary from the same or similar definitions in this Agreement shall have the meanings set forth in this Schedule 5.1 solely for the purposes of this Schedule 5.1.

1. Agreement Module: “Agreement Module” shall refer to each of Exhibits A, B, C and D of the Master Agreement, as amended, modified or supplemented from time to time in accordance therewith.

2. Distributor shall mean Universal or its successors and permitted assigns under the Theatrical Distribution Agreement.

3. DW or DW Studios shall mean DreamWorks L.L.C.

4. Exhibit A shall mean Exhibit A to the Master Agreement, and is also referred to as the Theatrical Distribution Agreement.

5. FSP shall mean Universal or its successors or permitted assigns under the Home Video Fulfillment Services Agreement.

6. Exhibit B shall mean Exhibit B to the Master Agreement, and is also referred to as the Home Video Fulfillment Services Agreement.

7. Master Agreement: “Master Agreement” shall refer solely to the amended and restated DW/Universal Studios, Inc. Master Agreement without consideration of the Agreement Modules attached thereto.

8. Parties: “parties” (individually “party”) shall refer to Universal, DW Studios and DWA.

9. Payment Default: A failure by DW or DWA, as applicable (as more fully set forth in Section 9.1 of the Interparty Agreement) (i) to pay any Advance Amount, Animation Advance Amount, Additional Amount, Animation Additional Amount, DW Adjustment, DW Animation Adjustment, Special Termination Payment or redemption or distribution amount payable under the DreamWorks L.L.C. Amended and Restated Operating Agreement, in each case on the date due or (ii) to satisfy the Satisfaction Event for Universal.

10. Person: “Person” shall refer to any individual, firm, corporation, partnership, limited liability company, trust, joint venture, governmental authority or other entity.

11. Preferred: “Preferred” shall refer to all outstanding shares of DW’s Class U Preferred Stock.

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VIII. Advance

1. Additional Definitions.

“Advance” is defined in Section VIII.2 of this Schedule 5.1.

“Advance Amount” at any time of determination, shall be equal to the Advance, plus all Universal Adjustments, less all DW Adjustments and less the advance adjustment effected under Paragraph VIII.3.

“Advance Maximum Amount” shall mean ***.

“Aggregate Expenses” shall equal the sum of (x) Distribution Expenses (as defined in Exhibit A) and (y) Service Expenses (as defined in Exhibit B).

“Aggregate Fees” shall equal the sum of (x) Distribution Fees (as defined in Exhibit A) and (y) Service Fees (as defined in Exhibit B).

“Aggregate Receipts” shall equal the sum of (x) Gross Receipts (as defined in Exhibit A) and (y) Service Receipts (as defined in Exhibit B).

“Animation Advance Amount” at any time of determination, shall be equal to the Initial Animation Advance, plus all Universal Animation Adjustments, less all DWA Animation Adjustments.

“Animated Pictures” shall mean any theatrical motion picture in which a substantial portion of the characters, creatures and environments are created using animation techniques, including those techniques commonly referred to as traditional hand-drawn animation, stop motion animation, claymation, computer-generated animation or a similar or new method of animation now known or hereafter devised; provided, however, that a theatrical motion picture shall not be deemed an Animated Picture solely (i) because parts of its action are created by animation intended to appear as live action, (ii) due to the inclusion of incidental animation, or (iii) because it contains limited amounts of animation presented in conjunction (whether or not in the same frame) with live action (e.g., “Who Framed Roger Rabbit” would not be an Animated Picture).

“Animation Pipeline Estimate” as of the end of any fiscal quarter shall be equal to a commercially reasonable estimate, based on revenue figures in ultimates, of Aggregate Receipts in the territory for which Distributor or FSP holds rights (i) for all Animated Pictures for which Distributor or FSP has been granted rights pursuant to the Universal Agreement and this Agreement (a) which had their initial public release (whether in theatres in the Domestic Territory (as defined in the Universal Agreement) or the Foreign Territory (as defined in the Universal Agreement), on home video or otherwise) prior to the end of such quarter (“Animation

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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Pipeline Released Pictures”), and (b) which are not Animated Pictures ultimates for which are included in the Pipeline Estimate, and (c) that were placed in production or pre-production (using estimates based on breakeven ultimates for such [Motion] Pictures after capitalized interest and overhead) prior to the end of such quarter (provided that, with respect to any [Motion] Picture described in clause (c), DWA shall (I) be firmly committed to the production of such [Motion] Picture, without any third party conditions, (II) have approved the preliminary budget and screenplay for such [Motion] Picture, and (III) have reasonably scheduled such Animated Picture for initial domestic theatrical release within 18 months of the last day of such quarter) less (x) Aggregate Fees which would be retained by Distributor and FSP based on such estimated Aggregate Receipts, (y) estimated Aggregate Expenses attributable to such Animated Pictures and (z) Aggregate Receipts for such Animated Pictures actually paid to DW by Distributor and FSP prior to the end of such quarter. For further clarity, once an Animated Picture has had its initial public release, it shall only be factored in clause (i)(a) above and shall no longer be factored in clause (i)(c). DWA’s independent auditors will certify that the ultimates for Animated Pictures referred to in clause (i)(a) above are the same figures used to prepare and review DW’s quarterly, and prepare and audit DW’s annual, financial statements for the applicable fiscal period.

“Pipeline Estimate” as of the end of any fiscal quarter shall be equal to a commercially reasonable estimate, based on revenue figures in ultimates, of Aggregate Receipts in the territory for which Distributor or FSP holds rights for all [Motion] Pictures for which Distributor or FSP has been granted rights pursuant to the Universal Agreement (a) which had their initial public release (whether in theatres in the Domestic Territory or the Foreign Territory, on home video or otherwise) prior to the end of such quarter (“Pipeline Released Pictures”), and (b) that were placed in production or pre-production (using estimates based on breakeven ultimates for such [Motion] Pictures after capitalized interest and overhead) prior to the end of such quarter (provided that, with respect to any [Motion] Picture described in clause (b), DW shall (i) be firmly committed to the production of such [Motion] Picture, without any third party conditions, (ii) have scheduled principal photography to commence within eight weeks of such quarter-end, (iii) have binding commitments from the director and two principal cast members for such [Motion] Picture and (iv) have approved the preliminary budget and screenplay for such [Motion] Picture) less (x) Aggregate Fees which would be retained by Distributor and FSP based on such estimated Aggregate Receipts, (y) estimated Aggregated Expenses attributable to such [Motion] Pictures and (z) Aggregate Receipts for such [Motion] Pictures actually paid to DW by Distributor and FSP prior to the end of such quarter. For further clarity, once a [Motion] Picture has had its initial public release, it shall only be factored in clause (a) above and shall no longer be factored in clause (b). DW’s independent auditors will certify that the ultimates for [Motion] Pictures referred to in clause (a) above are the same figures used to prepare and review DW’s quarterly, and prepare and audit DW’s annual, financial statements for the applicable fiscal period.

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“Pipeline Required Amount” shall mean ***.

“Termination Date” shall mean the date either or both of Exhibit A or Exhibit B terminates, for any reason, or expires.

2. Outstanding Advance. Effective as of the Restatement Effective Date, the Advance was in the stated amount of *** (the “Advance”).

3. Advance Adjustment. Effective as of the consummation of the transactions contemplated by the Business Combination Agreement dated as of October 8, 2003 by and among GE, National Broadcasting Holding, Inc., National Broadcasting Company Inc., Vivendi Universal S.A. and Universal Studios Holding III Corp. (the “NBC Closing”), *** of the Advance was forgiven and the stated amount of the Advance is ***.

4. Further Advance Adjustments. Not later than 45 days following the end of each of the first three fiscal quarters of DW (commencing with the fiscal quarter ending March 31, 2002) and 90 days following the end of each fiscal year-end of DW (commencing with the fiscal year ending December 31, 2002) (each, an “Estimate Date”), DW shall deliver to Universal a schedule containing DW’s good faith estimate of the Pipeline Estimate as of such Estimate Date (the “Periodic Pipeline Schedule” and, collectively the “Pipeline Schedules”), including reasonably detailed supporting documentation for such computation. Within *** following each Estimate Date:

(i) if the Pipeline Estimate in respect of such Estimate Date is less than the Pipeline Required Amount and less than the Pipeline Estimate in respect of the most recent preceding Estimate Date (or the Initial Estimate Date, in the case of the first Estimate Date), DW shall pay Universal in cash by wire transfer in immediately available funds an amount (a “DW Adjustment”) equal to ***% of the difference between (x) the lesser of (A) the Pipeline Required Amount and (B) the Pipeline Estimate in respect of the most recent preceding Estimate Date, and (y) the Pipeline Estimate on such Estimate Date; or

(ii) if the Pipeline Estimate in respect of such Estimate Date is greater than the Pipeline Estimate in respect of the most recent preceding Estimate Date (or the Initial Estimate Date, in the case of the first Estimate Date) and the Pipeline Estimate in respect of such preceding Estimate Date was less than the Pipeline Required Amount, Universal shall pay DW (a “Universal Adjustment”) in cash by wire transfer in immediately available funds an amount equal to *** of the difference between (x) the lesser of (A) the

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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Pipeline Required Amount and (B) the Pipeline Estimate in respect of such Estimate Date and (y) the Pipeline Estimate on the most recent preceding Estimate Date provided in no instance under this Agreement shall Universal be required to have outstanding as an advance to DW more than the Advance Maximum Amount, or to make any payment in respect of a Universal Adjustment if DW is then in default under its bank agreements or there is a Payment Default.

5. Animation Advance and Adjustments. On the Effective Date, DW has transferred to DWA, and DWA has assumed, the “Initial Animation Advance” in the amount of $75 million. Not later than *** following the end of each fiscal quarter of DWA (commencing with the first fiscal quarter ending after the Effective Date) and *** following the end of each fiscal year-end of DWA (commencing with the fiscal year ending December 31, 2004) (each, an “Animation Estimate Date”), DWA shall deliver to Universal a schedule containing DWA’s good faith estimate of the Animation Pipeline Estimate as of such Estimate Date (the “Periodic Animation Pipeline Schedule” and, collectively with the Initial Animation Pipeline Schedule, the “Animation Pipeline Schedules”), including reasonably detailed supporting documentation for such computation. Within 5 business days following each Animation Estimate Date:

(i) if the Animation Pipeline Estimate in respect of such Animation Estimate Date is less than *** and less than the Animation Pipeline Estimate in respect of the most recent preceding Animation Estimate Date, DWA shall pay Universal in cash by wire transfer in immediately available funds an amount (a “DWA Animation Adjustment”) equal to *** of the difference between (x) the lesser of (A) *** and (B) the Animation Pipeline Estimate in respect of the most recent preceding Animation Estimate Date, and (y) the Animation Pipeline Estimate on such Animation Estimate Date; or

(ii) if the Animation Pipeline Estimate in respect of such Animation Estimate Date is greater than the Animation Pipeline Estimate in respect of the most recent preceding Animation Estimate Date (or the Initial Animation Estimate Date, in the case of the first Animation Estimate Date) and the Animation Pipeline Estimate in respect of such preceding Animation Estimate Date was less than *** Universal shall pay DWA (a “Universal Animation Adjustment”) in cash by wire transfer in immediately available funds an amount equal to *** of the difference between (x) the lesser of (A) *** and (B) the Animation Pipeline Estimate in respect of such Animation Estimate Date and (y) the Animation

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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Pipeline Estimate on the most recent preceding Animation Estimate Date provided in no instance under this Agreement shall Universal be required to have outstanding as an Animation Advance to DWA of more than $75 million or to make any payment in respect of a Universal Animation Adjustment if DW or DWA is then in default under its bank agreements or there is a Payment Default.

6. Dispute Resolutions.

a. If Universal delivers written notice to DW setting forth a description of Universal’s objections to any Pipeline Estimate or a written notice to DWA setting forth a description of Universal’s objections to any Animation Pipeline Estimate, and the amount of the adjustment that Universal believes should be made to each item in respect of such objection (an “Objection Notice”) no later than *** days following receipt of such Pipeline Estimate or Animation Pipeline Estimate (and associated supporting documentation), the Parties hereto shall follow the resolution procedure described below.

b. No later than *** following receipt of an Objection Notice, the Designated Officer of each of DW or DWA, as applicable, on the one hand and Universal on the other hand shall meet and negotiate in good faith to resolve any items set forth in the Objection Notice. “Designated Officer” shall mean its chief financial officer, in the case of DW or DWA, and its Chief Financial Officer, in the case of Universal, or such other senior executive of such party as shall be reasonably acceptable to the other parties.

c. If the Designated Officers are unable to resolve all the objections set forth in any Objection Notice within ***, they shall jointly appoint *** (the “Neutral Expert”) within *** after the end of such *** period. The Neutral Expert, acting as experts and not as arbitrators, shall review the objections set forth in the Objection Notice which were not resolved pursuant to the procedure in clause (b) above. The Neutral Expert shall determine, based on the requirements set forth in this Agreement and only with respect to objections submitted to the Neutral Expert, whether and to what extent the applicable Pipeline Estimate or Animation Pipeline Estimate requires adjustment. Universal on the one hand and DW or DWA on the other shall each pay *** of the fees and disbursements of the Neutral Expert in respect of such engagement. Universal, DW and DWA shall, and shall cause their representatives to, provide to the Neutral Expert full cooperation. The Neutral Expert’s resolution shall be conclusive and binding upon the Parties.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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d. The Pipeline Estimate or Animation Pipeline Estimate, as applicable, for any quarter shall be deemed to reflect any objections thereto resolved pursuant to the foregoing procedure and any necessary adjustment to the amount of the Advance or Animation Advance, as applicable, resulting from such resolution shall be made within 5 days in accordance with the procedures of Paragraphs VIII.4 and VIII.5 above.

e. Notwithstanding the foregoing, Universal shall not be entitled to deliver an Objection Notice and trigger the procedures described above if any Pipeline Estimate delivered by DW or Animation Pipeline Estimate provided by DWA reflects (solely for Pipeline Released Pictures or Animation Pipeline Released Pictures, as applicable) (i) as to the Pipeline Estimate, a Pipeline Estimate greater than or equal to ***, or (ii) as to the Animation Pipeline Estimate, an Animation Pipeline Estimate greater than or equal to ***.

7. Additional Payment Obligation.

a. On the last day of each fiscal quarter and on the first Termination Date, through and including the last day of the fiscal quarter in which the Advance and Animation Advance are both repaid in full (each such date, a “Payment Date”), (i) DW shall pay to Universal by wire transfer in immediately available funds an amount in cash equal to the Additional Amount (as defined below) for each date from and including the preceding Payment Date until but excluding such Payment Date, and (ii) DWA shall pay to Universal by wire transfer in immediately available funds an amount in cash equal to the Animation Additional Amount (as defined below) for each date from and including the preceding Payment Date until but excluding such Payment Date. In addition, all accrued and unpaid Additional Amounts or Animation Additional Amounts shall accrue at a rate of 8.75% per year. For purposes hereof, (I) the “Additional Amount” means an amount equal to an annualized rate on the Advance Amounts outstanding from time to time of 8.75% per year, and (II) the “Animation Additional Amount” means an amount equal to an annualized rate on the Animation Advance Amount outstanding from time to time of 8.75% per year. Without limitation of its other rights and remedies hereunder, Universal shall be entitled to set off and apply an amount equal to any DW Adjustment if not paid when due and/or any accrued but unpaid Additional Amounts or Animation Additional Amounts not paid when due against, and recoup such DW Adjustment amount, Additional Amounts or Animation Additional Amounts from, any amounts owed to DW in accordance with the Agreement; provided, however, that any

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DW Adjustment or Additional Amounts may be recouped only against Aggregate Receipts for [Motion] Pictures other than Animated Pictures, and that any DW Animation Adjustment or Animation Additional Amounts may be recouped only against Aggregate Receipts for Animated Pictures.

b. Not later than *** days after (i) December 31 of each calendar year which ends on or after December 31, 2006 and during the Term of Exhibit A or Exhibit B, and (ii) the end of the Term of Exhibit A or Exhibit B (if such Term ends after December 31, 2006 other than on the last day of a year), the cumulative Aggregate Fees paid to Universal by DW since January 1, 2006 through the end of such calendar year or end of the Term of Exhibit A or Exhibit B, as applicable, shall be calculated. Each such calculation shall be an “Interest Credit Calculation” and the period covered by such Interest Credit Calculation is the “Interest Credit Calculation Period.”

(i) If at the time of any Interest Credit Calculation, the cumulative Aggregate Fees for the relevant Interest Credit Calculation Period are in excess of the product of *** times the number of calendar years in such Interest Credit Calculation Period (including any partial year in the case of a termination other than at the end of a calendar year) (such amount for the relevant Interest Credit Calculation Period, the “Interest Threshold Amount”), the amount in excess of the Interest Threshold Amount (less any amount of such excess previously credited pursuant to this Paragraph VIII.7.b. and not previously repaid) shall be credited on a dollar for dollar basis, with *** of such credit being applied against Additional Amounts and the remaining ***% of such credit being applied against Animation Additional Amounts (collectively, “AAA Amounts”) paid or payable during the applicable Interest Credit Calculation Period (the amount of any such credit determined as a result of the foregoing is the “Interest Credit”). Notwithstanding the foregoing, the maximum aggregate amount of all Interest Credits which can be earned under this Paragraph VIII.7.b. shall not exceed the Interest Credit Cap. The “Interest Credit Cap” is a dollar amount equal to *** per annum of the aggregate amount of the Advance Amount and Animation Advance Amount outstanding from time to time during the relevant Interest Credit Calculation Period.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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(ii) If at the time of any Interest Credit Calculation any Interest Credits are outstanding (i.e., have previously been made and not reversed), and the cumulative Interest Credit determined for such Interest Credit Calculation Period is less than the cumulative Interest Credit determined for the immediately preceding Interest Credit Calculation Period (or, no Interest Credit is available under the most recent Interest Credit Calculation), DW and DWA shall be entitled to retain only that amount of outstanding Interest Credits, if any, also available under the most recent Interest Credit Calculation and shall repay to Universal (in addition to any other AAA Amounts due and payable at such time) an amount equal to the difference between the Interest Credit allocable to it (if any) calculated for the most recent Interest Credit Calculation Period and the Interest Credit previously credited for the immediately preceding Interest Credit Calculation Period.

By way of illustration of this Paragraph VIII.7.b.:

• If as shown in Interest Credit Calculation for the Interest Credit Calculation Period ended December 31, 2006, Universal has received *** in Aggregate Fees for such Interest Credit Calculation Period, DW and DWA, collectively, would be entitled to a *** Interest Credit against the 2006 AAA Amount. This would either be credited against any 2006 AAA Amount payable to Universal (with *** credited against the Additional Amount, and *** credited against the Additional Animation Amount) or if all such AAA Amounts have already been paid, Universal would repay *** million to DW and *** to DWA. (Since the *** Interest Credit would not exceed the Interest Credit Cap, the entire *** is available.)

• If as shown in the Interest Credit Calculation for the Interest Credit Calculation Period ended December 31, 2007, Universal has received the *** in cumulative Aggregate Fees for such Interest Credit Calculation Period, the *** Interest Credit previously received for the Interest Credit Calculation Period ended *** would be reversed and DW would pay Universal *** corresponding to such reversal, and DWA would pay Universal ***, in each case in addition to all other AAA Amounts due in ***.

• If as shown in the Interest Credit Calculation for the Interest Credit Calculation Period ended ***, Universal has received *** in cumulative Aggregate Fees for such Interest Credit Calculation Period, DW and DWA collectively would be entitled to a *** Interest Credit against AAA

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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Amounts paid or payable by DW for *** and against previous years’ AAA Amounts to the extent necessary, but subject in all cases to the Interest Credit Cap.

8. Repayment of Advance Amount, Animation Advance Amount, Additional Amounts, Animation Additional Amounts. The Advance Amount, the Animation Advance Amount, plus all accrued and unpaid AAA Amounts shall become immediately due and payable upon the date (the “Due Date”) which is the earliest to occur of (x) the first Termination Date, (y) December 31, 2010 and (z) the *** day after a Payment Default (if such Payment Default has not been cured by such date). Following the Due Date, Universal shall have no further obligations to DW or DWA in respect of this Paragraph VIII. provided if the Due Date arises as a result of the preceding clause (z) and the Payment Default is subsequently cured in full, Universal’s obligations to make Advances to DW and DWA under this Paragraph VIII. shall be reinstated. Upon (a) notification by either DW or Universal to the other Party of such Party’s intention to terminate either Exhibit A or Exhibit B in accordance with its respective terms, (b) the expiration or termination of any Agreement Module in accordance with its terms prior to the stated expiration date of December 31, 2010, or (c) the Due Date, then Universal shall be entitled to set off and apply the Advance Amount, Animation Advance Amount, plus any accrued but unpaid Additional Amounts or Animation Additional Amounts against, and recoup the Advance Amount, Animation Advance Amount, Additional Amounts and Animation Additional Amounts from, any amounts owed to DW in accordance with the Universal Agreement or DWA in accordance with the Agreement or the Interparty Agreement among DW, DWA and Universal dated as of [date], 2004, provided that in no instance shall Universal be entitled (i) to recoup Advance Amounts or Additional Amounts from Aggregate Receipts for Animated Pictures included in the Animated Pipeline Estimate, or (ii) to recoup Animated Advance Amounts or Animation Additional Amounts from Aggregate Receipts for [Motion] Pictures included in the Pipeline Estimate. Any remaining Advance Amount and Additional Amounts after giving effect to the application set forth in this Section 8 shall, upon Universal’s election (in its sole discretion), convert into shares representing Preferred at a price of *** per share. Any Advance Amount and Additional Amounts that Universal does not elect to convert to equity of DW pursuant to the foregoing sentence shall continue to be due and payable by DW and shall continue to accrue Additional Amounts. Any Animation Advance Amount and Animation Additional Amounts remaining after giving effect to the application set forth in this Section 8 shall continue to be due and payable by DWA and shall continue to accrue Additional Animation Amounts.

Notwithstanding the foregoing, if both Exhibit A and Exhibit B expire at their stated expiration date of December 31, 2010 (and only in such case) (the “Special Repayment Case”), *** of the Advance outstanding on such date and *** of the Animation Advance outstanding on such date shall be due and payable *** together with all Additional Amounts and Animation Additional Amounts accrued with respect thereto, and the remaining Advance and the remaining

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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Animation Advance shall be payable ***, together with all Additional Amounts and Animation Additional Amounts accrued with respect thereto. In the Special Repayment Case, Universal shall be entitled to set off the Advance, Animation Advance, Additional Amount and Animation Additional Amounts against, or recoup such amounts from the amounts owed to DW under the Universal Agreement or to DWA under this Agreement or the Interparty Agreement among DW, DWA and Universal dated [date], 2004 only against amounts received by Universal after December 31, 2010 and to the extent such amounts are recouped through the set off, shall reduce DW’s and DWA’s respective payment obligations under the preceding sentence. (Notwithstanding the foregoing, in no instance shall Universal be entitled (i) to recoup Advance Amounts or Additional Amounts from Aggregate Receipts for Animated Pictures included in the Animated Pipeline Estimate, or (ii) to recoup Animated Advance Amounts or Animation Additional Amounts from Aggregate Receipts for [Motion] Pictures included in the Pipeline Estimate.) Unless and until the Advance, Animation Advance, Additional Amounts and Animation Additional Amounts are recouped or repaid in full, Universal shall retain all distribution and fulfillment services rights it holds as of December 31, 2010 to [Motion] Pictures then in release (theatrically or as Videograms) or revenues for which have been in either the Pipeline Estimate or the Animation Pipeline Estimate prior to December 31, 2010. In the Special Repayment Case, DW and DWA shall have the right but not the obligation after December 31, 2010, to prepay all or any portion of the Advance Amount, Animation Advance Amount, Additional Amounts and Animation Additional Amounts and on the payment in full of all such amounts (whether by prepayment, set off, or payment) all of Universal’s distribution and fulfillment rights under Exhibit A and Exhibit B shall terminate.

* * *

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EX-10.11

Exhibit 10.11

DW/UNIVERSAL STUDIOS, INC. MASTER AGREEMENT

AMENDED AND RESTATED AS OF OCTOBER 31, 2003

This agreement was entered into as of June 14, 1995, was amended and restated as of June 20, 2001, and is amended and restated herein as of October 31, 2003 by and between DreamWorks L.L.C. (“DW”), a Delaware limited liability company, with its principal offices at 1000 Flower Street, Glendale, California 91201, Universal Studios, Inc. (“Universal”), a Delaware corporation, with its principal offices at 100 Universal City Plaza, Universal City, California 91608, and Vivendi Universal Entertainment LLLP, a Delaware limited liability limited partnership (“VUE”) as assignee of Universal, with its principal offices at 100 Universal City Plaza, Universal City, California 91608.

PRELIMINARY STATEMENT

WHEREAS, DW and MCA, INC. (“MCA”) (currently known as Universal), entered into the DW/MCA Master Agreement dated as of June 14, 1995, which by its terms incorporated therein each “Agreement Module” (as defined and set forth below), all as amended, modified or supplemented from time to time in accordance therewith;

WHEREAS, in June 2001 DW and Universal agreed to amend and restate the Master Agreement and to extend and amend the terms thereof and to make certain amendments to Exhibit A and Exhibit B as defined therein (as so amended and restated, the “2001 Master Agreement”);

WHEREAS, after the 2001 Master Agreement DW and Universal entered into certain other amendments to the Master Agreement and/or to Exhibits A and B thereto, and Universal assigned its rights and obligations thereunder to VUE;

WHEREAS, effective as of October 31, 2003, DW and Universal have agreed to amend the 2001 Master Agreement, including to extend the term thereof and to make certain amendments to Exhibits A and B;

WHEREAS, effective as of October 31, 2003, DW has agreed to make certain amendments (the “Class U Amendment”) to the Sixth Amended and Restated Limited Liability Agreement of DreamWorks L.L.C. dated as of March 21, 2003 (the “Prior LLC Agreement”) (the Prior LLC Agreement as amended by the Class U Amendment is the “LLC Agreement”);

NOW, THEREFORE, DW and Universal hereby agree as follows:

I. General

1. In consideration of the mutual covenants and undertakings contained herein, Universal and DW agree as follows.

a. DW Representations. DW represents as follows: DW has received all required consents to enter into this Master Agreement and the

LLC Agreement from (i) its lenders under DW’s First Refinancing Credit Facility (as defined in the LLC Agreement); and (ii) its lenders under that DW Funding LLC Film Securitization Facility dated as of October 15, 2002; and (iii) the requisite equity holders whose consent is required under the LLC Agreement. DW further represents that its execution and delivery of, and its performance under this Agreement does not and will not conflict with, or result in the breach of, constitute a default or require a consent under, nor will it result in the termination, cancellation, modification, violation or acceleration (whether after giving notice or the lapse of time or both) of any right or obligation of DW under any material contract, deed, instrument or other agreement.

b. NBC Consent. Universal represents that it has received the consent of National Broadcasting Company, Inc. (“NBC”) to the form and substance of this Master Agreement and the LLC Agreement.

c. Class U Amendment. On or prior to the Restatement Effective Date (as defined below) the LLC Agreement shall have been executed and delivered by DW, Universal and the other parties thereto and shall have become effective.

d. Effective Date. The business day after all of the consents listed above have been received and circulated to each of DW and Universal is the “Restatement Effective Date.”

2. Notwithstanding anything to the contrary set forth in this Agreement, Amendment No. 2 to Exhibit B to the Master Agreement (“Amendment No. 2”) shall remain in full force and effect and is not amended by this Restated Master Agreement.

II. Term; Contract Year

a. The Term of this Master Agreement shall continue until termination of all of the Agreement Modules. The term of each of Exhibit A and Exhibit B is hereby amended to continue to December 31, 2010, unless extended in accordance with the following two sentences, or unless otherwise extended or terminated in accordance with the terms of this Master Agreement. Universal shall have the right, at its sole option, to extend the Term of both of Exhibit A and Exhibit B by written notice to DW delivered on or after January 2, 2010 and prior to February 1, 2010 to (x) December 31, 2011, if Total Fees Payable (as defined below)

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to Universal are *** or (y) December 31, 2012 if Total Fees Payable after the Restatement Effective Date are ***. In addition, the Terms of each of Exhibit A and Exhibit B shall automatically be extended on any otherwise scheduled expiration date for a three-month period from such scheduled expiration date if, on any scheduled expiration date, all of the Preferred shall not have been redeemed in cash, and all accrued and unpaid cash and non-cash distributions thereon not paid in cash in accordance with Section 8.01 of the LLC Agreement; provided, that from and after September 30, 2008 the period of such extensions shall be as set forth in Section 8.01(a)(vi)(y)(B) of the LLC Agreement. “Total Fees Payable” shall mean the sum of (i) Aggregate Fees paid to Universal and its Affiliates during the period from November 1, 2003 through December 31, 2009, (ii) Aggregate Fees accrued but not yet paid to Universal and its Affiliates during the period from November 1, 2003 through December 31, 2009, and (iii) as an estimate of Aggregate Fees expected to be paid or become payable to Universal and its Affiliates during the period from January 1, 2010 to December 31, 2010, the lesser of (A) Aggregate Fees used in the calculation of the Pipeline Estimate and the Animation Pipeline Estimate for such period and (B) *** times the Aggregate Fees paid to Universal and its Affiliates during the period from December 31, 2008 to December 31, 2009. For purposes of clarification, under this Agreement, (i) if the Preferred shall be converted or exchanged into a debt instrument, the “redemption” amounts and “distributions” required to be paid shall be deemed to mean the principal and interest of such debt instrument, and (ii) in any instance in which Universal has the right to terminate Exhibit A or Exhibit B but the term of that agreement extends automatically (notwithstanding a termination notice) because DW is required to redeem the Preferred together with all accrued and unpaid cash and non-cash distributions and has failed to do so, Universal (but not DW) can voluntarily waive the benefits of such provision and terminate the applicable agreement notwithstanding the failure to redeem (see, e.g., Paragraph XII.3.e.).

b. Effective as of January 1, 2004, the “contract year” as defined under each of Exhibit A and Exhibit B shall be revised to be the calendar year, and a new contract year shall commence on January 1, 2004 for purposes of both Exhibit A and Exhibit B.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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III. Definitions

Capitalized terms used in this Master Agreement but not referenced below or otherwise defined herein shall have the meanings assigned thereto in the Agreement Modules. For convenience, Schedule III attached hereto contains a table of defined terms.

1. Affiliate: “Affiliate” (collectively “Affiliates”) of any specified Person shall refer to any Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.

2. Agreement: “Agreement” shall refer collectively to the “Master Agreement” and all of the “Agreement Modules.”

3. Agreement Module: “Agreement Module” shall refer to each of Exhibits A, B, C and D of the DW/MCA Master Agreement, as amended, modified or supplemented from time to time in accordance therewith.

4. Master Agreement: “Master Agreement” shall refer solely to this amended and restated DW/Universal Studios, Inc. Master Agreement without consideration of the Agreement Modules attached hereto.

5. Parties: “Parties” (individually “Party”) shall refer to Universal and DW.

6. Payment Default: A failure by DW to pay any Advance Amount, Animation Advance Amount, Additional Amount, Animation Additional Amount, DW Adjustment, or redemption or distribution amount payable under the LLC Agreement, in each case on the date due.

7. Person: “Person” shall refer to any individual, firm, corporation, partnership, limited liability company, trust, joint venture, governmental authority or other entity.

8. Preferred: “Preferred” shall refer to all outstanding shares of DW’s Class U Preferred Stock.

9. Subscription Agreement: “Subscription Agreement” shall refer to the Subscription Agreement dated as of April 15, 2001 between DW and Universal pertaining to the purchase by Universal of DW’s Class U Preferred Stock, as more specifically set forth therein.

IV. Foreign Theatrical Motion Picture Distribution

Exhibit A shall refer to the agreement dated as of June 14, 1995 between DW and Universal City Studios, Inc. (“Distributor”), regarding, among other things, the distribution by Distributor of DW’s Pictures within the Territory during the Term (as such capitalized terms are defined in Exhibit A, as amended hereby), as more specifically set

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forth therein, as amended as of the Restatement Effective Date by this Master Agreement including the terms and conditions attached hereto as Schedule A-TC (which was effective prior to the date of the 2003 amendment and restatement of the Master Agreement and is continued in effect by this amended and restated Master Agreement), which is by this reference incorporated into Exhibit A. Other than as expressly amended in this Master Agreement, Exhibit A (including Schedule A-TC) remains in full force and effect as of the Restatement Effective Date.

1. All references to “MCA” in Exhibit A shall mean Universal Studios, Inc. and all references to MCA shall be to Universal Studios, Inc. The Parties acknowledge and agree that Universal has assigned its obligations and rights under the Master Agreement to VUE and services under the Master Agreement and Exhibit A may be provided by VUE (or its successor).

2. Paragraph 10 of Exhibit A is deleted and amended to read in full as follows, and all references in Exhibit A to Paragraph 10 shall mean such Paragraph 10 as amended:

The introduction to Paragraph 10 shall read: In all events under this Paragraph 10, and notwithstanding any provision of this Agreement to the contrary, no termination of either Exhibit A or Exhibit B shall be effective unless and until (i) all Advance Amounts, Animation Advance Amounts, Additional Amounts and Animation Additional Amounts have been paid in full, (ii) the Special Termination Fee has been paid in full, and (iii) the Preferred together with all accrued and unpaid cash and non-cash distributions thereon is redeemed and the redemption price has been paid in full in cash in accordance with Section 8.01(a) of the LLC Agreement.

a. Termination Without Cause.

(i) [Purposely left blank]

(ii) This Exhibit A (and Exhibit B, if DW determines in its sole discretion) may be terminated by DW, in its entirety upon the happening of any of the following circumstances: If UIP “restructures” (i.e., if UIP ceases to be the primary foreign distribution entity for either or both of the UIP Owners); provided, however, that DW shall be entitled to terminate pursuant to this provision on the first anniversary of the date of such “restructuring” (the “UIP Termination Date”) provided it provides not less than 15 days written notice of its election to terminate this Exhibit A prior to such UIP Termination Date. DW may terminate prior to the UIP Termination Date if UIP (or Universal) materially changes the manner in which the Pictures are theatrically distributed internationally and this change has or would have a material adverse impact on DW’s international theatrical revenues (a “Material International Change”). For

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the period of time prior to DW’s exercise of its rights under this clause (ii), and if DW does not exercise its termination right under this clause (ii), so long as there is not a Material International Change, UIP’s (or Universal’s) performance shall be deemed consistent with Universal’s obligations hereunder, it being acknowledged that DW may nonetheless thereafter choose to exercise its termination right under this subparagraph. Not later than the termination of Exhibit A under this clause (ii), DW shall redeem all of the Preferred in cash, together with all accrued and unpaid cash and non-cash distributions pursuant to Section 8.01(a) of the LLC Agreement. DW may not after notice of its election to terminate Exhibit A and prior to redemption in full of the Preferred enter into any agreement which would have the effect of prohibiting or restricting its redemption of all of the Preferred in cash, together with all accrued and unpaid cash and non-cash distributions.

(iii) DW shall have the right to terminate this Exhibit A and/or Exhibit B (but not Exhibit C and/or Exhibit D), as DW determines in its sole discretion, subject to the further provisions of this provision on a VUE Change of Control. DW may not exercise its rights under this Paragraph 10.a.(iii) at any time prior to the earlier of October 8, 2004 and the NBC Closing (as defined in the Master Agreement). After the earlier of October 8, 2004 and the NBC Closing, DW may exercise its rights to terminate during the 90 days following the first public announcement after such date of Vivendi Universal S.A.’s (or, if the NBC Closing has occurred, General Electric Company’s (“GE”)) intention to enter into a definitive agreement with a specific named third party for a transaction that would effect a “VUE Change Of Control” (as hereafter defined) under clauses (A) or (C) of such definition, and (B) at any time during the 90 days following a VUE Change of Control under clause (B) of such definition. In either case, such notice of termination shall be effective as to the Exhibit(s) being terminated 180 days after the receipt of such notice subject to the requirements of the Master Agreement, including without limitation Paragraph VIII.8 thereof, and to Section 8.01(a) of the LLC Agreement. No termination by DW shall be effective under this clause a.(iii) unless and until DW shall have redeemed all of the Preferred together with all accrued and unpaid cash and non-cash distributions thereon, in cash, in accordance with Section 8.01(a) of the LLC Agreement. A “VUE Change of Control” means (A)

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the acquisition, directly or indirectly, of (i) more than 50% of the voting power or aggregate equity value represented by the issued and outstanding ordinary equity interests (or preferred equity interests carrying voting power or consent rights substantially similar to ordinary equity interests) or (ii) actual managerial control (whether through the appointment, or ability to veto the appointment, of key executive officers or at least a majority of the members of the board of directors or equivalent governing body, or otherwise) of VUE or its motion picture studio division, whether pursuant to merger, consolidation, acquisition, share exchange, issuances of equity securities or otherwise, by any person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended), in each case, other than by Vivendi Universal S.A. and/or any of its majority owned subsidiaries or GE and/or any of its majority owned subsidiaries, (B) the filing of a registration statement for an initial public offering of 20% or more of the voting power or aggregate equity value represented by the issued and outstanding ordinary equity interests (or preferred equity interests carrying voting power or consent rights substantially similar to ordinary equity interests) of VUE (or any corporation into which VUE may be reconstituted or the substantial asset of which is equity interests in VUE), as a result of which Vivendi Universal S.A. (and/or its majority owned subsidiaries) or GE (and/or its majority owned subsidiaries) is not expected to retain actual managerial control (whether through the ability to elect at least a majority of the members of the board of directors or equivalent governing body or otherwise) of VUE or its motion picture studio division, or (C) the sale, transfer, contribution or other disposition, directly or indirectly, of (i) all or substantially all of the property, business or assets of VUE or (ii) 50% or more of the property, business or assets of the motion picture studio division of VUE, to any person or group (as defined above) (excluding internal reorganizations and transactions effected to reconstitute VUE as a corporation, so long as the successor assumes the obligations of VUE under the Master Agreement) excluding in each case (y) the NBC Closing, and (z) after the NBC Closing, other sales, transfers, contributions or other dispositions to GE and/or any of its majority owned subsidiaries.

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b. Termination With Cause.

(i) This Exhibit A (and Exhibit B, if DW determines in its sole discretion) may be terminated by either party, only in its entirety, without prejudice to any other rights or remedies available to it, upon the happening of any of the following circumstances, and subject to the Master Agreement and Section 8.01(a) of the LLC Agreement:

(1) If the other party shall fail to make any payment when due hereunder, provided that if the parties are in dispute over whether a payment is due, that portion of the payment in dispute shall not be deemed due unless and until the parties mutually agree or five business days after a final binding determination of the issue is made and noticed to the parties (provided that the non-terminating party shall have a period of 30 days, following written notice thereof, to cure) and provided further that an election to terminate under this subparagraph b.(i)(1) must be made, if at all, within 90 days of the date the payment was due and not paid; or

(2) If the non-terminating party shall make any assignment for the benefit of creditors, file a petition for bankruptcy, be judged bankrupt or become insolvent.

(ii) This Exhibit A (and Exhibit B, if DW determines in its sole discretion) may be terminated by DW, only in its entirety without prejudice to any other rights or remedies available to it, upon the happening of any of the following circumstances: If more than 3 times during any 12-month period during the Term or an aggregate of 7 times during any consecutive five-year period commencing after June 20, 2001 (provided that DW shall have given Universal reasonably prompt (but in no event to exceed 90 days after the date DW knew or reasonably should have known) written notice of each such alleged event and/or non-performance and that UIP shall have failed to cure the same within 5 days, or such shorter period as reasonably required by DW, following DW’s written notice thereof to cure) UIP fails to release the Pictures pursuant to plan on dates and for durations for the release of the Pictures and in the theaters approved by DW, subject to customary force majeure events (provided, in the event of a delay caused by a force majeure event, DW shall be permitted to distribute, or cause the distribution of, such Picture(s) as provided in Paragraph 2.c. above if DW reasonably determines that UIP

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will not be available to release the Pictures as and when required by DW) and provided further that such alleged event or non-performance (y) is attributable primarily to UIP’s actions or failures to act and is not directly attributable to any of DW’s actions or failures to act, and (z) affects portions of the Territory (not less than two countries) representing in the aggregate not less than 20% of all Territory Receipts for all Pictures distributed by UIP in the preceding year. UIP’s failure to meet plan shall not be attributable primarily to its actions or failures to act if DW’s plan is broadly inconsistent with past plans for comparable motion pictures, for example, requiring an “art film” to be released on a majority of the screens in a particular country.

(iii) Notwithstanding anything in this Exhibit A or the Master Agreement to the contrary, the only events permitting a termination of this Exhibit A for cause shall be those expressly set forth in this Paragraph 10.b.

c. Other Terminations. This Exhibit A (and Exhibit B, if DW determines in its sole discretion) may be terminated by DW (a) in any country(ies) or Region(s) where the applicable event or nonperformance has occurred (and either entirely in such country[ies] or Region[s]), or (b) only with respect to any Picture(s) affected by such event or non-performance in such country[ies] or Region[s]); and/or (c) in the entire Territory with respect to a Picture(s) materially affected by such event or non-performance, all as the terminating party determines in its sole discretion without prejudice to any other rights or remedies available to it, upon the happening of any of the following circumstances: If more than 3 times during any 12-month period during the Term or an aggregate of 7 times during any consecutive five-year period commencing after June 20, 2001 (provided that DW shall have given Universal reasonably prompt written notice (but in no event to exceed 90 days after the date DW knew or reasonably should have known) of each such alleged event and/or non performance and that UIP shall have failed to cure the same within 5 days, or such shorter period as reasonably required by DW, following DW’s written notice thereof to cure) UIP fails to release the Pictures pursuant to plan on dates and for durations for the release of the Pictures and in the theaters approved by DW, subject to customary force majeure events (provided, in the event of a delay caused by a force majeure event, DW shall be permitted to distribute, or cause the distribution of, such Picture(s) as provided in Paragraph 2.c. above if DW reasonably determines that UIP will not be available to release the Pictures as and when

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required by DW) and provided further that such alleged event or non-performance is attributable primarily to UIP’s actions or failures to act. Notwithstanding anything to the contrary in the Master Agreement or this Exhibit A, a termination under this clause (c) shall not be deemed a termination for cause of this Exhibit A, Exhibit B or the LLC Agreement. UIP’s failure to meet plan shall not be attributable primarily to its actions or failures to act if DW’s plan is broadly inconsistent with past plans for comparable motion pictures, for example, requiring an “art film” to be released on a majority of the screens in a particular country.

d. Upon the effective termination date of this Exhibit A, DW shall have the right (but not the obligation) to order the immediate cessation of any or all distribution of the Pictures and the immediate return of any or all prints and related materials, or, at DW’s election, to require Universal to continue distribution (subject to continuation of Distribution Fees on such Picture[s]) of some or all Pictures previously delivered and either in release or ready for release as and for the duration of the initial period (as determined by DW in its absolute discretion) of theatrical distribution, and in those parts of the Territory designated by DW in its absolute discretion (though DW shall not be obligated to deliver any additional Pictures subsequent to termination of this agreement); provided that Universal and UIP shall have the right to honor all then-existing DW-approved contractual commitments in connection with the exercise of rights granted hereunder. Universal will remain obligated to make all accountings and payments set forth herein with respect to motion pictures distributed by it (or UIP). On expiration or other effective termination of the Term, Universal will (subject to Paragraph XII.2 of the Master Agreement and the reasonable approval of Universal’s counsel) immediately execute such quitclaims and other documents as DW’s counsel deems necessary or advisable to evidence the termination of all Universal’s rights with respect to some or all of the Pictures. Any disputes with respect to such quitclaim and other documents shall be resolved as set forth in the Master Agreement. In the event no timely objection is made or such objection is resolved, and Universal fails to execute immediately any document useful or necessary to effectuate the confirmation or implementation of the provisions hereof, DW shall be irrevocably appointed as Universal’s attorney-in-fact for such purpose. It is acknowledged said appointment power is coupled with an interest.

e. Not later than the effective termination date of the term of this Exhibit A (or of Exhibit B), DW shall make a special termination fee payment to Universal (the “Special Termination Fee”), which shall be due and payable in the event of a termination for any

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reason (i) prior to October 31, 2007, in the amount of ***, (ii) on and after October 31, 2007 and prior to April 30, 2010, in the amount of *** minus an amount equal to *** times the number of full calendar months that have elapsed since October 31, 2007 (e.g., if either agreement terminated at April 30, 2008 the amount would be ***), and (iii) on and after April 30, 2010, ***. The Parties acknowledge and agree that the Special Termination Fee is reasonable in light of the circumstances at the time it was negotiated and agreed to, has been negotiated and agreed to as part of the Parties’ mutual expectation that Universal would continue as DreamWorks’ theatrical distributor and home video fulfillment service provider through at least April 30, 2010, and that in light of such expectation, Universal has extended certain terms to DW in the Agreement, including without limitation the Advance reduction in Paragraph VIII.3., and Universal has made or will make certain additional investments in reliance on that expectation. In the event that, for any reason, the term of Exhibit A and Exhibit B or of either of them terminates prior to April 30, 2010, the losses and other adverse consequences to Universal would be considerable and difficult to quantify, Universal’s ability to recoup its investments made in expectation of that term would be adversely affected, and the concessions made by Universal in this Agreement would be inequitable. A termination even for the purported breach or other action or inaction of Universal would carry similar consequences, including significant costs and foregone opportunities, the costs of which the parties agree Universal should not bear and which would be difficult to calculate. In all circumstances where either Exhibit A or Exhibit B terminates prior to April 10, 2010, the Special Termination Fee is a bargained for alternative. For purposes of clarity, only one Special Termination Fee in the relevant amount set forth above is due on the termination of Exhibit A and/or Exhibit B prior to April 30, 2010 (e.g., if a Special Termination Fee has been paid pursuant to Exhibit B, no Special Termination Fee shall be payable on the simultaneous or subsequent termination of this Exhibit A). In the event of a breach by Universal which is the basis for a termination of this Exhibit by DW, the payment to Universal pursuant to this Paragraph 10.e shall be without prejudice to DW’s right to recover damages from Universal in accordance with this Exhibit A.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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f. The parties acknowledge that if and to the extent DW terminates for cause Universal’s services under Paragraph 10.b., Universal shall not be entitled to any Distribution Fees thereafter with respect to any terminated territory(ies) and/or Pictures (i.e., if DW terminates Universal’s services hereunder with respect to a particular territory(ies) and/or Picture(s), Universal’s Distribution Fee will be calculated on Receipts attributable to other than such terminated territory(ies) and/or Picture(s)).

g. At the expiration or effective termination of the Term, DW shall advise UIP to either return or destroy all materials in its possession in connection with the Pictures, as DW shall instruct. Such action shall be at DW’s expense in the event of expiration of the Term or termination for cause by Universal, and at Universal’s expense in the event of termination for cause by DW.

3. Paragraph 5.b. of Exhibit A is deleted and amended to read in full as follows, and all references in Exhibit A to Paragraph 5.b. shall mean such Paragraph 5.b. as amended:

a. Amount Payable to DW: Subject to Paragraph 5.c.iii. below, Universal shall pay or cause to be paid to DW or, at DW’s election, to a DW-related entity, an amount equal to 100% of the aggregate of the Gross Receipts, less the following in the order listed:

(i) Distribution Fees to be retained by Universal of an amount equal to:

(1) *** of 100% of Gross Receipts paid to, or credited against uncontested outstanding sums owed to Universal by, DW until Gross Receipts equal ***;

(2) *** of 100% of Gross Receipts paid to, or credited against uncontested outstanding sums owed to Universal by, DW for to DW from the point that Gross Receipts exceed *** until Gross Receipts equal ***;

(3) *** of 100% of Gross Receipts paid to, or credited against uncontested outstanding sums owed to Universal by, DW for to DW from the point that Gross Receipts exceed ***;

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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(ii) Notwithstanding the foregoing clause b.(i), if a Payment Default (as defined in the Master Agreement) exists, for the period of time commencing 15 days after the date the relevant payment is due to the date such Payment Default is paid in full, each distribution fee percentage then in effect shall be increased by ***. This distribution fee adjustment shall apply separately to each Payment Default (i.e., in the event of two different concurrent Payment Defaults, each distribution fee percentage would increase by ***, provided that the maximum increase hereunder shall be *** and shall decrease on the date the applicable Payment Default is paid in full (e.g., if there are two Payment Defaults and one is cured, on the date of such cure one *** distribution fee increase shall terminate).

(iii) All “Distribution Expenses” (as defined below) accrued by Universal on behalf of DW calculated in accordance with Paragraph 5.d. below, subject to adjustment for Distribution Expenses accrued but not paid, in the same fashion as for UIP Owners.

4. For purposes of clarity, the Parties agree that the election DW has under Paragraph l.c. of Schedule A-TC of Exhibit A to exclude either Japan or the “German Territory” permits DW to exclude one or the other, but not both concurrently, from the “Territory” as defined in Exhibit A. The Parties hereby amend Paragraph 1.c. of Schedule A-TC to provide that after the first such election, no such election to exclude Japan or the German Territory shall be effective prior to the 180th day after the delivery by DW to Universal of notice of such election (and that no such election shall be effective unless and until the prior election is no longer in effect as to Pictures not previously released for theatrical exhibition on or before the date of termination of the agreement(s) governing the prior election).

5. A new Paragraph 6 shall be added to Schedule A-TC, prior to the last (unnumbered) paragraph of Schedule A-TC, to read in full as follows:

6. Staffing. Distributor shall hire or cause UIP to hire two new fully dedicated employees, one as a director level media planner and one as a publicity manager with start dates on or before April 1, 2004 (provided, if such hires are by Distributor, such persons shall have qualifications substantially comparable to what “director level” and “manager” level employees in such positions at UIP would have). UIP shall have the option to designate existing UIP employees for the positions, subject to Distributor’s mutual approval. Notwithstanding the foregoing, DW and Distributor will

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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work together prior to April 1, 2004 on an interim staffing plan to be implemented initially for a trial period. If the parties agree on an interim staffing plan subject to a trial period, such interim staffing plan shall be implemented by April 1, 2004. If, however, after the implementation of any such interim plan DW determines that the proposal is not effectively staffing the DW Pictures business, in whole or in part, DW shall notify Distributor in writing of the positions affected and which requirements of the first sentence of this Paragraph 6 shall be instituted. If, 30 days after such notice, the parties have not come to an agreement that the issues have been otherwise resolved, Universal shall be required to implement the staffing contemplated by the first sentence of this Paragraph 6 as expeditiously as is practicable, provided Distributor and UIP shall mutually approve the selection and hiring of the foregoing employees. If Distributor and UIP mutually determine that any of the foregoing employees referenced in this Paragraph 6 are not needed to service DW Pictures, either in whole or in part, such employee capacity can be used by Universal. In addition, commencing April 1, 2005, Universal shall be entitled to review, at the beginning of each quarter, on a rolling 12-month basis, whether the augmented staff levels set forth above are required given the historical and expected DW revenues, it being acknowledged and agreed by the parties that if the Gross Receipts collected by Universal have not increased above 2003 levels, or (if they have risen) have reduced to 2003 levels, such employee service levels are not required to be maintained. None of these new employees or staffing changes will change the allocation of duties as between DreamWorks and Universal set forth in this Exhibit A except as expressly set forth above.

V. Home Video Fulfillment Services

Exhibit B shall refer to the agreement dated as of June 14, 1995 between DW and Universal City Studios, Inc. (as Fulfillment Services Provider (“FSP”)) regarding FSP rendering Fulfillment Services to DW in connection with DW’s distribution of Pictures throughout the world during the Term (as such capitalized terms are defined in Exhibit B, as amended hereby), as more specifically set forth therein, as amended as of the Restatement Effective Date by this Master Agreement, Amendment No. 2 and the amended and supplemental terms and conditions attached hereto as Schedule B-TC (which was effective prior to the date of the 2003 amendment and restatement of the Master Agreement and is continued in effect by this amended and restated Master Agreement), which is by this reference incorporated into Exhibit B. Other than as expressly amended in this Master Agreement, Exhibit B (including Schedule B-TC) remains in full force and effect as of the Restatement Effective Date.

1. All references to “MCA” in Exhibit B shall mean Universal Studios, Inc. and all references to MCA shall be to Universal Studios, Inc. The parties acknowledge and agree that Universal’s international fulfillment services shall be provided through Universal Pictures International Ltd. (“UPI”). The Parties acknowledge and agree that Universal has assigned its obligations and rights under the Master Agreement to VUE and services under the Master Agreement and Exhibit B may be provided by VUE (or its successor). The parties also acknowledge and agree (including, without limitation, under Paragraph 7.B(ii)(a) of Exhibit B) that VUE may provide the fulfillment services required to be provided by it under Exhibit B (i) domestically,

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directly or through any wholly-owned subsidiary of VUE, provided that the subsidiary distributes or provides fulfillment services for VUE’s Videograms in the Domestic Territory, and (ii) otherwise through UPI, provided UPI distributes or provides fulfillment services for VUE’s Videograms in the Foreign Territory. In each of clauses (i) and (ii) above, “VUE’s Videograms” shall mean Videograms of theatrical motion pictures produced and released under the “Universal Studios” label, to the extent distributed by VUE or one of its affiliates (it being acknowledged and agreed that nothing in this Exhibit B requires Universal or any of its affiliates to retain any distribution rights in any territory or any media to any theatrical motion picture), and provided, further, that if more than one VUE entity distributes “Universal Studios” theatrical motion pictures, DW Videograms shall be distributed by the primary VUE distribution entity for “Universal Studios”.

2. The definitions of “Domestic Territory” and the “Foreign Territory” shall be amended to read as set forth in Schedule B-TC. For purposes of clarity, the Parties agree that the election DW has under Paragraph 1.b.iii. of Schedule B-TC of Exhibit B to exclude either Japan or the “German Territory” permits DW to exclude one or the other, but not both concurrently, from the “Foreign Territory” as defined in Exhibit B. The Parties hereby amend Paragraph l.b.iii. of Schedule B-TC to provide that after the first such election, no such election to exclude Japan or the German Territory shall be effective prior to the 180th day after the delivery by DW to Universal of notice of such election (and that no such election shall be effective unless and until the prior election is no longer in effect as to DW Videograms not previously distributed by DW in the applicable territory subject to the agreement(s) governing the prior election).

3. Paragraph 7 of Exhibit B is deleted and amended to read in full as follows, and all references in Exhibit B to Paragraph 7 shall mean such Paragraph 7 as amended:

The introduction to Paragraph 7 shall read: In all events under this Paragraph 7, and notwithstanding any provision of this Agreement to the contrary, no termination of either Exhibit A or Exhibit B shall be effective unless and until (i) all Advance Amounts, Animation Advance Amounts, Additional Amounts and Animation Additional Amounts have been paid in full, (ii) the Special Termination Fee has been paid in full, and (iii) the Preferred together with all accrued and unpaid cash and non-cash distributions thereon is redeemed and the redemption price has been paid in full in cash in accordance with Section 8.01(a) of the LLC Agreement.

a. Termination Without Cause.

(i) [Purposefully left blank]

(ii) DW shall have the right to terminate this Exhibit B and/or Exhibit A (but not Exhibit C and/or Exhibit D), as DW determines in its sole discretion, subject to the further provisions of this provision on a VUE Change of Control. DW may not exercise its rights under this Paragraph 7.a.(ii)

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at any time prior to the earlier of October 8, 2004 and the NBC Closing (as defined in the Master Agreement). After the earlier of October 8, 2004 and the NBC Closing, DW may exercise its rights to terminate during the 90 days following the first public announcement after such date of Vivendi Universal S.A.’s (or, if the NBC Closing has occurred, General Electric Company’s (“GE”)) intention to enter into a definitive agreement with a specific named third party for a transaction that would effect a “VUE Change Of Control” (as hereafter defined) under clauses (A) or (C) of such definition, and (B) at any time during the 90 days following a VUE Change of Control under clause (B) of such definition. In either case, such notice of termination shall be effective as to the Exhibit(s) being terminated 180 days after the receipt of such notice subject to the requirements of the Master Agreement, including without limitation Paragraph VIII.8 thereof, and to Section 8.01(a) of the LLC Agreement. No termination by DW shall be effective under this clause a.(ii) unless and until DW shall have redeemed all of the Preferred together with all accrued and unpaid cash and non-cash distributions thereon, in cash, in accordance with Section 8.01(a) of the LLC Agreement. A “VUE Change of Control” means (A) the acquisition, directly or indirectly, of (i) more than 50% of the voting power or aggregate equity value represented by the issued and outstanding ordinary equity interests (or preferred equity interests carrying voting power or consent rights substantially similar to ordinary equity interests) or (ii) actual managerial control (whether through the appointment, or ability to veto the appointment, of key executive officers or at least a majority of the members of the board of directors or equivalent governing body, or otherwise) of VUE or its motion picture studio division, whether pursuant to merger, consolidation, acquisition, share exchange, issuances of equity securities or otherwise, by any person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended), in each case, other than by Vivendi Universal S.A. and/or any of its majority owned subsidiaries, or GE and/or any of its majority owned subsidiaries, (B) the filing of a registration statement for an initial public offering of 20% or more of the voting power or aggregate equity value represented by the issued and outstanding ordinary equity interests (or preferred equity interests carrying voting power or consent rights substantially similar to ordinary equity interests) of VUE

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(or any corporation into which VUE may be reconstituted or the substantial asset of which is equity interests in VUE), as a result of which Vivendi Universal S.A. (and/or its majority owned subsidiaries) or GE (and/or its majority owned subsidiaries) is not expected to retain actual managerial control (whether through the ability to elect at least a majority of the members of the board of directors or equivalent governing body or otherwise) of VUE or its motion picture studio division, or (C) the sale, transfer, contribution or other disposition, directly or indirectly, of (i) all or substantially all of the property, business or assets of VUE or (ii) 50% or more of the property, business or assets of the motion picture studio division of VUE, to any person or group (as defined above) (excluding internal reorganizations and transactions effected to reconstitute VUE as a corporation, so long as the successor assumes the obligations of VUE under the Master Agreement), excluding in each case (y) the NBC Closing, and (z) after the NBC Closing, other sales, transfers, contributions or other dispositions to GE and/or any of its majority owned subsidiaries.

b. Termination With Cause.

(i) This Exhibit B (and Exhibit A, if DW determines in its sole discretion) may be terminated by the terminating party, solely in its entirety without prejudice to any other rights or remedies available to it, upon the happening of any of the following circumstances, and subject to the Master Agreement and Section 8.01(a) of the LLC Agreement:

(1) If the other party shall fail to make any payment when due hereunder, provided that if the parties are in dispute over whether a payment is due, that portion of the payment in dispute shall not be deemed due unless and until the parties mutually agree or five business days after a final binding determination of the issue is made and noticed to the parties (provided that the non-terminating party shall have a period of 30 days, following written notice thereof to cure a breach) and provided further that an election to terminate under this subparagraph b.(i)(1) must be made, if at all within 90 days of the date the payment was due and not paid; or

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(2) If the non-terminating party shall make any assignment for the benefit of creditors, file a petition for bankruptcy, be judged bankrupt or become insolvent,

(ii) This Exhibit B (and Exhibit A, if DW determines in its sole discretion) may be terminated by DW, solely in its entirety, without prejudice to any other rights or remedies available to it, under any of the following circumstances:

(1) If Universal ceases to be the distributor in the Domestic Territory for its Videograms and/or if UPI ceases to be the primary distributor of Videograms for Universal in the Foreign Territory; or

(iii) If more than 3 times during any 12-month period during the Term or an aggregate of 7 times during any consecutive five year period commencing after June 20, 2001 (provided that DW shall have given Universal reasonably prompt written notice (but in no event to exceed 90 days after the date DW knew or reasonably should have known) of each such alleged breach and/or non-performance and that Universal shall have failed to cure the same within 5 days, or such shorter period as reasonably required by DW, following DW’s written notice thereof to cure a breach) Universal fails to release the DW Videograms pursuant to plan on dates and for durations for the release of the DW Videograms approved by DW and with the content and materials provided by DW, except only if and to the extent that any changes are required to be made on an immediate basis (i.e., during which Universal does not have sufficient time to obtain DW’s approval) due to censorship requirements and subject to customary force majeure events (provided, in the event of a delay caused by a force majeure event, DW shall be permitted to render fulfillment services, or cause fulfillment services to be rendered, for such DW Videogram(s) as provided in Paragraph 2.C. above if DW reasonably determines that UPI will not be available to release the DW Videograms as and when required by DW) and provided further that such alleged event or non-performance (y) is attributable primarily to UPI’s actions or failures to act, and is not directly attributable to any of DW’s actions or failures to act and (z) affects portions of either the Domestic Territory

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representing not less than *** of all Domestic Territory Receipts for all DW Videograms for which Universal provided fulfillment services in the preceding year, or of portions of the Foreign Territory (not less than two countries) representing in the aggregate not less than *** of all Foreign Territory Receipts for all DW Videograms for which UPI provided fulfillment services in the preceding year. UPI’s failure to meet plan shall not be attributable primarily to its actions or failures to act if DW’s plan is broadly inconsistent with past plans for comparable Videograms, for example, requiring an “art film” to be broadly marketed and placed in a majority of retail video outlets in a particular country.

(iv) Notwithstanding anything in this Exhibit B or the Master Agreement to the contrary, the only events permitting a termination of this Exhibit B for cause shall be those expressly set forth in this Paragraph 7.b.

c. Other Terminations.

(i) This Exhibit B (and Exhibit A, if DW determines in its sole discretion) may be terminated by DW (a) in any country(ies) or Region(s) where the applicable event or nonperformance has occurred (and either entirely in such country[ies] or Region[s]), or (b) only with respect to any DW Videogram(s) affected by such event or non-performance in such country[ies] or Region[s]); and/or (c) in the entire Territory with respect to a DW Videogram(s) materially affected by such event or non-performance, all as the terminating party determines in its sole discretion without prejudice to any other rights or remedies available to it, upon the happening of any of the following circumstances: If more than 3 times during any 12-month period during the Term or an aggregate of 7 times during any consecutive five year period commencing after June 20, 2001 (provided that DW shall have given Universal reasonably prompt written notice (but in no event to exceed 90 days later) of each such alleged breach and/or non-performance and that Universal shall have failed to cure the same within 5 days, or such shorter period as reasonably

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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required by DW, following DW’s written notice thereof to cure a breach) Universal fails to release the DW Videograms pursuant to the plan on dates and for durations for the release of the DW Videograms approved by DW and with the content and materials provided by DW, except only if and to the extent that any changes are required to be made on an immediate basis (i.e., during which Universal does not have sufficient time to obtain DW’s approval) due to censorship requirements and subject to customary force majeure events (provided, in the event of a delay caused by a force majeure event, DW shall be permitted to render fulfillment services, or cause fulfillment services to be rendered, for such DW Videogram(s) as provided in Paragraph 2.C. above if DW reasonably determines that UPI will not be available to release the DW Videograms as and when required by DW) and provided further that such alleged event or non-performance is attributable primarily to UPI’s actions or failures to act and not directly attributable to DW’s actions or failures to act. UPI’s failure to meet plan shall not be attributable primarily to its actions or failures to act if DW’s plan is broadly inconsistent with past plans for comparable Videograms, for example, requiring an “art film” to be broadly marketed and placed in a majority of retail video outlets in a particular country.

(ii) DW may terminate this Exhibit B and/or Exhibit A if DW, in its sole discretion, determines that Universal and/or UPI rendering the fulfillment services will be more expensive with respect to out-of-pocket costs (but not necessarily with respect to Service Fees) to DW than if DW were to render such services itself or through an affiliated entity provided that no such termination shall be effective unless all of the Preferred and all accrued and unpaid cash and non-cash distributions thereon shall have been redeemed in cash in accordance with Section 8.01(a) of the LLC Agreement.

(iii) If DW believes that Universal has materially changed the manner in which it renders fulfillment services to DW or substantially alters the manner in which it distributes its Videograms, and that such changes have or reasonably would be expected to have a material adverse impact on DW sales, costs and/or collection of revenues (any such event, a “Material Change”), then the following procedures shall apply. DW shall notify Universal in writing of any such Material Change not later than 60 days after the date on which DW knew or should have known of such Material Change and the nature of the material adverse impact, in

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sufficient detail and with reasonable support of the nature and extent of the impact. The parties shall promptly meet to discuss a remedy for such impact and Universal shall have 30 days to suggest and begin implementation of a cure therefor. If the parties disagree about whether there has been a Material Change or whether an adequate cure has been suggested and/or effectuated, the matter shall be submitted to expedited binding alternative dispute resolution following the procedures set forth in Paragraph XII.13 of the Master Agreement, but the timeframes for such proceeding shall be compressed so that the dispute resolution is concluded within 45 days. If it is finally determined (including through appeal, if applicable) through the dispute resolution process that (i) there is an impact as the result of a Material Change that reduces DW’s net revenues by *** in the territory in question, or by ***, whichever is less, and (ii) that the material adverse impact to DW has not and cannot be remedied, DW may terminate as to the affected country within a territory, region, or if the entire domestic or international territory is affected, then DW may terminate Exhibit B in its entirety and, if it terminates Exhibit B, may also terminate Exhibit A provided that it must make such election(s) within 10 business days of such determination. If it is determined (by mutual agreement of the Parties or through the dispute resolution process) that the material adverse impact can be effectively addressed by a cure Universal can effect, DW shall not have the right to terminate Exhibit B in its entirety (or the right to terminate Exhibit A) under this subparagraph (iii) unless Universal fails promptly to commence and implement such cure within 30 days of the mutual agreement or final determination that through the dispute resolution process provided that DW must make such election within 10 business days of the date on which DW is or should have become aware of such failure. If the General Counsel of Universal agrees in writing that a Material Change has occurred and that Universal cannot or will not cure such Material Change, DW may terminate within 10 business days after receiving such written notice. The Parties have agreed that the changes in Brazil from the CIC joint venture to UPI was not an event that allows for

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termination of Exhibit B. DW may not after notice of its election to terminate Exhibit B and prior to redemption in full of the Preferred in accordance with Section 8.01(a) of the LLC Agreement enter into any agreement which would have the effect of prohibiting or restricting its redemption of all of the Preferred in cash, together with all accrued and unpaid cash and non-cash distributions.

(iv) Notwithstanding anything to the contrary in the Master Agreement or this Exhibit B, a termination under this clause c. shall not be deemed a termination for cause of this Exhibit B, Exhibit A or of the LLC Agreement.

d. Termination Effects.

(i) The parties acknowledge that if and to the extent DW terminates for cause Universal’s fulfillment services hereunder, subject to the next paragraph below, Universal shall not be entitled to any Service Fee thereafter with respect to any terminated territory(ies) and/or DW Videograms (i.e., if DW terminates Universal’s fulfillment services hereunder with respect to a particular territory(ies) and/or DW Videogram(s), Universal’s Service Fee will be calculated solely on Receipts attributable to other than such terminated territory[ies] and/or DW Videogram[s]).

(ii) Upon the effective termination or expiration of Universal’s right to provide fulfillment services (in whole or in part under this Exhibit B), DW shall have the option, at its sole discretion, to elect to (i) require Universal to continue to render fulfillment services for any or all of the DW Videograms (subject to continuation of Service Fees on such DW Videogram[s]) as and for the duration of the initial period (as determined by DW in its absolute discretion but not to exceed 180 calendar days following such expiration or effective termination date) of Videogram distribution, and during which Universal has committed to render fulfillment services as provided in this Exhibit B and in those parts of the Territory, designated by DW in its absolute discretion, (ii) permit Universal to sell off its then-existing inventory of DW Videograms upon the same terms and conditions as provided herein for a period not to exceed 180 calendar days following the date of expiration or effective termination hereof, (iii) require Universal to return its then-existing inventory of DW Videograms and all related materials to DW (such return to be at DW’s cost and expense in the event of expiration, termination without

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cause by DW or termination for cause by Universal, or at Universal’s cost and expense in the event of termination without cause by Universal or termination for cause by DW), (iv) immediately destroy or demagnetize Universal’s then-existing inventory of DW Videograms, at Universal’s sole cost and expense, in which event Universal shall promptly (but in no event more than 10 business days following destruction or demagnetization) furnish DW with certificates of destruction or proof of demagnetization, as the case may be, or (v) any combination of the above. In addition, Universal shall promptly provide DW with a list of all outstanding orders for the DW Videograms. On expiration or other effective termination of the Term, subject to Paragraph XII.2 of the Master Agreement, Universal will immediately execute such quitclaims and other documents as DW’s counsel reasonably deems necessary or advisable to evidence the termination of all Universal’s rights with respect to some or all of the DW Videograms. Any disputes with respect thereto shall be resolved as set forth in the Master Agreement. In the event no timely objection is made or such objection is resolved, and if Universal fails to execute immediately any document useful or necessary to effectuate the confirmation or implementation of the provisions hereof, DW shall be irrevocably appointed as Universal’s attorney-in-fact for such purpose. It is acknowledged that said appointment power is coupled with an interest.

e. Not later than the effective termination date of the term of this Exhibit B (or of Exhibit A), DW shall make a special termination fee payment to Universal (the “Special Termination Fee”), which shall be due and payable in the event of a termination for any reason (i) prior to October 31, 2007, in the amount of ***, (ii) on and after October 31, 2007 and prior to April 30, 2010, in the amount of *** minus an amount equal to *** times the number of full calendar months that have elapsed since October 31, 2007 ***, and (iii) on and after April 30, 2010, ***. The Parties acknowledge and agree that the Special Termination Fee is reasonable in light of the circumstances at the time it was negotiated and agreed to, has been negotiated and agreed to as part of the Parties’ mutual expectation that Universal would continue as DreamWorks’

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theatrical distributor and home video fulfillment service provider through at least April 30, 2010, and that in light of such expectation, Universal has extended certain terms to DW in the Agreement, including without limitation the Advance reduction in Paragraph VIII.3., and Universal has made or will make certain additional investments in reliance on that expectation. In the event that, for any reason, the term of Exhibit A and Exhibit B or of either of them terminates prior to April 30, 2010, the losses and other adverse consequences to Universal would be considerable and difficult to quantify, Universal’s ability to recoup its investments made in expectation of that term would be adversely affected, and the concessions made by Universal in this Agreement would be inequitable. A termination even for the purported breach or other action or inaction of Universal would carry similar consequences, including significant costs and foregone opportunities, the costs of which the parties agree Universal should not bear and which would be difficult to calculate. In all circumstances where either Exhibit A or Exhibit B terminates prior to April 10, 2010, the Special Termination Fee is a bargained for alternative. For purposes of clarity, only one Special Termination Fee in the relevant amount set forth above is due on the termination of Exhibit A and/or Exhibit B prior to April 30, 2010 (e.g., if a Special Termination Fee has been paid pursuant to Exhibit A, no Special Termination Fee shall be payable on the simultaneous or subsequent termination of this Exhibit B). In the event of a breach by Universal which is the basis for a termination of this Exhibit by DW, the payment to Universal pursuant to this Paragraph 7.e shall be without prejudice to DW’s right to recover damages from Universal in accordance with this Exhibit B.

4. Clause (ii) in Paragraph 8.A. of Exhibit B is deleted and amended to read in full as follows, and all references to such clause (ii) in Exhibit B shall mean such clause (ii) as amended: “(ii) the services provided by any Subdistributor will be in the aggregate substantially equivalent in quantity, level and priorities to the industry standard for subdistributors providing substantially similar services.”

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5. Paragraph 2 of Schedule II of Exhibit B is deleted and amended to read in full as follows, and all references to such Paragraph 2 shall mean such Paragraph 2 as amended:

2. Domestic Service Fees.

DW shall pay Universal the following (in the order listed) domestic service fees (“Domestic Service Fee”) of an amount equal to:

a. *** of 100% of Domestic Receipts paid to, or credited against uncontested outstanding sums owed to Universal, by DW in any contract year until Domestic Receipts equal ***;

b. *** of 100% of Domestic Receipts paid to, or credited against uncontested outstanding sums owed to Universal, by DW in any contract year from the point that Domestic Receipts exceed *** until Domestic Receipts equal ***; and

c. *** of 100% of Domestic Receipts paid to, or credited against uncontested outstanding sums owed to Universal, by DW in any contract year from the point that Domestic Receipts exceed***

d. In no event shall the Domestic Service Fee be less favorable to DW than the service fees paid to or retained by Universal and/or UPI in connection with Universal’s (or UPI’s) overall domestic fulfillment services in connection with Videograms produced by any party other than an affiliate of Universal, it being agreed that for the purpose of determining whether Universal and UPI have complied with this “favored nations” assurance, Universal’s or UPI’s receipt of a service fee plus any other consideration (in any form, e.g. non-monetary consideration such as other rights granted to Universal or UPI at the time) shall be taken into account, so that the determination is an “apples-to-apples” comparison, as much as possible and, in any event, one-picture deals shall be excluded.

e. Notwithstanding the foregoing, if a Payment Default (as defined in the Master Agreement) exists, for the period of time commencing 15 days after the date the relevant payment is due to the date such Payment Default is paid in full, each Domestic Service Fee percentage then in effect shall be increased by ***. This Domestic Service Fee adjustment shall apply separately to each Payment Default (i.e., in the event of two different Payment Defaults, each Domestic Service Fee percentage would increase by ***) provided that the maximum increase hereunder shall be *** and shall decrease on the date the applicable Payment Default is paid in full (e.g., if there are two Payment Defaults and one is cured, on the date of such cure one *** distribution fee increase shall terminate).

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Paragraph 5 of Schedule II of Exhibit B is deleted and amended to read in full as follows, and all references to such Paragraph 5 shall mean such Paragraph 5 as amended:

5. Foreign Service Fees.

DW shall pay Universal the following (in the order listed) foreign service fees (“Foreign Service Fee”) of an amount equal to:

a. *** of 100% of Foreign Receipts paid to, or credited against uncontested outstanding sums owed by, DW in any contract year until Foreign Receipts equal ***;

b. *** of 100% of Foreign Receipts paid to, or credited against uncontested outstanding sums owed by, DW in any contract year from the point that Foreign Receipts exceed *** until Foreign Receipts equal ***; and

c. *** of 100% of Foreign Receipts paid to, or credited against uncontested outstanding sums owed by, DW in any contract year from the point that Foreign Receipts exceed ***.

d. In no event shall the Foreign Service Fee be less favorable to DW than the service fees paid to or retained by Universal and/or UPI in connection with Universal’s (or UPI’s) overall foreign fulfillment services in connection with Videograms produced by any party other than a Universal affiliate, it being agreed that for the purpose of determining whether Universal and UPI have complied with this “favored nations” assurance, Universal’s or UPI’s receipt of a service fee plus any other consideration (in any form, e.g. non-monetary consideration such as other rights granted to Universal or UPI at the time) shall be taken into account, so that the determination is an “apples-to-apples” comparison, as much as possible and in any event, one-picture deals shall be excluded.

e. Notwithstanding the foregoing, if a Payment Default exists, for the period of time commencing 15 days after the date the relevant payment is due to the date such Payment Default is paid in full, each Foreign Service Fee percentage then in effect shall be increased by ***. This Foreign Service Fee adjustment shall apply separately to each Payment Default (i.e., in the event of two different Payment Defaults, each Foreign Service Fee percentage would increase by ***) provided that the maximum increase hereunder shall be *** and shall decrease on the date the applicable Payment Default is paid in full (e.g., if there are two Payment

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Defaults and one is cured, on the date of such cure one *** distribution fee increase shall terminate).

6. Employees.

a. Paragraph 1.E. of Exhibit FS to Exhibit B to the Master Agreement is deleted and amended to read in full as follows, and all references to such Paragraph 1.E. shall mean such Paragraph 1.E. as amended:

E. Staffing - Commitment to adequately staff with dedicated and shared personnel to effectively service the size and scope of DW’s Videogram business. Fully dedicated or primarily dedicated staffing shall consist of those positions set forth on Schedule 1.E attached hereto, subject to the remainder of this Paragraph 1.E. and except as mutually agreed otherwise. Notwithstanding the foregoing, Universal and DW agree that domestic Product Development, worldwide Promotions, Publicity/Special Events, Media Buys, and Retail Marketing, and international Research shall be performed by DW. Universal shall remit to DW the amount of *** per year (pro rated for partial years), as a deduction from Universal’s expenses, *** on a quarterly basis until March 31, 2004. On and after April 1, 2004, for so long as DW employs persons to fill the two positions identified on Schedule 1.E. as the head of domestic marketing (SVP Marketing/Sales) and the head of domestic sales positions (Sales VP), Universal shall remit to DW the amount of *** per year (pro rated for partial years), and up to *** per year (which shall reflect the actual market rate for such two hires)(pro rated for partial years and which shall be adjusted for inflation on a yearly basis), as a deduction from Universal’s expenses, which amounts shall be payable *** per quarter.

“Primarily dedicated” employees shall mean employees who shall in any situation where they do not have adequate time for all their duties, place all duties for DW prior to any other duties.

Schedule 1.E. contemplates that certain changes in staffing will occur; however, the parties have agreed that certain of such changes will be subject to a “trial period.” For each change that is subject to a trial period, the parties have agreed that Universal’s proposals of October 2003 regarding headcount and operating structure shall be implemented initially rather than the changes for

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that position reflected on Schedule 1.E. If, however, after the implementation of the Universal proposal DW determines that the proposal is not effectively staffing the DW Videogram business, in whole or in part, DW shall notify Universal in writing of the positions affected and the portion(s) of Schedule 1.E. to be instituted. If, 30 days after such notice, the parties have not come to an agreement that the issues have been otherwise resolved, Universal shall be required to implement the portions of Schedule 1.E. specified in the notice as expeditiously as is practicable.

If any of the foregoing employees referenced in this Paragraph 1.E. are not needed to service DW Videograms, either in whole or in part, such employee capacity can be used by Universal. In addition, commencing April 1, 2005, Universal shall be entitled to review, at the beginning of each quarter, on a rolling 12-month basis, whether the augmented staff levels set forth above (including in Schedule 1.E.) are required given the historical and expected DW revenues, it being acknowledged and agreed by the parties that if Domestic Receipts and Foreign Receipts collected by Universal have not increased above 2003 levels, or (if they have risen) have reduced to 2003 levels, such employee service levels are not required to be maintained, it being understood and agreed that a decrease only in one area (e.g. Domestic Receipts) shall be considered independently from the other area and can result in a decrease in staffing in only that area. None of these new employees or staffing changes will change the allocation of duties as between DW and Universal set forth in this Agreement except as expressly set forth above (including Schedule 1.E.).

VI. Amblin Projects

Exhibit C, which is by this reference incorporated herein, shall refer to the agreement dated as of June 14, 1995 between DW and Universal regarding the disposition of certain assets of Amblin’ Entertainment and related and miscellaneous issues, as more specifically set forth therein.

VII. Theme Park Rights

Exhibit D, which is by this reference incorporated herein, shall refer to the letter agreement dated as of July 31, 1995 between DW and Universal regarding the utilization of certain DW projects as the basis for theme park and other attractions, as more specifically set forth therein. Notwithstanding the foregoing or anything in this Master Agreement to the contrary, Paragraph 9 of Exhibit D of the Master Agreement shall govern the assignment of such Exhibit D agreement.

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VIII.  Advance

1. Additional Definitions.

“Advance Amount” at any time of determination, shall be equal to the Advance, plus all Universal Adjustments, less all DW Adjustments and less the advance adjustment effected under Paragraph VIII.3, if and when such adjustment occurs.

“Advance Maximum Amount” shall mean (i) until the NBC Closing, ***, and (ii) on and after the NBC Closing, ***.

“Aggregate Expenses” shall equal the sum of (x) Distribution Expenses (as defined in Exhibit A) and (y) Service Expenses (as defined in Exhibit B).

“Aggregate Fees” shall equal the sum of (x) Distribution Fees (as defined in Exhibit A) and (y) Service Fees (as defined in Exhibit B).

“Aggregate Receipts” shall equal the sum of (x) Gross Receipts (as defined in Exhibit A) and (y) Service Receipts (as defined in Exhibit B).

“Animation Advance Amount” at any time of determination, shall be equal to the Initial Animation Advance, plus all Universal Animation Adjustments, less all DW Animation Adjustments.

“Animated Pictures” shall mean any theatrical motion picture in which a substantial portion of the characters, creatures and environments are created using animation techniques, including those techniques commonly referred to as traditional hand-drawn animation, stop motion animation, claymation, computer-generated animation or a similar or new method of animation now known or hereafter devised; provided, however, that a theatrical motion picture shall not be deemed an Animated Picture solely (i) because parts of its action are created by animation intended to appear as live action, (ii) due to the inclusion of incidental animation, or (iii) because it contains limited amounts of animation presented in conjunction (whether or not in the same frame) with live action (e.g., “Who Framed Roger Rabbit” would not be an Animated Picture).

“Animation Pipeline Estimate” as of the end of any fiscal quarter shall be equal to a commercially reasonable estimate, based on revenue figures in ultimates, of Aggregate Receipts in the Territory for (i) Sinbad (to the extent Distributor or FSP has been granted rights thereto pursuant to the Agreement) and (ii) for all other Animated Pictures for which Distributor or FSP has been granted rights pursuant to the Agreement (a) which had their initial public release (whether in theatres in the Domestic Territory or

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the Foreign Territory, on home video or otherwise) prior to the end of such quarter (“Animation Pipeline Released Pictures”) and on or after November 1, 2003, and (b) which are not Animated Pictures ultimates for which are included in the Pipeline Estimate, and (c) that were placed in production or pre-production (using estimates based on breakeven ultimates for such Pictures after capitalized interest and overhead) prior to the end of such quarter (provided that, with respect to any Picture described in clause (c), DW shall (I) be firmly committed to the production of such Picture, without any third party conditions, (II) have approved the preliminary budget and screenplay for such Picture, and (III) have reasonably scheduled such Animated Picture for initial domestic theatrical release within 18 months of the last day of such quarter) less (x) Aggregate Fees which would be retained by Distributor and FSP based on such estimated Aggregate Receipts, (y) estimated Aggregate Expenses attributable to such Animated Pictures and (z) Aggregate Receipts for such Animated Pictures actually paid to DW by Distributor and FSP prior to the end of such quarter. For further clarity, once an Animated Picture has had its initial public release, it shall only be factored in clause (ii)(a) above and shall no longer be factored in clause (ii)(c). DW’s independent auditors will certify that the ultimates for Animated Pictures referred to in clause (ii)(a) above and for Sinbad are the same figures used to prepare and review DW’s quarterly, and prepare and audit DW’s annual, financial statements for the applicable fiscal period.

“Pipeline Estimate” as of the end of any fiscal quarter shall be equal to a commercially reasonable estimate, based on revenue figures in ultimates, of Aggregate Receipts in the Territory for all Pictures for which Distributor or FSP has been granted rights pursuant to the Agreement (a) which had their initial public release (whether in theatres in the Domestic Territory or the Foreign Territory, on home video or otherwise) prior to the end of such quarter (“Pipeline Released Pictures”), (b) which are Animated Pictures which had their initial public release prior to November 1, 2003 (other than Sinbad), and (c) that were placed in production or pre-production (using estimates based on breakeven ultimates for such Pictures after capitalized interest and overhead) prior to the end of such quarter (provided that, with respect to any Picture described in clause (c), DW shall (i) be firmly committed to the production of such Picture, without any third party conditions, (ii) have scheduled principal photography to commence within eight weeks of such quarter-end, (iii) have binding commitments from the director and two principal cast members for such Picture and (iv) have approved the preliminary budget and screenplay for such Picture) less (x) Aggregate Fees which would be retained by Distributor and FSP based on such estimated Aggregate Receipts, (y) estimated Aggregated Expenses attributable to such Pictures and (z) Aggregate Receipts for such Pictures actually paid to DW by Distributor and FSP prior to the end of such quarter. For further clarity, once a Picture has had its initial public release, it shall only be factored in clause (a) above and shall no longer be factored in clause (c). DW’s independent auditors will certify that the ultimates for Pictures referred to in clause (a) above are the same figures used to prepare and review DW’s quarterly, and prepare and audit DW’s annual, financial statements for the applicable fiscal period.

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“Pipeline Required Amount” shall mean (i) until the NBC Closing, ***, and (ii) on and after the NBC Closing, ***.

“Termination Date” shall mean the date either or both of Exhibit A or Exhibit B terminates, for any reason, or expires.

2. Outstanding Advance. Effective as of the Restatement Effective Date, the Advance is in the stated amount of *** (the “Advance”).

3. Advance Adjustment. Effective as of the consummation of the transactions contemplated by the Business Combination Agreement dated as of October 8, 2003 by and among GE, National Broadcasting Holding, Inc., National Broadcasting Company Inc., Vivendi Universal S.A. and Universal Studios Holding III Corp. (the “NBC Closing”), *** of the Advance shall be forgiven and the stated amount of the Advance shall be ***.

4. Further Advance Adjustments. Not later than 45 days following the end of each of the first three fiscal quarters of DW (commencing with the fiscal quarter ending March 31, 2002) and 90 days following the end of each fiscal year-end of DW (commencing with the fiscal year ending December 31, 2002) (each, an “Estimate Date”), DW shall deliver to Universal a schedule containing DW’s good faith estimate of the Pipeline Estimate as of such Estimate Date (the “Periodic Pipeline Schedule” and, collectively the “Pipeline Schedules”), including reasonably detailed supporting documentation for such computation. Within 5 business days following each Estimate Date:

(i) if the Pipeline Estimate in respect of such Estimate Date is less than the Pipeline Required Amount and less than the Pipeline Estimate in respect of the most recent preceding Estimate Date (or the Initial Estimate Date, in the case of the first Estimate Date), DW shall pay Universal in cash by wire transfer in immediately available funds an amount (a “DW Adjustment”) equal to *** of the difference between (x) the lesser of (A) the Pipeline Required Amount and (B) the Pipeline Estimate in respect of the most recent preceding Estimate Date, and (y) the Pipeline Estimate on such Estimate Date; or

(ii) if the Pipeline Estimate in respect of such Estimate Date is greater than the Pipeline Estimate in respect of the most recent preceding Estimate Date (or the Initial Estimate Date, in the case of the first Estimate Date) and the Pipeline

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Estimate in respect of such preceding Estimate Date was less than the Pipeline Required Amount, Universal shall pay DW (a “Universal Adjustment”) in cash by wire transfer in immediately available funds an amount equal to *** of the difference between (x) the lesser of (A) the Pipeline Required Amount and (B) the Pipeline Estimate in respect of such Estimate Date and (y) the Pipeline Estimate on the most recent preceding Estimate Date provided in no instance under this Agreement shall Universal be required to have outstanding as an advance to DW more than the Advance Maximum Amount, or to make any payment in respect of a Universal Adjustment if DW is then in default under its bank agreements or there is a Payment Default.

5. Animation Advance and Adjustments. On the Restatement Effective Date, DW shall deliver to Universal a schedule containing DW’s good faith computation of the Animation Pipeline Estimate for the most recently ended fiscal quarter (the “Initial Animation Pipeline Schedule”), including reasonably detailed supporting documentation for such computation. Within five business days following the delivery to Universal of the Initial Animation Pipeline Schedule (the date such payment is made, the “Initial Animation Advance Payment Date”), provided DW is not then in default under its bank agreements and no Payment Default exists, Universal shall advance to DW by wire transfer in immediately available funds an amount (the “First Animation Advance”) in cash equal to the lesser of (x) *** and (y) *** of the Animation Pipeline Estimate in the Initial Animation Pipeline Schedule. On the later of the Restatement Effective Date and February 28, 2004, provided DW is not then in default under its bank agreements, no Payment Default exists, and DW has provided an Animation Pipeline Schedule for the fiscal quarter ended December 31, 2003, Universal shall advance to DW by wire transfer in immediately available funds an amount in cash which, together with the First Animation Advance, equals the lesser of (x) *** and (y) *** of the Animation Pipeline Estimate for the fiscal quarter ended December 31, 2003 (such amount, together with the First Animation Advance, the “Initial Animation Advance”). Not later than 45 days following the end of each of the first three fiscal quarters of DW (commencing with the fiscal quarter ending December 31, 2003 or, if later, the first fiscal quarter ended after the Restatement Effective Date) and 90 days following the end of each fiscal year-end of DW (commencing with the fiscal year ending December 31, 2003 unless the Restatement Effective Date is after December 31, 2003 in which case commencing with the fiscal year ending December 31, 2004) (each, an “Animation Estimate Date”), DW shall deliver to Universal a schedule containing DW’s good faith estimate of the Animation Pipeline Estimate as of such Estimate Date (the “Periodic Animation Pipeline Schedule” and, collectively with the Initial Animation Pipeline

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Schedule, the “Animation Pipeline Schedules”), including reasonably detailed supporting documentation for such computation. Within 5 business days following each Animation Estimate Date:

(i) if the Animation Pipeline Estimate in respect of such Animation Estimate Date is less than *** and less than the Animation Pipeline Estimate in respect of the most recent preceding Animation Estimate Date (or the Initial Animation Estimate Date, in the case of the first Animation Estimate Date), DW shall pay Universal in cash by wire transfer in immediately available funds an amount (a “DW Animation Adjustment”) equal to *** of the difference between (x) the lesser of (A) *** and (B) the Animation Pipeline Estimate in respect of the most recent preceding Animation Estimate Date, and (y) the Animation Pipeline Estimate on such Animation Estimate Date; or

(ii) if the Animation Pipeline Estimate in respect of such Animation Estimate Date is greater than the Animation Pipeline Estimate in respect of the most recent preceding Animation Estimate Date (or the Initial Animation Estimate Date, in the case of the first Animation Estimate Date) and the Animation Pipeline Estimate in respect of such preceding Animation Estimate Date was less than *** Universal shall pay DW (a “Universal Animation Adjustment”) in cash by wire transfer in immediately available funds an amount equal to *** of the difference between (x) the lesser of (A) *** and (B) the Animation Pipeline Estimate in respect of such Animation Estimate Date and (y) the Animation Pipeline Estimate on the most recent preceding Animation Estimate Date provided in no instance under this Agreement shall Universal be required to have outstanding as an Animation Advance to DW more than *** (prior to the later of the Restatement Effective Date and February 28, 2004) or *** (on and after the later of the Restatement Effective Date and February 28, 2004) or to make any payment in respect of a Universal Animation Adjustment if DW is then in default under its bank agreements or there is a Payment Default.

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6. Dispute Resolutions.

a. If Universal delivers written notice to DW setting forth a description of Universal’s objections to any Pipeline Estimate or Animation Pipeline Estimate, and the amount of the adjustment that Universal believes should be made to each item in respect of such objection (an “Objection Notice”) no later than ten days following receipt of such Pipeline Estimate or Animation Pipeline Estimate (and associated supporting documentation), the Parties hereto shall follow the resolution procedure described below.

b. No later than ten days following receipt of an Objection Notice, the Designated Officer of each of DW and Universal shall meet and negotiate in good faith to resolve any items set forth in the Objection Notice. “Designated Officer” shall mean its chief financial officer, in the case of DW and its Chief Financial Officer, in the case of Universal, or such other senior executive of such Party as shall be reasonably acceptable to the other Party.

c. If the Designated Officers are unable to resolve all the objections set forth in any Objection Notice within ten days, they shall jointly appoint Houlihan Lokey Howard & Zukin (the “Neutral Expert”) within three business days after the end of such ten-day period. The Neutral Expert, acting as experts and not as arbitrators, shall review the objections set forth in the Objection Notice which were not resolved pursuant to the procedure in clause (b) above. The Neutral Expert shall determine, based on the requirements set forth in this Agreement and only with respect to objections submitted to the Neutral Expert, whether and to what extent the applicable Pipeline Estimate or Animation Pipeline Estimate requires adjustment. Universal and DW shall each pay 50% of the fees and disbursements of the Neutral Expert in respect of such engagement. Universal and DW shall, and shall cause their representatives to, provide to the Neutral Expert full cooperation. The Neutral Expert’s resolution shall be conclusive and binding upon the Parties.

d. The Pipeline Estimate or Animation Pipeline Estimate, as applicable, for any quarter shall be deemed to reflect any objections thereto resolved pursuant to the foregoing procedure and any necessary adjustment to the amount of the Advance or Animation Advance, as applicable, resulting from such resolution shall be made within 5 days in accordance with the procedures of Paragraphs VIII.4 and VIII.5 above.

e. Notwithstanding the foregoing, Universal shall not be entitled to deliver an Objection Notice and trigger the procedures described

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above if any Pipeline Estimate or Animation Pipeline Estimate provided by DW reflects (solely for Pipeline Released Pictures or Animation Pipeline Released Pictures, as applicable) (i) as to the Pipeline Estimate, a Pipeline Estimate greater than or equal to *** prior to the NBC Closing and after the NBC Closing, a Pipeline Estimate greater than or equal to ***, or (ii) as to the Animation Pipeline Estimate, greater than or equal to ***.

f. In the event that the NBC Closing does not occur on or before October 8, 2004, DW and Universal acknowledge and agree that they will come to a mutually satisfactory alternative arrangement as to the advance adjustment described in Paragraph VIII.3 above (and corollary changes, e.g., to definitions and other provisions of this Agreement).

7. Additional Payment Obligation.

a. On the last day of each fiscal quarter and on the first Termination Date, through and including the last day of the fiscal quarter in which the Advance and Animation Advance are both repaid in full (each such date, a “Payment Date”), DW shall pay to Universal by wire transfer in immediately available funds an amount in cash equal to (i) the Additional Amount (as defined below) for each date from and including the preceding Payment Date until but excluding such Payment Date, and (ii) the Animation Additional Amount (as defined below) for each date from and including the preceding Payment Date (or if none the Initial Animation Advance Payment Date) until but excluding such Payment Date. In addition, all accrued and unpaid Additional Amounts or Animation Additional Amounts shall accrue (y) until the NBC Closing at a rate of *** per year and (z) on and after such NBC Closing shall accrue at a rate of *** per year. For purposes hereof, (I) the “Additional Amount” means an amount equal to an annualized rate on the Advance Amounts outstanding from time to time of *** per year until the NBC Closing, and on and after the date of such NBC Closing means an amount equal to an annualized rate on the Advance Amounts outstanding of *** per year, and (II) the “Animation Additional Amount” means an amount equal to an annualized rate on the Animation Advance Amount outstanding from time to time of *** until the NBC Closing, and on and after the date of such NBC Closing means an amount equal to an

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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annualized rate on the Animation Advance Amount of *** per year. Without limitation of its other rights and remedies hereunder, Universal shall be entitled to set off and apply an amount equal to any DW Adjustment if not paid when due and/or any accrued but unpaid Additional Amounts or Animation Additional Amounts not paid when due against, and recoup such DW Adjustment amount, Additional Amounts or Animation Additional Amounts from, any amounts owed to DW in accordance with the Agreement; provided, however, that any DW Adjustment or Additional Amounts may be recouped only against Aggregate Receipts for Pictures other than Animated Pictures, and that any DW Animation Adjustment or Animation Additional Amounts may be recouped only against Aggregate Receipts for Animated Pictures.

b. Not later than sixty (60) days after (i) December 31 of each calendar year which ends on or after December 31, 2006 and during the Term of Exhibit A or Exhibit B, and (ii) the end of the Term of Exhibit A or Exhibit B (if such Term ends after December 31, 2006 other than on the last day of a year), the cumulative Aggregate Fees paid to Universal since January 1, 2006 through the end of such calendar year or end of the Term of Exhibit A or Exhibit B, as applicable, shall be calculated. Each such calculation shall be an “Interest Credit Calculation” and the period covered by such Interest Credit Calculation is the “Interest Credit Calculation Period.”

(i) If at the time of any Interest Credit Calculation, the cumulative Aggregate Fees for the relevant Interest Credit Calculation Period are in excess of the product of *** times the number of calendar years in such Interest Credit Calculation Period (including any partial year in the case of a termination other than at the end of a calendar year) (such amount for the relevant Interest Credit Calculation Period, the “Interest Threshold Amount”), the amount in excess of the Interest Threshold Amount (less any amount of such excess previously credited pursuant to this Paragraph VIII.7.b. and not previously repaid) shall be credited on a dollar for dollar basis against Additional Amounts and Animation Additional Amounts (collectively, “AAA Amounts”) paid or payable during the applicable Interest Credit Calculation Period (the amount of any such credit

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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determined as a result of the foregoing is the “Interest Credit”). Notwithstanding the foregoing, the maximum aggregate amount of all Interest Credits which can be earned under this Paragraph VIII.7.b. shall not exceed the Interest Credit Cap. The “Interest Credit Cap” is a dollar amount equal to *** per annum of the Advances outstanding from time to time during the relevant Interest Credit Calculation Period.

(ii) If at the time of any Interest Credit Calculation any Interest Credits are outstanding (i.e., have previously been made and not reversed), and the cumulative Interest Credit determined for such Interest Credit Calculation Period is less than the cumulative Interest Credit determined for the immediately preceding Interest Credit Calculation Period (or, no Interest Credit is available under the most recent Interest Credit Calculation), DW shall be entitled to retain only that amount of outstanding Interest Credits, if any, also available under the most recent Interest Credit Calculation and shall repay to Universal (in addition to any other AAA Amounts due and payable at such time) an amount equal to the difference between the Interest Credit (if any) calculated for the most recent Interest Credit Calculation Period and the Interest Credit previously credited for the immediately preceding Interest Credit Calculation Period.

By way of illustration of this Paragraph VIII.7.b.:

• If as shown in Interest Credit Calculation for the Interest Credit Calculation Period ended December 31, 2006, Universal has received *** in Aggregate Fees for such Interest Credit Calculation Period, DW would be entitled to a *** Interest Credit against the 2006 AAA Amount. This would either be credited against any 2006 AAA Amount payable to Universal or if all such AAA Amounts have already been paid, Universal would repay *** to DW. (Since the *** Interest Credit would not exceed the Interest Credit Cap, the entire *** is available.)

• If as shown in the Interest Credit Calculation for the Interest Credit Calculation Period ended December 31, 2007, Universal has

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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received the *** in cumulative Aggregate Fees for such Interest Credit Calculation Period, the *** Interest Credit previously received for the Interest Credit Calculation Period ended December 31, 2006 would be reversed and DW would pay Universal *** corresponding to such reversal, in addition to all AAA Amounts due in 2007.

• If as shown in the Interest Credit Calculation for the Interest Credit Calculation Period ended December 31, 2008, Universal has received *** in cumulative Aggregate Fees for such Interest Credit Calculation Period, DW would be entitled to a *** Interest Credit against AAA Amounts paid or payable by DW for 2008 and against previous years’ AAA Amounts to the extent necessary, but subject in all cases to the Interest Credit Cap.

8. Repayment of Advance Amount, Animation Advance Amount, Additional Amounts, Animation Additional Amounts. The Advance Amount, the Animation Advance Amount, plus all accrued and unpaid AAA Amounts shall become immediately due and payable upon the date (the “Due Date”) which is the earliest to occur of (x) the first Termination Date, (y) December 31, 2010 and (z) the 90th day after a Payment Default (if such Payment Default has not been cured by such date). Following the Due Date, Universal shall have no further obligations to DW in respect of this Paragraph VIII. provided if the Due Date arises as a result of the preceding clause (z) and the Payment Default is subsequently cured in full, Universal’s obligations to make Advances to DW under this Paragraph VIII. shall be reinstated. Upon (a) notification by either DW or Universal to the other Party of such Party’s intention to terminate either Exhibit A or Exhibit B in accordance with its respective terms, (b) the expiration or termination of any Agreement Module in accordance with its terms prior to the stated expiration date of December 31, 2010, or (c) the Due Date, then Universal shall be entitled to set off and apply the Advance Amount, Animation Advance Amount, plus any accrued but unpaid Additional Amounts or Animation Additional Amounts against, and recoup the Advance Amount, Animation Advance Amount, Additional Amounts and Animation Additional Amounts from, any amounts owed to DW in accordance with the Agreement, provided that in no instance shall Universal be entitled (i) to recoup Advance Amounts or Additional Amounts from Aggregate Receipts for Animated Pictures included in the Animated Pipeline Estimate, or (ii) to recoup Animated Advance Amounts or Animation Additional Amounts from Aggregate Receipts for Pictures included in the Pipeline Estimate. Any remaining Advance Amount, Animation Advance Amount, Additional Amounts, and Animation Additional Amounts after giving effect to such application shall, upon Universal’s election (in its sole discretion), convert into

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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shares representing Preferred at a price of *** per share. Any such amounts that Universal does not elect to convert to equity pursuant to the foregoing sentence shall continue to be due and payable and shall continue to accrue Additional Amounts or Animation Additional Amounts, as applicable.

Notwithstanding the foregoing, if both Exhibit A and Exhibit B expire at their stated expiration date of December 31, 2010 (and only in such case)(the “Special Repayment Case”), *** of the Advance outstanding on such date and *** of the Animation Advance outstanding on such date shall be due and payable June 30, 2011 together with all Additional Amounts and Animation Additional Amounts accrued with respect thereto, and the remaining Advance and the remaining Animation Advance shall be payable December 31, 2011, together with all Additional Amounts and Animation Additional Amounts accrued with respect thereto. In the Special Repayment Case, Universal shall be entitled to set off the Advance, Animation Advance, Additional Amount and Animation Additional Amounts against, or recoup such amounts from the amounts owed to DW under this Agreement only against amounts received by Universal after December 31, 2010 and to the extent such amounts are recouped through the set off, shall reduce DW’s payment obligations under the preceding sentence. (Notwithstanding the foregoing, in no instance shall Universal be entitled (i) to recoup Advance Amounts or Additional Amounts from Aggregate Receipts for Animated Pictures included in the Animated Pipeline Estimate, or (ii) to recoup Animated Advance Amounts or Animation Additional Amounts from Aggregate Receipts for Pictures included in the Pipeline Estimate.) Unless and until the Advance, Animation Advance, Additional Amounts and Animation Additional Amounts are recouped or repaid in full, Universal shall retain all distribution and fulfillment rights it holds as of December 31, 2010 to Pictures then in release (theatrically or as Videograms) or revenues for which have been in either the Pipeline Estimate or the Animation Pipeline Estimate prior to December 31, 2010. In the Special Repayment Case, DW shall have the right but not the requirement after December 31, 2010, to prepay all or any portion of the Advance Amount, Animation Advance Amount, Additional Amounts and Animation Additional Amounts and on the payment in full of all such amounts (whether by prepayment, set off, or payment) all of Universal’s distribution and fulfillment rights under Exhibit A and Exhibit B shall terminate.

IX. Media Buys

Until the later of (x) completion of all distribution by Distributor pursuant to Exhibit A and (y) completion of all Fulfillment Services by FSP pursuant to Exhibit B (the “Post-Term Period”), Universal shall cooperate with, and consult with DW on such Media purchases as DW may require from time-to-time, with the intent that to the extent not inconsistent with Universal’s agreements (and without detriment to Universal (e.g., Universal is not required to make limited Media space available to DW which Universal

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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intends to utilize for its own purposes)), Universal will attempt to permit DW to utilize Universal’s Media rates (net of all discounts, rebates and adjustments) for such Media to the extent such rates are better than DW’s rates. Universal shall have no obligation under this Paragraph IX. to provide services to DW, including in connection with identifying such potential opportunities or making any Media buys, or to bear any costs in connection therewith. If DW has the opportunity to utilize Universal’s Media rates, DW shall bear all costs in connection therewith. Media includes: all television (e.g. network, cable, syndication and spot); radio (e.g., network and spot); print such as newspaper advertisements, cable guides, magazines, periodicals, circulars, college print, military print; outdoor such as billboards, bus shelters, bus sides, phone kiosks, premiere squares; trade publications; internet and new media as they evolve.

X. Film Library; Transfer of Pictures, DW Reorganization

a. Film Library Assets. It is the general understanding of the Parties that until all of the Agreement Modules have been terminated in accordance with their respective terms, DW will notify Universal in advance of entering into substantive negotiations concerning a transaction in which a third party would acquire all or a substantial portion of DW’s film library (or a controlling equity interest therein); provided, however, that the foregoing shall not apply to any proposed transaction involving the acquisition of *** or more of the equity interests in DW or significant assets of DW in addition to its film library assets.

b. Transfer of Pictures; DW Reorganization. Notwithstanding anything to the contrary in this Agreement, but subject to the last sentence of this subsection X.b., if revenues from theatrical distribution of, or from Videogram distribution of, a Picture have been included in either the Pipeline Advance or the Animation Pipeline Advance, Universal’s rights under Exhibit A and Exhibit B to distribute such Pictures and to provide fulfillment services for any Videograms for such Pictures shall survive any transfer of any rights in such Picture to any Person (including any Affiliate). For purposes of clarity, DW may transfer a Picture, or any rights therein, provided any such transfer shall not abrogate, impair or adversely affect, the rights to distribute or provide fulfillment services which Universal holds under this Agreement. If a Picture or any rights to receive revenues from a Picture under this Agreement are transferred, the transferee shall expressly acknowledge in writing Universal’s rights to distribute and provide

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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fulfillment services in accordance with this Agreement (a “Subject Picture Transfer”). DW shall notify Universal of each Subject Picture Transfer not later than 30 days after consummation of such Subject Picture Transfer, and deliver therewith the transferee’s written acknowledgement referenced in the prior sentence. Universal shall continue to be entitled to deal solely with, and rely on DW’s instructions and directions in respect of any Pictures or Videograms covered by a Subject Picture Transfer. In the event that DW reorganizes or restructures in a way which includes the transfer of portions of its film business to another entity which is an Affiliate of DW, such entity (and its pictures and videograms) shall be subject to Exhibit A and Exhibit B, respectively, to the same extent as such pictures and videograms would have been had DW had rights to such pictures and videograms and the transferee acknowledges in writing Universal’s rights to distribute in accordance with this Agreement (an “Affiliate Picture Transfer”). DW shall notify Universal of each Affiliate Picture Transfer not later than 30 days after consummation of such Affiliate Picture Transfer, and deliver therewith the transferee’s written acknowledgement referenced in the prior sentence. Universal acknowledges that the provisions of this subsection X.b. do not restrict DW’s rights to exclude either the Japan or the “German Territory” in accordance with this Agreement, or DW’s right to self-distribute or to otherwise transfer, assign or license rights in and to any Picture where and to the extent UIP declines to distribute such Picture, or to exercise other express rights set forth in this Agreement pursuant to which DW may distribute Pictures or provide fulfillment services itself.

XI. Additional Services

During the Term and the Post-Term Period, DW and Universal will work together to reduce overhead of both companies through the provision of common services as may be mutually agreed from time to time, provided that neither party shall be under any obligation to agree to any agreement related to or designed to reduce overhead, and the terms of any agreement which the parties do enter into related to the reduction of overhead shall be within each party’s sole discretion and control.

XII. Miscellaneous Provisions

1. Conflicting Provisions: In the event of a conflict between anything contained in this Master Agreement and any provisions contained elsewhere in the Agreement, this Master Agreement shall control.

2. Further Acts and Documents: The Parties each will perform such other and further acts and execute, acknowledge and deliver such other and further documents to evidence their respective rights and obligations under the Agreement as

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may reasonably be necessary or appropriate to carry out the intent hereof. Such documents shall be provided, or such acts taken, promptly upon the receipt of written notice thereof given in accordance with the provisions of Paragraph XII.20 below, unless the Party of whom such request is made submits, within ten (10) business days (or, if specified in such written notice, such shorter period as exigencies require) following receipt of such notice, a written statement of its reason(s) for failing to comply therewith. In that event, the Parties shall resolve such dispute in the same manner as any other dispute which may arise under the Agreement. In the event no timely objection is made or such objection is resolved, and the required Party fails to promptly provide such documents or perform such acts, the requesting Party irrevocably shall be appointed as the required Party’s attorney-in-fact for such purpose. It is acknowledged said appointment power is coupled with an interest.

3. Termination.

a. Exhibits C and/or D, as applicable, may be terminated by the Terminating Party without prejudice to any other rights or remedies available to it, under any of the following circumstances:

(i) Upon the occurrence of a material breach by the other Party (“Breaching Party”) of any portion of Exhibit C and/or D, as applicable (i.e., a breach of Exhibit C only shall not itself entitle the Terminating Party to terminate Exhibit D, and vice versa), provided that, as to a non-recurring breach which is capable of being cured, the Terminating Party shall have first given written notice within a reasonably prompt period after discovery of the alleged breach specifying in reasonable detail the alleged breach and the action(s) necessary to cure and the Breaching Party shall have failed to so cure the alleged material breach within 30 days (or such shorter period as may be reasonably required) of receipt of said notice; or

(ii) If the other Party makes an assignment for the benefit of creditors, files or has filed against it a petition for bankruptcy (which proceeding is not dismissed, bonded or discharged within 60 days of filing), becomes insolvent or is adjudged bankrupt; or

(iii) If the other Party restructures (other than an internal corporate reorganization, merger or consolidation, or with the prior written consent of the non-restructuring Party in its absolute sole discretion) in a manner that has or may have a significant impact on either Party’s performance under the Agreement or dissolves. Any dispute as to whether a restructuring has or may have a significant impact on either Party’s performance under the Agreement

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shall be subject to dispute resolution under Paragraph XII.13 below.

b. [Purposely left blank]

c. Any claimed right of termination of Exhibit(s) A, B, C and/or D shall be subject to dispute resolution under Paragraph XII.13 below. In the event of a termination of the Agreement, or any Agreement Module(s) or portion thereof, DW shall retain ownership of and all rights of every nature in and to its “Pictures” and “Videograms” (as those capitalized terms are defined and set forth in Exhibits A and B), provided that the rights of the Parties with respect to any motion pictures or television project subject to Exhibit C (whether in development, production, distribution or otherwise) shall continue and remain unchanged except to the extent otherwise specifically provided therein. The following rights and obligations shall survive termination of the Agreement, in addition to any rights or obligations which any Agreement Module provides will survive termination of the Agreement or of such Agreement Module: (i) all representations, warranties and indemnities; (ii) all reporting and record keeping obligations; (iii) all of Universal’s rights to receive accountings and payments; (iv) all of Universal’s rights under Paragraphs VIII. and X. hereof; and (v) any provision respecting the confidentiality of information.

d. Upon the occurrence of a Limitation Event (as defined in the LLC Agreement), DW shall provide prompt written notice of such Limitation Event to Universal. Universal shall have the option, exercisable by written notice to DW within ninety (90) calendar days following receipt of such notice of Limitation Event from DW, to terminate the Master Agreement and/or Exhibit A and/or Exhibit B and/or Exhibit D, and, if such notice is provided, the Company shall redeem the Preferred in full, in cash, together with all accrued and unpaid cash and non-cash distributions thereon, in accordance with and on the date required under Section 8.01(a) of the LLC Agreement. Notwithstanding any provision of the Agreement to the contrary, neither Exhibit A nor Exhibit B shall terminate on a Limitation Event, whether after Universal’s option is exercised or otherwise, unless and until the Advance, Animation Advance, AAA Amounts have been repaid and the Preferred shall have been redeemed in full, in cash, in accordance with Section 8.01(a)(iv) of the LLC Agreement and all accrued and unpaid cash and non-cash distributions thereon have been paid.

e. DW shall have the right to terminate Exhibit A and Exhibit B by providing written notice (a “Termination Notice”) to Universal no later than thirty (30) calendar days following a Company Change

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of Control (as defined below), and Exhibits A and B shall thereupon terminate on the date upon which the Advance, Animation Advance, and AAA Amounts have been paid and the Preferred shall have been redeemed in accordance with Section 8.01(a)(iv) of the LLC Agreement and all accrued and unpaid cash and non-cash distributions paid in full. If DW has not provided a Termination Notice to Universal within thirty (30) calendar days of a Company Change of Control, Universal shall have the right to terminate the Agreement by providing a Termination Notice to DW within fifteen (15) calendar days of the later of (i) the expiration of such thirty (30) day period, and (ii) the date on which the General Counsel of Universal shall have actual knowledge of such Company Change of Control, and this Agreement shall thereupon terminate on the later of (x) 180 calendar days following the date of the receipt of the Termination Notice by DW and (y) the date upon which the Preferred shall have been redeemed in accordance with Section 8.01(a)(iv) of the LLC Agreement and all accrued and unpaid cash and non-cash distributions paid in full. In the event either Party provides a Termination Notice hereunder, the Company shall (i) repay the Advances, the Additional Amounts, and the Animation Additional Amounts on or before the termination of Exhibits A and B, (ii) pay the Special Termination Fee, if applicable, and (iii) redeem the Preferred in full, in cash, together with all accrued and unpaid cash and non-cash distributions thereon, on the date required under Section 8.01(a) of the LLC Agreement. DW shall provide written notice to Universal of the termination date of the Agreement pursuant to the preceding sentence no later than twenty (20) calendar days following the receipt of the Termination Notice.

A “Company Change of Control” for purposes of this Agreement means (i) the acquisition of ownership, directly or indirectly, beneficially or of record, of equity interests in DW representing more than 50% of either the aggregate ordinary voting power or of the aggregate equity value represented by the issued and outstanding equity interests in DW, whether pursuant to merger, consolidation, issuances by DW of equity securities or otherwise by any Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) other than any of the Principals (as defined in the LLC Agreement) or their Affiliates, if (in each case described in this clause (i)) as a result of such acquisition or after such acquisition the Principals no longer exercise actual control over the management of DW, or (ii) the sale of all or substantially all of the property, business or assets of DW or of its motion picture studio division to any Person (excluding internal reorganizations and transactions effected to reconstitute DW as a corporation), so long as any such successor

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assumes the obligations of DW under the LLC Agreement in respect of the Preferred.

f. DW shall not have the right to terminate either Exhibit A or Exhibit B as the result of any offering of securities by DW or by any subsidiary of DW, or on any restructuring of DW or of any subsidiary of DW. Notwithstanding the foregoing, if DW or a subsidiary of DW consummates a registered public offering of securities and thereafter the entity (DW or such subsidiary) holding all or substantially all of the DW assets related to the “live action” motion picture business sells such assets, DW may elect, on not less than 180 days’ notice, to have Exhibit A and Exhibit B be inapplicable to such “live action” Pictures included in such sale (but not any Animated Pictures) effective on the date of consummation of the sale provided that not later than such sale consummation date DW repays the Advance, all Additional Amounts and the Preferred in full, in cash, together with all accrued and unpaid cash and non-cash distributions thereon (and, in the case of the Preferred, in accordance with Section 8.01(a)(iv) of the LLC Agreement).

4. Warranties and Representations: Each Party warrants and represents that:

a. It is an entity duly authorized to do business, and in good standing, in the state of California and in the state in which it is organized.

b. It has the power and authority to enter into the Agreement and to perform in accordance with the terms thereof.

c. The Agreement and the execution thereof have been duly authorized, and when executed and delivered the Agreement will be a legally valid and binding obligation of each Party, enforceable against each Party in accordance with its terms.

d. The execution, delivery and performance of the Agreement will not violate any agreement, instrument or undertaking to which such Party is a party or by which such Party or any of its property is bound, except to the extent such violation could not reasonably be expected to have a material adverse effect on such Party.

5. Indemnity. In addition to, and without limiting, each Party’s indemnities under the Agreement Modules: (a) each Party (“Indemnitor”) shall, at its own cost and expense, indemnify, defend and hold harmless the other Party, its Affiliates, employees, agents, managers, directors and shareholders (collectively, “Indemnitee”), from and against all cost, loss (exclusive of profits), liability, or expense (including reasonable outside attorneys’ fees) arising in connection with Indemnitor’s breach of any

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of the representations, warranties and agreements contained in the Agreement, or Indemnitor’s violation or alleged violation of any third party’s rights and/or Indemnitor’s violation or alleged violation of law; (b) each Indemnitor shall, at its own cost and expense, indemnify, defend and hold harmless each Indemnitee from and against all cost, loss (exclusive of profits), liability, or expense (including reasonable outside attorneys’ fees) arising out of or in connection with any claim by any third party that is in contractual privity with Indemnitor or with a party engaged by Indemnitor, including co-ventures and Subdistributors as defined in the Agreement Modules (collectively, a “Third Party”), if such claim arises out of or in connection with the Agreement (provided that the indemnity in this Paragraph XII.5 shall not apply to the extent that: (i) such claim is the result of Indemnitee’s breach or alleged breach of its contractual obligations, if any, to such Third Party which is not caused by any breach or wrongful act by Indemnitor; and/or (ii) the Indemnitee under this clause (b) is an Indemnitor under clause (a) with respect to the same claim); and (c) Universal shall, at its own cost and expense, indemnify, defend and hold harmless DW, its Affiliates, employees, agents, managers, directors and shareholders from and against all cost, loss, liability, or expense (including reasonable outside attorneys’ fees) resulting from any injury or loss suffered by any third party on or in any facility owned by Universal, excluding the “Premises” (as defined in Exhibit C) but including any “Theme Park” (as defined in Exhibit D) or arising directly or indirectly out of any the development, construction or use of any Permanent Attraction, Live Event, Restaurant, Walk Around, Themed Area, or other use of any DW Element (as those terms are defined in Exhibit D) in or in connection with any Theme Park. (Nothing in the immediately preceding sentence shall be deemed to amend or affect the parties’ respective obligations under Paragraphs 8.h. and 8.i. of Exhibit C.) Indemnitee will give Indemnitor prompt written notice of any such claim or proceeding by a third party. If Indemnitor does not notify Indemnitee within a reasonable period after Indemnitor’s receipt of notice of such claim or proceeding that Indemnitor is assuming the defense of Indemnitee, then until such defense is assumed by Indemnitor and except as set forth below, Indemnitee shall have the right to defend, contest, settle or compromise such claim by a third party in the exercise of its reasonable judgment and all costs and expenses of such defense, contest, settlement or compromise (including reasonable outside attorneys’ fees and expenses) shall be reimbursed to Indemnitee by Indemnitor. Upon assumption of the defense of any such claim or proceeding, Indemnitor shall, at its own cost and expense, select legal counsel, conduct and control the defense and/or settlement of any suit or action which is covered by Indemnitor’s indemnity. Indemnitee shall render all cooperation and assistance reasonably requested by the Indemnitor, and Indemnitor shall keep Indemnitee fully apprised of the status of any claim or proceeding. Notwithstanding the foregoing, Indemnitee may, at its election and sole expense, be represented in such action by separate counsel, and, if Indemnitee thereby waives Indemnitor’s indemnity hereunder, Indemnitee may, at its election and sole expense, assume the defense of any such action. Unless Indemnitee waives the indemnity hereunder, in no event shall Indemnitee settle any claim or proceeding covered by this indemnity or stipulate to, admit or acknowledge any liability or wrongdoing (whether in contract, tort or otherwise) of any issue which may be covered by this indemnity, in each case without the consent of the Indemnitor.

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6. Publicity. Except as may be required by law or NASD or stock exchange rules, no press release concerning the Agreement (including its creation or termination) or any of its terms or conditions, or containing any other trade secret or confidential information of the other Party, or concerning any dispute or claim arising under the Agreement, shall be issued by either Party without the express written consent of the other Party obtained in advance and in each instance.

7. Assignment. Subject to any further provisions permitting or restricting assignment of all or any portion of an Agreement Module that are expressly set forth in the pertinent Agreement Module:

a. Universal (and/or its Affiliates which are a party to, or are obligated to perform under, any Agreement Module) shall not assign the Agreement, or any of its rights or interests thereunder, except: (a) to an Affiliate of Universal, including in connection with an internal corporate reorganization, a merger or consolidation, in each case so long as such assignment does not relieve the assigning party of its obligations under this Agreement; or (b) upon the prior written consent of DW in its absolute sole discretion.

b. DW shall not assign the Agreement, or any of its rights or interests thereunder, except: (a) to an Affiliate of DW, including in connection with an internal corporate reorganization, a merger or consolidation, in each case so long as such assignment does not relieve the assigning party of its obligations under this Agreement; or (b) upon the prior written consent of Universal in its absolute sole discretion. Notwithstanding the foregoing, DW may not assign to any Person its right to receive the Advance, the Animation Advance or any Universal Adjustment or Universal Animation Adjustment amounts.

c. Any attempted assignment in contravention of the foregoing shall be deemed a material breach of the Agreement. In the event of a permitted assignment by either Party, the assigning Party shall nonetheless remain primarily liable hereunder.

d. Notwithstanding the foregoing, either Party may have any Affiliate perform its obligations under the Agreement, subject to the terms and conditions of the Agreement; provided that each Party shall remain responsible for the performance of its obligations under the Agreement and its Affiliates’ performance.

8. IPO Related Capital Structure Changes. If DW or a subsidiary of DW which is more than 50% owned by, and is controlled by DW (a “DW Subsidiary”) gives notice to Universal that it intends to file a registration statement under the Securities Act of 1933, as amended, for the purpose of registering shares of stock of DW

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or of such DW Subsidiary, as applicable, for the first time for sale to the public (an “IPO”), Universal agrees that it will in good faith discuss changes to the structure of the Preferred and to the Advance and/or Animation Advance to consummate such IPO provided in no event shall Universal (i) be required to agree to any changes other than those changes which are reasonably necessary for consummation of such IPO, or (ii) be required to compromise its rights or obligations under this Agreement, the LLC Agreement or with respect to the Preferred in connection with such IPO. Whatever agreement the parties reach as to changes, if any, shall be effective only upon consummation of the IPO of DW or such DW Subsidiary.

9. Financial Information. DW shall provide to the outside auditors of Universal all the information required to be provided to the holder of the Preferred under Article 3 of the LLC Agreement (subject to such auditors entering into appropriate confidentiality agreements) until both Exhibits A and B have terminated, regardless of whether the Preferred is outstanding. All information provided by DW under this Paragraph XII.9 shall be subject to Paragraph XII.17 hereof so long as it is Confidential Information as defined therein, and may not be disclosed by such outside auditors except to persons entitled to receive such information under Section 3.07 of the LLC Agreement.

10. Active Involvement. DW covenants and agrees that for so long as any portion of the Animation Advance is outstanding, Jeffrey Katzenberg will be actively involved in the management of DW’s animated motion picture business. For purposes of clarity, Mr. Katzenberg is not required to be actively involved if he is incapacitated, and this Paragraph XII.10 shall be of no further force or effect on Mr. Katzenberg’s death.

11. No Partnership or Third Party Benefit. The Agreement does not constitute the Parties as partners, joint venturers, or as each other’s agents or representatives (except as may be therein otherwise expressly provided). The Agreement is not for the benefit of any third party and shall not give any right or remedy to any such third party whether or not referred to therein.

12. Integration/Formalities. This Agreement, Amendment No. 2, the LLC Agreement and the Subscription Agreement contain the entire agreement and understanding between the Parties relating to the subject matter hereof and supersedes, cancels and replaces any prior understanding, writing or agreement between the Parties relating to such subject matter (including, without limitation, the Film Term Sheet dated as of October 31, 2003). The Agreement may not be amended, modified or altered except by an instrument in writing duly executed by both Parties. The Parties acknowledge that each was represented by counsel in the negotiation and execution of the Agreement. No provision therein shall be construed against either Party by virtue of the activity of that Party, through its counsel or otherwise, in negotiating and drafting the Agreement.

13. Dispute Resolution. Any controversy or dispute between the Parties arising out of the Agreement or the LLC Agreement or relating in any way to the rights and obligations of the Parties thereunder, including any controversy or dispute between the Parties concerning the distribution and other exploitation of DW’s motion pictures, videograms, recordings, or other intellectual property thereunder, any matter

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requiring mutual agreement between the Parties, and accounting and payment obligations shall be resolved by submitting such controversy or dispute to a “Judge” (as defined below), whose decision shall be final and binding and enforceable in a court of competent jurisdiction. The Parties will abide by the following procedures:

a. Before proceedings are initiated hereunder, the CEO or COO or any of the Presidents of DW (as designated by DW) and the CEO or COO of Universal shall meet in good faith to attempt to resolve the dispute.

b. If the dispute is not so resolved, the Parties shall meet within three (3) business days and shall agree upon a Judge to whom the dispute will be submitted. “Judge” shall mean a retired federal court justice or judge, or a retired justice or judge of the California Supreme Court, Court of Appeals or Superior Court, who is available to render dispute resolution services in the County of Los Angeles. In the event that the Parties cannot, within such three (3) business day period, agree upon a Judge, either Party may apply to the Superior Court for the State of California, County of Los Angeles, for the appointment of a Judge, and upon such appointment, such Party shall also be awarded its costs and attorneys’ fees in connection with the application; in the event both Parties jointly or separately apply, no costs and fees will be awarded.

c. Within fourteen (14) business days of the selection/appointment of a Judge, the Parties shall submit a Joint Statement setting forth: (i) a Joint Statement of Facts; (ii) a summary of each Party’s claim or defense, including factual and legal contentions; and (iii) a joint discovery plan. Within ten (10) business days of service of the Joint Statement, the Parties (through their counsel) and the Judge shall convene in person or by telephone, and at such meeting the Judge shall order a discovery schedule and set a hearing date. It is the intent of the Parties hereunder to resolve disputes as expeditiously as possible, and it is the Parties’ goal that a hearing be held and a decision be rendered within three (3) months, except in complex cases, in which event a hearing shall be held and a decision rendered within six (6) months. In the event a Party seeks preliminary injunctive relief, the Judge shall hold an expedited hearing on a schedule to be determined by the Judge.

d. The Parties’ rights of discovery shall be governed by the California Rules of Civil Procedure.

e. Except as specifically provided herein, the Judge shall have the same powers as those of a judge of the United States District Court for the Central District of California, and shall render a decision as

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would a judge of such Court. Without limitation, such authority includes the power: (i) to enter and serve a written award within ten (10) business days after the hearing is concluded and final briefs (if permitted) submitted, and in this regard shall have specific power to order injunctive relief (preliminary and permanent) and to award compensatory (but not punitive) damages, all enforceable by a court of competent jurisdiction; and (ii) to award costs and reasonable attorneys’ fees to the prevailing party.

f. The Parties reserve their rights to confirm, correct or vacate the award pursuant to California Code of Civil Procedure Section 1285, et seq., subject always to the limitations set forth in subparagraph e. above. If an award is so confirmed, the prevailing Party shall recover its costs and reasonable attorneys’ fees in connection with such confirmation. A party shall have the right to appeal the ruling of the Judge to a panel of three retired judges. A party shall have five business days after its receipt of the Judge’s ruling to serve notice of its exercise of this right to appeal. The parties shall use the same procedure for selection of the Judge in Paragraph XII.13.b. to select the panel of three judges for the appeal (the “Panel”). The Panel shall use the same standard of review of the Judge’s ruling as if it were a California Court of Appeal reviewing a trial judge’s ruling. The opening brief of the appealing party shall be due within 20 days of the selection of the Panel, the opposing brief within 20 days of receipt of the opening brief, and the reply brief will be due within 10 days of the appealing party’s receipt of the opposing brief. The Panel will hold oral argument within 20 days of the filing of the final brief, and issue a written opinion, stating its reasons for its decision, 20 days thereafter.

g. In the event the dispute or controversy involves the rights and obligations of one or more third parties, the Parties shall attempt in good faith to have them join in the proceeding, submit to the jurisdiction of the Judge, and agree to be bound by the Judge’s award. In the event, however, that there is no such joinder, the Judge shall have authority to resolve the dispute or controversy as between the Parties without the participation of any third party.

h. Each party shall bear half the costs of the Judge (and any staff for the proceedings (such as a court reporter), unless the Judge in his or her discretion awards some or all of such costs to the prevailing Party.

14. Severability of Provisions. If any provision in the Agreement shall be held by any court of competent jurisdiction to be illegal, void or unenforceable, such

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provision shall be of no force or effect while such infirmity shall exist, but such infirmity shall have no effect whatsoever upon the binding force or effectiveness of any of the other provisions thereof.

15. Waiver. No delay or failure to exercise any right hereunder shall constitute a waiver of such right except in those instances where the Agreement provides for specific notice and a period of time thereafter within which to exercise a right, in which case failure to exercise such right within the specified time period shall constitute a waiver thereof.

16. Governing Law. The Agreement shall be construed and enforced in accordance with the laws of the state of California, applicable to contracts entered into and to be fully performed in said state by residents thereof. For purposes of enforcing, confirming or vacating an award under Paragraph XII.13 above, or in the event the provisions of such Paragraph XII.13 shall be held invalid or unenforceable, only the California courts (state and federal) shall have jurisdiction over controversies regarding or arising under the Agreement, and if there is any matter which might be subject either to state or federal jurisdiction, the Parties agree that the matter shall be submitted to federal jurisdiction. The Parties specifically agree that the Superior Court of the State of California, County of Los Angeles and the United States District Court for the Central District of California shall have personal jurisdiction over them, and each of them, notwithstanding the fact that they may be citizens of other states or countries. In this regard the Parties agree that Los Angeles County is a convenient forum.

17. Confidentiality. Except as may be required by law or NASD or stock exchange rules, each Party shall keep confidential all terms and conditions contained herein. Universal and DW acknowledge that they will, during the Term have access to, and acquire knowledge from, materials, data and other information which is not accessible or known to the general public (“Confidential Information”). Except as required by law or NASD or stock exchange rules, or as may be required for the preparation of tax returns or other government or legally required documents, or as reasonably necessary to employees, agents, lawyers, accountants, auditors, bankers, consultants, representatives or investors of Universal or DW or their Affiliates for a bona fide business purpose (who shall be similarly bound by these confidentiality provisions), neither the Confidential Information nor any knowledge acquired by Universal or DW, as the case may be, from such Confidential Information or otherwise through its engagement hereunder shall be used, publicized or divulged by the other to any other Person without the prior written consent of the other Party obtained in advance and in each instance. Nothing herein shall prevent either Party, or any employees, agents, lawyers, accountants, auditors, bankers, consultants, representatives or investors of such Party or its Affiliates (the “Receiving Party”) from using, disclosing, or authorizing the disclosure of any information it receives in the course of performance of the Agreement which:

a. was known to the Receiving Party prior to its disclosure by the other Party;

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b. is or becomes publicly available without default hereunder by the Receiving Party;

c. is lawfully acquired by the Receiving Party from a source which is not an agent or representative of the Receiving Party and is not under any obligation to the other Party regarding disclosure of such information;

d. is independently developed by the Receiving Party without use of any of the other Party’s confidential information; or

e. is disclosed by the other Party hereto to unaffiliated third parties without confidential undertakings.

Notwithstanding anything herein to the contrary, any party to the Agreement (and any employee, representative or other agent of such party) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by the Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure, except that (i) tax treatment and tax structure shall not include the identity of any existing or future party (or any affiliate of such party) to the Agreement and (ii) this provision shall not permit disclosure to the extent that nondisclosure is reasonably necessary in order to comply with applicable securities laws.

18. Notice of Representatives. DW will give Universal reasonable notice of DW’s appropriate contact person(s). Universal will give DW reasonable notice of Universal’s appropriate contact person(s).

19. Paragraph Headings. Paragraph headings and titles are solely for convenience of reference and are not a part of the Agreement, nor are they intended to aid or govern the interpretation of the Agreement.

20. Notices. All notices hereunder shall be served by private delivery service, and shall be deemed given on the date delivered to the following addresses (or such other addresses as either Party may hereafter designate in writing):

DW:	1000 Flower Street Glendale, California 91201 Attention: General Counsel
Universal:	100 Universal City Plaza Universal City, CA 91608 Attention: Executive Vice President and General Counsel

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After the NBC Closing, with a copy to:
	NBC Universal Attn: General Counsel 30 Rockefeller Plaza New York, NY 10112 Fax: (212) 664-4733

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Counterparts. The Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument, which may be sufficiently evidenced by One counterpart.

IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first written above.

DREAMWORKS L.L.C.
By	/s/ Kristina M. Leslie
Its	Authorized Signatory
UNIVERSAL STUDIOS, INC.
By
Its	Authorized Signatory
VIVENDI UNIVERSAL ENTERTAINMENT LLP, AS ASSIGNEE
By
Its	Authorized Signatory

EX-10.12

Exhibit 10.12

EXHIBIT “A”

MEMORANDUM OF AGREEMENT

BETWEEN DREAMWORKS L.L.C. AND UNIVERSAL CITY STUDIOS, INC.

FOREIGN THEATRICAL DISTRIBUTION

TABLE OF CONTENTS

		Page
1.	Definitions	2
2.	Distribution	5
3.	Distribution Controls and Procedures	8
4.	Grant of Rights	20
5.	Collections/Remittance/Accounting	23
6.	Representations and Warranties	36
7.	Indemnity	37
8.	Copyright	38
9.	Delivery	38
10.	Termination	38
11.	Miscellaneous	44
	EXHIBIT “A-1”	47
	EXHIBIT “A-2”	48

EXHIBIT “A”

MEMORANDUM OF AGREEMENT BETWEEN DREAMWORKS L.L.C.

AND UNIVERSAL CITY STUDIOS, INC.

This agreement (“Exhibit A”) is entered into as of June , 1995 by and between DreamWorks L.L.C., a Delaware Limited Liability Company (“DW”), and Universal City Studios, Inc. (herein, “Universal”) relating to foreign theatrical motion picture distribution.

In consideration of the covenants and conditions herein contained, and for other good and valuable consideration, the parties hereto agree as follows:

1. Definitions:

a. “Pictures” (individually “Picture”) means all live-action and animated motion pictures (and combinations thereof) initially distributed by DW in commercial motion picture theaters before paying public audiences in the United States during the “Term”, as and to the extent DW has or acquires “Theatrical Distribution Rights” in the “Territory”. Universal acknowledges that third parties may distribute a Picture in such portion of the Territory (which may be the entire Territory) where and when DW does not have Theatrical Distribution Rights in such portion. The term “Picture” or “Pictures” does not include any motion picture co-financed by DW and MCA pursuant to Exhibit “C” to the Master Agreement.

b. “Term” means the period commencing on the date hereof and continuing through December 31, 2001; provided that the Term may be extended for an additional four-year period at DW’s and Universal’s mutual agreement confirmed by both parties in writing no later than 90 days prior to December 31, 2001. Notwithstanding the foregoing and subject to the terms of this Exhibit “A”, Universal shall have the exclusive Theatrical Distribution Rights for each Picture for the initial period (as DW determines in its sole discretion) of theatrical distribution of such Picture in each country of the Territory in which such distribution commences within twelve months following such Picture’s initial general U.S. theatrical release, provided that DW shall be entitled to re-release any Picture theatrically but only after the Term without utilizing Universal as the distributor. Notwithstanding the foregoing, the Term is subject to earlier termination in accordance with Paragraph 10 below.

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c. “Territory” means the entire world, excluding only:

i. the United States and Canada and their territories and possessions (including specifically, without limitation, Guam, Midway Islands, U.S. Virgin Islands, Canal Zone, Saipan, Marshall Islands and Puerto Rico), the Bahamas and Bermuda; and

ii. South Korea, North Korea and the remainder of Asia (excluding Japan), but only if and to the extent that DW assigns theatrical distribution rights in such countries to or through Lee Entertainment L.L.C. or any of its affiliated or related parties, or any of their successors or designees (collectively, the “Korean Shareholder”) pursuant to an agreement between DW and the Korean Shareholder (the “Investor Agreement”) (it being understood that the countries so excluded may increase during the Term as such Korean Shareholder distributes motion pictures theatrically in more countries in Asia other than Japan). DW will provide Universal with reasonable notice, if and to the extent that DW receives same, of such additional countries, although DW’s failure to do so shall not be deemed to be a breach of this Exhibit “A”; provided, however, if and to the extent that Universal and/or UIP has previously entered into arrangements pre-approved by DW in such additional countries, DW shall hold harmless Universal from any third party claims and actual direct out-of-pocket losses (i.e., excluding internal costs, profits and/or other consequential damages) resulting from DW’s failure to provide timely notice. In any event, any such change in countries shall be prospective only (i.e, it will only affect Pictures which have not then been distributed by UIP). Notwithstanding the foregoing, it is agreed that the Korean Shareholder may not distribute the Pictures through another U.S. “major” motion picture distributor (currently Twentieth Century Fox, Warner Bros., Sony, and Disney), although it may co-venture with such distributor(s) for distribution. Notwithstanding the foregoing, if the Korean Shareholder’s distribution rights have terminated with respect to a particular Picture(s) or in a specified country(ies), and/or if the Investor Agreement terminates, then to the extent the Korean Shareholder no longer has distribution rights, the Territory shall then include any such excluded country(ies) and/or Universal shall then have Theatrical Distribution Rights with respect to the particular Picture(s), as the case may be.

d. “Theatrical Distribution Rights” means only the exclusive limited right and obligation, subject to the terms of this Exhibit “A”, to

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distribute the Pictures for the purpose of exhibition in commercial motion picture theaters before paying public audiences. Theatrical Distribution Rights do not include, (i) any form of distribution or exploitation of the Pictures outside the Territory, (ii) distribution or exhibition of the Pictures in any other medium including, without limitation, on free and pay television, video disc, video tape, computer or other video or in-home distribution now known or hereafter devised, radio, legitimate stage, non-theatrical exhibition (including, without limitation, airlines, ships, schools, hospitals, clubs, societies, military and industrial installations, etc.) and/or (iii) any other form of distribution, exhibition or other method of exploitation of the Pictures, now known or hereafter devised.

e. “Subdistributor” means any person or entity other than “UIP” which distributes the Pictures hereunder within the Territory, and which is not owned or controlled, in whole or in part, by UIP.

f. “UIP” means United International Pictures, B.V., a company incorporated in the Netherlands, and any entity which it owns or controls in whole or in part.

g. Notwithstanding anything to the contrary in this Exhibit “A”, the parties agree that: (i) Universal shall not be required hereunder to violate any contract existing as of the date hereof or any law, provided Universal shall give DW written notice promptly following (1) DW’s submission of a proposed marketing plan(s) or other request for “Services” (as defined below), but in no event later than 30 days following such submission or request, specifying in reasonable detail any requirement hereunder which would cause Universal to violate any such existing contract (and including a copy of the relevant provision[s] of such contract) and/or any law or (2) Universal’s knowledge of any such violation or prospective violation; (ii) if Universal receives a claim (which Universal in its good faith business judgment believes poses a risk of a result materially adverse to Universal) that any Services requested by DW violate any third party rights and, as a result thereof, Universal desires to discontinue rendering such Services, Universal will be permitted to do so until such time, if ever, as such claim has been resolved in Universal’s favor or in any other manner which does not prevent Universal from rendering such Services and provided that, prior to discontinuing such Services, Universal shall give DW written notice specifying in reasonable detail the specifics of such claim (as well as a copy of any relevant pleadings, demand letters, correspondence, etc.) and shall nonetheless continue rendering such Services for a reasonable period of time so as to enable DW to arrange for a commercially acceptable alternative; (iii) Universal shall not be required to cause UIP to deliver greater services,

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information, data or reports (collectively, “Services”) than the comparable level of Services which UIP then renders to Universal or to any of the “UIP Owners” (as defined below) (provided, however, that Universal will use its best efforts to cause UIP to comply with any additional requirements or Services requested by DW, it being acknowledged that Universal cannot guarantee that UIP will agree to do so); and (iv) there will not be a material reduction (on an overall basis) in the Services provided hereunder, from that provided by UIP to Universal or any of the UIP Owners in June 1995 although the parties acknowledge that (1) any such material reduction shall not be deemed to be a breach of this Exhibit “A”, and (2) each of the UIP Owners may themselves render or cause to be rendered specific Services theretofore rendered by UIP and, in such event, to the extent Universal renders or causes to be rendered such Services to its own pictures generally, it shall provide such Services to DW at no additional cost.

2. Distribution:

a. Universal is granted Theatrical Distribution Rights in the Territory to the Pictures during the Term, provided that such distribution shall be conducted by UIP in the ordinary course of UIP’s business. In distributing Pictures pursuant to this Exhibit “A”, Universal shall be subject to, and shall cause UIP to follow, the direction and control of DW consistent with this Exhibit “A”. All decisions by DW under this Exhibit “A” may be made from time-to-time on a Picture-by-Picture and territory-by-territory basis, unless otherwise specifically provided herein. DW shall have the right to designate the period of distribution of any Picture and may require Universal (which shall in turn require UIP) to withhold or withdraw any Picture(s) from distribution overall or on a territory-by-territory basis in the Territory, as DW in its sole discretion instructs, in which event DW agrees to hold Universal and UIP harmless from any third party claims directly resulting from any withholding or withdrawal which shortens the period of distribution previously designated by DW. Neither Universal nor UIP shall have any rights in or to the Pictures other than as distributor and as set forth in this Exhibit “A”. Universal shall, or shall cause UIP to, advance on a timely basis all DW-approved “Distribution Expenses” (as defined in Paragraph 5.d. below) in connection with the Pictures and shall be entitled to recoup same as herein provided.

b. Notwithstanding the foregoing, to the extent Universal is precluded from distributing a Picture theatrically during the Term as a result of DW’s exercise of its rights in this paragraph to withhold or

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withdraw a Picture from distribution in any country (or overall) in the Territory, DW shall not permit any third party to distribute such Picture in such country (or overall) during the Term or for one year after the Term without affording Universal the right to do so pursuant to the terms hereof.

c. Unless expressly prohibited by applicable law, Universal shall not have the right to refuse to distribute any Picture(s) for theatrical distribution, except for a refusal to distribute based on Universal’s or UIP’s good faith business judgment exercised in a manner which does not discriminate against the Pictures as compared to the pictures of the “UIP Owners” (as defined below), provided that Universal will give timely prior notice of its intention not to distribute a Picture(s) in sufficient time to allow DW to distribute, or cause the distribution of, such Picture(s) on or about the dates contemplated for initial theatrical release. If Universal refuses (or is deemed unable due to a force majeure event as provided in Paragraph 10.b.ii.3(b) below) to distribute any Picture(s) for theatrical distribution in any country(ies), DW shall have the right in its sole discretion to withdraw any such Picture(s) from Universal and distribute or cause the distribution of such Picture(s) in such country(ies). In addition, if Universal refuses other than for legal or censorship reasons (or is deemed unable due to a force majeure event as provided in Paragraph 10.b.ii.3(b) below and such event does not affect distributors generally) to distribute any Picture(s) in a portion of the Territory representing *** or more of “Territory Receipts” (as defined in Exhibit “A-2”) for all UIP pictures in the preceding year, DW shall have the right in its sole discretion to withdraw any such Picture(s) from Universal and distribute or cause the distribution of such Picture(s) in the entire Territory or any portion of the Territory, as DW elects. Notwithstanding the foregoing, if Universal refuses other than for legal or censorship reasons (or is deemed unable due to a force majeure event as provided in Paragraph 10.b.ii.3(b) below and such event does not effect distributors generally) to distribute any Picture(s) in Japan, Universal shall nonetheless have the right to distribute any such Picture(s) in the remainder of the Territory; provided, however, that DW may, in its sole discretion, withdraw any such Picture(s) from Universal: (a) in the Far East and distribute or cause distribution of such Picture(s) therein; or (b) in the entire Territory on any portion of the Territory if Universal

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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does not distribute any such Picture(s) in any country(ies) other than Japan representing *** or more of Territory Receipts for all UIP Pictures distributed in the preceding year and distribute or cause distribution of such Picture(s) therein. If DW distributes or causes the distribution of any Picture(s) pursuant to either of the two preceding sentences, DW shall also have the right in its sole discretion to withdraw from Universal, and render fulfillment services or cause fulfillment services to be rendered for, any “Videogram” (as defined in Exhibit “B”) embodying such Picture[s]), in the relevant country(ies) or, if DW elects, in the entire Territory, as provided in Paragraph 2.C. of Exhibit “B”. Any distribution of Picture(s) and/or Videogram(s) by or caused by DW under this subparagraph 2.c. shall be at DW’s risk (except as provided in Paragraph 7 of this Exhibit “A” with respect to loss or destruction of any Pictures or related physical elements in Universal’s or UIP’s or any of their Subdistributors’ or agents’ possession or control and in Paragraph 8.D.2 of Exhibit “B” with respect to loss or destruction of any Videograms or related physical elements in Universal’s or CIC’s or any of their Subdistributors’ or agents’ possession or control) and without any obligation to Universal, UIP and/or CIC with respect to such distribution (including, without limitation, any obligation to pay any Distribution Fees or Distribution Expenses incurred after DW assumes distribution in such country(ies) under this Exhibit “A” and/or any Service Fees incurred after DW assumes distribution in such country(ies) or Service Expenses under Exhibit “B”).

d. DW shall not enter into any agreement during the Term with any third party in which DW does not directly or indirectly have a substantial financial interest or which does not directly or indirectly have a substantial financial interest in DW, for the distribution of Pictures during the Term in commercial motion pictures theaters before paying public audiences in the United States or Canada covering all or substantially all of its Pictures without discussing such matters with Universal, but DW shall have no obligation to enter into an agreement with Universal for such distribution of Pictures in the United States or Canada. DW shall have no obligations under this subparagraph in the event of a termination of this Exhibit “A” per Paragraph 10.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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3. Distribution Controls and Procedures: The parties acknowledge that Universal shall cause distribution in the Territory to be handled by UIP, whose services shall be supplied to DW by Universal, which hereby guarantees and shall be fully responsible for the performance of UIP in accordance with and subject to the terms and conditions set forth herein. References to UIP therefore shall refer to those services of UIP which Universal is supplying hereunder. Universal shall cause the Pictures to be distributed by UIP in the same fashion as the pictures of Universal, MGM/UA and/or Paramount Pictures or any other partner in or owner of UIP (collectively, the “UIP Owners”) and UIP shall timely submit all recommendations for DW’s approval as specified below. DW shall have the right to exercise complete and final control in its absolute discretion over all aspects of the distribution, marketing and advertising for the Pictures in the Territory throughout the Term consistent with the provisions of this Exhibit “A”. Notwithstanding anything to the contrary herein contained, DW shall have the same right of direct contact with UIP as any of the UIP Owners in its agreement with UIP. In this regard, Universal represents and warrants that it has and shall retain during the Term identical rights of access to UIP (on a “favored nations” basis) available to any other UIP Owner whether by virtue of the UIP Agreement or as otherwise established from time-to-time during the Term. With respect to the distribution of the Pictures in the Territory, Universal shall delegate to DW whatever powers and authorities Universal is entitled to under its agreement with UIP; provided, however, that if Universal is contractually prevented from delegating such powers and authorities under its presently existing agreement with UIP, Universal will exercise such powers and authorities on DW’s behalf and at DW’s direction or in concert with DW. Without limiting the generality of the foregoing, the following specific terms shall apply:

a. General: In accordance with UIP’s practices with respect to the UIP Owner’s pictures, UIP shall prepare and recommend in full consultation with DW continent-by-continent (broken down territory-by-territory) marketing plans, budgets and distribution plans and other items containing such information, analysis and recommendations as DW may from time-to-time request for DW’s approval in sufficient time for DW to review and discuss. UIP shall commence preparation of such plans and other items immediately following receipt of pertinent materials and information provided by DW, and in any event, such plans and items will be delivered to DW no less than *** days prior to the initial theatrical release date in the Territory for each Picture hereunder (with such detail and specifics as possible given the information previously provided by DW, and updated by UIP from time-to-time as more information is made available by DW to UIP). DW shall timely approve or timely supply reasonable revisions thereto so that UIP can take such

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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actions as may be necessary to distribute Pictures as contemplated hereby in a fashion consistent with DW’s approvals. In addition to any specific approvals set forth in this Exhibit “A”, DW shall have the same right to approve actions to be taken by UIP in connection with the Pictures as any UIP Owner has with respect to actions to be taken by UIP in connection with such UIP Owner’s pictures (provided, DW shall not forfeit any approval rights if it fails to act within a specified period of time due to Universal and/or UIP’s failure to timely advise DW in writing of such time period). DW may exercise such approval rights in its absolute discretion with respect to all matters, including, without limitation, the dates and durations of the releases of the Pictures, the dates and terms of initial booking of the Pictures, the decision to create, and the final version of, any altered versions of any Pictures (including, without limitation, colorization of the Pictures), the amount and nature of budgeted Distribution Expenses, distribution patterns, dubbing, theaters, circuits, suppliers, vendors and service providers, laboratories, the use of trailers from the Pictures on other pictures distributed by UIP and the plans for marketing, advertising, publicity and promotion, including, without limitation, coop media plans and advertising, creative campaigns, and the creation and content of all advertising and promotional material. If UIP fails to obtain the release dates, durations and/or exhibitor terms approved by DW for any Picture(s) (unless such exhibitor terms are the same as exhibitor terms for comparable pictures of the UIP Owners), DW shall have the right in its sole discretion to withdraw any such Picture(s) from Universal and distribute or cause the distribution of such Picture(s) in the country(ies) in which UIP fails to obtain such release dates, durations and/or exhibitor terms (or, if UIP so fails in a portion of the Territory representing *** or more of “Territory Receipts” for all UIP pictures in the preceding year and DW elects, in the entire Territory), at DW’s risk (except as provided in Paragraph 7 of this Exhibit “A” with respect to loss or destruction of any Pictures or related physical elements in Universal’s or UIP’s or any of their Subdistributors’ or agents’ possession or control) and without any obligation to Universal and/or UIP with respect to such distribution (including, without limitation, any obligation to pay any Distribution Fees hereunder). If DW distributes or causes the distribution of any Picture(s) pursuant to the preceding sentence, DW shall also have the right in its sole discretion to withdraw from Universal, and render fulfillment services or cause

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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fulfillment services to be rendered for, any “Videogram” (as defined in Exhibit “B”) embodying such Picture[s]), in the relevant country(ies) or, if DW elects, in the entire Territory, as provided in Paragraph 2.C. of Exhibit “B”. Any distribution of Picture(s) and/or Videogram(s) by or caused by DW under this subparagraph 3.a. shall be at DW’s risk (except as provided in Paragraph 8.C.(ii) of Exhibit “B” with respect to loss or destruction of any Videograms or related physical elements in Universal’s or CIC’s or any of their Subdistributors’ or agents’ possession or control) and without any obligation to Universal, UIP and/or CIC with respect to such distribution (including, without limitation, any obligation to pay any Distribution Fees or Distribution Expenses incurred after DW assumes distribution in such country(ies) under this Exhibit “A” and/or any Service Fees or Service Expenses incurred after DW assumes distribution in such country(ies) under Exhibit “B”). There shall be no exclusivity or other distribution restriction in any exhibition or distribution deal nor any double bills or accompanying short subjects (unless required by law) without DW’s specific approval. If a short subject is required by law or custom to accompany any Picture in any portion of the Territory, DW shall have the first opportunity to supply such short subject. The parties acknowledge that Universal, UIP, the other UIP Owners and DW are each engaged in the motion picture business and that nothing in this Exhibit “A” shall be deemed to limit each party’s rights to fully, freely and completely engage in all aspects of the motion picture and related businesses.

b. Subdistribution: UIP shall have the right to employ Subdistributors, provided that:

i. DW shall have the right of prior approval (not to be unreasonably withheld) of each Subdistributor and the duration and terms of each Subdistributor’s agreement. DW hereby approves the list of Subdistributors for the durations and on the terms attached hereto as Exhibit “A-1” and incorporated herein by this reference, and shall not, without cause, withdraw such approval for the durations and on the terms therein indicated.

ii. UIP may only distribute Pictures through a Subdistributor in territories in which UIP does not directly distribute any other motion pictures, which territories shall be limited to the territories specified in Exhibit “A-1” and such other minor territories, consistent therewith, where UIP elects not to directly distribute any motion pictures.

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iii. If DW does not approve a Subdistributor selected by UIP, DW shall have the right to engage directly a subdistributor of its choice (a “DW Subdistributor”), in which event DW shall be solely responsible for all activities of and all obligations to the DW Subdistributor and no Distribution Fees shall be payable to Universal and/or UIP with respect to the territory in which such subdistribution occurs. Notwithstanding the foregoing, Universal shall, at DWs request, service DWs agreement(s) with a DW Subdistributor(s)), in which event the reduced Schedule Percentages set forth in Paragraph 5.c.ii shall apply (provided, as set forth in Paragraph 5.a., that UIP Gross and SD Gross shall be aggregated in any event for purposes of calculating the Gross Receipts breakpoints for the Schedule Percentages in subparagraphs 5.b.i.(1)-(3)).

iv. Notwithstanding the foregoing, the parties acknowledge that, subject to DW’s reasonable approval and the provisions of Paragraph 1.c.ii., the Pictures may be distributed by UIP through co-venture distribution in some territories within the Territory (e.g., Hong Kong, China), which co-ventures shall not be considered subdistribution. In these instances, reference to “UIP” shall include such co-ventures for all purposes hereunder. Accordingly, all amounts payable or credited to such co-ventures in connection with the Pictures shall be included in deemed “Gross Receipts”, and DW shall be accorded audit rights with respect to all such co-ventures.

c. Suppliers: With respect to any Picture distributed by UIP hereunder, DW shall have the right (but, except as provided elsewhere, not the obligation) to contract directly with UIP’s third party suppliers and/or to “piggyback” on any or all of UIP’s arrangements with any third party (including, without limitation, dubbing, manufacturing, advertising, marketing and publicity suppliers/arrangements), except as and to the extent precluded by law, regulation or written agreement between such third party supplier on the one hand, and UIP and/or Universal on the other hand, entered into, and containing a preclusive provision effective, before July, 1996 and disclosed to DW in writing before execution of this Agreement (provided, however, that notwithstanding anything to the contrary in such written agreements, in no event will DW be bound by such agreements after January 1, 1999). In addition, Universal shall disclose to DW relevant excerpts of any

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such written agreement (except only its agreement with *** for laboratory services) to the extent permissible under such agreement, and DW shall have the right to contest the asserted preclusive contract provision under the dispute resolution provisions of Paragraph 10 of the Master Agreement; provided, however, that Universal shall cause UIP to use its best efforts to cause such third party supplier(s) to contract directly with DW and/or allow DW to “piggyback” on UIP’s arrangements with such third party suppliers, as DW elects. UIP shall disclose to DW on an ongoing basis all material information (including, without limitation, advances, volume discounts, laboratory and other vendor rebates and any other economic consideration or financial advantages) regarding deals which could relate to UIP’s services hereunder and which are under negotiation and/or concluded with third party suppliers as such information develops, and UIP shall also disclose to DW upon execution of this Exhibit “A” all such information regarding deals concluded with third party suppliers prior to the date of execution of this Exhibit “A”. Notwithstanding the foregoing, Universal shall not be required to disclose any information respecting Universal’s presently existing laboratory services agreement with ***. DW may use such information in order to assist DW in deciding whether to “piggyback” on any or all such existing and/or future arrangements with third party suppliers and, in the event DW elects to “piggyback”, to determine whether Universal and/or UIP are allocating advances, volume discounts, laboratory and other vendor rebates and any other economic consideration or financial advantages as provided below in this subparagraph 3.c. and in subparagraph 5.e. Notwithstanding the foregoing, DW shall not be entitled to confidential third party information regarding arrangements existing as of the date of execution of this Exhibit “A”; provided, however, that Universal and UIP shall in any event disclose the existence of all such arrangements (including, without limitation, any confidentiality agreements contained therein), and provide to DW as much specificity as possible consistent with such third party confidentiality agreements, and provided further that if Universal and/or UIP refuses to supply any such third party confidential information, the parties will (on DW’s request) submit to dispute resolution pursuant to Paragraph 10 of the Master Agreement and the “Judge” (as defined in the Master Agreement) shall impose such reasonable procedures (including, without limitation,

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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redaction and in camera proceedings) as the Judge deems necessary to accord information reasonably necessary for the purposes indicated above while preserving the third party’s legal rights to confidentiality. In the event of any “piggyback” arrangement: (i) DW-approved costs with respect thereto shall be advanced by UIP and recouped or repaid as Distribution Expenses; (ii) DW shall have the option to have the Pictures aggregated with other UIP product for purposes of obtaining advances, volume discounts, rebates and any other economic consideration or financial advantages accorded to a group of pictures and in such event, all such advances, discounts, rebates, economic consideration and financial advantages will be allocated to the Pictures according to the terms of the arrangement in question, or if such arrangement does not provide a means of allocation, on a fair and reasonable basis (subject to later reconciliation if and to the extent such allocation was in retrospect unfair or unreasonable to either party); (iii) the terms and conditions of such arrangement with respect to DW shall be no less favorable than the terms and conditions which pertain to the distribution of the UIP Owners’ pictures; and (iv) provided such arrangement has been previously timely disclosed to DW in writing, then with respect to rights to Pictures granted Universal hereunder, DW shall be bound by the terms and conditions of such arrangement as if it were a party thereto except to the extent the third party agrees otherwise. Alternatively, DW shall have the right in its sole discretion to itself obtain any or all such services through its own third party arrangements; provided, however, subject to DW’s absolute control, DW shall be obligated to utilize UIP’s advertising agency or agencies to make any up-front media buys (i.e. long-term, bulk media purchases made by UIP before how such media will be used is determined) during any period in which all UIP Owners are contractually required to make all of their up-front media buys with respect to advertising in the Territory exclusively through such agency pursuant to an exclusivity arrangement existing as of the date of this Exhibit “A” and on terms no less favorable than those offered to UIP Owners (e.g., DW shall receive the same discounts). If DW enters into its own third party arrangements, DW will not be entitled to “piggyback” on UIP’s arrangements for the same services unless the “piggyback” terms previously rejected by DW thereafter materially change. If DW utilizes its own third party arrangements, DW will: (a) coordinate (or instruct such third party suppliers to coordinate) information and performance between each other as required and with Universal and UIP; (b) pay such third party suppliers directly; (c) agree to proceed directly against such third party supplier for such third party supplier’s breach; and (d) if UIP incurs substantial actual excess

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administrative costs as a direct result thereof, consider in good faith contributing towards such excess costs, provided that DW shall not be obligated to do so. Universal will not, and will cause UIP not to, enter into any new obligations or agreements, or extensions of any existing obligations or agreements, which restrict the right of any supplier that is a party to such obligations or agreements to contract directly with DW (e.g., exclusivity arrangements which prevent such party from contracting with DW). Notwithstanding the foregoing, prior to DW directly entering into any third party arrangement, DW will, in appropriate circumstances, make a good faith effort to give Universal advance notice and consult with Universal, it being agreed that DW’s failure to comply with this sentence shall not be deemed a breach of this Exhibit “A”. Subject to the terms of the Master Agreement, to the extent either party is provided any confidential information with respect to UIP or DW arrangements with suppliers, vendors, or service providers, such party shall keep such information absolutely confidential.

d. Operating Requirements:

i. Distribution Outside the Territory: Universal is expressly prohibited from distributing, or authorizing the distribution of, the Pictures anywhere outside the Territory.

ii. Direct Communications and Dealings: DW shall have the right to communicate (regarding anything within the scope of this Exhibit “A”) directly with (a) all Universal officers, appropriate management employees and staff engaged in any aspect of distribution of motion pictures by Universal anywhere in the Territory, including officers, management employees and staff stationed at Universal corporate and territorial offices; and (b) to the same extent as the UIP Owners, all UIP officers, appropriate management employees and staff engaged in any aspect of theatrical distribution of motion pictures by UIP, including, without limitation, officers, appropriate management employees and staff stationed at UIP corporate, regional and territorial offices. DW shall receive in a timely fashion, directly from UIP and from all Subdistributors, all distribution information, including, without limitation, release dates, projections and so forth. DW shall also have the right to receive copies of any report insofar as it relates to the Pictures or such other information received by or available to the UIP Owners (other than internal financial information respecting the UIP partnership or relating solely to the respective UIP Owner’s Pictures) respecting

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an audit of any Subdistributor conducted by or on behalf of UIP, the costs of which shall be borne solely by UIP if done in the ordinary course of business by UIP. In addition, Universal shall use its best efforts to have UIP audit the accountings of any Subdistributor upon the request of DW and if done, DW shall (to the extent pre-approved by DW, which pre-approval will not be unreasonably withheld) bear its proportionate share of the costs thereof.

iii. UIP Personnel: Universal shall cause the President and Chief Executive Officer of UIP (subject to reasonable absences for vacation and other business) to personally supervise DW motion picture distribution and be responsible to DW with respect to all matters arising hereunder. In the event that the President and/or Chief Executive Officer of UIP shall be replaced during the Term hereof or there is any other substantial change in the management or operation of UIP, DW shall have a right of full consultation with Universal with respect thereto.

e. Operating Structure:

i. Marketing:

(a) Packaging/Shipping: UIP shall consolidate shipment of all DW materials to the Territories at UIP’s London headquarters (or such other location approved by DW), provided that DW shall only disapprove any other location if, in its absolute discretion, it believes that such location is not secure, or if it results in a significant increase in cost to DW, unless Universal pays such increase in cost. DW and associated vendors will deliver packaged material to UIP for shipment. UIP’s actual, direct, third party out-of-pocket shipping costs shall be billed to DW, provided such costs are not, in any event, charged at rates greater than the shipment costs charged to the UIP Owners for like materials.

(b) Shipping/Storage/Inspection of Prints: Subject to DW’s approval rights, UIP will render all services in connection with the shipping, storage and inspection of the prints required by DW for the Pictures distributed by UIP hereunder (for which services DW shall reimburse Universal and/or UIP as the case may be for their actual direct

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out-of-pocket costs paid to unaffiliated third parties). DW may elect, in its sole discretion, to discontinue using such services for all of the Pictures; provided, however, that DW shall not have the right to thereafter re-engage UIP to render any such services which DW has previously discontinued hereunder.

(c) Favored Nations: UIP shall provide DW with UIP and third party goods and services (including, without limitation, publicity and promotional services) substantially equivalent on an overall basis in quantity, level, priority, quality and cost (including discounts, rebates, allocations and charges) as such services are provided to UIP Owners in connection with the distribution of their motion pictures.

ii. Distribution:

(a) Key Contracts: DW shall have the right to approve all key contracts for the distribution of the Pictures including, without limitation, all key country and key city contracts, if and to the extent that any of the other UIP Owners have such approval rights as to their pictures.

(b) Distribution Plans: UIP shall timely prepare a territory-by-territory distribution plan for each Picture indicating exhibition dates and theaters in each city (with such detail and specifics as possible given the information previously provided by DW, and updated by UIP from time-to-time as more information is made available by DW to UIP). Each distribution plan shall be prepared in consultation with DW for DW’s approvals as set forth under this Exhibit “A”. Distribution of each Picture shall be in accordance with the approved plan. Each Picture may only be distributed in each country within the Territory by means of one continuous release in such country, except as otherwise approved by DW. No reissues, re-releases or colorization of the Pictures will be permitted unless specifically approved in writing by DW, and DW shall have the same approval rights with respect to any reissue or re-release as it had with respect to the initial release. All material changes from such plan shall require DW’s approval; provided, however, that pending

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such approval UIP’s field personnel may, in good faith and if required due to distribution exigencies, make reasonable non-material changes to such plan (which changes will be submitted to DW for approval as soon as possible thereafter). Notwithstanding anything to the contrary in this Agreement, DW will provide UIP, on a territory-by-territory, Picture-by-Picture basis, a schedule for the release of the Pictures, which schedule UIP may change as reasonably necessary with DW’s prior written approval (not to be unreasonably withheld). If DW fails to approve such changes, UIP shall have no liability to DW thereof except to implement such corrections and changes as DW thereafter instructs.

f. Information and Documents: To the extent it exists, and subject to the requirements of law, Universal shall furnish, and shall cause UIP to furnish:

i. Information:

(a) All “Information” (as defined below) as to the Pictures, to the extent similar Information as to a UIP Owner’s pictures is made available by UIP to such UIP Owner;

(b) All Information as to the UIP Owners’ pictures, to the extent such Information is made available by UIP to any UIP Owner other than the UIP Owner that produced such picture; and all Information (including, without limitation, Information about the release of other motion pictures in the Territory) that is made generally available to the UIP Owners by UIP;

(c) All Information as to Universal pictures, to the extent similar Information is available to Universal with respect to the Pictures; provided such Information: (1) shall only be furnished upon written request from DW; (2) shall be restricted to Information required by DW for a bona fide business purpose under this Agreement (e.g., optimal release scheduling, verification of most favorable terms as specified in the Agreement, including terms related to services, pricing, costs, comparable accounts and collection of revenues therefrom, etc.); and (3) shall not be furnished to

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DW if in Universal’s good faith business judgment, such disclosure would constitute a violation of any applicable law, decree, government regulation, or constitute a violation of any third party right;

(d) All Information as to the Pictures that is available to Universal (excluding Information as to the Pictures that is not available to Universal, and not based upon Information as to the Pictures available to Universal, directly or indirectly by virtue of Universal’s and/or UIP’s services hereunder); and

(e) All other Information as may be required by DW, including, without limitation, MPAA, MPA and other trade association publications and reports (except to the extent distribution to DW is prohibited by such trade association), subject to pertinent confidentiality agreements of which DW is given prior written notice, irrespective of whether such Information is customarily provided by UIP to the UIP Owners and/or any other party; provided, however, that if Universal and/or UIP are required to incur any new additional costs (of which Universal and/or UIP notifies DW in advance) for outside personnel Universal and/or UIP are required to engage solely in order to furnish any such additional Information which is not included within the scope of services to be rendered by Universal and/or UIP under this Exhibit “A”, Universal and/or UIP shall not be required to furnish such additional Information unless DW pre-approves such costs and agrees to reimburse Universal and/or UIP, as applicable, for same (subject to appropriate reduction, to be mutually agreed, if and to the extent that such additional Information is supplied [subject to DW’s prior approval] to any party other than DW). Any dispute as to whether such additional Information is within the scope of services to be rendered by Universal and/or UIP hereunder will be subject to dispute resolution pursuant to Paragraph 10 of the Master Agreement.

(f) As used herein, “Information” shall mean all tangible (i.e., excluding only staff meetings, phone conversations and similar conversations which are not reduced to written or other tangible form) information, data, reports, agreements and other

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documents including, without limitation, all outright sales proposals for the outright sales of a Picture, direct access to the theatrical database for each Picture on a territory-by-territory basis, daily box office reports, competitive release dates, advertising expenses, copies of all outside sourced market surveys, updates and analysis, etc., whether distributed on paper, electronically and/or through any other means (e.g., DW shall be put on the distribution lists for such information). The Information shall be provided consistent with the frequency and timeliness with which the Information (or similar material) is created by, or supplied to, Universal, UIP and/or the UIP Owners, or otherwise as DW shall reasonably request; provided, however, that if Universal and/or UIP are required to incur any new additional costs (of which Universal and/or UIP notifies DW in advance) for outside personnel Universal and/or UIP are required to engage solely in order to furnish Information more frequently or quickly (if possible) than the Information (or similar material) is supplied to the UIP Owners and such increased frequency or quickness is not included within the scope of services to be rendered by Universal and/or UIP under this Exhibit “A”, Universal and/or UIP shall not be required to furnish such Information with such increased frequency or quickness as requested unless DW pre-approves such costs and agrees to reimburse Universal and/or UIP, as applicable, for same (subject to appropriate reduction, to be mutually agreed, if and to the extent that such increased frequency or quickness is also accorded [subject to DW’s approval] to any party other than DW). Any dispute as to whether such increased frequency or quickness is within the scope of services to be rendered by Universal and/or UIP hereunder will be subject to dispute resolution pursuant to Paragraph 10 of the Master Agreement. DW shall, on request, be supplied Information by tape data transmission, without any fee if so supplied to the UIP Owners, or otherwise at Universal and/or UIP’s direct actual out-of-pocket cost.

(g) Notwithstanding anything in this section (f) to the contrary, in no instance shall Information include

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(and Universal and UIP shall not be required to provide) (i) internal financial information of Universal, UIP and/or the UIP Owners, or (ii) Information which is not related to the exploitation and performance of motion pictures or the costs of distribution.

ii. Operations:

(a) As to the Pictures: Print inventories (features and trailers) together with an analysis of print storage costs by title and quantity, not less than on a quarterly basis.

(b) Print orders for the Territory, for the initial release date and for the date 30 days thereafter.

(c) For the top ten markets only, trailer release dates, on a monthly basis for the period commencing with the first release of the trailer through 30 days after initial theatrical release.

(d) Unless the “Payment Reports” (as defined below) include an itemization of dubbing expenses, dubbing budgets on a territory-by-territory, Picture-by-Picture basis and in local currency where applicable, not less than on a monthly basis.

4. Grant of Rights:

a. DW grants to Universal Theatrical Distribution Rights in the Pictures in the Territory during the Term, which Theatrical Distribution Rights include the right (but only in connection with the exercise of the Theatrical Distribution Rights):

i. To distribute the Pictures through UIP and its Subdistributors, as specified herein, and to exhibit, advertise, publicize and exploit the Pictures pursuant to the terms hereof;

ii. To use the name and likeness of any person who rendered services on the Pictures for advertising and promoting the Pictures, subject to contractual and/or union/guild restrictions on such uses of which Universal is timely notified in writing and with which Universal shall have the affirmative obligation to comply;

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iii. Subject to any limitations upon DW’s rights timely communicated to Universal or UIP, to publicize, advertise and exploit the Pictures and the titles (as designated by DW) thereof throughout the Territory during the Term and to permit others to do so;

iv. Subject to any limitations upon DW’s rights timely communicated to Universal or UIP, to cause trailers of the Pictures and prints thereof to be manufactured, exhibited and distributed; and

v. To order and procure from DW, and subject to the terms hereof directly from any laboratory in any part of the world holding pre-print or other material (which material shall, at DW’s election, be held in DW’s name) such number of release prints and related materials as DW requires.

vi. Subject to any limitations upon DW’s rights timely communicated to Universal or UIP, any contractual and/or union/guild restrictions of which Universal/UIP is notified in writing, and DW’s prior written approval in each instance pursuant to its approval rights hereunder, to utilize the different titles of the Pictures designated by DW for each country of distribution, to dub and subtitle the Pictures and trailers and to edit same as may be required by the distribution/exhibition requirements in the particular countries in the Territory; to publish and authorize others to publish synopses of and excerpts from the Pictures and any literary material included in the Pictures upon which they were based for use in newspapers, magazines, press books and other publicity-related periodicals and in television and radio advertising. Without limiting the generality of the foregoing, with respect to subtitling and dubbing, DW shall determine, in its sole discretion, which Pictures, if any, shall be subtitled and/or dubbed and in what languages. DW shall have the right in its absolute discretion to approve any edited version of the Pictures and all language tracks and subtitles.

b. Universal and UIP shall maintain security and anti-piracy measures consistent with the highest level of security and anti-piracy measures maintained for the UIP Owners’ pictures to prevent unauthorized distribution, copying and the infringement of any of DW’s rights. If DW desires security and anti-piracy measures beyond those provided by Universal and UIP per the preceding sentence, it may require Universal and UIP to provide same (or DW may make its own third party arrangements for such services)

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at DW’s sole cost and expense. Each party shall immediately notify the other of any unauthorized copying, distribution, exhibition or other exploitation of the Pictures and of any other infringements or violations of DW’s copyrights, trademarks and other rights in the Pictures of which such party has knowledge. DW shall take such actions as it deems appropriate with respect thereto. To the extent appropriate, Universal and/or UIP shall join in any actions and cooperate fully in any litigation or other proceedings to protect the Pictures and DW’s rights. If DW elects to proceed alone directly through its own counsel, DW shall bear the costs thereof and DW shall be entitled to retain any recovery. If DW does not elect to proceed as provided in the prior sentence, Universal or UIP shall have the right to proceed either in DW’s name or in Universal’s or UIP’s name, in which event all recovery reasonably allocated to the Pictures shall be included in Gross Receipts and all reasonable, actual direct third party expenses reasonably allocated to protecting the Pictures shall be a Distribution Expense. DW shall cooperate fully therewith, and if recovery is through MPAA or MPA actions, any financial recovery shall be applied consistent with MPAA or MPA practices. To the extent Universal and/or UIP pays direct additional costs related to piracy, copyright or trademark infringement or other violations of DWs rights in the Pictures, such costs (to the extent pre-approved by DW), including but not limited to anti-piracy print coding, MPAA or MPA anti-piracy programs, and other anti-infringement activities, shall be payable by DW. Notwithstanding the foregoing, DW may, in its sole discretion, elect not to have the Pictures included in such MPAA, MPA, piracy, copyright or trademark infringement or other actions.

c. In the exercise of Theatrical Distribution Rights hereunder:

i. Neither Universal nor UIP shall re-cut, dub, sub-title, edit or alter the Pictures, without DW’s prior written approval;

ii. Neither Universal nor UIP shall add trailer, commercial or other material to the Pictures without DW’s prior written approval, and neither Universal nor UIP shall use any elements from the Pictures as part of a commercial, advertisement or trailer in other motion pictures distributed by Universal or UIP, without DW’s prior written approval. Notwithstanding the foregoing, neither Universal nor UIP shall be in breach if a local theater owner violates the terms of the preceding sentence, provided that neither Universal nor UIP has consented to or approved same;

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iii. Without DW’s prior written approval, neither Universal nor UIP shall distribute the Pictures through “tying” arrangements or package deals (e.g., where the Pictures are marketed and sold in a group with other motion pictures); and

iv. Subject to Paragraph 11.b., without DW’s prior written approval, neither Universal nor UIP will alter the credits on the Pictures, and Universal and UIP will otherwise comply with all credit obligations on the Pictures.

d. In no event shall the rights granted hereunder to Universal be construed to include rights to use any DW characters or other element of intellectual property owned or controlled by DW in any way other than in connection with the advertising and distribution of the Pictures in which they appear, pursuant to the terms set forth in this Exhibit “A”.

e. All rights not expressly granted to UIP under this Exhibit “A” are hereby expressly reserved to DW. Specifically, and without limitation, DW reserves all tangible and intangible right to every Picture (except only the right specifically set forth to distribute Pictures in the Territory). All materials and other physical elements created hereunder shall be the property of DW upon creation.

5. Collections/Remittance/Accounting:

a. Gross Receipts: Gross Receipts consists of (i) all amounts paid or credited by theaters to UIP (or deemed “received” by UIP as set forth below in this subparagraph 5.a.) for the right to exhibit the Pictures (including, without limitation, returnable and non-returnable advances) or as subsidies, prizes, or aid, and all receipts directly from the distribution of the Pictures in the case of so called “four wall engagements and/or road shows” (“UIP Gross”) and (ii) all amounts payable or credited by Subdistributors to UIP, as DWs collection agent, for the right to distribute the Pictures or as subsidies, prizes, or aid, and all receipts directly from the distribution of the Pictures in the case of so called “four wall engagements and/or road shows” (“SD Gross”) (UIP Gross and SD Gross shall collectively be referred to as “Gross Receipts”). Gross Receipts shall be considered “received” when booked as a receivable, subject to later adjustment for amounts not received. Payment of such amounts shall be made directly for the account of DW, or at DW’s election, of a DW-related entity, on a monthly basis. Gross Receipts shall not include amounts payable or credited to DW as a result of agreements and arrangements made directly

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between DW and any DW Subdistributor or any promotional or commercial “tie-in” agreements entered into by DW.

b. Amount Payable to DW: Subject to Paragraph 5.b.i.(6) below, Universal shall pay or cause to be paid to DW or, at DW’s election, to a DW-related entity, an amount equal to 100% of the aggregate of the Gross Receipts, less the following in the order listed:

i. Distribution Fees (“Distribution Fees”) to be retained by Universal of an amount equal to:

(1) *** of 100% of Gross Receipts paid to, or credited against uncontested outstanding sums owed to Universal by, DW until Gross Receipts equal***;

(2) *** of 100% of Gross Receipts paid to, or credited against uncontested outstanding sums owed to Universal by, DW for to DW from the point that Gross Receipts exceed *** until Gross Receipts equal ***;

(3) *** of 100% of Gross Receipts paid to, or credited against uncontested outstanding sums owed to Universal by, DW for to DW from the point that Gross Receipts exceed ***;

ii. All “Distribution Expenses” (as defined below) accrued by Universal on behalf of DW calculated in accordance with Paragraph 5.d. below, subject to adjustment for Distribution Expenses accrued but not paid, in the same fashion as for UIP Owners.

c. CALCULATION OF DISTRIBUTION FEES:

i. For purposes of the calculation of the Distribution Fees pursuant to subparagraph 5.b.i, Gross Receipts shall be aggregated and calculated for each “contract year” (with the first “contract year” being the one year period commencing the first day of the month in which the first release of a Picture hereunder occurs and each subsequent “contract year” being the one year period commencing on

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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the next anniversary of the first day of the month in which the first release of a Picture hereunder occurs), such that at the beginning of each contract year the fee payable to Universal pursuant to the schedule in Paragraph 5.b.i. above (“Schedule Percentages”) shall be calculated by again commencing with Paragraph 5.b.i.(1). Notwithstanding the foregoing, (i) all post-Term services (regardless of when rendered) shall be deemed to occur in the last contract year that begins during the Term, and (ii) if the last contract year is a partial year, the fee payable to Universal for Gross Receipts from such partial year as well as Gross Receipts from the distribution of any of the Pictures beyond the Term per Paragraph 1.b. above shall be the lesser of ***of Gross Receipts paid to DW or the otherwise applicable Schedule Percentages. As used in subparagraph 5.b.i., Gross Receipts shall be based on actual receipt by DW for purposes of measuring when the Gross Receipts have been derived.

ii. Notwithstanding anything to the contrary in subparagraphs 5.b.i.(1)-(3) above, where UIP utilizes a Subdistributor (or services a DW Subdistributor engaged by DW pursuant to Paragraph 3.b.iii. above), Universal shall be entitled to a fee based on SD Gross in the amount of *** of the applicable Schedule Percentages; provided, however, as provided in subparagraph 5.a., that UIP Gross and SD Gross shall be aggregated in any event for purposes of calculating the Gross Receipts breakpoints for the Schedule Percentages in subparagraphs 5.b.i.(1)-(3).

iii. No Distribution Fee shall be payable to Universal until concurrent payment to DW of the Gross Receipts, if any, upon which such fee is charged, it being recognized that Universal is entitled to recoup Distribution Expenses out of amounts otherwise payable to DW which recoupment shall not affect Universal’s right to its Distribution Fee hereunder. In the event of any adjustment as provided in Paragraph 5.a. above, the Distribution Fee shall be similarly recalculated and adjusted.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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iv. Notwithstanding the foregoing, if Universal and/or UIP changes its accounting methodology (it being agreed that the re-allocation of an in-house expense to an outside source shall not be deemed to be a change in accounting methodology), its new accounting methodology shall govern this Exhibit “A”; provided, however, that if the current accounting methodology used by Universal in connection with the UIP Owners is more favorable to DW than Universal’s new accounting methodology, Universal’s current accounting methodology shall govern this Exhibit “A”.

v. In no event shall the Distribution Fees be less favorable to DW than the distribution fees paid to or retained by Universal and/or UIP in connection with Universal’s (or UIP’s) overall distribution in the Territory of motion pictures produced by any party other than a UIP Owner, it being agreed that for the purpose of determining whether Universal and UIP have complied with this “favored nations” assurance, Universal’s or UIP’s receipt of a distribution fee plus any other consideration (in any form, e.g. non-monetary consideration such as other rights granted to Universal at the time) shall be taken into account, so that the determination is an “apples-to-apples” comparison, as much as possible, and, in any event, one picture deals and output deals for any country which represents less than *** of the rental receipts from theatrical distribution in the Territory for the prior year shall be excluded.

d. Distribution Expenses: “Distribution Expenses” shall mean all actual direct out-of-pocket costs and expenses accrued (i.e., *** after being accrued, provided such costs and expenses are paid no more than *** thereafter), or otherwise when paid, by Universal and/or UIP in connection with the distribution of the Pictures in accordance with, and subject to, all of the terms and conditions of this Exhibit “A”. Distribution Expenses paid in connection with both Pictures and other pictures will be allocated in a manner agreed by the parties. Included in Distribution Expenses are the following costs:

i. Manufacturing of prints, and subtitling, dubbing and editing;

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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ii. Advertising, promoting, and publicizing the Pictures in publications, radio and television, previews, P.O.P. materials, displays and all other media;

iii. Freight, insurance (provided, however, that if DW would be required hereunder to reimburse Universal and/or UIP for such insurance costs and Universal and/or UIP can exclude DW under the terms of the policy, then DW may in its sole discretion decline such insurance), and storage;

iv. Applicable payments to performing right societies (e.g., SESAC) which Universal and/or UIP is required to pay;

v. Prosecution, settlement and/or defense of copyright infringement, trademark infringement, unfair competition and related claims and litigation, provided that all amounts recovered pursuant to any of the aforementioned shall be included in Gross Receipts as provided in Paragraph 4.b.; and

vi. Permit fees and sales, use, remittance, transfer and other taxes on goods, however denominated.

vii. Notwithstanding anything in subparagraphs i - vi above, in computing Distribution Expenses, any allocation among the Pictures and UIP Owner’s pictures shall be reasonably and fairly made, in a manner no less favorable to DW than to the UIP Owners and none of the following shall constitute Distribution Expenses or otherwise be paid by DW to Universal and/or UIP: (a) except to the extent caused by DW’s actions or inaction, expenses associated with delinquent payments by Universal and/or UIP to suppliers, vendors or other service providers (e.g., interest or finance charges); (b) so-called “overhead” expenses or other indirect costs (including, without limitation, salaries and travel expenses) of Universal and/or UIP; (c) expenses associated with tradeshows, film festivals, conventions and similar events, except that incremental increases in such costs over those paid in prior years (to the extent pre-approved by DW and solely attributable to the Pictures) shall be Distribution Expenses hereunder; (d) any other expenses (other than actual direct out-of-pocket costs and expenses otherwise reimbursable under this subparagraph 5.d. as set forth above) of any kind, including, without

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limitation, collection costs and Universal’s and UIP’s share of trade association dues and assessments (subject to an appropriate reduction, to be mutually agreed, if and to the extent publications or reports from such trade associations are not supplied to DW hereunder per subparagraph 3.f.(i)(f), and provided further that DW may elect in any event to become a member of any such trade association(s) and pay such dues and assessments directly to the appropriate association(s), in which event DW shall not be responsible for any share of Universal’s and VIP’s dues and assessments to such association(s)), except that incremental increases in such costs over those paid in prior years (to the extent pre-approved by DW and solely attributable to the Pictures) shall be Distribution Expenses hereunder.

e. Finance/Audits:

i. Advances/Rebates: UIP shall promptly disclose in writing and credit to DW all advances, volume discounts, laboratory and other vendor rebates and any other economic consideration or financial advantages accorded UIP by a third party as a direct or indirect result of UIP’s distribution of the Pictures whether or not specifically allocated to the Pictures, including any amounts received for or in connection with the distribution of motion pictures including the Pictures which are not specifically allocated or credited to the distribution of specific Pictures consistent with Section 3.c. All such advances, volume discounts, laboratory and other vendor rebates and other economic consideration or financial advantages will be allocated to the Pictures according to the terms of the agreements in question, or, if such agreements do not provide a means of allocation, on a fair and reasonable basis (subject to later reconciliation if and to the extent such allocation was in retrospect unfair or unreasonable to either party). DW shall have access to any agreement which provides for any such advance, volume discount, laboratory or other vendor rebate or other economic consideration or financial advantages, subject to the conditions set forth in subparagraph 3.c above with respect to third party suppliers. No rebates which relate, in whole or in part, to the Pictures shall be granted to UIP’s Subdistributors without DW’s specific written consent.

ii. Local Currency: Other than amounts which cannot legally be remitted from the country in which they are earned

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(“Blocked Currency”), all amounts payable hereunder shall, as DW elects, be paid in either U.S. currency or the currency of the country where such Gross Receipts are received. In the event that DW elects to be paid such amounts in U.S. currency, the amounts shall be converted, using the same exchange rate for Distribution Expenses and Gross Receipts, on specified dates of which Universal and/or UIP shall notify DW on an ongoing basis and which shall be the same dates and rates used for the UIP Owners’ pictures; provided, if amounts are not converted directly from the foreign currency in which they were received to U.S. currency (i.e., if intermediary conversion to other currency(ies) is utilized), then Universal shall bear all risk from fluctuation of such intermediary currencies. Notwithstanding the above, DW shall have absolute approval over any currency hedging contracts applicable to the Pictures entered into by UIP, and DW shall have the right to enter into foreign currency hedging contracts with respect to amounts due hereunder. In the case of Blocked Currency, DW shall have the right to elect whether to receive some or all of the payment which may be due in such Blocked Currency, in the country where it is located. DW may use such amounts to pay Universal for any Distribution Expenses, Distribution Fee or other amounts due hereunder on the Pictures in the country of such Blocked Currency or make any other arrangements with respect thereto as are available to the UIP Owners. To facilitate this, Universal shall cause UIP, on each statement hereunder, to advise DW in writing as to Gross Receipts which are in Blocked Currency and Universal shall, at the written request of DW (subject to any and all limitations, restrictions, laws, rules and regulations affecting such transaction), deposit into a bank designated by DW in the country involved, or pay to any other party designated by DW in such country, any Blocked Currency which would have been payable to DW hereunder. Such deposits or payments to or for DW shall constitute due remittance to DW, and Universal shall have no further interest therein or responsibility therefor. At DW’s election, Universal will convert such deposits or payments into U.S. dollars to the same extent and in the same manner and proportion that UIP is able to convert such funds for UIP Owner’s pictures.

iii. Bonuses: To the extent that UIP pays bonuses or compensation or consideration of any type (including, without limitation, discretionary bonuses) to its sales staff or other employees or to any person or entity which renders

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services on or in connection with UIP’s distribution of the Pictures, that are tied or relate in any fashion, in whole or in part, directly or indirectly, to UIP staff’s revenue generation in connection with UIP pictures, UIP shall include the Pictures on a pro-rata basis in all such calculations and with respect to all such bonuses, compensation or consideration such that any person or entity which receive a bonus shall have equal incentive with respect to the Pictures as compared to other UIP pictures. DW may not pay bonuses or consideration of any type directly to UIP’s personnel.

iv. Computer System/Electronic Mail: DW shall be “on line” on UIP’s computer systems as to information DW is entitled to hereunder and shall have direct access to UIP’s electronic mail system, if any, and any other system of communication between UIP and the UIP Owners and will reimburse UIP or Universal, as the case may be, for the allocable portion of UIP’s or Universal’s actual, direct, third party out-of-pocket additional installation and hardware costs, if any, paid by UIP or Universal as a direct result thereof, within a reasonable period following receipt of appropriate supporting documentation; provided, however, that at the expiration or earlier termination of the Term, UIP shall (at DW’s election) either: (a) give DW any hardware for which DW has reimbursed Universal or UIP; or (b) UIP shall retain such hardware and refund to DW the amount equal to the depreciated value of such hardware.

v. Tax Rebates: Universal shall be entitled to charge remittance taxes, but shall be obligated to rebate to DW*** of such taxes at the end of the year in which they are withheld, and the remaining *** at the end of the following year.

vi. UIP Owned Businesses: With respect to the distribution of Pictures hereunder, any agreement with any theater or theater chain, or any supplier or other business or entity owned in whole or in part, directly or indirectly, by UIP or any UIP Partner (“UIP Business”) shall be fair and reasonable in the marketplace and on an arms-length basis.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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If Universal has UIP audit and monitor any agreement with a UIP Business to ensure that DW is not prejudiced in any fashion as a result of such business being owned by UIP or a UIP Partner, it shall supply to DW all information with respect thereto supplied to the UIP Owners, including the results of any such audit or procedure.

f. Accountings:

i. Universal shall cause UIP to furnish to DW, on a monthly basis, within *** from the end of each calendar month, revenue and payment detail reports (the “Payment Reports”) in a format approved by DW, which format may change from time-to-time in DW’s good faith discretion. The Payment Reports shall, among other things, indicate with specificity on a territory-by-territory basis, all Gross Receipts earned by each Picture and all Distribution Expenses for each Picture and any Distribution Fees (as set forth in Paragraph 5.b) with respect thereto, and (since Gross Receipts are on a billings basis and Distribution Expenses on an accrual basis) shall reconcile prior Payment Reports to reflect Gross Receipts actually received and Distribution Expenses actually paid, in a manner consistent with the way such items are reconciled for the UIP Owners. All Distribution Expenses and Gross Receipts shall be fully crossed among all Pictures hereunder for purposes of recoupment by Universal of its advances of Distribution Expenses hereunder; in no event will Distribution Expenses and Gross Receipts be crossed between this Exhibit “A” and Exhibit “B” (except only if and to the extent that DW fails to timely make any payments required hereunder). Payment Reports may be corrected, adjusted or supplemented by Universal from time-to-time to reflect adjustments, uncollectible amounts, errors, etc. No Payment Reports need be rendered for any accounting period during which there are no Gross Receipts or Distribution Expenses to be reported. If Universal and/or UIP are required to incur any new additional costs (of which Universal and/or UIP notifies DW in advance) for outside personnel Universal and/or UIP are required to engage solely in order to furnish any Payment Reports which are re-formatted to DW’s specifications and which are not included within the scope of services to be rendered by Universal and/or UIP under this Exhibit “A”, Universal and/or UIP shall not be required to furnish such re-formatted Payment Reports unless DW pre-approves such costs and agrees to reimburse Universal and/or UIP, as

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applicable, for same (subject to appropriate reduction, to be mutually agreed, if and to the extent that the format of such re-formatted Payment Reports is used for similar reports [subject to DW’s prior approval] to any party other than DW). Any dispute as to whether such re-formatted Payment Reports are within the scope of services to be rendered by Universal and/or UIP hereunder will be subject to dispute resolution pursuant to Paragraph 10 of the Master Agreement.

ii. Concurrently with its receipt of each Payment Report, Universal will pay to DW amounts indicated thereon to be due to DW. All payments to DW or Universal, as the case may be, hereunder shall be made by wire transfer or such other method as DW or Universal, as the case may be, shall approve. Payments to DW shall be to DW or any entity designated from time-to-time by DW. Alternatively, at DW’s election, such payment shall be made directly by MCA International, B.V. in the Netherlands to a DW subsidiary in the United Kingdom or such other country as DW may designate, provided that any additional remittance or other taxes paid by MCA and resulting from payment being so made shall be a Distribution Expense, in which event MCA will rebate to DW *** of such tax credits at the end of such year and the remaining *** at the end of the following year.

iii. If a Payment Report indicates that the Distribution Expenses of Pictures exceed the Gross Receipts, DW shall pay Universal the difference within 5 business days following DW’s receipt of the Payment Report. In the event that it is later determined that such Payment Report overstated the amount payable by DW to Universal, DW shall be entitled to an immediate refund of such overpayment (plus interest thereon at the rate set forth in sub-paragraph iv).

Interest shall be charged on the amount due a party as computed from the date of the Payment Report but shall be waived if payment of the amount owing

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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is made within 5 business days after the receipt of the Payment Report.

iv. Interest shall be charged on any amount which is not paid when due (from the date due until the date of payment) hereunder by either party at the *** rate from time-to-time in effect. Such interest shall be paid at the same time as the associated principal payment shall be made.

v. DW shall be entitled to all audit results respecting the Pictures on the same basis and frequency as UIP Owners are provided with audit results as to their pictures. In that regard, DW acknowledges that currently such UIP audits are performed annually on an alternating basis using internal and external auditors.

g. Access and Audit Rights:

i. Universal shall keep, and shall cause UIP to keep, full, true and complete records and books of accounts together with all supporting vouchers and documents relating to the distribution of the Pictures hereunder (collectively, “Records”), and maintain, and cause UIP to maintain, for a period of seven years following DW’s receipt of a Payment Report all Records relevant thereto. Notwithstanding the foregoing, Universal shall in any event, and shall cause UIP in any event to, keep and maintain (or deliver to DW) all of the above mentioned materials for any longer period required to complete an open audit of which DW gives notice or in the event of an unresolved dispute with any participant or third party related to a Picture of which DW gives notice.

ii. Universal grants DW and its agents, employees and representatives the rights, from time-to-time at all times during the Term and for a period of *** after the latter of the expiration of the Term and the delivery of the last Payment Report hereunder, with reasonable prior notice to Universal and at all reasonable hours and with reasonable frequency, to examine, audit and take excerpts from and make copies of any such records, invoices, book of account, computer or data base information, and all other documents or

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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correspondence related to the distribution of the Pictures or to the calculation of amounts due to or from DW hereunder; provided, however, transactions will not be subject to audit more than *** years after delivery to DW of the Payment Report in which such transactions are initially reported. Notwithstanding the foregoing, DW shall only be entitled to confidential third party information to the extent the same is reasonably necessary to resolve an issue(s) under audit; if Universal and/or UIP refuses to supply any such information, the parties will (on DW’s request) submit to dispute resolution pursuant to Paragraph 10 of the Master Agreement and the “Judge” (as defined in the Master Agreement) shall impose such reasonable procedures (including, without limitation, limiting disclosure to auditors, redaction and in camera proceedings) as the Judge deems necessary to accord information reasonably necessary to conduct the audit while preserving the third party’s legal rights to confidentiality. DW’s audit rights hereunder shall include the right to examine and inspect all inventory of the Pictures in the possession or control of Universal, UIP and any Subdistributors and/or the duplication, printing and storage facilities used by Universal. All such audits shall, except as otherwise provided in subparagraph 5.g.iii. below, be at DW’s sole cost and expense.

iii. If an audit discloses any inaccuracies or discrepancies in Universal’s and/or UIP’s books and records with respect to the distribution of the Pictures hereunder or the amounts payable to or from DW, Universal and/or UIP, as applicable, shall cure such inaccuracies and discrepancies within thirty (30) days following notice thereof. In the event an audit shall uncover a deficiency as of the end of the period audited, or for any period of at least six months during the period audited, in each case equal to or greater than *** in any account owed at any time by Universal and/or UIP, as applicable, to DW hereunder, Universal and/or UIP, as applicable, shall immediately pay DW (i) said deficiency in full, and (ii) all costs and expenses in connection with such audit including, without limitation, hotel and airfare expenses.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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iv. In the event of an audit, Universal and/or UIP, as applicable, shall provide DW and its agents, employees and representatives with reasonable and suitable physical conditions in which to conduct such audit, including, without limitation, a desk and chair, adequate lighting and suitable ventilation, as well as a copying machine with which to make copies. UIP shall cause each Subdistributor to comply with the foregoing.

v. Each of Universal, UIP and DW shall use reasonable efforts to conduct any audit in an expeditious manner.

h. Operations:

i. Prints: UIP shall catalog and track (in a manner reasonably acceptable to DW) all prints and trailer and other advertising material and for the destruction of prints and for issuance of a certificate of destruction evidencing same, to the extent done for other UIP Owners (or to a greater extent as required by DW, provided, however, that if Universal and/or UIP are required to incur any new additional costs (of which Universal and/or UIP notifies DW in advance) for outside personnel Universal and/or UIP are required to engage solely in order to render such more extensive cataloging and tracking services which are not included within the scope of services to be rendered by Universal and/or UIP under this Exhibit “A”, Universal/UIP shall not be required to furnish such more extensive cataloging and tracking services unless DW pre-approves such costs and agrees to reimburse Universal and/or UIP, as applicable, for same (subject to appropriate reduction, to be mutually agreed, if and to the extent such more extensive cataloging and tracking services are utilized [subject to DW’s prior approval] by any party other than DW). Any dispute as to whether such more extensive cataloging and tracking services are within the scope of services to be rendered by Universal and/or UIP hereunder will be subject to dispute resolution pursuant to Paragraph 10 of the Master Agreement.

ii. Laboratories: DW shall have the right, at DW’s option, to negotiate laboratory deals independently of UIP (provided that DW will in appropriate circumstances use its good faith efforts to provide UIP notice thereof; it being agreed that DW’s failure to do same shall not be deemed to be a breach of this Exhibit “A”); otherwise DW shall be entitled

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to piggyback on the economics terms of Universal’s laboratory deal.

6. Representations and Warranties:

a. DW represents and warrants that:

i. As of the date UIP commences to advertise and/or distribute a Picture hereunder there shall be no claims, liens, encumbrances or licenses in or to the Picture which would limit or interfere with the rights hereby granted.

ii. All negatives and other materials to be delivered or made available to Universal will be of a quality suitable for the manufacturing of technically acceptable positive release prints of the Pictures and trailers thereof.

iii. Unless DW notifies Universal or UIP in writing to the contrary, there will be no restrictions which would prevent Universal from distributing the Pictures consistent with the provisions of this Exhibit “A”. There will not be any payments which must be made by Universal to any actors, musicians, directors, writers or other persons who participated in the Pictures, or to any union, guild or other labor organization for any right to exhibit the Pictures or as compensation in connection with such exhibition or for any other use of the Pictures or any of the rights therein and thereto, provided that DW shall not be obligated to supply any performing rights license (e.g., SESAC) which may be required in connection with exhibition of any Picture except only to the extent obtained by the UIP Owners or otherwise as customary in the motion picture business for so-called “major” studios.

b. Universal represents and warrants that:

i. Neither Universal (nor UIP) will suffer or permit any lien, claim, encumbrance, pledge or mortgage to attach to any Picture or to any materials furnished by DW relating to the Pictures.

ii. No material (including, without limitation, advertising, publicity, promotional, trailers, etc.) added to the Pictures or used in connection therewith by Universal or on its behalf by UIP violates or will violate, or infringes or will infringe, any trademark, trade name, contract, agreement, copyright (whether common law or statutory), patent, literary, artistic, dramatic, personnel, private, civil,

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property, or privacy right or “moral rights of authors” or any other right or slander or libel, any person or entity, provided that the foregoing shall not apply to any material which is created by or supplied by DW.

iii. UIP has or will have written agreements with each Subdistributor hereunder to comply with the terms and conditions of this Exhibit “A”. Such agreements will be made available to DW promptly upon its request.

7. Indemnity: In addition to, and without limiting, each party’s indemnity pursuant to Paragraph VIII.5. of the Master Agreement, each party (“Indemnitor”) shall also at its own cost and expense indemnify, defend and hold the other party, its and their parents and affiliates, and their respective employees, agents, managers, subdistributors, directors and shareholders (collectively, “Indemnitee”) harmless from and against any and all loss (exclusive of profits), liability or expense resulting from any claim, demand or suit which may be made or brought against Indemnitee by reason of any claim by any third party that a Picture, or any element thereof, including, without limitation, the sound and music synchronized therewith, or any material (including, without limitation, advertising, publicity, promotional trailers, etc.) added to the Picture or used in connection therewith, to the extent any of the above are supplied by or at the request or direction of or on behalf of Indemnitor and utilized by Indemnitee as instructed by Indemnitor, or added by the Indemnitor without Indemnitee’s knowledge, violates or infringes upon the trademark, trade name, patent, copyright, literary, dramatic, musical, artistic, personal, private, publicity, civil, property or contract right, right of privacy, the moral rights of authors or any other right of any person, firm, corporation or entity. Universal will not be entitled to any indemnity hereunder to the extent that losses arise or result because Universal fails to withdraw any Picture which is the basis of any such claim from distribution immediately as, when and to the extent so instructed by DW (in which event DW will indemnify Universal and UIP against third party breach of contract claims in connection with contracts entered into by Universal and/or UIP in accordance with the terms of this Exhibit “A” and based on such withdrawal). DW shall maintain and cause Universal and UIP to be added as additional insureds (without responsibility for premiums or deductibles) with respect to the Pictures under DW’s customary Errors and Omissions policy pertinent to exhibition of the Pictures in the Territory (and each country therein). All such insurance coverage shall be primary to any other coverage maintained by Universal and UIP. DW will supply Universal with customary certificates of insurance and copies of the pertinent policies evidencing DW’s coverage, if any. Notwithstanding the foregoing, DW may elect in its sole discretion to self-insure. Universal shall be fully responsible for the loss or destruction of any Pictures or related physical elements in Universal’s or VIP’s or any of their Subdistributors’ or agents’ possession or control, unless and to the extent that the negligent or wrongful conduct of DW and/or a third party with whom DW contracts directly pursuant to Paragraph 3.c of this Exhibit “A” results in such loss or destruction (and further provided that such negligent or wrongful conduct is not of the type for which the distributor would be responsible under industry custom). To the extent UIP does so for UIP Owner’s pictures, the Pictures shall be covered, and DW shall be added as an additional insured (without responsibility for premiums or

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deductibles), under UIP’s property, casualty, and liability insurance and the proportionate cost thereof shall be a Distribution Expense hereunder (provided, however, that if DW would be required hereunder to reimburse Universal and/or UIP for such insurance costs and Universal and/or UIP can exclude DW under the terms of the policy, then DW may in its sole discretion decline such insurance). All such insurance coverage shall be primary to any other coverage maintained by DW. UIP shall immediately forward to DW Certificates of Insurance evidencing UIP’s coverage, if any. Notwithstanding the foregoing, Universal may elect in its sole discretion to self-insure.

8. Copyright: DW at its sole expense shall cause the Pictures to be protected by copyright in any part of the Territory where motion pictures may be protected by copyright. Universal will cooperate as reasonably required by DW in connection with actions undertaken by DW (in its sole discretion) to protect copyrights, trademarks, etc.

9. Delivery: DW shall timely deliver to Universal at DW’s expense all pertinent physical materials which DW reasonably deems necessary to facilitate Universal’s exercise of its Theatrical Distribution Rights hereunder provided that Universal and UIP shall have no liability whatsoever for any loss, cost or damages caused by DW’s failure to provide customary advertising and release materials in a complete and timely manner, except and to the extent that such failure is the fault of a Universal-provided service provider with whom DW has not directly contracted for the service provided. DW will provide Universal with any then-available print, trailer and advertising materials within sufficient time to enable UIP to meet DW’s advertising and release requirements hereunder. DW will deliver to Universal a fully-executed laboratory access letter for each Picture in which DW has granted Universal Theatrical Distribution Rights hereunder.

10. Termination:

a. Termination Without Cause:

i. DW and/or Universal shall be entitled to terminate this Exhibit “A” and/or Exhibit “B” (but not Exhibit “C” and/or Exhibit “D”), as DW or Universal, as applicable, determines in its sole discretion, at any time, without cause, upon twelve-months written notice as to the Exhibit(s) being terminated. Termination without cause must be in good faith and after written notice to the non-terminating party specifying in good faith the terminating party’s problems, suggested solutions and following the opportunity for both parties to meet and work together to cure such problems. Termination under this subparagraph 10.a. will not be subject to arbitration and/or litigation except solely for claims of bad faith or alleged violation of the next sentence. Termination without cause would not be appropriate if the reason for the termination was: (a) solely for the economic advantage of the terminating party (e.g.,

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for DW to make a better deal or if Universal determined that this is not a good deal); and/or (b) solely because DW has started (or wants to start) its own distribution company and/or network for the Territory (although if DW otherwise terminates without cause, DW may thereafter commence its own distribution company and/or network).

b. Termination With Cause:

i. This Exhibit “A” (and Exhibit “B”, if DW determines in its sole discretion) may be terminated by either party, either (a) entirely; (b) in any country(ies) or “Region(s)” (as defined below) where the applicable event or non-performance has occurred (and either entirely in such country[ies] or Region[s]), or only with respect to any Picture(s) affected by such event or non-performance in such country[ies] or Region[s]); and/or (c) in the entire Territory with respect to a Picture(s) affected by such event or non-performance, all as the terminating party determines in its sole discretion without prejudice to any other rights or remedies available to it, upon the happening of any of the following circumstances:

1. If the other party shall materially breach this Exhibit ”A” (provided that the non-terminating party shall have a period of 30 days, or such other shorter period as may be reasonably required with respect to each alleged breach, following written notice thereof (specifying in reasonable detail the alleged breach and the action(s) necessary to cure same and indicating the Picture(s) and territory(ies) being terminated) to cure an inadvertent breach; provided that no such cure shall be allowed for a second breach of the same type as to which the breaching party has previously been notified and given a cure period; or

2. If the non-terminating party shall make any assignment for the benefit of creditors, file a petition for bankruptcy, be judged bankrupt or become insolvent, or if the other party restructures or dissolves or changes pursuant to government order affecting a significant portion of the market.

ii. This Exhibit “A” (and Exhibit “B”, if DW determines in its sole discretion) may be terminated by DW, either (a) entirely; (b) in any country(ies) or Region(s) where the

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applicable event or non-performance has occurred (and either entirely in such country[ies] or Region[s]), or only with respect to any Picture(s) affected by such event or non-performance in such country[ies] or Region[s]); and/or (c) in the entire Territory with respect to a Picture(s) affected by such event or non-performance, all as the terminating party determines in its sole discretion without prejudice to any other rights or remedies available to it, upon the happening of any of the following circumstances:

1. If UIP’s exemption from certain trade laws and regulations in the European Economic Community is not extended or renewed by the EEC Commission or other governing body (“EEC”), with the result that UIP cannot conduct business in the EEC in the manner and with the organizational structure that exists as of the date of this Exhibit “A”, provided that if DW does not exercise its termination right under this subparagraph 1 and Universal is permitted to continue to render services hereunder, so long as UIP (or if it cannot legally, then Universal) continues the services required hereunder to the maximum extent legally possible given such event and at the level of services then required of UIP and Universal hereunder, such performance shall be deemed consistent with Universal’s obligations hereunder, it being acknowledged that DW may nonetheless thereafter choose to exercise its termination right under this subparagraph; or

2. If UIP “restructures” (i.e., if UIP ceases to be the foreign distribution entity for any or all of UIP Owners or if the relative ownership interests among the UIP Owners change); provided, however, that DW shall not be entitled to terminate pursuant to this provision if UIP (or a successor entity) continues to be the distribution entity for Paramount and Universal and no other U.S. major theatrical studio or motion picture financier or distributor. If DW does not exercise its termination right under this subparagraph 2 and Universal is permitted to continue to render services hereunder, so long as UIP (or if it cannot legally, then Universal) continues the services required hereunder to the maximum extent legally possible given such event and at the level of services then required of UIP and

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Universal hereunder, such performance shall be deemed consistent with Universal’s obligations hereunder, it being acknowledged that DW may nonetheless thereafter choose to exercise its termination right under this subparagraph; or

3. If more than 3 times during any 12-month period during the Term or an aggregate of 7 times during the Term (provided that DW shall have given Universal reasonably prompt notice of each such alleged event and/or non-performance and that UIP shall have failed to cure the same within 5 days, or such shorter period as reasonably required by DW, following DW’s written notice thereof to cure an inadvertent breach) UIP fails to:

(a) Timely provide any distribution and/or marketing plans and budgets and/or other information or documentation required under this Exhibit “A”; or

(b) Release the Pictures pursuant to plan on dates and for durations for the release of the Pictures and in the theaters approved by DW, subject to customary force majeure events (provided, in the event of a delay caused by a force majeure event, DW shall be permitted to distribute, or cause the distribution of, such Picture(s) as provided in Paragraph 2.c. above if DW reasonably determines that UIP will not be available to release the Pictures as and when required by DW); or

(c) Obtain distribution terms from exhibitors for the Pictures equivalent to those UIP has obtained for comparable pictures of a UIP Owner.

4.     (a) If DW determines that Universal (and UIP) has failed or will fail to achieve “Minimum Results” (as defined below) in the Territory as a whole, in any “Region” as a whole (i.e., South America, Western Europe, Australia, New Zealand, Japan, Far East [to the extent included in the Territory] and/or Africa) and/or in any of UIP’s six top box office

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grossing countries (provided, Japan shall not be considered a “country” for this purpose) for the preceding calendar year (each, a “Top 6 Country”, and currently Germany, France, England, Spain, Australia and Brazil) with respect to: (i) five or more Pictures in the Territory, any Region or any Top 6 Country during the Term; and/or (ii) any three out of five (on a rolling basis) consecutively released Pictures (i.e., consecutively initially released in commercial motion picture theaters before paying public audiences in the United States) in the Territory, any Region or any Top 6 Country. (UIP will provide DW with a list of the Top 6 Countries annually.) Minimum Results in the Territory, any Region or any Top 6 Country, as the case may be, shall be defined pursuant to Exhibit “A-2” attached hereto and incorporated herein by this reference.

(b) If DW believes that Universal (and UIP) has failed or will fail as provided in Exhibit “A-2” to achieve Minimum Results with respect to any Picture or Pictures, DW will so notify Universal in writing, and unless Universal notifies DW in writing within ten business days thereafter stating in detail its objection to DW’s determination, such determination shall thereafter be deemed conclusive for all purposes and not subject to later challenge. If Universal so objects to DW’s determination, DW may submit such dispute to dispute resolution pursuant to Paragraph 10 of the Master Agreement. DW’s right to submit such controversy to dispute resolution shall be without prejudice to its other rights under the Agreement and shall not be deemed to be a challenge to the validity and/or enforceability of the Agreement.

(c) Notwithstanding the foregoing, a Picture(s) will not be required to achieve “Minimum Results” if DW materially changes UIP’s distribution plan therefor and if the plan

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submitted by UIP was consistent with the distribution plans proposed or implemented by UIP in connection with VIP’s distribution of comparable motion pictures.

5. If at any time during the Term any country(ies) comprising the Territory shall be or become subject to a United States Government embargo or trade restriction, and Universal fails to immediately comply (and cause UIP to comply) with such embargo or trade restriction as to the Pictures; or

6. If DW exercises its termination right with respect to this Exhibit “A” under the first sentence of Paragraph 7.B.(i) of Exhibit “B”.

c. Upon termination of this Exhibit “A”, DW shall have the right (but not obligation) to order the immediate cessation of any or all distribution of the Pictures and the immediate return of any or all prints and related materials, or, at DW’s election, to require Universal to continue distribution (subject to continuation of Distribution Fees on such Picture[s]) of some or all Pictures previously delivered and either in release or ready for release as and for the duration of the initial period (as determined by DW in its absolute discretion) of theatrical distribution, and in those parts of the Territory designated by DW in its absolute discretion (though DW shall not be obligated to deliver any additional Pictures subsequent to termination of this agreement); provided that Universal and UIP shall have the right to honor all then-existing DW-approved contractual commitments in connection with the exercise of rights granted hereunder. Universal will remain obligated to make all accountings and payments set forth herein with respect to motion pictures distributed by it (or UIP). On expiration or other termination of the Term, Universal will (subject to Section VIII.2 of the Master Agreement and the reasonable approval of Universal’s counsel) immediately execute such quitclaims and other documents as DW’s counsel deems necessary or advisable to evidence the termination of all Universal’s rights with respect to some or all of the Pictures. Any disputes with respect to such quitclaim and other documents shall be resolved as set forth in Section VIII.2 of the Master Agreement. In the event no timely objection is made or such objection is resolved, and Universal fails to execute immediately any document useful or necessary to effectuate the confirmation or implementation of the provisions hereof, DW shall be irrevocably appointed as Universal’s attorney-in-fact for such purpose. It is acknowledged said appointment power is coupled with an interest.

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d. The parties acknowledge that if and to the extent DW terminates for cause Universal’s services hereunder, subject to the first and second sentences of subparagraph c. above, Universal shall not be entitled to any Distribution Fees thereafter with respect to any terminated territory(ies) and/or Pictures (i.e., if DW terminates Universal’s services hereunder with respect to a particular territory(ies) and/or Picture(s), Universal’s Distribution Fee will be calculated on Receipts attributable to other than such terminated territory(ies) and/or Picture(s)).

e. At the expiration or termination of the Term, DW shall advise UIP to either return or destroy all materials in its possession in connection with the Pictures, as DW shall instruct. Such action shall be at DW’s expense in the event of expiration, termination without cause by DW or termination for cause by Universal, and at Universal’s expense in the event of termination without cause by Universal or termination for cause by DW.

11. Miscellaneous:

a. Standard of Care: Except as otherwise specifically directed or approved in writing by DW, in all actions under this Exhibit “A”, Universal shall cause UIP to act in accordance with at least that standard of care that it exercises on behalf of each of the UIP Owners. Both parties shall operate under this agreement in good faith. Without limiting the generality of the foregoing, Universal will ensure that services Universal provides to DW hereunder will be substantially equivalent in quantity, level and priorities to the services accorded by Universal with respect to theatrical distribution of Universal motion pictures; and services provided by UIP (and any Subdistributor) will be substantially equivalent in quantity, level and priorities (including, without limitation, priorities in booking theaters, circuits and booking dates) to the services accorded by UIP (and any Subdistributor) to the UIP Owners’ pictures of similar domestic theatrical grosses for same genre of picture.

b. UIP Distribution Credit: Universal shall have the right to accord UIP (or any successor entity, if permitted hereunder) its distribution credit (with its logo) on screen for each Picture in reasonable and customary position on a separate card, but such credit shall be no larger or more prominent and shall remain on screen no longer than UIP’s present customary credit or UIP’s credit on the motion pictures of the UIP Owners. Universal shall also have the right to accord UIP (or any successor entity, if permitted hereunder) its distribution credit (with its logo) in advertising in the Territory approved hereunder, in reasonable and

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customary position and size. DW shall have the right to designate all other credits on the Pictures and each agreement with a Subdistributor shall provide that such Subdistributor is contractually bound to abide by all such credit obligations.

c. Assignment:

i. Universal may not assign this Exhibit “A” except in accordance with the terms of the Master Agreement. Notwithstanding the foregoing, it is agreed that UIP, or a successor entity which is owned and controlled solely by the UIP Owners (or by Paramount Pictures and Universal and no other party) and distributes all their motion pictures in the Territory for which they have the distribution rights, must be the foreign distributor for the Pictures.

ii. DW may not assign this Exhibit “A” except in accordance with the terms of the Master Agreement.

iii. Any attempted assignment in contravention of the foregoing shall be deemed a material breach of this Exhibit ”A”. In the event of a permitted assignment by Universal or DW to a subsidiary, Universal or DW, as applicable, shall nonetheless remain primarily liable hereunder.

d. Other Activities: Subject to the provisions hereof, nothing herein shall limit in any way the right of DW, Universal, or UIP or any subsidiary or affiliate thereof to engage in business activities or endeavors of any kind or nature, including but not limited to:

i. All manner of television, home video and merchandising (including, without limitation, video and computer games) exploitation of the Pictures;

ii. Advertising;

iii. Publishing;

iv. Interactive Media;

v. The sale of designs, stories, characters, trademarks, trade names or other rights or properties;

vi. Ancillary market activities;

vii. The co-financing or co-production or any other interest of any nature in any motion picture or other property (as to

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which, in the case of DW, DW does not own or control [and hence can not accord UIP hereunder] any or all of the theatrical distribution rights to such Picture in the Territory.)

viii. The exercise of any right not expressly granted hereunder.

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EXHIBIT “A-1”

SUBDISTRIBUTORS AND TERMS

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EXHIBIT “A-2”

1. General: Minimum Results for a Picture in the Territory as a whole, in each Region of the Territory (i.e., South America, Western Europe, Australia/New Zealand, Japan, Far East [to the extent included in the Territory] and/or Africa) and in each Top 6 Country, as the case may be, shall be determined by comparing, in the manner set forth below, either (a) the “Territory Billings” for a Picture to the “Domestic Billings” for such Picture, or (b) the “Regional Billings” or “Country Billings” (in each Top 6 Country) for a Picture, as the case may be, to the “Territory Billings” for such Picture. “Domestic Billings”, “Territory Billings”, “Regional Billings” and “Country Billings” shall mean rental receipts from theatrical distribution in the relevant territory. Notwithstanding anything in this Exhibit “A-2” or in Exhibit “A” to the contrary, the Far East [to the extent included in the Territory] shall not be considered a Region for Minimum Results purposes if the portion of the Far East initially included in the Territory decreases, as a result of the exclusion (pursuant to Paragraph 1.c.ii of Exhibit “A”) of additional countries in Asia in which the Korean Shareholder commences distribution of motion pictures, such that the Regional Billings for the portion of the Far East thereafter remaining in the Territory is less than 75% of the Regional Billings of the portion of the Far East initially included in the Territory; and in such event, the remainder of the Far East remaining in the Territory shall instead be included as part of Japan for Minimum Results purposes (with appropriate adjustments to account for the increase in the size of Japan in such event). Appropriate adjustments shall also be made for Minimum Results purposes to the extent necessary to account for (a) a Picture not being distributed by UIP in any portion of the Territory due solely to censorship or governmental prohibition, and (b) only with respect to Pictures with Domestic Billings of less than ***, a Picture not being distributed by UIP in any portion of the Territory pursuant to the first sentence of Paragraph 2.c of Exhibit “A”.

2. Definitions:

a. “Amblin’ Performance Standard” (“APS”) shall mean the following:

(i) “APS I” shall mean the percentage amount *** determined by dividing (x) the aggregate Domestic Billings for all theatrical motion pictures produced by Amblin’ Entertainment (“Amblin”) and initially released for theatrical exhibition in the Domestic Territory in the years 1988 through 1995 inclusive (the “Base Period”) and thereafter released for theatrical exhibition in the Territory which achieved Domestic Billings of *** (other than “Schindler’s List” and “Arachnophobia”) into (y) the aggregate Territory Billings for the same group of Amblin’ pictures. By way

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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of example only, assume aggregate Domestic Billings in the Base Period of *** and aggregate Territory Billings for the same group of Amblin’ pictures of ***. The APS I for the Territory would be ***.

(ii) “APS II” shall mean the percentage amount *** determined by dividing (x) the aggregate Domestic Billings for all theatrical motion pictures produced by Amblin’ and initially released for theatrical exhibition in the Domestic Territory in the Base Period and thereafter released for theatrical exhibition in the Territory which achieved Domestic Billings of less than *** and more than *** into (y) the aggregate Territory Billings for the same group of Amblin’ pictures. By way of example only, assume aggregate Domestic Billings in the Base Period of *** and aggregate Territory Billings for all such Amblin’ pictures of ***. The APS II for the Territory would be ***.

b. “Regional or Country Billing Percentage”, as the case may be, shall mean the percentage amount *** determined by dividing (x) the aggregate Regional or Country Billings, as the case may be, for all UIP pictures released in the last three (3) years of the Base Period into (y) the aggregate Territory Billings for the same group of UIP pictures. By way of example only, assume aggregate Country Billings in Germany for all UIP pictures released in the years 1993, 1994 and 1995 of *** and aggregate Territory Billings for the same group of UIP pictures of ***. The Country Billing Percentage would be ***. The Regional or Country Billing Percentage shall be subject to adjustment on an annual basis utilizing a floating three (3) year average updated each year.

c. “Regional or Country Performance Standard”, as the case may be, shall be determined by multiplying (x) Domestic Billings for the applicable Picture by (y) the applicable APS as determined by the Picture’s Domestic Billings, the product of which shall be multiplied by (z) the Regional or Country Billing Percentage, as the case may be. By way of example only, assume (i) Domestic Billings for the applicable picture of *** (ii) an APS I of ***, and (iii) a Country Billing Percentage of *** for the specific Top 6 Country within the Territory (e.g., Germany). Based on the foregoing, the applicable Country Performance Standard for a Picture achieving Domestic Billings of *** would be ***.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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3. Minimum Results:

Minimum Results for a Picture in the Territory as a whole, in each Region, and in each Top 6 Country, as the case may be, shall be deemed to have been achieved if with respect to each Picture:

(a) For the Territory as a whole — the Territory Billings for a Picture as a percentage of the Picture’s Domestic Billings fall within fifteen (15) percentage points of the applicable APS. By way of example only, assume the APS I is ***. Then each Picture which achieves Domestic Billings of *** or more must achieve Territory Billings equal to at least *** of such Picture’s Domestic Billings in order to meet Minimum Results for the Territory as a whole.

(b) For each Region or Top 6 Country within the Territory — the Regional or Country Billings, as the case may be, for a Picture fall within *** of the Regional or Country Performance Standard. By way of example only, assume (i) a Country Performance Standard of *** for a specific Picture in Germany, calculated in accordance with Paragraph 2.c. above, and (ii) Country Billings in Germany of *** for the Picture. Based on the foregoing, the Picture will have failed to achieve Minimum Results in Germany because it failed to achieve Country Billings of at least ***.

(c) For purposes of determining the applicable APS for a Picture, the *** breakpoint will be adjusted by the percentage change in the annual average movie ticket price outside the U.S., as reported by the MPAA or MPA, as applicable.

4. Projection of Final Results:

If final Domestic Billings, Territory Billings, Regional Billings and/or Country Billings for a Picture are not yet available (e.g., because the date of the initial theatrical distribution in a country within the Territory has not occurred or because some or all final billing results are not available), DW may, nevertheless, utilize interim billing figures (in the Domestic Territory, the Territory and/or any Region or Top 6 Country), reasonable projections based thereon, and historical billings from the immediately preceding year to determine whether a Picture has failed or will fail to achieve Minimum Results. If a Picture fails to meet Minimum Results based on such projections, but ultimately achieves Minimum Results based on actual results, then it shall be deemed to meet Minimum Results for all purposes; provided, in no event will rental receipts from third-party distribution (i.e., other than UIP or an affiliated party) be included for purposes of calculating Minimum Results and in no event will DW be required to retroactively reverse any termination hereunder.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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SCHEDULE A-TC

AMENDED AND SUPPLEMENTAL TERMS AND CONDITIONS APPLICABLE TO EXHIBIT A

1. Territory. “Territory” as defined in Exhibit A shall exclude the following:

a. The entire territorial United States and its possessions, territories and commonwealths, including the U.S. Virgin Islands, Puerto Rico, Guam, and the former U.S. Trust Territories of the Pacific Islands, including the Carolina Islands, the Marshall Islands and the Mariana Islands, Saipan and American Samoa; the Dominican Republic, the British Virgin Islands, the Bahamas, Bermuda, Saba Island, St. Eustatius Island, St. Kitts Island, St. Martin Island, St Maarten Island; and Canada and its possessions and territories;

b. Republic of South Korea, Democratic People’s Republic of North Korea and the People’s Republic of China (including Hong Kong) to the extent DW licenses Theatrical Distribution Rights in such countries to or through DW’s Korean shareholder or any of its Affiliates, their successors or designees.

c. Either Japan or the “German Territory”, as DW may elect. The Federal Republic of Germany, the Republic of Austria and German-language rights in Lichtenstein, Luxembourg and Alto Adige shall constitute the German Territory. At any time during the Term, as a basis to raise additional capital, DW may assign, license or grant to any third party(ies)Theatrical Distribution Rights in and to Pictures for either Japan or the German Territory (the “Output Arrangement”), in which event Distributor shall not have the right to exercise Theatrical Distribution Rights to the applicable Pictures in the designated territory, except as otherwise may be provide in Exhibit A. DW, however, shall have the right to cause Distributor to provide all of the “Services” (as defined herein) in connection with such Theatrical Distribution Rights in Japan or the German Territory, in which event Distributor shall be entitled to the applicable Distribution Fees as set forth in Exhibit A, calculated on Gross Receipts (as defined in Exhibit A) derived from the applicable territory, and such Gross Receipts shall be taken into account for purposes of calculating the Gross Receipts breakpoints for the Schedules Percentages in Paragraph 5.b.i. of Exhibit A. DW and such third parties shall have free access to all Picture elements and related materials for all purposes, provided DW and such third parties shall bear all duplication, freight and delivery costs in connection therewith. DW will provide Distributor with reasonable notice of termination of Theatrical Distribution Rights in the applicable territory, provided, however, if Distributor has prior to such notice (x) booked theatres for any Picture(s) subject to the Output Arrangement, then Distributor shall continue to provide all of the Services

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in connection with such Picture(s) in the applicable territory and shall be entitled to retain the applicable Distribution Fees thereon, or (y) incurred approved Distribution Expenses for any Picture(s) subject to the Output Arrangement, then DW shall reimburse Distributor for the cost thereof unless such Distribution Expenses are otherwise reimbursed to Distributor pursuant to the terms of Exhibit A.

2. Non-Theatrical Rights. Certain Non-Theatrical Rights, as set forth and defined in a. below, are granted to Distributor for exploitation pursuant to Exhibit A.

a. “Non-Theatrical Rights” shall refer to the right to exhibit a Picture solely in the Territory in hotels, motels, hospital and other health care facilities; correctional facilities; schools and other educational institutions; common areas of residential living communities; retirement centres, camps, religious institutions, buses, coaches and trains; libraries and museums; restaurants, bars and clubs; community military bases and government installations (excluding US/Canadian); and oil fields and oil rigs (excluding Aramco/US/Canadian sites).

b. Non-Theatrical Rights retained by DW and specifically excluded from Exhibit A include: all airlines and aircraft (including military aircraft, e.g. the Royal Air Force) and all ships at sea (including cruise ships and ferries); all US and Canadian military and government installations (e.g. embassies and diplomatic posts) wherever located; Aramco/US/Canadian industrial sites; and all other non-theatrical venues and rights not specifically granted to Distributor hereunder.

c. Distributor agrees to use reasonable efforts to exploit on behalf of DW Non-Theatrical Rights with respect to the Pictures during the Term, and such Non-Theatrical Rights shall be subject to the terms and conditions of Exhibit A, including (i) the accounting for revenues and related distribution expenses in accordance with Exhibit A, and (ii) the rights of DW to withhold, withdraw and/or terminate Non-Theatrical Rights, as and to the extent permitted by the terms of Exhibit A with respect to the Pictures and Theatrical Distribution Rights. Additionally, upon six (6) months written notice to Distributor, DW shall have the right to terminate Distributor’s exploitation of such Non-Theatrical Rights, subject to existing licenses entered into prior to such notice and provided that the term of any licenses entered into after such notice shall not continue beyond the six (6) month notice period unless preapproved by DW.

3. Services. Subject to and without limiting anything set forth in Exhibit A except as amended by the terms of this Schedule A-TC (provided that in the event of any conflict between Exhibit A, the Settlement Agreement (as defined below) and this Schedule A-TC, the provisions of this Schedule A-TC shall control over both the Settlement Agreement and Exhibit A, and the Settlement Agreement shall control over Exhibit A), Distributor shall supply and render, either itself or through third

52

parties, at no cost or expense to DW, except for Distributor’s retention of the applicable Distribution Fees set forth in Exhibit A, or as expressly set forth in the Settlement Agreement or Paragraph 4. below, the services (“Services”) as described in Paragraph 4. below. Distributor and DW shall bear the cost of Services during the “Initial Term” and during the Extended Term (as such capitalized terms are defined in Paragraph 4. below) in accordance with Exhibit A as supplemented by that certain Settlement and Release Agreement between the parties hereto, dated as of December 29, 2000 (the “Settlement Agreement”), and as further amended and supplemented by the provisions of this Schedule A-TC.

4. Definition of Services. Distributor shall render all customary services required to distribute the Pictures in a manner consistent with Services rendered during the initial term, i.e. the period from June 1995 through June 19, 2001 (“the Initial Term”), throughout the Territory. Any Services rendered by UIP personnel during the Initial Term shall not be charged separately or allocated in any manner to Pictures under the Agreement during the extended Term, i.e., from June 20, 2001 until termination of the Term (the “Extended Term”), whether the Services are hereafter performed by UIP personnel or through third parties, except as expressly permitted in this Schedule A-TC. Services shall not be deemed to include permitted Distribution Expenses pursuant to Exhibit A, costs for which DW is responsible under Paragraph 4 of this Schedule A-TC, or are Distribution Expenses specifically approved by DW. If any Services that DW knowingly agreed to pay as a third party cost during the Initial Term (“DW Approved Prior Costs”, e.g. ***) are hereafter subsequently provided internally by UIP or Universal, DW will agree (prior to such costs being permitted Distribution Expenses as defined in Exhibit A) on an appropriate charge or allocation of such costs to Pictures, provided such charge or allocation shall be calculated in a fair and equitable manner and in no event exceed the rate or outside service charges formerly paid as a third party cost, taking into consideration prevailing market changes. DW’s approval of third party costs in any given territory or country shall not be deemed approval in other territories or countries unless expressly agreed in writing by the parties. During the Extended Term, DW shall be responsible only for costs for controlled agency services and backroom services to the extent such services are performed by third parties as of April 15, 2001 on a country-by-country basis throughout the Territory. Promptly after June 15, 2001 (and not later than July 31, 2001), Distributor shall provide to DW a list of all controlled agency service providers as of April 15, 2001, on a country-by-country basis, provided that an inadvertent failure to list a controlled agency service provider on such list shall not preclude Distributor from using such provider (or affect DW’s responsibility for the costs associated therewith) if such provider (or a prior

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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controlled agency service provider) in fact provided controlled agency services as of April 15, 2001. Services shall include, but are not limited to:

a. Marketing And Distribution

i. For the top fifteen (15) countries and for all countries within the Territory in the case of animated feature films, and otherwise mutually agreed — prepare and recommend in full consultation with DW country-by-country marketing plans, budgets and distribution plans containing such information, analysis and recommendations as DW may from time-to-time reasonably request. Country-by-country distribution plans for each Picture shall specify release dates and pursuant to and in accordance with UIP’s SF4 policies (which shall not materially change from the policy as in effect on April 15, 2001), the theaters in each key city. The top 15 countries as of the date hereof are: Japan, Germany, UK, France, Italy, Spain, Sweden, Belgium, Netherlands, Switzerland, Argentina, Brazil, Mexico, Australia and Taiwan.

ii. Where rights are known to be available, all plans to be delivered no less than six (6) weeks prior to the initial theatrical release date in the Territory for each Picture. Notwithstanding the foregoing, in circumstances where media availability or advance booking deadlines require earlier commitments to facilitate the cost effective purchase of media, UIP shall use its reasonable efforts to deliver plans in time to allow DW at least 5 business days to review and approve budgets and media plans ahead of such deadlines (provided in no event shall Distributor be required to provide plans more than 60 days prior to initial theatrical release).

iii. Provide marketing and advertising services, including all staff and personnel costs, excluding (a) controlled agency services (to the extent DW bears the costs thereof as set forth in the penultimate sentence of Paragraph 4, above), which for purposes of Exhibit A (including this Schedule A-TC) shall mean (i) “implants”, i.e., agency personnel located at or substantially based at UIP offices (unless UIP has no local office) and who, in connection with UIP pictures generally, render specific tasks or perform specific department functions related to marketing and advertising (e.g., *** personnel in the United Kingdom), and (ii) marketing and advertising agencies who on an out-sourced basis administer the

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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marketing and promotion of UIP pictures generally in a territory (e.g., the *** in Germany), (b) DW Approved Prior Costs, and (c) costs included in DW approved budgets, provided any budget item(s) specifically disapproved by DW shall not be provided unless and until Distributor and DW mutually agree on such costs.

iv. Develop strategies for media buying and advertising and promotion, including the preparation of advertising budgets and advertising media and publicity plans. Negotiate with third party agencies and media representatives in respect of media buying. Coordinate and place orders for media buying on behalf of DW, including broadcast transmissions, display space, publicity material, etc. The basic services described herein are included within the Distribution Fees, excluding (a) any controlled agency services rendered in connection with such basic services, (b) DW Approved Prior Costs, and (c) costs included in DW approved budgets, provided any budget item(s) specifically disapproved by DW shall not be provided unless and until Distributor and DW mutually agree on such costs. Costs of media buyer agency commissions and actual ad costs will continue to be borne by DW.

v. Adapt advertising and promotional concepts on a country-by-country basis.

vi. Advise on the selection of local or alternative titles for DW’s approval.

vii. Where applicable, develop and implement in-theatre promotions, exhibitor and consumer mailings.

viii. Select and purchase on behalf of DW goods and services from third parties, including graphic designers, printers, producers, sound and film labs.

ix. Arrange and supervise the production of all filmed, taped and recorded advertising and publicity. The basic services described herein are included within the Distribution Fees, excluding (a) any controlled agency services rendered in connection with such basic services, (b) DW Approved Prior Costs, and (c) costs included in DW approved budgets, provided any budget item(s) specifically disapproved by DW shall not be provided unless and until Distributor and DW mutually agree on such costs.

x. In-house evaluation of the effectiveness of media buying and other campaigns against final box office results on an occasional basis as requested by DW.

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xi. Coordination of the preparation and control of advertising and promotional materials (e.g. text, scripts, ad sales materials, etc.). The basic services described herein are included within the Distribution Fees, excluding (a) any controlled agency services rendered in connection with such basic services, (b) DW Approved Prior Costs, and(c) costs included in DW approved budgets, provided any budget item(s) specifically disapproved by DW shall not be provided unless and until Distributor and DW mutually agree on such costs.

xii. To the extent made available to UIP, pass through to DW media buying reports and statistics.

xiii. To the extent applicable, arrange for the development of secondary marketing and new product opportunities.

xiv. Provide all publicity coordination services (including UIP in-house supervision). The cost of third party publicists will be borne by DW, subject to DW’s prior approval of the designated third party publicist and costs thereof. The basic services described herein are included within the Distribution Fees, excluding (a) any controlled agency services rendered in connection with such basic services, (b) DW Approved Prior Costs, (c) costs included in DW approved budgets, provided any budget item(s) specifically disapproved by DW shall not be provided unless and until Distributor and DW mutually agree on such costs.

xv. Develop and use reasonable efforts to secure national and local tie-in partner promotions.

xvi. Advise DW re censorship issues and submit each Picture to censorship authorities.

b. Finance

i. Develop and maintain profit/loss statements for all released Pictures per the level of information currently received as of the date hereof.

ii. Provide financial/accounting reports/results per the current level of information and frequency of reporting as of the date hereof.

iii. Code and approve expenditures and invoices. Review and approve purchase orders.

iv. Prepare gross billings reports, booking confirmations, sales dating charts, reports detailing by Picture and by country local box office (in both U.S. Dollars and local currency) and theater admissions

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where available, bad debt/write-off reports and Blocked Currency totals to the extent applicable after the date hereof.

v. Provide comparative performance data, such as competitive grosses to the extent such information is available in the relevant market and the provision of such information will not result in a violation of law.

vi. Maintain exhibitor data, including key theater ownership, number of screens and seats, local applicable taxes on admission prices and geographical breakdown of theaters.

vii. Collection of billings.

c. Operations

i. Oversee all print duplication operations.

ii. Manage all vendor and supplier activities.

iii. Manage and render all services and provide all facilities and space in connection with the shipping, storage and inspection of prints and trailers in accordance with the procedures set forth in Exhibit A. DW shall pay for such service costs, whether incurred by UIP or third parties if (i) in the relevant territory, such services were provided by third parties as of April 15, 2001, and (ii) to the extent such costs do not exceed the cost previously charged by third parties, taking into consideration prevailing market changes.

iv. Prepare and submit dubbing budgets on a country-by-country, Picture-by-Picture basis in U.S. Dollars and in local currency other than to the extent DW chooses to provide such services itself.

v. Manage all dubbing, subtitling and editing of the Pictures and trailers thereof other than to the extent DW chooses to provide such services itself. If and only if DW utilizes UIP internal supervisory dubbing personnel, the cost thereof shall be allocated on a non-discriminatory basis to the applicable Picture(s).

vi. Manage and implement all security and anti-piracy measures.

vii. Provide all backroom services, facilities and maintenance in accordance with the procedures set forth in Exhibit A. DW shall pay for such backroom service costs, whether incurred by UIP or third parties if (i) in the relevant territory, such services were provided by third parties as of April 15, 2001, and (ii) to the extent such costs do not exceed the cost previously charged by third parties, taking into consideration prevailing market changes.

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viii. Print servicing — store, catalog, check and track all prints, trailers and other advertising material, including the maintenance and preparation of the foregoing for shipment to and from theaters in accordance with the procedures set forth in Exhibit A. DW shall pay for such backroom service costs, whether incurred by UIP or third parties if (i) in the relevant territory, such services were provided by third parties as of April 15, 2001, and (ii) to the extent such costs do not exceed the cost previously charged by third parties, taking into consideration prevailing market changes.

ix. Arrange for the destruction of prints and the issuance of certificates of destruction.

x. Order and invoice for prints and trailers.

xi. Manage movement of prints, trailers and other advertising materials in accordance with the procedures set forth in Exhibit A. DW shall pay for such backroom service costs (excluding UIP internal personnel who supervise such management), whether incurred by UIP or third parties if (i) in the relevant territory, such services were provided by third parties as of April 15, 2001, and (ii) to the extent such costs do not exceed the cost previously charged by third parties, taking into consideration prevailing market changes

5. “American Beauty”. Distributor agrees to pay to DW, within ten (10) business days from execution of the amended and restated DW/Universal Studios, Inc. Master Agreement, *** in full and complete settlement of the “American Beauty” reel 3 ab issue pertaining to the additional costs incurred to reprint the altered negative.

Except as specifically provided above, all other terms and conditions set forth in Exhibit A shall continue in full force and effect.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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EX-10.13

Exhibit 10.13

EXHIBIT “B”

MEMORANDUM OF AGREEMENT

BETWEEN DREAMWORKS L.L.C. AND UNIVERSAL CITY STUDIOS, INC.

HOME VIDEO FULFILLMENT SERVICES

TABLE OF CONTENTS

		Page
1.	General Purpose	1
2.	Videograms And Pictures	1
3.	MCA Obligations	3
4.	CIC Services	5
5.	MCA Service Fees	6
6.	Term	8
7.	Termination Of Agreement	8
8.	Additional Provisions	12
SCHEDULE I		17
SCHEDULE II		28
SCHEDULE III		38
EXHIBIT “B-1”		40

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EXHIBIT “B”

(MEMORANDUM OF AGREEMENT)

BETWEEN DREAMWORKS L.L.C. AND UNIVERSAL CITY STUDIOS, INC.

HOME VIDEO FULFILLMENT SERVICES

This agreement (which incorporates by reference herein the attached Schedules I, II and III and Exhibit “B-1”) (“Exhibit B”) is entered into as of June             , 1995 by and between DreamWorks L.L.C., a Delaware Limited Liability Company (“DW”), and Universal City Studios, Inc. (herein “MCA”) relating to home video fulfillment services.

In consideration of the covenants and conditions herein contained, and for other good and valuable consideration, the parties hereto agree as follows:

1. General Purpose

DW is engaged in the business of distribution of “Videograms” (as defined below) of “DW Pictures” (as defined below) throughout the world and, as between DW and MCA, exercises total dominion and control over distribution thereof. MCA is willing to render certain fulfillment services to DW in furtherance of DW’s Videogram business and accept the terms and conditions set forth herein for such services.

2. Videograms And Pictures

A. Videograms

A “Videogram” is a videocassette, laserdisc or Digital Versatile Disc (“DVD”) intended for in-home use by members of the public and physically transported to the home for such use that is sold or rented and physically embodies (without need for further transfer of data or further activation or other authorization from outside the home) a “Picture” (as defined below) for exhibition by a playback device which causes a visual image of the Picture to be seen, in a linear fashion, as such Picture is made available by DW for video distribution, and which Picture appears on the screen of a television receiver or other monitor in the home. CD-ROM, CD-I products, video games, and interactive products (including, but not limited to, DVD interactive products containing a Picture[s]) or pictures of any type, are not Videograms.

B. Pictures/DW Videograms

A “Picture” is, in reference to a Videogram, a theatrical motion picture, one or more TV programs, TV movies or TV episodic series, or a direct-to-video motion picture (any of which may be live action, animated, short, feature length or otherwise), except to the extent DW reserves any rights in and to such Videogram pursuant to the terms of this Exhibit “B”. DW shall designate at its sole discretion which, if any, of its Pictures (each, a “DW Picture”) will be distributed by means of a Videogram (each, a “DW Videogram”).

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C. Scope of Fulfillment Services

Subject to the terms of this Exhibit “B” (including, without limitation, Paragraph 3.A. below) MCA shall have the exclusive right and obligation to render fulfillment services for every DW Videogram which is initially distributed as a DW Videogram during the Term or within*** following the corresponding DW Picture’s initial general U.S. theatrical release (provided such initial U.S. theatrical release occurs during the Term), and shall be obligated to render such services as requested by DW in accordance with and subject to the terms of this Exhibit “B”. To the extent MCA is required to render fulfillment services in connection with any DW Videogram as provided above, DW may elect in its sole discretion to require MCA to render fulfillment services in connection with such DW Videogram(s) for the entire initial (as determined by DW in its absolute discretion) distribution cycle throughout the Territory notwithstanding expiration of the Term (in which event this Exhibit “B” shall remain in full force with respect to such DW Videogram(s) for such extended period). DW shall consult in good faith with MCA respecting the timing of television releases, interactive devices containing an entire DW Picture(s) and mail order sales, provided, however, that in the event of a disagreement, DW’s decision shall govern. MCA shall not have the right to refuse to render fulfillment services in connection with any DW Videogram, except (i) where its provision of such services is expressly prohibited by applicable law; (ii) where its refusal is for censorship reasons; or (iii) in a country(ies) where neither Cinema International Corporation B. V., a company incorporated in the Netherlands, nor any entity which it owns or controls in whole or in part (“CIC”) renders, or arranges for the rendering of, fulfillment services in connection with Videograms. Where permitted, MCA will give timely prior notice of its intention not to render fulfillment services in connection with a DW Videogram in sufficient time to allow DW to render fulfillment services, or cause fulfillment services to be rendered, for such DW Videogram(s) on or about the dates contemplated for initial Videogram release. If MCA refuses as provided above (or is deemed unable due to force majeure as provided in Paragraph 7.d.(ii) below) to render fulfillment services in connection with any DW Videogram hereunder (and/or with respect to any DW Videogram embodying a DW Picture(s) in connection with which MCA refuses to distribute pursuant to Paragraph 2.c. of Exhibit “A”) in any country(ies), DW shall have the right in its sole discretion to withdraw any such DW Videogram(s) from MCA, and render fulfillment services or cause fulfillment services to be rendered, for such Videogram(s) in such countries(ies) at its risk (except as provided in Paragraph 8.D.(ii) of this Exhibit “B” with respect to loss or destruction of any DW Videograms or related physical elements in MCA’s or CIC’s or any of their “Subdistributors” (as defined below) or agents’ possession or control), without any obligation (including, without limitation, any obligation to pay any “Service Fee” or “Service Expenses”) with respect to the distribution of such DW Videogram(s) in such country(ies) incurred after the date DW withdraws such DW Videogram(s) from MCA. In the event DW elects to withdraw any DW Videogram(s) from MCA by reason of MCA refusing to distribute the corresponding

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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DW Picture(s) pursuant to Paragraph 2.c. of Exhibit “A”, DW will use commercially reasonable best efforts to utilize materials previously approved by DW and created by MCA and/or CIC in connection with such DW Videogram(s), and DW shall reimburse MCA and/or CIC for their actual out-of-pocket costs for any materials DW elects to utilize.

D. Notwithstanding anything to the contrary in this Exhibit “B”, the parties agree that: (i) MCA shall not be required hereunder to violate any contract existing as of the date hereof or any law, provided MCA shall give DW written notice promptly following (1) DW’s submission of a proposed marking plan(s) or other request for “Services” (as defined below), but in no event later than 30 days following such submission or request specifying in reasonable detail any requirement hereunder which would cause MCA to violate any such existing contract (and including a copy of the relevant provision[s] of such contract) and/or any law or (2) MCA’s knowledge of any such violation or prospective violation; (ii) if MCA receives a claim (which MCA in its good faith business judgment believes poses a risk of a result materially adverse to MCA) that any Services requested by DW violate any third party rights and, as a result thereof, MCA desires to discontinue rendering such Services, MCA will be permitted to do so until such time, if ever, as such claim has been resolved in MCA’s favor or in any other manner which does not prevent MCA from rendering such Services and provided that, prior to discontinuing such Services, MCA shall give DW written notice specifying in reasonable detail the specifics of such claim (as well as a copy of any relevant pleadings, demand letters, correspondence, etc.) and shall nonetheless continue rendering such Services for a reasonable period of time so as to enable DW to arrange for a commercially acceptable alternative; (iii) MCA shall not be required to cause CIC to deliver greater services, information, data or reports (collectively, “Services”) than the comparable level of Services which CIC then renders to MCA or to any of the “CIC Owners” (as defined below) (provided, however, that MCA will use its best efforts to cause CIC to comply with any additional requirements or Services requested by DW, it being acknowledged that MCA cannot guarantee that CIC will agree to do so); and (iv) there will not be a material reduction (on an overall basis) in the Services provided hereunder, from that provided by CIC to MCA or any of the CIC Owners in June 1995 although the parties acknowledge that (1) any such material reduction shall not be deemed to be a breach of this Exhibit “B”, and (2) each of the CIC Owners may themselves render or cause to be rendered specific Services theretofore rendered by UIP and, in such event, to the extent MCA renders or causes to be rendered such Services to its own Videograms generally, it shall provide such Services to DW at no additional cost.

3. MCA Obligations

A. Fulfillment Services

MCA’s fulfillment services are set forth in Schedule I attached hereto, which together with such ancillary and miscellaneous services reasonably necessary to facilitate the successful rendition of such services shall constitute MCA’s obligations hereunder. Notwithstanding the foregoing or anything to the contrary in this Exhibit “B”, DW retains (and reserves for itself) the right to render, or cause to be rendered, all fulfillment services

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and related activities in connection with its right to sell or otherwise distribute DW Videograms as promotional or premium items in connection with a so-called commercial tie-in arrangement or otherwise (including, but not limited to, sale of DW Videograms at a fast food restaurant such as McDonald’s or Burger King, or at any other business not regularly in the business of selling or renting Videograms, whether or not the purchaser of such DW Videogram must also purchase one of such business’ normal products); or for use in or by schools, or community, religious or charitable institutions; or for use in so-called award campaigns, and any amounts. received in connection therewith shall be excluded from “Domestic Receipts” (as defined in Schedule II) and “Foreign Receipts” (as defined in Schedule II); provided, however, that DW may in its sole discretion delegate in writing to MCA the rendering of fulfillment services in connection with these rights, in which event MCA shall carry out DW’s instructions and any amounts received which are directly attributable to such fulfillment services shall be included in Domestic Receipts or Foreign Receipts, as applicable. If MCA renders fulfillment services per the preceding sentence in connection only with part of a premium or promotional deal, as requested by DW, then MCA’s Service Fees shall be calculated only on that portion of the Domestic Receipts and/or Foreign Receipts, as applicable, directly attributable to MCA’s rendition of fulfillment services. (For example, if DW enters into an agreement with McDonalds whereby DW agrees to pick, pack and ship 4,000,000 DW Videograms of a particular DW Picture to McDonalds, and MCA picks, packs and ships 1,000,000 DW Videograms of such DW Picture, then in MCA’s inventory to McDonalds at DW’s request and on DW’s behalf, MCA’s Service Fee shall be calculated on 25% of the “Receipts” [as defined in Schedule II] from such deal.) The parties further agree that: (i) DW will give MCA notice of its intended theatrical or non-theatrical DW Videograms in connection with which DW will be requiring MCA to render fulfillment services in the next three months, updated on a revolving quarterly basis; such notice shall include courtesy notice of any such DW Videograms which DW has then scheduled to release after such quarter; and (ii) DW shall give MCA 12-months (or such shorter period as may be dictated by DW s release schedule) advance courtesy notice of any intended direct-to-video DW Videogram(s) (rental and/or sell-through) in connection with which DW will be requiring MCA to render fulfillment services. If MCA anticipates that it will (and does) incur additional overhead as a direct result of rendering fulfillment services in connection with such non-theatrical DW Videograms, it must so advise DW in writing of all such additional overhead expenses not less than 90 days in advance thereof and, if DW thereafter commits to such number of non-theatrical releases, DW cannot reduce the number of such non-theatrical releases without reimbursing MCA for such additional incremental overhead; (iii) if MCA objects to any DW promotion or DW’s early television exploitation of a DW Picture(s) which is contrary to MCA’s prevailing policy for all MCA releases, then MCA shall have the right to publicly so state that DW’s policy is contrary to MCA’s policy; and (iv) MCA shall give DW, on a continuing basis, reports of other studio’s release activities to the extent the same are available and as consistent with law and the other provisions of this Exhibit “B”.

B. Picture-by-Picture

(i) Such fulfillment services shall be rendered on a Picture-by-Picture, territory-by-territory basis as requested and directed by DW, provided that MCA shall not

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be required to render fulfillment services hereunder that are in the aggregate substantially in excess of the comparable type of services which MCA renders, or secures the rendering of by third parties, in connection with its own or any third parties’ comparable Videograms.

(ii) Every fulfillment service MCA provides to DW in connection with each DW Videogram hereunder will be rendered in compliance with DW’s contractual obligations to third parties of which MCA receives notice.

C. Credit

MCA shall comply with DW’s credit requirements respecting the DW Videograms, and, in this regard, it is agreed that DW Home Video shall receive credit in the form “DreamWorks Home Video” or such other form as DW designates from time-to-time on screen and in packaging and advertising and that DW shall have the right to designate all other credits on the DW Videograms (and that neither MCA and/or CIC shall be entitled to receive any credit in connection with same). Any MCA agreement with a third party for fulfillment services for the DW Videograms shall provide that the third party contracting with MCA is contractually bound to abide by all such credit obligations.

D. Out-of-Pocket Costs

MCA shall, unless instructed otherwise by DW, secure and pay for goods and services from third parties in the video business on DW’s behalf, provided that (i) the costs are substantially equivalent to the costs (including the benefits of discounts, rebates and allocations) paid by MCA on behalf of its own video business; and (ii) are encompassed within budgets pre-approved by DW for the services to be so rendered. DW shall reimburse MCA for such out-of-pocket costs expended on DW’s behalf as provided in Schedule II attached hereto. Notwithstanding the foregoing, if DW enters into its own third party arrangements per paragraph 8 of Schedule I, DW shall pay such third party supplier(s) directly as set forth therein.

4. CIC Services

The parties acknowledge that MCA will cause the fulfillment services in the “Foreign Territory” (as defined below) to be rendered by CIC, and MCA hereby guarantees and will be fully responsible for performance hereunder by CIC in accordance with and subject to the terms and conditions set forth in this Exhibit “B”. References to CIC therefore shall refer to those services of CIC which MCA is supplying hereunder and, where applicable, references to MCA include CIC. With respect to the DW Videograms, MCA shall delegate to DW whatever powers and authorities MCA is entitled to under its agreement with CIC; provided, however, that if MCA is contractually prevented from delegating such powers and authorities under its presently existing agreement with CIC, MCA will exercise such powers and authorities on DW’s behalf and at DW’s direction or in concert with MCA. The parties acknowledge that CIC may render fulfillment services for the DW Videograms through the Subdistributors in the territories and on the terms as more specifically set forth in Exhibit “B-1”, attached hereto and incorporated herein by this reference; in these instances, references in this Exhibit “B” to “CIC” shall include all

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Subdistributors. Amounts received by CIC and any such Subdistributors shall be deemed Receipts received by MCA and there will be no “doubling up” of MCA’s and CIC’s “Service Fees” and/or “Service Expenses”. The parties acknowledge that, subject to DW’s reasonable approval and the provisions of Paragraph 5.B., CIC’s fulfillment services may be rendered by CIC through a co-venture(s) in some territories within the Territory (e.g., Hong Kong, China), which co-ventures shall not be considered subdistribution. In these instances, reference to “CIC” shall include such co-ventures for all purposes hereunder. Accordingly, all amounts payable or credited to such co-ventures in connection with the DW Videograms shall be included in deemed “Foreign Receipts”, and DW shall be accorded audit rights with respect to all such co-ventures.

5. MCA Service Fees

A. Domestic Receipts

Service Fees for MCA’s fulfillment services are based on Domestic Receipts from the “Domestic Territory” (i.e., United States and Canada and their territories and possessions [including, specifically without limitation, Guam, Midway Islands, U.S. Virgin Islands, Canal Zone, Saipan, Marshall Islands and Puerto Rico], the Bahamas and Bermuda), as more fully set forth in Schedule II.

B. Foreign Receipts

Service Fees for MCA’s fulfillment services are based on Foreign Receipts from the “Foreign Territory” (i.e., the entire world excluding only: (i) the Domestic Territory; and (ii) South Korea, North Korea and the remainder of Asia [excluding Japan], but only if and to the extent DW assigns distribution rights, the right to render fulfillment services [“Service Rights”] and/or any or all of DW’s rights in connection with the DW Videograms, as DW elects from time-to-time, in such countries to or through Lee Entertainment L.L.C. or any of its affiliated or related parties, or any of their successors or designees [collectively, the “Korean Shareholder”] pursuant to an agreement between DW and the Korean Shareholder [the “Investor Agreement”]). The number of countries so excluded may increase during the Term as such Korean Shareholder distributes or renders fulfillment services similar to those defined hereunder for DW Videograms in more countries in Asia (other than Japan). DW will provide MCA with reasonable notice, if and to the extent that DW receives same, of such additional countries, although DW’s failure to do so shall not be deemed a breach of this Exhibit “B”; provided, however, if and to the extent that MCA and/or CIC has previously entered into arrangements, pre-approved by DW in such additional countries, DW shall hold harmless MCA from any third party claims and actual out-of-pocket losses (i.e., excluding internal costs, profits and/or other consequential damages) resulting from DW’s failure to provide timely notice. In any event, any such change in countries shall be prospective only (i.e., it will only affect DW Videograms in connection with which MCA has not rendered fulfillment services). Notwithstanding the foregoing, if the Korean Shareholder’s distribution rights or Service Rights have terminated with respect to a particular DW Videogram(s) or in a specified country(ies), and/or if the Investor Agreement terminates, then to the extent the Korean Shareholder no longer has such rights, the Foreign Territory shall then include any such

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excluded country(ies) and/or MCA shall then have Service Rights with respect to the particular DW Videogram(s), as the case may be. Notwithstanding the foregoing, it is agreed that the Korean Shareholder may not cause fulfillment services for DW Videograms to be rendered through another U.S. “major” motion picture entity (currently Twentieth Century Fox, MGM, Warner Bros., Sony and Disney), although it may engage in a co-venture with such entity(ies) for such distribution or fulfillment services.

C. Inclusion of DW Contracts

DW shall have the right to enter into contracts in its own name with SuperComm, Rentrack and/or other intermediary distribution entities substantially similar to SuperComm and Rentrack. All revenue directly attributable to the actual sale of DW Videograms pursuant to such contracts, other than a sale advance or signing bonus (both of which shall be retained by DW and not included in Receipts), shall be included in Domestic Receipts or Foreign Receipts, as applicable, for the purpose of determining MCA’s Service Fees. Notwithstanding the foregoing, with respect to sale advances, MCA shall be entitled to its Domestic Service Fee and/or Foreign Service Fee, as applicable, with respect thereto as and to the extent such advance is earned out by the actual sale of DW Videograms. If and to the extent required by DW, MCA will provide fulfillment services in connection with these contracts.

MCA shall enter into contracts with respect to DW Videograms in its own name (subject to DW’s right to approve the terms of such contracts and be directly involved [in-person] in the negotiations of such contracts) or as otherwise requested by DW, with retail accounts (e.g., video chains and stores), general merchandise stores (e.g., Wal-Mart, K-Mart, supermarkets) and similarly situated parties who are or may reasonably be expected to be Videogram customers of MCA. If MCA fails to enter into such contracts promptly following DW’s request, DW shall have the right to enter into such contracts in DW’s own name). If and to the extent required by DW consistent with this Exhibit “B”, MCA will provide fulfillment services in connection with such contracts. Provided MCA renders all fulfillment services required pursuant to the preceding sentence, all revenue directly attributable to the actual sale of DW Videograms pursuant to such contracts, other than a sale advance or signing bonus (both of which shall be remitted to DW), shall be included in Domestic Receipts or Foreign Receipts, as applicable, for the purpose of determining MCA’s Service Fees; provided, however, that with respect to sale advances, MCA shall be entitled to its Domestic Service Fee and/or Foreign Service Fee, as applicable, with respect thereto as and to the extent such advance is earned out by the actual sale of DW Videograms. Notwithstanding the foregoing, if such contracts require MCA to bear additional costs in connection with extraordinary fulfillment services not customarily rendered by MCA in connection with other Videograms and MCA so informs DW promptly upon DW’s request that MCA render fulfillment services in connection with such contracts, then DW will, at DW’s election, either: (a) reimburse MCA for such additional costs pre-approved by DW; (b) require MCA to render fulfillment services (except only such extraordinary fulfillment services) in connection with such contract(s); or (c) withdraw such contracts from MCA, in which event MCA shall not be required to render fulfillment services with respect thereto and no Service Fee shall be payable to MCA in connection with such contracts.

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6. Term

“Term” means the period commencing on the date hereof and continuing through December 31, 2001; provided that the Term may be extended for an additional four-year period at DW’s and MCA’s mutual agreement confirmed by both parties in writing no later than 90 days prior to December 31, 2001 and/or as set forth in Exhibit “B-1”. Notwithstanding the foregoing and subject to the terms of this Exhibit “B”, as and to the extent required by DW pursuant to Paragraph 2.B. above, MCA will continue to render fulfillment services in connection with the DW Videograms on a Picture-by-Picture and country-by-country (or territory-by-territory) basis, following expiration of the Term. Notwithstanding the foregoing, the Term is subject to earlier termination in accordance with Paragraph 7 below.

7. Termination Of Agreement

A. Termination Without Cause:

(i) DW and/or MCA shall be entitled to terminate this Exhibit “B” and/or Exhibit “A” (but not Exhibit “C” and/or Exhibit “D”) as DW or MCA, as applicable, determines in its sole discretion at any time, without cause, upon twelve months’ written notice. Termination without cause must be in good faith and after written notice to the non-terminating party specifying in good faith the terminating party’s problems, suggested solutions and following the opportunity for both parties to meet and work together to cure such problems. Termination under this subparagraph 7.A. will not be subject to arbitration and/or litigation except for claims of bad faith or an alleged violation of the next sentence. Termination without cause would not be appropriate if the reason for the termination was: (a) solely for the economic advantage of the terminating party (e.g., for DW to make a better deal or if MCA determined that this is not a good deal), it being acknowledged that if DW’s policies with respect to television release and mail order sales holdbacks, premium and promotional rights and/or interactive rights are substantially different than MCA’s policies respecting same, and such DW policies materially and detrimentally affect MCA’s business, MCA’s election to terminate without cause for such reason shall not be deemed to be solely for its economic advantage; and/or (b) solely because DW has started (or wants to start) its own fulfillment or an additional or expanded distribution company and/or network for the Territory (although if DW otherwise terminates without cause, DW may thereafter commence its own fulfillment or an additional or expanded distribution company and/or network).

B. Termination With Cause:

(i) This Exhibit “B” (and Exhibit “A”, if DW determines in its sole discretion) may be terminated by the terminating party, either (a) entirely; (b) in any country(ies) or “Region(s)” (i.e., South America, Western Europe, Australia/New Zealand, Japan/Far East and Africa) where the applicable event, breach or non-performance has occurred (and either entirely in such country[ies] or Region[s], or only with respect to any of the DW Videogram(s) affected by such event, breach or non-performance in such country[ies] or Region[s]); and/or (c) in the entire Territory with

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respect to any DW Videogram(s) affected by such event, breach or nonperformance, all as the terminating party determines in its sole discretion without prejudice to any other rights or remedies available to it, upon the happening of any of the following circumstances:

(a) If the other party shall materially breach this Exhibit “B” (provided that the non-terminating party shall have a period of 30 days, or such other shorter period as may be reasonably required, with respect to each alleged breach, following written notice thereof specifying in reasonable detail the alleged breach and the action(s) necessary to cure same and indicating the DW Videogram(s) and country(ies) or Region(s) being terminated) to cure an inadvertent breach; provided that no such cure shall be allowed for a second breach of the same type as to which the breaching party has previously been notified and given a cure period; or

(b) If the non-terminating party shall make any assignment for the benefit of creditors, file a petition for bankruptcy, be judged bankrupt or become insolvent, or if the other party restructures or dissolves or changes pursuant to government order affecting a significant portion of the market.

(ii) This Exhibit “B” (and Exhibit “A”, if DW determines in its sole discretion) may be terminated by DW, either (a) entirely; (b) in any country(ies) or Region(s) where the applicable event, breach or non-performance has occurred (and either entirely or in such country[ies] or Region[s], or only with respect to any of the DW Videogram(s) affected by such event, breach or non-performance in such country[ies] or Region[s]); and/or (c) in the entire Territory with respect to a DW Videogram(s) affected by such event, breach or non-performance, all as DW determines in its sole discretion, without prejudice to any other rights or remedies available to it, under any of the following circumstances:

(a) If MCA ceases to be the distributor in the Domestic Territory for its Videograms and/or if CIC ceases its distribution of Videograms for MCA; or

(b) If CIC “restructures” (i.e., if CIC ceases to be the foreign Videogram distribution entity for any or all of the “CIC Owners” [i.e., MCA and Paramount Pictures] or if the relative ownership interests of the CIC Owners change); provided, however, that DW shall not be entitled to terminate pursuant to this provision if CIC (or a successor entity) continues to be the distribution entity for Paramount and MCA and no other U.S. major theatrical studio or motion picture financier or distributor. If DW does not exercise its termination right under this subparagraph (b) and MCA is permitted to continue to render services hereunder, so long as CIC (or if it cannot legally, then MCA) continues the services required hereunder to the maximum extent legally possible given such event and at the level of services then required of CIC and MCA hereunder, such performance shall be deemed consistent with MCA’s obligations hereunder, it being acknowledged that DW may nonetheless thereafter choose to exercise its termination right under this subparagraph. The parties hereby acknowledge that the CIC/Japan joint venture shall not be deemed to be a “restructure” of CIC; provided, however, that if such venture changes the relative ownership interests of the CIC Owners DW shall be entitled to terminate hereunder.

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(c) If MCA: (a) fails to achieve timely and satisfactory manufacture or shipment of DW Videograms as requested (other than by reason of DW’s delay in providing MCA with all materials necessary for such manufacture and shipment); or (b) manufactures DW Videograms that are defective or of unsatisfactory technical quality in excess of customary rates for first-class Videogram manufacturers (provided that DW shall give MCA reasonably prompt notice of any such alleged breach and/or non-performance and that MCA shall have a fair opportunity to cure (not to exceed 30 days or such shorter period as DW may reasonably require); or

(d) If more than 3 times during any 12-month period during the Term or an aggregate of 7 times during the Term (provided that DW shall have given MCA reasonably prompt notice of each such alleged breach and/or non-performance and that MCA shall have failed to cure the same within 5 days, or such shorter period as reasonably required by DW, following DW’s written notice thereof to cure an inadvertent breach) MCA fails to:

(i) Timely provide any fulfillment service and/or marketing plans and budgets and/or other information or documentation required under this Exhibit “B”; or

(ii) Release the DW Videograms pursuant to plan on dates and for durations for the release of the DW Videograms approved by DW and with the content and materials provided by DW, except only if and to the extent that any changes are required to be made on an immediate basis (i.e., during which MCA does not have sufficient time to obtain DW’s approval) due to censorship requirements and subject to customary force majeure events (provided, in the event of a delay caused by a force majeure event, DW shall be permitted to render fulfillment services, or cause fulfillment services to be rendered, for such DW Videogram(s) as provided in Paragraph 2.C. above if DW reasonably determines that CIC will not be available to release the DW Videograms as and when required by DW); or

(e) If CIC’s exemption from certain trade laws and regulations in the European Economic Community is not extended or renewed by the EEC Commission or other governing body (“EEC”), with the result that CIC cannot conduct business in the EEC in the manner and with the organizational structure that exists as of the date of this Exhibit “B”; provided that if DW does not exercise its termination right under this subparagraph (e) and MCA is permitted to continue to render services hereunder, so long as CIC (or if it cannot legally, then MCA) continues the services required hereunder to the maximum extent legally possible given such event and at the level of services then required of CIC and MCA hereunder, such performance shall be deemed consistent with MCA’s obligations hereunder, it being acknowledged that DW may nonetheless thereafter choose to exercise its termination right under this subparagraph; or

(f) If DW, in its sole discretion, determines that MCA and/or CIC rendering the fulfillment services will be more expensive with respect to out-of-pocket costs (but not necessarily with respect to Service Fees) to DW than if DW were to render such services itself or through an affiliated entity; or

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(g) If at any time during the Term any country(ies) or Region(s) comprising the Territory shall be or become subject to a United States Government embargo or trade restriction, and MCA fails to immediately comply with such embargo or trade restriction as to DW Videograms; or

(h) If DW exercises its termination right with respect to this Exhibit “B” under the first sentence of Paragraph 10.b.i. of Exhibit “A”.

(i) The parties acknowledge that if and to the extent DW terminates for cause MCA’s fulfillment services hereunder, subject to subparagraph j. below, MCA shall not be entitled to any Service Fee thereafter with respect to any terminated territory(ies) and/or DW Videograms (i.e., if DW terminates MCA’s fulfillment services hereunder with respect to a particular territory(ies) and/or DW Videogram(s), MCA’s Service Fee will be calculated solely on Receipts attributable to other than such terminated territory[ies] and/or DW Videogram[s]).

(j) Upon the termination or expiration of this Exhibit “B”, DW shall have the option, at its sole discretion, to either (i) require MCA to continue to render fulfillment services for any or all of the DW Videograms (subject to continuation of Service Fees on such DW Videogram[s]) as and for the duration of the initial period (as determined by DW in its absolute discretion but not to exceed 180 calendar days following such expiration or termination date) of Videogram distribution, and during which MCA has committed to render fulfillment services as provided in this Exhibit “B” and in those parts of the Territory, designated by DW in its absolute discretion, (ii) permit MCA to sell off its then-existing inventory of DW Videograms upon the same terms and conditions as provided herein for a period not to exceed 180 calendar days following the date of expiration or termination hereof, (iii) require MCA to return its then-existing inventory of DW Videograms and all related materials to DW (such return to be at DW’s cost and expense in the event of expiration, termination without cause by DW or termination for cause by MCA; or at MCA’s cost and expense in the event of termination without cause by MCA or termination for cause by DW), (iv) immediately destroy or demagnetize MCA’s then-existing inventory of DW Videograms, at MCA’s sole cost and expense, in which event MCA shall promptly (but in no event more than 10 business days following destruction or demagnetization) furnish DW with certificates of destruction or proof of demagnetization, as the case may be; or (v) any combination of the above. In addition, MCA shall promptly provide DW with a list of all outstanding orders for the DW Videograms. On expiration or other termination of the Term, subject to Section VIII.2. of the Master Agreement, MCA will immediately execute such quitclaims and other documents as DW’s counsel reasonably deems necessary or advisable to evidence the termination of all MCA’s rights with respect to some or all of the DW Videograms. Any disputes with respect thereto shall be resolved as set forth in Section VIII.2. of the Master Agreement. In the event no timely objection is made or such objection is resolved, and if MCA fails to execute immediately any document useful or necessary to effectuate the confirmation or implementation of the provisions hereof, DW shall be irrevocably appointed as MCA’s attorney-in-fact for such purpose. It is acknowledged that said appointment power is coupled with an interest.

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8. Additional Provisions

A. Standard of Care

Except as otherwise specifically directed or approved in writing by DW, in all actions under this Exhibit “B”, MCA shall, and shall cause CIC to, act in accordance with at least that standard of care that it exercises in connection with the MCA Videograms and on behalf of each of the CIC Owners, as the case may be. Without limiting the generality of the foregoing, MCA shall ensure that (i) the fulfillment services MCA provides to DW hereunder will be in the aggregate substantially equivalent in quantity, level and priorities to the fulfillment services accorded by MCA with respect to MCA Videograms and/or other Videograms of Pictures of similar domestic theatrical box office results (or in the case of Pictures not released theatrically, similar format, length and public acceptance); and (ii) the services provided by CIC (and any Subdistributor) will be in the aggregate substantially equivalent in quantity, level and priorities to the services accorded by CIC with respect to CIC Owners’ Videograms of Pictures of similar domestic theatrical box office results (or in the case of Pictures not released theatrically, similar format, length and public acceptance). In addition, the terms on which the fulfillment services for the DW Videograms are rendered, including, without limitation, terms applicable to collections and selection of retail accounts and release dates shall be no less favorable than similar terms applicable to MCA Videograms. In no event shall the Service Fees be less favorable to DW than the service fees paid to or retained by MCA and/or CIC in connection with MCA’s (or CIC’s) overall fulfillment services in the Territory for Videograms produced by any party other than a CIC Owner, it being agreed that for the purpose of determining whether MCA and CIC have complied with this “favored nations” assurance, MCA’s or CIC’s receipt of a service fee plus any other consideration in any form (e.g. non-monetary consideration such as other rights granted to MCA at the time) shall be taken into account, so that the determination is an “apples-to-apples” comparison, as much as possible, and, in any event, one Videogram deals and output deals for any country which represents less than*** of the receipts from Videogram distribution in the Territory for the prior year shall be excluded. Both parties shall operate under this agreement in good faith.

B. Representations and Warranties

DW represents and warrants that:

(i) As of the date(s) MCA and CIC commence rendering fulfillment services hereunder with respect to each DW Videogram, there will be no claims, liens, encumbrances or licenses which would limit or interfere with the rights hereby granted.

(ii) All masters, submasters and other materials to be delivered or made available to MCA will be of a quality suitable for the manufacturing of technically acceptable DW Videograms.

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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(iii) Unless DW notifies MCA or CIC in writing to the contrary, there will be no restrictions which would prevent MCA from rendering fulfillment services for the DW Videograms consistent with the provisions of this Exhibit “B”. Except with respect to any payments that may be required as remuneration for so-called “rental and lending” rights in the EEC and elsewhere, there will not be any payments which must be made by MCA to any actors, musicians, directors, writers or other persons who participated in the Pictures, or to any union, guild or other labor organization for any right to exhibit the DW Videograms or as compensation in connection with such exhibition or for any other use of the DW Videograms or any of the rights therein and thereto, provided that DW shall not be obligated to supply any performing rights license (e.g., SESAC) which may be required in connection with exhibition of any DW Videogram except only to the extent obtained by the CIC Owners or otherwise as customary in the motion picture business for so-called “major” studios.

MCA represents and warrants that:

(i) Neither MCA nor CIC shall suffer or permit any lien, claim, encumbrance, pledge or mortgage to attach to any DW Videogram or to any materials furnished by DW relating to the DW Pictures, the masters, submasters and/or DW Videograms.

(ii) No material (including, without limitation, advertising, publicity, promotional, trailers, etc.) added to the DW Videograms or used in connection therewith by MCA or on its behalf by CIC violates or will violate, infringes or will infringe any trademark, trade name, contract, agreement, copyright (whether common law or statutory), patent, literary, artistic, dramatic, personal, private, civil, property, or privacy right or “moral rights of authors” or any other right or slander or libel, any person or entity; provided that the foregoing shall not apply to any material which is created or supplied to MCA by or on behalf of DW.

C. Insurance

(i) DW Insurance: DW shall secure and maintain at its sole cost and expense and add MCA and CIC as additional insureds with respect to the DW Videograms under DW’s customary Errors and Omissions policy pertinent to distribution of the DW Videograms in the Territory (and each country therein). Such policy shall be for a term, in amounts and containing a deductible and notice provision as customarily required in the Videogram industry. All such insurance coverage shall be primary to any other coverage maintained by MCA and CIC. Notwithstanding the foregoing, DW may elect in its sole discretion to self insure.

(ii) MCA Insurance: MCA shall secure and maintain at its sole cost and expense and add DW as an additional insured with respect to the DW Videograms under MCA’s property casualty and liability policies pertinent to Videogram distribution or fulfillment services and all inventory and handling of the DW Videograms and related physical elements in the Territory (and each country therein), and cause CIC to do the same with respect to their respective policies (provided, however, that if DW would be

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required hereunder to reimburse MCA and/or CIC for such insurance costs and MCA and/or CIC can exclude DW under the terms of the policy [which MCA and CIC hereby warrant that they can do], then DW may in its sole discretion decline such coverage). Such policies shall be for a term, in amounts and containing a deductible and notice provision as customarily required in the Videogram industry. All such insurance coverage shall be primary to any other coverage maintained by DW. Notwithstanding the foregoing, MCA may elect in its sole discretion to self-insure. MCA shall be fully responsible for the loss or destruction of any DW Videograms or related physical elements in its or CIC’s or any of the Subdistributors’ or agents’ possession or control, unless and to the extent that the negligent or wrongful conduct of DW and/or a third party with whom DW contracts directly pursuant to Paragraph 5.C. results in such loss or destruction (and further provided that such negligent or wrongful conduct is not of the type for which the MCA, CIC or their Subdistributors or agents would be responsible under industry custom).

(iii) Certificates of Insurance: Promptly following the execution of this Exhibit “B”, each of the parties will forward to the other party customary Certificates of Insurance and copies of pertinent policies, if any, evidencing the foregoing coverages.

D. Copyright

DW at its sole expense shall cause the DW Pictures to be protected by copyright in any part of the Territory where Pictures may be protected by copyright. MCA will cooperate as reasonably required by DW in connection with actions undertaken by DW (in its sole discretion) to protect copyrights, trademarks, etc.

E. Other Activities

Subject to the provisions hereof, nothing herein shall limit in any way the right of either of the parties, CIC, or their respective subsidiaries and affiliates to engage in business activities or endeavors of any kind or nature, including but not limited to:

(i) All manner of theatrical, television and merchandising (including, but not limited to video and computer games) exploitation of Pictures;

(ii) Advertising;

(iii) Publishing;

(iv) Interactive Media;

(v) The sale of designs, stories, characters, trademarks, trade names or other rights or properties;

(vi) Ancillary market activities;

(vii) The co-financing or co-production or any other interest of any nature in any motion picture or other property (as to which DW, in the case of DW, does not own

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or control [and hence cannot accord MCA hereunder] any Service Rights as contemplated by the terms of this Exhibit “B” in the Territory).

(viii) The exercise of any right not expressly granted hereunder.

F. Other Provisions.

(i) In addition to, and without limiting, each party’s indemnity pursuant to Paragraph VIII.5. of the Master Agreement, each party (“Indemnitor”) shall also at its own cost and expense indemnify, defend and hold the other party, its and their parents and affiliates, and their respective employees, agents, managers, subdistributors, directors and shareholders (collectively, “Indemnitee”) harmless from and against any and all loss (exclusive of profits), liability or expense resulting from any claim, demand or suit which may be made or brought against Indemnitee by reason of: (i) any claim by any third party that a DW Videogram, or any element thereof, including, without limitation, the sound and music synchronized therewith, or any material (including, without limitation, advertising, publicity, promotional trailers, etc.) added to the DW Videogram or used in connection therewith, to the extent any of the above are supplied by or at the request or direction of or on behalf of Indemnitor and utilized by Indemnitee as instructed by Indemnitor or added by Indemnitor without Indemnitee’s knowledge, violates or infringes upon the trademark, trade name, patent, copyright, literary, dramatic, musical, artistic, personal, private, publicity, civil, property or contract right, right of privacy, the moral rights of authors or any other right of any person, firm, corporation or entity. MCA will not be entitled to any indemnity hereunder to the extent that losses arise or result because MCA fails to withdraw any DW Videogram which is the basis of any such claim from distribution as, when and to the extent so instructed by DW (in which event DW will indemnify MCA and CIC against third party breach of contract claims in connection with contracts entered into by MCA in accordance with the terms of this Exhibit “B” and based upon such withdrawal).

(ii) Assignment

(A) MCA may not assign this Exhibit “B” except in accordance with the terms of the Master Agreement. Notwithstanding the foregoing, it is agreed that CIC, or a successor entity which is owned and controlled solely by the CIC Owners and renders fulfillment services for all of their Videograms in the Foreign Territory where they have distribution rights, must render fulfillment services for the DW Videograms in the Foreign Territory, except as otherwise set forth in this Exhibit “B”.

(B) DW may not assign this Exhibit “B” except in accordance with the terms of the Master Agreement.

(C) Any attempted assignment in contravention of the foregoing shall be deemed a material breach of this Exhibit “B”. In the event of a permitted assignment by MCA or DW to a

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subsidiary, MCA or DW, as applicable, shall nonetheless remain primarily liable hereunder.

(iii) Delivery. DW shall timely deliver to MCA at DW’s expense all pertinent physical materials which DW reasonably deems necessary to facilitate MCA’s exercise of its rights hereunder provided that MCA and CIC shall have no liability whatsoever for any loss, cost or damages caused by DW’s failure to provide customary advertising and release materials in a complete and timely manner, except and to the extent that such failure is the fault of a MCA-provided service provider with whom DW has not directly contracted for the service provided. DW will provide MCA with any then-available release and advertising materials within sufficient time to enable CIC to meet DW’s advertising and release requirements hereunder. DW will deliver to MCA a fully executed laboratory access letter for each DW Videogram in which DW has granted MCA rights hereunder.

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SCHEDULE I

DW exercises total dominion and control over the distribution of DW Videograms. MCA has agreed to render the following fulfillment services, together with such ancillary and miscellaneous services reasonably necessary to facilitate the successful rendition of such fulfillment services, in furtherance of same:

1. General

Prepare and recommend, in full good faith consultation with DW, distribution and marketing plans and budgets, product pricing and sales policies and all other elements of MCA’s fulfillment service obligations hereunder as requested from time-to-time by DW for DW’s approval in sufficient time to allow DW to review and discuss. Propose, and upon DW’s timely approval, and subject to MCA having been timely supplied with all requested pertinent materials and information, implement street date, pricing, period of availability and applicable sales, credit, rebate, bonus (which will be non-discriminatory to DW Videograms) and return policies on behalf of DW Videograms. (If DW does not timely approve any of the plans and policies in the preceding sentence and/or timely supply such pertinent requested materials and information, MCA shall propose and implement such plans and policies with such details and specifics as possible given the materials and information then approved or provided by DW, to be updated by MCA from time-to-time as further approvals are granted by DW and/or as more materials and information are made available to MCA.) Recommendations shall be on a Picture-by-Picture, country-by-country basis and are subject to DW’s timely approval and, after such approval, are subject to reasonable good faith changes requested by DW.

2. Third Parties

Procure the goods and services of third parties for DW’s Videograms that are customarily utilized by MCA for fulfillment services in connection with MCA Videograms.

3. Artwork

Procure, supervise and assist in the development of all artwork, ads, point of sale and any other—sales or promotional materials. Subject to MCA having been timely supplied with all pertinent requested materials and information and DW’s timely approval, implement the usage thereof pursuant to a marketing plan approved by DW or as otherwise directed by DW. (If DW does not timely approve any of the items in the preceding sentence and/or supply such pertinent requested materials and information, MCA shall propose and implement such plans and policies with such details and specifics as possible given the materials and information then approved or provided by DW, to be updated by MCA from time-to-time as further approvals are granted by DW and/or as more materials and information are made available to MCA.)

4. Media

Make media buys or make available MCA inventoried media pursuant to an approved marketing plan on behalf of a DW Videograms.

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5. Communications

Set up appropriate direct communication channels and procedures between DW and MCA, and DW and CIC (and between DW, on the one hand, and MCA and CIC’s offices, appropriate management employees and staff, on the other hand) and with appropriate third parties rendering goods or furnishing services through MCA and/or CIC, for and on behalf of DW Videograms. Advise officers and appropriate management employees engaged in any aspect of MCA’s home video business that the fulfillment services are subordinate to DW’s rights hereunder and that they should fully cooperate with DW’s exercise of such rights.

6. Inventory

Maintain secure physical inventory sites, records and procedures and furnish DW with duplication and inventory reports to the extent the same are available and subject to the requirements of law, in such form and with such frequency as DW may designate and in this regard DW may tie in to CIC’s and MCA’s on-line ordering and inventory system, if any, subject to the requirements of law and/or DW, as applicable. If CIC and/or MCA are required to incur any new additional costs (of which CIC and/or MCA notifies DW in advance) for outside personnel CIC and/or MCA are required to engage solely in order to furnish any additional duplication and inventory reports which are not included within the scope of services which to be rendered by CIC and/or MCA under this Exhibit “B”, CIC and/or MCA shall not be required to furnish such additional duplication and inventory reports unless DW pre-approves such costs and agrees to reimburse CIC and/or MCA, as applicable, for same (subject to appropriate reduction, to be mutually agreed, if and to the extent that such additional duplication and inventory reports are supplied [subject to DW’s prior approval] to any party other than DW). Any dispute as to whether such additional duplication and inventory reports are within the scope of services to be rendered by CIC and/or MCA hereunder will be subject to dispute resolution pursuant to Paragraph 10 of the Master Agreement.

7. Pick/Pack/Ship

Subject to DW’s prior written approval and the provisions of this paragraph, MCA and/or CIC will render all so-called pick/pack/ship services required by DW for DW Videograms (for which services DW shall reimburse MCA and/or CIC as the case may be for its or their actual direct out-of-pocket costs paid to unaffiliated third parties). DW may elect, in its sole discretion, to discontinue using such services for all “rental” and/or all “sell-through” (as DW determines in its sole discretion) DW Videograms; provided, however, that DW shall not have the right to thereafter re-engage MCA and/or CIC, as applicable, to render any such services which DW has previously discontinued hereunder unless there is a change in the terms on which such services are supplied to MCA and/or CIC by a third party, or to MCA by CIC. If DW elects not to use MCA’s and/or CIC’s pick/pack/ship services or elects to discontinue such services, DW shall have the right to contract directly with third parties for such services, in which event DW shall agree: (a) to pay such third party suppliers directly; (b) to proceed directly against such third party supplier for such third party supplier’s breach; (c) to coordinate (or instruct such third

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party suppliers to coordinate) information and performance between each other as required and with MCA and CIC; and (d) if MCA or CIC pay substantial actual excess administrative costs as a direct result thereof, to consider in good faith contributing towards such excess costs, provided that DW shall not be obligated to so contribute. Notwithstanding the foregoing, if DW elects not to utilize MCA’s and/or CIC’s third party pick/pack/ship service provider(s) during any period in which MCA and/or CIC, as applicable, is contractually required to exclusively use such service provider(s) pursuant to an exclusivity arrangement entered into before the date of this Exhibit “B”, a copy of which MCA and/or CIC, as applicable, will provide DW prior to execution hereof (provided, however, that notwithstanding anything to the contrary in such written agreements, in no event will DW be bound by such agreements after January 1, 1999) pursuant to DW’s determination that such agreement does not extend to DW, then DW agrees to indemnify and hold harmless MCA and/or CIC, as applicable, from a claim or determination that such action by DW was in fact a breach of MCA’s and/or CIC’s, as applicable, exclusivity obligations under its agreement to a service provider. MCA will not, and will cause CIC not to, enter into any new obligations or agreements, or extensions of any existing obligations or agreements which restrict the right of any party to such obligations or agreements to contract directly with DW (e.g., exclusivity arrangements which prevent such party from contracting with DW), and all such obligations, agreements and extensions shall specifically exclude DW by name from any such exclusivity obligations thereunder. Notwithstanding the foregoing, prior to DW directly entering into any third party arrangement, DW will, in appropriate circumstances, make a good faith effort to give MCA advance notice and consult with MCA, it being agreed that DW s failure to comply with this sentence shall not be deemed a breach of this Exhibit “B”. Subject to the terms of the Master Agreement, to the extent either party is provided any confidential information with respect to MCA, CIC or DW arrangements with suppliers, vendors, or service providers, such party shall keep such information absolutely confidential.

8. Third Party Suppliers

The parties acknowledge that in connection with Videograms in connection with which MCA or CIC render fulfillment services, MCA and CIC have entered, and may hereafter enter, into arrangements with third party suppliers (including, without limitation, laboratory, dubbing, duplicating, manufacturing, advertising, marketing, publicity and packaging arrangements, including arrangements with advertising and publicity agencies, printers, designers, production houses and other related vendors and service suppliers) (collectively, “Third Party Suppliers”) and that, in certain instances, it may be in DW’s and MCA/CIC’s mutual best interest for DW to “piggyback” on such arrangements. Accordingly, the parties have agreed as follows:

A. DW shall have the right (but, except as provided below, not the obligation) to contract directly. with such Third Party Suppliers and/or to “piggyback” on any or all of MCA’s and/or CIC’s arrangements with such Third Party Suppliers, except as and to the extent precluded by law, regulation or written agreement between such Third Party Supplier, on the one hand, and CIC and/or MCA on the other hand, entered into, and containing a preclusive provision effective before July, 1996 and disclosed to DW in

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writing before execution of this Agreement (provided, however, that notwithstanding anything to the contrary in such written agreements, in no event will DW be bound by such agreements after January 1, 1999). In addition, MCA and/or CIC, as applicable, shall disclose to DW relevant excerpts of any such written agreement except only MCA’s agreement with *** for laboratory services to the extent permissible under such agreement, and DW shall have the right to contest the asserted preclusive contract provision under the dispute resolution provisions of Paragraph 10 of the Master Agreement; provided, however, that MCA shall, and shall cause CIC to, use its best efforts to cause such third party supplier(s) to contract directly with DW and/or allow DW to “piggyback” on MCA’s and/or CIC’s, as applicable, arrangements with such Third Party Suppliers, as DW elects. MCA and CIC shall disclose to DW on an ongoing basis all material information (including, without limitation, advances, volume discounts, laboratory and other vendor rebates and any other economic consideration or financial advantages) regarding deals under negotiation and/or concluded with Third Party Suppliers as such information develops, and MCA and CIC shall also disclose to DW upon execution of this Exhibit “B” all such information regarding deals concluded with Third Party Suppliers prior to the date of execution of this Exhibit “B”. Notwithstanding the foregoing, MCA shall not be required to disclose any information respecting MCA’s presently existing laboratory services agreement with *** DW may use such information in order to assist DW in deciding whether to “piggyback” on any or all such existing and/or future arrangements with Third Party Suppliers and, in the event DW elects to “piggyback”, to determine whether MCA and/or CIC are allocating advances, volume discounts, laboratory and other vendor rebates and any other economic consideration or financial advantages as provided below in Paragraph 8 of Schedule II. Notwithstanding the foregoing, DW shall not be entitled to confidential third party information regarding arrangements existing as of the date of execution of this Exhibit “B”; provided, however, that MCA and CIC shall in any event disclose the existence of all such arrangements (and excerpts containing any confidentiality agreements contained therein), and provide to DW as much specificity as possible consistent with such third party confidentiality agreements, and provided further that if MCA and/or CIC refuses to supply any such third party confidential information, the parties will (on DW’s request) submit to dispute resolution pursuant to Paragraph 10 of the Master Agreement and the “Judge” (as defined in the Master Agreement) shall impose such reasonable procedures (including, without limitation, redaction and in camera proceedings) as the Judge deems necessary to accord information reasonably necessary for the purposes indicated above while preserving the third party’s legal rights to confidentiality.

B. In the event of any “piggyback” arrangement: (i) DW-approved costs with respect thereto shall be advanced by MCA or CIC, as the case may be, and recouped or repaid as Service Expenses; (ii) DW shall have the option to have the DW Videograms aggregated with other MCA and/or CIC product for purposes of obtaining advances, volume discounts, rebates and any other economic consideration or financial advantages accorded to a group of Videograms and in such event, all such advances, discounts,

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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rebates and economic consideration and financial advantages will be allocated to the DW Videograms according to the terms of the arrangement in question, or if such arrangement does not provide a means of allocation, on a fair and reasonable basis (subject to later reconciliation if and to the extent such allocation was in retrospect unfair or unreasonable to either party); (iii) the terms and conditions of such arrangement with respect to DW shall be no less favorable than the terms and conditions which pertain to the distribution of the Videograms of MCA and/or the CIC Owners, as the case may be, and (iv) provided such arrangements have been timely disclosed in writing to DW, then with respect to rights to Videograms granted MCA hereunder, DW shall be bound by the terms and conditions of such arrangements as if it were a party thereto except to the extent the third party agrees otherwise. DW shall have the right to work and communicate directly with said manufacturers, suppliers, vendors and service providers.

C. Alternatively, DW shall have the right in its sole discretion to itself obtain any or all such services by contracting directly with MCA’s and/or CIC’s Third Party Suppliers or through other third party arrangements; provided however, that (subject to DW’s absolute control): (i) DW shall be obligated to utilize CIC’s and MCA’s advertising agency to make upfront media buys (i.e., long-term, bulk media purchases made by CIC or MCA before how such media will be used is determined) during any period in which all CIC Owners are contractually required to make all of their up-front media buys with respect to advertising in the Foreign Territory exclusively through such agency and MCA is contractually required to make all of its up-front media buys with respect to advertising in the Domestic Territory exclusively through such agency pursuant to an exclusivity arrangement existing as of the date of this Exhibit “B” and on terms no less favorable than those offered to MCA and CIC Owners (e.g., DW shall receive the same discounts), as the case may be; (ii) DW shall be obligated to utilize CIC’s third party suppliers for physical distribution, in-store merchandising, warehousing, sales services and exclusive customer representation through January 1, 1999, if and to the extent that CIC is contractually obligated to deal exclusively with such third party suppliers with respect to all Videograms for which CIC renders fulfillment services, as applicable (and provided MCA gives DW at least six months advance notice of such arrangements); and (iii) thereafter, DW agrees to negotiate first with the third party suppliers listed in the immediately preceding subparagraph (ii) with which CIC is then doing business and, in the event DW does not engage such third party, DW shall consider in good faith (but shall not be obligated for) reimbursing CIC for significant additional actual, direct third party out-of-pocket costs paid as the direct result of engaging a third party with which CIC does not do business. If DW enters into its own third party arrangements, DW will not be entitled to “piggyback” on CIC’s arrangements for the same services unless the “piggyback” terms previously rejected by DW thereafter materially change.

D. If DW utilizes its own third party arrangements, DW will: (a) coordinate (or instruct such third party suppliers to coordinate) information and performance between each other as required and with MCA and CIC; (b) pay such third party suppliers directly; (c) agree to proceed directly against such third party supplier for such third party supplier’s breach; and (d) if MCA or CIC incur substantial actual excess administrative costs as direct result thereof, consider in good faith contributing towards such excess costs, provided that DW shall not be obligated to do so. MCA will not, and will not cause

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CIC not to, enter into any new obligations or agreements, or extensions of any existing obligations or agreements, which restrict the right of any Third Party Supplier that is a party to such obligations or agreements to contract directly with DW (e.g., exclusivity arrangements which prevent such party from contracting with DW). Notwithstanding the foregoing, prior to DW directly entering into any third party arrangement, DW will, in appropriate circumstances, make a good faith effort to give MCA advance notice and consult with MCA, it being agreed that DW’s failure to comply with this sentence shall not be deemed a breach of this Exhibit “B”. Subject to the terms of the Master Agreement, to the extent either party is provided any confidential information with respect to MCA, CIC or DW arrangements with suppliers, vendors, or service providers, such party shall keep such information absolutely confidential.

9. Orders

Enter into transactions and secure orders in its own name with those buyers such as video wholesalers, retailers or jobbers with whom MCA customarily deals on behalf of its own videos, for purchase transactions involving DW Videograms and fulfill such orders pursuant to MCA’s regular processes and procedures.

10. Information And Reports

Subject to the requirements of law MCA shall provide, and cause CIC to provide, DW with access to all “Information” (as defined below) as set forth below:

A. Information

(i) All “Information” (as defined below) as to the DW Videograms, to the extent similar Information as to a CIC Owner’s Videograms is made available by CIC to such CIC Owner;

(ii) All Information as to the CIC Owners’ Videograms, to the extent such Information is made available by CIC to any CIC Owner other than the CIC Owner that produced the picture embodied in such Videogram; and all Information (including, without limitation, Information about the release of other Videograms in the Territory) that is made generally available to the CIC Owners by CIC;

(iii) All Information as to MCA Videograms, to the extent similar Information is available to MCA with respect to the DW Videograms; provided such Information: (1) shall only be furnished upon written request from DW; (2) shall be restricted to Information required by DW for a bona fide business purpose under this Agreement (e.g., optimal release scheduling, verification of most favorable terms as specified in the Agreement, including terms related to services, pricing, costs, comparable accounts and collection of revenues therefrom, etc.); and (3) shall not be furnished to DW if in MCA’s good faith business judgment, such disclosure would constitute a violation of any applicable law,

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decree, government regulation, or constitute a violation of any third party right.

(iv) All Information as to the DW Videograms that is available to MCA (excluding Information as to the DW Videograms that is not available to MCA, and not based upon Information as to the DW Videograms available to MCA, directly or indirectly by virtue of MCA’s and/or CIC’s fulfillment services hereunder); and

(v) All other Information as may be required by DW, including, without limitation, MPAA, MPA and other trade association publications and reports (except to the extent distribution to DW is prohibited by such trade association), subject to pertinent confidentiality agreements of which DW is given prior written notice, irrespective of whether such Information is customarily provided by CIC to the CIC Owners and/or any other party; provided, however, that if CIC and/or MCA are required to incur any new additional costs (of which CIC and/or MCA notifies DW in advance) for outside personnel CIC and/or MCA are required to engage solely in order to furnish such additional information which is not included within the scope of services to be rendered by CIC and/or MCA under this Exhibit “B”, CIC and/or MCA shall not be required to furnish such additional information unless DW pre-approves such costs and agrees to reimburse CIC and/or MCA, as applicable, for same (subject to appropriate reduction, to be mutually agreed, if and to the extent that such additional information is supplied [subject to DW’s prior approval] to any party other than DW). Any dispute as to whether such additional information is within the scope of services to be rendered by CIC and/or MCA hereunder will be subject to dispute resolution pursuant to Paragraph 10 of the Master Agreement.

(vi) As used herein, “Information” shall mean all tangible (i.e., excluding only staff meetings, phone conversations and similar conversations which are not reduced to written or other tangible form) information, data, reports, agreements and other documents including, without limitation, all outright sales proposals for the outright sales of a DW Videogram, direct access to the database for each DW Videogram on a territory-by-territory basis, daily box office reports, competitive release dates, advertising expenses, copies of all outside sourced market surveys, updates and analysis, etc., whether distributed on paper, electronically and/or through any other means (e.g., DW shall be put on the distribution lists for such information). The Information shall be provided consistent with the frequency and timeliness with which the Information (or similar material) is created by, or supplied to, MCA, CIC and/or the CIC Owners, or otherwise as DW shall reasonably request; provided,

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however, that if CIC and/or MCA are required to incur any new additional costs (of which CIC and/or MCA notifies DW in advance) for outside personnel CIC and/or MCA are required to engage solely in order to furnish such Information more frequently or quickly (if possible) than the Information (or similar material) is supplied to the CIC Owners and such increased frequency or quickness is not included within the scope of services to be rendered by CIC and/or MCA under this Exhibit “B”, CIC and/or MCA shall not be required to furnish such Information with increased frequency or quickness as requested unless DW pre-approves such costs and agrees to reimburse CIC and/or MCA, as applicable, for same (subject to appropriate reduction, to be mutually agreed, if and to the extent that increased frequency or quickness is also accorded [subject to DW’s prior approval] to any party other than DW). Any dispute as to whether such increased frequency or quickness is within the scope of services to be rendered by CIC and/or MCA hereunder will be subject to dispute resolution pursuant to Paragraph 10 of the Master Agreement. DW shall, on request, be supplied Information by tape data transmission, without any fee if so supplied to the CIC Owners, or otherwise at MCA and/or CIC’s direct actual out-of-pocket cost.

(vii) Notwithstanding anything in this Section 10 to the contrary, in no instance shall Information include (and MCA and CIC shall not be required to provide) (i) internal financial information of MCA, CIC and/or the CIC Owners, or (ii) Information which is not related to the exploitation and performance of Videograms or the costs of distribution.

B. Reports

In addition to the Information set forth in subparagraph 10.A. above, to the extent available and subject to the requirements of law, MCA shall provide access to DW of all information, data, reports, agreements and other documents created by MCA on a state-by-state, country-by-country and territory-by-territory basis relating to the DW Videograms (e.g., DW shall be put on the regular routing lists for such information) such that DW shall receive the same concurrently with MCA (except only the internal financial statements of MCA which do not relate to the sales or performance of DW Videograms or costs of MCA’s fulfillment services) and with such frequency as specified herein or otherwise requested by DW, including, without limitation, with respect to the following general categories: marketing, distributing, financing and operations; provided, however, that if CIC and/or MCA are required to incur any new additional costs (of which CIC and/or MCA notifies DW in advance) for outside personnel CIC and/or MCA are required to engage solely in order to furnish Information more frequently or quickly (if possible) than the Information (or similar material) is supplied to the CIC Owners and such increased frequency or quickness is not included within the scope of services to be rendered by CIC and/or MCA under this Exhibit “B”, CIC and/or MCA shall not be

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required to furnish such Information with increased frequency or quickness as requested unless DW pre-approves such costs and agrees to reimburse CIC and/or MCA, as applicable, for same (subject to appropriate reduction, to be mutually agreed, if and to the extent that increased frequency or quickness is also accorded [subject to DW’s prior approval] to any party other than DW). Any dispute as to whether such increased frequency or quickness is within the scope of services to be rendered by CIC and/or MCA hereunder will be subject to dispute resolution pursuant to Paragraph 10 of the Master Agreement. MCA shall use its best efforts to provide all such material in an electronic format specified by DW. Subject to the foregoing provisions of this Paragraph 10, the reports (or similar reports) created by, or supplied to, MCA, include, but are not limited to, the following reports:

(i) Trade Reports. Monthly Trade Reports from the National Association of Video Dealers and all other reports and information which relate, in whole or in part, to the manufacturing, distribution, advertising and/or exploitation of Videograms which are supplied to MCA from any trade or industry of which MCA is a member or subscriber or which otherwise provides such reports and information by MCA as and when received by MCA, except to the extent distribution to DW is prohibited by such trade association;

(ii) Marketing Reports. On a monthly basis, a report setting out all of the marketing terms and conditions relating to the DW Videograms;

(iii) Sales Reports. On a daily basis, information regarding sales of DW Videograms on a Picture-by-Picture, country-by-country basis, specifying such information reasonably requested by DW including the quantity, price, rental or sell-through, and the retail account;

(iv) Release Reports. On a weekly basis, anticipated projected competitive release dates shall be reported to DW;

(v) Cash Transfers. MCA shall advise DW in writing concurrently with the negotiation hereof, and on a continuing basis throughout the Term of this Exhibit “B”, whether it has entered into any agreements and/or is subject to any requirements (governmental or otherwise) which impact the amount and timing of any money required to be transferred from MCA, CIC or any of their subsidiaries to DW hereunder;

(vi) Expenses. Reports of all expenses paid by MCA comparing budgeted and actual expenses on a Picture-by-Picture and country-by-country basis;

(vii) Taxes/Currency Transactions. Reports of any taxes paid on DW’s behalf and/or any currency transactions made on DW’s behalf, in

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such detail and at such frequency as DW shall reasonably require to the extent the same is not regularly included in Payment Reports;

(viii) Tax Rebates. MCA shall be entitled to charge remittance taxes, but shall be obligated to rebate to DW*** of such taxes at the end of the year in which they are withheld, and the remaining*** at the end of the following year;

(ix) Currency Exchange. MCA shall provide to DW a monthly (or more frequently as DW may from time to time require) breakdown of rate of exchange adjustments to Receipts (as defined in Schedule II) on a country-by-country basis;

(x) Legal. Reports or information which pertain to home video security interests imposed on third parties or reports of audits and the audit itself conducted directly or indirectly by MCA with respect to which MCA shall, at DW’s request, include DW’s Videograms; and

(xi) Additional Documents. MCA shall furnish, and cause CIC to furnish, such additional information and documents as may be required by DW, subject to the terms of subparagraph 10.A(vii) above.

11. Computer Mail

DW shall be “on line” on MCA’s and CIC’s computer systems as to information DW is entitled to hereunder and shall have direct access to MCA’s and CIC’s electronic mail system, if any, and any other system of communication between CIC and the CIC Owners and will reimburse MCA or CIC, as the case may be, for the allocable portion of CIC’s or MCA’s actual, direct, third party out-of-pocket additional installation and hardware costs, if any, paid by CIC or MCA as a direct result thereof, within a reasonable period following receipt of appropriate supporting documentation; provided, however, that at the expiration or earlier termination of the Term, CIC or MCA, as applicable, shall (at DW’s election) either: (a) give DW any hardware for which DW has reimbursed MCA or CIC; or (b) MCA or CIC, as applicable, shall retain such hardware and refund to DW the amount equal to the depreciated value of such hardware.

12. Anti-Piracy

MCA shall have the duty to maintain adequate security and anti-piracy measures consistent with the highest level of security and anti-piracy measures maintained for MCA’s and CIC’s own Videograms to prevent unauthorized distribution, copying and the

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infringement of any of DW’s rights. If DW desires security and anti-piracy measures beyond those provided by MCA and CIC, DW may require MCA and CIC to provide same (or DW may make its own third party arrangements for such services) at DW’s sole cost and expense. Each party shall immediately notify the other of any unauthorized copying, distribution, sale, exhibition and/or other exploitation of DW Videograms and of any other infringements or violations of DW’s copyrights, trademarks and/or other rights in the DW Videograms of which such party has or should have knowledge in the exercise of reasonable prudence. DW shall take such actions as it deems appropriate with respect thereto. To the extent appropriate, MCA shall join in any actions and cooperate fully in any litigation or other proceedings to protect the DW Videograms and DW’s rights. If DW elects to proceed alone directly through its own counsel or instructs MCA to proceed alone directly through its own counsel in DW’s name, DW shall bear the costs thereof and DW shall be entitled to retain any recovery. If DW does not elect to proceed as provided in the prior sentence, MCA or CIC shall have the right to proceed either in DW’s name or in MCA’s or CIC’s name, in which event all recovery reasonably allocated to DW Videograms shall be included in Receipts and all reasonable actual direct third party expenses reasonably allocated to protecting the rights in the DW Videograms shall be deemed a Service Expense. DW shall cooperate fully therewith, and if recovery is through MPAA or MPA actions, any financial recovery and any costs related thereto shall be applied consistent with MPAA or MPA practices. To the extent MCA and/or CIC pays direct additional costs related to piracy, copyright or trademark infringement or other violations of DW’s rights in the DW Videograms, such costs (to the extent pre-approved by DW), including but not limited to anti-piracy print coding, MPA or MPAA anti-piracy programs, and other anti-infringement activities, shall be payable by DW. Notwithstanding the foregoing, DW may, in its sole discretion, elect not to have the DW Pictures included in such MPAA, MPA, piracy, copyright or trademark infringement or other actions.

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SCHEDULE II

Payment of all amounts actually received or credited by MCA hereunder shall be made directly for the account of DW, or at DW’s election, of a DW-related entity, and the charging of all expenses by MCA to DW hereunder shall be made on a periodic basis subject to and in accordance with the provisions of Schedule III, attached hereto and incorporated herein by this reference, and which shall govern in the event of an inconsistency with this Schedule II.

1. Domestic Receipts

MCA shall collect on DW’s behalf as DW’s collection agent all amounts paid or credited to MCA from any source in the “Domestic Territory” in connection with the exploitation of the DW Videograms hereunder including, without limitation, advances, minimum guarantees and other remittances, recoveries from copyright infringement, trademark infringement, unfair competition and related claims brought by MCA in DW’s name (and with DW’s approval), blank tape taxes or levies, performing rights license fees, and rental and lending right levies or royalties paid or credited to MCA from any source (and not otherwise payable to third parties) (collectively, “Domestic Receipts”). Except as provided in Paragraph 3.A of Exhibit “B” to which this Schedule II is attached, Domestic Receipts shall not include any amounts payable or credited to DW as a result of any agreements and arrangements made directly between DW and any mail order entity or any entity that causes the DW Videograms to be distributed directly to members of the public for in-home use by electronic transmission; nor shall Domestic Receipts include any amounts payable or credited to DW as a result of any promotional or commercial “tie-in” agreement entered into by DW.

2. Domestic Service Fees

DW shall pay MCA the following (in the order listed) domestic service fees (“Domestic Service Fee”) of an amount equal to:

A. *** of 100% of Domestic Receipts paid to, or credited against uncontested outstanding sums owed to MCA, by DW in any contract year until Domestic Receipts equal ***;

B. *** of 100% of Domestic Receipts paid to, or credited against uncontested outstanding sums owed to MCA, by DW in any contract year from the point that Domestic Receipts exceed *** until Domestic Receipts equal ***; and

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C. *** of 100% of Domestic Receipts paid to, or credited against uncontested outstanding sums owed to MCA, by DW in any contract year from the point that Domestic Receipts exceed ***.

D. In no event shall the Domestic Service Fee be less favorable to DW than the service fees paid to or retained by MCA and/or CIC in connection with MCA’s (or CIC’s) overall domestic fulfillment services in connection with Videograms produced by any party other than a CIC Owner, it being agreed that for the purpose of determining whether MCA and CIC have complied with this “favored nations” assurance, MCA’s or CIC’s receipt of a service fee plus any other consideration (in any form, e.g., non-monetary consideration such as other rights granted to MCA or CIC at the time) shall be taken into account, so that the determination is an “apples-to-apples” comparison, as much as possible and, in any event, one-picture deals shall be excluded.

3. Domestic Contract Year

For the purpose of calculating Domestic Service Fees, Domestic Receipts shall be aggregated and calculated for each “contract year” (with the first “contract year” being the one year period commencing upon the first day of the accounting month (the “Domestic Commencement Date”) in which the release of a DW Videogram occurs hereunder and each subsequent “contract year” being the one year period commencing on the next anniversary of the Domestic Commencement Date), such that at the beginning of each contract year the fee payable to MCA pursuant to the schedule in Paragraph 2 above (“Domestic Schedule Percentage”) shall be calculated by again commencing with Paragraph 2.A. Notwithstanding the foregoing (i) all post-Term services shall be deemed to occur in the last contract year to begin during the Term, and (ii) if the last contract year of the Term is a partial year, the fee payable to MCA for Domestic Receipts from such partial year as well as Domestic Receipts from DW’s distribution of any of the DW Videograms beyond the Term per Paragraphs 2.C. and 6 of Exhibit “B” shall be calculated at the lesser of *** or the otherwise applicable Domestic Service Fee rate under Paragraph 2 above. As used in this paragraph, Domestic Receipts shall be based on actual receipt by MCA on behalf of DW for purposes of measuring when the Domestic Receipts have been derived.

4. Foreign Receipts

MCA shall collect on DW’s behalf as DW’s collection agent, all amounts paid or credited to MCA from any source in the “Foreign Territory” (as defined in Exhibit “B”) in connection with the exploitation of DW Videograms hereunder, including, without limitation, advances, minimum guarantees and other remittances or credits from “Subdistributors” (as defined in Exhibit “B-1”) (“Subdistributor Revenue”) recoveries from copyright infringement, trademark infringement, unfair competition and related claims brought by MCA in DW’s name (and with DW’s approval); and blank tape taxes or levies, and rental and lending right levies or royalties received by or credited to MCA

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from any source (and not otherwise payable to third parties) (collectively, “Foreign Receipts”). Except as provided in Paragraph 3.A. of Exhibit “B”, Foreign Receipts shall not include any amounts payable or credited to DW as a result of any agreements and arrangements made directly between DW and any mail order entity or any entity that causes DW Videograms to be distributed directly to customers by electronic transmission; nor shall Foreign Receipts include any amounts payable or credited to DW as a result of any promotional or commercial “tie-in” agreement entered into by DW.

5. Foreign Service Fees

DW shall pay MCA the following (in the order listed) foreign service fees (“Foreign Service Fee”) of an amount equal to:

A. *** of 100% of Foreign Receipts paid to, or credited against uncontested outstanding sums owed by, DW in any contract year until Foreign Receipts equal ***;

B. *** of 100% of Foreign Receipts paid to, or credited against uncontested outstanding sums owed by, DW in any contract year from the point that Foreign Receipts exceed *** until Foreign Receipts equal ***; and

C. *** of 100% of Foreign Receipts paid to, or credited against uncontested outstanding sums owed by, DW in any contract year from the point that Foreign Receipts exceed ***.

D. In no event shall the Foreign Service Fee be less favorable to DW than the service fees paid to or retained by MCA and/or CIC in connection with MCA’s (or CIC’s) overall foreign fulfillment services in connection with Videograms produced by any party other than a CIC Owner, it being agreed that for the purpose of determining whether MCA and CIC have complied with this “favored nations” assurance, MCA’s or CIC’s receipt of a service fee plus any other consideration (in any form, e.g., non-monetary consideration such as other rights granted to MCA or CIC at the time) shall be taken into account, so that the determination is an “apples-to-apples” comparison, as much as possible and in any event, one-picture deals shall be excluded.

6. Foreign Contract Year

For the purpose of calculating Foreign Service Fees, Foreign Receipts shall be aggregated and calculated for each “contract year” (with the first “contract year” being the one year period commencing upon the first day of the accounting month (the “Foreign Commencement Date”) in which the first Foreign Videogram release of a DW Videogram occurs hereunder and each subsequent “contract year” being the one year period commencing on the next anniversary of the Foreign Commencement Date), such that at the beginning of each contract year, the fee payable to MCA pursuant to the Schedule in Paragraph 5 above (“Foreign Schedule Percentages”) shall be calculated by again

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commencing with Paragraph 5.A. Notwithstanding the foregoing, (i) all post-Term services shall be deemed to occur in the last contract year to begin during the Terms, and (ii) if the last Foreign contract year of the Term is a partial year, the fee payable to MCA for Foreign Receipts from such partial year as well as Foreign Receipts from DW’s distribution of any of the DW Videograms beyond the Term per Paragraphs 2.C. and 6 of Exhibit “B”, shall be calculated at the lesser of *** or the otherwise applicable Foreign Service Fee rate under Paragraph 5 above. As used in this paragraph, Foreign Receipts shall be based on actual receipt by MCA on behalf of DW for purposes of measuring when the Foreign Receipts have been derived.

7. Service Fee Payments

The Domestic Service Fee and Foreign Service Fee shall be herein collectively referred to as the “Service Fee”. No Domestic Service Fee or Foreign Service Fee shall be payable to MCA until concurrent payment to DW of the Domestic Receipts and/or Foreign Receipts (collectively, “Receipts”), as applicable, upon which such Service Fee is charged, provided however that MCA may deduct and retain its Domestic Service Fee and/or Foreign Service Fee, as applicable, payable hereunder concurrently with the payment to DW of the Receipts upon which such Service Fee is charged. In the event of any adjustment as provided in Paragraphs 3, 4 and 6 above, the Domestic Service Fee and/or Foreign Service Fee, as applicable, shall be similarly re-calculated and adjusted. It is understood that MCA and/or CIC is entitled to recoup Service Expenses out of amounts otherwise payable to DW which recoupment shall not affect their rights to Domestic Service Fees or Foreign Service Fees hereunder.

8. Service Expenses

A. MCA shall advance all DW approved Domestic Expenses and Foreign Expenses (collectively, “Service Expenses”) (except only that MCA shall not be required to advance monies payable to a third party supplier or service provider with whom DW contracts directly in exercise of its rights under Paragraph 7 of Schedule I) and shall be entitled to be reimbursed for same on a monthly basis (following payment of the Service Fees). If MCA changes its accounting methodology with respect to its own pictures or those of any third party, DW may elect to have the Service Expenses accounted on the basis of MCA’s revised accounting methodology. Subject to Paragraph 9 below, in computing Service Expenses, if MCA receives or is credited with any advances, volume discounts, laboratory or other vendor rebates, or any other economic consideration or financial advantage of any kind or nature tied directly or indirectly to the manufacture of or fulfillment services for Videograms or to the DW Videograms, or expenses incurred in connection therewith (including, without limitation, any cash discounts for accelerated payment or volume or combined volume discounts), such advances, volume discounts, laboratory or other vendor rebates and any other economic consideration or financial advantage shall be included in Receipts, or applied as a reduction of Service Expenses, as the case may be, allocated to the DW Videograms according to the terms of the

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agreements in question, or, if such agreements do not provide a means of allocation, on a fair and reasonable basis (subject to later reconciliation if and to the extent such allocation was in retrospect unfair or unreasonable to either party). If and to the extent that DW has reimbursed MCA in excess of amounts actually advanced by MCA for such Domestic Expenses and/or Foreign Expenses, such excess payment shall be rebated to DW on a quarterly basis. MCA shall reasonably promptly disclose in writing when it receives such advances, volume discounts, laboratory or other vendor rebates and/or any other economic consideration or financial advantage.

B. “Service Expenses” shall mean all actual direct out-of-pocket costs and expenses “accrued” (i.e., *** after being accrued, provided such costs and expenses are paid no more than *** thereafter, or otherwise when paid, by MCA and/or CIC in connection with its fulfillment services for the DW Videograms), in accordance with, and subject to, all of the terms and limitations of this Exhibit “B”. Service Expenses paid in connection with both DW Videograms and other Videograms will be allocated in a manner agreed by the parties. Included in Service Expenses are the following costs:

(i) Manufacturing and duplication, including raw stock and shells, boxes, printing of box wraps and stickers, anti-copying devices and/or signal encoding, shrink-wrapping, subtitling, and dubbing, shipping, packouts, holograms, mastering, insertions and similar costs;

(ii) Advertising, promoting, and publicizing the DW Videograms in publications, radio and television, previews, P.O.P. materials, displays and all other media, including co-op advertising;

(iii) Freight, insurance (provided, however, that if DW would be required hereunder to reimburse MCA and/or CIC for such insurance costs, and MCA and/or CIC can exclude DW under the terms of the policy, DW may in its sole discretion decline such insurance), and storage;

(iv) Applicable payments, if any, to performing right societies (e.g., SESAC) which are remitted by MCA on DW’s behalf;

(v) Prosecution, settlement and/or defense of copyright infringement, trademark infringement, unfair competition and related claims and litigation, provided that all amounts recovered pursuant to any of the aforementioned shall be included in Domestic Receipts or Foreign Receipts as provided in Paragraphs 1 and 4 above; and

(vi) Permit fees and sales and other taxes on goods, however denominated, censorship charges, duties, tariffs, customs and similar charges, and DW-approved sales performance related rebates and/or DW-approved discounts to customers.

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C. Notwithstanding anything in subparagraphs (i) through (vi) above, none of the following shall constitute Service Expenses or otherwise be paid by DW to MCA:

(a) expenses associated with delinquent payments by MCA to suppliers, vendors or other service providers (e.g., interest or finance charges); (b) so-called “overhead” expenses or other indirect costs (including, without limitation, salaries and travel expenses) of MCA other than such costs paid solely with respect to DW Videograms which DW has pre-approved in writing; (c) expenses associated with tradeshows, film festivals, conventions and similar events, except that incremental increases in such costs over those paid in prior years (to the extent pre-approved in writing by DW and attributable to DW Videograms) shall be Service Expenses hereunder; and (d) any other expenses (other than actual direct out-of-pocket costs and expenses otherwise reimbursable under this subparagraph 5.d. as set forth above) of any kind, including, without limitation, collection costs and MCA’s share of trade association dues and assessments (subject to an appropriate reduction, to be mutually agreed, if and to the extent any information including, without limitation, publications or reports from such trade associations are not supplied to DW hereunder per subparagraph 10.B.(i) of Schedule I, and provided further that DW may elect in any event to become a member of any such trade association(s) and pay such dues and assessments directly to the appropriate association(s), in which event DW shall not be responsible for any share of MCA’s dues and assessments to such association(s)), except that incremental increases in such costs over those paid in prior years (to the extent pre-approved by DW and solely attributable to the DW Videograms) shall be Service Expenses hereunder.

9. Advances/Rebates/Unallocated Amounts

MCA shall promptly disclose in writing and credit to DW all advances, volume discounts, laboratory and other vendor rebates and any other economic consideration or financial advantages accorded MCA and/or CIC by a third party as a direct or indirect result of MCA’s and/or CIC’s fulfillment services or to the DW Videograms whether or not specifically allocated to DW Videograms, including any amounts received for or in connection with the distribution of Videograms including DW Videograms which are not specifically allocated or credited to the distribution of specific Videograms consistent with Schedule I.8. All such advances, volume discounts, laboratory and other vendor rebates and other economic consideration or financial advantages will be allocated to the DW Videograms according to the terms of the agreements in question, or, if such agreements do not provide a means of allocation, on a fair and reasonable basis (subject to later reconciliation if and to the extent such reconciliation was in retrospect unfair or unreasonable to the other party). DW shall have access to any agreement which provides for any such advance, volume discount, laboratory or other vendor rebate or other economic consideration or financial advantages, subject to the conditions set forth in Paragraph 8 of Schedule I with respect to third party suppliers]. No rebates which relate, in whole or in part, to the DW Videograms shall be granted to any third party which renders services or suppliers without DW’s specific written consent.

10. Currency

Other than amounts which cannot legally be remitted from the country in which they are earned (“Blocked Currency”), all amounts payable hereunder shall, as DW elects, be paid in either U.S. currency or the currency of the country where such Domestic Receipts or Foreign Receipts are received. In the event that DW elects to be paid such

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amounts in U.S. currency, the amounts shall be converted, using the same exchange rate for Service Expenses and Foreign Receipts, on specified dates of which CIC and/or MCA shall notify DW on an ongoing basis and which shall be the same dates and rates used for the CIC Owners’ Videograms; provided, if the amounts are not converted directly from the foreign currency in which they were received to U.S. currency (i.e., if intermediary conversion to other currency(ies) is utilized), then MCA shall bear all risk from fluctuation of such intermediary currencies. Notwithstanding the above, DW shall have absolute approval over any currency hedging contracts applicable to the DW Videograms entered into by CIC. DW shall have the right to enter into foreign currency hedging contracts with respect to amounts due hereunder. In the case of Blocked Currency, DW shall have the right to elect whether to receive some or all of the payment which may be due in such Blocked Currency, in the country where it is located. DW may use such amounts to pay MCA for any Service Expenses, Domestic Service Fee or Foreign Service Fee or other amounts due hereunder on the DW Videograms in the country of such Blocked Currency or make any other arrangements with respect thereto as are available to MCA, CIC or the CIC Owners. To facilitate this, MCA shall advise DW in writing as to Foreign and Domestic Receipts, if any, which are in Blocked Currency and MCA shall, at the written request of DW (subject to any and all limitations, restrictions, laws, rules and regulations affecting such transaction) deposit into bank designated by DW in the country involved, or pay to any other party designated by DW in such country, any Blocked Currency which would have been payable to DW hereunder. Such deposits or payments to or for DW shall constitute due remittance to DW, and MCA shall have no further interest therein or responsibility therefor. At DW’s election, CIC will convert such deposits or payments into U.S. dollars to the same extent and in the same manner and proportion that CIC is able to convert such funds for the CIC Owners’ Videograms.

11. Accounting

A. MCA shall furnish, and shall cause CIC to furnish, to DW, on a monthly basis, within *** from the end of each MCA accounting month, revenue and payment detail reports (the “Payment Reports”) in a format approved by DW, which format may change from time to time in DW’s sole discretion (provided, however, that if CIC and/or MCA are required to incur any new additional costs (of which CIC and/or MCA notifies DW in advance) for outside personnel CIC and/or MCA are required to engage solely in order to furnish any Payment Reports which are re-formatted to DW’s specifications and which are not included within the scope of services which DW reasonably expects to be rendered by CIC and/or MCA under this Exhibit “B”, CIC and/or MCA shall not be required to furnish such re-formatted Payment Reports unless DW pre-approves such costs and agrees to reimburse CIC and/or MCA, as applicable, for same (subject to appropriate reduction, to be mutually agreed, if and to the extent that the format of such re-formatted Payment Reports is used for similar reports [subject to DW’s prior approval] to any party other than DW). Any dispute as to whether such re-formatted Payment Reports are reasonably expected to be within the scope of services to be rendered by CIC and/or MCA hereunder will be subject to dispute resolution pursuant to Paragraph 10 of

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the Master Agreement. Each Payment Report shall reflect, on both a monthly and cumulative basis, the following information relating to all Videograms for which MCA renders fulfillment services, with such information separately provided for DW Videograms for each territory in which the DW Videograms are distributed: the wholesale price derived per Videogram during such month and the number of DW Videograms sold or otherwise distributed during such month; all information relating to MCA receivables and actual receipts from the DW Videograms hereunder, including receipts from Subdistributors and Foreign Intermediary Entities; all information relating to all costs and expenses payable and actually paid in connection with MCA’s and CIC’s manufacture of, and fulfillment services for, Videograms (including for DW Videograms, the Service Expenses); and a listing of outstanding inventory of DW Videograms on a title-by-title basis. Each Payment Report shall be certified as correct by MCA’s and CIC’s chief financial officer. All Service Expenses and Receipts shall be fully crossed among all DW Videograms hereunder for purposes of recoupment by MCA of its advances of Service Expenses hereunder; in no event will Service Expenses and Receipts be crossed between this Exhibit “B” and Exhibit “A” (except only if and to the extent that DW fails to timely make any payments required hereunder). Payment Reports may be corrected, adjusted, or supplemented by MCA from time-to-time to reflect adjustments, uncollectible amounts, errors, etc. No Payment Reports need be rendered for any accounting period during which there are no Receipts or Service Expenses to be reported.

B. Concurrently with its receipt of each Payment Report, MCA will pay or cause to be paid to DW amounts indicated thereon to be due to DW. All payments hereunder to DW or MCA, as the case may be, shall be made by wire transfer or such other method as may be approved by DW and MCA. Payments to DW shall be made to DW or any entity designated from time-to-time by DW. Alternatively, at DW’s election, such payment shall be made directly by MCA International, B.V. in the Netherlands to a DW subsidiary in the United Kingdom or such other country as DW may designate, provided that any additional remittance or other taxes paid by MCA and resulting from payment being so made shall be a Service Expense, in which event MCA will rebate to DW *** of such tax credits at the end of such year and the remaining *** at the end of the following year.

C. Interest shall be charged on any amount which is not paid when payable hereunder by either party at *** from time-to-time in effect. Such interest shall be paid at the same time as the associated principal payment shall be made.

12. Access And Audit Rights

A. MCA shall keep, and shall cause CIC to keep, full, true and complete records and books of accounts together with all supporting vouchers and documents relating to the rendition of MCA’s fulfillment services, including without limitation, the manufacture, sales, promotion, duplication, printing, packaging, shipping and handling of DW Videograms and DW’s distribution of DW Videograms within the Territory

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(collectively, “Records”), and maintain, and cause CIC to maintain, for a period of seven years following DW’s receipt of a Payment Report all Records relevant thereto. Notwithstanding the foregoing, MCA shall in any event, and shall cause CIC in any event to, keep and maintain (or deliver to DW) all of the above mentioned materials for any longer period required to complete an open audit of DW of which DW gives notice or in the event of an unresolved dispute with any participant or third party related to a DW Videogram of which DW gives notice.

B. MCA grants DW and its agents, employees and representatives the rights, from time-to-time at all times during the Term and for a period of *** after the latter of the expiration of the Term and the delivery of the last Payment Report hereunder, with reasonable prior notice to MCA and at all reasonable hours and with reasonable frequency, to examine, audit and take excerpts from and make copies of any such records, invoices, book of account, computer or data base information, and all other documents or correspondence, related to the provision of fulfillment services for DW Videograms and/or to the calculation of amounts due to or from DW hereunder; provided, however, transactions will not be subject to audit more than five years after delivery to DW of the Payment Report in which such transactions are initially reported. Notwithstanding the foregoing, DW shall only be entitled to confidential third party information to the extent the same is reasonably necessary to resolve an issue(s) under audit; if MCA and/or CIC refuses to supply any such information, the parties will submit to dispute resolution pursuant to Paragraph 10 of the Master Agreement and the “Judge” (as defined in the Master Agreement) shall impose such reasonable procedures (including, without limitation, limiting disclosure to auditors, redaction and in camera proceedings) as the Judge deems necessary to accord information reasonably necessary to conduct the audit while preserving confidentiality. DW’s audit rights hereunder shall include the right to examine and inspect all inventory of DW Videograms in the possession or control of MCA, CIC and any Subdistributors and/or the duplication, printing and storage facilities used by MCA. All such audits shall, except as otherwise provided in Paragraph 12.C. below, be at DW’s sole cost and expense.

C. If an audit discloses any inaccuracies or discrepancies in MCA’s and/or CIC’s books and records with respect to the fulfillment services or the calculation of amounts payable to or from DW, MCA and/or CIC, as applicable, shall cure such inaccuracies and discrepancies within thirty (30) days following notice thereof. In the event an audit shall uncover a deficiency as of the end of the period audited, or for any period of at least six months during the period audited, in each case equal to or greater than *** in any account owed at any time by MCA and/or CIC, as applicable, to DW hereunder, MCA and/or CIC, as applicable, shall immediately pay DW (i) said deficiency in full; and, (ii) all costs and expenses in connection with such audit including, without limitation, hotel and airfare expenses.

D. In the event of an audit, MCA and/or CIC, as applicable, shall provide DW and its agents, employees and representatives with reasonable and suitable physical

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conditions in which to conduct such audit, including, without limitation, a desk and chair, adequate lighting and suitable ventilation, as well as a copying machine with which to make copies. MCA shall cause each Subdistributor to comply with the foregoing.

E. Each of MCA, CIC and DW shall use reasonable efforts to conduct any audit in an expeditious manner.

F. MCA/CIC Owned Businesses: With respect to the provision of fulfillment services hereunder, any agreement with any supplier or other business entity owned in whole or in part, directly or indirectly, by MCA and/or CIC or any CIC Owner (“Owned Business”) shall be fair and reasonable in marketplace and on an arm’s-length basis. MCA shall use its best efforts to audit and monitor any agreement with an Owned Business to ensure that DW is not prejudiced in any fashion as a result of such business being owned by MCA, and shall supply to DW all information with respect thereto supplied to any other party for whom MCA renders Videogram fulfillment services and/or the CIC Owners, as the case may be, including the results of any such audit or procedure.

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SCHEDULE III

HOME VIDEO ACCOUNTING

9/11/96

Domestic (including Canada)

The procedure would be as follows:

1. On the first business day after the *** of each month, MCA will pay to DW, or DW will pay to MCA, an amount based on:

• *** of amounts first due to MCA from customers that month from the initial distribution of a video (i.e., excluding catalogue sales), less

• *** of expenses first payable by MCA that month.

2. On the first Friday (assuming it’s a business day, or the first business day thereafter if it’s not) following the first Monday after the close of each accounting month, MCA will pay to DW any net positive amount, or DW will pay to MCA any net negative amount, based on:

• *** of cumulative actual receipts by MCA (as determined from information available and recorded in the ordinary course) through the preceding accounting month for both initial distribution and catalogue sales net of receipts included in prior accountings (i.e., receipts are continuously trued up on a cumulative basis on the basis of ordinary course information), less

• *** of cumulative expenses paid by MCA (as determined from information available and recorded in the ordinary course) through the preceding accounting month net of expenses included in prior accountings (i.e., expenses are continuously trued up on a cumulative basis on the basis of ordinary course information).

3. Returns during any month will be netted against cumulative receipts through that month. Credits for coop advertising will reduce receipts due when issued. The parties will negotiate in good faith and agree upon reasonable bad debt reserves if necessary based on actual experience (the failure to agree being subject to dispute resolution).

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Foreign

Because different territories have different due dates and the payment pattern varies widely, we will use the following (which reflects MCA’s averages):

1. On the 25th of each month (assuming it’s a business day, or the first business day thereafter if it’s not), MCA will pay to DW any positive amount, or DW will pay to MCA any negative amount, based on:

• The sum of (i) *** of amounts first due to MCA for that month, plus (ii) *** of amounts first due to MCA for the immediately preceding month, minus (iii) the extent to which receipts included in prior accountings for cumulative amounts due MCA through the second preceding month exceed cumulative actual receipts through the immediately preceding month (as determined from information available and recorded in the ordinary course) for such amounts due through such second preceding month (i.e., cumulative amounts received would be continuously trued up to cumulative amounts due through the second preceding month), less

• The sum of (a) *** of expenses first payable by MCA that month, plus (b) *** of expenses first payable by MCA during the immediately preceding month, minus (iii) the extent to which expenses included in prior accountings for cumulative expenses first payable by MCA through the second preceding month exceed cumulative actual expenses paid by MCA through the immediately preceding month (i.e., cumulative expenses paid would be continuously trued up to cumulative expenses first payable through the second preceding month).

2. To the extent relevant, returns during any month will be netted against cumulative receipts through that month. The parties will negotiate in good faith and agree upon reasonable bad debt reserves if necessary based on actual experience (the failure to agree being subject to dispute resolution).

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EXHIBIT “B-1”

MEMORANDUM OF AGREEMENT

BETWEEN DREAMWORKS L.L.C. AND UNIVERSAL CITY STUDIOS. INC.

SUBDISTRIBUTORS

DW intends to enter into subdistribution agreements as it determines in its sole discretion in those markets and territories in the “Foreign Territory” (as defined in Exhibit “B”) in which it does not distribute the DW Videograms. With respect to such subdistribution agreements, it is agreed as follows:

1. DW shall select, and may contract in its own name with, each subdistributor (and, in this regard, DW agrees where appropriate and in DW’s sole discretion to utilize the subdistributors which are pre-approved in Paragraph 4 below and which CIC uses in the applicable territory(ies)).

2. If and to the extent required by DW, CIC will render certain fulfillment services (e.g., manufacturing and shipping DW Videograms, collecting monies on DW’s behalf, etc.) in connection with such subdistribution agreements, subject in all instances to the provisions of Exhibit “B”, including provisions related to expiration or termination of the Term. For each subdistribution agreement in connection with which CIC renders fulfillment services, CIC shall be entitled to a Service Fee based upon Subdistributor Revenue in the amount of *** of the applicable Foreign Schedule Percentages (and MCA shall not be entitled to any Service Fee in connection with same); provided, however, that Foreign Receipts and Subdistributor Revenue will be aggregated in any event for purposes of calculating the Foreign Receipts breakpoints for the Foreign Schedule Percentages in Paragraph 5 of Schedule II of Exhibit “B”.

3. Notwithstanding the expiration of the Term as set forth in Exhibit “B” (but not DW’s earlier termination thereof for cause as otherwise provided in Exhibit “B”), but subject to the first sentence of Paragraph 2 above, the terms and conditions of Exhibit “B” and this Exhibit “B-1” shall continue to apply to, and for such limited purpose only, the Term shall be extended with respect to one or more DW Videograms, for such additional period of time as may be required (and solely to the extent required) by applicable subdistribution agreements entered into pursuant to this Exhibit “B-l”.

4. List of Approved Subdistributors, Territories and terms of subdistribution:

[                    ]

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SCHEDULE B-TC

AMENDED AND SUPPLEMENTAL TERMS AND CONDITIONS APPLICABLE TO

EXHIBIT B

1. Territory. “Territory” as defined in Exhibit B refers to the Domestic Territory and the Foreign Territory.

a. “Domestic Territory” means the entire territorial United States and its possessions, territories and commonwealths, including the U.S. Virgin Islands, Puerto Rico, Guam, and the former U.S. Trust Territories of the Pacific Islands, including the Carolina Islands, the Marshall Islands and the Mariana Islands, Saipan and American Samoa; the Dominican Republic, the British Virgin Islands, the Bahamas, Bermuda, Saba Island, St. Eustatius Island, St. Kitts Island, St. Martin Island, St Maarten Island; and Canada and its possessions and territories.

b. “Foreign Territory” means the entire world, excluding only:

i. The Domestic Territory;

ii. Republic of South Korea and the Democratic People’s Republic of North Korea to the extent DW assigns the right to render Fulfillment Services in connection with DW Videograms in such countries to or through DW’s Korean shareholder or any of its Affiliates, or any of their successors or designees; and

iii. Japan or the “German Territory”, as DW may elect. The Federal Republic of Germany, the Republic of Austria and German-language rights in Switzerland, Lichtenstein, Luxembourg and Alto Adige shall constitute the German Territory. At any time during the Term, as a basis to raise additional capital, DW may assign or grant to any third party(ies) the right and obligation to render Fulfillment Services in connection with DW Pictures for either Japan or the German Territory, in which event FSP shall not have the right and obligation to render Fulfillment Services in connection with the applicable DW Pictures in the designated territory, except as otherwise may be provided in Exhibit B; provided, however, that DW shall provide Universal with 90 days notice prior to the effective date of any such assignment or grant, and DW shall hold Universal harmless from third party claims and actual out-of-pocket losses (i.e., excluding internal costs, profits, and/or consequential damages) resulting from any such assignment or grant (including costs incurred in terminating personnel as a result thereof). Notwithstanding the foregoing, DW shall have the right to cause FSP to provide to such third party(ies) all of the Fulfillment Services required in connection with DW Videograms in the designated territory, in which event FSP shall be entitled to the applicable “Foreign Service Fees” set forth in Schedule B-II of Exhibit B, calculated on the “Foreign Receipts” (as defined in Exhibit B) derived from the applicable territory and such Foreign Receipts shall be taken

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into account for purposes of calculating the Foreign Receipts breakpoints for the Foreign Schedule Percentages in Schedule B-II of Exhibit B. DW and applicable third parties shall have access to all DW Picture elements and related materials in accordance with Exhibit B, provided DW and such third parties shall bear all duplication, freight and delivery costs in connection therewith.

2. Videogram. “Videogram” as defined in Exhibit B shall include video CDs (i.e., “VCDs”).

3. Services. FSP shall supply and render, at no cost or expense to DW, except for FSP’s retention of the applicable Service Fees set forth in Exhibit A or expressly set forth in Paragraphs 1.b and 5 of this Schedule B-TC, the services (“Services”) set forth in Exhibit FS, attached hereto and incorporated herein by reference.

In territories where Universal does not provide certain Fulfillment Services contemplated under Exhibit “B” (including the Services) and DW pays the third party costs attributable thereto (i.e., sales [e.g. Sales Agents in Italy], marketing, finance or operations [e.g., Sales and Distribution Agreement in Japan]), the parties agree that the fee due to Universal shall be reduced*** in the event that Sales and/or Distribution Services are not provided in such territory.

DW agrees that it will negotiate and consider in good faith an agreement for the provision of fulfillment services by Universal for DVDs in Japan provided that Universal is (or will be) substantially capable of providing such services to DW as of the agreed-upon date of commencement of the provision of such services.

4. Self-Help; Cure. If DW believes the performance of Fulfillment Services set forth in paragraph 1 of Exhibit FS is substandard as compared to those commonly rendered in the industry, DW will notify Universal in writing of such belief, including detailed substantiation of its position. Universal will have 90 days to substantially cure such substandard performance. At the end of the cure period, DW will either approve Universal’s remedy on the basis that it represents a substantial cure (which approval shall not be unreasonably withheld), or disapprove the cure. If DW disapproves the cure, and the parties do not otherwise mutually agree, the matter shall be submitted to arbitration pursuant to the procedures set forth herein (except that the same shall be conducted and completed within 30 days from commencement) for determination of the provision of services issues and the remedy, if any, therefor.

5. Pick, Pack & Ship; Replenishment; Returns Processing. DW shall be responsible for the cost of pick/pack/ship services, replenishment and returns processing of DW Videograms on a worldwide basis, whether such services are rendered by FSP or a third party, provided that such costs in the case of FSP shall be limited to FSP’s actual cost of providing such services, but not to exceed the most favorable rate available to DW as charged by third parties for such services.

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6. CIC Audit. DW and FSP agree to promptly resolve, within six months (6) months from execution of the DW/[    ] Master Agreement, DW’s pending audit claims for the territories of Italy, Germany, Japan, Spain, the United Kingdom and France resulting from the audit of Cinema International Corporation B.V. by DW’s independent auditors.

7. Accounting/Payments. DW and FSP agree to the following modifications with respect to accountings and payments pursuant to Exhibit B.

a. All Domestic Territory and Foreign Territory video payments shall be made to DW based on***, rather than***. Deemed Receipts, Services Expenses and Service Fees shall be settled monthly with *** of the same due on a sixty (60) day lag from the end of the month in which DW Videograms are shipped and billed, or Service Expenses are incurred, and the remaining *** of the same on a ninety (90) day lag from the end of the month in which DW Videograms are shipped and billed, or Service Expenses are incurred. Deemed Receipts shall be defined as gross shipments, less actual returns, sales allowances, and discounts, and substantial unpaid receivables (provided that Universal shall promptly notify DW of the same and the parties shall negotiate in good faith the appropriate accounting and settlement of the same). FSP shall not establish return reserves at any time. Notwithstanding the foregoing, the parties agree that the intent hereof is an interest-neutral position for both parties, and if there is a change to receivables dating that substantially effects Deemed Receipts concerning DreamWorks Videograms, the parties shall discuss and revise in good faith.

b. Foreign Receipts and Foreign Service Expenses shall be translated at the average exchange rate in the month they are incurred. No adjustments up or down for currency fluctuations are permitted.

c. Sales and returns reporting for the Domestic Territory must be made available to DW within *** business days of FSP’s month-end close.

d. FSP shall provide electronic reporting to DW within *** business days of FSP’s Foreign Territory month-end close.

e. Domestic and Foreign Territory reporting shall include revenue, actual returns, and manufacturing costs by format.

Except as specifically provided above, all other terms and conditions set forth in Exhibit B shall continue in full force and effect.

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EX-10.14

Exhibit 10.14

AMENDMENT NO. 2

TO

EXHIBIT B TO THE MASTER AGREEMENT

DreamWorks L.L.C. (“DW”) and Universal Studios, Inc. (“Universal”) have entered into a Master Agreement dated as of June 14, 1995, which was amended and restated in its entirety as of June 20, 2001 (the “Master Agreement”) and, in connection with the amendment and restatement of the Master Agreement, entered into an amendment to Exhibit B to the Master Agreement (Exhibit B as amended, the “Home Video Agreement”). DW and Universal have agreed, effective as of January 15, 2002 (the “Amendment Effective Date”) to enter into this amendment number 2 (“Amendment No. 2”) to the Home Video Agreement as more fully set forth below.

1. General.

a. Capitalized terms used in this Amendment No. 2 but not otherwise defined herein shall have the meaning assigned thereto in the Home Video Agreement.

b. The parties hereto have or may discuss other matters which may or may not result in further amendments to the Home Video Agreement. The fact that such matters are not addressed in this Amendment No. 2 shall not be used to impute to any party any position on any matter, or to imply that any agreement has been reached on such matter. Other than as expressly amended in this Amendment No. 2, the Home Video Agreement remains in full force and effect as of the Amendment Effective Date.

2. Clarification of Exhibit FS.

Subparagraph 1.ii of Exhibit FS is hereby clarified, with the parties agreeing that it does not require FSP to provide compression and authoring services to DW.

3. Amendment to Schedule B-TC

a. Paragraph 7.a. of Schedule B-TC is amended and restated to read, in its entirety, as follows:

All Domestic Territory and Foreign Territory video expenses and receipts shall be made as follows:

1. All Domestic Territory and Foreign Territory video payments shall be made to DW based on *** rather than***. Receipts for DW Videograms shall be deemed paid to Universal, and therefore payable to DW (net of applicable Service Fees) as follows: *** on the last day of the second fiscal month commencing after the fiscal month in which the effective invoice date occurs (“effective invoice date” means the actual invoice date after shipment date, except for initial

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shipments, for which the effective invoice date shall be street date) and the remaining *** on the last day of the third fiscal month commencing after such effective invoice date. (As an example, if units are shipped in January and invoiced in February prior to the February invoice cutoff date, *** net of Service Fees would be due on the last day of April and the remaining *** net of Service Fees on the last day of May, subject to the next sentence.) Each of the payment due dates set forth in the preceding sentence shall be extended by any DreamWorks-approved additional terms or dating. Deemed Receipts shall be defined as gross shipments, less actual returns, sales allowances, and discounts, and substantially aged receivables (provided that Universal shall promptly notify DW of the same and the parties shall negotiate in good faith the appropriate accounting and settlement of the same). Universal shall not establish return reserves at any time.

2. Service Expenses shall be settled monthly on a “Deemed Payment” basis. 100% of all Service Expenses incurred in a month shall be due and payable on the last day of the next succeeding month. (As an example, if a Service Expense is incurred in January, it will be invoiced and paid on the last day of February.)

3. The parties agree that the intent of this paragraph 7.a. is to create an interest neutral position for both parties. If there are changes in circumstances which substantially affect the period of time between the time Universal actually pays an expense and the time it is reimbursed, or the period of time between the time Universal invoices and collects receipts, the parties shall discuss and revise this paragraph 7.a. in good faith, provided that the intent hereof shall be consistent with the first sentence of this paragraph 3, but that nothing herein shall require Universal to adopt cutoffs or reporting periods for DW which vary from Universal’s standard cutoffs or reporting periods. Without limitation of the foregoing, the Deemed Receipts formulation set forth in paragraph a.1 above shall not apply to any account where the payor is in bankruptcy, or has expressly indicated it will not pay such account, or where such account is more than *** days past due and Universal has ceased to ship product based on such delinquency: in any such event, amounts receivable from such payor which are not identified by specific invoices shall be credited and paid (in an equitable manner based on amounts due and payable to both DW and Universal) if and when received by Universal from the payor. Neither party may take “self help” measures inconsistent with the terms of this paragraph 7.a.

4. To the extent that Universal is requested to do so by DW, it shall institute or defend litigation, claims or proceedings on behalf of

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DW with respect to any amounts due to DW for DW Videograms, at DW’s cost and expense.

b. A new paragraph 8 is added to Schedule B-TC (prior to the last, unnumbered paragraph thereof) which reads in full as follows:

8. Research Reports

The parties agree to the following modifications with respect to the cost and sharing of research studies:

a. Except as further set forth in this paragraph 8, non-title specific domestic market research studies related to home video distribution, if commissioned or performed by Universal shall be paid for by Universal and shared with DW. Domestic research which is targeted on the DW family entertainment business shall be commissioned by and paid for by DW (which shall control both the scope of such research and the cost therefor) and shared with Universal, provided that if and when the domestic family entertainment business becomes a Universal core business (i.e. more than *** of Universal’s own aggregate domestic home video revenue is generated by Universal “G” and/or ““PG” rated releases in each of two consecutive years), Universal shall include DW titles in any of such family entertainment business home video market research Universal commissions and share such research reports with DW. Domestic research which is related to new developments in the market or technology (e.g., new formats) shall be paid for *** by DreamWorks and Universal and both parties shall be provided the research provided both the scope of the research and the cost therefor is preapproved by both parties.

b. Except as further set forth in this paragraph, non-title specific international market research studies related to home video distribution, if commissioned or performed by Universal shall be paid for by Universal and shared with DW. International research which is targeted on the DW family entertainment business shall be commissioned by and paid for by DW (which shall control both the scope of such research and the cost therefore) and shared with Universal, provided that if and when the international family entertainment business becomes a Universal core business (i.e. more than *** of Universal’s own aggregate international home video revenue is generated by Universal “G” and/or ““PG” rated releases in each of two consecutive years), Universal shall include DW titles in any of such family entertainment business home video market research Universal commissions and share such research reports with DW. International research which is related to new developments in the market or

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technology (e.g., new formats) shall be paid for *** by DreamWorks and Universal and both parties shall be provided the research provided both the scope of the research and the cost therefor is preapproved by both parties.

4. Agreement Re Alleged Interest. The parties disagree on whether the manner in which expenses and receipts have been deducted and paid has been “cash neutral” to both parties, and on whether certain errors in monthly international financial reports delivered by Universal to DW after June 30 and on or before December 31, 2001 underreported receipts and resulted in a loss of use of funds by DW and/or Universal. In consideration of the agreements made herein, DW agrees to accept an amount equal to *** from Universal as the total payment due from Universal (whether as interest, penalty or otherwise) on the ground that it was paid amounts due it later than it should have been due to such international financial reporting errors or because expenses were deducted early or receipts were not timely paid for the period June 30, 2001 through December 31, 2001. Universal agrees not to seek any payment from DW (whether as interest, penalty or otherwise) on the basis that it paid amounts to DW earlier than it was required to during the period from June 30, 2001 through December 31, 2001. Nothing herein shall be deemed to waive (i) any DW claim that it has not received receipts to which it is entitled, or any claim that expenses deducted are not appropriate expenses, or (ii) any Universal claim that it has paid DW receipts Universal was not required to pay DW, or that Universal has not deducted expenses it is entitled to deduct.

5. Conflicting Provisions. In the event of a conflict between anything contained in this Amendment No. 2 and any provisions contained elsewhere in the Home Video Agreement, this Amendment No. 2 shall control.

6. Integration. This Amendment No. 2 contains the entire agreement and understanding between the Parties relating to the subject matter hereof and supersedes, cancels and replaces any prior understanding, writing or agreement between the Parties relating to such subject matter.

7. Counterparts. This Amendment No. 2 may be executed in multiple counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument, which may be sufficiently evidenced by one counterpart.

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IN WITNESS WHEREOF, the Parties have caused this Amendment No. 2 to the Home Video Agreement to be duly executed as of the date first written above.

DREAMWORKS L.L.C.

By:

Its:

UNIVERSAL STUDIOS, INC.

By:

Its:

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EX-10.15

Exhibit 10.15

as of July 31, 1995

MCA, Inc.

100 Universal Plaza

488-7A

Universal City, CA 91608

RE: THEME PARK AGREEMENT

Gentlemen:

Below is a summary of the terms upon which we have agreed with respect to the use of characters and elements from DreamWorks (“DW”) motion pictures and television programs and other properties in MCA theme parks:

1. DEFINITIONS:

A. A “Theme Park” shall be defined as a park: (i) of at least forty (40) contiguous acres; (ii) surrounded by a fence, water or other barrier (or combination of barriers); (iii) which consists of at least five rides, attractions, shows and exhibits, which may or may not be based upon a single theme; (iv) which has an admission charge to the Theme Park as a whole (although additional charges may be made for specific rides or attractions); and (v) which shall generally be advertised to the public as a theme park, amusement park or studio tour-type attraction. Without limitation, Six Flags Magic Mountain and Universal Studios are both Theme Parks, but IMAX is not, nor would any entertainment complex or single stand-alone ride or combination of two to five Permanent Attractions and Live Shows be a Theme Park, even if part of a hotel, shopping center, entertainment or motion picture complex or other development.

B. A “Permanent Attraction” shall be (i) a ride or free-standing attraction, area, building or location of any nature using any character, theme, story, setting, or any other element, including the title or name, from an “Eligible DW Property” (as defined below) (“DW Element(s)”) and/or which advertises or promotes in any way an identification between such use and any Eligible DW Property or (ii) any show, event or any other Theme Park use of any DW Elements which is intended to or does remain in place for two years or more, including non-consecutive periods (e.g., Electric Light Parade). As illustrations, without limitation, “Splash Mountain”, the “Back to the Future Ride”, the “Flintstones Show”, “Captain EO”, “Star Tours”, and the “Wild West Show” are all Permanent Attractions.

C. A “Live Event” is a scheduled live stage show, parade, or other organized event taking place at a Theme Park that includes or uses in any way one or more DW Elements or promotes in any way an identification between such use and any

Eligible DW Property, including without limitation individual(s) or groups of individuals costumed as characters from any Eligible DW Property who perform in any portion of a Theme Park as part of a pre-choreographed or scripted routine, show or review with other actors.

D. “Eligible DW Property(ies)” shall mean feature length theatrical motion pictures (live action and animation) which are initially released during the “Term” (as defined below), television programs which are initially broadcast during the Term, or other DW product which is released to the general public (e.g., interactive game or device distributed to the public) during the Term, which DW has the right to exploit in Theme Parks as set forth herein. Notwithstanding the foregoing, “Eligible DW Properties” shall exclude any properties co-produced by MCA and DW pursuant to Exhibit “C”, all theme park rights to which shall be governed by the existing agreements between and among MCA, Diamond Lane Productions, Inc. and Steven Spielberg. DW hereby confirms that the motion pictures entitled “Prince of Egypt”, “El Dorado” and, if produced, “Ants” shall be included, i.e., DW shall grant the “Theme Park Rights” (as defined below) in and to such properties to MCA in accordance with the terms hereof, although the parties hereto acknowledge that there may be incidental elements of such motion pictures, including voice performances, licensed music, and other audio or visual elements which may require consents of third parties or additional payments.

E. “Walk-Arounds” shall be defined as individual(s) or groups of individuals costumed as characters from any Eligible DW Property, who walk around a Theme Park and do not perform as part of a pre-choreographed or scripted routine, show or review with other actors except as contemplated under Paragraph 4.B.(3) below (in which event such pre-choreographed or scripted routine, show or review shall be deemed a Live Event).

2. TERM: The Agreement shall be for a term (“Term”) which begins as of the date of execution hereof and ends upon the earlier of the date six (6) months after the initial domestic release of the last theatrical motion picture which is subject to Exhibit “A” or December 31, 2001; provided, however, that if Exhibit “A” is extended pursuant to its terms to December 31, 2005, this Agreement shall be deemed extended until the earlier of the date six (6) months after the initial domestic release of the last theatrical motion picture which is subject to the extended term of Exhibit “A” or December 31, 2005. Notwithstanding the foregoing, the Term shall also terminate as of the earlier date upon which either DW or MCA gives notice of its election to terminate Exhibit “A” pursuant to the terms thereof; provided, however, that if MCA terminates “Exhibit “A” by reason of DW’s breach and/or DW terminates Exhibit “A” other than by reason of MCA’s breach, DW will, at its election, either:

A. Remit to MCA the “Unearned Exclusivity Fee”. The Unearned Exclusivity Fee shall be an amount equal to the following: (a) the total amount of fees paid by MCA per Paragraph 4.A. below, less all amounts refunded per the proration formula in Paragraph 4.A. and/or credited against applicable fees payable under

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Paragraph 4.B., multiplied by (b) ***minus a fraction, (i) the numerator of which is the number of feature length motion picture Eligible DW Properties (“Pictures”) Theme Park Rights with respect to which have been made available by DW to MCA hereunder during the Term (i.e., prior to such termination) and (ii) the denominator of which is the number of years (or partial year) for which MCA has paid a fee under Paragraph 4.A. below multiplied by ***. For example, if: (i) MCA has paid *** in exclusivity fees, (ii) Exhibit “A” is terminated 6 months after the second Anniversary Date, (iii) *** is credited against applicable fees payable under Paragraph 4.B., and (iv) there were *** Pictures during such Term, then DW shall remit to MCA ***. OR

B. Provided that MCA has then paid at least *** in exclusivity fees under Paragraph 4.A., commit to accord MCA the exclusive Theme Park Rights to up to the first *** consecutive Pictures, plus the next *** consecutive Pictures for each subsequent payment of *** in exclusivity fees under Paragraph 4.A, to a cap of *** such Pictures, whether or not such Pictures are Released Prior to Termination, less the number of Eligible DW Properties (excluding feature length theatrical motion pictures) the Theme Park Rights to which MCA has then exploited or notified DW of its intention to exploit. For example, if MCA has paid *** in exclusivity fees (and has not exploited or notified DW of its intention to exploit any Eligible DW Properties), MCA shall have exclusive Theme Park Rights to *** Pictures. Notwithstanding the foregoing, if any of the exclusivity fees are refunded to MCA per the proration formula in Paragraph 4.A. (if such refund is not a multiple of ***, DW will further refund an amount necessary to increase the refund to the next multiple of ***), then the number of Pictures shall be reduced by *** Picture for each *** refunded. For example, if DW refunds MCA *** per the proration formula in Paragraph 4.A., then DW shall refund an additional *** to MCA and the number of Pictures shall be reduced by ***.

3. GRANT OF RIGHTS/EXCLUSIVITY: Subject to the terms hereof and the payment of all consideration required hereunder, DW grants MCA the “Theme Park Rights” during the Term. As used herein “Theme Park Rights” shall mean the right to incorporate DW Elements from Eligible DW Properties into Theme Parks, i.e., into Permanent Attractions, Live Events, Restaurants, Walk-Arounds, and promotional uses in Theme Parks. MCA shall be entitled to exploit such Theme Park rights solely in Theme Parks under the control of MCA, subject to the terms and conditions set forth below. For the purposes hereof, a Theme Park shall be deemed to be under the control of MCA if (i) MCA retains an equity interest in such Theme Park, (ii) MCA has an active creative role; (iii) the park uses the MCA name; and (iv) DW has all of its approvals and controls with respect to such park as set forth herein. Without limiting the foregoing, MCA shall not have the right to assign to any third party the right to make any use of any DW property in a Theme Park other than a Theme Park which satisfies the criteria set forth in (i) and (ii) above, except as set forth in Paragraph 9. below. The foregoing grant of Theme Park

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Rights shall not be deemed to vest in MCA any right of ownership in or to any DW motion picture, television program, or other property, or any right to use DW Elements in any venue or form other than in a Theme Park, and DW retains all rights not expressly granted herein. Without limiting the foregoing, the foregoing grant of exclusivity shall not preclude DW from using DW characters or elements or exploiting Eligible DW Properties in any entertainment venue in any form other than a Theme Park (including without limitation restaurants, stores, live stage shows, mall tours or other projects themed to or using any Eligible-DW Property/or any other DW property); provided, however, that DW shall not have the right to license DW Elements from Eligible DW Properties to third parties during the Term for use in Permanent Attractions, Live Events, Walk-Arounds, or Restaurants themed to such Eligible DW Property in any entertainment complex which is adjacent to and is advertised and promoted as operated in conjunction with a Theme Park owned by such third party.

4. COMPENSATION: MCA shall pay DW the following compensation:

A. Yearly Exclusivity Fee: Commencing on June 7, 1998, MCA shall pay DW *** per year (payable *** on June 7, 1998 and *** on each anniversary date [“Anniversary Date”] thereafter during the Term, (subject to proration to the extent that the period between the, last Anniversary Date to occur during the Term and the date of expiration or termination of the Term is less than twelve months), *** of which shall be applicable against fees as set forth in Paragraph 4.B. below paid or payable within each such year. For the purposes hereof, fees shall be considered paid or payable at such time as they are due pursuant to the payment schedule specified for the applicable use set forth below. There shall be no carry forward or carry back of fees paid or payable during any Term year against the Term year exclusivity fees payable for any other Term years.

B. Additional Fees: Fees as set forth below:

(1) Permanent Attractions: For each Permanent Attraction in each Theme Park, fees as follows:

a. An initial fee of *** if the Permanent Attraction is based on an animated theatrical motion picture (including any combination of live action/animation picture [e.g., “Roger Rabbit”] and/or non-traditional animation, such as stop-motion or claymation); *** if the Permanent Attraction is based on a live-action theatrical motion picture. With respect to any Permanent Attraction based on any motion picture which is a co-production with MCA (other than one co-produced pursuant to Exhibit “C”), MCA and DW shall negotiate a fee in good faith ***. Such fees shall be payable *** upon the earlier of MCA’s notification to DW or public announcement that MCA intends to construct the Permanent Attraction; *** on commencement of construction; and *** upon the initial public opening; and

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b. ***for each Permanent Attraction, per Theme Park, per year thereafter, commencing upon the first anniversary of the initial public opening of such attraction.

For the fourth and fifth Permanent Attractions at any single Theme Park, the amounts set forth in Paragraphs 4.B.(1)(a) and 4.B.(1)(b) above shall be increased by ***; for the sixth and subsequent Permanent Attractions at any Theme Park, the amounts set forth in Paragraphs 4.B.(1)(a) and 4.B.(1)(b) shall be increased by ***.

(2) Live Events: For each Live Event based on any Eligible DW Property, MCA shall pay DW either, at MCA’s election:

a. *** per Live Event, per year, per Theme Park, commencing upon the date of the initial public performance; or

b. *** per Live Event for six months, per Theme Park, payable upon the initial public performance. At the conclusion of such six months, MCA shall pay DW ***if MCA elects to continue such Live Event and then, commencing one year after the initial public performance of such Live Event, ^*** per year, per Theme Park, for such Live Event.

Any event which MCA determines in good faith to be a Live Event (i.e., as opposed to a Permanent Attraction) and which is performed for a period in excess of *** (or *** if the additional *** is necessary for such show to run for two complete summers), whether or not continuously performed, shall be deemed a Permanent Attraction and upon the conclusion of such *** or ***, as applicable, MCA shall pay DW an amount equal to the difference between sums already paid with respect to the show, and the applicable fee due for a Permanent Attraction as set forth in Paragraph 4.B. 1.(a) above. By way of example, if a Live Event based on an animated motion picture runs for ***, which encompasses two summers, upon the conclusion of such ***, MCA would pay DW *** less amounts paid under 4(B)(2) in order to continue the applicable Permanent Attraction and on the next anniversary of the initial public performance, the annual payments as set forth in 4.B.1(b) would commence, provided, however, that if prior to expiration of the above *** month period, MCA announces or designates the applicable event to be a Permanent Attraction, upon the conclusion of such *** period, MCA would then pay DW the applicable fee in paragraph 4.B. 1 .(a) less the payments under 4.B.2 plus the payments under 4.B.1.(b) commencing upon the next anniversary of such announcement or designation.

(3) “Walk-Arounds”: With respect to all “Walk-Around” characters, MCA shall pay DW *** on a one-time basis, per Eligible DW Property, per Theme Park, payable upon the first use of any character; provided, however, that no payment shall be due for the use of any strolling Walk-Around characters if (i) such characters do not perform any scripted lines or songs or choreographed routine, or if the aggregate time of all scripted lines and songs and choreographed routines performed by any Walk-Around

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character or group of Walk-Around characters is *** or less (e.g., if two (2) or more Walk-Around characters speak, sing or perform together, the aggregate running time of all lines, songs, and/or performance of any group of Walk-Around characters may be ***; and (ii) photographs, drawings, or other visual depictions of and/or mention, description, excerpted performance, or any other reference to the Walk-Around characters do not comprise more than-*** of any single item of visual and/or auditory marketing material or any single advertisement. By way of example, if a newspaper ad promoting a Theme Park includes drawings of the Walk-Around Characters or photographs depicting the Walk-Around Characters, which comprise *** of the total artwork space used, payment would be due as set forth above for such Walk-Around Characters.

(4) Restaurants: For any restaurant in a Theme Park (which may have an entrance outside the Theme Park) themed to an Eligible DW Property, if such restaurant is used in connection with the advertisement or promotion of the applicable Theme Park (“Restaurant”), MCA shall pay DW *** on a one-time basis per Restaurant, per Theme Park, upon the opening of each such Restaurant (or at such later time, if ever, as payment becomes due for such Restaurant by reason of the use of such Restaurant to advertise or promote the applicable Theme Park, as set forth below). A Restaurant shall be deemed to be used in connection with advertisement or promotion of the applicable Theme Park if photographs, drawings, or other visual depictions of and/or mention, description, or any other references to the Restaurant comprise more than *** of any single item of visual and/or auditory marketing material or any single advertisement for the applicable Theme Park. No payment shall be due for the use of any themed Restaurant which is not used to promote the applicable Theme Park, i.e., if photographs, drawings, or other visual depictions of and/or mention, description, or any other references to the Restaurant do not comprise more than *** of any single item of visual and/or auditory marketing material or any single advertisement for the applicable Theme Park.

(5) Themed Areas: For any area or location which is entirely themed to one DW property (including any sequels, remakes, TV series, or other forms of exploitation of such property) (“Themed Area”) which is used in connection with the advertisement or promotion of the applicable Theme Park, payment shall be due for each individual use (i.e., Restaurant and Walk-Around characters) as set forth above. If the themed area contains or incorporates DW Elements into uses which are not specifically listed above, MCA and DW shall negotiate a fee in good faith, which fee shall in no event be lower than the applicable fee for a Permanent Attraction. A themed area shall be deemed to be used in connection with the advertisement or promotion of the applicable Theme Park if photographs, drawings, or other visual depictions of and/or mention, description or any other reference to the themed area comprise more than *** of any single item of visual or auditory marketing material or any single advertisement. No payment shall be due for the use of any themed area which is not used to promote the applicable Theme Park, i.e, if photographs, drawings, or other visual depictions of and/or mention; description or any other reference to the themed area do not comprise more than *** of any single item of

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visual or auditory marketing material or any single advertisement for the applicable Theme Park.

(6) Other Promotional Uses: No fee shall be payable for use of elements from any DW feature-length motion picture or television special in promotional shows or displays (e.g., use of props or sets, showing of clips) which are limited in time to coincide with the initial theatrical or television release of the property, as applicable.

(7) Other Uses: For any Theme Park use of elements from an Eligible DW Property which is not listed above, MCA and DW shall negotiate a fee consistent with the above fees.

5. MERCHANDISING: MCA will construct and maintain immediately adjacent to each Permanent Attraction and Live Event (for the duration of operation of such Permanent Attraction and/or Live Event) a kiosk or separate covered sales area of at least *** square feet, which will exclusively contain merchandise based upon or themed to the same motion picture or television program as the applicable Permanent Attraction or Live Event. Each kiosk or sales area shall include at least *** square feet which is dedicated entirely to licensed DW merchandise; provided, however, that DW acknowledges that such kiosk or sales area may contain a small number of non-themed items (e.g., film and photographic supplies). DW shall sell such licensed DW merchandise to MCA at DW’s customary wholesale price, and receive DW’s customary royalty therefrom. If MCA constructs a Permanent Attraction or Live Event, subject to DW’s pre-existing and prospective third party merchandising arrangements, MCA shall have the right to manufacture and sell in the theme park which houses such Permanent Attraction or Live Event, merchandising based upon the same motion picture or television program on which the applicable Permanent Attraction or Live Event is based. For merchandise so manufactured by MCA for sale at the park, MCA will pay DW a royalty of *** of the wholesale price (i.e., the greater of MCA’s wholesale price or the price MCA would pay to the normal DW supplier of comparable goods). For example, if MCA’s wholesale price is *** per t-shirt, and DW’s t-shirt supplier would charge *** for a comparable shirt, Universal would pay *** on ***. All payments due to DW pursuant to this Paragraph 5 shall be made on a quarterly basis and shall be accompanied by a statement setting forth in reasonable detail a description of the items of merchandise, the number of each item manufactured and the wholesale price of each such item. Upon reasonable notice and during normal business hours, DW shall have the right to audit MCA’s books and records pertaining to the retail sales of merchandise based upon and/or themed to DW properties. MCA shall be solely responsible for maintenance and operation of each kiosk or sales area, including without limitation payment of all operating costs and salaries, payment of sales taxes, and maintenance of customary insurance coverage.

6. APPROVALS: DW will have reasonable approvals over all creative and design elements, location, advertising, promotion (including sponsorships and tie-ins) and

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merchandising with respect to any Permanent Attraction, Live Event, Walk-Arounds, Restaurants, Promotional Uses, merchandising areas, and any other use of elements from Eligible DW Properties, as described above. Without limiting the generality of the foregoing, DW shall have the right to approve all creative aspects of any new film elements, footage, animation, voice recording, and other elements specifically created for Theme Park uses. In no event shall DW have any lesser approval rights than Steven Spielberg is entitled to exercise under the existing agreement between Steven Spielberg and MCA. MCA shall comply with all of DW’s contractual obligations and restrictions regarding the use of Eligible DW Properties in MCA Theme Parks, and be responsible for all costs, and creative and rights fees to third parties, including all cash fees, payments required by virtue of any collective bargaining agreements (e.g., Writers Guild of America residuals or payments), bonuses or royalties payable specifically for Theme Park uses hereunder, but excluding any participations which are based upon a percentage of adjusted gross receipts, net profits, or other defined proceeds from the exploitation of any rights relating to motion picture or television program, and excluding any payments to officers or principals of DW; provided, however, that DW shall be responsible for *** of any such third party talent fees (excluding guild mandated payments) up to a ceiling of *** of the fees payable to DW hereunder for the applicable attraction. Upon MCA’s request, DW will advise MCA of such payments required to be made by MCA (other than payments required by virtue of any collective bargaining agreements). Any renovations, additions, and/or other changes to existing Permanent Attractions, Live Events, Walk-Arounds, Restaurants, or any other use shall require approval by DW.

7. POST-TERM EXPLOITATION OF PROPERTIES: Notwithstanding the expiration of the Term or earlier termination of the Term (including any additional time period pursuant to Paragraph 2.B. above) upon DW or MCA’s notice of its election to terminate Exhibit “A” for any reason, MCA shall retain exclusive Theme Park Rights to each Eligible DW Property for the longer of (i) *** after expiration or the termination of the Term and (ii) a period of *** after the initial domestic release, broadcast or distribution by DW to the public of such Eligible DW Property (the “Post Term Exploitation Period”) on a property-by-property basis. For example, if an Eligible DW Property has an initial domestic release *** prior to expiration of the Term, the Post Term Exploitation Period will be ***. In the event of expiration of the Term as to each Eligible DW Property with respect to which MCA has not already exercised any of its-rights hereunder, MCA shall, by the end of the applicable Post Term Exploitation Period, notify DW if MCA intends to construct a Permanent Attraction or Restaurant (or intends to complete construction, if such a project has been commenced but not completed), stage a Live Event or exercise any of its other Theme Park Rights hereunder based on such Eligible DW Property (the “Notice”). If MCA gives such Notice, MCA shall be concurrently committed to pay DW the applicable initial fees, which fees shall be paid as set forth in the next two sentences. The initial Permanent Attraction fee shall be paid *** upon Notice, *** upon the earlier of eighteen months after Notice or commencement of construction and *** upon the earlier of completion of construction or three years after Notice; the initial Live Event fee shall

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be paid upon the earlier of the date of initial performance of such Live Event or one year after Notice; and the Restaurant fee shall be paid upon the earlier of the opening of such Restaurant or one year after Notice. Annual fees with respect to Permanent Attractions and Live Events shall commence within the earlier of *** after opening or *** after Notice for a Permanent Attraction; and within *** following payment of the initial Live Event fee for a Live Event. Annual fees shall terminate at the end of the annual fee period in which the Permanent Attraction or Live Event, as applicable, ceased operating on a permanent basis or if no Permanent Attraction or Live Event is ever opened after payment of all applicable initial fees and *** of annual fees, at which point MCA’s rights with respect thereto shall concurrently terminate. In addition, if MCA gives such Notice, MCA shall open any such Permanent Attraction within *** of payment of the initial fee, and any Live Event or Restaurant within *** of payment of the initial fee (it being acknowledged that any such Permanent Attraction, Live Event or Restaurant shall be deemed “opened” upon the earlier of same being opened or MCA’s payment of the applicable fee therefor). If MCA fails to comply with the foregoing, MCA’s rights hereunder shall terminate. MCA shall retain rights in DW properties which were exploited during the Term (and/or the Post Term Exploitation Period) as follows:

a. Permanent Attractions: MCA shall have the right to continue operation of any Permanent Attraction created in accordance with the terms hereof, provided that MCA continues to make the applicable yearly payments therefor. MCA’s rights with respect to all DW properties which are the basis for such Permanent Attractions shall be non-exclusive, provided that with respect to each DW Property which is the basis for a Permanent Attraction, MCA shall retain exclusive Theme Park rights to such DW Property in the “Territory(ies)” (as defined below) for which the applicable fees have been paid or in which the applicable Permanent Attraction(s) are constructed for the duration of operation of such Permanent Attraction(s) (including the right to develop additional Permanent Attractions based on the same DW Property in the same Territory, provided that [1] MCA pays the applicable Initial Fee for each such additional Permanent Attraction prior to the time, if ever, that all previously constructed Permanent Attractions in such Territory cease operations or fees are no longer paid therefor, and [2] MCA continues to make the yearly payments for such additional Permanent Attraction). In addition, with respect to DW Properties which are the subject of an existing Permanent Attraction in one Territory, MCA shall have a period of ***after the opening of the immediately preceding Permanent Attraction based on the applicable DW property (or *** after the expiration of the Term, whichever last occurs) to notify DW that MCA intends to construct a second (or third, fourth, fifth and so forth) Permanent Attraction based on the same property in a different Territory (hereinafter “Additional Territory(ies)”), and pay the applicable fee in full, and, in such event, MCA shall have exclusive Theme Park rights to such DW Property in such Additional Territory, provided MCA makes (and continues to make) payment of the annual fee, and opens such additional Permanent Attraction within the applicable time period set forth below. On the date *** after payment of the initial fee, MCA shall commence payment of the applicable annual fee as

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set forth above. If MCA has not actually opened any such Permanent Attraction within *** of payment of the applicable initial fee, MCA shall have the right to extend such *** period up to-an aggregate of ***, by payment of ***, per year, per Theme Park (with respect to each such Permanent Attraction in an additional Territory). By way of example, if MCA opens a Permanent Attraction based on “Prince of Egypt” in the United States on *** (and the Term has expired), MCA must notify DW that it intends to open a “Prince of Egypt” attraction in Europe (or any other Territory) by ***, and pay the applicable fee therefor. Provided that MCA makes all payments and the “Prince of Egypt” attraction in Europe is opened by ***, MCA shall have the right exercisable within *** after the opening of the “Prince of Egypt” attraction in Europe to notify DW that it intends to construct a “Prince of Egypt” attraction in Japan, and so forth. If MCA exercises its right to extend as set forth in the preceding sentence, and any Permanent Attraction is not opened within *** after the opening of the immediately preceding Permanent Attraction, all rights with respect thereto shall automatically revert to DW.

The “Territories” shall be as follows: ***

b. Live Events/Restaurants/Walk-Arounds:

(i) Live Events/Restaurants: After the Term, MCA can continue to operate any Live Event commenced during the Term or the applicable Post Term Exploitation Period (provided MCA continues to make payments therefor) and/or Restaurant so long as such Live Event or Restaurant is in continuous operation, but MCA’s rights will become non-exclusive with respect to the DW property(ies) which are the basis for such Live Events/Restaurants (except to the extent MCA has exclusive rights in such Territory as a result of the applicable Post Term Exploitation Period, or the continuing operation of a Permanent Attraction as provided in subparagraph a. above, or MCA has exclusive rights during a *** exclusivity period as specifically set forth in and pursuant to subparagraph b.(iii) below).

(ii) Walk-Arounds: MCA may continue Walk-Arounds for *** after the Term, but MCA’s rights will become non-exclusive with respect to the DW properties which are the basis for the Walk-Arounds on the expiration of the applicable Post Term Exploitation Period (except as provided in subparagraph a. above). On the date *** after the expiration of the Term, MCA must discontinue all Walk-Arounds, except that MCA may continue Walk-Arounds in any Theme Park in which MCA has a continuing Permanent Attraction or Live Event based on the applicable property or for which it has commenced paying fees with respect to a Permanent Attraction or Live Event, for the duration of operation or performance of, or the payment of fees for, as applicable, of the Permanent Attraction or Live Event.

(iii) *** Exclusivity Period: Notwithstanding the foregoing, for each use of Live Events and Restaurants, whether commenced during the Term or during the applicable Post Term Exploitation Period (the commencement of fees being deemed to be

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a “use” for the purposes of this subparagraph), MCA’s rights with respect to exploitation of the applicable DW property in such use only will be exclusive for a minimum of***. By way of example, if MCA opens a “Prince of Egypt” Restaurant on ***, after the expiration of the Term, MCA may continue to operate the Restaurant, and commencing upon ***, DW may license to a third party the right to exploit a Restaurant based on “Prince of Egypt” in a Theme Park.

8. VIRTUAL THEATER PROJECT: DW intends to develop a “Virtual Theater” project, which MCA acknowledges does not interfere with any rights it may have to the services of Steven Spielberg in connection with MCA Theme Parks. The parties hereto agree that provided such Virtual Theater Project is not constructed in or adjacent to a Theme Park, or advertised or promoted as operated in conjunction with a Theme Park, such Virtual Theater Project shall not be deemed a Theme Park and shall not be subject to the exclusivity provisions of this agreement. If MCA so elects, MCA shall have the right to contribute to the financing and the development and construction of the first such Virtual Theater project, upon terms to be negotiated in good faith (and each succeeding Virtual Theater project, if MCA contributed to the immediately preceding Virtual Theater Project). If MCA does not make such election and notify DW (within 30 days of notice from DW), or if DW and MCA are unable to reach agreement with respect to the terms of MCA’s involvement within 30 days after the commencement of such negotiations, DW has the right to proceed with development and construction of the Virtual Theater (and to create duplicate projects in various locations) without any further obligation to MCA.

9. ASSIGNMENT: Except as expressly set forth below, MCA may not assign, license, transfer or otherwise encumber any of its rights or obligations hereunder, and in the event of any such assignment by MCA, all of MCA’s rights hereunder shall immediately terminate, except as follows: Any assignee of MCA which assumes all obligations of MCA hereunder in writing with respect to one or more Theme Parks may continue to operate any Permanent Attraction, Live Event or Restaurant which is in operation in such Theme Park on the date of such assignment, provided that (i) MCA’s assignee continues to make the applicable payments therefor and comply with all of its other obligations hereunder, (ii) such assignee may not make any changes to any elements of such Permanent Attraction (excluding only maintenance or upgrading of mechanical elements which do not in any way change the visual, auditory, or any other creative elements of such Permanent Attraction), (iii) DW continues to have all of its approvals and controls with respect to such Theme Park as set forth herein, (iv) such Theme Park shall continue to operate under a MCA proprietary name, (v) such Theme Park continues to be maintained in substantially the same condition, and (vi) such assignee’s rights shall otherwise be as set forth herein, and subject to its compliance with all other terms hereof. In addition, MCA may assign its rights hereunder as security with respect to any MCA Theme Park solely in connection with a financing transaction (e.g. mortgage, sale and lease-back, or recapitalization) as a result of which by foreclosure or similar proceeding any financier(s) (or its successors or assigns) is assigned control of an MCA Theme Park, in which event such assignee may continue to operate any Permanent Attraction, Live Event or Restaurant which is in operation on the date

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of such assignment, subject to clauses (i) through (vi) inclusive in the immediately preceding sentence. Notwithstanding the above, nothing shall limit MCA’s right to assign or transfer any interest in any Theme Park in which MCA (or such assignee or transferee) does not utilize any rights hereunder (including but not limited to any Permanent Attraction) and in this regard MCA (or such assignee or transferee) may continue to operate any Permanent Attraction, if it stops using any copyrightable or other protectable DW elements and ceases all advertising and publicity which in any way promotes an identification between the use and any Eligible DW Property.

The parties hereto intend to enter into a more formal, long, form agreement. Unless and until such agreed is executed, the parties hereto confirm by their signature below that the foregoing constitutes a binding agreement with respect to the subject matter hereof.

DREAMWORKS L.L.C.

By

Its

		/MCA
By
	Universal Studios, Inc.
Is
	Executive Vice President Corporate Operations

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EX-10.16

Exhibit 10.16

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

As of October 8, 2004

Mr. Jeffrey Katzenberg

c/o Mickey Rutman

Breslauer & Rutman

11400 W. Olympic Boulevard, Suite 550

Los Angeles, CA 90064

Dear Jeffrey:

Upon the date (“Effective Date”) of the closing (“Closing”) of the initial public offering (“IPO”) of DreamWorks Animation SKG, Inc. (“Studio”), Studio agrees to employ you and you agree to accept such employment upon the terms and conditions set forth below. In the event the Closing fails to occur for any reason by June 28, 2005, this agreement (“Agreement”) shall be null and void:

1. Term. The term of your employment hereunder shall commence on the Effective Date and shall continue for a period of five (5) years thereafter. This period shall hereinafter be referred to as the “Employment Term”.

2. Duties/Responsibilities/Reporting.

a. General. Your title shall be “President” and “Chief Executive Officer” of Studio. You shall have such duties and responsibilities as are consistent with the traditional positions of President and Chief Executive Officer of publicly traded major entertainment and media corporations. No other individual shall have the title President and Chief Executive Officer or hold a position equal to or superior to yours or have any authority equal to or superior to yours during the Employment Term without your consent. You shall report solely and directly to the Board of Directors of Studio.

Without limiting the foregoing, you shall have authority over all operations and the overall direction of Studio, within maximum individual project and aggregate cost limits to be established as part of the business plan or otherwise as approved by the Board of Directors. All other employees of Studio and such affiliates and subsidiaries as may hereafter be established shall report directly to you or to you through such other personnel as you may designate.

b. Services. Except as herein otherwise specified, during the Employment Term you shall devote your business time and efforts to the affairs of Studio in substantially the same manner as you have previously rendered services in connection with your previous work experience.

3. Exclusivity. Except as otherwise provided herein, your personal professional services shall be exclusive to Studio. Moreover, you shall not make any investments after the date hereof other than as permitted in Paragraph 3.b., below. The foregoing two sentences of this Paragraph 3 shall be collectively referred to herein as the “Exclusivity Provisions”. The following are exceptions to the Exclusivity Provisions and Paragraph 8 below:

a. DW Services. You shall be permitted to render services for DreamWorks L.L.C. (“DW”) with respect to your consultation with executives of DW; it being understood that you shall not devote more than approximately ten percent (10%) of your professional working hours to DW.

b. Investments. The Exclusivity Provisions shall also not prohibit your ownership or services in connection with investments which you or members of your family or your charitable trusts or foundations (directly or indirectly) owned as of June 28, 1995 and future investments which: (a) relate to DW, (b) do not require devotion of a substantial amount of your personal professional services which shall include, without limitation, passive investment interests or limited partnership interests and (c) other than DW, do not compete with Studio’s business when the investment is made, provided however that you may own directly or indirectly up to 5% of a publicly held company, limited partnership interests or other passive investment interests in private companies even if it does compete with Studio’s business.

4. Compensation.

a. Base Salary. For all services rendered under this Agreement, Studio will pay you a base salary at an annual rate of One Dollar ($1.00).

b. Equity-based compensation.

(i) It is our present expectation, subject to the approval of the compensation committee of the Board of Directors of Studio (the “Compensation Committee”), that, upon the pricing of the IPO, you will receive, pursuant to the equity compensation plan to be adopted by Studio (the “Plan”), stock options with respect to Studio’s Class A common stock (“Options”) having a grant-date value of $4,740,000 and restricted shares of Studio’s Class A Common Stock (“Restricted Stock”) having a grant-date value of $12,990,000 (or, in lieu of Options and Restricted Stock, such other form of equity-based compensation as the Compensation Committee may determine) (the “Initial Grants”). In the event that the Closing fails to occur for any reason by June 28, 2005, then the Initial Grants will be automatically canceled and you will be entitled to no payments or benefits with respect thereto.

(ii) You will also be eligible, while you remain employed hereunder, commencing for the year 2005 (with the amount of the award for 2005 anticipated to be

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determined in the first quarter of 2006), subject to annual approval by the Compensation Committee, to receive, in lieu of an annual cash bonus, annual awards of Options and Restricted Stock (or such other form of equity-based compensation as the Compensation Committee may determine). It is our present expectation that such annual awards will have an aggregate grant-date value, depending on company performance, ranging between $1,000,000 (bonus target) and $3,000,000 (in the case of superior company performance). In the event that such awards consist of Options and Restricted Stock, they shall be divided, as determined by the Compensation Committee, between Options and Restricted Stock.

(iii) In addition, you will be eligible, while you remain employed hereunder, commencing in 2006, subject to annual approval by the Compensation Committee, to receive annual equity incentive awards of Options and Restricted Stock (or such other form of equity-based compensation as the Compensation Committee may determine). It is our present expectation that such annual awards will have an annual aggregate grant-date value targeted at $5,000,000. In the event that such awards consist of Options and Restricted Stock, they shall be divided, as determined by the Compensation Committee, between Options and Restricted Stock.

(iv) All Options and Restricted Stock (and any other equity-based awards) referred to in this Paragraph 4.b will (x) be valued using a method or methods (including where appropriate a Black-Scholes or other fair value method) as determined by the Compensation Committee from time to time (and, in the case of the Initial Grants, taking into account the IPO price to the public without regard to the underwriters’ discount), (y) become fully vested, exercisable (if applicable) and nonforfeitable within a period not to exceed four (4) years from the date of grant, contingent on both the continuing performance of services to Studio (subject to Paragraphs 9, 10, 11, 12 and 13) and the achievement of performance goals as established by the Compensation Committee from time to time, and (z) otherwise be subject to such terms and conditions as may be set forth in the Plan or determined by the Compensation Committee from time to time. Notwithstanding the foregoing, any performance based Initial Grants may, in the discretion of the Compensation Committee, have a vesting schedule that ends in the first quarter of 2009.

(v) Following the expiration of the Employment Term (i.e., five (5) years after the Effective Date), but only if your employment hereunder has not been terminated earlier, you will not be required to perform any additional services to Studio in order for all of the equity compensation awards granted to you during the Employment Term to be fully vested, exercisable (if applicable) and nonforfeitable; provided that such awards will continue to remain subject to the achievement of performance goals as provided pursuant to the Plan and the agreements evidencing such awards and to such other terms and conditions as may be determined by the Compensation Committee at the time of the grant; and provided further that, subject to the foregoing, all Options and any similar equity-based awards will remain exercisable for the balance of the term of the grant.

5. Benefits. In addition to the foregoing, you shall be entitled to vacation days and/or personal days to be taken subject to the demands of Studio (as determined by Studio) and consistent with the amount of days taken by other senior level executives (provided,

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however, no vacation time will be accrued during the Employment Term) and you shall be entitled to participate in such other medical, dental and life insurance, 401(k), pension and other benefit plans as Studio may have or establish from time to time. The foregoing, however, shall not be construed to require Studio to establish any such plans or to prevent the modification or termination of such plans once established, and no such action or failure thereof shall affect this Agreement. All benefits you may be entitled to as an employee of Studio shall be on a most favored nations basis with any executive of Studio.

6. Business Expenses. During the Employment Term, you shall be reimbursed for such reasonable travel and other expenses incurred in the performance of your duties hereunder as are customarily reimbursed for President/CEO’s of major motion picture, television and record companies. Studio shall reimburse all of your costs and expenses (including reasonable legal fees) in connection with entering into this Agreement. All Studio business-related air travel by you shall be by private jet. You shall be entitled to take guests on such trips at Studio’s expense to attend a premiere or industry function, or for such other business-related travel as you determine necessary. You shall be entitled to utilize the Studio corporate jet for personal use, subject to its availability as determined by Studio and to your reimbursement to Studio of the allocable costs of the personal travel. You shall be entitled to a car allowance, to limousine transportation and to first class private business travel expenses, including hotels and per diems (as you determine) in accordance with Studio’s policy for its senior-most executives. You shall be entitled to the services of such reasonable security personnel as you request. In addition to the foregoing, you shall be entitled to industry-customary perks as are normally made available to entertainment industry studio chiefs and in all cases to treatment no less favorable than accorded any other executive of Studio.

7. Indemnification. You shall be fully indemnified and held harmless by Studio to the fullest extent permitted by law from any claim, liability, loss, cost or expense of any nature (including attorney’s fees of counsel selected by you, judgments, fines, any amounts paid or to be paid in any settlement, and all costs of any nature) incurred by you (all such indemnification to be on an “after tax” or “gross-up” basis) which arises, directly or indirectly, in whole or in part out of any alleged or actual conduct, action or inaction on your part in or in connection with or related in any manner to your status as an employee, agent, officer, corporate director, member, manager, shareholder, partner of, or your provision of services to, Studio or any of its affiliated entities, or any entity to which you are providing services on behalf of Studio or which may be doing business with Studio. To the maximum extent allowed by law, all amounts to be indemnified hereunder including reasonable attorneys’ fees shall be promptly advanced by Studio until such time, if ever, as it is determined by final decision pursuant to Paragraph 24 below that you are not entitled to indemnification hereunder (whereupon you shall reimburse Studio for all sums theretofore advanced).

8. Covenants.

a. Confidential Information. You agree that you shall not, during the Employment Term or at any time thereafter, use for your own purposes, or disclose to or for

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any benefit of any third party, any trade secret or other confidential information of Studio or any of its affiliates (except as may required by law or in the performance of your duties hereunder consistent with Studio’s policies) and that you will comply with any confidentiality obligations of Studio known by you to a third party, whether under agreement or otherwise. Notwithstanding the foregoing, confidential information shall be deemed not to include information which (i) is or becomes generally available to the public other than as a result of a disclosure by you or any other person who directly or indirectly receives such information from you or at your direction or (ii) is or becomes available to you on a non-confidential basis from a source which you reasonably believe is entitled to disclose it to you.

b. Studio Ownership. Except as otherwise herein provided as with respect to your services to DW, the results and proceeds of your services hereunder, including, without limitation, any works of authorship resulting from your services during your employment and any works in progress, shall be works-made-for-hire and Studio shall be deemed the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner Studio determines in its sole discretion without any further payment to you whatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-for-hire and/or there are any rights which do not accrue to Studio under the preceding sentence, then you hereby irrevocably assign and agree to assign any and all of your right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed by Studio, and Studio shall have the right to use the same in perpetuity throughout the universe in any manner Studio may deem useful or desirable to establish or document Studio’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. To the extent you have any rights in the results and proceeds of your services that cannot be assigned in the manner described above, you unconditionally and irrevocably waive the enforcement of such rights. This Paragraph 8.b is subject to, and shall not be deemed to limit, restrict, or constitute any waiver by Studio of any rights of ownership to which Studio may be entitled by operation of law by virtue of Studio or any of its affiliates being your employer.

c. Return of Property. All documents, data, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for you and utilized by you in the course of your employment with Studio or any of its affiliates shall remain the exclusive property of Studio. In the event of the termination of your employment for any reason, and subject to any other provisions hereof, Studio reserves the right, to the extent permitted by law and in addition to any other remedy Studio may have, to deduct from any monies otherwise payable to you the following: (i) the full amount of any specifically determined debt you owe to Studio or any of its affiliates at the time of or subsequent to the termination of your employment with Studio, and (ii) the value of Studio property which you retain in your possession after the termination of your employment with Studio following Studio’s written request for such item(s) return and your

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failure to return such items within thirty (30) day of receiving such notice. In the event that the law of any state or other jurisdiction requires the consent of an employee for such deductions, this Agreement shall serve as such consent.

d. Promise Not To Solicit. You will not during the period of the Employment Term or for the period ending one (1) year after the earlier of expiration of the Employment Term or your termination hereunder, induce or attempt to induce any employees, exclusive consultants, exclusive contractors or exclusive representatives of Studio (or those of any of its affiliates) to stop working for, contracting with or representing Studio or any of its affiliates or to work for, contract with or represent any of Studio’s (or its affiliates’) competitors.

9. Incapacity.

a. In the event you become totally medically disabled and cannot substantially perform your duties at any time during the Employment Term, the Board of Directors may at any time after such disability has continued for ninety (90) consecutive days require Studio to give you written notice that it intends, subject to applicable state and federal law, to suspend this Agreement. Upon receipt of such notice, prior to any suspension hereunder, you shall be entitled to an expedited arbitration to determine whether or not you are medically disabled and have been disabled for at least ninety (90) consecutive days, provided that you request such arbitration within ten (10) business days of receipt of such notice from Studio. If you do not so request such an arbitration, or if the arbitrator rules that you are so disabled, you shall be placed on a “medical payroll,” meaning you will remain employed for the first twenty-six (26) weeks of consecutive absence commencing at the end of the later of the ten (10) day period or upon the conclusion of the arbitration. Thereafter, if you are not able to resume your duties hereunder, your employment will be terminated.

b. Upon termination of employment as provided in Paragraph 9.a, you shall remain entitled to receive 50% of your Base Salary, 100% of all medical, dental, life insurance and other benefits for the remainder of the then current Employment Term, and all grants of equity-based compensation made to you on or prior to the date of termination, but will not be entitled to receive any grants of equity-based compensation thereafter. Unless otherwise specified in the Plan or in the agreement evidencing the grant, in each case as of the date of the grant, after termination of employment your grants of equity-based compensation will be determined as follows. Your rights to receive or exercise the awards provided by the grants will be determined after the end of the performance period specified in the grant, or satisfaction of such other criteria pursuant to the Plan, subject to the applicable performance or other criteria, as if you had continued to remain employed with Studio throughout such performance period. You will be entitled to receive or exercise a ratable portion of the amount of each award determined in the preceding sentence, calculated by multiplying such amount by a fraction, the numerator of which is the sum of (i) your actual period of service in months through the date of termination plus (ii) 50% of the remaining Employment Term in months determined as of the date of termination (but in no event will the numerator exceed the denominator), and the denominator of which is the total performance period in months specified in the grant. The balance of such awards will

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be forfeited. Subject to this Paragraph 9.b and to the other terms and conditions of the grants, all Options and any similar equity-based awards will remain exercisable for the remaining term of the grant.

10. Death.

a. If you die prior to the end of the Employment Term, this Agreement shall be terminated as of the date of death and your beneficiary or estate shall be entitled to receive your Base Salary and all other benefits pro-rated up to the date on which the death occurs and for 12 months thereafter, but not to exceed the end of the then current Employment Term.

b. Upon termination of employment as provided in Paragraph 10.a, the rights to equity-based compensation of your estate or beneficiary will be determined in the same manner and at the same time as provided in Paragraph 9.b.

11. Termination for Cause. Studio may, at its option and upon resolution by the Board of Directors, terminate this Agreement forthwith for “cause”, including, without limitation, any obligation to pay the Base Salary or provide benefits or equity based compensation under this Agreement (except to the extent accrued or vested to the date of termination). For purposes of this Agreement, termination of this Agreement for “cause” shall mean only: (i) conviction of a felony or other crime involving moral turpitude or for embezzlement or the misappropriation of corporate assets, in any case, after the exhaustion of all possible appeals; or (ii) your material breach of Paragraphs 2.b, 3 or 8 hereof. Anything herein to the contrary notwithstanding, Studio will give you written notice prior to terminating this Agreement for your material breach under clause (ii), setting forth the exact nature of any alleged breach and the conduct required to cure such breach. You shall have thirty (30) days from the receipt of such notice within which to cure.

12. Involuntary Termination. Studio may terminate your employment other than for cause or on account of incapacity, in which case you will receive continuation of Base Salary and benefits as specified herein, until the end of the Employment Term. At the end of the Employment Term, you shall have the right to take over and continue, at your option and at your own expense, any benefits which by the terms of such benefit plans may be assumed. In the event of termination of your employment without cause pursuant to this Paragraph 12, all equity based compensation held by you shall accelerate vesting (on the basis that any mid-range or “target” goals rather than premium goals are deemed to have been achieved) and, subject to the other terms and conditions of the grants, will remain exercisable for the remainder of the term of the grant; however, you will not be entitled to receive any future equity based compensation. You agree that you will have no rights or remedies in the event of your termination without cause other than those set forth in the Agreement to the maximum extent allowed by law.

13. Termination For Good Reason. You shall be entitled to terminate employment for good reason, for the purpose of this Paragraph 13, in the event of a material breach of this Agreement by Studio, any material reduction of your title or duties or failure

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to obtain a Director’s and Officer’s liability insurance policy. Notwithstanding anything to the contrary contained herein, you will give Studio written notice prior to terminating this Agreement pursuant to the foregoing sentence, setting forth the exact nature of any alleged breach and the conduct required to cure such breach. Studio shall have thirty (30) days from the receipt of such notice within which to cure. In the event of your voluntary termination for good reason, you shall be entitled to the payments, benefits (including the post-term assumption of the applicable benefits) and equity based compensation provided under Paragraph 12 for involuntary termination without cause. You agree that you will have no rights or remedies in the event of your termination for good reason other than those set forth in the Agreement to the maximum extent allowed by law.

14. No Mitigation. In the event this Agreement is terminated for any reason prior to its expiration you shall not be required to mitigate your damages hereunder, nor shall Studio be entitled to offset from any sums owing to you hereunder any amounts received by you from any third party.

15. Section 317 and 508 of the Federal Communications Act. You represent that you have not accepted or given nor will you accept or give, directly or indirectly, any money, services other valuable consideration from or to anyone other than Studio for the inclusion of any matter as part of any film, television program or other production produced, distributed and/or developed by Studio and/or any of its affiliates.

16. Equal Opportunity Employer. You acknowledge that Studio is an equal opportunity employer. You agree that you will comply with Studio policies regarding employment practices and with applicable federal, state and local laws prohibiting discrimination or harassment.

17. Notices. All notices required to be given hereunder shall be given in writing, by personal delivery or by mail and confirmed by fax at the respective addresses of the parties hereto set forth above, or at such address as may be designated in writing by either party, and in the case of Studio, to the attention of the General Counsel of Studio. A courtesy copy of any notice to you hereunder shall be sent to Munger, Tolles & Olson LLP, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560, Fax: (213) 683-5137, Attn: Rob Knauss and Breslauer & Rutman, 11400 W. Olympic Boulevard, Suite 550, Los Angeles, CA 90064, Fax: (310) 481-3615 Attn: Mickey Rutman. Any notice given by mail shall be deemed to have been given three (3) business days following such mailing.

18. Assignment. This is an Agreement for the performance of personal services by you and may not be assigned by you (other than the right to receive payments which may be assigned to a company, trust or foundation owned or controlled by you) and any purported assignment in violation of the foregoing shall be deemed null and void. Studio shall have the right to assign this Agreement and your services hereunder only to an entity or person acquiring all or substantially all of the assets of Studio; provided however, as a condition to any such assignment, Studio shall require any person or entity acquiring all or substantially all of the assets of Studio to expressly assume the obligations of Studio hereunder.

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19. California Law. This Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of California applicable to contracts entered into and performed entirely therein.

20. No Implied Contract. The parties intend to be bound only upon execution of this Agreement and no negotiation, exchange or draft or partial performance shall be deemed to imply an agreement. Neither the continuation of employment or any other conduct shall be deemed to imply a continuing agreement upon the expiration of this Agreement.

21. Entire Understanding. This Agreement contains the entire understanding of the parties hereto relating to the subject matter herein contained, and can be changed only by a writing signed by both parties hereto.

22. Void Provisions. If any provision of this Agreement, as applied to either party or to any circumstances, shall be adjudged by a court to be void or unenforceable, the same shall be deemed stricken from this Agreement and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. In the event any such provision (the “Applicable Provision”) is so adjudged void or unenforceable, you and Studio shall take the following actions in the following order: (i) seek judicial reformation of the Applicable Provision; (ii) negotiate in good faith with each other to replace the Applicable Provision with a lawful provision; and (iii) have an arbitration as provided in Paragraph 24 hereof determine a lawful replacement provision for the Applicable Provision; provided, however, that no such action pursuant to either of clauses (i) or (iii) above shall increase in any respect your obligations pursuant to the Applicable Provision.

23. Survival / Modification of Terms. Your obligations under Paragraph 8 hereof shall remain in full force and effect for the entire period provided therein notwithstanding the termination of the Employment Term pursuant to Paragraph 11 hereof or otherwise. Studio’s obligations under Paragraphs 6 (with respect to expenses theretofore incurred) and 7 hereof shall survive indefinitely the termination of this Agreement regardless of the reason for such termination. Further, Paragraphs 4.b(v), 9.b, 10.b, 12 and 13 will continue to govern your entitlement, if any, to benefits and equity based compensation after the termination of the Employment Term, and paragraph 24 will continue to govern any Claims (as defined below) by one party against the other.

24. Arbitration of Disputes. Any controversy or claim by you against Studio or any of its parent companies, subsidiaries, affiliates (and/or officers, directors, employees, representatives or agents of Studio and such parent companies, subsidiaries and/or affiliates), including any controversy or claim arising from, out of or relating to this Agreement, the breach thereof, or the employment or termination thereof of you by Studio which would give rise to a claim under federal, state or local law (including, but not limited to, claims based in tort or contract, claims for discrimination under state or federal law, and/or claims for violation of any federal, state or local law, statute or regulation), or any

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claim against you by Studio (individually and/or collectively, “Claim[s]”) shall be submitted to an impartial mediator (“Mediator”) selected jointly by the parties. Both parties shall attend a mediation conference in Los Angeles County, California and attempt to resolve any and all Claims. If the parties are not able to resolve all Claims, then upon written demand for arbitration to the other party, which demand shall be made within a reasonable time after the Claim has arisen, any unresolved Claims shall be determined by final and binding arbitration in Los Angeles, California, in accordance with the Model Employment Procedures of the American Arbitration Association (collectively, “Rules”) by a neutral arbitrator experienced in employment law, licensed to practice law in California, in accordance with the Rules, except as herein specified. In no event shall the demand for arbitration be made after the date when the institution of legal and/or equitable proceedings based upon such Claim would be barred by the applicable statute of limitations. Each party to the arbitration will be entitled to be represented by counsel and will have the opportunity to take depositions in Los Angeles, California of any opposing party or witnesses selected by such party and/or request production of documents by the opposing party before the arbitration hearing. By mutual agreement of the parties, additional depositions may be taken at other locations. In addition, upon a party’s showing of need for additional discovery, the arbitrator shall have discretion to order such additional discovery. You acknowledge and agree that you are familiar with and fully understand the need for preserving the confidentiality of Studio’s agreements with third parties and compensation of Studio’s employees. Accordingly, you hereby agree that to the extent the arbitrator determines that documents, correspondence or other writings (or portions thereof) whether internal or from any third party, relating in any way to your agreements with third parties and/or compensation of other employees are necessary to the determination of any Claim, you and/or your representatives may discover and examine such documents, correspondence or other writings only after execution of an appropriate confidentiality agreement. Each party shall have the right to subpoena witnesses and documents for the arbitration hearing. A court reporter shall record all arbitration proceedings. With respect to any Claim brought to arbitration hereunder, either party may be entitled to recover whatever damages would otherwise be available to that party in any legal proceeding based upon the federal and/or state law applicable to the matter. The arbitrator shall issue a written decision setting forth the award and the findings and/or conclusions upon which such award is based. The decision of the arbitrator may be entered and enforced in any court of competent jurisdiction by either Studio or you. Notwithstanding the foregoing, the result of any such arbitration shall be binding but shall not be made public (including by filing a petition to confirm the arbitration award), unless necessary to confirm such arbitration award after non-payment of the award for a period of at least fifteen (15) days after notice to Studio of the arbitrator’s decision. Each party shall pay the fees of their respective attorneys (except as otherwise awarded by the arbitrator), the expenses of their witnesses, and all other expenses connected with presenting their Claims or defense(s). Other costs of arbitration shall be borne by Studio. Except as set forth below, should you or Studio pursue any Claim covered by this Paragraph 24 by any method other than said arbitration, the responding party shall be entitled to recover from the other party all damages, costs, expenses, and reasonable outside attorneys’ fees incurred as a result of such action. The provisions contained in this Paragraph 24 shall survive the termination of your employment with Studio. Notwithstanding anything set forth above, you agree that any breach or threatened breach of

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this Agreement (particularly, but without limitation, with respect to Paragraphs 3 and 8, above) may result in irreparable injury to Studio, and therefore, in addition to the procedures set forth above, Studio may be entitled to file suit in a court of competent jurisdiction to seek a Temporary Restraining Order and/or preliminary or permanent injunction or other equitable relief to prevent a breach or contemplated breach of such provisions.

25. Unique Services. Notwithstanding anything to the contrary in Paragraph 24., above, you acknowledge that the services to be rendered by you under the terms of this Agreement, and the rights and privileges granted to Studio by you under its terms, are of a special, unique, extraordinary and intellectual character, which gives them a peculiar value, the loss of which cannot reasonably or adequately be compensated in damages in any action at law, and that a breach by you of any of the provisions contained in this Agreement may cause Studio great and irreparable injury and damage. Notwithstanding anything to the contrary in Paragraph 24., above, you acknowledge that Studio shall be entitled, in addition to any other remedies it may have at law, to seek the remedies of injunction, and other equitable relief for a breach of this Agreement by you. This provision shall not, however, be construed as a waiver of any of the rights which Studio and/or you may have for damages or otherwise.

26. Name and Likeness. During the Employment Term, Studio shall have the right to use your name, biography and likeness in connection with its business as follows: You shall promptly submit to Studio a biography of yourself. Provided that you timely submit such biography, Studio shall not use any other biographical information other than contained in such biography so furnished, other than references to your prior professional services and your services hereunder, without your prior approval (which approval shall not be unreasonably withheld). If you fail to promptly submit a biography, then you shall not have the right to approve any biographical material used by Studio. You shall have the right to approve all likenesses of you used by Studio hereunder. Nothing herein contained shall be construed to authorize the use of your name, biography or likeness to endorse any product or service or to use the same for similar commercial purposes.

27. Change of Control. In the event of a “change of control”, all equity-based compensation held by you shall accelerate vesting (on the basis that any mid-range or “target” goals rather than premium goals are deemed to have been achieved) and remain exercisable for the remainder of the term of the grant.

(a) For purposes of this Agreement, “change of control” shall mean the occurrence of any of the following events, not including any events occurring prior to or in connection with the Closing (including the occurrence of the Closing):

(i) during any period of fourteen (14) consecutive calendar months, individuals who were directors of Studio on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board of Directors of Studio (the “Board”); provided, however, that any individual becoming a director subsequent to the first day of such period whose election, or nomination for election, by Studio’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered

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as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (each, a “Person”), in each case other than the management of Studio, the Board or the holders of Studio’s Class B common stock par value $0.01;

(ii) the consummation of (A) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) Studio or (y) any of its Subsidiaries, but in the case of this clause (y) only if Studio Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the assets of Studio to an entity that is not an Affiliate (a “Sale”), in each such case, if such Reorganization or Sale requires the approval of Studio’s stockholders under the law of Studio’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of Studio in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the individuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the securities eligible to vote for the election of the Board (“Studio Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including, without limitation, a corporation that as a result of such transaction owns Studio or all or substantially all Studio’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Studio Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than Studio), (2) no Person (excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation, (y) you and (z) David Geffen) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale;

(iii) the stockholders of Studio approve a plan of complete liquidation or dissolution of Studio; or

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(iv) any Person, corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) Studio, (B) any trustee or other fiduciary holding securities under an employee benefit plan of Studio or an Affiliate or (C) any company owned, directly or indirectly, by the stockholders of Studio in substantially the same proportions as their ownership of the voting power of Studio Voting Securities) becomes the beneficial owner, directly or indirectly, of securities of Studio representing 20% or more of the combined voting power of Studio Voting Securities but only if the percentage so owned exceeds the aggregate percentage of the combined voting power of Studio Voting Securities then owned, directly or indirectly, by you and David Geffen; provided, however, that for purposes of this subparagraph (iv), the following acquisitions shall not constitute a change of control: (x) any acquisition directly from Studio or (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Studio or an Affiliate.

b. In the event that it is determined that any payment (other than the Gross-Up Payments provided for in this Paragraph 27.b) or distribution by Studio or any of its affiliates to you or for your benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (or any successor provision thereto), by reason of being considered “contingent on a change in the ownership or effective control” of Studio, within the meaning of Section 280G of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the “Excise Tax”), then you will be entitled to receive (or have paid to the applicable taxing authority on your behalf) an additional payment or payments (collectively, a “Gross-Up Payment”). The Gross-Up Payment will be in an amount such that, after payment by you of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, you retain (or receive the benefit of a payment to the applicable taxing authority of) an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes of determining the amount of the Gross-Up Payment, you will be considered to pay (i) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (ii) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state or local tax, net of the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes.

28. Miscellaneous. Your sole and exclusive remedy for Studio’s breach, termination, or cancellation of this Agreement or any term hereof shall be an action for damages unless otherwise expressly limited hereunder, and you irrevocably waive any right to seek and/or obtain rescission and/or other equitable and/or injunctive relief. You agree that Studio may deduct and withhold from your compensation hereunder the amounts required to be deducted and withheld under the provisions of the Federal and California

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Income Tax Acts, Federal Insurance Contributions Act, California Unemployment Insurance Act, any and all amendments thereto, and other statutes heretofore or hereafter enacted requiring the withholding of compensation. All of Studio’s obligations in this Agreement are expressly conditioned upon you completing and delivering to Studio an Employment Eligibility Form (“Form I-9”) (in form satisfactory to Studio) and in connection therewith, you submitting to Studio original documentation demonstrating your employment eligibility.

If the foregoing correctly sets forth your understanding, please sign one copy of this letter and return it to the undersigned, whereupon this letter shall constitute a binding agreement between us.

Very truly yours,
DREAMWORKS ANIMATION SKG, INC.
By:	/s/ Katherine Kendrick
Its:	General Counsel

ACCEPTED AND AGREED AS OF THE

DATE FIRST ABOVE WRITTEN:

/s/ Jeffrey Katzenberg

JEFFREY KATZENBERG

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Exhibit 10.16

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

Mr. Jeffrey Katzenberg

c/o Mickey Rutman

Breslauer & Rutman LLC

11400 W. Olympic Blvd., Suite 550

Los Angeles, CA 90064

Dear Jeffrey:

This letter is to amend and restate, effective as of November 1, 2004, the letter employment agreement dated as of October 8, 2004 by and between you and DreamWorks Animation SKG, Inc. (the “Studio”) (the “Employment Agreement”). For good and valuable consideration, the receipt and sufficiency of which is hereby mutually acknowledged, we agree as follows:

1. Paragraph 6 of the Employment Agreement is hereby amended and restated in its entirety to read as follows:

“6. Business Expenses. During the Employment Term, you are expected and required to travel, entertain, and incur expenses on Studio business and in the performance of your duties hereunder in approximately the same manner and at approximately the same level as other President/CEO’s of major motion picture, television and record companies. All Studio business-related air travel by you shall be by private jet. You may take guests, if desired, on business-related travel as you determine necessary. You shall be entitled to utilize a private jet for personal use subject to your reimbursement to Studio of the allocable costs of any personal travel. You shall be entitled to the services of such reasonable security personnel as you request at Studio expense. Your overall compensation package is intended to cover all costs you are anticipated to incur for business related travel, hotel, entertainment, meals, and other business expenses which you incur as President and Chief Executive of Studio. Therefore, notwithstanding anything to the contrary contained in Studio’s employee business expense reimbursement plan, or in any other Studio statement, policy, filing, or writing, no such expenses will be provided or reimbursed to you by Studio with the exception of (1) business related airplane charter costs and (2) all of your costs and expenses (including reasonable legal fees) in connection with entering into this Agreement.”

2. The effective date of this amendment shall be November 1, 2004.

If the foregoing correctly sets forth your understanding, please sign one copy of this letter and return it to the undersigned, whereupon this letter shall constitute a binding agreement between us.

Dated: March 24, 2005

Very truly yours,
DREAMWORKS ANIMATION SKG, INC.
By:	/s/ Katherine Kendrick
Its:	General Counsel and Secretary

ACCEPTED AND AGREED AS OF THE

DATE FIRST ABOVE WRITTEN:

/s/ Jeffrey Katzenberg

JEFFREY KATZENBERG

EX-10.17

Exhibit 10.17

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

As of October 8, 2004

Mr. Roger A. Enrico

100 Crescent Court

Suite 700

Dallas, TX 75201

Dear Roger:

Upon the date (“Effective Date”) of the closing (“Closing”) of the initial public offering (“IPO”) of DreamWorks Animation SKG, Inc., a Delaware corporation (“Studio”), Studio agrees to employ you and you agree to accept such employment upon the terms and conditions set forth below. In the event the Closing fails to occur for any reason by June 28, 2005, this agreement (“Agreement”) shall be null and void.

1. Term. The term of your employment hereunder shall commence on the Effective Date and shall continue up to and including the fifth anniversary of the Effective Date. This period shall hereinafter be referred to as the “Employment Term”.

2. Duties/Responsibilities.

a. General. Your title shall be “Chairman of the Board” of Studio. You shall have such duties and responsibilities as are consistent with the traditional positions of Chairman of the Board of major corporations. In addition, you will be involved in investor relations, corporate strategic planning, marketing and promotional strategy, succession planning and employee development and will oversee matters related to corporate governance and compliance with the Sarbanes-Oxley Act of 2002. You shall also consult with the senior executive officers of Studio with respect to the operations, overall direction and projects of Studio.

b. Services. Your professional services shall be non-exclusive to Studio. During the Employment Term you shall devote approximately an average of up to two (2) working days of services per week of your business time and efforts to the affairs of Studio.

3. Non-Compete. To the extent allowed under California law, you shall not perform services for any person, firm or corporation and will not engage in any activity which would be directly competitive with Studio during the Employment Term. Nothing contained herein shall prevent you from owning directly or indirectly up to 5% of the equity securities of a publicly held company or a limited partnership, or from owning directly or indirectly up to 5% of a passive equity interest in a private company, even if such company or partnership does compete with Studio’s business.

4. Compensation.

a. Base Salary. For all services rendered under this Agreement, Studio will pay you a base salary at an annual rate of One Dollar ($1.00) and, subject to the approvals and conditions described below, the equity-based compensation described in Paragraph 4.b below.

b. Equity-Based Compensation.

(i) It is Studio’s present expectation, subject to the approval of the compensation committee of the Board of Directors of Studio (the “Compensation Committee”), that, upon the pricing date of the IPO, you will receive, pursuant to the equity compensation plan to be adopted by Studio (the “Plan”), stock options with respect to Studio’s Class A common stock (“Options”) having a grant-date value of $1,000,000 and restricted shares of Studio’s Class A common stock (“Restricted Stock”) having a grant-date value of $3,000,000 (or, in lieu of Options and Restricted Stock, such other form of equity-based compensation as the Compensation Committee may determine) (the “Initial Grants”). In the event that the Closing fails to occur for any reason by June 28, 2005, then the Initial Grants will be automatically canceled and you will be entitled to no payments or benefits with respect thereto.

(ii) In addition, you will be eligible, provided you remain employed hereunder (subject to Paragraphs 9, 10, 11, 12 and 13), to receive, subject to annual approval by the Compensation Committee, an annual equity incentive award of Options and Restricted Stock (or such other form of equity-based compensation as the Compensation Committee may determine) commencing on the first anniversary of the Effective Date and continuing on each succeeding anniversary date until you have been granted a total of four (4) additional equity incentive awards (it being understood that the actual granting of the award may lag behind such anniversary date by up to five (5) months). It is Studio’s present expectation that such annual awards will have an annual aggregate grant-date value targeted at $2,000,000. In the event that such awards consist of Options and Restricted Stock, they shall be divided, as determined by the Compensation Committee, between Options and Restricted Stock. In its sole determination, the Compensation Committee may elect to substitute a cash payment of $2,000,000 (“Cash Payment”) in lieu of any annual equity incentive award referenced in this subparagraph, provided payment of the Cash Payment to you will occur no later than the actual granting of such award would have occurred. For purposes of determining your entitlement, if any, under Paragraphs 9, 10, 11, 12 and 13 to the equity-based awards set forth in this Paragraph 4.b(ii), to the extent your employment was terminated after you became eligible for an award approved by the Compensation Committee but prior to the actual granting of such award, then you shall be entitled to receive such award or the substituted Cash Payment.

(iii) All Options and Restricted Stock (and any other equity-based awards) referred to in this Paragraph 4.b will (x) be valued using a method or methods (including where appropriate a Black-Scholes or other fair value method) as determined by the

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Compensation Committee from time to time (and, in the case of the Initial Grants, taking into account the IPO price to the public without regard to the underwriters’ discount), (y) become fully vested, exercisable (if applicable) and nonforfeitable within a period not to exceed four (4) years from the date of grant in a manner determined by the Compensation Committee, contingent on both the continuing performance of services to Studio (subject to Paragraphs 9, 10, 11, 12 and 13) and the achievement of performance goals as established by the Compensation Committee from time to time (it being understood that (A) the period of time required for achievement of any such performance goal may not exceed four (4) years from the date of the grant of the applicable award and (B) the performance goals and performance periods will be no more burdensome than the performance goals and the performance periods for applicable compensation awards made approximately contemporaneously to the CEO, COO and the CFO of Studio), and (z) otherwise be subject to such terms and conditions as may be set forth in the Plan or determined by the Compensation Committee from time to time and set forth or referred to in the agreement(s) evidencing such award or awards. Notwithstanding the foregoing, any performance based Initial Grants may, in the discretion of the Compensation Committee, have a vesting schedule that ends in the first quarter of 2009.

(iv) Following the expiration of the Employment Term (i.e., five (5) years after the Effective Date), but only if your employment hereunder has not been terminated earlier, you will not be required to perform any additional services to Studio in order for all of the equity-based compensation awards granted to you during the Employment Term to be fully vested, exercisable (if applicable) and nonforfeitable; provided that such awards will continue to remain subject to the achievement of performance goals as provided pursuant to the Plan and to such other terms and conditions as may be determined by the Compensation Committee and set forth or referred to in the agreement(s) evidencing such award or awards; and provided further that, subject to the foregoing, all Options and any similar equity-based awards will remain exercisable for the balance of the term of the grant.

(v) At all times, provided Studio remains a public company, Studio will maintain registrations on Form S-8 or any successor form under the Securities Act of 1933, as amended (“Securities Act”), of shares of common stock of Studio that may be received by you pursuant to equity incentive awards referred to in this Paragraph 4.b to the extent such form is applicable to such shares. It is understood that even though the shares are registered at the time of issuance to you, such shares will be subject to (a) any restrictions that apply to “affiliates” under Rule 144 of the Securities Act, (b) any blackout periods and other company policies relating to directors and senior officers, and (c) any other limitations on resale under applicable law.

5. Benefits. You acknowledge that you will not be entitled to participate in Studio’s benefit plans.

6. Business Expenses. During the Employment Term, you shall be reimbursed for such reasonable travel and other expenses incurred in the performance of your duties hereunder as are customarily reimbursed for Chairmen of the Board of publicly traded major motion picture, television and record companies. Studio shall reimburse all of your costs and expenses (including reasonable legal fees) in connection with the preparation, review and

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negotiation of this Agreement and any document, agreement or arrangement contemplated by this Agreement or otherwise entered into by you in connection with the commencement of employment with Studio. You shall be entitled to first class travel expenses, including hotels in accordance with Studio’s policy for its senior-most executives.

7. Indemnification.

a. You shall be fully indemnified and held harmless by Studio to the fullest extent permitted by law from any claim, liability, loss, cost or expense of any nature (including attorney’s fees of counsel selected by you, judgments, fines, any amounts paid or to be paid in any settlement, and all costs of any nature) incurred by you (all such indemnification to be on an “after tax” or “gross-up” basis) which arises in whole or in part out of any alleged or actual action or conduct on your part in or in connection with or related in any manner to your services (whether as an employee, agent, officer, corporate director, member, manager, shareholder, partner, or in any other capacity) to Studio or any entity owned or controlled by Studio, or which owns or controls Studio, or as to which you are providing services on behalf of Studio or which may be doing business with Studio. To the maximum extent allowed by law, all amounts to be indemnified hereunder including attorneys’ fees shall be promptly advanced by Studio until such time, if ever, as it is determined by final decision pursuant to Paragraph 24 below that you are not entitled to indemnification hereunder (whereupon you shall reimburse Studio for all sums theretofore advanced).

b. Studio will cover you under directors and officers liability insurance during and, while potential liability exists, after the Employment Term in the same amount and to the same extent, if any, as Studio covers its other officers and directors.

8. Covenants.

a. Confidential Information. You agree that you shall not, during the Employment Term or at any time thereafter, use for your own purposes, or disclose to or for any benefit of any third party, any trade secret or other confidential information of Studio or any of its affiliates (except as may required by law or in the performance of your duties hereunder consistent with Studio’s policies) and that you will comply with any confidentiality obligations of Studio known by you to a third party, whether under agreement or otherwise. Notwithstanding the foregoing, confidential information shall be deemed not to include information which (i) is or becomes generally available to the public other than as a result of a disclosure by you or any other person who directly or indirectly receives such information from you or at your direction or (ii) is or becomes available to you on a non-confidential basis from a source which you reasonably believe is entitled to disclose it to you. Studio may waive application of the foregoing restrictions and obligations in its discretion from time to time.

b. Results and Proceeds. The results and proceeds of your services hereunder, including, without limitation, any works of authorship resulting from your services during your employment and any works in progress, shall be works-made-for-hire and Studio shall

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be deemed the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner Studio determines in its sole discretion without any further payment to you whatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-for-hire and/or there are any rights which do not accrue to Studio under the preceding sentence, then you hereby irrevocably assign and agree to assign any and all of your right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed by Studio, and Studio shall have the right to use the same in perpetuity throughout the universe in any manner Studio may deem useful or desirable to establish or document Studio’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. To the extent you have any rights in the results and proceeds of your services that cannot be assigned in the manner described above, you unconditionally and irrevocably waive the enforcement of such rights. This Paragraph 8.b is subject to, and shall not be deemed to limit, restrict, or constitute any waiver by Studio of any rights of ownership to which Studio may be entitled by operation of law by virtue of Studio or any of its affiliates being your employer.

c. Promise Not To Solicit. You will not during the period of the Employment Term or for the period ending one (1) year after the earlier of expiration of the Employment Term or your termination hereunder, without the prior written consent of Studio, induce or attempt to induce any employees, exclusive consultants, exclusive contractors or exclusive representatives of Studio (or those of any of its affiliates) to stop working for, contracting with or representing Studio or any of its affiliates or to work for, contract with or represent any of Studio’s (or its affiliates’) competitors. Nothing in this Agreement will prevent you from providing references for any employee.

9. Incapacity.

a. In the event you become totally medically disabled and cannot substantially perform your duties at any time during the Employment Term, the Board of Directors may at any time after such disability has continued for ninety (90) consecutive days require Studio to give you written notice that it intends, subject to applicable state and federal law, to suspend this Agreement. Upon receipt of such notice, prior to any suspension hereunder, you shall be entitled to an expedited arbitration to determine whether or not you are medically disabled and have been disabled for at least ninety (90) consecutive days, provided that you request such arbitration within ten (10) business days of receipt of such notice from Studio. If you do not so request such an arbitration, or if the arbitrator rules that you are so disabled, you shall be placed on a “medical payroll”. You will remain employed for the first twenty-six (26) weeks of consecutive absence commencing at the end of the later of the ten (10) day period or upon the conclusion of the arbitration. Thereafter, if you are not able to resume your duties hereunder, your employment will be terminated.

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b. Upon termination of employment as provided in Paragraph 9.a, you will be entitled to retain all grants of equity-based compensation made to you on or prior to the date of termination and to receive and retain any approved grants of equity-based compensation (or substituted Cash Payment) for which you have become eligible but which have not been made, but will not be entitled to receive any additional grants of equity-based compensation thereafter. Unless otherwise specified in the Plan or in the agreement evidencing the grant, after termination of employment your grants of equity-based compensation will be determined as follows. Your rights to receive or exercise the awards provided by the grants will be determined after the end of the performance period, if any, specified in the grant, subject to the applicable performance criteria, if any, as if you had continued to remain employed with Studio throughout such performance period. You will be entitled to receive or exercise a ratable portion of the amount of each award determined in the preceding sentence, calculated by multiplying such amount by a fraction, the numerator of which is the sum of (i) your actual period of service through the date of termination plus (ii) one (1) year (but in no event will the numerator exceed the denominator) and the denominator of which is the total performance period specified in the grant. The balance of such awards will be forfeited. Subject to this Paragraph 9.b and to the other terms and conditions of the grants, all Options and any similar equity-based awards will remain exercisable for the remaining term of the grant.

10. Death.

a. If you die prior to the end of the Employment Term, this Agreement shall be terminated as of the date of death.

b. Upon termination of employment as provided in Paragraph 10.a, the rights to equity-based compensation of your estate or beneficiary will be determined in the same manner and at the same time as provided in Paragraph 9.b, except that, in addition, your estate or beneficiary will be entitled to receive and retain the additional annual equity incentive award (or substituted Cash Payment) for which you would have become eligible under Paragraph 4.b(ii) had your employment continued up to the first anniversary of the date of your death.

11. Termination for Cause.

a. Studio may, at its option and upon resolution by the Board of Directors, terminate this Agreement forthwith for “cause,” including, without limitation, any obligation to pay the Base Salary. For purposes of this Agreement, termination of this Agreement for “cause” shall mean only: (i) conviction of a felony or other crime involving moral turpitude or for embezzlement or the misappropriation of corporate assets, in any case, after the exhaustion of all possible appeals; or (ii) your material breach of Paragraph 2, 3 or 8 hereof. Anything herein to the contrary notwithstanding, Studio will give you written notice prior to terminating this Agreement for your material breach under clause (ii), setting forth the exact nature of any alleged breach and the conduct required to cure such breach. You shall have thirty (30) days from the receipt of such notice within which to cure.

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b. Upon termination of employment for cause as provided in Paragraph 11.a(i), Studio will have no further obligation to pay equity-based compensation under this Agreement (except to the extent such equity-based compensation has vested to the date of termination).

c. Upon termination of employment for cause as provided in Paragraph 11.a(ii), your rights to equity-based compensation will be determined in the same manner and at the same time as provided in Paragraph 9.b, except that the numerator of the fraction will be limited to your actual period of service through the date of termination.

12. Involuntary Termination. Studio may, at its option and upon resolution by the Board of Directors, terminate your employment other than for cause or on account of incapacity, in which case you will receive continuation of Base Salary as specified herein, until the end of the Employment Term. Upon termination of employment as provided in Section 12, you will be entitled to retain all grants of equity-based compensation made to you on or prior to the date of termination and to receive and retain any grants of equity-based compensation (or substituted Cash Payment) for which you have become eligible but which have not been made. In addition, you will be entitled to receive and retain the additional annual equity incentive award (or substituted Cash Payment) for which you would have become eligible under Section 4.b(ii) had your employment continued up to the first anniversary of the termination of your employment provided, however, you will not be entitled to receive any other future equity-based compensation. Unless otherwise specified in the Plan or in the agreement evidencing the grant, after termination of employment your grants of equity-based compensation will be determined as follows. Your rights to receive or exercise the awards provided by the grants will be determined after the end of the performance period specified in the grant, subject to the applicable performance criteria, as if you had continued to remain employed with Studio throughout such performance period. You will be entitled to receive or exercise 100% of the amount of the awards determined in the preceding sentence. Subject to the terms and conditions of the grants, all Options and any similar equity-based awards will remain exercisable for the remaining term of the grant. You agree that you will have no rights or remedies in the event of your termination without cause other than those set forth in the Agreement to the maximum extent required by law.

13. Termination for Good Reason. You shall be entitled to terminate this Agreement at any time for “good reason.” As used herein, the term “good reason” shall mean only: (i) any material breach of this Agreement by Studio, (ii) a successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Studio fails to assume liability under the Agreement; (iii) the failure to elect you as a director of Studio and as Chairman of the Board of Directors of Studio within three (3) months after the Effective Date; (iv) the failure to reelect or otherwise to maintain you as a director of Studio and as Chairman of the Board of Directors of Studio; (v) there is a material reduction in your duties and responsibilities as set forth in Paragraph 2.a above, (vi) the failure to make the Initial Grants, or (vii) the failure to make any of the annual equity incentive awards in accordance with Paragraph 4.b(ii) unless a Cash Payment has been paid, or (vii) the failure to make a Cash Payment in accordance with Paragraph 4.b(ii) if the Compensation Committee has elected to substitute an annual

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equity incentive award with such Cash Payment. Notwithstanding anything to the contrary contained herein, you will give Studio written notice prior to terminating this Agreement pursuant to the foregoing, setting forth the exact nature of any alleged breach and, should the “good reason” consist of matters contained in clause (i)above, the conduct required to cure such breach. Studio shall have thirty (30) days from the receipt of such notice within which to cure should the “good” reason for your termination consist of matters contained in clause (i) above. In the event of your voluntary termination for good reason, you shall be entitled to the payments and equity-based compensation provided under Paragraph 12 for involuntary termination without cause. Should you terminate this Agreement because of Studio’s failure to pay you an annual equity incentive award or Cash Payment pursuant to Paragraph 4.b(ii) above, then, in lieu of the payments and equity-based-compensation to be provided under Paragraph 12, you instead will be entitled to a one-time-only payment in the amount of $4,000,000, payable promptly following Studio’s receipt of your written notice of termination. You agree that you will have no rights or remedies in the event of your termination for good reason other than those set forth in the Agreement to the maximum extent allowed by law.

14. No Mitigation. In the event this Agreement is terminated for any reason prior to its expiration you shall not be required to mitigate your damages hereunder, nor shall Studio be entitled to offset from any sums owing to you hereunder any amounts received by you from any third party.

15. Section 317 and 508 of the Federal Communications Act. You represent that you have not accepted or given nor will you accept or give, directly or indirectly, any money, services other valuable consideration from or to anyone other than Studio for the inclusion of any matter as part of any film, television program or other production produced, distributed and/or developed by Studio and/or any of its affiliates.

16. Equal Opportunity Employer. You acknowledge that Studio is an equal opportunity employer. You agree that you will comply with Studio policies regarding employment practices and with applicable federal, state and local laws prohibiting discrimination or harassment.

17. Notices. All notices required to be given hereunder shall be given in writing, by personal delivery or by overnight courier and confirmed by fax at the respective addresses of the parties hereto set forth above, or at such address as may be designated in writing by either party, and in the case of Studio, to the attention of the General Counsel of Studio. A courtesy copy of any notice to you hereunder shall be sent to Richard A. Freling, Jones Day, 2727 North Harwood Street, Dallas, Texas 75201.

18. Assignment. This is an Agreement for the performance of personal services by you and may not be assigned by you (other than the right to receive payments which may be assigned to a company, trust or foundation owned or controlled by you) and any purported assignment in violation of the foregoing shall be deemed null and void. Studio shall have the right to assign this Agreement and your services hereunder only to an entity acquiring all or substantially all of the assets of Studio.

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19. California Law. This Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of California applicable to contracts entered into and performed entirely therein.

20. No Implied Contract. The parties intend to be bound only upon execution of this Agreement and no negotiation, exchange or draft or partial performance shall be deemed to imply an agreement. Neither the continuation of employment or any other conduct shall be deemed to imply a continuing agreement upon the expiration of this Agreement.

21. Entire Understanding. Except as otherwise specifically provided herein, this Agreement contains the entire understanding of the parties hereto relating to the subject matter herein contained, and can be changed only by a writing signed by both parties hereto.

22. Void Provisions. If any provision of this Agreement, as applied to either party or to any circumstances, shall be adjudged by a court to be void or unenforceable, the same shall be deemed stricken from this Agreement and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. In the event any such provision (the “Applicable Provision”) is so adjudged void or unenforceable, you and Studio shall take the following actions in the following order: (i) seek judicial reformation of the Applicable Provision; (ii) negotiate in good faith with each other to replace the Applicable Provision with a lawful provision; and (iii) have an arbitration as provided in Paragraph 24 hereof determine a lawful replacement provision for the Applicable Provision; provided, however, that no such action pursuant to either of clauses (i) or (iii) above shall increase in any respect your obligations pursuant to the Applicable Provision.

23. Survival Modification of Terms. Your obligations under Paragraph 8 hereof shall remain in full force and effect for the entire period provided therein notwithstanding the termination of the Employment Term pursuant to Paragraph 11 hereof or otherwise. Studio’s obligations under Paragraphs 6 (with respect to expenses theretofore incurred), 7 and 28 hereof shall survive indefinitely the termination of this Agreement regardless of the reason for such termination.

24. Arbitration of Disputes. Any controversy or claim by you against Studio or any of its parent companies, subsidiaries, affiliates (and/or officers, directors, employees, representatives or agents of Studio and such parent companies, subsidiaries and/or affiliates), including any controversy or claim arising from, out of or relating to this Agreement, the breach thereof, or the employment or termination thereof of you by Studio which would give rise to a claim under federal, state or local law (including, but not limited to, claims based in tort or contract, claims for discrimination under state or federal law, and/or claims for violation of any federal, state or local law, statute or regulation), or any claim against you by Studio (individually and/or collectively, “Claim[s]”) shall be submitted to an impartial mediator (“Mediator”) selected jointly by the parties. Both parties shall attend a mediation conference in Los Angeles County, California and attempt to resolve any

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and all Claims. If the parties are not able to resolve all Claims, then upon written demand for arbitration to the other party, which demand shall be made within a reasonable time after the Claim has arisen, any unresolved Claims shall be determined by final and binding arbitration in Los Angeles, California, in accordance with the Model Employment Procedures of the American Arbitration Association (collectively, “Rules”) by a neutral arbitrator experienced in employment law, licensed to practice law in California, in accordance with the Rules, except as herein specified. In no event shall the demand for arbitration be made after the date when the institution of legal and/or equitable proceedings based upon such Claim would be barred by the applicable statute of limitations. Each party to the arbitration will be entitled to be represented by counsel and will have the opportunity to take depositions in Los Angeles, California of any opposing party or witnesses selected by such party and/or request production of documents by the opposing party before the arbitration hearing. By mutual agreement of the parties, additional depositions may be taken at other locations. In addition, upon a party’s showing of need for additional discovery, the arbitrator shall have discretion to order such additional discovery. Further, the arbitrator shall have the authority to decide any dispute regarding discovery that arises in connection with any Claim. You acknowledge and agree that you are familiar with and fully understand the need for preserving the confidentiality of Studio’s agreements with third parties and compensation of Studio’s employees. Accordingly, you hereby agree that to the extent the arbitrator determines that documents, correspondence or other writings (or portions thereof) whether internal or from any third party, relating in any way to your agreements with third parties and/or compensation of other employees are necessary to the determination of any Claim, you and/or your representatives may discover and examine such documents, correspondence or other writings only after execution of an appropriate confidentiality agreement. In the event the parties fail to agree on the form of a confidentiality agreement, the arbitrator shall have the authority to determine the form of such agreement (provided same is consistent with the terms of this Agreement). Each party shall have the right to subpoena witnesses and documents for the arbitration hearing. A court reporter shall record all arbitration proceedings. With respect to any Claim brought to arbitration hereunder, either party may be entitled to recover whatever damages would otherwise be available to that party in any legal proceeding based upon the federal and/or state law applicable to the matter. The arbitrator shall issue a written decision setting forth the award and the findings and/or conclusions upon which such award is based. The decision of the arbitrator may be entered and enforced in any court of competent jurisdiction by either Studio or you. Notwithstanding the foregoing, the result of any such arbitration shall be binding but shall not be made public (including by filing a petition to confirm the arbitration award), unless necessary to confirm such arbitration award after non-payment of the award for a period of at least fifteen (15) days after notice to Studio of the arbitrator’s decision. Each party shall pay the fees of their respective attorneys (except as otherwise awarded by the arbitrator), the expenses of their witnesses, and all other expenses connected with presenting their Claims or defense(s). Other costs of arbitration shall be borne by Studio. Except as set forth below, should you or Studio pursue any Claim covered by this Paragraph 24 by any method other than said arbitration, the responding party shall be entitled to recover from the other party all damages, costs, expenses, and reasonable outside attorneys’ fees incurred as a result of such action. The provisions contained in this Paragraph 24 shall survive the termination of your employment with Studio. Notwithstanding anything set forth above, you agree that any

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breach or threatened breach of this Agreement (particularly, but without limitation, with respect to Paragraph 8, above) may result in irreparable injury to Studio, and therefore, in addition to the procedures set forth above, Studio may be entitled to file suit in a court of competent jurisdiction to seek a Temporary Restraining Order and/or preliminary or permanent injunction or other equitable relief to prevent a breach or contemplated breach of such provisions.

25. Name and Likeness. Studio shall have the right to use your name, biography and likeness in connection with its business as follows: You shall promptly submit to Studio a biography of yourself. Provided that you timely submit such biography, Studio shall not use any other biographical information other than contained in such biography so furnished, other than references to your prior professional services and your services hereunder, without your prior approval (which approval shall not be unreasonably withheld). If you fail to promptly submit a biography, or such biography is not approved by Studio, then you shall not have the right to approve any biographical material used by Studio. Nothing herein contained shall be construed to authorize the use of your name, biography or likeness to endorse any product or service or to use the same for similar commercial purposes.

26. Employee Representations and Warranties. You warrant and represent that: (a) your services hereunder shall not infringe on the rights of any third parties or constitute an interference with contractual rights or business advantage of others; (b) you have no prior existing commitments which will conflict or interfere with your rendering services hereunder; (c) you know of no party who will or might reasonably claim that in offering employment to you, Studio has interfered with their contractual commitments or prospective business advantage; and (d) you will not enter into any future commitment which will conflict or interfere with your rendering services hereunder. You further represent and warrant that you will not make any commitment which is or may be binding on Studio without Studio’s prior consent.

27. Beneficiaries. You will be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following your death, and may change such election, in either case by giving Studio written notice thereof.

28. Gross-Up Payment. In the event that it is determined that any payment (other than the Gross-Up Payments provided for in this Paragraph 28) or distribution by Studio or any of its affiliates to you or for your benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (or any successor provision thereto), by reason of being considered “contingent on a change in the ownership or effective control” of Studio, within the meaning of Section 280G of the Code (or any successor provision thereto) or to any similar tax imposed

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by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the “Excise Tax”), then you will be entitled to receive (or have paid to the applicable taxing authority on your behalf) an additional payment or payments (collectively, a “Gross-Up Payment”). The Gross-Up Payment will be in an amount such that, after payment by you of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, you retain (or receive the benefit of a payment to the applicable taxing authority of) an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes of determining the amount of the Gross-Up Payment, you will be considered to pay (i) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (ii) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state or local tax, net of the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes. The procedures and allocation of expenses for the determination of whether an Excise Tax would be imposed and the amount of such Excise Tax shall be no less favorable to you than any comparable procedures or allocation provided in any plan or agreement applicable to the CEO, COO and CFO of Studio.

29. Miscellaneous. You agree that Studio may deduct and withhold from your compensation hereunder the amounts required to be deducted and withheld under the provisions of the Federal and California Income Tax Acts, Federal Insurance Contributions Act, California Unemployment Insurance Act, any and all amendments thereto, and other statutes heretofore or hereafter enacted requiring the withholding of compensation. All of Studio’s obligations in this Agreement are expressly conditioned upon you completing and delivering to Studio an Employment Eligibility Form (“Form I-9”) (in form satisfactory to Studio) and in connection therewith, you submitting to Studio original documentation demonstrating your employment eligibility. This Agreement may be executed in several counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same Agreement. The captions used in connection with the paragraphs of this Agreement are inserted only for the purpose of reference. Such captions shall not be deemed to govern, limit, modify or in any other manner affect the scope, meaning, or intent of the provisions of this Agreement or any part thereof, nor shall such captions otherwise be given any legal effect.

If the foregoing correctly sets forth your understanding, please sign this letter and the attached three (3) copies, and return all four documents to the undersigned, whereupon this letter shall constitute a binding agreement between us

	Very truly yours,
ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN:	DREAMWORKS ANIMATION SKG, INC.
/s/ Roger Enrico	By:	/s/ Katherine Kendrick
ROGER ENRICO	Its:	VP and General Counsel

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EX-10.18

Exhibit 10.18

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

As of October 8, 2004

Ann Daly

c/o Munger, Tolles & Olsen LLP

355 South Grand Avenue

35^th Floor

Los Angeles, CA 90071

Attn: Rob Knauss

Dear Ann:

Upon the date (“Effective Date”) of the closing (“Closing”) of the initial public offering (“IPO”) of DreamWorks Animation SKG, Inc. (“Studio”), Studio agrees to employ you and you agree to accept such employment upon the terms and conditions set forth below. In the event the Closing fails to occur for any reason by June 28, 2005, this agreement (“Agreement”) shall be null and void:

1. Term. The term of your employment hereunder shall commence on the Effective Date and shall continue for a period of five (5) years thereafter. This period shall hereinafter be referred to as the “Employment Term”.

2. Duties/Responsibilities/Reporting.

a. General. Your title shall be “Chief Operating Officer” of Studio. You shall have such duties and responsibilities as are consistent with the traditional position of Chief Operating Officer of publicly traded major entertainment and media corporations.

b. Services. During the Employment Term you shall render your exclusive full time business services to Studio and/or its divisions, subsidiaries or affiliates in accordance with the reasonable directions and instructions of the Chief Executive Officer of Studio, all as hereinafter set forth.

c. Reporting. You shall report to Jeffrey Katzenberg (“Katzenberg”); provided that if Katzenberg is not actively involved in the business of Studio or otherwise incapable of involvement in the day-to-day business of Studio, including by reason of death or disability, then you shall report to the individual (who will be Katzenberg’s successor) designated by the Board of Directors of Studio to assume such duties.

3. Exclusivity. You shall not during the Employment Term perform services for any person, firm or corporation (hereinafter referred to collectively as a “person”) without the prior written consent of Studio and will not engage in any activity which would

interfere with the performance of Studio’s services hereunder, or become financially interested in any other person engaged in the production, distribution or exhibition of motion pictures or television programs (including, without limitation, motion pictures produced for, distributed to or exhibited on free, cable, pay, satellite and/or subscription television, music and/or interactive), anywhere in the world. Nothing contained herein shall prevent you from owning publicly traded minority stock interests not to exceed five percent (5%), limited partnership interests or other passive investment interests in businesses performing any of the aforesaid activities.

4. Compensation.

a. Base Salary. For all services rendered under this Agreement, Studio will pay you a yearly base salary rate of One Million Dollars ($1,000,000) for each full year of the Employment Term, payable in accordance with Studio’s applicable payroll practices (“Base Salary”).

b. Equity-Based Compensation.

(i) It is Studio’s present expectation, subject to the approval of the compensation committee of the Board of Directors of Studio (the “Compensation Committee”), that immediately prior to the Closing, you will receive a grant of fully vested DreamWorks LLC Phantom E Interests (the “Phantom E Interests”) that, upon the Closing, will be converted into fully vested shares of Studio Class A Common Stock, par value $0.01 per share (“Shares”), that will have an aggregate value as of the IPO pricing date of $5,700,000 (or, in lieu of Shares, such other form of equity-based compensation as the Compensation Committee may determine). In the event that the Closing fails to occur for any reason by June 28, 2005, then the Phantom E Interests will be automatically canceled and you will be entitled to no payments or benefits with respect thereto.

(ii) It is Studio’s present expectation, subject to the approval of the Compensation Committee, that, upon the pricing date of the IPO, you will receive, pursuant to the equity compensation plan to be adopted by Studio (the “Plan”), stock options with respect to Studio’s Class A common stock (“Options”) having a grant-date value of $1,990,000 and restricted shares of Studio’s Class A common stock (“Restricted Stock”) having a grant-date value of $5,450,000 (or, in lieu of Options and Restricted Stock, such other form of equity-based compensation as the Compensation Committee may determine) (the “Initial Grants”). In the event that the Closing fails to occur for any reason by June 28, 2005, then the Initial Grants will be automatically canceled and you will be entitled to no payments or benefits with respect thereto.

(iii) While you remain employed hereunder, commencing in 2005, in lieu of receiving a larger base salary than the amount set forth in paragraph 4.a. of this Agreement, you will be entitled to receive annual equity awards of Options and Restricted Stock (or such other form of equity-based compensation as the Compensation Committee may determine) having an aggregate grant-date value of $500,000. In the event that such awards consist of Options and Restricted Stock, they shall be evenly divided between Options and Restricted Stock based on their grant-date values. For the avoidance of doubt,

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the initial grant of such annual awards shall be guaranteed and not subject to further approval by the Compensation Committee, but the vesting of such Options and Restricted Stock (or such other form of equity-based compensation as the Compensation Committee may determine) shall be subject to vesting conditions (including achievement of performance goals) as referred to below.

(iv) You will also be eligible, while you remain employed hereunder, commencing for the year 2005 (with the amount of the award for 2005 anticipated to be determined in the first quarter of 2006), subject to annual approval by the Compensation Committee, to receive annual awards of Options and Restricted Stock (or such other form of equity-based compensation as the Compensation Committee may determine). It is Studio’s present expectation that such annual awards will have an aggregate grant-date value, depending on company performance, ranging between $750,000 (bonus target) and $1,500,000 (in the case of superior company performance). In the event that such awards consist of Options and Restricted Stock, they shall be divided, as determined by the Compensation Committee, between Options and Restricted Stock. These annual awards shall be in lieu of annual cash bonuses in the event the Compensation Committee does not pay cash bonuses to Studio’s most senior executives; provided that if the Compensation Committee does elect to pay such cash bonuses in addition to such annual awards, such awards shall also be in addition to any cash bonuses granted by the Compensation Committee.

(v) In addition, you will be eligible, while you remain employed hereunder, commencing in 2006, subject to annual approval by the Compensation Committee, to receive annual equity incentive awards of Options and Restricted Stock (or such other form of equity-based compensation as the Compensation Committee may determine). It is Studio’s present expectation that such annual awards will have an annual aggregate grant-date value targeted at $2,500,000. In the event that such awards consist of Options and Restricted Stock, they shall be divided, as determined by the Compensation Committee, between Options and Restricted Stock.

(vi) All Options and Restricted Stock (and any other equity-based awards) referred to in this Paragraph 4.b will (x) be valued using a method or methods (including where appropriate a Black-Scholes or other fair value method) as determined by the Compensation Committee from time to time (and, in the case of the Initial Grants, taking into account the IPO price to the public without regard to the underwriters’ discount), (y) become fully vested, exercisable (if applicable) and nonforfeitable within a period not to exceed seven (7) years from the date of the Initial Grant or four (4) years from the date of any other grant in a manner determined by the Compensation Committee, and will be contingent on both the continuing performance of services to Studio (subject to Paragraphs 9, 10, 11, 12 and 13) and the achievement of performance goals as established by the Compensation Committee from time to time, and (z) otherwise be subject to such terms and conditions as may be set forth in the Plan or determined by the Compensation Committee from time to time. Notwithstanding the foregoing, any performance based Initial Grants may, in the discretion of the Compensation Committee, have a vesting schedule that ends in the first quarter of 2012. Upon the expiration of the Employment Term (i.e., five (5) years

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after the Effective Date) but only if your employment hereunder has not been terminated earlier, (x) you will be entitled to all equity based compensation vested as of such date, and (y) provided Studio does not continue to employ you and solely with respect to any grant of equity based compensation previously awarded to you that is subject to cliff vesting (i.e., is not eligible for vesting prior to the end of the applicable four- or seven-year period), you will have the opportunity, on the previously established vesting date for such grant and provided that all the terms and conditions of such grant (including any performance-based criteria) have been satisfied, to vest in the portion of such grant that would have been eligible for vesting prior to the expiration of the Employment Term if such grant had been eligible for 25% vesting in the case of a four year grant or 14 ²/7% vesting in the case of a seven year grant on each of the anniversaries of such grant.

5. Benefits. In addition to the foregoing, you shall be entitled to participate in such other, medical, dental and life insurance, 401(k), pension and other benefit plans as Studio may have or establish from time to time for its most senior executives. During the Employment Term, unless earlier terminated as set forth below, you shall be entitled to utilize the Studio corporate jet for business-related air travel (subject to Studio policy), you shall be entitled to coverage in accordance with Studio’s standard leave of absence policy and you shall be entitled to vacation days and/or personal days to be taken subject to the demands of Studio (as determined by Studio) and consistent with the amount of days taken by other senior level executives; provided, however, no vacation time will be accrued during the Employment Term. The foregoing, however, shall not be construed to require Studio to establish any such plans or to prevent the modification or termination of such plans once established, and no such action or failure thereof shall affect this Agreement.

6. Business Expenses. Studio shall reimburse you for business expenses on a regular basis in accordance with its policy regarding the reimbursement of such expenses for executives of like stature to you (including travel, at Studio’s request, [which, in accordance with company policy, is currently first class], a car and/or cellular phone and including the reimbursement or direct payment of business phone expenses on a regular basis in accordance with Studio’s policy regarding the reimbursement or payment of such expenses for executives of like stature to you). Studio will provide you with a monthly car allowance of One Thousand Dollars ($1,000), which shall be administered in accordance with Studio’s then-current policy for similarly situated executives.

7. Indemnification. You shall be fully indemnified and held harmless by Studio to the fullest extent permitted by law from any claim, liability, loss, cost or expense of any nature (including attorney’s fees of counsel selected by you, judgments, fines, any amounts paid or to be paid in any settlement, and all costs of any nature) incurred by you (all such indemnification to be on an “after-tax” or “gross-up” basis) which arises, directly or indirectly, in whole or in part out of any alleged or actual conduct, action or inaction on your part in or in connection with or related in any manner to your status as an employee, agent, officer, corporate director, member, manager, shareholder, partner of, or your provision of services to, Studio or any of its affiliated entities or any entities to which you are providing services on behalf of Studio or which may be doing business with Studio. To the maximum extent allowed by law, all amounts to be indemnified hereunder including reasonable

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attorneys’ fees shall be promptly advanced by Studio until such time, if ever, as it is determined by final decision pursuant to Paragraph 24 below that you are not entitled to indemnification hereunder (whereupon you shall reimburse Studio for all sums theretofore advanced).

8. Covenants.

a. Non-Competition. You acknowledge and agree that due to the unique and intellectual nature of your services and due to your familiarity with the confidential strategies, creative concepts, proprietary animation techniques and technology, market studies, marketing and other confidential information of Studio, including information that you will develop for Studio, it will be impossible for you to perform animation services for any other animation employer or animation division of an employer or animation division of a production or entertainment company for some time after the termination of your services with Studio without necessarily using confidential information and techniques of Studio; and you further agree that it would be impossible for you to discharge your duty to use your best efforts to assist such other entity without breaching your duties of confidentiality to Studio, provided, however, that nothing herein shall prevent you from being in charge of an entertainment company that has an animation division. Accordingly, to the extent permitted by California law, you agree that for one (1) year after your services to Studio terminate for any reason (subject to Paragraphs 12 and 13 below), you shall not perform any services related to animation for any other entity (including any entity owned or controlled in whole or in part by you) or assist any other person or entity to engage in such services. You agree that this restriction shall not prevent you from obtaining employment, including employment in the film or entertainment industries in areas other than animation, and that this restriction is reasonable and necessary to protect legitimate interests of Studio unless otherwise provided by California law.

b. Confidential Information. You agree that you shall not, during the Employment Term or at any time thereafter, use for your own purposes, or disclose to or for any benefit of any third party, any trade secret or other confidential information of Studio or any of its affiliates (except as may required by law or in the performance of your duties hereunder consistent with Studio’s policies) and that you will comply with any confidentiality obligations of Studio known by you to a third party, whether under agreement or otherwise. Notwithstanding the foregoing, confidential information shall be deemed not to include information which (i) is or becomes generally available to the public other than as a result of a disclosure by you or any other person who directly or indirectly receives such information from you or at your direction or (ii) is or becomes available to you on a non-confidential basis from a source which you reasonably believe is entitled to disclose it to you.

c. Studio Ownership. The results and proceeds of your services hereunder, including, without limitation, any works of authorship resulting from your services during your employment and any works in progress, shall be works-made-for-hire and Studio shall be deemed the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or

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developed, with the right to use the same in perpetuity in any manner Studio determines in its sole discretion without any further payment to you whatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-for-hire and/or there are any rights which do not accrue to Studio under the preceding sentence, then you hereby irrevocably assign and agree to assign any and all of your right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed by Studio, and Studio shall have the right to use the same in perpetuity throughout the universe in any manner Studio may deem useful or desirable to establish or document Studio’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. To the extent that you have any rights in the results and proceeds of your services that cannot be assigned in the manner described above, you unconditionally and irrevocably waive the enforcement of such rights. This Paragraph 8.c is subject to, and shall not be deemed to limit, restrict, or constitute any waiver by Studio of any rights of ownership to which Studio may be entitled by operation of law by virtue of Studio or any of its affiliates being your employer.

d. Return of Property. All documents, data, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for you and utilized by you in the course of your employment with Studio or any of its affiliates shall remain the exclusive property of Studio. In the event of the termination of your employment for any reason, and subject to any other provisions hereof, Studio reserves the right, to the extent required by law, and in addition to any other remedy Studio may have, to deduct from any monies otherwise payable to you the following: (i) the full amount of any specifically determined debt you owe to Studio or any of its affiliates at the time of or subsequent to the termination of your employment with Studio, and (ii) the value of Studio property which you retain in your possession after the termination of your employment with Studio following Studio’s written request for such item(s) return and your failure to return such items within thirty (30) day of receiving such notice. In the event that the law of any state or other jurisdiction requires the consent of an employee for such deductions, this Agreement shall serve as such consent.

e. Promise Not To Solicit. You will not, during the period of the Employment Term or for the period ending two (2) years after the earlier of expiration of the Employment Term or your termination hereunder, induce or attempt to induce any employees, exclusive consultants, exclusive contractors or exclusive representatives of Studio (or those of any of its affiliates) to stop working for, contracting with or representing Studio or any of its affiliates or to work for, contract with or represent any of Studio’s (or its affiliates’) competitors.

9. Incapacity.

a. In the event you are unable to perform the services required of you hereunder as a result of a physical or mental disability and such disability shall continue for a period of ninety (90) or more consecutive days or an aggregate of four (4) or more months during any

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twelve (12) month period during the term hereof, Studio shall have the right, at its option and subject to applicable state and federal law, to terminate your employment hereunder, and Studio shall only be obligated to pay you (a) 50% of the specified Base Salary for the remainder of the then current Employment Term, but not to exceed two (2) years, and (b) any additional compensation (including, without limitation, any grants of equity-based compensation made to you on or prior to the date of termination (it being understood you will not be entitled to receive any grants of equity-based compensation thereafter) as determined pursuant to Paragraph 9.b, car allowance which has accrued prior to your termination, and expense reimbursement for expenses incurred prior to your termination) earned by you prior to the termination of your employment. Notwithstanding the foregoing sentence, you further will be entitled to continuation of medical, dental, life insurance and other benefits for a period of twelve (12) months after termination of your employment pursuant to this paragraph (but not to exceed the end of the then current Employment Term). Whenever compensation is payable to you hereunder, during or with respect to a time when you are partially or totally disabled and such disability (except for the provisions hereof) would entitle you to disability income or to salary continuation payments from Studio according to the terms of any plan now or hereafter provided by Studio or according to any policy of Studio in effect at the time of such disability, the compensation payable to you hereunder shall be inclusive of any such disability income or salary continuation and shall not be in addition thereto. If disability income is payable directly to you by an insurance company under an insurance policy paid for by Studio, the compensation payable to you hereunder shall be inclusive of the amounts paid to you by said insurance company and shall not be in addition thereto.

b. Unless otherwise specified in the Plan or in the agreement evidencing the grant, in each case as of the date of the grant, after termination of employment your grants of equity-based compensation will be determined as follows. Your rights to receive or exercise the awards provided by the grants will be determined after the end of the performance period specified in the grant, or satisfaction of such other criteria pursuant to the Plan, subject to the applicable performance or other criteria, as if you had continued to remain employed with Studio throughout such performance period. You will be entitled to receive or exercise a ratable portion of the amount of each award determined in the preceding sentence, calculated by multiplying such amount by a fraction, the numerator of which is the sum of (i) your actual period of service in months through the date of termination plus (ii) the lesser of (A) twelve (12) months or (B) 50% of the remaining Employment Term in months determined as of the date of termination (but in no event will the numerator exceed the denominator), and the denominator of which is the total performance period in months specified in the grant. The balance of such awards will be forfeited. Subject to this Paragraph 9.b and to the other terms and conditions of the grants, all Options and any similar equity-based awards will remain exercisable for the remaining term of the grant.

10. Death. If you die prior to the end of the Employment Term, this Agreement shall be terminated as of the date of death and your beneficiary or estate shall be entitled to receive (a) your Base Salary accrued to date and for 12 months thereafter, but not to exceed the end of the then current Employment Term, (b) equity-based compensation to be determined in the same manner and at the same time as provided in Paragraph 9.b, under and in accordance with any stock plan of Studio, and (c) all other benefits pro-rated up to the date on which the death occurs.

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11. Termination for Cause. Studio shall have the right to terminate this Agreement at any time for cause. As used herein, the term “cause” shall mean (i) misappropriation of any material funds or property of Studio or any of its related companies; (ii) failure to obey reasonable and material orders given by the Chief Executive Officer of Studio or by the board of directors of Studio; (iii) any material breach of this Agreement by you; (iv) conviction of or entry of a plea of guilty or nolo contendre to a felony or a crime involving moral turpitude; (v) any willful act, or failure to act, by you in bad faith to the material detriment of Studio; or (vi) material non-compliance with established Studio policies and guidelines (after which you have been informed in writing of such policies and guidelines and you have failed to cure such non-compliance); provided that in each such case (other than (i) or (iv) or a willful failure in (ii) or repeated breaches, failures or acts of the same type or nature) prompt written notice of such cause is given to you by specifying in reasonable detail the facts giving rise thereto and that continuation thereof will result in termination of employment, and such cause is not cured within ten (10) business days after receipt by you of the first such notice. If you are terminated as set forth in this Paragraph 11, then payment of the specified Base Salary and any additional noncontingent cash compensation (including, without limitation, any equity-based compensation which has vested and expense reimbursement for expenses incurred prior to your termination) theretofore earned by you shall be payment in full of all compensation payable hereunder. If Studio terminated you hereunder, then you shall immediately reimburse Studio for all paid but unearned sums.

12. Involuntary Termination. Studio may terminate your employment other than for cause or on account of incapacity, in which case you will receive continuation of Base Salary and benefits as specified herein, until the end of the Employment Term. In the event that cash bonuses have been paid, you shall also be entitled to receive through the end of the Employment Term an annual cash amount equal to the average annual cash bonuses that have been paid to you, if any (e.g., if you are terminated pursuant to this Paragraph 12 after three and one-half (3 ¹/2) years of employment, the annual cash bonus payable to you at the end of each of years four and five will be an amount equal to the aggregate of the cash bonuses, if any, paid to you at the end of years one, two and three divided by the number of full years of your employment prior to termination [i.e., three (3), in this example]). In the event of termination of your employment without cause pursuant to this Paragraph 12, all the equity based compensation specified in Paragraph 4.b hereof held by you shall accelerate vesting (on the basis that any mid-range or “target” goals rather than premium goals are deemed to have been achieved) and will, subject to the other terms and conditions of the grants, remain exercisable for the remainder of the term of the grant; however, you will not be entitled to receive any future equity-based compensation. If your services are terminated pursuant to this paragraph, (a) you shall not be obligated to secure other employment to mitigate damages incurred by Studio or any payment due you as a result of your termination hereunder, and (b) the provisions of Paragraph 8.a shall not apply. You agree that you will have no rights or remedies in the event of your termination without cause other than those set forth in the Agreement to the maximum extent required by law.

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13. Termination for Good Reason. You shall be entitled to terminate this Agreement at any time for “good reason.” As used herein, the term “good reason” shall mean only: (i) any material breach of this Agreement by Studio, (ii) any diminution in title; (iii) any time that Studio shall direct or require that you report to any person other than the Chief Executive Officer; or (iv) any time that Studio shall direct or require that your principal place of business be anywhere other than the Los Angeles area. Notwithstanding anything to the contrary contained herein, you will give Studio written notice prior to terminating this Agreement pursuant to the foregoing, setting forth the exact nature of any alleged breach and the conduct required to cure such breach. Studio shall have thirty (30) days from the receipt of such notice within which to cure. In the event of your voluntary termination for good reason, you shall be entitled to the payments, benefits (including the post-term assumption of the applicable benefits) and equity-based compensation proved under Paragraph 12 for involuntary termination without cause. If your services are terminated pursuant to this paragraph, (a) you shall not be obligated to secure other employment to mitigate damages incurred by Studio or any payment due you as a result of your termination hereunder, and (b) the provisions of Paragraph 8.a shall not apply. You agree that you will have no rights or remedies in the event of your termination for good reason other than those set forth in the Agreement to the maximum extent allowed by law.

14. Name/Likeness. During the Employment Term, Studio shall have the right to use your name, biography and likeness in connection with its business as follows: You shall promptly submit to Studio a biography of yourself. Provided that you timely submit such biography, Studio shall not use any other biographical information other than contained in such biography so furnished, other than references to your prior professional services and your services hereunder, without your prior approval (which approval shall not be unreasonably withheld). If you fail to promptly submit a biography, then you shall not have the right to approve any biographical material used by Studio. You shall have the right to approve any likeness of you used by Studio. Nothing herein contained shall be construed to authorize the use of your name, biography or likeness to endorse any product or service or to use the same for similar commercial purposes.

15. Section 317 and 508 of the Federal Communications Act. You represent that you have not accepted or given, nor will you accept or give, directly or indirectly, any money, services or other valuable consideration from or to anyone other than Studio for the inclusion of any matter as part of any film, television program or other production produced, distributed and/or developed by Studio and/or any of its affiliates.

16. Equal Opportunity Employer. You acknowledge that Studio is an equal opportunity employer. You agree that you will comply with Studio policies regarding employment practices and with applicable federal, state and local laws prohibiting discrimination or harassment.

17. Notices. All notices required to be given hereunder shall be given in writing, by personal delivery or by mail and confirmed by fax at the respective addresses of the parties hereto set forth above, or at such address as may be designated in writing by either

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party, and in the case of Studio, to the attention of the General Counsel of Studio. A courtesy copy of any notice to you hereunder shall be sent to Munger, Tolles & Olson LLP, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560, Fax: (213) 683-5137, Attn: Rob Knauss. Any notice given by mail shall be deemed to have been given three (3) business days following such mailing.

18. Assignment. This is an Agreement for the performance of personal services by you and may not be assigned by you (other than the right to receive payments which may be assigned to a company, trust or foundation owned or controlled by you) and any purported assignment in violation of the foregoing shall be deemed null and void. Studio may assign this Agreement or all or any part of its rights hereunder to any entity which acquires all or substantially all of the assets of Studio and this Agreement shall inure to the benefit of such assignee, provided your duties do not materially change.

19. California Law. This Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of California applicable to contracts entered into and performed entirely therein.

20. No Implied Contract. The parties intend to be bound only upon execution of this Agreement and no negotiation, exchange or draft or partial performance shall be deemed to imply an agreement. Neither the continuation of employment or any other conduct shall be deemed to imply a continuing agreement upon the expiration of this Agreement.

21. Entire Understanding. This Agreement contains the entire understanding of the parties hereto relating to the subject matter herein contained, and can be changed only by a writing signed by both parties hereto.

22. Void Provisions. If any provision of this Agreement, as applied to either party or to any circumstances, shall be adjudged by a court to be void or unenforceable, the same shall be deemed stricken from this Agreement and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. In the event any such provision (the “Applicable Provision”) is so adjudged void or unenforceable, you and Studio shall take the following actions in the following order: (i) seek judicial reformation of the Applicable Provision; (ii) negotiate in good faith with each other to replace the Applicable Provision with a lawful provision; and (iii) have an arbitration as provided in Paragraph 24 hereof determine a lawful replacement provision for the Applicable Provision; provided, however, that no such action pursuant to either of clauses (i) or (iii) above shall increase in any respect your obligations pursuant to the Applicable Provision.

23. Survival Modification of Terms. Your obligations under Paragraph 8 hereof shall remain in full force and effect for the entire period provided therein, notwithstanding the termination of the Employment Term pursuant to Paragraph 11 hereof or otherwise. Studio’s obligations under Paragraphs 6 (with respect to expenses theretofore incurred) and 7 hereof shall survive indefinitely the termination of this Agreement

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regardless of the reason for such termination. Further, Paragraphs 4.b(vi), 9, 10, 12 and 13 will continue to govern your entitlement, if any, to benefits and equity based compensation after the termination of the Employment Term, and paragraph 24 will continue to govern any Claims (as defined below) by one party against the other.

24. Arbitration of Disputes. Any controversy or claim by you against Studio or any of its parent companies, subsidiaries, affiliates (and/or officers, directors, employees, representatives or agents of Studio and such parent companies, subsidiaries and/or affiliates), including any controversy or claim arising from, out of or relating to this Agreement, the breach thereof, or the employment or termination thereof of you by Studio which would give rise to a claim under federal, state or local law (including, but not limited to, claims based in tort or contract, claims for discrimination under state or federal law, and/or claims for violation of any federal, state or local law, statute or regulation), or any claim against you by Studio (individually and/or collectively, “Claim[s]”) shall be submitted to an impartial mediator (“Mediator”) selected jointly by the parties. Both parties shall attend a mediation conference in Los Angeles County, California and attempt to resolve any and all Claims. If the parties are not able to resolve all Claims, then upon written demand for arbitration to the other party, which demand shall be made within a reasonable time after the Claim has arisen, any unresolved Claims shall be determined by final and binding arbitration in Los Angeles, California, in accordance with the Model Employment Procedures of the American Arbitration Association (collectively, “Rules”) by a neutral arbitrator experienced in employment law, licensed to practice law in California, in accordance with the Rules, except as herein specified. In no event shall the demand for arbitration be made after the date when the institution of legal and/or equitable proceedings based upon such Claim would be barred by the applicable statute of limitations. Each party to the arbitration will be entitled to be represented by counsel and will have the opportunity to take depositions in Los Angeles, California of any opposing party or witnesses selected by such party and/or request production of documents by the opposing party before the arbitration hearing. By mutual agreement of the parties, additional depositions may be taken at other locations. In addition, upon a party’s showing of need for additional discovery, the arbitrator shall have discretion to order such additional discovery. You acknowledge and agree that you are familiar with and fully understand the need for preserving the confidentiality of Studio’s agreements with third parties and compensation of Studio’s employees. Accordingly, you hereby agree that to the extent the arbitrator determines that documents, correspondence or other writings (or portions thereof) whether internal or from any third party, relating in any way to your agreements with third parties and/or compensation of other employees are necessary to the determination of any Claim, you and/or your representatives may discover and examine such documents, correspondence or other writings only after execution of an appropriate confidentiality agreement. Each party shall have the right to subpoena witnesses and documents for the arbitration hearing. A court reporter shall record all arbitration proceedings. With respect to any Claim brought to arbitration hereunder, either party may be entitled to recover whatever damages would otherwise be available to that party in any legal proceeding based upon the federal and/or state law applicable to the matter. The arbitrator shall issue a written decision setting forth the award and the findings and/or conclusions upon which such award is based. The decision of the arbitrator may be entered and enforced in any court of competent jurisdiction

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by either Studio or you. Notwithstanding the foregoing, the result of any such arbitration shall be binding but shall not be made public (including by filing a petition to confirm the arbitration award), unless necessary to confirm such arbitration award after non-payment of the award for a period of at least fifteen (15) days after notice to Studio of the arbitrator’s decision. Each party shall pay the fees of their respective attorneys (except as otherwise awarded by the arbitrator), the expenses of their witnesses, and all other expenses connected with presenting their Claims or defense(s). Other costs of arbitration shall be borne by Studio. Except as set forth below, should you or Studio pursue any Claim covered by this Paragraph 24 by any method other than said arbitration, the responding party shall be entitled to recover from the other party all damages, costs, expenses, and reasonable outside attorneys’ fees incurred as a result of such action. The provisions contained in this Paragraph 24 shall survive the termination of your employment with Studio. Notwithstanding anything set forth above, you agree that any breach or threatened breach of this Agreement (particularly, but without limitation, with respect to Paragraphs 3 and 8, above) may result in irreparable injury to Studio, and therefore, in addition to the procedures set forth above, Studio may be entitled to file suit in a court of competent jurisdiction to seek a Temporary Restraining Order and/or preliminary or permanent injunction or other equitable relief to prevent a breach or contemplated breach of such provisions.

25. Change of Control. In the event of a “change of control”, all equity-based compensation held by you shall accelerate vesting (on the basis that any mid-range or “target” goals rather than premium goals are deemed to have been achieved) and, subject to the other terms and conditions of the grants, remain exercisable for the remainder of the term of the grant.

a. For purposes of this Agreement, “change of control” shall mean the occurrence of any of the following events, not including any events occurring prior to or in connection with the Closing (including the occurrence of the Closing):

(i) during any period of fourteen (14) consecutive calendar months, individuals who were directors of Studio on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board of Directors of Studio (the “Board”); provided, however, that any individual becoming a director subsequent to the first day of such period whose election, or nomination for election, by Studio’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (each, a “Person”), in each case other than the management of Studio, the Board or the holders of Studio’s Class B common stock par value $0.01;

(ii) the consummation of (A) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) Studio or (y) any of its Subsidiaries, but in the case of this clause (y) only if Studio Voting Securities (as defined

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below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the assets of Studio to an entity that is not an Affiliate (a “Sale”), in each such case, if such Reorganization or Sale requires the approval of Studio’s stockholders under the law of Studio’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of Studio in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the individuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the securities eligible to vote for the election of the Board (“Studio Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including, without limitation, a corporation that as a result of such transaction owns Studio or all or substantially all Studio’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Studio Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than Studio), (2) no Person (excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation, (y) Jeffrey Katzenberg and (z) David Geffen) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale;

(iii) the stockholders of Studio approve a plan of complete liquidation or dissolution of Studio; or

(iv) any Person, corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) Studio, (B) any trustee or other fiduciary holding securities under an employee benefit plan of Studio or an Affiliate or (C) any company owned, directly or indirectly, by the stockholders of Studio in substantially the same proportions as their ownership of the voting power of Studio Voting Securities) becomes the beneficial owner, directly or indirectly, of securities of Studio representing 20% or more of the combined voting power of Studio Voting Securities but only if the percentage so owned exceeds the aggregate percentage of the combined voting power of Studio Voting Securities then owned, directly or indirectly, by Jeffrey Katzenberg and David Geffen; provided, however, that for purposes of this subparagraph (iv), the following acquisitions shall not constitute a change of control: (x) any acquisition directly from Studio or (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Studio or an Affiliate.

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b. In the event that it is determined that any payment (other than the Gross-Up Payments provided for in this Paragraph 25.b) or distribution by Studio or any of its affiliates to you or for your benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (or any successor provision thereto), by reason of being considered “contingent on a change in the ownership or effective control” of Studio, within the meaning of Section 280G of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the “Excise Tax”), then you will be entitled to receive (or have paid to the applicable taxing authority on your behalf) an additional payment or payments (collectively, a “Gross-Up Payment”). The Gross-Up Payment will be in an amount such that, after payment by you of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, you retain (or receive the benefit of a payment to the applicable taxing authority of) an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes of determining the amount of the Gross-Up Payment, you will be considered to pay (i) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (ii) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state or local tax, net of the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes.

26. Miscellaneous. You agree that Studio may deduct and withhold from your compensation hereunder the amounts required to be deducted and withheld under the provisions of the Federal and California Income Tax Acts, Federal Insurance Contributions Act, California Unemployment Insurance Act, any and all amendments thereto, and other statutes heretofore or hereafter enacted requiring the withholding of compensation. All of Studio’s obligations in this Agreement are expressly conditioned upon you completing and delivering to Studio an Employment Eligibility Form (“Form I-9”) (in form satisfactory to Studio) and in connection therewith, you submitting to Studio original documentation demonstrating your employment eligibility.

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If the foregoing correctly sets forth your understanding, please sign one copy of this letter and return it to the undersigned, whereupon this letter shall constitute a binding agreement between us.

Very truly yours,
DREAMWORKS ANIMATION SKG, INC.
	/s/ Katherine Kendrick
By:	Katherine Kendrick
Its:	General Counsel

ACCEPTED AND AGREED AS OF THE

DATE FIRST ABOVE WRITTEN:

/s/ Ann Daly

ANN DALY

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EX-10.19

Exhibit 10.19

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

As of October 8, 2004

Katherine Kendrick

c/o Munger, Tolles & Olsen LLP

355 South Grand Avenue

35^th Floor

Los Angeles, CA 90071

Attn: Rob Knauss

Dear Katherine:

Upon the date (“Effective Date”) of the closing (“Closing”) of the initial public offering (“IPO”) of DreamWorks Animation SKG, Inc. (“Studio”), Studio agrees to employ you and you agree to accept such employment upon the terms and conditions set forth below. In the event the Closing fails to occur for any reason by June 28, 2005, this agreement (“Agreement”) shall be null and void.

1. Term. The term of your employment hereunder shall commence on the Effective Date and shall continue for a period of five (5) years thereafter. This period shall hereinafter be referred to as the “Employment Term.”

2. Duties/Responsibilities.

a. General. Your title shall be “General Counsel” of Studio. You shall have such duties and responsibilities as are consistent with the traditional positions of General Counsel of publicly traded major entertainment and media corporations.

b. Services. During the Employment Term you shall render your exclusive full time business services to Studio and/or its divisions, subsidiaries or affiliates in accordance with the reasonable directions and instructions of the Chief Executive Officer and Chief Operating Officer of Studio, all as hereinafter set forth. Notwithstanding the foregoing, Studio may not require you to render services on a permanent basis outside Los Angeles County without your consent. If Studio moves its primary operations outside of Los Angeles County and you do not consent to render permanent services at such new location, then you may elect to terminate this Agreement.

3. Exclusivity. You shall not during the Employment Term perform services for any person, firm or corporation (hereinafter referred to collectively as a “person”) without the prior written consent of Studio and will not engage in any activity which would interfere with the performance of Studio’s services hereunder, or become financially interested in any other person engaged in the production, distribution or exhibition of motion

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pictures or television programs (including, without limitation, motion pictures produced for, distributed to or exhibited on free, cable, pay, satellite and/or subscription television, music and/or interactive), anywhere in the world. Nothing contained herein shall prevent you from owning publicly traded minority stock interests not to exceed five percent (5%), limited partnership interests or other passive investment interests in businesses performing any of the aforesaid activities.

4. Compensation.

a. Base Salary. For all services rendered under this Agreement, Studio will pay you a yearly base salary rate of Five Hundred Seventy Five Thousand Dollars ($575,000.00) for the first full year of the Employment Term, and Six Hundred Thousand Dollars ($600,000.00) for each of the second, third, fourth and fifth full years of the Employment Term, payable in accordance with Studio’s applicable payroll practices (“Base Salary”).

b. Equity-Based Compensation.

(i) It is Studio’s present expectation, subject to the approval of the Compensation Committee of the Board of Directors of Studio (the “Compensation Committee”), that, upon the pricing date of the IPO, you will receive, pursuant to the equity compensation plan to be adopted by Studio (the “Plan”), stock options with respect to Studio’s Class A common stock (“Options”) having a grant-date value of approximately $820,000 vesting over four (4) years, and restricted stock units (“RSUs”) having a grant-date value of $2,330,000 which shall be fully vested on the grant-date (or, in lieu of Options and RSUs, such other form of equity-based compensation as the Compensation Committee may determine) (the “Initial Grants”). In the event that the Closing fails to occur for any reason by June 28, 2005, then the Initial Grants will be automatically canceled and you will be entitled to no payments or benefits with respect thereto.

(ii) You will also be eligible, while you remain employed hereunder, commencing for the year 2005 (with the amount of the award for 2005 anticipated to be determined in the first quarter of 2006), subject to annual approval by the Compensation Committee, to receive annual awards of Options and restricted shares of Studio’s Class A common stock (“Restricted Stock”) vesting over four (4) years (or such other form of equity-based compensation as the Compensation Committee may determine). It is Studio’s present expectation, that such annual awards will have an aggregate grant-date value, depending on company performance, ranging between $300,000 (bonus target) and $600,000 (in the case of superior company performance). In the event that such awards consist of Options and Restricted Stock, they shall be divided, as determined by the Compensation Committee, between Options and Restricted Stock. These annual awards shall be in lieu of annual cash bonuses in the event the Compensation Committee does not pay cash bonuses to Studio’s most senior executives; provided that if the Compensation Committee does elect to pay such cash bonuses in addition to such annual awards, such awards shall also be in addition to any cash bonuses granted by the Compensation Committee.

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(iii) In addition, you will be eligible, while you remain employed hereunder, commencing in 2006, subject to annual approval by the Compensation Committee, to receive annual equity incentive awards of Options and Restricted Stock vesting over four (4) years (or such other form of equity-based compensation as the Compensation Committee may determine). It is Studio’s present expectation, that such annual awards will have an annual aggregate grant-date value targeted at $1,500,000. In the event that such awards consist of Options and Restricted Stock, they shall be divided, as determined by the Compensation Committee, between Options and Restricted Stock.

(iv) All Options, RSUs and Restricted Stock (and any other equity-based awards) referred to in this Paragraph 4.b will (x) be valued using a method or methods (including where appropriate a Black-Scholes or other fair value method) as determined by the Compensation Committee from time to time (and, in the case of the Initial Grants, taking into account the IPO price to the public without regard to the underwriters’ discount), (y) become fully vested, exercisable (if applicable) and nonforfeitable within a period not to exceed four (4) years from the date of grant in a manner determined by the Compensation Committee, and will be contingent on both the continuing performance of services to Studio (subject to Paragraphs 9, 10, 11, 12 and 13) and the achievement of performance goals as established by the Compensation Committee from time to time (except that the Initial Grants shall not be subject to the achievement of performance goals and the Initial Grants that are fully vested RSUs shall not be subject to the continuing performance of services), and (z) otherwise be subject to such terms and conditions as may be set forth in the Plan or determined by the Compensation Committee from time to time. Upon the expiration of the Employment Term (i.e., five (5) years after the Effective Date) but only if your employment hereunder has not been terminated earlier, (x) you will be entitled to all equity based compensation vested as of such date, and (y) provided Studio does not continue to employ you and solely with respect to any grant of equity based compensation previously awarded to you that is subject to cliff vesting (i.e., is not eligible for vesting prior to the end of the applicable four-year period), you will have the opportunity, on the previously established vesting date for such grant and provided that all the terms and conditions of such grant (including any performance-based criteria) have been satisfied, to vest in the portion of such grant that would have been eligible for vesting prior to the expiration of the Employment Term if such grant had been eligible for 25% vesting on each of the anniversaries of such grant.

5. Benefits. In addition to the foregoing, you shall be entitled to participate in such other, medical, dental and life insurance, 401(k), pension and other benefit plans as Studio may have or establish from time to time for its most senior executives. During the Employment Term, unless earlier terminated as set forth below, you shall be entitled to coverage in accordance with Studio’s standard leave of absence policy and shall be entitled to vacation days and/or personal days to be taken subject to the demands of Studio (as determined by Studio) and consistent with the amount of days taken by other senior level executives; provided, however, no vacation time will be accrued during the Employment Term. The foregoing, however, shall not be construed to require Studio to establish any such plans or to prevent the modification or termination of such plans once established, and no such action or failure thereof shall affect this Agreement.

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6. Business Expenses. Studio shall reimburse you for business expenses on a regular basis in accordance with its policy regarding the reimbursement of such expenses for executives of like stature to you (including travel, at Studio’s request, [which, in accordance with company policy, is currently first class], a car or cellular phone and including the reimbursement or direct payment of business phone expenses on a regular basis in accordance with Studio’s policy regarding the reimbursement or payment of such expenses for executives of like stature to you). Studio will provide you with a monthly car allowance of One Thousand Dollars ($1,000), which shall be administered in accordance with Studio’s then-current policy for similarly situated executives.

7. Indemnification. You shall be fully indemnified and held harmless by Studio to the fullest extent permitted by law from any claim, liability, loss, cost or expense of any nature (including attorney’s fees of counsel selected by you, judgments, fines, any amounts paid or to be paid in any settlement, and all costs of any nature) incurred by you (all such indemnification to be on an “after-tax” or “gross-up” basis) which arises, directly or indirectly, in whole or in part out of any alleged or actual conduct, action or inaction on your part in or in connection with or related in any manner to your status as an employee, agent, officer, corporate director, member, manager, shareholder, partner of, or your provision of services to, Studio or any of its affiliated entities, or any entity to which you are providing services on behalf of Studio or which may be doing business with Studio. To the maximum extent allowed by law, all amounts to be indemnified hereunder including reasonable attorneys’ fees shall be promptly advanced by Studio until such time, if ever, as it is determined by final decision pursuant to Paragraph 24 below that you are not entitled to indemnification hereunder (whereupon you shall reimburse Studio for all sums theretofore advanced).

8. Covenants.

a. Confidential Information. You agree that you shall not, during the Employment Term or at any time thereafter, use for your own purposes, or disclose to or for any benefit of any third party, any trade secret or other confidential information of Studio or any of its affiliates (except as may be required by law or in the performance of your duties hereunder consistent with Studio’s policies) and that you will comply with any confidentiality obligations of Studio known by you to a third party, whether under agreement or otherwise. Notwithstanding the foregoing, confidential information shall be deemed not to include information which (i) is or becomes generally available to the public other than as a result of a disclosure by you or any other person who directly or indirectly receives such information from you or at your direction or (ii) is or becomes available to you on a non-confidential basis from a source which you reasonably believe is entitled to disclose it to you.

b. Studio Ownership. The results and proceeds of your services hereunder, including, without limitation, any works of authorship resulting from your services during

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your employment and any works in progress, shall be works-made-for-hire and Studio shall be deemed the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner Studio determines in its sole discretion without any further payment to you whatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-for-hire and/or there are any rights which do not accrue to Studio under the preceding sentence, then you hereby irrevocably assign and agree to assign any and all of your right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed by Studio, and Studio shall have the right to use the same in perpetuity throughout the universe in any manner Studio may deem useful or desirable to establish or document Studio’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. To the extent that you have any rights in the results and proceeds of your services that cannot be assigned in the manner described above, you unconditionally and irrevocably waive the enforcement of such rights. This Paragraph 8.b is subject to, and shall not be deemed to limit, restrict, or constitute any waiver by Studio of any rights of ownership to which Studio may be entitled by operation of law by virtue of Studio or any of its affiliates being your employer.

c. Return of Property. All documents, data, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for you and utilized by you in the course of your employment with Studio or any of its affiliates shall remain the exclusive property of Studio. In the event of the termination of your employment for any reason, and subject to any other provisions hereof, Studio reserves the right, to the extent required by law, and in addition to any other remedy Studio may have, to deduct from any monies otherwise payable to you the following: (i) the full amount of any specifically determined debt you owe to Studio or any of its affiliates at the time of or subsequent to the termination of your employment with Studio, and (ii) the value of Studio property which you retain in your possession after the termination of your employment with Studio following Studio’s written request for such item(s) return and your failure to return such items within thirty (30) day of receiving such notice. In the event that the law of any state or other jurisdiction requires the consent of an employee for such deductions, this Agreement shall serve as such consent.

d. Promise Not To Solicit. You will not, during the period of the Employment Term or for the period ending one (1) year after the earlier of expiration of the Employment Term or your termination hereunder, induce or attempt to induce any employees, exclusive consultants, exclusive contractors or exclusive representatives of Studio (or those of any of its affiliates) to stop working for, contracting with or representing Studio or any of its affiliates or to work for, contract with or represent any of Studio’s (or its affiliates’) competitors.

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9. Incapacity.

a. In the event you are unable to perform the services required of you hereunder as a result of a physical or mental disability and such disability shall continue for a period of ninety (90) or more consecutive days or an aggregate of four (4) or more months during any twelve (12) month period during the term hereof, Studio shall have the right, at its option and subject to applicable state and federal law, to terminate your employment hereunder, and Studio shall only be obligated to pay you (a) 50% of the specified Base Salary for the remainder of the then current Employment Term, but not to exceed two (2) years, and (b) any additional compensation (including, without limitation, any grants of equity-based compensation made to you on or prior to the date of termination (it being understood you will not be entitled to receive any grants of equity-based compensation thereafter) as determined pursuant to Paragraph 9.b below, car allowance which has accrued prior to your termination, and expense reimbursement for expenses incurred prior to your termination) earned by you prior to the termination of your employment. Notwithstanding the foregoing sentence, you further will be entitled to continuation of medical, dental, life insurance and other benefits for a period of twelve (12) months after termination of your employment pursuant to this paragraph (but not to exceed the end of the then current Employment Term). Whenever compensation is payable to you hereunder, during or with respect to a time when you are partially or totally disabled and such disability (except for the provisions hereof) would entitle you to disability income or to salary continuation payments from Studio according to the terms of any plan now or hereafter provided by Studio or according to any policy of Studio in effect at the time of such disability, the compensation payable to you hereunder shall be inclusive of any such disability income or salary continuation and shall not be in addition thereto. If disability income is payable directly to you by an insurance company under an insurance policy paid for by Studio, the compensation payable to you hereunder shall be inclusive of the amounts paid to you by said insurance company and shall not be in addition thereto.

b. Unless otherwise specified in the Plan or in the agreement evidencing the grant, in each case as of the date of the grant, after termination of employment your grants of equity-based compensation will be determined as follows. Your rights to receive or exercise the awards provided by the grants will be determined after the end of the performance period specified in the grant, or satisfaction of such other criteria pursuant to the Plan, subject to the applicable performance or other criteria, as if you had continued to remain employed with Studio throughout such performance period. You will be entitled to receive or exercise a ratable portion of the amount of each award determined in the preceding sentence, calculated by multiplying such amount by a fraction, the numerator of which is the sum of (i) your actual period of service in months through the date of termination plus (ii) the lesser of (A) twelve (12) months or (B) 50% of the remaining Employment Term in months determined as of the date of termination (but in no event will the numerator exceed the denominator), and the denominator of which is the total performance period in months specified in the grant. The balance of such awards will be forfeited. Subject to this Paragraph 9.b and to the other terms and conditions of the grants, all Options any similar equity-based awards will remain exercisable for the remaining term of the grant.

10. Death. If you die prior to the end of the Employment Term, this Agreement shall be terminated as of the date of death and your beneficiary or estate shall be entitled to

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receive (a) your Base Salary accrued to date and for 12 months thereafter, but not to exceed the end of the then current Employment Term, (b) equity-based compensation to be determined in the same manner and at the same time as provided in Paragraph 9.b, under and in accordance with any stock plan of Studio, and (c) all other benefits pro-rated up to the date on which the death occurs.

11. Termination for Cause. Studio shall have the right to terminate this Agreement at any time for cause. As used herein, the term “cause” shall mean (i) misappropriation of any material funds or property of Studio or any of its related companies; (ii) failure to obey reasonable and material orders given by the Chief Executive Officer and Chief Operating Officer of Studio or by the board of directors of Studio; (iii) any material breach of this Agreement by you; (iv) conviction of or entry of a plea of guilty or nolo contendre to a felony or a crime involving moral turpitude; (v) any willful act, or failure to act, by you in bad faith to the material detriment of Studio; or (vi) material non-compliance with established Studio policies and guidelines (after which you have been informed in writing of such policies and guidelines and you have failed to cure such non-compliance); provided that in each such case (other than (i) or (iv) or a willful failure in (ii) or repeated breaches, failures or acts of the same type or nature) prompt written notice of such cause is given to you by specifying in reasonable detail the facts giving rise thereto and that continuation thereof will result in termination of employment, and such cause is not cured within ten (10) business days after receipt by you of the first such notice. If you are terminated as set forth in this Paragraph 11, then payment of the specified Base Salary and any additional noncontingent cash compensation (including, without limitation, any equity-based compensation which has vested and expense reimbursement for expenses incurred prior to your termination) theretofore earned by you shall be payment in full of all compensation payable hereunder. If Studio terminated you hereunder, then you shall immediately reimburse Studio for all paid but unearned sums.

12. Involuntary Termination. Studio may terminate your employment other than for cause or on account of incapacity, in which case you will receive continuation of Base Salary and benefits as specified herein, until the end of the Employment Term. In the event that cash bonuses have been paid, you shall also be entitled to receive through the end of the Employment Term an annual cash amount equal to the average annual cash bonuses that had been paid to you, if any (e.g., if you are terminated pursuant to this Paragraph 12 after three and one-half (3 ¹/2) years of employment, the annual cash bonus payable to you at the end of each of years four and five will be an amount equal to the aggregate of the cash bonuses, if any, paid to you at the end of years one, two and three divided by the number of full years of your employment prior to termination [i.e., three (3), in this example]). In the event of termination of your employment without cause pursuant to this Paragraph 12, all the equity-based compensation specified in Paragraph 4.b hereof held by you shall accelerate vesting (on the basis that any mid-range or “target” goals rather than premium goals are deemed to have been achieved) and will, subject to the other terms and conditions of the grants, remain exercisable for the remainder of the term of the grant; however, you will not be entitled to receive any future equity-based compensation. If your services are terminated pursuant to this paragraph, you shall not be obligated to secure other employment to mitigate damages incurred by Studio or any payment due you as a result of your

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termination hereunder. You agree that you will have no rights or remedies in the event of your termination without cause other than those set forth in the Agreement to the maximum extent required by law.

13. Termination for Good Reason. You shall be entitled to terminate this Agreement at any time for “good reason.” As used herein, the term “good reason” shall mean only: (i) any material breach of this Agreement by Studio, (ii) any diminution in title; (iii) failure to be the most senior legal officer of Studio; (iv) any time that Studio shall direct or require that you report to any person other than the Chief Executive Officer and Chief Operating Officer; or (v) any time that Studio shall direct or require that your principal place of business be anywhere other than the Los Angeles area. Notwithstanding anything to the contrary contained herein, you will give Studio written notice prior to terminating this Agreement pursuant to the foregoing, setting forth the exact nature of any alleged breach and the conduct required to cure such breach. Studio shall have thirty (30) days from the receipt of such notice within which to cure. In the event of your voluntary termination for good reason, you shall be entitled to the payments, benefits (including the post-term assumption of the applicable benefits) and equity-based compensation proved under Paragraph 12 for involuntary termination without cause. If your services are terminated pursuant to this paragraph, you shall not be obligated to secure other employment to mitigate damages incurred by Studio or any payment due you as a result of your termination hereunder. You agree that you will have no rights or remedies in the event of your termination for good reason other than those set forth in the Agreement to the maximum extent allowed by law.

14. Name/Likeness. During the Employment Term, Studio shall have the right to use your name, biography and likeness in connection with its business as follows: You shall promptly submit to Studio a biography of yourself. Provided that you timely submit such biography, Studio shall not use any other biographical information other than contained in such biography so furnished, other than references to your prior professional services and your services hereunder, without your prior approval (which approval shall not be unreasonably withheld). If you fail to promptly submit a biography, then you shall not have the right to approve any biographical material used by Studio You shall have the right to approve any likeness of you used by Studio. Nothing herein contained shall be construed to authorize the use of your name, biography or likeness to endorse any product or service or to use the same for similar commercial purposes.

15. Section 317 and 508 of the Federal Communications Act. You represent that you have not accepted or given, nor will you accept or give, directly or indirectly, any money, services or other valuable consideration from or to anyone other than Studio for the inclusion of any matter as part of any film, television program or other production produced, distributed and/or developed by Studio and/or any of its affiliates.

16. Equal Opportunity Employer. You acknowledge that Studio is an equal opportunity employer. You agree that you will comply with Studio policies regarding employment practices and with applicable federal, state and local laws prohibiting discrimination or harassment.

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17. Notices. All notices required to be given hereunder shall be given in writing, by personal delivery or by mail and confirmed by fax at the respective addresses of the parties hereto set forth above, or at such address as may be designated in writing by either party, and in the case of Studio, to the attention of the Corporate Secretary of Studio. A courtesy copy of any notice to you hereunder shall be sent to Munger, Tolles & Olson LLP, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560, Fax: (213) 683-5137, Attn: Rob Knauss. Any notice given by mail shall be deemed to have been given three (3) business days following such mailing.

18. Assignment. This is an Agreement for the performance of personal services by you and may not be assigned by you (other than the right to receive payments which may be assigned to a company, trust or foundation owned or controlled by you) and any purported assignment in violation of the foregoing shall be deemed null and void. Studio may assign this Agreement or all or any part of its rights hereunder to any entity which acquires all or substantially all of the assets of Studio and this Agreement shall inure to the benefit of such assignee, provided your duties do not materially change.

19. California Law. This Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of California applicable to contracts entered into and performed entirely therein.

20. No Implied Contract. The parties intend to be bound only upon execution of this Agreement and no negotiation, exchange or draft or partial performance shall be deemed to imply an agreement. Neither the continuation of employment or any other conduct shall be deemed to imply a continuing agreement upon the expiration of this Agreement.

21. Entire Understanding. This Agreement contains the entire understanding of the parties hereto relating to the subject matter herein contained, and can be changed only by a writing signed by both parties hereto.

22. Void Provisions. If any provision of this Agreement, as applied to either party or to any circumstances, shall be adjudged by a court to be void or unenforceable, the same shall be deemed stricken from this Agreement and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. In the event any such provision (the “Applicable Provision”) is so adjudged void or unenforceable, you and Studio shall take the following actions in the following order: (i) seek judicial reformation of the Applicable Provision; (ii) negotiate in good faith with each other to replace the Applicable Provision with a lawful provision; and (iii) have an arbitration as provided in Paragraph 24 hereof determine a lawful replacement provision for the Applicable Provision; provided, however, that no such action pursuant to either of clauses (i) or (iii) above shall increase in any respect your obligations pursuant to the Applicable Provision.

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23. Survival Modification of Terms. Your obligations under Paragraph 8 hereof shall remain in full force and effect for the entire period provided therein, notwithstanding the termination of the Employment Term pursuant to Paragraph 11 hereof or otherwise. Studio’s obligations under Paragraphs 6 (with respect to expenses theretofore incurred) and 7 hereof shall survive indefinitely the termination of this Agreement regardless of the reason for such termination. Further, Paragraphs 4.b(iv), 9, 10, 12 and 13 will continue to govern your entitlement, if any, to benefits and equity based compensation after the termination of the Employment Term, and paragraph 24 will continue to govern any Claims (as defined below) by one party against the other.

24. Arbitration of Disputes. Any controversy or claim by you against Studio or any of its parent companies, subsidiaries, affiliates (and/or officers, directors, employees, representatives or agents of Studio and such parent companies, subsidiaries and/or affiliates), including any controversy or claim arising from, out of or relating to this Agreement, the breach thereof, or the employment or termination thereof of you by Studio which would give rise to a claim under federal, state or local law (including, but not limited to, claims based in tort or contract, claims for discrimination under state or federal law, and/or claims for violation of any federal, state or local law, statute or regulation), or any claim against you by Studio (individually and/or collectively, “Claim[s]”) shall be submitted to an impartial mediator (“Mediator”) selected jointly by the parties. Both parties shall attend a mediation conference in Los Angeles County, California and attempt to resolve any and all Claims. If the parties are not able to resolve all Claims, then upon written demand for arbitration to the other party, which demand shall be made within a reasonable time after the Claim has arisen, any unresolved Claims shall be determined by final and binding arbitration in Los Angeles, California, in accordance with the Model Employment Procedures of the American Arbitration Association (collectively, “Rules”) by a neutral arbitrator experienced in employment law, licensed to practice law in California, in accordance with the Rules, except as herein specified. In no event shall the demand for arbitration be made after the date when the institution of legal and/or equitable proceedings based upon such Claim would be barred by the applicable statute of limitations. Each party to the arbitration will be entitled to be represented by counsel and will have the opportunity to take depositions in Los Angeles, California of any opposing party or witnesses selected by such party and/or request production of documents by the opposing party before the arbitration hearing. By mutual agreement of the parties, additional depositions may be taken at other locations. In addition, upon a party’s showing of need for additional discovery, the arbitrator shall have discretion to order such additional discovery. You acknowledge and agree that you are familiar with and fully understand the need for preserving the confidentiality of Studio’s agreements with third parties and compensation of Studio’s employees. Accordingly, you hereby agree that to the extent the arbitrator determines that documents, correspondence or other writings (or portions thereof) whether internal or from any third party, relating in any way to your agreements with third parties and/or compensation of other employees are necessary to the determination of any Claim, you and/or your representatives may discover and examine such documents, correspondence or other writings only after execution of an appropriate confidentiality agreement. Each party shall have the right to subpoena witnesses and documents for the arbitration hearing. A court reporter shall record all arbitration proceedings. With respect to any Claim brought to

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arbitration hereunder, either party may be entitled to recover whatever damages would otherwise be available to that party in any legal proceeding based upon the federal and/or state law applicable to the matter. The arbitrator shall issue a written decision setting forth the award and the findings and/or conclusions upon which such award is based. The decision of the arbitrator may be entered and enforced in any court of competent jurisdiction by either Studio or you. Notwithstanding the foregoing, the result of any such arbitration shall be binding but shall not be made public (including by filing a petition to confirm the arbitration award), unless necessary to confirm such arbitration award after non-payment of the award for a period of at least fifteen (15) days after notice to Studio of the arbitrator’s decision. Each party shall pay the fees of their respective attorneys (except as otherwise awarded by the arbitrator), the expenses of their witnesses, and all other expenses connected with presenting their Claims or defense(s). Other costs of arbitration shall be borne by Studio. Except as set forth below, should you or Studio pursue any Claim covered by this Paragraph 24 by any method other than said arbitration, the responding party shall be entitled to recover from the other party all damages, costs, expenses, and reasonable outside attorneys’ fees incurred as a result of such action. The provisions contained in this Paragraph 24 shall survive the termination of your employment with Studio. Notwithstanding anything set forth above, you agree that any breach or threatened breach of this Agreement (particularly, but without limitation, with respect to Paragraphs 3 and 8, above) may result in irreparable injury to Studio, and therefore, in addition to the procedures set forth above, Studio may be entitled to file suit in a court of competent jurisdiction to seek a Temporary Restraining Order and/or preliminary or permanent injunction or other equitable relief to prevent a breach or contemplated breach of such provisions.

25. Change of Control. In the event of a “change of control”, all equity-based compensation held by you shall accelerate vesting (on the basis that any mid-range or “target” goals rather than premium goals are deemed to have been achieved) and, subject to the other terms and conditions of the grants, remain exercisable for the remainder of the term of the grant.

a. For purposes of this Agreement, “change of control” shall mean the occurrence of any of the following events, not including any events occurring prior to or in connection with the Closing (including the occurrence of the Closing):

(i) during any period of fourteen (14) consecutive calendar months, individuals who were directors of Studio on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board of Directors of Studio (the “Board”); provided, however, that any individual becoming a director subsequent to the first day of such period whose election, or nomination for election, by Studio’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (each, a “Person”), in each case other than the management of Studio, the Board or the holders of Studio’s Class B common stock par value $0.01;

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(ii) the consummation of (A) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) Studio or (y) any of its Subsidiaries, but in the case of this clause (y) only if Studio Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the assets of Studio to an entity that is not an Affiliate (a “Sale”), in each such case, if such Reorganization or Sale requires the approval of Studio’s stockholders under the law of Studio’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of Studio in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the individuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the securities eligible to vote for the election of the Board (“Studio Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including, without limitation, a corporation that as a result of such transaction owns Studio or all or substantially all Studio’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Studio Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than Studio), (2) no Person (excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation, (y) Jeffrey Katzenberg and (z) David Geffen) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale;

(iii) the stockholders of Studio approve a plan of complete liquidation or dissolution of Studio; or

(iv) any Person, corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) Studio, (B) any trustee or other fiduciary holding securities under an employee benefit plan of Studio or an Affiliate or (C) any company owned, directly or indirectly, by the stockholders of Studio in substantially the same proportions as their ownership of the voting power of Studio Voting Securities)

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becomes the beneficial owner, directly or indirectly, of securities of Studio representing 20% or more of the combined voting power of Studio Voting Securities but only if the percentage so owned exceeds the aggregate percentage of the combined voting power of Studio Voting Securities then owned, directly or indirectly, by Jeffrey Katzenberg and David Geffen; provided, however, that for purposes of this subparagraph (iv), the following acquisitions shall not constitute a change of control: (x) any acquisition directly from Studio or (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Studio or an Affiliate.

b. In the event that it is determined that any payment (other than the Gross-Up Payments provided for in this Paragraph 25.b) or distribution by Studio or any of its affiliates to you or for your benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (or any successor provision thereto), by reason of being considered “contingent on a change in the ownership or effective control” of Studio, within the meaning of Section 280G of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the “Excise Tax”), then you will be entitled to receive (or have paid to the applicable taxing authority on your behalf) an additional payment or payments (collectively, a “Gross-Up Payment”). The Gross-Up Payment will be in an amount such that, after payment by you of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, you retain (or receive the benefit of a payment to the applicable taxing authority of) an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes of determining the amount of the Gross-Up Payment, you will be considered to pay (i) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (ii) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state or local tax, net of the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes.

26. Miscellaneous. You agree that Studio may deduct and withhold from your compensation hereunder the amounts required to be deducted and withheld under the provisions of the Federal and California Income Tax Acts, Federal Insurance Contributions Act, California Unemployment Insurance Act, any and all amendments thereto, and other statutes heretofore or hereafter enacted requiring the withholding of compensation. All of Studio’s obligations in this Agreement are expressly conditioned upon you completing and delivering to Studio an Employment Eligibility Form (“Form I-9”) (in form satisfactory to Studio) and in connection therewith, you submitting to Studio original documentation demonstrating your employment eligibility.

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If the foregoing correctly sets forth your understanding, please sign one copy of this letter and return it to the undersigned, whereupon this letter shall constitute a binding agreement between us

	Very truly yours,
	DREAMWORKS ANIMATION SKG, INC.
		/s/ Kristina M. Leslie
	By:	Kristina M. Leslie
	Its:	Chief Financial Officer
ACCEPTED AND AGREED AS OF THE
DATE FIRST ABOVE WRITTEN:
/s/ Katherine Kendrick
KATHERINE KENDRICK

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EX-10.20

Exhibit 10.20

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

As of October 8, 2004

Kristina Leslie

c/o Munger, Tolles & Olsen LLP

355 South Grand Avenue

35^th Floor

Los Angeles, CA 90071

Attn: Rob Knauss

Dear Kris:

Upon the date (“Effective Date”) of the closing (“Closing”) of the initial public offering (“IPO”) of DreamWorks Animation SKG, Inc. (“Studio”), Studio agrees to employ you and you agree to accept such employment upon the terms and conditions set forth below. In the event the Closing fails to occur for any reason by June 28, 2005, this agreement (“Agreement”) shall be null and void.

1. Term. The term of your employment hereunder shall commence on the Effective Date and shall continue for a period of five (5) years thereafter. This period shall hereinafter be referred to as the “Employment Term.”

2. Duties/Responsibilities.

a. General. Your title shall be “Chief Financial Officer” of Studio. You shall have such duties and responsibilities as are consistent with the traditional positions of Chief Financial Officer of publicly traded major entertainment and media corporations.

b. Services. During the Employment Term you shall render your exclusive full time business services to Studio and/or its divisions, subsidiaries or affiliates in accordance with the reasonable directions and instructions of the Chief Executive Officer and Chief Operating Officer of Studio, all as hereinafter set forth. Notwithstanding the foregoing, Studio may not require you to render services on a permanent basis outside Los Angeles County without your consent. If Studio moves its primary operations outside of Los Angeles County and you do not consent to render permanent services at such new location, then you may elect to terminate this Agreement.

3. Exclusivity. You shall not during the Employment Term perform services for any person, firm or corporation (hereinafter referred to collectively as a “person”) without the prior written consent of Studio and will not engage in any activity which would interfere with the performance of Studio’s services hereunder, or become financially interested in any other person engaged in the production, distribution or exhibition of motion

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pictures or television programs (including, without limitation, motion pictures produced for, distributed to or exhibited on free, cable, pay, satellite and/or subscription television, music and/or interactive), anywhere in the world. Nothing contained herein shall prevent you from owning publicly traded minority stock interests not to exceed five percent (5%), limited partnership interests or other passive investment interests in businesses performing any of the aforesaid activities.

4. Compensation.

a. Base Salary. For all services rendered under this Agreement, Studio will pay you a yearly base salary rate of Five Hundred Twenty Five Thousand Dollars ($525,000.00) for the first full year of the Employment Term, Five Hundred Fifty Thousand Dollars ($550,000.00) for the second full year of the Employment Term, Five Hundred Seventy Five Thousand Dollars ($575,000.00) for the third full year of the Employment Term and Six Hundred Thousand Dollars ($600,000.00) for each of the fourth and fifth full years of the Employment Term, payable in accordance with Studio’s applicable payroll practices (“Base Salary”).

b. Equity-Based Compensation.

(i) It is Studio’s present expectation, subject to the approval of the Compensation Committee of the Board of Directors of Studio (the “Compensation Committee”), that, upon the pricing date of the IPO, you will receive, pursuant to the equity compensation plan to be adopted by Studio (the “Plan”), stock options with respect to Studio’s Class A common stock (“Options”) having a grant-date value of approximately $820,000 vesting over four (4) years, and restricted stock units (“RSUs”) having a grant-date value of $2,330,000 which shall be fully vested on the grant-date (or, in lieu of Options and RSUs, such other form of equity-based compensation as the Compensation Committee may determine) (the “Initial Grants”). In the event that the Closing fails to occur for any reason by June 28, 2005, then the Initial Grants will be automatically canceled and you will be entitled to no payments or benefits with respect thereto.

(ii) You will also be eligible, while you remain employed hereunder, commencing for the year 2005 (with the amount of the award for 2005 anticipated to be determined in the first quarter of 2006), subject to annual approval by the Compensation Committee, to receive annual awards of Options and restricted shares of Studio’s Class A common stock (“Restricted Stock”) vesting over four (4) years (or such other form of equity-based compensation as the Compensation Committee may determine). It is Studio’s present expectation, that such annual awards will have an aggregate grant-date value, depending on company performance, ranging between $350,000 (bonus target) and $700,000 (in the case of superior company performance). In the event that such awards consist of Options and Restricted Stock, they shall be divided, as determined by the Compensation Committee, between Options and Restricted Stock. These annual awards shall be in lieu of annual cash bonuses in the event the Compensation Committee does not pay cash bonuses to Studio’s most senior executives; provided that if the Compensation Committee does elect to pay such cash bonuses in addition to such annual awards, such awards shall also be in addition to any cash bonuses granted by the Compensation Committee.

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(iii) In addition, you will be eligible, while you remain employed hereunder, commencing in 2006, subject to annual approval by the Compensation Committee, to receive annual equity incentive awards of Options and Restricted Stock vesting over four (4) years (or such other form of equity-based compensation as the Compensation Committee may determine). It is Studio’s present expectation, that such annual awards will have an annual aggregate grant-date value targeted at $1,500,000. In the event that such awards consist of Options and Restricted Stock, they shall be divided, as determined by the Compensation Committee, between Options and Restricted Stock.

(iv) All Options, RSUs and Restricted Stock (and any other equity-based awards) referred to in this Paragraph 4.b will (x) be valued using a method or methods (including where appropriate a Black-Scholes or other fair value method) as determined by the Compensation Committee from time to time (and, in the case of the Initial Grants, taking into account the IPO price to the public without regard to the underwriters’ discount), (y) become fully vested, exercisable (if applicable) and nonforfeitable within a period not to exceed four (4) years from the date of grant in a manner determined by the Compensation Committee, and will be contingent on both the continuing performance of services to Studio (subject to Paragraphs 9, 10, 11, 12 and 13) and the achievement of performance goals as established by the Compensation Committee from time to time (except that the Initial Grants shall not be subject to the achievement of performance goals and the Initial Grants that are fully vested RSUs shall not be subject to the continuing performance of services), and (z) otherwise be subject to such terms and conditions as may be set forth in the Plan or determined by the Compensation Committee from time to time. Upon the expiration of the Employment Term (i.e., five (5) years after the Effective Date) but only if your employment hereunder has not been terminated earlier, (x) you will be entitled to all equity based compensation vested as of such date, and (y) provided Studio does not continue to employ you and solely with respect to any grant of equity based compensation previously awarded to you that is subject to cliff vesting (i.e., is not eligible for vesting prior to the end of the applicable four-year period), you will have the opportunity, on the previously established vesting date for such grant and provided that all the terms and conditions of such grant (including any performance-based criteria) have been satisfied, to vest in the portion of such grant that would have been eligible for vesting prior to the expiration of the Employment Term if such grant had been eligible for 25% vesting on each of the anniversaries of such grant.

5. Benefits. In addition to the foregoing, you shall be entitled to participate in such other, medical, dental and life insurance, 401(k), pension and other benefit plans as Studio may have or establish from time to time for its most senior executives. During the Employment Term, unless earlier terminated as set forth below, you shall be entitled to coverage in accordance with Studio’s standard leave of absence policy and shall be entitled to vacation days and/or personal days to be taken subject to the demands of Studio (as determined by Studio) and consistent with the amount of days taken by other senior level executives; provided, however, no vacation time will be accrued during the Employment

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Term. The foregoing, however, shall not be construed to require Studio to establish any such plans or to prevent the modification or termination of such plans once established, and no such action or failure thereof shall affect this Agreement.

6. Business Expenses. Studio shall reimburse you for business expenses on a regular basis in accordance with its policy regarding the reimbursement of such expenses for executives of like stature to you (including travel, at Studio’s request, [which, in accordance with company policy, is currently first class], a car or cellular phone and including the reimbursement or direct payment of business phone expenses on a regular basis in accordance with Studio’s policy regarding the reimbursement or payment of such expenses for executives of like stature to you). Studio will provide you with a monthly car allowance of One Thousand Dollars ($1,000), which shall be administered in accordance with Studio’s then-current policy for similarly situated executives.

7. Indemnification. You shall be fully indemnified and held harmless by Studio to the fullest extent permitted by law from any claim, liability, loss, cost or expense of any nature (including attorney’s fees of counsel selected by you, judgments, fines, any amounts paid or to be paid in any settlement, and all costs of any nature) incurred by you (all such indemnification to be on an “after-tax” or “gross-up” basis) which arises, directly or indirectly, in whole or in part out of any alleged or actual conduct, action or inaction on your part in or in connection with or related in any manner to your status as an employee, agent, officer, corporate director, member, manager, shareholder, partner of, or your provision of services to, Studio or any of its affiliated entities, or any entity to which you are providing services on behalf of Studio or which may be doing business with Studio. To the maximum extent allowed by law, all amounts to be indemnified hereunder including reasonable attorneys’ fees shall be promptly advanced by Studio until such time, if ever, as it is determined by final decision pursuant to Paragraph 24 below that you are not entitled to indemnification hereunder (whereupon you shall reimburse Studio for all sums theretofore advanced).

8. Covenants.

a. Confidential Information. You agree that you shall not, during the Employment Term or at any time thereafter, use for your own purposes, or disclose to, or for any benefit of any third party, any trade secret or other confidential information of Studio or any of its affiliates (except as may be required by law or in the performance of your duties hereunder consistent with Studio’s policies) and that you will comply with any confidentiality obligations of Studio known by you to a third party, whether under agreement or otherwise. Notwithstanding the foregoing, confidential information shall be deemed not to include information which (i) is or becomes generally available to the public other than as a result of a disclosure by you or any other person who directly or indirectly receives such information from you or at your direction or (ii) is or becomes available to you on a non-confidential basis from a source which you reasonably believe is entitled to disclose it to you.

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b. Studio Ownership. The results and proceeds of your services hereunder, including, without limitation, any works of authorship resulting from your services during your employment and any works in progress, shall be works-made-for-hire and Studio shall be deemed the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner Studio determines in its sole discretion without any further payment to you whatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-for-hire and/or there are any rights which do not accrue to Studio under the preceding sentence, then you hereby irrevocably assign and agree to assign any and all of your right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed by Studio, and Studio shall have the right to use the same in perpetuity throughout the universe in any manner Studio may deem useful or desirable to establish or document Studio’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. To the extent that you have any rights in the results and proceeds of your services that cannot be assigned in the manner described above, you unconditionally and irrevocably waive the enforcement of such rights. This Paragraph 8.b is subject to, and shall not be deemed to limit, restrict, or constitute any waiver by Studio of any rights of ownership to which Studio may be entitled by operation of law by virtue of Studio or any of its affiliates being your employer.

c. Return of Property. All documents, data, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for you and utilized by you in the course of your employment with Studio or any of its affiliates shall remain the exclusive property of Studio. In the event of the termination of your employment for any reason, and subject to any other provisions hereof, Studio reserves the right, to the extent required by law, and in addition to any other remedy Studio may have, to deduct from any monies otherwise payable to you the following: (i) the full amount of any specifically determined debt you owe to Studio or any of its affiliates at the time of or subsequent to the termination of your employment with Studio, and (ii) the value of Studio property which you retain in your possession after the termination of your employment with Studio following Studio’s written request for such item(s) return and your failure to return such items within thirty (30) day of receiving such notice. In the event that the law of any state or other jurisdiction requires the consent of an employee for such deductions, this Agreement shall serve as such consent.

d. Promise Not To Solicit. You will not, during the period of the Employment Term or for the period ending one (1) year after the earlier of expiration of the Employment Term or your termination hereunder, induce or attempt to induce any employees, exclusive consultants, exclusive contractors or exclusive representatives of Studio (or those of any of its affiliates) to stop working for, contracting with or representing Studio or any of its affiliates or to work for, contract with or represent any of Studio’s (or its affiliates’) competitors.

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9. Incapacity.

a. In the event you are unable to perform the services required of you hereunder as a result of a physical or mental disability and such disability shall continue for a period of ninety (90) or more consecutive days or an aggregate of four (4) or more months during any twelve (12) month period during the term hereof, Studio shall have the right, at its option and subject to applicable state and federal law, to terminate your employment hereunder, and Studio shall only be obligated to pay you (a) 50% of the specified Base Salary for the remainder of the then current Employment Term, but not to exceed two (2) years, and (b) any additional compensation (including, without limitation, any grants of equity-based compensation made to you on or prior to the date of termination (it being understood you will not be entitled to receive any grants of equity-based compensation thereafter) as determined pursuant to Paragraph 9.b below, car allowance which has accrued prior to your termination, and expense reimbursement for expenses incurred prior to your termination) earned by you prior to the termination of your employment. Notwithstanding the foregoing sentence, you further will be entitled to continuation of medical, dental, life insurance and other benefits for a period of twelve (12) months after termination of your employment pursuant to this paragraph (but not to exceed the end of the then current Employment Term). Whenever compensation is payable to you hereunder, during or with respect to a time when you are partially or totally disabled and such disability (except for the provisions hereof) would entitle you to disability income or to salary continuation payments from Studio according to the terms of any plan now or hereafter provided by Studio or according to any policy of Studio in effect at the time of such disability, the compensation payable to you hereunder shall be inclusive of any such disability income or salary continuation and shall not be in addition thereto. If disability income is payable directly to you by an insurance company under an insurance policy paid for by Studio, the compensation payable to you hereunder shall be inclusive of the amounts paid to you by said insurance company and shall not be in addition thereto.

b. Unless otherwise specified in the Plan or in the agreement evidencing the grant, in each case as of the date of the grant, after termination of employment your grants of equity-based compensation will be determined as follows. Your rights to receive or exercise the awards provided by the grants will be determined after the end of the performance period specified in the grant, or satisfaction of such other criteria pursuant to the Plan, subject to the applicable performance or other criteria, as if you had continued to remain employed with Studio throughout such performance period. You will be entitled to receive or exercise a ratable portion of the amount of each award determined in the preceding sentence, calculated by multiplying such amount by a fraction, the numerator of which is the sum of (i) your actual period of service in months through the date of termination plus (ii) the lesser of (A) twelve (12) months or (B) 50% of the remaining Employment Term in months determined as of the date of termination (but in no event will the numerator exceed the denominator), and the denominator of which is the total performance period in months specified in the grant. The balance of such awards will be forfeited. Subject to this Paragraph 9.b and to the other terms and conditions of the grants, all Options and any similar equity-based awards will remain exercisable for the remaining term of the grant.

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10. Death. If you die prior to the end of the Employment Term, this Agreement shall be terminated as of the date of death and your beneficiary or estate shall be entitled to receive (a) your Base Salary accrued to date and for 12 months thereafter, but not to exceed the end of the then current Employment Term, (b) equity-based compensation to be determined in the same manner and at the same time as provided in Paragraph 9.b, under and in accordance with any stock plan of Studio, and (c) all other benefits pro-rated up to the date on which the death occurs.

11. Termination for Cause. Studio shall have the right to terminate this Agreement at any time for cause. As used herein, the term “cause” shall mean (i) misappropriation of any material funds or property of Studio or any of its related companies; (ii) failure to obey reasonable and material orders given by the Chief Executive Officer and Chief Operating Officer of Studio or by the board of directors of Studio; (iii) any material breach of this Agreement by you; (iv) conviction of or entry of a plea of guilty or nolo contendre to a felony or a crime involving moral turpitude; (v) any willful act, or failure to act, by you in bad faith to the material detriment of Studio; or (vi) material non-compliance with established Studio policies and guidelines (after which you have been informed in writing of such policies and guidelines and you have failed to cure such non-compliance); provided that in each such case (other than (i) or (iv) or a willful failure in (ii) or repeated breaches, failures or acts of the same type or nature) prompt written notice of such cause is given to you by specifying in reasonable detail the facts giving rise thereto and that continuation thereof will result in termination of employment, and such cause is not cured within ten (10) business days after receipt by you of the first such notice. If you are terminated as set forth in this Paragraph 11, then payment of the specified Base Salary and any additional noncontingent cash compensation (including, without limitation, any equity-based compensation which has vested and expense reimbursement for expenses incurred prior to your termination) theretofore earned by you shall be payment in full of all compensation payable hereunder. If Studio terminated you hereunder, then you shall immediately reimburse Studio for all paid but unearned sums.

12. Involuntary Termination. Studio may terminate your employment other than for cause or on account of incapacity, in which case you will receive continuation of Base Salary and benefits as specified herein, until the end of the Employment Term. In the event that cash bonuses have been paid, you shall also be entitled to receive through the end of the Employment Term an annual cash amount equal to the average annual cash bonuses that had been paid to you, if any (e.g., if you are terminated pursuant to this Paragraph 12 after three and one-half (3 ¹/2) years of employment, the annual cash bonus payable to you at the end of each of years four and five will be an amount equal to the aggregate of the cash bonuses, if any, paid to you at the end of years one, two and three divided by the number of full years of your employment prior to termination [i.e., three (3), in this example]). In the event of termination of your employment without cause pursuant to this Paragraph 12, all the equity-based compensation specified in Paragraph 4.b hereof held by you shall accelerate vesting (on the basis that any mid-range or “target” goals rather than premium goals are deemed to have been achieved) and will, subject to the other terms and conditions of the grants, remain exercisable for the remainder of the term of the grant; however, you will not be entitled to receive any future equity-based compensation. If your services are

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terminated pursuant to this paragraph, you shall not be obligated to secure other employment to mitigate damages incurred by Studio or any payment due you as a result of your termination hereunder. You agree that you will have no rights or remedies in the event of your termination without cause other than those set forth in the Agreement to the maximum extent required by law.

13. Termination for Good Reason. You shall be entitled to terminate this Agreement at any time for “good reason.” As used herein, the term “good reason” shall mean only: (i) any material breach of this Agreement by Studio, (ii) any diminution in title; (iii) failure to be the most senior financial officer of Studio; (iv) any time that Studio shall direct or require that you report to any person other than the Chief Executive Officer and Chief Operating Officer; or (v) any time that Studio shall direct or require that your principal place of business be anywhere other than the Los Angeles area. Notwithstanding anything to the contrary contained herein, you will give Studio written notice prior to terminating this Agreement pursuant to the foregoing, setting forth the exact nature of any alleged breach and the conduct required to cure such breach. Studio shall have thirty (30) days from the receipt of such notice within which to cure. In the event of your voluntary termination for good reason, you shall be entitled to the payments, benefits (including the post-term assumption of the applicable benefits) and equity-based compensation provided under Paragraph 12 for involuntary termination without cause. If your services are terminated pursuant to this paragraph, you shall not be obligated to secure other employment to mitigate damages incurred by Studio or any payment due you as a result of your termination hereunder. You agree that you will have no rights or remedies in the event of your termination for good reason other than those set forth in the Agreement to the maximum extent allowed by law.

14. Name/Likeness. During the Employment Term, Studio shall have the right to use your name, biography and likeness in connection with its business as follows: You shall promptly submit to Studio a biography of yourself. Provided that you timely submit such biography, Studio shall not use any other biographical information other than contained in such biography so furnished, other than references to your prior professional services and your services hereunder, without your prior approval (which approval shall not be unreasonably withheld). If you fail to promptly submit a biography, then you shall not have the right to approve any biographical material used by Studio. You shall have the right to approve any likeness of you used by Studio. Nothing herein contained shall be construed to authorize the use of your name, biography or likeness to endorse any product or service or to use the same for similar commercial purposes.

15. Section 317 and 508 of the Federal Communications Act. You represent that you have not accepted or given, nor will you accept or give, directly or indirectly, any money, services or other valuable consideration from or to anyone other than Studio for the inclusion of any matter as part of any film, television program or other production produced, distributed and/or developed by Studio and/or any of its affiliates.

16. Equal Opportunity Employer. You acknowledge that Studio is an equal opportunity employer. You agree that you will comply with Studio policies regarding employment practices and with applicable federal, state and local laws prohibiting discrimination or harassment.

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17. Notices. All notices required to be given hereunder shall be given in writing, by personal delivery or by mail and confirmed by fax at the respective addresses of the parties hereto set forth above, or at such address as may be designated in writing by either party, and in the case of Studio, to the attention of the General Counsel of Studio. A courtesy copy of any notice to you hereunder shall be sent to Munger, Tolles & Olson LLP, 355 South Grand Avenue, 35th Floor, Los Angeles, CA 90071-1560, Fax: (213) 683-5137, Attn: Rob Knauss. Any notice given by mail shall be deemed to have been given three (3) business days following such mailing.

18. Assignment. This is an Agreement for the performance of personal services by you and may not be assigned by you (other than the right to receive payments which may be assigned to a company, trust or foundation owned or controlled by you) and any purported assignment in violation of the foregoing shall be deemed null and void. Studio may assign this Agreement or all or any part of its rights hereunder to any entity which acquires all or substantially all of the assets of Studio and this Agreement shall inure to the benefit of such assignee, provided your duties do not materially change.

19. California Law. This Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of California applicable to contracts entered into and performed entirely therein.

20. No Implied Contract. The parties intend to be bound only upon execution of this Agreement and no negotiation, exchange or draft or partial performance shall be deemed to imply an agreement. Neither the continuation of employment or any other conduct shall be deemed to imply a continuing agreement upon the expiration of this Agreement.

21. Entire Understanding. This Agreement contains the entire understanding of the parties hereto relating to the subject matter herein contained, and can be changed only by a writing signed by both parties hereto.

22. Void Provisions. If any provision of this Agreement, as applied to either party or to any circumstances, shall be adjudged by a court to be void or unenforceable, the same shall be deemed stricken from this Agreement and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. In the event any such provision (the “Applicable Provision”) is so adjudged void or unenforceable, you and Studio shall take the following actions in the following order: (i) seek judicial reformation of the Applicable Provision; (ii) negotiate in good faith with each other to replace the Applicable Provision with a lawful provision; and (iii) have an arbitration as provided in Paragraph 24 hereof determine a lawful replacement provision for the Applicable Provision; provided, however, that no such action pursuant to either of clauses (i) or (iii) above shall increase in any respect your obligations pursuant to the Applicable Provision.

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23. Survival Modification of Terms. Your obligations under Paragraph 8 hereof shall remain in full force and effect for the entire period provided therein, notwithstanding the termination of the Employment Term pursuant to Paragraph 11 hereof or otherwise. Studio’s obligations under Paragraphs 6 (with respect to expenses theretofore incurred) and 7 hereof shall survive indefinitely the termination of this Agreement regardless of the reason for such termination. Further, Paragraphs 4.b(iv), 9, 10, 12 and 13 will continue to govern your entitlement, if any, to benefits and equity based compensation after the termination of the Employment Term, and paragraph 24 will continue to govern any Claims (as defined below) by one party against the other.

24. Arbitration of Disputes. Any controversy or claim by you against Studio or any of its parent companies, subsidiaries, affiliates (and/or officers, directors, employees, representatives or agents of Studio and such parent companies, subsidiaries and/or affiliates), including any controversy or claim arising from, out of or relating to this Agreement, the breach thereof, or the employment or termination thereof of you by Studio which would give rise to a claim under federal, state or local law (including, but not limited to, claims based in tort or contract, claims for discrimination under state or federal law, and/or claims for violation of any federal, state or local law, statute or regulation), or any claim against you by Studio (individually and/or collectively, “Claim[s]”) shall be submitted to an impartial mediator (“Mediator”) selected jointly by the parties. Both parties shall attend a mediation conference in Los Angeles County, California and attempt to resolve any and all Claims. If the parties are not able to resolve all Claims, then upon written demand for arbitration to the other party, which demand shall be made within a reasonable time after the Claim has arisen, any unresolved Claims shall be determined by final and binding arbitration in Los Angeles, California, in accordance with the Model Employment Procedures of the American Arbitration Association (collectively, “Rules”) by a neutral arbitrator experienced in employment law, licensed to practice law in California, in accordance with the Rules, except as herein specified. In no event shall the demand for arbitration be made after the date when the institution of legal and/or equitable proceedings based upon such Claim would be barred by the applicable statute of limitations. Each party to the arbitration will be entitled to be represented by counsel and will have the opportunity to take depositions in Los Angeles, California of any opposing party or witnesses selected by such party and/or request production of documents by the opposing party before the arbitration hearing. By mutual agreement of the parties, additional depositions may be taken at other locations. In addition, upon a party’s showing of need for additional discovery, the arbitrator shall have discretion to order such additional discovery. You acknowledge and agree that you are familiar with and fully understand the need for preserving the confidentiality of Studio’s agreements with third parties and compensation of Studio’s employees. Accordingly, you hereby agree that to the extent the arbitrator determines that documents, correspondence or other writings (or portions thereof) whether internal or from any third party, relating in any way to your agreements with third parties and/or compensation of other employees are necessary to the determination of any Claim, you and/or your representatives may discover and examine such documents, correspondence or other writings only after execution of an appropriate confidentiality agreement. Each party shall have the right to subpoena witnesses and documents for the arbitration hearing. A

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court reporter shall record all arbitration proceedings. With respect to any Claim brought to arbitration hereunder, either party may be entitled to recover whatever damages would otherwise be available to that party in any legal proceeding based upon the federal and/or state law applicable to the matter. The arbitrator shall issue a written decision setting forth the award and the findings and/or conclusions upon which such award is based. The decision of the arbitrator may be entered and enforced in any court of competent jurisdiction by either Studio or you. Notwithstanding the foregoing, the result of any such arbitration shall be binding but shall not be made public (including by filing a petition to confirm the arbitration award), unless necessary to confirm such arbitration award after non-payment of the award for a period of at least fifteen (15) days after notice to Studio of the arbitrator’s decision. Each party shall pay the fees of their respective attorneys (except as otherwise awarded by the arbitrator), the expenses of their witnesses, and all other expenses connected with presenting their Claims or defense(s). Other costs of arbitration shall be borne by Studio. Except as set forth below, should you or Studio pursue any Claim covered by this Paragraph 24 by any method other than said arbitration, the responding party shall be entitled to recover from the other party all damages, costs, expenses, and reasonable outside attorneys’ fees incurred as a result of such action. The provisions contained in this Paragraph 24 shall survive the termination of your employment with Studio. Notwithstanding anything set forth above, you agree that any breach or threatened breach of this Agreement (particularly, but without limitation, with respect to Paragraphs 3 and 8, above) may result in irreparable injury to Studio, and therefore, in addition to the procedures set forth above, Studio may be entitled to file suit in a court of competent jurisdiction to seek a Temporary Restraining Order and/or preliminary or permanent injunction or other equitable relief to prevent a breach or contemplated breach of such provisions.

25. Change of Control. In the event of a “change of control”, all equity-based compensation held by you shall accelerate vesting (on the basis that any mid-range or “target” goals rather than premium goals are deemed to have been achieved) and, subject to the other terms and conditions of the grants, remain exercisable for the remainder of the term of the grant.

a. For purposes of this Agreement, “change of control” shall mean the occurrence of any of the following events, not including any events occurring prior to or in connection with the Closing (including the occurrence of the Closing):

(i) during any period of fourteen (14) consecutive calendar months, individuals who were directors of Studio on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board of Directors of Studio (the “Board”); provided, however, that any individual becoming a director subsequent to the first day of such period whose election, or nomination for election, by Studio’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (each, a “Person”), in each case other than the management of Studio, the Board or the holders of Studio’s Class B common stock par value $0.01;

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(ii) the consummation of (A) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) Studio or (y) any of its Subsidiaries, but in the case of this clause (y) only if Studio Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the assets of Studio to an entity that is not an Affiliate (a “Sale”), in each such case, if such Reorganization or Sale requires the approval of Studio’s stockholders under the law of Studio’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of Studio in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the individuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the securities eligible to vote for the election of the Board (“Studio Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including, without limitation, a corporation that as a result of such transaction owns Studio or all or substantially all Studio’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Studio Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than Studio), (2) no Person (excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation, (y) Jeffrey Katzenberg and (z) David Geffen) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale;

(iii) the stockholders of Studio approve a plan of complete liquidation or dissolution of Studio; or

(iv) any Person, corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) Studio, (B) any trustee or other fiduciary holding securities under an employee benefit plan of Studio or an Affiliate or (C) any company owned, directly or indirectly, by the stockholders of Studio in substantially the same proportions as their ownership of the voting power of Studio Voting Securities)

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becomes the beneficial owner, directly or indirectly, of securities of Studio representing 20% or more of the combined voting power of Studio Voting Securities but only if the percentage so owned exceeds the aggregate percentage of the combined voting power of Studio Voting Securities then owned, directly or indirectly, by Jeffrey Katzenberg and David Geffen; provided, however, that for purposes of this subparagraph (iv), the following acquisitions shall not constitute a change of control: (x) any acquisition directly from Studio or (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Studio or an Affiliate.

b. In the event that it is determined that any payment (other than the Gross-Up Payments provided for in this Paragraph 25.b) or distribution by Studio or any of its affiliates to you or for your benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (or any successor provision thereto), by reason of being considered “contingent on a change in the ownership or effective control” of Studio, within the meaning of Section 280G of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such tax (such tax or taxes, together with any such interest and penalties, being hereafter collectively referred to as the “Excise Tax”), then you will be entitled to receive (or have paid to the applicable taxing authority on your behalf) an additional payment or payments (collectively, a “Gross-Up Payment”). The Gross-Up Payment will be in an amount such that, after payment by you of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, you retain (or receive the benefit of a payment to the applicable taxing authority of) an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment. For purposes of determining the amount of the Gross-Up Payment, you will be considered to pay (i) federal income taxes at the highest rate in effect in the year in which the Gross-Up Payment will be made and (ii) state and local income taxes at the highest rate in effect in the state or locality in which the Gross-Up Payment would be subject to state or local tax, net of the maximum reduction in federal income tax that could be obtained from deduction of such state and local taxes.

26. Miscellaneous. You agree that Studio may deduct and withhold from your compensation hereunder the amounts required to be deducted and withheld under the provisions of the Federal and California Income Tax Acts, Federal Insurance Contributions Act, California Unemployment Insurance Act, any and all amendments thereto, and other statutes heretofore or hereafter enacted requiring the withholding of compensation. All of Studio’s obligations in this Agreement are expressly conditioned upon you completing and delivering to Studio an Employment Eligibility Form (“Form I-9”) (in form satisfactory to Studio) and in connection therewith, you submitting to Studio original documentation demonstrating your employment eligibility.

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If the foregoing correctly sets forth your understanding, please sign one copy of this letter and return it to the undersigned, whereupon this letter shall constitute a binding agreement between us

		Very truly yours,
		DREAMWORKS ANIMATION SKG, INC.
		/s/ Katherine Kendrick
	By:	Katherine Kendrick
	Its:	General Counsel
ACCEPTED AND AGREED AS OF THE
DATE FIRST ABOVE WRITTEN:
/s/ Kristina Leslie
KRISTINA LESLIE

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EX-10.21

Exhibit 10.21

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

As of October 8, 2004

Mr. David Geffen

c/o James H. Schwab

Paul, Weiss, Rifkind, Wharton & Garrison

1285 Avenue of the Americas

New York, NY 10019

Dear David:

Upon the date (“Effective Date”) of the closing of the DreamWorks Animation SKG Inc. (“Studio”) initial public offering (“Closing”), Studio agrees to retain you as a consultant and you agree to accept such retention upon the terms and conditions set forth below. In the event the Closing fails to occur for any reason by June 28, 2005, the parties shall have no obligation to each other under the terms of this consulting agreement (“Agreement”).

1. Term. The term of your retention hereunder shall commence on the Effective Date and shall continue for a period of five (5) years thereafter. This period shall hereinafter be referred to as the “Consulting Term”.

2. Duties/Responsibilities. You shall consult with Jeffrey Katzenberg in his capacity as Chief Executive Officer of Studio with respect to the operations, overall direction and projects of the Studio.

3. Exclusivity. Your services shall be non-exclusive to Studio; it being understood that your services hereunder will be subject to your other personal and business activities, including to your services under your agreement with DreamWorks L.L.C. (“DW”).

4. Compensation. For all services rendered under this Agreement, Studio will pay you base salary at an annual rate of One Dollar ($1.00), payable in accordance with Studio’s applicable payroll practices (“Base Salary”).

5. Business Expenses. During the Consulting Term, you shall be reimbursed for such reasonable travel and other expenses incurred in the performance of your duties hereunder as are customarily reimbursed for executives of major motion picture and television companies, but in no event less favorable than any other officer, director, employee or consultant of Studio (an “MFN Basis”). Studio shall reimburse all of your costs and expenses (including reasonable legal fees) in connection with entering into this Agreement. All Studio business-related air travel by you shall be by private jet. You shall be entitled to take guests on such trips at Studio expense, to attend a premiere or industry function, or, for such other business-related travel as

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you determine necessary. You shall be entitled to limousine transportation and to first class private business travel expenses, including hotels and per diems on an MFN Basis. You shall be entitled to the services of such reasonable security personnel as you request. In addition to the foregoing, you shall be entitled to industry-customary perks as are normally made available to entertainment industry executives and in all cases on an MFN Basis. To the extent any such business expenses are duplicative with the business expenses actually paid by DW or reimbursed to you under your agreement with DW, you shall not be entitled to such expense reimbursement hereunder.

6. Indemnification. You shall be fully indemnified and held harmless by Studio to the fullest extent permitted by law from any claim, liability, loss, cost or expense of any nature (including attorney’s fees of counsel selected by you, judgments, fines, any amounts paid or to be paid in any settlement, and all costs of any nature) incurred by you (all such indemnification to be on an “after tax” “grossed-up” basis) which arises in whole or in part out of any alleged or actual action, inaction, omission or conduct on your part in or in connection with or related in any manner to your services (whether as an employee, agent, officer, corporate director, member, manager, shareholder, partner, or in any other capacity) to Studio or any entity owned or controlled by Studio, or which owns or controls Studio, or as to which you are providing services on behalf of Studio or which may be doing business with Studio. To the maximum extent allowed by law, all amounts to be indemnified hereunder including reasonable attorneys’ fees shall be advanced by Studio until such time, if ever, as it is determined by final, non-appealable decision pursuant to Paragraph 23 below that you are not entitled to indemnification hereunder (whereupon you shall reimburse Studio for all sums theretofore advanced). Your rights under this Paragraph 6 will be in addition to any other rights you may be entitled to pursuant to Studio’s Certificate of Incorporation or By-Laws, or any other agreement between you and Studio.

7. Covenants.

a. Non-Competition. During the Consulting Term (or the earlier termination of your consulting services to Studio) you shall not directly or indirectly engage in or participate as an officer, employee, corporate director, agent of or consultant for or provide services in any other capacity to, any animation business directly competitive with that of Studio.

For purposes of this paragraph, an animation business directly competitive (a “Direct Competitor”) with that of Studio shall mean an entity whose primary business and purpose is the development and production of animated product (such as Pixar), but would not include a motion picture studio that produces live action product or a combination of live action and animation product (e.g., Sony and Disney) or any other entity that has material business or assets other than the development and production of animated product, so long as you do not provide services directly to the animation business of such entity.

b. Confidential Information. You agree that you shall not, during the Consulting Term or at any time thereafter; use for your own purposes, or disclose to or for any benefit of any third party, any trade secret or other material confidential information of Studio or

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any of its subsidiaries (except as may be required by law or in the performance of your duties hereunder consistent with Studio’s policies) and that you will comply with any confidentiality obligations of Studio actually known by you to a third party, whether under agreement or otherwise. Notwithstanding the foregoing, confidential information shall be deemed not to include information which (i) is or becomes generally available to the public other than as a result of a disclosure by you or any other person who directly or indirectly receives such information from you or at your direction or (ii) is or becomes available to you on a non-confidential basis from a source which you reasonably believe is entitled to disclose it to you.

c. Studio Ownership. Except as otherwise herein provided, the results and proceeds of your services hereunder, including, without limitation, any works of authorship resulting from your services during the Consulting Term with Studio and/or any of its subsidiaries and any works in progress, in each case to the extent they are readily identifiable as being directly related to your services hereunder, shall be works-made-for-hire and Studio shall be deemed the sole owner throughout the universe of any and all rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner Studio determines in its sole discretion without any further payment to you whatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-for-hire and/or there are any rights which do not accrue to Studio under the preceding sentence, then you hereby irrevocably assign and agree to assign any and all of your right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed by Studio, and Studio shall have the right to use the same in perpetuity throughout the universe in any manner Studio may deem useful or desirable to establish or document Studio’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. To the extent you have any rights in the results and proceeds of your services that cannot be assigned in the manner described above, you unconditionally and irrevocably waive the enforcement of such rights. This Paragraph 7(c) is subject to, and shall not be deemed to limit, restrict, or constitute any waiver by Studio of any rights of ownership to which Studio may be entitled by operation of law by virtue of Studio or any of its subsidiaries having retained your services.

d. Return of Property. All documents, data, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for you, in each case to the extent they are readily identifiable as being directly related to your services hereunder, shall remain the exclusive property of Studio. In the event of the termination of your employment for any reason, and subject to any other provisions hereof, all such property in your possession shall be returned by you to Studio, at Studio’s sole cost and expense, as soon as reasonably practical.

e. Promise Not To Solicit. You will not during the period of the Consulting Term (or the earlier termination of your consulting services to Studio) induce or attempt to induce any employees, exclusive consultants, exclusive contractors or exclusive representatives

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of the Studio (or those of any of its subsidiaries) to stop working for, contracting with or representing the Studio or any of its subsidiaries or to work for, contract with or represent any Direct Competitors; provided that this Paragraph 7.e shall not prohibit you from employing any member of your personal staff upon the termination of the Consulting Term (or the earlier termination of your consulting services to Studio).

8. Incapacity. In the event you become totally medically disabled and cannot substantially perform your duties at any time during the Consulting Term, the Board of Directors may at any time after such disability has continued for ninety (90) consecutive days require Studio to give you written notice that it intends, subject to applicable state and federal law, to suspend this Agreement. Upon receipt of such notice, prior to any suspension hereunder, you shall be entitled to an expedited arbitration to determine whether or not you are medically disabled and have been disabled for at least ninety (90) consecutive days, provided that you request such arbitration within ten (10) business days of receipt of such notice from Studio. If you do not so request such an arbitration, or if the arbitrator rules that you are so disabled, you shall be placed on a “medical payroll”. You will first receive your Base Salary (and all other payments and benefits) for the first twenty-six (26) weeks of consecutive absence commencing at the end of the later of the ten (10) day period or upon the conclusion of the arbitration. Thereafter, if you are not able to resume your duties hereunder, you shall remain entitled to receive 50% of Base Salary for the remainder of the then current Consulting Term. Notwithstanding the foregoing, you shall be entitled to reinstate this Agreement and to resume your duties hereunder if subsequent to your disability you recover the ability to so perform.

9. Death. If you die prior to the end of the Consulting Term this Agreement shall be terminated as of the date of death and your beneficiary or estate shall be entitled to receive your Base Salary up to the date on which the death occurs and for 12 months thereafter, but not to exceed the end of the then current Consulting Term.

10. Termination for Cause. Studio may, at its option and upon resolution of the Board of Directors, terminate this Agreement forthwith for “cause”, including, without limitation, any obligation to pay Base Salary under this Agreement (except to the extent accrued to the date of termination). For purposes of this Agreement, termination of this Agreement for “cause” shall mean only: (i) conviction of a felony or a crime involving moral turpitude or for embezzlement or the misappropriation of corporate assets, in any case, after the exhaustion of all possible appeals; or (ii) your material breach of Paragraphs 2 or 7 hereof. Anything herein to the contrary notwithstanding, Studio will give you written notice prior to terminating this Agreement for your material breach under clause (ii), setting forth the exact nature of any alleged breach and the conduct required to cure such breach. You shall have thirty (30) days from the giving of such notice within which to cure.

11. Change of Control. In the event of a “change of control”, you shall be entitled to terminate this Agreement and discontinue providing any consulting services hereunder.

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a. For purposes of this Agreement, “change of control” shall mean the occurrence of any of the following events, not including any events occurring prior to or in connection with the Closing (including the occurrence of the Closing):

(i) during any period of fourteen (14) consecutive calendar months, individuals who were directors of Studio on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board of Directors of Studio (the “Board”); provided, however, that any individual becoming a director subsequent to the first day of such period whose election, or nomination for election, by Studio’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (each, a “Person”), in each case other than the management of Studio, the Board or the holders of Studio’s Class B common stock par value $0.01;

(ii) the consummation of (A) a merger, consolidation, share exchange or similar form of corporate transaction involving (x) Studio or (y) any of its Subsidiaries, but in the case of this clause (y) only if Studio Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the assets of Studio to an entity that is not an Affiliate (a “Sale”), in each such case, if such Reorganization or Sale requires the approval of Studio’s stockholders under the law of Studio’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of Studio in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the individuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the securities eligible to vote for the election of the Board (“Studio Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including, without limitation, a corporation that as a result of such transaction owns Studio or all or substantially all Studio’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Studio Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than Studio), (2) no Person (excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation, (y) Jeffrey Katzenberg and (z) you) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation

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and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale;

(iii) the stockholders of Studio approve a plan of complete liquidation or dissolution of Studio; or

(iv) any Person, corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) Studio, (B) any trustee or other fiduciary holding securities under an employee benefit plan of Studio or an Affiliate or (C) any company owned, directly or indirectly, by the stockholders of Studio in substantially the same proportions as their ownership of the voting power of Studio Voting Securities) becomes the beneficial owner, directly or indirectly, of securities of Studio representing 20% or more of the combined voting power of Studio Voting Securities but only if the percentage so owned exceeds the aggregate percentage of the combined voting power of Studio Voting Securities then owned, directly or indirectly, by Jeffrey Katzenberg and you; provided, however, that for purposes of this subparagraph (iv), the following acquisitions shall not constitute a change of control: (x) any acquisition directly from Studio or (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Studio or an Affiliate.

12. Termination For Good Reason. You shall be entitled to terminate your consulting services for good reason, for the purpose of this Paragraph 12, in the event of a material breach of this Agreement by Studio or any material change in your services hereunder. If, in the event of any of the foregoing, such circumstance is not remedied within 30 days after receipt of written notice from you specifically delineating each act giving rise to good reason and setting forth your intention to terminate your consulting services if such breach is not duly remedied, provided that if the specified circumstance cannot reasonably be remedied within said 30-day period and the Studio commences reasonable steps within said 30-day period to remedy said breach and diligently continues such steps thereafter until a remedy is effected, such circumstance will not constitute good reason.

13. No Mitigation. In the event this Agreement is terminated for any reason prior to its expiration, you shall not be required to mitigate your damages hereunder, nor shall Studio be entitled to offset from any sums owing to you hereunder any amounts received by you from any third party.

14. Section 317 and 508 of the Federal Communications Act. You represent that you have not accepted or given nor will you accept or give, directly or indirectly, any money, services or other valuable consideration from or to anyone other than Studio for the inclusion of any matter as part of any film, television program or other production produced, distributed and/or developed by Studio and/or any of its affiliates.

15. Equal Opportunity Employer. You acknowledge that Studio is an equal

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opportunity employer. You agree that you will comply with Studio policies regarding employment practices and with applicable federal, state and local laws prohibiting discrimination or harassment.

16. Notices. All notices required to be given hereunder shall be given in writing, by personal delivery or by mail and confirmed by fax at the respective addresses of the parties hereto set forth above, or at such address as may be designated in writing by either party, and in the case of Studio, to the attention of the General Counsel of Studio. A courtesy copy of any notice to you hereunder shall be sent to Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of the Americas, New York, NY 10019, Fax: (212) 757-3990, Attn: James H. Schwab, Esq. Any notice given by mail shall be deemed to have been given three (3) business days following such mailing.

17. Assignment. This is an Agreement for the performance of personal services by you and may not be assigned by you (other than the right to receive payments which may be assigned to a company, trust or foundation owned or controlled by you) and any purported assignment in violation of the foregoing shall be deemed null and void. Studio shall have the right to assign this Agreement and your services hereunder only to an entity acquiring all or substantially all of the assets of Studio.

18. California Law. This Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of California applicable to contracts entered into and performed entirely therein.

19. No Implied Contract. The parties intend to be bound only upon execution of this Agreement and no negotiation, exchange or draft or partial performance shall be deemed to imply an agreement. Neither the continuation of employment or any other conduct shall be deemed to imply a continuing agreement upon the expiration of this Agreement.

20. Entire Understanding. This Agreement contains the entire understanding of the parties hereto relating to the subject matter herein contained, and can be changed only by a writing signed by both parties hereto.

21. Void Provisions. If any provision of this Agreement, as applied to either party or to any circumstances, shall be adjudged by a court to be void or unenforceable, the same shall be deemed stricken from this Agreement and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. In the event any such provision (the “Applicable Provision”) is so adjudged void or unenforceable, you and Studio shall take the following actions in the following order: (i) seek judicial reformation of the Applicable Provision; (ii) negotiate in good faith with each other to replace the Applicable Provision with a lawful provision; and (iii) have an arbitration as provided in Paragraph 23 hereof determine a lawful replacement provision for the Applicable Provision; provided, however, that no such action pursuant to either of clauses (i) or (iii) above shall increase in any respect your obligations pursuant to the Applicable Provision.

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22. Survivals Modification of Terms. Your obligations under Paragraph 7 hereof shall remain in full force and effect for the entire period provided therein notwithstanding the termination of the Consulting Term pursuant to Paragraph 10 hereof or otherwise. Studio’s obligations under Paragraphs 5 (with respect to expenses theretofore incurred) and 6 hereof shall survive indefinitely the termination of this Agreement regardless of the reason for such termination.

23. Arbitration of Disputes. Any controversy or claim by you against Studio or any of its parent companies, subsidiaries, affiliates (and/or officers, directors, employees, representatives or agents of Studio and such parent companies, subsidiaries and/or affiliates), including any controversy or claim arising from, out of or relating to this Agreement, the breach thereof, or the employment or termination thereof of you by Studio which would give rise to a claim under federal, state or local law (including, but not limited to, claims based in tort or contract, claims for discrimination under state or federal law, and/or claims for violation of any federal, state or local law, statute or regulation), or any claim against you by Studio (individually and/or collectively, “Claim[s]”) shall be submitted to an impartial mediator (“Mediator”) selected jointly by the parties. Both parties shall attend a mediation conference in Los Angeles County, California and attempt to resolve any and all Claims. If the parties are not able to resolve all Claims, then upon written demand for arbitration to the other party, which demand shall be made within a reasonable time after the Claim has arisen, any unresolved Claims shall be determined by final and binding arbitration in Los Angeles, California, in accordance with the Model Employment Procedures of the American Arbitration Association (collectively, “Rules”) by a neutral arbitrator experienced in employment law, licensed to practice law in California, in accordance with the Rules, except as herein specified. In no event shall the demand for arbitration be made after the date when the institution of legal and/or equitable proceedings based upon such Claim would be barred by the applicable statute of limitations. Each party to the arbitration will be entitled to be represented by counsel and will have the opportunity to take depositions in Los Angeles, California of any opposing party or witnesses selected by such party and/or request production of documents by the opposing party before the arbitration hearing. By mutual agreement of the parties, additional depositions may be taken at other locations. In addition, upon a party’s showing of need for additional discovery, the arbitrator shall have discretion to order such additional discovery. You acknowledge and agree that you are familiar with and fully understand the need for preserving the confidentiality of Studio’s agreements with third parties and compensation of Studio’s employees. Accordingly, you hereby agree that to the extent the arbitrator determines that documents, correspondence or other writings (or portions thereof) whether internal or from any third party, relating in any way to your agreements with third parties and/or compensation of other employees are necessary to the determination of any Claim, you and/or your representatives may discover and examine such documents, correspondence or other writings only after execution of an appropriate confidentiality agreement. Each party shall have the right to subpoena witnesses and documents for the arbitration hearing. A court reporter shall record all arbitration proceedings. With respect to any Claim brought to arbitration hereunder, either party may be entitled to recover whatever damages would otherwise be available to that party in any legal proceeding based upon the federal and/or

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state law applicable to the matter. The arbitrator shall issue a written decision setting forth the award and the findings and/or conclusions upon which such award is based. The decision of the arbitrator may be entered and enforced in any court of competent jurisdiction by either Studio or you. Notwithstanding the foregoing, the result of any such arbitration shall be binding but shall not be made public (including by filing a petition to confirm the arbitration award), unless necessary to confirm such arbitration award after non-payment of the award for a period of at least fifteen (15) days after notice to Studio of the arbitrator’s decision. Each party shall pay the fees of their respective attorneys (except as otherwise awarded by the arbitrator), the expenses of their witnesses, and all other expenses connected with presenting their Claims or defense(s). Other costs of arbitration shall be borne by Studio. Except as set forth below, should you or Studio pursue any Claim covered by this Paragraph 23 by any method other than said arbitration, the responding party shall be entitled to recover from the other party all damages, costs, expenses, and reasonable outside attorneys’ fees incurred as a result of such action. The provisions contained in this Paragraph 23 shall survive the termination of your consulting services to Studio. Notwithstanding anything set forth above, you agree that any breach or threatened breach of this Agreement (particularly, but without limitation, with respect to Paragraphs 2 and 7, above) may result in irreparable injury to the Studio, and therefore, in addition to the procedures set forth above, Studio may be entitled to file suit in a court of competent jurisdiction to seek a Temporary Restraining Order and/or preliminary or permanent injunction or other equitable relief to prevent a breach or contemplated breach of such provisions.

If the foregoing correctly sets forth your understanding, please sign one copy of this letter and return it to the undersigned, whereupon this letter shall constitute a binding agreement between us.

Very truly yours,
DREAMWORKS ANIMATION SKG, INC.
By:	/s/ Katherine Kendrick

ACCEPTED AND AREED AS OF THE

DATE FIRST ABOVE WRITTEN:

/s/ David Geffen

DAVID GEFFEN

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EX-10.22

Exhibit 10.22

DREAMWORKS ANIMATION SKG, INC.

1000 FLOWER STREET

GLENDALE, CA 91201

As of October 8, 2004

Mr. Steven Spielberg

c/o Gang, Tyre, Ramer & Brown, Inc.

132 South Rodeo Drive

Beverly Hills, CA 90212-2425

Attn: Bruce Ramer

Dear Steven:

Upon the date (“Effective Date”) of the closing of the DreamWorks Animation SKG Inc. (“Studio”) initial public offering (“Closing”), Studio agrees to retain you as a consultant and you agree to accept such retention upon the terms and conditions set forth below. In the event the Closing fails to occur for any reason by June 28, 2005, the parties shall have no obligation to each other under the terms of this consulting agreement (“Agreement”).

1. Term. The term of your retention hereunder shall commence on the Effective Date and shall continue until the earlier of (a) for a period of three (3) years thereafter, or (b) your earlier termination (if applicable) of the “New Term” (as defined in that certain employment agreement [the “DW LLC Agreement”] between you and DreamWorks LLC [“DW LLC”] dated as of July 16, 2004) pursuant to the terms of the Studio Agreement. This period shall hereinafter be referred to as the “Consulting Term”.

2. Duties/Responsibilities. You shall consult with Jeffrey Katzenberg (or his replacement as designated by the Board of Directors of Studio) at his request with respect to the overall creative direction and projects of the Studio. You may elect to render services from whatever location(s) you determine in your absolute discretion. No casual or inadvertent failure to render such services shall be a breach hereof, and in all events your services hereunder are subject to your rights and obligations under the Studio Agreement.

3. Exclusivity. Your services shall be non-exclusive to Studio; it being understood that your services hereunder will be subject in all events to your other personal and business activities and to your availability as you determine in your absolute discretion. Reference is made to Exhibit 1 hereto, which is incorporated herein. To the extent any activities, investments, business arrangements, etc. encompassed in Exhibit 1 are or could be inconsistent with your

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services or otherwise hereunder, such Exhibit 1 shall be deemed exceptions to such conflicting provisions. For the avoidance of doubt, any inconsistency or ambiguity in construing this Agreement together with Exhibit 1 shall be resolved in favor of the terms of Exhibit 1.

4. Compensation. For all services rendered under this Agreement, Studio will pay you base salary at an annual rate of One Dollar ($1.00), payable in accordance with Studio’s applicable payroll practices (“Base Salary”).

5. Business Expenses. During the Consulting Term, you shall be reimbursed for such reasonable travel and other expenses incurred in the performance of your duties hereunder as are customarily reimbursed for executives of major motion picture and television companies, but in no event less favorable than any other officer, director, employee or consultant of Studio (an “MFN Basis”). Studio shall reimburse all of your costs and expenses (including reasonable legal fees) in connection with entering into this Agreement. All Studio business-related air travel by you shall be by private jet. You shall be entitled to take guests on such trips at Studio expense, to attend a premiere or industry function, or, for such other business-related travel as you determine necessary. You shall be entitled to limousine transportation and to first class private business travel expenses, including hotels and per diems on an MFN Basis. You shall be entitled to the services of such reasonable security personnel as you request. In addition to the foregoing, you shall be entitled to industry-customary perks as are normally made available to entertainment industry executives and in all cases on an MFN Basis. To the extent any such business expenses are duplicative with the business expenses provided you under your agreement with DW, you shall not be entitled to such expense reimbursement hereunder.

6. Indemnification. You shall be fully indemnified and held harmless by Studio to the fullest extent permitted by law from any claim, liability, loss, cost or expense of any nature (including attorney’s fees of counsel selected by you, judgments, fines, any amounts paid or to be paid in any settlement, and all costs of any nature) incurred by you (all such indemnification to be on an “after tax” “grossed-up” basis) which arises in whole or in part out of any alleged or actual action, inaction, omission or conduct on your part in or in connection with or related in any manner to your services (whether as an employee, agent, officer, corporate director, member, manager, shareholder, partner, or in any other capacity) to Studio or any entity owned or controlled by Studio, or which owns or controls Studio, or as to which you are providing services on behalf of Studio or which may be doing business with Studio. To the maximum extent allowed by law, all amounts to be indemnified hereunder including reasonable attorneys’ fees shall be advanced by Studio until such time, if ever, as it is determined by final, non-appealable decision pursuant to Paragraph 23 below that you are not entitled to indemnification hereunder (whereupon you shall reimburse Studio for all sums theretofore advanced). Your rights under this Paragraph 6 will be in addition to any other rights you may be entitled to pursuant to Studio’s Certificate of Incorporation or By-Laws, or any other agreement between you and Studio.

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7. Covenants.

a. Non-Competition. Except as specifically permitted hereunder or under your DW LLC Agreement, during the Consulting Term (or until earlier termination of your consulting services to Studio) you shall not directly or indirectly engage in or participate as an officer, employee, corporate director, agent of or consultant for or provide services in any other capacity to, any animation business directly competitive with that of Studio.

For purposes of this paragraph, an animation business directly competitive (a “Direct Competitor”) with that of Studio shall mean an entity whose primary business and purpose is the development and production of animated product (such as Pixar), but would not include a motion picture studio that produces live action product or a combination of live action and animation product (e.g., Sony and Disney) or any other entity that has material business or assets other than the development and production of animated product, so long as you do not provide services directly to the animation business of such entity.

b. Confidential Information. You agree that you shall not, during the Consulting Term or at any time thereafter, use for your own purposes, or disclose to or for any benefit of any third party, any trade secret or other material confidential information of Studio or any of its subsidiaries (except as may be required by law or in the performance of your duties hereunder consistent with Studio’s policies) and that you will comply with any confidentiality obligations of Studio actually known by you to a third party, whether under agreement or otherwise. Notwithstanding the foregoing, confidential information shall be deemed not to include information which (i) is or becomes generally available to the public other than as a result of a disclosure by you or any other person who directly or indirectly receives such information from you or at your direction unless such disclosure was permitted hereunder), (ii) is or becomes available to you on a non-confidential basis from a source which you reasonably believe is entitled to disclose it to you; or (iii) pertains to any project other than those you are not entitled to pursue elsewhere under your DW LLC Agreement, or (iv) as required by legal process (provided that, in this case, you will use good-faith efforts to notify Studio of such process so that Studio may attempt in its own behalf, and at its own expense, to protect the confidentiality of the information in question).

c. Studio Ownership. Except as otherwise herein provided, the results and proceeds of your services hereunder, including, without limitation, any works of authorship resulting from your services during the Consulting Term with Studio and/or any of its subsidiaries and any works in progress, in each case to the extent they are readily identifiable as being directly related to your services hereunder, shall be works-made-for-hire and Studio shall be deemed the sole owner throughout the universe of any and all rights of whatsoever nature

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therein, whether or not now or hereafter known, existing, contemplated, recognized or developed, with the right to use the same in perpetuity in any manner Studio determines in its sole discretion without any further payment to you whatsoever. If, for any reason, any of such results and proceeds shall not legally be a work-for-hire and/or there are any rights which do not accrue to Studio under the preceding sentence, then you hereby irrevocably quitclaim and agree to quitclaim any and all of your right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of whatsoever nature therein, whether or not now or hereafter known, existing, contemplated, recognized or developed by Studio, and Studio shall have the right to use the same in perpetuity throughout the universe in any manner Studio may deem useful or desirable to establish or document Studio’s exclusive ownership of any and all rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright and/or patent applications or assignments. To the extent you have any rights in the results and proceeds of your services that cannot be assigned in the manner described above, you unconditionally and irrevocably waive the enforcement of such rights. This Paragraph 7(c) is subject to, and shall not be deemed to limit, restrict, or constitute any waiver by Studio of any rights of ownership to which Studio may be entitled by operation of law by virtue of Studio or any of its subsidiaries having retained your services.

d. Return of Property. All documents, data, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for you and utilized by you in each case to the extent they are readily identifiable as being directly related to your services hereunder, shall remain the exclusive property of Studio. In the event of the termination of your employment for any reason, and subject to any other provisions hereof, all such property in your possession shall be returned by you to Studio, at Studio’s sole cost and expense, as soon as reasonably practical.

e. Promise Not To Solicit. You will not during the period of the Consulting Term (or the earlier termination of your consulting services to Studio) induce or attempt to induce any employees, exclusive consultants, exclusive contractors or exclusive representatives of the Studio (or those of any of its subsidiaries) to stop working for, contracting with or representing the Studio or any of its subsidiaries or to work for, contract with or represent any Direct Competitors; provided that this Paragraph 7.e shall not prohibit you from employing any member of your personal staff upon the termination of the Consulting Term (or the earlier termination of your consulting services to Studio).

8. Incapacity. In the event you become totally medically disabled and cannot substantially perform your duties at any time during the Consulting Term, the Board of Directors may at any time after such disability has continued for ninety (90) consecutive days require Studio to give you written notice that it intends subject to applicable state and federal law, to suspend this Agreement. Upon receipt of such notice, prior to any suspension hereunder, you

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shall be entitled to an expedited arbitration to determine whether or not you are medically disabled and have been disabled for at least ninety (90) consecutive days, provided that you request such arbitration within ten (10) business days of receipt of such notice from Studio. If you do not so request such an arbitration, or if the arbitrator rules that you are so disabled, you shall be placed on a “medical payroll”. You will first receive your Base Salary (and all other payments and benefits) for the first twenty-six (26) weeks of consecutive absence commencing at the end of the later of the ten (10) day period or upon the conclusion of the arbitration. Thereafter, if you are not able to resume your duties hereunder, you shall remain entitled to receive 50% of Base Salary for the remainder of the then current Consulting Term. Notwithstanding the foregoing, you shall be entitled to reinstate this Agreement and to resume your duties hereunder if subsequent to your disability you recover the ability to so perform.

9. Death. If you die prior to the end of the Consulting Term this Agreement shall be terminated as of the date of death and your beneficiary or estate shall be entitled to receive your Base Salary up to the date on which the death occurs and for 12 months thereafter, but not to exceed the end of the then current Consulting Term.

10. Termination for Cause. Studio may, at its option and upon resolution of the Board of Directors, terminate this Agreement forthwith for “cause”, including, without limitation, any obligation to pay Base Salary under this Agreement (except to the extent accrued to the date of termination). For purposes of this Agreement, termination of this Agreement for “cause” shall mean only: (i) conviction of a felony or a crime involving moral turpitude or for embezzlement or the misappropriation of corporate assets, in any case, after the exhaustion of all possible appeals; or (ii) your material breach of Paragraphs 2 or 7 hereof. Anything herein to the contrary notwithstanding, Studio will give you written notice prior to terminating this Agreement for your material breach under clause (ii), setting forth the exact nature of any alleged breach and the conduct required to cure such breach. You shall have thirty (30) days from the giving of such notice within which to cure.

11. Change of Control. In the event of a “change of control”, you shall be entitled to terminate this Agreement and discontinue providing any consulting services hereunder.

a. For purposes of this Agreement, “change of control” shall mean the occurrence of any of the following events, not including any events occurring prior to or in connection with the Closing (including the occurrence of the Closing):

(i) during any period of fourteen (14) consecutive calendar months, individuals who were directors of Studio on the first day of such period (the “Incumbent Directors”) cease for any reason to constitute a majority of the Board of Directors of Studio (the “Board”); provided, however, that any individual becoming a director subsequent to the first day of such

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period whose election, or nomination for election, by Studio’s stockholders was approved by a vote of at least a majority of the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as such term is used in Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (each, a “Person”), in each case other than the management of Studio, the Board or the holders of Studio’s Class B common stock par value $0.01;

(ii) the consummation of (A) a merger, consolidation, share exchange or similar form of corporate transaction involving (x) Studio or (y) any of its Subsidiaries, but in the case of this clause (y) only if Studio Voting Securities (as defined below) are issued or issuable (each of the events referred to in this clause (A) being hereinafter referred to as a “Reorganization”) or (B) the sale or other disposition of all or substantially all the assets of Studio to an entity that is not an Affiliate (a “Sale”), in each such case, if such Reorganization or Sale requires the approval of Studio’s stockholders under the law of Studio’s jurisdiction of organization (whether such approval is required for such Reorganization or Sale or for the issuance of securities of Studio in such Reorganization or Sale), unless, immediately following such Reorganization or Sale, (1) all or substantially all the individuals and entities who were the “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act (or a successor rule thereto)) of the securities eligible to vote for the election of the Board (“Studio Voting Securities”) outstanding immediately prior to the consummation of such Reorganization or Sale beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding voting securities of the corporation resulting from such Reorganization or Sale (including, without limitation, a corporation that as a result of such transaction owns Studio or all or substantially all Studio’s assets either directly or through one or more subsidiaries) (the “Continuing Corporation”) in substantially the same proportions as their ownership, immediately prior to the consummation of such Reorganization or Sale, of the outstanding Studio Voting Securities (excluding any outstanding voting securities of the Continuing Corporation that such beneficial owners hold immediately following the consummation of the Reorganization or Sale as a result of their ownership prior to such consummation of voting securities of any company or other entity involved in or forming part of such Reorganization or Sale other than Studio), (2) no Person (excluding (x) any employee benefit plan (or related trust) sponsored or maintained by the Continuing Corporation or any corporation controlled by the Continuing Corporation, (y) Jeffrey Katzenberg and (z) you) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the Continuing Corporation and (3) at least a majority of the members of the board of directors of the Continuing Corporation were Incumbent Directors at the time of the execution of the definitive agreement providing for such Reorganization or Sale or, in the absence of such an agreement, at the time at which approval of the Board was obtained for such Reorganization or Sale;

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(iii) the stockholders of Studio approve a plan of complete liquidation or dissolution of Studio; or

(iv) any Person, corporation or other entity or “group” (as used in Section 14(d)(2) of the Exchange Act) (other than (A) Studio, (B) any trustee or other fiduciary holding securities under an employee benefit plan of Studio or an Affiliate or (C) any company owned, directly or indirectly, by the stockholders of Studio in substantially the same proportions as their ownership of the voting power of Studio Voting Securities) becomes the beneficial owner, directly or indirectly, of securities of Studio representing 20% or more of the combined voting power of Studio Voting Securities but only if the percentage so owned exceeds the aggregate percentage of the combined voting power of Studio Voting Securities then owned, directly or indirectly, by Jeffrey Katzenberg and you; provided, however, that for purposes of this subparagraph (iv), the following acquisitions shall not constitute a change of control: (x) any acquisition directly from Studio or (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Studio or an Affiliate.

12. Termination For Good Reason. You shall be entitled to terminate your consulting services for good reason, for the purpose of this Paragraph 12, in the event of a material breach of this Agreement by Studio or any material change in your services hereunder. If, in the event of any of the foregoing, such circumstance is not remedied within 30 days after receipt of written notice from you specifically delineating each act giving rise to good reason and setting forth your intention to terminate your consulting services if such breach is not duly remedied, provided that if the specified circumstance cannot reasonably be remedied within said 30-day period and the Studio commences reasonable steps within said 30-day period to remedy said breach and diligently continues such steps thereafter until a remedy is effected, such circumstance will not constitute good reason.

13. No Mitigation. In the event this Agreement is terminated for any reason prior to its expiration, you shall not be required to mitigate your damages hereunder, nor shall Studio be entitled to offset from any sums owing to you hereunder any amounts received by you from any third party.

14. Section 317 and 508 of the Federal Communications Act. You represent that you have not accepted or given nor will you accept or give, directly or indirectly, any money, services or other valuable consideration from or to anyone other than Studio for the inclusion of any matter as part of any film, television program or other production produced, distributed and/or developed by Studio and/or any of its affiliates.

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15. Equal Opportunity Employer. You acknowledge that Studio is an equal opportunity employer. You agree that you will comply with Studio policies regarding employment practices and with applicable federal, state and local laws prohibiting discrimination or harassment.

16. Notices. All notices required to be given hereunder shall be given in writing, by personal delivery or by mail and confirmed by fax at the respective addresses of the parties hereto set forth above, or at such address as may be designated in writing by either party, and in the case of Studio, to the attention of the General Counsel of Studio. A courtesy copy of any notice to you hereunder shall be sent to Gang, Tyre, Ramer & Brown, Inc., 132 South Rodeo Drive, Beverly Hills, CA 90212-2403, fax (310) 777-4801, Attn. Bruce M. Ramer, Esq., and Harold A. Brown, Esq. Any notice given by mail shall be deemed to have been given three (3) business days following such mailing.

17. Assignment. This is an Agreement for the performance of personal services by you and may not be assigned by you (other than the right to receive payments which may be assigned to a company, trust or foundation owned or controlled by you) and any purported assignment in violation of the foregoing shall be deemed null and void. Studio shall have the right to assign this Agreement and your services hereunder only to an entity acquiring all or substantially all of the assets of Studio.

18. California Law. This Agreement and all matters or issues collateral thereto shall be governed by the laws of the State of California applicable to contracts entered into and performed entirely therein.

19. No Implied Contract. The parties intend to be bound only upon execution of this Agreement and no negotiation, exchange or draft or partial performance shall be deemed to imply an agreement. Neither the continuation of employment or any other conduct shall be deemed to imply a continuing agreement upon the expiration of this Agreement.

20. Entire Understanding. This Agreement contains the entire understanding of the parties hereto relating to the subject matter herein contained, and can be changed only by a writing signed by both parties hereto.

21. Void Provisions. If any provision of this Agreement, as applied to either party or to any circumstances, shall be adjudged by a court to be void or unenforceable, the same shall be deemed stricken from this Agreement and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. In the event any such provision (the “Applicable Provision”) is so adjudged void or unenforceable, you and Studio shall take the following actions in the following order: (i) seek judicial reformation of the Applicable

8

Provision; (ii) negotiate in good faith with each other to replace the Applicable Provision with a lawful provision; and (iii) have an arbitration as provided in Paragraph 23 hereof determine a lawful replacement provision for the Applicable Provision; provided, however, that no such action pursuant to either of clauses (i) or (iii) above shall increase in any respect your obligations pursuant to the Applicable Provision.

22. Survivals Modification of Terms. Your obligations under Paragraph 7 hereof shall remain in full force and effect for the entire period provided therein notwithstanding the termination of the Consulting Term pursuant to Paragraph 10 hereof or otherwise. Studio’s obligations under Paragraphs 5 (with respect to expenses theretofore incurred) and 6 hereof shall survive indefinitely the termination of this Agreement regardless of the reason for such termination.

23. Arbitration of Disputes. Any controversy or claim by you against Studio or any of its parent companies, subsidiaries, affiliates (and/or officers, directors, employees, representatives or agents of Studio and such parent companies, subsidiaries and/or affiliates), including any controversy or claim arising from, out of or relating to this Agreement, the breach thereof, or the employment or termination thereof of you by Studio which would give rise to a claim under federal, state or local law (including, but not limited to, claims based in tort or contract, claims for discrimination under state or federal law, and/or claims for violation of any federal, state or local law, statute or regulation), or any claim against you by Studio (individually and/or collectively, “Claim[s]”) shall be submitted to an impartial mediator (“Mediator”) selected jointly by the parties. Both parties shall attend a mediation conference in Los Angeles County, California and attempt to resolve any and all Claims. If the parties are not able to resolve all Claims, then upon written demand for arbitration to the other party, which demand shall be made within a reasonable time after the Claim has arisen, any unresolved Claims shall be determined by final and binding arbitration in Los Angeles, California, in accordance with the Model Employment Procedures of the American Arbitration Association (collectively, “Rules”) by a neutral arbitrator experienced in employment law, licensed to practice law in California, in accordance with the Rules, except as herein specified. In no event shall the demand for arbitration be made after the date when the institution of legal and/or equitable proceedings based upon such Claim would be barred by the applicable statute of limitations. Each party to the arbitration will be entitled to be represented by counsel and will have the opportunity to take depositions in Los Angeles, California of any opposing party or witnesses selected by such party and/or request production of documents by the opposing party before the arbitration hearing. By mutual agreement of the parties, additional depositions may be taken at other locations. In addition, upon a party’s showing of need for additional discovery, the arbitrator shall have discretion to order such additional discovery. You acknowledge and agree that you are familiar with and fully understand the need for preserving the confidentiality of Studio’s agreements with third parties and compensation of Studio’s employees. Accordingly, you hereby agree that to the

9

extent the arbitrator determines that documents, correspondence or other writings (or portions thereof) whether internal or from any third party, relating in any way to your agreements with third parties and/or compensation of other employees are necessary to the determination of any Claim, you and/or your representatives may discover and examine such documents, correspondence or other writings only after execution of an appropriate confidentiality agreement. Each party shall have the right to subpoena witnesses and documents for the arbitration hearing. A court reporter shall record all arbitration proceedings. With respect to any Claim brought to arbitration hereunder, either party may be entitled to recover whatever damages would otherwise be available to that party in any legal proceeding based upon the federal and/or state law applicable to the matter. The arbitrator shall issue a written decision setting forth the award and the findings and/or conclusions upon which such award is based. The decision of the arbitrator may be entered and enforced in any court of competent jurisdiction by either Studio or you. Notwithstanding the foregoing, the result of any such arbitration shall be binding but shall not be made public (including by filing a petition to confirm the arbitration award), unless necessary to confirm such arbitration award after non-payment of the award for a period of at least fifteen (15) days after notice to Studio of the arbitrator’s decision. Each party shall pay the fees of their respective attorneys (except as otherwise awarded by the arbitrator), the expenses of their witnesses, and all other expenses connected with presenting their Claims or defense(s). Other costs of arbitration shall be borne by Studio. Except as set forth below, should you or Studio pursue any Claim covered by this Paragraph 23 by any method other than said arbitration, the responding party shall be entitled to recover from the other party all damages, costs, expenses, and reasonable outside attorneys’ fees incurred as a result of such action. The

[continued on next page]

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provisions contained in this Paragraph 23 shall survive the termination of your consulting services to Studio. Notwithstanding anything set forth above, you agree that any breach or threatened breach of this Agreement (particularly, but without limitation, with respect to Paragraph 7, above) may result in irreparable injury to the Studio, and therefore, in addition to the procedures set forth above, Studio may be entitled to file suit in a court of competent jurisdiction to seek a Temporary Restraining Order and/or preliminary or permanent injunction or other equitable relief to prevent a breach or contemplated breach of such provisions.

If the foregoing correctly sets forth your understanding, please sign one copy of this letter and return it to the undersigned, whereupon this letter shall constitute a binding agreement between us.

Very truly yours,

DREAMWORKS ANIMATION SKG, INC.

By:

ACCEPTED AND AREED AS OF THE

DATE FIRST ABOVE WRITTEN:

STEVEN SPIELBERG

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EXHIBIT 1

SPECIAL PROVISIONS RELATING TO STEVEN SPIELBERG

1. Without limiting any of your other rights under the DW LLC Agreement, it is expressly acknowledged that, notwithstanding anything to the contrary set forth in the Agreement to which this Exhibit 1 is attached, you are free to render any services for any party which you are free to render under the DW LLC Agreement.

2. Other than pursuant to that certain Theme Park Agreement between DW LLC and MCA, Inc. dated as of July 31, 1995 (as assigned from time to time by MCA Inc. and its successors in interest), Studio shall not engage in “theme park activities” for as long as you are a consultant to Studio hereunder, and all theme park activities are excluded from the exclusivity requirement hereunder. No services from you in connection with theme park activities shall be required or rendered at any time, nor may there be any use of your name in or in connection with any theme park activity. For purposes of this Paragraph, theme park activities are any activities in the field of theme, amusement, tour and/or similar tourist park attractions. This restriction will cease to apply if you confirm to Studio in writing that, in your absolute determination and in your absolute discretion, you have ceased to maintain exclusive theme park arrangement(s) with third parties. Nothing herein limits any obligations to you under any other agreement.

[end]

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EX-10.23

Exhibit 10.23

EXECUTION COPY

$200,000,000

CREDIT AGREEMENT

DATED AS OF OCTOBER 27, 2004

AMONG

DREAMWORKS ANIMATION SKG, INC.,

THE SEVERAL LENDERS

FROM TIME TO TIME PARTIES HERETO,

HSBC BANK USA, NATIONAL ASSOCIATION,

SYNDICATION AGENT,

SOCIÉTÉ GÉNÉRALE,

AS DOCUMENTATION AGENT,

AND

JPMORGAN CHASE BANK,

AS ADMINISTRATIVE AGENT

J.P. MORGAN SECURITIES INC. AND BANC OF AMERICA SECURITIES, LLC,

AS CO-LEAD ARRANGERS AND JOINT BOOKRUNNERS

TABLE OF CONTENTS

		Page
SECTION 1. DEFINITIONS		1
1.1	Defined Terms	1
1.2	Other Definitional Provisions	15
SECTION 2. LOANS		16
2.1	Revolving Credit Commitments	16
2.2	Procedure for Revolving Credit Borrowing	16
2.3	Swingline Commitment	17
2.4	Procedure for Swingline Borrowing	17
2.5	Refunding of Swingline Loans	17
2.6	Commitment Fee	18
2.7	Termination or Reduction of Commitments; Mandatory Prepayments	18
2.8	Repayment of Loans; Evidence of Debt	19
2.9	Optional Prepayments	20
2.10	Conversion and Continuation Options	20
2.11	Minimum Amounts and Maximum Number of Tranches	20
2.12	Interest Rates and Payment Dates	21
2.13	Computation of Interest and Fees	21
2.14	Inability to Determine Interest Rate	21
2.15	Pro Rata Treatment and Payments	22
2.16	Requirements of Law	22
2.17	Taxes	24
2.18	Indemnity	26
2.19	Change of Lending Office	26
2.20	Replacement of Lenders under Certain Circumstances	26
SECTION 3. L/CS		27
3.1	L/C Commitment	27
3.2	Procedure for Issuance of L/Cs	27
3.3	L/C Participations	27
3.4	Fees, Commissions and Other Charges	28
3.5	Reimbursement Obligation of DW Animation	28
3.6	Obligations Absolute	29
3.7	L/C Payments	29
3.8	Applications; Uniform Customs	29
SECTION 4. REPRESENTATIONS AND WARRANTIES		29
4.1	Financial Statements	29
4.2	No Material Adverse Change	30
4.3	Existence; Compliance with Law	30
4.4	Power; Authorization; Enforceable Obligations	30
4.5	No Legal Bar	30
4.6	No Material Litigation	30
4.7	No Default	31
4.8	Ownership of Property; Liens	31
4.9	Intellectual Property	31
4.10	Taxes	31

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4.11	Accuracy of Information	31
4.12	Federal Regulations	32
4.13	ERISA	32
4.14	Investment Company Act; Other Regulations	32
4.15	Subsidiaries	32
4.16	Purpose of Loans	32
4.17	Security Documents	32
SECTION 5. CONDITIONS PRECEDENT
5.1	Conditions to Initial Extension of Credit	33
5.2	Conditions to Each Extension of Credit	34
SECTION 6. AFFIRMATIVE COVENANTS
6.1	Financial Statements	35
6.2	Certificates; Other Information	35
6.3	Payment of Obligations	36
6.4	Conduct of Business and Maintenance of Existence	36
6.5	Compliance with Contractual Obligations and Laws	36
6.6	Maintenance of Property; Insurance	37
6.7	Inspection of Property; Books and Records; Discussions	37
6.8	Notices	37
6.9	Additional Collateral, etc	38
6.10	Further Assurances	39
SECTION 7. NEGATIVE COVENANTS
7.1	Financial Condition Covenants	39
7.2	Limitation on Liens	39
7.3	Limitation on Fundamental Changes	41
7.4	Limitation on Distributions	41
7.5	Limitation on Transactions with Affiliates	42
7.6	Limitation on Negative Pledge Clauses	42
7.7	Limitation on Restrictions on Subsidiary Distributions	42
7.8	Limitation on Modification of Organizational Agreements	42
7.9	Optional Payments and Modifications of Certain Debt Instruments	42
SECTION 8. REMEDIAL PROVISIONS
8.1	Events of Default	43
SECTION 9. THE AGENTS
9.1	Appointment	46
9.2	Delegation of Duties	46
9.3	Exculpatory Provisions	46
9.4	Reliance by Administrative Agent	46
9.5	Notice of Default	47
9.6	Non-Reliance on Agents and Other Lenders	47
9.7	Indemnification	47
9.8	Agent in Its Individual Capacity	47
9.9	Successor Administrative Agent	48
9.10	The Documentation Agent and Syndication Agent	48

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SECTION 10. MISCELLANEOUS		48
10.1	Amendments and Waivers	48
10.2	Notices	49
10.3	No Waiver; Cumulative Remedies	49
10.4	Survival of Representations and Warranties	49
10.5	Payment of Expenses and Taxes	50
10.6	Successors and Assigns; Participations and Assignments	50
10.7	Adjustments; Set-off	53
10.8	Counterparts	53
10.9	Severability	53
10.10	Integration	53
10.11	GOVERNING LAW	53
10.12	Submission To Jurisdiction; Waivers	54
10.13	Acknowledgements	54
10.14	Releases of Guarantees and Liens	54
10.15	Confidentiality	55
10.16	WAIVERS OF JURY TRIAL	55
10.17	HBO Subordinated Loan Agreement	55
10.18	Distribution Intercreditor Agreement	55
10.19	Effective Date	55

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SCHEDULES
Schedule 1.1	Commitments of Lenders
Schedule 3.1	Existing L/Cs
Schedule 4.1	Certain Asset Dispositions; Guarantee Obligations
Schedule 4.6	Litigation
Schedule 4.15	Subsidiaries
Schedule 4.17	UCC Filing Jurisdictions
Schedule 7.2(f)	Existing Liens
Schedule 7.5	Transactions with Affiliates
EXHIBITS
Exhibit A	Form of Guarantee and Collateral Agreement
Exhibit B	Form of Closing Certificate
Exhibit C-1	Form of Legal Opinion of Cravath, Swaine & Moore LLP
Exhibit C-2	Form of Legal Opinion of Katherine Kendrick, Esq.
Exhibit C-3	Form of Legal Opinion of Seyfarth Shaw
Exhibit C-4	Form of Legal Opinion of Richards, Layton & Finger
Exhibit D	Form of Assignment and Assumption
Exhibit E	Form of Revolving Credit Loan Promissory Note
Exhibit F	Form of Exemption Certificate
Exhibit G	Terms of Specified Subordinated Indebtedness

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CREDIT AGREEMENT, dated as of October 27, 2004, among DREAMWORKS ANIMATION SKG, INC., a Delaware corporation (“DW Animation”), the several banks and other financial institutions from time to time parties to this Agreement (the “Lenders”), HSBC BANK USA, NATIONAL ASSOCIATION, as syndication agent (in such capacity, the “Syndication Agent”), SOCIÉTÉ GÉNÉRALE, as documentation agent (in such capacity, the “Documentation Agent”), and JPMORGAN CHASE BANK, as administrative agent for the Lenders hereunder.

The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings:

“ABR”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day plus ½ of 1%. For purposes hereof: “Prime Rate” shall mean the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank as its prime rate in effect at its principal office in New York City (the Prime Rate not being intended to be the lowest rate of interest charged by JPMorgan Chase Bank in connection with extensions of credit to debtors); “Base CD Rate” shall mean the sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one and the denominator of which is one minus the CD Reserve Percentage and (b) the CD Assessment Rate; and “Three-Month Secondary CD Rate” shall mean, for any day, the secondary market rate for three-month certificates of deposit reported as being in effect on such day (or, if such day shall not be a Business Day, the next preceding Business Day) by the Board through the public information telephone line of the Federal Reserve Bank of New York (which rate will, under the current practices of the Board, be published in Federal Reserve Statistical Release H.15(519) during the week following such day), or, if such rate shall not be so reported on such day or such next preceding Business Day, the average of the secondary market quotations for three-month certificates of deposit of major money center banks in New York City received at approximately 10:00 A.M., New York City time, on such day (or, if such day shall not be a Business Day, on the next preceding Business Day) by JPMorgan Chase Bank from three New York City negotiable certificate of deposit dealers of recognized standing selected by it. Any change in the ABR due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be effective as of the opening of business on the effective day of such change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal Funds Effective Rate, respectively.

“ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.

“Administrative Agent”: JPMorgan Chase Bank, as the agent for the Lenders under this Agreement and the other Loan Documents, and any successor agent appointed pursuant to Section 9.9. References in this Agreement or any other Loan Document to the Administrative Agent that are contained in exculpatory or indemnification provisions (including, without limitation, Sections 9.3, 9.6, 9.7 and 10.5) shall be deemed to include J.P. Morgan Securities Inc. in its capacity as arranger of the Commitments.

“Affiliate”: as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 20% or more of the voting interests of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise.

“Agents”: the collective reference to the Documentation Agent, the Syndication Agent and the Administrative Agent.

“Aggregate First Cycle Residual Value”: as of any date of determination, an amount equal to the First Cycle Residual Value of all Motion Pictures released on or prior to such date.

“Aggregate Revolving Extensions of Credit”: as to any Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Credit Loans made by such Lender then outstanding, (b) such Lender’s Commitment Percentage of the aggregate L/C Obligations then outstanding and (c) such Lender’s Commitment Percentage of the aggregate principal amount of the Swingline Loans then outstanding.

“Aggregate Second Cycle Residual Value”: as of any date of determination, an amount equal to the Second Cycle Residual Value of all Motions Pictures released prior to such date.

“Agreement”: this Credit Agreement, as amended, supplemented or otherwise modified from time to time.

“Applicable Margin”: (a) 1.75% in the case of Eurodollar Loans and (b) 0.75% in the case of ABR Loans.

“Application”: with respect to each L/C, an application, in such form as the L/C Issuer may specify from time to time, requesting the L/C Issuer to open such L/C.

“Assignee”: as defined in Section 10.6(b).

“Assignment and Assumption”: an Assignment and Assumption, substantially in the form of Exhibit D.

“Board”: the Board of Governors of the Federal Reserve System of the United States of America or any successor.

“Borrowing Availability”: as of any date of determination, an amount equal to (a) 67% of the Aggregate First Cycle Residual Value as of such date, plus (b) 67% of the Aggregate Second Cycle Residual Value as of such date, minus (c) Total Debt of DW Animation and its Subsidiaries outstanding as of such date, whether or not included on a consolidated balance sheet of DW Animation (including the Universal Advance, but excluding Indebtedness outstanding under this Agreement, the HBO Subordinated Debt and up to $50,000,000 of Specified Subordinated Indebtedness) as of such date, plus (d) 100% of cash on hand of DW Animation or any Subsidiary Guarantor on such date to the extent constituting Collateral in which the Administrative Agent has a perfected first priority security interest. For the purposes of determining Borrowing Availability at any date, values and costs will in all cases be determined as of such date on a present value basis using a discount rate equal to the ABR plus the Applicable Margin.

“Borrowing Availability Certificate”: any certificate delivered pursuant to Section 6.2(g).

“Borrowing Date”: any Business Day specified in a notice pursuant to Section 2.2 or 2.4 as a date on which DW Animation requests the relevant Lenders to make Loans hereunder.

“Business Day”: a day other than a Saturday, Sunday or other day on which commercial banks in New York City or Los Angeles, California, are authorized or required by law to close; provided that,

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when used in connection with a Eurodollar Loan with respect to which the Eurodollar Rate is determined based upon the Telerate screen (or any successor service), the term “Business Day” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

“Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

“CD Assessment Rate”: for any day as applied to any ABR Loan, the annual assessment rate in effect on such day that is payable by a member of the Bank Insurance Fund maintained by the Federal Deposit Insurance Corporation (the “FDIC”) classified as well-capitalized and within supervisory subgroup “B” (or a comparable successor assessment risk classification) within the meaning of 12 C.F.R. § 327.4 (or any successor provision) to the FDIC (or any successor) for the FDIC’s (or such successor’s) insuring time deposits at offices of such institution in the United States.

“CD Reserve Percentage”: for any day as applied to any ABR Loan, that percentage (expressed as a decimal) which is in effect on such day, as prescribed by the Board, for determining the maximum reserve requirement for a Depositary Institution (as defined in Regulation D of the Board as in effect from time to time) in respect of new non-personal time deposits in Dollars having a maturity of 30 days or more.

“Closing Date”: the date on which the conditions precedent set forth in Section 5.1 shall be satisfied.

“Code”: the Internal Revenue Code of 1986, as amended from time to time.

“Collateral”: all property of the Loan Parties, now owned or hereafter acquired, upon which a Lien is purported to be created by any Security Document.

“Commitment Fee”: as defined in Section 2.6.

“Commitment Fee Rate”: (a) on any date on which the Facility Exposure exceeds 50% of the aggregate Commitments, 0.50% per annum and (b) on any other date, 0.75% per annum.

“Commitment Percentage”: as to any Lender at any time, the percentage which such Lender’s Commitment at such time constitutes of the aggregate Commitments at such time (or, at any time after the Commitments shall have expired or terminated, the percentage which the Aggregate Revolving Extensions of Credit of such Lender at such time constitutes of the Facility Exposure at such time).

“Commitment Period”: the period from and including the Closing Date to but not including the Scheduled Termination Date or such earlier date on which the aggregate Commitments shall terminate as provided herein.

“Commitments”: as to any Lender, the obligation of such Lender to make Revolving Credit Loans to, to participate in Swingline Loans made to, and to participate in L/Cs issued on behalf of, DW Animation in an aggregate principal and/or face amount at any one time outstanding not to exceed (a) in the case of any Lender that is a Lender on the date hereof, the amount set forth opposite such Lender’s name on Schedule 1.1 under the caption “Commitments”, as such amount may be changed from time to time in accordance with this Agreement and (b) in the case of any Lender that becomes a Lender after the date hereof, the amount specified as such Lender’s “Commitment” in the Assignment and Acceptance pursuant to which such Lender assumed a portion of the aggregate Commitments, as such amount may be changed from time to time in accordance with this Agreement. The aggregate amount of the Commitments as of the Closing Date is $200,000,000.

3

“Commonly Controlled Entity”: an entity, whether or not incorporated, which is under common control with DW Animation within the meaning of Section 4001 of ERISA or is part of a group which includes DW Animation and which is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of determining liability under Section 412 of the Code, which is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

“Conduit Lender”: any special purpose corporation organized and administered by any Lender for the purpose of making Loans otherwise required to be made by such Lender and designated by such Lender in a written instrument; provided that the designation by any Lender of a Conduit Lender shall not relieve the designating Lender of any of its obligations to fund a Loan under this Agreement if, for any reason, its Conduit Lender fails to fund any such Loan, and the designating Lender (and not the Conduit Lender) shall have the sole right and responsibility to deliver all consents and waivers required or requested under this Agreement with respect to its Conduit Lender, and provided, further, that no Conduit Lender shall (a) be entitled to receive any greater amount pursuant to Section 2.16, 2.17, 2.18 or 10.5 than the designating Lender would have been entitled to receive in respect of the extensions of credit made by such Conduit Lender or (b) be deemed to have any Commitment.

“Confidential Information Memorandum”: the Confidential Information Memorandum dated August 2004 and furnished to certain Lenders with respect to DW Animation.

“Consolidated Cash Interest Expense”: for any period, total cash interest expense of DW Animation and its consolidated Subsidiaries with respect to all outstanding Indebtedness of DW Animation and its consolidated Subsidiaries, including, without limitation, all commissions, discounts and other fees and charges owed with respect to L/Cs and bankers’ acceptance financing and amounts paid in cash (net of amounts received in cash) under interest rate protection agreements.

“Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

“Default”: any of the events specified in Section 8.1, whether or not any requirement for the giving of notice or the lapse of time, or both, has been satisfied.

“Distribution Agreement”: the Distribution Agreement, between DreamWorks and DW Animation, dated on or prior to the Closing Date.

“Distribution Intercreditor Agreement”: the Intercreditor Agreement, dated on or prior to the Closing Date, among DreamWorks, DW Animation and the Administrative Agent relating to the Liens permitted by Section 7.2(l), in form and substance reasonably satisfactory to the Administrative Agent.

“Dollars” and “$”: dollars in lawful currency of the United States of America.

“Domestic Free Television Exhibition”: Free Television Exhibition within the Domestic Territories.

“Domestic Territories”: the entire territorial United States and its possessions, territories and commonwealths, including the U.S. Virgin Islands, Puerto Rico, Guam, and the former U.S. Trust Territories of the Pacific Islands, including the Carolina Islands, the Marshall Islands and the Mariana

4

Islands, Saipan and American Samoa; the Dominican Republic, the British Virgin Islands, the Bahamas, Bermuda, Saba Island, St. Eustatius Island, St. Kitts Island, St. Martin Island, St. Maarten Island, and Canada and its possessions and territories.

“DreamWorks”: DreamWorks L.L.C., a Delaware limited liability company.

“DWA LLC”: DreamWorks Animation LLC, a Delaware limited liability company.

“Effective Date”: the date on which the conditions precedent set forth in paragraphs (a), (h) and (i) of Section 5.1 shall be satisfied.

“Employee Equity Plan”: the DW Animation 2004 Omnibus Incentive Compensation Plan dated on or prior to the Closing Date as such plan may be amended from time to time.

“Equity Interest”: any equity, ownership or profit participation interest in a Person.

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Eurodollar Loans”: Loans the rate of interest applicable to which is based upon the Eurodollar Rate.

“Eurodollar Rate”: with respect to each Eurodollar Loan during a specified Interest Period, the rate of interest determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period, commencing on the first day of such Interest Period, appearing on Page 3750 of the Telerate screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the “Eurodollar Rate” shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by the Administrative Agent and DW Animation or, in the absence of such agreement, the “Eurodollar Rate” shall instead be the rate per annum equal to the rate at which JPMorgan Chase Bank is offered Dollar deposits at or about 11:00 A.M., New York City time, two Business Days prior to the beginning of such Interest Period, in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for delivery on the first day of such Interest Period, for a period equal to such Interest Period, and in an amount comparable to the amount of its Eurodollar Loan to be outstanding during such Interest Period.

“Eurodollar Tranche”: the collective reference to Eurodollar Loans the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Eurodollar Loans shall originally have been made on the same day).

“Event of Default”: any of the events specified in Section 8.1.

“Excluded Asset Sale”: with respect to DW Animation and its Subsidiaries, (a) any sale or other disposition of assets in the ordinary course of business, (b) any sale or other disposition of rights in films (or participations therein) and (c) any sale or other disposition of accounts receivable.

“Excluded Lease Debt”: (a) Indebtedness of DW Animation or any Subsidiary Guarantor pursuant to any guarantee of (i) the Indebtedness of any Person (the “Lessor”) incurred to finance the acquisition, design and construction of the animation division facility constructed by DW Animation in Glendale, California, and leased by the Lessor to Animation, and any refinancing thereof if the terms of

5

such refinancing (other than monetary terms so long as such monetary terms are comparable to those obtainable in similar transactions) are no less favorable to the Lessor, the lessee and the Lenders in any material respect than those applicable to the Indebtedness being refinanced and (ii) certain related obligations of the Lessor and (b) Indebtedness pursuant to any refinancing of the Indebtedness referred to in clause (a) above so long as recourse for payment of such refinancing is expressly limited to such animation division facility.

“Existing L/C”: each letter of credit identified on Schedule 3.1 hereto that is outstanding on the Closing Date and each renewal of such letter of credit, each of which shall be deemed, on and after the Closing Date, to have been issued hereunder.

“Facility Exposure”: at any time, the sum of the Aggregate Revolving Extensions of Credit of all Lenders at such time.

“FDIC”: the Federal Deposit Insurance Corporation or any successor to the functions and powers thereof.

“Federal Funds Effective Rate”: for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day of such transactions received by JPMorgan Chase Bank from three federal funds brokers of recognized standing selected by it.

“Financing Lease”: any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee.

“First Cycle Residual Value”: as of any date of determination with respect to any Motion Picture released on or prior to such date, an amount equal to (a) DW Animation’s remaining first cycle ultimates commencing with the second weekend after release of such Motion Picture (to be defined in a manner consistent with calculations of residual ultimates made in connection with any financial statements of DW Animation, whether pursuant to this Agreement or otherwise and including a ten-year limit) as of such date, less (b) all anticipated cash expenses (including distribution fees) directly associated with such ultimate as of such date.

“Foreign Free Television Exhibition”: Free Television Exhibition outside of the Domestic Territories.

“Foreign Pay Television Exhibition”: Pay Television Exhibition outside of the Domestic Territories.

“Foreign Subsidiary”: any Subsidiary of DW Animation organized under the laws of any jurisdiction outside the United States of America.

“Free Television Exhibition”: Television Exhibition, other than Pay Television Exhibition, without any fee being charged to the viewer for the privilege of unimpaired reception of such exhibition. For purposes of this definition, any government-imposed fees or taxes applicable to the use of television receivers generally or a regular periodic access, carriage or equipment fee (but not any optional premium subscription charge or fee paid with respect to Pay Television Exhibition) paid by a subscriber to a cable television transmission service or other transmission service or agency for the privilege of unimpaired reception shall not be deemed a fee charged to the viewer.

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“Funded Debt”: as to any Person, all Indebtedness of such Person that matures more than one year from the date of its creation or matures within one year from such date but is renewable or extendible, at the option of such Person, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including, without limitation, all amounts of Funded Debt required to be paid or prepaid within one year from the date of its creation and, in the case of DW Animation, Indebtedness in respect of the Loans.

“GAAP”: generally accepted accounting principles in the United States of America.

“Governmental Authority”: any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including the National Association of Securities Dealers.

“Guarantee Obligation”: as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term “Guarantee Obligation” shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by DW Animation in good faith.

“Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement to be executed by DW Animation and each Subsidiary Guarantor, substantially in the form of Exhibit A.

“HBO”: Home Box Office, Inc., a Delaware corporation.

“HBO Attornment Agreement”: the Attornment Agreement, dated on or prior to the Closing Date, between HBO and DW Animation, confirming certain rights and obligations of DW Animation in respect of the HBO License Agreement.

“HBO License Agreement”: the License Agreement, dated as of March 7, 1995, between DreamWorks and HBO, as amended, supplemented or otherwise modified from time to time.

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“HBO Subordinated Debt”: Indebtedness of DW Animation pursuant to the HBO Subordinated Loan Agreement in an aggregate principal amount not to exceed $50,000,000 (after giving effect to the prepayment referred to in Section 7.9(a)(ii)).

“HBO Subordinated Debt Documents”: the collective reference to (a) the HBO Subordinated Loan Agreement, (b) the other “Subordinated Loan Documents” referred to therein, (c) the HBO Attornment Agreement and (d) any other document or instrument entered into by DW Animation in connection therewith, in each case as amended, supplemented or otherwise modified from time to time.

“HBO Subordinated Loan Agreement”: the Subordinated Loan Agreement between DW Animation and HBO pursuant to which DW Animation assumed the HBO Subordinated Debt, as amended, supplemented or otherwise modified from time to time.

“Indebtedness”: of any Person at any date, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person in respect of Financing Leases, (f) all obligations, contingent or otherwise, of such Person as an account party under acceptance, letter of credit or similar facilities, (g) all obligations of such Person to purchase, redeem, retire or otherwise acquire for value any Equity Interest in respect of such Person, (h) all Guarantee Obligations of such Person in respect of Indebtedness of any other Person, (i) all obligations of the kind referred to in clauses (a) through (h) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation and (j) for purposes of Section 8.1(e) only, all obligations of such Person in respect of Swap Agreements. For purposes of Section 8.1(e) only, the “principal amount” of the obligations of any Person in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Person would be required to pay if such Swap Agreement were terminated at such time. It is understood that the Universal Advance shall not constitute Indebtedness for the purpose of this Agreement.

“Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA.

“Insolvent”: pertaining to a condition of Insolvency.

“Interest Payment Date”: (a) as to any ABR Loan or Swingline Loan (other than Swingline Loans which do not constitute Unrefunded Swingline Loans), the last day of each March, June, September and December and the Scheduled Termination Date, (b) as to any Swingline Loan which does not constitute an Unrefunded Swingline Loan, the last day such Loan is outstanding, (c) as to any Eurodollar Loan having an Interest Period of three months or less, the last day of such Interest Period and (d) as to any Eurodollar Loan having an Interest Period longer than three months, each day which is three months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period.

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“Interest Period”: with respect to any Eurodollar Loan:

(a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three or six months thereafter (or, to the extent available from all the Lenders, nine or twelve months thereafter), as selected by DW Animation in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and

(b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three or six months thereafter (or, to the extent available from all the Lenders, nine or twelve months thereafter), as selected by DW Animation by irrevocable notice to the Administrative Agent not less than three Business Days prior to the last day of the then current Interest Period with respect thereto;

provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

(i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day;

(ii) no Interest Period may be selected with respect to any Eurodollar Loan that would extend beyond the Scheduled Termination Date; and

(iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.

“Joint Venture”: any joint venture, partnership or other minority-owned entity (other than a Subsidiary) in which DW Animation or any of its Subsidiaries owns an interest.

“L/Cs”: as defined in Section 3.1(a), which shall be deemed to include the Existing L/Cs.

“L/C Commitment”: $50,000,000.

“L/C Fee Payment Date”: three Business Days after the last day of each March, June, September and December and the last day of the Commitment Period.

“L/C Issuer”: JPMorgan Chase Bank, in its capacity as issuer of any L/C; provided that at the option of JPMorgan Chase Bank, any L/C may instead be issued by JPMorgan Chase Bank Delaware, in which case JPMorgan Chase Bank Delaware shall be subject to, and entitled to the benefits of, the applicable provisions of this Agreement, as a “L/C Issuer”, with respect to any such L/C.

“L/C Obligations”: at any time, an amount equal to the sum of (a) the aggregate then undrawn and unexpired amount of the then outstanding L/Cs and (b) the aggregate amount of drawings under L/Cs which have not then been reimbursed pursuant to Section 3.5.

“L/C Participants”: the collective reference to all Lenders other than the L/C Issuer

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“Lenders”: as defined in the preamble hereto; provided that, unless the context otherwise requires, each reference herein to the Lenders shall be deemed to include any Conduit Lender.

“Leverage Ratio”: at any date of determination, the ratio of Total Debt at such date to Total Capitalization at such date.

“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing).

“Loan”: any loan made by any Lender pursuant to this Agreement.

“Loan Documents”: this Agreement, the Security Documents, the Distribution Intercreditor Agreement and the Applications.

“Loan Parties”: the collective reference to DW Animation and each Subsidiary Guarantor.

“Material Adverse Effect”: a material adverse effect on (a) the business, property, operations or condition (financial or otherwise) of DW Animation and its Subsidiaries taken as a whole or (b) the validity or enforceability of this Agreement or any of the other Loan Documents or the rights or remedies of the Administrative Agent or the Lenders hereunder and thereunder.

“Moody’s”: Moody’s Investors Service, Inc.

“Motion Picture”: pictures produced by and distributed of every kind and character whatsoever, including all present and future technological developments, whether produced by means of any photographic, electrical, electronic, mechanical or other processes or devices now known or hereafter devised, and their accompanying devices and processes whether pictures, images, visual and aural representations are recorded or otherwise preserved for projection, reproduction, exhibition, or transmission by any means or media now known or hereafter devised in such manner as to appear to be in motion or sequence, including computer generated pictures and graphics other than video games.

“Multiemployer Plan”: a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Cash Proceeds”: in connection with any asset sale, the cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such asset sale, net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be applied to the repayment of Indebtedness secured by a Lien expressly permitted hereunder on any asset which is the subject of such asset sale and other customary fees actually incurred in connection therewith and net of taxes paid or reasonably estimated to be payable on a current basis, by DW Animation or its members, as a result thereof (after taking into account any available tax credits or deductions available to DW Animation and any tax sharing arrangements).

“Non-Excluded Asset Sale”: any asset sale by DW Animation or its Subsidiaries that is not an Excluded Asset Sale.

“Non-Excluded Taxes”: as defined in Section 2.17(a).

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“Non-U.S. Lender”: any Lender (or Transferee) that is not (a) a citizen or resident of the United States of America, (b) a corporation or partnership, or other entity treated as a corporation or partnership for U.S. federal tax purposes, created or organized in and under the laws of the United States of America or a political subdivision thereof or (c) an estate or trust that is subject to U.S. federal income taxation regardless of the source of its income.

“Notes”: the collective reference to any promissory note evidencing the Loans.

“Obligations”: the unpaid principal of and interest on (including interest accruing after the maturity of the Loans and Reimbursement Obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to DW Animation, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) the Loans and all other obligations and liabilities of DW Animation to the Administrative Agent or to any Lender (or, in the case of Specified Swap Agreements or Specified Cash Management Arrangements, any Affiliate of any Lender), whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement, any other Loan Document, the L/Cs, any Specified Swap Agreement, any Specified Cash Management Arrangement or any other document made, delivered or given in connection herewith or therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges and disbursements of counsel to the Administrative Agent or to any Lender that are required to be paid by DW Animation pursuant hereto) or otherwise.

“Organizational Agreements”: the collective reference to the Restated Certificate of Incorporation and By-Laws of DW Animation.

“Participant”: as defined in Section 10.6(c).

“Pay Television Exhibition”: Television Exhibition that is available on the basis of the payment of a premium subscription charge or fee (as distinguished from an access, carriage or equipment fee) to any Person for the privilege of unimpaired reception of a transmission for viewing in a private residence or in a hotel, motel, hospital or other living accommodation or other non-public area, whether or not (a) such transmission is on a pay-per-view, pay-per-show, pay-per-channel or pay-per-time period basis, or (b) such premium subscription charge or fee is charged to the operator of a hotel, motel, hospital or other living accommodation.

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA.

“Person”: an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature.

“Plan”: at a particular time, any employee benefit plan which is covered by ERISA and in respect of which DW Animation or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Projected Sources”: for any Test Period, with respect to DW Animation and its Subsidiaries, the sum of (a) cash held by DW Animation and its Subsidiaries on the relevant Test Date and (b) the aggregate amount, without duplication and to the extent not already deducted in the definition of “Projected Uses”, of cash projected by DW Animation in good faith to be received during such Test

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Period by DW Animation or any of its Subsidiaries from the following sources: (i) Unutilized Commitments to the extent Revolving Credit Loans could be borrowed thereunder on the relevant Test Date without resulting in a Default or Event of Default; (ii) other available commitments to make advances to DW Animation or any of its Subsidiaries during such Test Period and commitments to make payments of royalties to DW Animation or any of its Subsidiaries during such Test Period so long as, in each case, such commitments are subject to no conditions other than (x) performance by DW Animation or the relevant Subsidiary of the agreements giving rise to such commitments or (y) the passage of time; (iii) accounts receivables to be paid to DW Animation or any of its Subsidiaries during such Test Period; (iv) cash collections to be received during such Test Period (determined by reference to the ultimates used in calculating any component of Borrowing Availability) in respect of any completed and released film or television product; (v) cash collections to be received during such Test Period (determined on a break even basis) in respect of any uncompleted or completed but unreleased film or television product which is projected to be completed (if then uncompleted) and released during such Test Period; and (vi) distributions DW Animation or any of its Subsidiaries is entitled to receive during such Test Period from any Joint Ventures so long as (x) such entitlement is subject to no condition other than (1) performance by DW Animation or the relevant Subsidiary of the agreements giving rise to such entitlement, (2) any other condition the satisfaction of which is solely within the control of DW Animation or the relevant Subsidiary or (3) the passage of time and (y) each condition referred to in clause (x) above is expected by DW Animation in good faith to be satisfied during such Test Period, in each case determined on a consolidated basis by reference to the Section 6.2 Projections.

“Projected Uses”: for any Test Period, with respect to DW Animation and its Subsidiaries, the sum, without duplication and to the extent not already deducted in the definition of “Projected Sources”, of the following amounts as projected by DW Animation in good faith: (a) cash overhead for such Test Period; (b) Consolidated Cash Interest Expense for such Test Period; (c) tax expense for such Test Period; (d) cash expense for such Test Period attributable to remaining negative costs and prints and advertising expenses for films which have commenced principal photography or are projected to have commenced principal photography (and are also projected to be released) during such Test Period; (e) cash expenses for such Test Period in respect of television product for which confirmed orders have been received; (f) capital expenditures to be made during such Test Period; and (g) investments or advances to be made during such Test Period in or to Joint Ventures, in each case determined on a consolidated basis by reference to the Section 6.2 Projections.

“Refunded Swingline Loans”: as defined in Section 2.5(a).

“Register”: as defined in Section 10.6(b)(iv).

“Regulation U”: Regulation U of the Board as in effect from time to time.

“Reimbursement Obligation”: the obligation of DW Animation to reimburse the L/C Issuer pursuant to Section 3.5 for amounts drawn under L/Cs.

“Reorganization”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.

“Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other than those events as to which the thirty-day notice period is waived.

“Required Lenders”: at any date, the holders of more than 50% of (a) the aggregate Commitments, or (b) if the Commitments have been terminated or for the purposes of determining whether to accelerate the Loans and L/C Obligations pursuant to Section 8.1, the Facility Exposure.

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“Requirement of Law”: as to any Person, (a) the organizational or governing documents of such Person and (b) any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Responsible Officer”: any officer of DW Animation holding the title (or performing the functions) of chief executive officer, president, chief financial officer or treasurer.

“Revolving Credit Loans”: as defined in Section 2.1(a).

“Scheduled Termination Date”: November 1, 2009.

“Second Cycle Residual Value”: as of any date of determination with respect to any Motion Picture released on or prior to such date, an amount equal to (a) DW Animation’s remaining projected second cycle value as of such date, which have been reviewed by Ernst & Young LLP pursuant to procedures reasonably satisfactory to the Administrative Agent, less (b) all anticipated cash expenses directly associated with such ultimate as of such date. For the purposes of determining Second Cycle Value, (i) only the values associated with Domestic Free Television Exhibition, Foreign Pay Television Exhibition and Foreign Free Television Exhibition shall be included and (ii) second cycle ultimates (other than those that will derive from binding contracts in effect at the time of calculation) shall be limited to 50% of the first cycle ultimate.

“Section 6.2 Projections”: as defined in Section 6.2.

“Secured Obligations”: as of any date of determination, the aggregate amount as of such date of all Indebtedness and other obligations of DW Animation or any of its Subsidiaries secured by a consensual Lien on any asset of DW Animation or any of its Subsidiaries, determined on a consolidated basis in accordance with GAAP.

“Security Documents”: the collective reference to the Guarantee and Collateral Agreement and all other security documents hereafter delivered to the Administrative Agent granting a Lien on any property of any Person to secure the obligations and liabilities of any Loan Party under any Loan Document.

“Separation Transactions”: the transactions contemplated in Article II of the Separation Agreement, dated on or prior to the Closing Date, among DreamWorks, DW Animation L.L.C. and DW Animation.

“Single Employer Plan”: any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan.

“S&P”: Standard & Poor’s.

“Specified Cash Management Arrangement”: any cash management arrangement entered into by DW Animation and any Lender or Affiliate thereof.

“Specified Subordinated Indebtedness”: Indebtedness of DW Animation which is evidenced by a promissory note substantially identical to Exhibit E.

“Specified Swap Agreement”: any Swap Agreement entered into by DW Animation and any Lender or Affiliate thereof in respect of interest rates or currency exchange rates.

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“Subsidiary”: as to any Person, a corporation, limited liability company, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, limited liability company, partnership or other entity are at the time owned by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of DW Animation.

“Subsidiary Guarantor”: each Subsidiary of DW Animation party to the Guarantee and Collateral Agreement. It is understood that DWA Finance I LLC shall not be a Subsidiary Guarantor.

“Swap Agreement”: any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of DW Animation or any of its Subsidiaries or Affiliates shall be deemed a “Swap Agreement”.

“Swingline Commitment”: the obligation of the Swingline Lender to make Swingline Loans pursuant to Section 2.3 in an aggregate principal amount at any one time outstanding not to exceed $25,000,000.

“Swingline Lender”: as defined in Section 2.3.

“Swingline Loans”: as defined in Section 2.3.

“Swingline Participation Amount”: as defined in Section 2.5(c).

“Television Exhibition”: with respect to any film, exhibition of such film using any form of motion picture copy for transmission by any means now known or hereafter devised (including over-the-air, cable, wire, fiber, master antennae, satellite, microwave, closed circuit, laser, multi-point distribution services or direct broadcast systems), which transmission is received, directly or indirectly by retransmission or otherwise, impaired or unimpaired, for viewing such film on the screen of a television receiver or comparable device now known or hereafter devised (including high definition television), other than home video exhibition, any exhibition pursuant to the HBO License Agreement or any theatrical exhibition.

“Test Date”: as defined in Section 7.1(a).

“Test Period”: as defined in Section 7.1(a).

“Total Capitalization”: at any date of determination, the sum of Total Debt at such date and book equity of DW Animation at such date, determined without giving effect to unrealized accounting gains and losses relating to interest rate hedge agreements. For the purpose of determining the Leverage Ratio pursuant to Section 7.1(b) at any time, book equity shall be deemed to include the Second Cycle Residual Value at such date.

“Total Debt”: at any date of determination, all Indebtedness of DW Animation and its Subsidiaries (other than Excluded Lease Debt and the HBO Subordinated Debt) determined on a consolidated basis in accordance with GAAP.

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“Trademark License Agreement”: the License Agreement, dated on or prior the Closing Date, between DWA LLC and DreamWorks pursuant to which DW Animation shall grant DreamWorks a license to use certain trademarks.

“Transferee”: any Assignee or Participant.

“Uniform Customs”: the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended from time to time.

“Universal”: Universal Studios, Inc., a Delaware corporation.

“Universal Advance”: the Animation Advance (as defined in the Universal Interparty Agreement) in an amount not to exceed $75,000,000.

“Universal Advance Documents”: the Universal Master Agreement and the Universal Interparty Agreement, together with all other documents or instruments (or portions thereof) governing the terms of the Universal Advance, as amended, supplemented or otherwise modified from time to time.

“Universal Interparty Agreement”: the Interparty Agreement, dated on or prior to the Closing Date, among DreamWorks, DW Animation and Vivendi Universal Entertainment LLP.

“Universal Master Agreement”: the Master Agreement dated as of June 14, 1995, as amended and restated as of June 20, 2001, as further amended and restated as of October 31, 2003, among DreamWorks, Universal and Vivendi Universal Entertainment LLP, as further amended, supplemented or otherwise modified from time to time.

“Unrefunded Swingline Loans”: as defined in Section 2.5(c).

“Unutilized Commitment”: as to any Lender at any time, an amount equal to the excess, if any, of (a) the amount of such Lender’s Commitment over (b) such Lender’s Aggregate Revolving Extensions of Credit.

1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any other Loan Document or any certificate or other document made or delivered pursuant hereto or thereto.

(b) Unless otherwise specified herein, all accounting terms used herein (and in any other Loan Document and any certificate or other document made or delivered pursuant hereto or thereto) shall be interpreted, all accounting determinations shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP as in effect from time to time; provided, however, that if DW Animation notifies the Administrative Agent that DW Animation wishes to amend any covenant in Section 7 to eliminate the effect of any change in GAAP on the operation of such covenant (or if the Administrative Agent notifies DW Animation that the Required Lenders wish to amend Section 7 for such purpose), then compliance with such covenant shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective, until either such notice is withdrawn or such covenant is amended in a manner satisfactory to DW Animation and the Required Lenders.

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(c) Unless otherwise stated herein, all calculations of ultimates pursuant to this Agreement shall be made in a manner consistent with calculations of ultimates made in connection with any financial statements prepared by DW Animation whether pursuant to this Agreement or otherwise.

(d) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwise specified. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

(e) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

SECTION 2. LOANS

2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions hereof, each Lender severally agrees to make revolving credit loans (“Revolving Credit Loans”) to DW Animation from time to time during the Commitment Period. DW Animation may use the Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof.

(b) The Revolving Credit Loans may from time to time be Eurodollar Loans or ABR Loans, as determined by DW Animation and notified to the Administrative Agent in accordance with Sections 2.2 and 2.10; provided that no Revolving Credit Loan of a particular Lender shall be made as a Eurodollar Loan after the day that is one month prior to the Scheduled Termination Date.

2.2 Procedure for Revolving Credit Borrowing. DW Animation may borrow under the Commitments during the Commitment Period on any Business Day; provided that DW Animation shall give the Administrative Agent irrevocable notice (which notice must be received by the Administrative Agent prior to (a) 3:00 P.M., New York City time, three Business Days prior to the requested Borrowing Date, in the case of Eurodollar Loans or (b) 12:00 noon, New York City time on the requested Borrowing Date, in the case of ABR Loans), specifying (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether such borrowing shall consist of Eurodollar Loans or ABR Loans, and (iv) in the case of Eurodollar Loans, the respective amounts thereof and the respective lengths of the initial Interest Periods therefor. Each borrowing under the Commitments shall be in an amount equal to (x) in the case of ABR Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof (or, if the then Unutilized Commitments are less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of $500,000 in excess thereof. Upon receipt of any such notice from DW Animation, the Administrative Agent shall promptly notify each relevant Lender thereof. Each relevant Lender will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of DW Animation at the office of the Administrative Agent specified in Section 10.2 prior to 1:00 P.M., New York City time, on the Borrowing Date requested by DW Animation in funds immediately available to the Administrative Agent. Such borrowing will then be made available to DW Animation by the Administrative Agent crediting the account of DW Animation on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the relevant Lenders and in like funds as received by the Administrative Agent; provided that if, on the Borrowing Date of any Revolving Credit Loans, any Swingline Loans shall be outstanding, the proceeds of such Revolving Credit Loans shall first be applied to pay in full such Swingline Loans, with any remaining proceeds to be made available to DW Animation as provided above.

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2.3 Swingline Commitment. Subject to the terms and conditions hereof, JPMorgan Chase Bank (in such capacity, the “Swingline Lender”) agrees to make available to DW Animation a portion of the credit otherwise available under the Commitments from time to time during the Commitment Period by making Swingline loans (“Swingline Loans”) to DW Animation in an aggregate principal amount not to exceed at any one time outstanding the Swingline Commitment (notwithstanding that the Swingline Loans outstanding at any time, when aggregated with the Swingline Lender’s other outstanding Loans hereunder, may exceed such Lender’s Commitment then in effect). During the Commitment Period, DW Animation may use the Swingline Commitment by borrowing, repaying and reborrowing, all in accordance with the terms and conditions hereof. All Swingline Loans shall at all times be ABR Loans.

2.4 Procedure for Swingline Borrowing. Whenever DW Animation desires that the Swingline Lender make Swingline Loans under Section 2.3 it shall give the Swingline Lender irrevocable telephonic notice confirmed promptly in writing (which telephonic notice must be received by the Swingline Lender not later than 3:00 P.M., New York City time, on the proposed Borrowing Date), specifying (a) the amount to be borrowed and (b) the requested Borrowing Date. Each borrowing under the Swingline Commitment shall be in an amount equal to $500,000 or a whole multiple of $100,000 in excess thereof. Not later than 5:00 P.M., New York City time, on the Borrowing Date specified in a notice in respect of Swingline Loans, the Swingline Lender shall make available to the Administrative Agent for the account of DW Animation at the office of the Administrative Agent specified in Section 10.2 an amount in immediately available funds equal to the amount of the Swingline Loan to be made by the Swingline Lender. The proceeds of such Swingline Loan will then be made available to DW Animation on such Borrowing Date by the Administrative Agent crediting the account of DW Animation on the books of such office with the aggregate of the amounts made available to the Administrative Agent by the Swingline Lender and in like funds as received by the Administrative Agent.

2.5 Refunding of Swingline Loans. (a) The Swingline Lender, at any time and from time to time in its sole and absolute discretion may, on behalf of DW Animation (which hereby irrevocably directs the Swingline Lender to act on its behalf), upon notice given by the Swingline Lender no later than 10:00 A.M., New York City time, on the relevant refunding date, request each Lender to make, and each such Lender hereby agrees to make, a Revolving Credit Loan (which shall be an ABR Loan), in an amount equal to such Lender’s Commitment Percentage of the aggregate amount of the Swingline Loans (the “Refunded Swingline Loans”) outstanding on the date of such notice, to refund such Swingline Loans. Each Lender shall make the amount of such Revolving Credit Loan available to the Administrative Agent at its office set forth in Section 10.2 in immediately available funds, no later than 1:00 P.M., New York City time, on the date of such notice. The proceeds of such Revolving Credit Loans shall be distributed by the Administrative Agent to the Swingline Lender and immediately applied by the Swingline Lender to repay the Refunded Swingline Loans. Effective on the day such Revolving Credit Loans are made, the portion of the Swingline Loans so paid shall no longer be outstanding as Swingline Loans.

(b) The making of any Swingline Loan hereunder shall be subject to the satisfaction of the applicable conditions precedent thereto set forth in Section 5.2 (unless otherwise waived in accordance with Section 10.1). The Swingline Lender shall notify DW Animation of its election not to make Swingline Loans hereunder as a result of the failure to satisfy such conditions precedent, unless an Event of Default of the type specified in Section 8.1(f) shall have occurred and be continuing.

(c) If, for any reason, Revolving Credit Loans may not be (as determined by the Administrative Agent in its sole discretion), or are not, made pursuant to Section 2.5(a) to repay Swingline Loans as required by said Section, then, effective on the date such Revolving Credit Loans would otherwise have been made, each Lender severally, unconditionally and irrevocably agrees that it shall purchase a participating interest in such Swingline Loans (“Unrefunded Swingline Loans”) in an amount equal to the amount of Revolving Credit Loans which would otherwise have been made by such

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Lender pursuant to Section 2.5(a). Each such Lender will immediately transfer to the Administrative Agent, in immediately available funds, the amount of its participation (the “Swingline Participation Amount”), and the proceeds of such participation shall be distributed by the Administrative Agent to the Swingline Lender in such amount as will reduce the amount of the participating interest retained by the Swingline Lender in its Swingline Loans to the amount of the Revolving Credit Loans which were to have been made by it pursuant to Section 2.5(a).

(d) Whenever, at any time after the Swingline Lender has received from any Lender such Lender’s Swingline Participation Amount, the Swingline Lender receives any payment on account of the Swingline Loans, the Swingline Lender will distribute to such Lender its Swingline Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender’s participating interest was outstanding and funded and, in the case of principal and interest payments, to reflect such Lender’s pro rata portion of such payment if such payment is not sufficient to pay the principal of and interest on all Swingline Loans then due); provided, however, that in the event that such payment received by the Swingline Lender is required to be returned, such Lender will return to the Swingline Lender any portion thereof previously distributed to it by the Swingline Lender.

(e) Each Lender’s obligation to make the Loans referred to in Section 2.5(a) and to purchase participating interests pursuant to Section 2.5(c) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any setoff, counterclaim, recoupment, defense or other right which such Lender or DW Animation may have against the Swingline Lender, DW Animation or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the other conditions specified in Section 5; (iii) any adverse change in the condition (financial or otherwise) of DW Animation; (iv) any breach of this Agreement or any other Loan Document by DW Animation or any Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

2.6 Commitment Fee. DW Animation agrees to pay to the Administrative Agent for the account of each Lender a commitment fee (a “Commitment Fee”), computed at a rate per annum equal to the Commitment Fee Rate on the average daily amount of the unutilized Commitment of such Lender for the period for which such payment is made. The Commitment Fee shall be payable quarterly in arrears on the last day of each March, June, September and December and on the last day of the Commitment Period, commencing on the first of such dates to occur after the Effective Date. For the purposes of this Section 2.6, Swingline Loans shall be deemed not to constitute utilization of the Commitments.

2.7 Termination or Reduction of Commitments; Mandatory Prepayments. (a) DW Animation shall have the right, upon not less than five Business Days’ notice to the Administrative Agent, to terminate the Commitments or, from time to time, to reduce the amount of the Commitments; provided that no such termination or reduction of the Commitments shall be permitted if, after giving effect thereto and to any repayments of the Loans made on the effective date thereof, (i) the Facility Exposure would exceed the aggregate Commitments then in effect or (ii) the Aggregate Revolving Extensions of Credit of any Lender would exceed such Lender’s Commitment. Any such reduction shall be in an amount equal to $10,000,000 or a whole multiple thereof and shall reduce permanently the Commitments then in effect.

(b) The Commitments shall automatically be permanently reduced on the date of any Non-Excluded Asset Sale (each, a “Specified Non-Excluded Asset Sale”) occurring on or after the date on which the aggregate fair market value of all assets sold or otherwise disposed of in connection with Non-Excluded Asset Sales since the Closing Date exceeds $50,000,000, such reduction to be in an amount equal to 100% of the Net Cash Proceeds of such asset sale (or the Specified Percentage of such Net Cash Proceeds, in the case of the first Specified Non-Excluded Asset Sale). As used in this Section 2.7(b), the term “Specified Percentage” means, with respect to the first Specified Non-Excluded Asset Sale, the

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quotient, expressed as a percentage, of (i) the excess of the aggregate fair market value of all assets sold or otherwise disposed of in connection with Non-Excluded Asset Sales (including such Specified Non-Excluded Asset Sale) since the Closing Date through the date of such Specified Non-Excluded Asset Sale over $50,000,000 and (ii) the aggregate fair market value of the assets sold or otherwise disposed of in connection with such Specified Non-Excluded Asset Sale.

(c) If, after giving effect to any reduction in the Commitments pursuant to Section 2.7(b), (i) the Aggregate Revolving Extensions of Credit of any Lender exceeds such Lender’s Commitment or (ii) the Facility Exposure exceeds the aggregate Commitments, DW Animation shall, on the date of such reduction, prepay the Revolving Credit Loans and/or Swingline Loans to the extent necessary to eliminate any such excess; provided that if any such prepayment is insufficient to eliminate any such excess (because L/C Obligations constitute a portion thereof), DW Animation shall, on the date of such reduction, to the extent of the balance of such excess, deposit an amount in cash in a cash collateral account established with the Administrative Agent for the benefit of the relevant Lenders on terms and conditions reasonably satisfactory to the Administrative Agent, which deposit shall be released to DW Animation from time to time in the amount of each subsequent reduction of such L/C Obligations.

(d) Within ten Business Days after (i) the date of delivery of any Borrowing Availability Certificate showing that the Facility Exposure exceeds the Borrowing Availability then in effect or (ii) any date on which DW Animation shall otherwise become aware that the Facility Exposure exceeds the Borrowing Availability then in effect, DW Animation shall prepay the Revolving Credit Loans or Swingline Loans (or, if no such Loans remain outstanding, cash collateralize L/Cs on terms satisfactory to the Administrative Agent) in an amount sufficient to cause the Facility Exposure to be no greater than the Borrowing Availability then in effect. The application of any prepayment pursuant to this paragraph (d) shall be made first to ABR Loans and second to Eurodollar Loans.

2.8 Repayment of Loans; Evidence of Debt. (a) DW Animation hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender on the Scheduled Termination Date, the then unpaid principal amount of each Revolving Credit Loan and Swingline Loan made by such Lender. DW Animation hereby further agrees to pay interest in immediately available funds at the office of the Administrative Agent on the unpaid principal amount of the Loans from time to time outstanding from the Closing Date until payment in full thereof at the rates per annum, and on the dates, set forth in Section 2.12.

(b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of DW Animation to such Lender resulting from each Loan of such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

(c) The Administrative Agent shall maintain the Register pursuant to Section 10.6(b), and a subaccount therein for each Lender, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each Loan made hereunder, whether such Loan is a Revolving Credit Loan or Swingline Loan, whether, if applicable, such Loan is an ABR Loan or a Eurodollar Loan, and any Interest Period applicable to such Loan, (ii) the amount of any principal or interest due and payable or to become due and payable from DW Animation to each Lender hereunder and (iii) both the amount of any sum received by the Administrative Agent hereunder from DW Animation and each Lender’s share thereof.

(d) The entries made in the Register and the accounts of each Lender maintained pursuant to Section 2.8(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of DW Animation therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain the Register or any such account, or any

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error.therein, shall not in any manner affect the obligation of DW Animation to repay (with applicable interest) the Loans made to DW Animation by such Lender in accordance with the terms of this Agreement.

2.9 Optional Prepayments. DW Animation may at any time and from time to time prepay the Loans, in whole or in part, without premium or penalty, upon at least one Business Day’s irrevocable notice to the Administrative Agent, specifying the date and amount of prepayment, whether the prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each; provided that notice of any prepayment of Swingline Loans may be delivered to the Administrative Agent as late as, but not later than, 12:00 Noon, New York City time, on the date of such prepayment. Upon receipt of any such notice, the Administrative Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with (in the case of any Eurodollar Loans) any amounts payable pursuant to Section 2.18 and (except in the case of ABR Loans) accrued interest to such date on the amount prepaid. Partial prepayments of Loans (other than Swingline Loans) pursuant to this Section 2.9 shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof (or, if less, the remaining outstanding principal amount thereof). Partial prepayments of Swingline Loans shall be in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof (or, if less, the remaining outstanding principal amount thereof).

2.10 Conversion and Continuation Options. (a) DW Animation may elect from time to time to convert Eurodollar Loans to ABR Loans by giving the Administrative Agent at least one Business Day’s prior irrevocable notice of such election; provided that any such conversion of Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. DW Animation may elect from time to time to convert ABR Loans to Eurodollar Loans by giving the Administrative Agent at least three Business Days’ prior irrevocable notice of such election. Any such notice of conversion to Eurodollar Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. All or any part of outstanding Eurodollar Loans and ABR Loans may be converted as provided herein; provided that no ABR Loan made by a particular Lender may be converted into a Eurodollar Loan after the date that is one month prior to the Scheduled Termination Date.

(b) Any Eurodollar Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by DW Animation giving notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans; provided that no Eurodollar Loan may be continued as such after the date that is one month prior to the Scheduled Termination Date or when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such continuations, and provided, further, that if DW Animation shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Loans shall be automatically converted to ABR Loans on the last day of such then expiring Interest Period.

2.11 Minimum Amounts and Maximum Number of Tranches. Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions, continuations and prepayments of Eurodollar Loans and all selections of Interest Periods shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, (a) the aggregate principal amount of the Loans comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and (b) there shall be no more than 10 Eurodollar Tranches outstanding at any time.

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2.12 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such Interest Period plus the Applicable Margin.

(b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the Applicable Margin.

(c) If all or a portion of (i) the principal amount of any Loan, (ii) any interest payable thereon or (iii) any Commitment Fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this Section 2.12 plus 2% or (y) in the case of any overdue interest, Commitment Fee or other amount, equal to the rate then applicable to ABR Loans plus 2%, in each case from the date of such non-payment until such amount is paid in full (whether before or after judgment).

(d) Interest shall be payable in arrears on each Interest Payment Date; provided that interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on demand.

2.13 Computation of Interest and Fees. (a) Commitment Fees and interest (other than interest calculated on the basis of the Prime Rate) shall be calculated on the basis of a 360-day year for the actual days elapsed. Interest calculated on the basis of the Prime Rate shall be calculated on the basis of a 365- or 366- (as the case may be) day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify DW Animation and the Lenders of each determination of a Eurodollar Rate in respect of any Eurodollar Tranche. Any change in the interest rate on a Loan resulting from a change in the ABR shall become effective as of the opening of business on the day on which such change becomes effective. The Administrative Agent shall as soon as practicable notify DW Animation and the Lenders of the effective date and the amount of each such change in interest rate.

(b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on DW Animation and the Lenders in the absence of manifest error. The Administrative Agent shall, at the request of DW Animation, deliver to DW Animation a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to Section 2.12(a).

2.14 Inability to Determine Interest Rate. If prior to the first day of any Interest Period:

(a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon DW Animation) that, by reason of circumstances affecting the eurodollar market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or

(b) the Administrative Agent shall have received notice from the Required Lenders that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Eurodollar Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to DW Animation and the Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans requested to be made on the first day of such Interest Period shall be made as ABR Loans and (y) any Loans that, on the first day of such Interest Period, were to be converted to or continued as Eurodollar Loans shall be

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converted to or continued as ABR Loans. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made or continued as such, nor shall DW Animation have the right to convert ABR Loans to Eurodollar Loans.

2.15 Pro Rata Treatment and Payments. (a) Except as contemplated by Section 2.7, (i) each reduction of the Commitments and each payment in respect of Commitment Fees shall be made pro rata according to the respective Commitment Percentages of the Lenders and (ii) each payment (including each prepayment) by DW Animation on account of principal of and interest on Loans shall be made pro rata according to the respective outstanding principal amount of such Loans then held by the Lenders. Notwithstanding anything to the contrary in this Agreement, if an Event of Default shall have occurred and be continuing, each payment (including each prepayment) by DW Animation on account of principal of and interest on Loans shall be made pro rata according to the respective outstanding principal amount of all such Loans then held by all Lenders. All payments (including prepayments) to be made by DW Animation hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set off or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Administrative Agent, for the account of the Lenders, at the Administrative Agent’s office specified in Section 10.2, in Dollars and in immediately available funds. The Administrative Agent shall distribute such payments to the relevant Lenders promptly upon receipt in like funds as received. If any payment hereunder (other than payments on Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day (and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension) unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day.

(b) Unless the Administrative Agent shall have been notified in writing by any Lender prior to a borrowing that such Lender will not make the amount that would constitute its share of such borrowing available to the Administrative Agent, the Administrative Agent may assume that such Lender is making such amount available to the Administrative Agent, and the Administrative Agent may, in reliance upon such assumption, make available to DW Animation a corresponding amount. If such amount is not made available to the Administrative Agent by the required time on the Borrowing Date therefor, such Lender shall pay to the Administrative Agent, on demand, such amount with interest thereon at a rate equal to the daily average Federal Funds Effective Rate for the period until such Lender makes such amount immediately available to the Administrative Agent. A certificate of the Administrative Agent submitted to any Lender with respect to any amounts owing under this Section 2.15(b) shall be conclusive in the absence of manifest error. If such Lender’s share of such borrowing is not made available to the Administrative Agent by such Lender within three Business Days of such Borrowing Date, the Administrative Agent shall also be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans, on demand, from DW Animation.

2.16 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority (other than tax laws), in each case made subsequent to the date hereof:

(i) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender which is not otherwise included in the determination of the Eurodollar Rate; or

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(ii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender (other than an increase in taxes), by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or issuing or participating in L/Cs or to reduce any amount receivable hereunder in respect thereof, then, in any such case, DW Animation shall promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable. If any Lender becomes entitled to claim any additional amounts pursuant to this Section 2.16(a), it shall promptly notify DW Animation, through the Administrative Agent, of the event by reason of which it has become so entitled.

(b) If any Lender shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority, in each case made subsequent to the date hereof, has the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder or under any L/C to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, after submission by such Lender to DW Animation (with a copy to the Administrative Agent) of a written request therefor, DW Animation shall promptly pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction.

(c) DW Animation agrees to pay to each Lender which requests compensation under this Section 2.16(c) (by notice to DW Animation), on the last day of each Interest Period with respect to any Eurodollar Loan made by such Lender, so long as such Lender shall be required to maintain reserves against “Eurocurrency liability” under Regulation D of the Board (or, so long as such Lender may be required by the Board or by any other Governmental Authority to maintain reserves against any other “category of liabilities” under Regulation D of the Board (or, so long as such Lender may be required by the Board or by any other Governmental Authority to maintain reserves against any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Loans is determined as provided in this Agreement or against any category of extensions of credit or other assets of such Lender which includes any Eurodollar Loans), an additional amount (determined by such Lender and notified to DW Animation) representing such Lender’s calculation or, if an accurate calculation is impracticable, reasonable estimate (using such reasonable means of allocation as such Lender shall determine) of the actual costs, if any, incurred by such Lender during such Interest Period, as a result of the applicability of the foregoing reserves to such Eurodollar Loans, which amount in any event shall not exceed the product of the following for each day of such Interest Period:

(i) the principal amount of the Eurodollar Loans made by such Lender to which such Interest Period relates and outstanding on such day; and

(ii) the difference between (x) a fraction, the numerator of which is the Eurodollar Rate (expressed as a decimal) applicable to such Eurodollar Loan and the denominator of which is one minus the maximum rate (expressed as a decimal) at which such reserve requirements are imposed by the Board or other Governmental Authority on such date, minus (y) such numerator; and

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(iii) a fraction the numerator of which is one and the denominator of which is 360.

Any Lender which gives notice under this Section 2.16(c) shall promptly withdraw such notice (by written notice of withdrawal given to the Administrative Agent and DW Animation) in the event such Lender is no longer required to maintain such reserves or the circumstances giving rise to such notice shall otherwise cease to exist.

(d) A certificate as to any additional amounts payable pursuant to this Section 2.16 submitted by any Lender, through the Administrative Agent, to DW Animation shall specify in reasonable detail the basis for the request for compensation of such additional amounts and the method of computation thereof and shall be conclusive in the absence of manifest error. DW Animation shall (except as otherwise provided in Section 2.16(c)) pay each Lender the amount shown as due on any such certificate delivered by it within 30 days after receipt thereof. The obligations of DW Animation pursuant to this Section 2.16 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

(e) Promptly after any Lender has determined that it will make a request for additional amounts pursuant to this Section 2.16, such Lender will notify DW Animation thereof. Failure on the part of any Lender so to notify DW Animation or to demand additional amounts with respect to any period shall not constitute a waiver of such Lender’s right to demand additional amounts with respect to such period or any other period; provided that DW Animation shall not be under any obligation to compensate any Lender with respect to increased costs or reductions with respect to any period prior to the date (the “Cut-Off Date”) that is six months prior to such request if such Lender was aware on the Cut-Off Date of the circumstances giving rise to such increased costs or reductions and of the fact that such circumstances would in fact result in such increased costs or reduction and provided, further, that the limitation in the preceding proviso shall not apply to any increased costs or reductions arising out of the retroactive application of any Requirement of Law.

2.17 Taxes. (a) Except as otherwise required by law, all payments made by DW Animation under this Agreement and the other Loan Documents shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) and branch profits taxes imposed on the Administrative Agent or any Lender (or Transferee) as a result of a present or former connection between the Administrative Agent or such Lender (or Transferee) and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Lender (or Transferee) having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement). If any such non-excluded taxes, levies, imposts, duties, charges, fees deductions or withholdings (“Non-Excluded Taxes”) are required to be withheld from any amounts payable to the Administrative Agent or any Lender (or Transferee) hereunder, the amounts so payable to the Administrative Agent or such Lender (or Transferee) shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (or Transferee) (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement; provided, however, that DW Animation shall not be required to increase any such amounts payable to any Non-U.S. Lender if such Non-U.S. Lender fails to comply with the requirements of paragraph (c) of this Section 2.17. Whenever any Non-Excluded Taxes are payable by DW Animation, as promptly as possible thereafter DW Animation shall send to the Administrative Agent for its own account or for the account of such Lender (or Transferee), as the case may be, a certified copy of an original official receipt received by DW Animation showing payment thereof. If DW Animation fails to pay any Non-Excluded Taxes when due

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to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, DW Animation shall indemnify the Administrative Agent and the Lenders (and the Transferees) for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Lender (or Transferee) as a result of any such failure. The agreements in this Section 2.17 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

(b) If any Lender (or Transferee) or the Administrative Agent, as applicable, receives a refund of a tax for which a payment has been made by DW Animation pursuant to this Section 2.17, which refund in the good faith judgment of such Lender (or Transferee) or the Administrative Agent, as the case may be, is attributable to such payment made by DW Animation, then the Lender (or Transferee) or the Administrative Agent, as the case may be, shall reimburse DW Animation (without interest, other than interest paid by the relevant taxing authority with respect to such refund) for such amount as the Lender (or Transferee) or the Administrative Agent, as the case may be, determines to be the proportion of the refund as will leave it, after such reimbursement, in no better or worse position than it would have been if the payment had not been required. Each Lender (or Transferee) and the Administrative Agent, as the case may be, shall claim any refund that it determines is available to it, unless it concludes in its reasonable discretion that it would be adversely affected by making such a claim. Neither any Lender (or Transferee) nor the Administrative Agent shall be obligated to disclose any information regarding its tax affairs or computations to DW Animation in connection with this paragraph (b) or any other provision of this Section 2.17.

(c) Each Non-U.S. Lender shall deliver to DW Animation and the Administrative Agent two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit F and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by DW Animation under this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any Participant, on or before the date such Participant purchases the related participation) and on or before the date, if any, such Non-U.S. Lender changes its applicable lending office by designating a different lending office (a “New Lending Office”). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify DW Animation at any time it determines that it is no longer in a position to provide any previously delivered certificate to DW Animation (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of this Section 2.17(c), a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 2.17(c) that such Non-U.S. Lender is not legally able to deliver.

(d) Notwithstanding any other provision of this Section 2.17, DW Animation shall not be required to indemnify any Non-U.S. Lender, or to pay any additional amounts to any Non-U.S. Lender, in respect of United States federal withholding tax pursuant to paragraph (a) above to the extent that the obligation to withhold amounts with respect to United States federal withholding tax existed on the date such Non-U.S. Lender became a party to this Agreement (or, in the case of a Transferee that is a Participant, on the date such Participant became a Transferee hereunder) or, with respect to payments to a New Lending Office, the date such Non-U.S. Lender designated such New Lending Office with respect to a Loan.

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(e) Any Lender (or Transferee) claiming any indemnity payment or additional amounts payable pursuant to this Section 2.17 shall use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document reasonably requested in writing by DW Animation if the making of such a filing would avoid the need for or reduce the amount of any such indemnity payment or additional amounts that may thereafter accrue and would not, in the sole determination of such Lender (or Transferee), be otherwise disadvantageous to such Lender (or Transferee).

(f) Each Lender (or Transferee) represents that it is not, and agrees that at all times during the term of this Agreement will not be, a conduit entity participating in a conduit financing arrangement (as defined in Section 7701(l) of the Code and the regulations thereunder) with respect to any Loan.

2.18 Indemnity. DW Animation agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of (a) default by DW Animation in making a borrowing of Eurodollar Loans or in the conversion into or continuation of Eurodollar Loans after DW Animation has given a notice requesting the same in accordance with the provisions of this Agreement, (b) default by DW Animation in making any prepayment of Eurodollar Loans after DW Animation has given a notice thereof in accordance with the provisions of this Agreement or (c) the making of a prepayment of Eurodollar Loans on a day which is not the last day of an Interest Period with respect thereto. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or the proposed Interest Period), in each case at the applicable rate of interest for such Loans provided for herein (excluding, however, the margin included therein) over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. The obligations contained in this Section 2.18 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

2.19 Change of Lending Office. Each Lender (or Transferee) agrees that, upon the occurrence of any event giving rise to the operation of Section 2.16 or 2.17 with respect to such Lender (or Transferee), it will, if requested by DW Animation, use reasonable efforts (subject to overall policy considerations of such Lender (or Transferee)) to designate another lending office for any Loans affected by such event with the object of avoiding the consequences of such event; provided that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no material economic, legal or regulatory disadvantage, and provided, further, that nothing in this Section 2.19 shall affect or postpone any of the obligations of DW Animation or the rights of any Lender (or Transferee) pursuant to Sections 2.16 and 2.17.

2.20 Replacement of Lenders under Certain Circumstances. DW Animation shall be permitted to replace any Lender which (a) requests reimbursement for amounts owing pursuant to Section 2.16 or 2.17 or (b) defaults in its obligation to make Revolving Credit Loans or Swingline Loans hereunder, with a replacement bank or other financial institution; provided that (i) such replacement does not conflict with any Requirement of Law, (ii) no Event of Default shall have occurred and be continuing at the time of such replacement, (iii) DW Animation shall repay (or the replacement bank or institution shall purchase, at par) all Loans and other amounts owing to such replaced Lender prior to the date of replacement, (iv) DW Animation shall be liable to such replaced Lender under Section 2.18 if any Eurodollar Loan owing to such replaced Lender shall be prepaid (or purchased) other than on the last day of the Interest Period relating thereto, (v) the replacement bank or institution, if not already a Lender, and the terms and conditions of such replacement, shall be reasonably satisfactory to the Administrative Agent, (vi) the

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replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 10.6 (provided that DW Animation shall be obligated to pay the registration and processing fee referred to therein), (vii) until such time as such replacement shall be consummated, DW Animation shall pay all additional amounts (if any) required pursuant to Section 2.16 or 2.17, as the case may be, and (viii) any such replacement shall not be deemed to be a waiver of any rights which DW Animation, the Administrative Agent or any other Lender shall have against the replaced Lender or that the replaced Lender shall have under this Agreement.

SECTION 3. L/CS

3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the L/C Issuer, in reliance on the agreements of the other Lenders set forth in Section 3.3(a), agrees to issue L/Cs (“L/Cs”) for the account of DW Animation on any Business Day during the Commitment Period in such form as may be approved from time to time by the L/C Issuer; provided that the L/C Issuer shall have no obligation to issue any L/C if, after giving effect to such issuance, the sum of the L/C Obligations would exceed the L/C Commitment. It is understood that the Existing L/Cs shall be deemed to constitute L/Cs hereunder. Each L/C (i) shall be denominated in Dollars, (ii) shall expire no later than the earlier of (x) the fifth Business Day prior to the Scheduled Termination Date and (y) the first anniversary of the date of issuance thereof; provided that any L/C with a one-year tenor may provide for the renewal thereof for additional one-year periods, and provided, further, that in no event shall such L/C extend beyond the date that is the fifth Business Day prior to the Scheduled Termination Date) and (iii) unless otherwise agreed by the L/C Issuer in its sole discretion, shall be in a face amount of at least $1,000,000. It is understood that the letter of credit described on Schedule 3.1 hereto shall be a “L/C” for all purposes of this Agreement.

(b) The L/C Issuer shall not at any time be obligated to issue any L/C hereunder if such issuance would conflict with, or cause the L/C Issuer or any L/C Participant to exceed any limits imposed by, any applicable Requirement of Law.

3.2 Procedure for Issuance of L/Cs. DW Animation may from time to time request that the L/C Issuer issue an L/C by delivering to the L/C Issuer at its address for notices specified herein an Application therefor, completed to the reasonable satisfaction of the L/C Issuer, and such other certificates, documents and other papers and information as the L/C Issuer may reasonably request. Upon receipt of any Application, the L/C Issuer will process such Application and the certificates, documents and other papers and information delivered to it in connection therewith in accordance with its customary procedures and shall promptly issue the L/C requested thereby (but in no event shall the L/C Issuer be required to issue any L/C earlier than three Business Days after its receipt of the Application therefor and all such other certificates, documents and other papers and information relating thereto) by issuing the original of such L/C to the beneficiary thereof or as otherwise may be agreed by the L/C Issuer and DW Animation. The L/C Issuer shall furnish a copy of such L/C to DW Animation and each Lender promptly following the issuance thereof.

3.3 L/C Participations. (a) The L/C Issuer irrevocably agrees to grant and hereby grants to each L/C Participant, and, to induce the L/C Issuer to issue L/Cs hereunder, each L/C Participant irrevocably agrees to accept and purchase and hereby accepts and purchases from the L/C Issuer, on the terms and conditions hereinafter stated, for such L/C Participant’s own account and risk, an undivided interest equal to such L/C Participant’s Commitment Percentage in the L/C Issuer’s obligations and rights under each L/C and the amount of each draft paid by the L/C Issuer thereunder. Each L/C Participant unconditionally and irrevocably agrees with the L/C Issuer that, if a draft is paid under any L/C for which the L/C Issuer is not reimbursed in full by DW Animation in accordance with the terms of this Agreement, such L/C Participant shall pay to the L/C Issuer upon demand at the L/C Issuer’s address for notices specified herein an amount equal to such L/C Participant’s Commitment Percentage of the amount of such draft, or any part thereof, which is not so reimbursed.

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(b) If any amount required to be paid by any L/C Participant to the L/C Issuer pursuant to Section 3.3(a) in respect of any unreimbursed portion of any payment made by the L/C Issuer under any L/C is paid to the L/C Issuer within three Business Days after the date such payment is due, such L/C Participant shall pay to the L/C Issuer on demand an amount equal to the product of (i) such amount, times (ii) the daily average Federal funds rate, as quoted by the L/C Issuer, during the period from and including the date such payment is required to the date on which such payment is immediately available to the L/C Issuer, times (iii) a fraction the numerator of which is the number of days that elapse during such period and the denominator of which is 360. If any such amount required to be paid by any L/C Participant pursuant to Section 3.3(a) is not in fact made available to the L/C Issuer by such L/C Participant within three Business Days after the date such payment is due, the L/C Issuer shall be entitled to recover from such L/C Participant, on demand, such amount with interest thereon calculated from such due date at the rate per annum applicable to ABR Loans. A certificate of the L/C Issuer submitted to any L/C Participant with respect to any amounts owing under this Section 3.3 shall be conclusive in the absence of manifest error.

(c) Whenever, at any time after the L/C Issuer has made payment under any L/C and has received from any L/C Participant its prorata share of such payment in accordance with Section 3.3(a), the L/C Issuer receives any payment related to such L/C (whether directly from DW Animation or otherwise), or any payment of interest on account thereof, the L/C Issuer will distribute to such L/C Participant its prorata share thereof; provided, however, that in the event that any such payment received by the L/C Issuer shall be required to be returned by the L/C Issuer, such L/C Participant shall return to the L/C Issuer the portion thereof previously distributed by the L/C Issuer to it.

3.4 Fees, Commissions and Other Charges. (a) DW Animation shall pay to the Administrative Agent, for the account of the Lenders, a letter of credit commission with respect to each L/C at a rate per annum equal to 1.75% on the average daily amount available to be drawn under such L/C during the period for which payment is made. Such commission shall be payable to the Lenders (including JPMorgan Chase Bank) to be shared ratably among them in accordance with their respective Commitment Percentages. In addition, DW Animation shall pay to the Administrative Agent, for the sole account of the L/C Issuer, a fronting fee with respect to each L/C at a rate per annum equal to 0.125% on the average daily amount available to be drawn under such L/C during the period for which payment is made. Each such letter of credit commission and fronting fee shall be payable in arrears on each L/C Fee Payment Date.

(b) In addition to the foregoing commissions and fees, DW Animation shall pay or reimburse the L/C Issuer for such reasonable and customary costs and expenses as are incurred or charged by the L/C Issuer in issuing, effecting payment under, amending or otherwise administering any L/C.

3.5 Reimbursement Obligation of DW Animation. DW Animation agrees to reimburse the L/C Issuer on each date on which the L/C Issuer notifies DW Animation of the date and amount of a draft presented under any L/C and paid by the L/C Issuer for the amount of (a) such draft so paid and (b) any taxes, fees, charges or other reasonable costs or expenses incurred by the L/C Issuer in connection with such payment. Each such payment shall be made to the L/C Issuer at its address for notices specified herein in Dollars and in immediately available funds. Interest shall be payable on any and all amounts remaining unpaid by DW Animation under this Section 3.5 from and including the date such amounts become payable (whether at stated maturity, by acceleration or otherwise) to but not including the date of payment in full at the rate which would be payable on any outstanding ABR Loans which were then overdue. Each drawing under any L/C shall constitute a request by DW Animation to the Administrative

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Agent for a borrowing of Revolving Credit Loans which are ABR Loans pursuant to Section 2.2 in the amount of such drawing. The Borrowing Date with respect to such borrowing shall be the date of such drawing, and the proceeds of such Revolving Credit Loans shall be applied by the Administrative Agent to reimburse the L/C Issuer for the amounts drawn under such L/C.

3.6 Obligations Absolute. DW Animation’s obligations under this Section 3 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which DW Animation may have or have had against the L/C Issuer or any beneficiary of an L/C. DW Animation also agrees with the L/C Issuer that, except as contemplated by the next succeeding sentence, the L/C Issuer shall not be responsible for, and DW Animation’s Reimbursement Obligations under Section 3.5 shall not be affected by, among other things, the validity or genuineness of documents or of any endorsements thereon, even though such documents shall in fact prove to be invalid, fraudulent or forged, or any dispute between or among DW Animation and any beneficiary of any L/C or any other party to which such L/C may be transferred or any claims whatsoever of DW Animation against any beneficiary of such L/C or any such transferee. The L/C Issuer shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any L/C, except to the extent of any errors or omissions found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the L/C Issuer. DW Animation agrees that any action taken or omitted by the L/C Issuer under or in connection with any L/C or the related drafts or documents, if done in the absence of gross negligence and willful misconduct, shall be binding on DW Animation and shall not result in any liability of the L/C Issuer to DW Animation.

3.7 L/C Payments. If any draft shall be presented for payment under any L/C, the applicable L/C Issuer shall promptly notify DW Animation of the date and amount thereof. The responsibility of the L/C Issuer to DW Animation in connection with any draft presented for payment under any L/C shall, in addition to any payment obligation expressly provided for in such L/C, be limited to determining that the documents (including each draft) delivered under such L/C in connection with such presentment are in conformity with such L/C.

3.8 Applications; Uniform Customs. To the extent that any provision of any Application related to any L/C is inconsistent with the provisions of this Section 3, the provisions of this Section 3 shall apply. Each L/C shall be subject to the Uniform Customs and, to the extent not inconsistent therewith, the laws of the State of New York.

SECTION 4. REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this Agreement and to make the Loans and issue or participate in the L/Cs, DW Animation hereby represents and warrants to the Administrative Agent and each Lender that:

4.1 Financial Statements. The audited consolidated balance sheets of DW Animation as at December 31, 2001, December 31, 2002 and December 31, 2003, and the related consolidated statements of income and retained earnings and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from Ernst & Young LLP, present fairly the consolidated financial condition of DW Animation as at each such date, and the consolidated results of its operations and its consolidated retained

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earnings and cash flows for the respective fiscal years then ended. The unaudited consolidated balance sheets of DW Animation as at March 31, 2004 and June 30, 2004, and the related unaudited consolidated statements of income and retained earnings and of cash flows for the portion of the fiscal year ended on each such date, present fairly the consolidated financial condition of DW Animation as at such date, and the consolidated results of its operations and its consolidated retained earnings and cash flows for the portion of the fiscal year then ended (subject to normal year-end audit adjustments). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). Except as set forth in Schedule 4.1, DW Animation and its Subsidiaries do not have any material Guarantee Obligations, contingent liabilities and liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the audited financial statements as at December 31, 2003 referred to in this paragraph. Except as set forth on Schedule 4.1, during the period from December 31, 2003 to and including the date hereof there has been no sale, transfer or other disposition by DW Animation or any of its Subsidiaries of any material part of its business or property.

4.2 No Material Adverse Change. Since December 31, 2003 there has been no development or event which has had or could reasonably be expected to have a Material Adverse Effect.

4.3 Existence; Compliance with Law. Each of DW Animation and each of its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is qualified to do business in each jurisdiction where such qualification is required, except to the extent that the failure to qualify therein could not, in the aggregate, reasonably be expected to have a Material Adverse Effect and (d) is in compliance with all Requirements of Law, except to the extent that the failure to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

4.4 Power; Authorization; Enforceable Obligations. Each Loan Party has the power and authority, and the legal right, to make, deliver and perform each Loan Document to which it is a party and, in the case of DW Animation, to borrow hereunder and has taken all necessary action to authorize the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party and, in the case of DW Animation, the borrowings on the terms and conditions of this Agreement. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or the other Loan Documents. This Agreement has been, and each other Loan Document to which it is a party will be, duly executed and delivered on behalf of each Loan Party party thereto. This Agreement constitutes, and each other Loan Document to which it is a party when executed and delivered will constitute, a legal, valid and binding obligation of each Loan Party party thereto, enforceable against each such Loan Party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

4.5 No Legal Bar. The execution, delivery and performance of the Loan Documents to which any Loan Party is a party, the borrowings hereunder and the use of the proceeds thereof will not violate any Requirement of Law or Contractual Obligation of DW Animation or of any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation (other than the Liens created by the Security Documents).

4.6 No Material Litigation. Except as set forth on Schedule 4.6, no litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of DW Animation, threatened by or against DW Animation or any of its Subsidiaries or against any of its or their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) which could reasonably be expected to have a Material Adverse Effect.

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4.7 No Default. Neither DW Animation nor any of its Subsidiaries is in default under or with respect to any of its Contractual Obligations in any respect which could reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing.

4.8 Ownership of Property; Liens. Each of DW Animation and its Subsidiaries has good title to, or a valid leasehold interest in, all its material real property, and good title to, or a valid leasehold interest in, all its other material property, and none of such property is subject to any Lien except as permitted by Section 7.2.

4.9 Intellectual Property. DW Animation and each of its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, technology, know-how and processes (the “Intellectual Property”) necessary for the conduct of its business as currently conducted except for those the failure to own or license which could not reasonably be expected to have a Material Adverse Effect. No material claim has been asserted and is pending by any Person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does DW Animation know of any valid basis for any such claim. The use of such Intellectual Property by DW Animation and its Subsidiaries does not infringe on the rights of any Person, except for such claims and infringements that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

4.10 Taxes. Each of DW Animation and its Subsidiaries has filed or caused to be filed all material tax returns which, to the knowledge of DW Animation, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property by any Governmental Authority (other than any the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of DW Animation or its Subsidiaries, as the case may be); no tax Lien has been filed, and, to the knowledge of DW Animation, no claim is being asserted, with respect to any such tax, fee or other charge.

4.11 Accuracy of Information. Neither the Confidential Information Memorandum (taken as a whole and as supplemented by DW Animation prior to the date hereof) nor this Agreement, any other Loan Document or any other document, certificate or statement furnished to the Administrative Agent or the Lenders or any of them, by or on behalf of any Loan Party for use in connection with the transactions contemplated by this Agreement or the other Loan Documents (excluding the projections, financial models and business plans referred to in the next succeeding sentence), contained as of the date such statement, information, document or certificate was so furnished (or, in the case of the Confidential Information Memorandum, as of the Closing Date) any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements contained herein or therein not materially misleading. The projections, financial models and business plans that have been or are hereafter prepared by DW Animation or any of its representatives and made available to the Administrative Agent or the Lenders have been or will be prepared in good faith based upon assumptions believed by the management of DW Animation to be reasonable, it being recognized that such projections, financial models and business plans, as they relate to future events, are not to be viewed as fact and that actual results during the period or periods covered thereby may differ materially from the projected results set forth therein. There is no fact known to any Credit Party on the Closing Date that could reasonably be expected to have a Material Adverse Effect that has not been expressly disclosed herein, in the other Loan Documents, in the Confidential Information Memorandum or in such other documents, certificates and statements furnished to the Administrative Agent and the Lenders for use in connection with the transactions contemplated hereby and by the other Loan Documents.

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4.12 Federal Regulations. No part of the proceeds of any Loans will be used for “buying” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board as now and from time to time hereafter in effect. If requested by any Lender or the Administrative Agent, DW Animation will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in said Regulation U.

4.13 ERISA. Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code, except in each case to the extent that the liability which could reasonably be expected to result could not reasonably be expected to have a Material Adverse Effect. No termination of a Single Employer Plan has occurred except where, in connection with any such termination, the liability that could reasonably be expected to result could not reasonably be expected to have a Material Adverse Effect, and no Lien that remains undischarged in favor of the PBGC or a Plan has arisen, during such five-year period. The present value of all accrued benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits, except in each case to the extent that the same could not reasonably be expected to have a Material Adverse Effect. Neither DW Animation nor any Commonly Controlled Entity has had a complete or partial withdrawal from any Multiemployer Plan, and neither DW Animation nor any Commonly Controlled Entity would become subject to any liability under ERISA if DW Animation or any such Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date most closely preceding the date on which this representation is made or deemed made, except in each case to the extent that the same could not reasonably be expected to have a Material Adverse Effect. No such Multiemployer Plan is in Reorganization or Insolvent except where, in any such case, the liability that could reasonably be expected to result could not reasonably be expected to have a Material Adverse Effect.

4.14 Investment Company Act; Other Regulations. DW Animation is not an “investment company”, or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended. DW Animation is not subject to regulation under any Federal or State statute or regulation (other than Regulation X of the Board) which limits its ability to incur Indebtedness.

4.15 Subsidiaries. Set forth on Schedule 4.15 are the Subsidiaries of DW Animation as of the date hereof.

4.16 Purpose of Loans. The proceeds of the Loans shall be used by DW Animation for general purposes including, without limitation, to finance the development, production and distribution costs of entertainment software and to finance acquisitions and investments.

4.17 Security Documents. The Guarantee and Collateral Agreement is effective to create in favor of the Administrative Agent, for the benefit of the Lenders, a legal, valid and enforceable security interest in the Collateral described therein and proceeds thereof. In the case of the Pledged Stock described in the Guarantee and Collateral Agreement, when stock certificates representing such Pledged Stock are delivered to the Administrative Agent, and in the case of the other Collateral described in the Guarantee and Collateral Agreement, when financing statements and other filings specified on Schedule 4.17(a) in appropriate form are filed in the offices specified on Schedule 4.17(a), the Guarantee and Collateral Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and

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interest of the Loan Parties in such Collateral and the proceeds thereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), in each case prior and superior in right to any other Person (except, in the case of Collateral other than Pledged Stock, Liens permitted by Section 7.2).

SECTION 5. CONDITIONS PRECEDENT

5.1 Conditions to Initial Extension of Credit. The agreement of each Lender to make the initial extension of credit requested to be made by it is subject to the satisfaction, prior to or concurrently with the making of such extension of credit on the Closing Date, of the following conditions precedent on or prior to November 15, 2004:

(a) Credit Agreement; Guarantee and Collateral Agreement. The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of DW Animation and each of the Persons listed on Schedule 1.1A, (ii) the Guarantee and Collateral Agreement, executed and delivered by DW Animation and by a duly authorized officer of each Subsidiary Guarantor (other than any Excluded Foreign Subsidiary), and (iii) an Acknowledgement and Consent in the form attached to the Guarantee and Collateral Agreement, executed and delivered by each Subsidiary which is an Issuer (as defined in the Guarantee and Collateral Agreement) but not a Loan Party.

(b) Closing Certificate. The Administrative Agent shall have received a certificate of each Loan Party, dated the Closing Date, substantially in the form of Exhibit B, with appropriate insertions and attachments, in each case reasonably satisfactory in form and substance to the Administrative Agent and, in any event, in the case of DW Animation, certifying that no Default or Event of Default is then in existence, executed by a Responsible Officer and the Secretary or any Assistant Secretary of such Loan Party.

(c) DW Animation IPO. (i) The initial public offering of the common stock of DW Animation shall have been consummated and (ii) the amount of cash retained by DW Animation from such proceeds shall equal at least $150,000,000.

(d) Employment Agreement. Jeffrey Katzenberg shall have entered into an employment agreement reasonably satisfactory to the Administrative Agent.

(e) DreamWorks Securitization Documents. The documents relating to DreamWorks’ existing securitization shall have been amended in a manner reasonably satisfactory to the Administrative Agent to permit the exclusion of the animated film library from DreamWorks’ existing securitization.

(f) Legal Opinions. The Administrative Agent shall have received the following executed legal opinions, or substitute opinions, dated the Closing Date, reasonably satisfactory to the Administrative Agent:

(i) the executed legal opinion of Cravath, Swaine & Moore LLP, special counsel to DW Animation, substantially in the form of Exhibit C-1;

(ii) the executed legal opinion of Katherine Kendrick, General Counsel of DW Animation, substantially in the form of Exhibit C-2;

(iii) the executed legal opinion of Seyfarth Shaw, special counsel to DW Animation, substantially in the form of Exhibit C-3; and

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(iv) the executed legal opinion of Richards, Layton & Finger, special counsel to DW Animation, substantially in the form of Exhibit C-4.

(g) Fees. The Administrative Agent shall have received, for the benefit of the Lenders, all fees and expenses required to be paid to the Lenders on or prior to the Closing Date.

(h) Financial Statements. The Lenders shall have received the financial statements referred to in Section 4.1.

(i) Projections. The Administrative Agent shall have received satisfactory projections through the 2009 fiscal year.

(j) Pledged Stock; Stock Powers; Pledged Notes. The Administrative Agent shall have received (i) the certificates, if any, representing the shares of Capital Stock pledged pursuant to the Guarantee and Collateral Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof and (ii) each promissory note (if any) pledged to the Administrative Agent pursuant to the Guarantee and Collateral Agreement endorsed (without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor thereof.

(k) Filings, Registrations and Recordings. Each document (including any Uniform Commercial Code financing statement) required by the Security Documents or under law or reasonably requested by the Administrative Agent to be filed, registered or recorded in order to create in favor of the Administrative Agent, for the benefit of the Lenders, a perfected Lien on the Collateral described therein, prior and superior in right to any other Person (other than with respect to Liens expressly permitted by Section 7.2), shall be in proper form for filing, registration or recordation on the Closing Date.

(l) HBO Subordinated Debt. DW Animation shall have executed a written notice to HBO designating this Agreement as the “Senior Credit Agreement” for the purposes of the HBO Subordinated Loan Agreement.

(m) Distribution Intercreditor Agreement. The Administrative Agent shall have received and be satisfied with the Distribution Intercreditor Agreement, executed and delivered by DW Animation, DreamWorks and the Administrative Agent.

5.2 Conditions to Each Extension of Credit. The agreement of each Lender to make any extension of credit (other than the conversion or continuation of ABR Loans or Eurodollar Loans) requested to be made by it on any date (including, without limitation, its initial extension of credit) is subject to the satisfaction of the following conditions precedent:

(a) Representations and Warranties. Each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents shall be true and correct in all material respects on and as of such date as if made on and as of such date.

(b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

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(c) Credit Limits. After giving effect to such extension of credit, (i) the Aggregate Revolving Extensions of Credit of each Lender shall not exceed such Lender’s Commitment then in effect and (ii) the Facility Exposure shall not exceed the aggregate Commitments then in effect.

(d) Borrowing Availability. Either (i) DW Animation shall have delivered, within 10 calendar days prior to such extension of credit, an updated calculation of the Borrowing Availability demonstrating that, after giving effect to such extension of credit, the Facility Exposure would not exceed the Borrowing Availability or (ii) to DW Animation’s knowledge, after giving effect to such extension of credit, the Facility Exposure would not exceed the Facility Exposure if the most recent calculation of the Borrowing Availability were to be updated as of the date of such extension of credit.

Each borrowing by and issuance of an L/C on behalf of DW Animation hereunder shall constitute a representation and warranty by DW Animation as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied.

SECTION 6. AFFIRMATIVE COVENANTS

DW Animation hereby agrees that, so long as the Commitments remain in effect, any L/C remains outstanding, or any amount is owing to any Lender or the Administrative Agent hereunder or under any other Loan Document, DW Animation shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to:

6.1 Financial Statements. Furnish to each Lender (through the Administrative Agent):

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of DW Animation, a copy of the consolidated balance sheet of DW Animation and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without qualification, by independent certified public accountants of nationally recognized standing; and

(b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of DW Animation (commencing with the fiscal quarter ending September 30, 2004), the unaudited consolidated balance sheet of DW Animation and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings and of cash flows of DW Animation and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year.

All such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein (except as may be approved by such Responsible Officer or accountants, as the case may be, and disclosed therein).

6.2 Certificates; Other Information. Furnish to each Lender (through the Administrative Agent):

(a) within 15 days after the delivery of the financial statements referred to in Section 6.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate;

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(b) concurrently with the delivery of the financial statements referred to in Section 6.1(a) and within 15 days after the delivery of the financial statements referred to in Section 6.1(b), a certificate of a Responsible Officer (i) stating that such Responsible Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate, (ii) including calculations in reasonable detail with respect to compliance with Sections 7.1 and 7.4 and (iii) certifying that the financial statements delivered for such period are fairly stated in all material respects (subject to normal year-end audit adjustments);

(c) concurrently with the delivery of the financial statements referred to in Sections 6.1(a) and within 15 days after the delivery of the financial statements referred to in Section 6.1(b), projections in form and scope reasonably acceptable to the Administrative Agent (the “Section 6.2 Projections”), for the Test Period commencing immediately after the fiscal period covered by such financial statements, including an operating budget and cash flow budget of DW Animation and its Subsidiaries for such period and sufficient information in reasonable detail to support the calculation of Projected Sources and Projected Uses for such Test Period, such projections to be accompanied by a certificate of a Responsible Officer to the effect that such projections have been prepared on the basis of sound financial planning practice and that such Responsible Officer has no reason to believe they are incorrect or misleading in any material respect;

(d) no later than five Business Days prior to the effective date thereof, a copy of any amendment, supplement, waiver or other modification to any Organizational Agreement;

(e) promptly after the same become publicly available, copies of all periodic reports, proxy statements and other materials filed by DW Animation or any of its Subsidiaries with the Securities and Exchange Commission (or any successor thereto) or any national securities exchange, or distributed by DW Animation or any of its Subsidiaries to its security holders generally, as the case may be;

(f) promptly, such additional financial and other information as any Lender may from time to time reasonably request; and

(g) no later than the 20^th calendar day after the last Business Day of each calendar month, a certificate of a Responsible Officer setting forth an updated calculation of the Borrowing Availability as of such last Business Day of such calendar month; provided that DW Animation (i) shall be entitled to deliver at any time an updating certificate calculating the Borrowing Availability at such time and (ii) shall not be required to deliver such certificate if the Facility Exposure is zero on the date such certificate would otherwise be required to be delivered hereunder.

6.3 Payment of Obligations. Pay, discharge or otherwise satisfy, at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except where (a) the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of DW Animation or its Subsidiaries, as the case may be or (b) the failure to do so could not reasonably be expected to have a Material Adverse Effect.

6.4 Conduct of Business and Maintenance of Existence. Continue to engage in the entertainment business and preserve, renew and keep in full force and effect its existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of such business.

6.5 Compliance with Contractual Obligations and Laws. Comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith, in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

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6.6 Maintenance of Property; Insurance. (a) Keep all material property useful and necessary in its business in good working order and condition and (b) maintain with financially sound and reputable insurance companies insurance in such form and upon such terms and in such amounts and against such risks as are usually insured against in the same general area by companies engaged in the same or a similar business, in each case (i) providing that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 10 days after receipt by the Administrative Agent of written notice thereof and (ii) naming the Administrative Agent as insured party or loss payee.

6.7 Inspection of Property; Books and Records; Discussions. (a) Keep proper books of records and account in which complete and correct entries in conformity with GAAP and all material Requirements of Law shall be made of all dealings and transactions in relation to its business and activities and (b) permit appropriate representatives of the Administrative Agent or any Lender to (i) visit and inspect any of its properties and examine and make abstracts from any of its financial records as often as may be reasonably requested, in each case during normal business hours and upon reasonable prior notice specifying the purpose of such visit and inspection, and (ii) discuss the business, operations, properties and financial and other condition of DW Animation and its Subsidiaries with officers and employees of DW Animation and its Subsidiaries and with DW Animation’s independent certified public accountants (any such discussion with such accountants to be in the presence of a Responsible Officer of DW Animation unless an Event of Default has occurred and is continuing). In light of the nature of the businesses in which DW Animation and its Subsidiaries will engage, it is understood and agreed that, unless an Event of Default has occurred and is continuing, DW Animation may limit the access of representatives of the Administrative Agent and any Lender to any property of DW Animation and its Subsidiaries if DW Animation determines in good faith, after consultation with the Administrative Agent, that such access to such property would significantly disrupt the normal conduct of the business conducted on such property.

6.8 Notices. Promptly give written notice to each Lender (through the Administrative Agent) of:

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual Obligation of DW Animation or any of its Subsidiaries or (ii) litigation, investigation or proceeding which may exist at any time between DW Animation or any of its Subsidiaries and any other Person, which in the case of clause (i) or (ii) above, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect (including, in any event, notice of any such litigation or proceeding in which the amount involved is $15,000,000 or more and not covered by insurance);

(c) the following events, as soon as possible and in any event within 30 days after DW Animation knows thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or DW Animation or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan, to the extent that, in the case of clause (i) or (ii) above, the amount involved is $15,000,000 or more; and

(d) any development or event which could reasonably be expected to have a Material Adverse Effect.

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Each notice pursuant to this Section 6.8 shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action, if any, DW Animation proposes to take with respect thereto.

6.9 Additional Collateral, etc. (a) With respect to any property acquired after the Closing Date by DW Animation or any Loan Party (other than (x) any property that would have been excluded from the definition of Collateral as set forth in Section III of the Guarantee and Collateral Agreement if such property had been owned by DW Animation or any Grantor prior to the Closing Date, (y) any property described in paragraph (b), (c) or (d) below and (z) any property subject to a Lien expressly permitted by Section 7.2(g)) as to which the Administrative Agent, for the benefit of the Lenders, does not have a perfected Lien, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement or such other documents as the Administrative Agent deems reasonably necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a security interest in such property and (ii) take all actions necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in such property, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Administrative Agent.

(b) With respect to any fee interest in any real property having a value (together with improvements thereof) of at least $500,000 acquired after the Closing Date by any Loan Party (other than any such real property subject to a Lien expressly permitted by Section 7.2(g)), promptly (i) execute and deliver a first priority mortgage, in favor of the Administrative Agent, for the benefit of the Lenders, covering such real property, (ii) if reasonably requested by the Administrative Agent, provide the Lenders with (x) title and extended coverage insurance covering such real property in an amount at least equal to the purchase price of such real property (or such other amount as shall be reasonably specified by the Administrative Agent) and (y) any consents or estoppels reasonably deemed necessary or advisable by the Administrative Agent in connection with such mortgage, each of the foregoing in form and substance reasonably satisfactory to the Administrative Agent and (iii) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

(c) With respect to any new Subsidiary (other than a Foreign Subsidiary) created or acquired after the Closing Date by DW Animation or its Subsidiaries (which for purposes of this paragraph (c) shall include any existing Subsidiary that ceases to be a Foreign Subsidiary), promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems reasonably necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock of such new Subsidiary that is owned by DW Animation or its Subsidiaries, (ii) deliver to the Administrative Agent the certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Loan Party, (iii) cause such new Subsidiary (A) to become a party to the Guarantee and Collateral Agreement, (B) to take such actions necessary or advisable to grant to the Administrative Agent for the benefit of the Lenders a perfected first priority security interest in the Collateral described in the Guarantee and Collateral Agreement with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Guarantee and Collateral Agreement or by law or as may be reasonably requested by the Administrative Agent and (C) to deliver to the Administrative Agent a certificate of such Subsidiary, substantially in the form of Exhibit B, with appropriate insertions and attachments, and (iv) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

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(d) With respect to any new Foreign Subsidiary created or acquired after the Closing Date by any Loan Party, promptly (i) execute and deliver to the Administrative Agent such amendments to the Guarantee and Collateral Agreement as the Administrative Agent deems reasonably necessary or advisable to grant to the Administrative Agent, for the benefit of the Lenders, a perfected first priority security interest in the Capital Stock of such new Foreign Subsidiary that is owned by any such Loan Party (provided that in no event shall more than 66% of the total issued and outstanding voting Capital Stock of any such new Foreign Subsidiary be required to be so pledged), (ii) deliver to the Administrative Agent the certificates representing the Capital Stock, if any, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Loan Party, and take such other action as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the Administrative Agent’s security interest therein, and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

6.10 Further Assurances. DW Animation, at its expense, will take such action with respect to the recording, filing, re-recording and refiling of any financing statements or other instruments as are necessary to maintain, so long as this Agreement is in effect, the perfection of the security interests under this Agreement or the Loan Documents, or will furnish timely notice to the Administrative Agent of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable the Administrative Agent to take such action. DW Animation will notify the Administrative Agent in the event that any Loan Party intends to change its name on the public record of the state of its organization or its “location” (as such term is used in Article 9 of any applicable Uniform Commercial Code) at least 30 days before such change is made.

SECTION 7. NEGATIVE COVENANTS

DW Animation hereby agrees that, so long as the Commitments remain in effect, any L/C remains outstanding, or any amount is owing to any Lender or the Administrative Agent hereunder or under any other Loan Document, DW Animation shall not, and shall not permit any of its Subsidiaries to, directly or indirectly:

7.1 Financial Condition Covenants

(a) As of the last day of any fiscal quarter (each such day, a “Test Date”) ending on or after September 30, 2004, permit the ratio of Projected Sources to Projected Uses for the twelve-month period (each such period, a “Test Period”) commencing on the date immediately succeeding such Test Date to be less than 1.20 to 1.0.

(b) Permit the Leverage Ratio to exceed at any time 0.35 to 1.0.

7.2 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for:

(a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of DW Animation or its Subsidiaries, as the case may be, in conformity with GAAP;

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(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings;

(c) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements;

(d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(e) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of DW Animation or such Subsidiary;

(f) Liens in existence on the date hereof listed on Schedule 7.2(f);

(g) Liens securing Indebtedness of DW Animation and its Subsidiaries incurred to finance the acquisition of fixed or capital assets; provided that (i) such Liens shall be created substantially simultaneously with the acquisition of such fixed or capital assets, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (iii) the amount of Indebtedness secured thereby is not increased;

(h) Liens arising out of any financing or other transaction in which a Person purchases, factors or otherwise finances accounts receivable (or interests therein) of DW Animation or any of its Subsidiaries;

(i) rights of licensees under access agreements pursuant to which such licensees have access to duplicating material for the purpose of making prints of films licensed to them, and rights of distributors, exhibitors, licensees and other Persons in films created in connection with the distribution and exploitation of such films in the ordinary course of business and not securing any Indebtedness;

(j) Liens securing Indebtedness incurred in connection with acquiring rights to films in the ordinary course of business; provided that (i) the Indebtedness secured by such Liens does not constitute a general obligation of DW Animation or any of its Subsidiaries and that under the terms of such Indebtedness the lender thereof has recourse only to such films and the rights pertaining thereto and, in each case, to the proceeds thereof, (ii) such Liens shall be created substantially simultaneously with the acquisition or production of such films and (iii) such Liens do not at any time encumber any property other than the films being produced or acquired;

(k) Liens securing Indebtedness arising from advances to DW Animation or any of its Subsidiaries made by licensees of product in order to finance the production thereof; provided that the aggregate principal amount of such Indebtedness shall not exceed (as to DW Animation and all of its Subsidiaries) $50,000,000 at any time outstanding;

(l) Liens securing the performance of (i) DW Animation’s obligations to DreamWorks under the Distribution Agreement; provided that such Liens (x) cover only the “DWA Collateral” under and as defined in the Distribution Agreement as in effect on the Closing Date, (y) are junior to the Liens created pursuant to the Security Documents and (z) are subject to the Distribution Intercreditor

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Agreement and (ii) DWA LLC’s obligations to DreamWorks under the Trademark License Agreement; provided that such Liens (x) cover only the “Licensed Marks” (and registrations thereof) under and as defined in the Trademark License Agreement as in effect on the Closing Date, (y) are junior to the Liens created pursuant to the Security Documents and (z) are subject to intercreditor arrangements acceptable to the Administrative Agent;

(m) Liens securing the HBO Subordinated Debt and obligations of DW Animation under the Attornment Agreement; provided that such Liens cover only the rights of DW Animation to receive payments of license fees from HBO in respect of license arrangements, distribution rights of HBO relating to films subject to such license arrangements and related collateral comparable in scope to those contained in the HBO License Agreement as in effect on the Closing Date;

(n) Liens created pursuant to the Security Documents; and

(o) Liens (not otherwise permitted hereunder) that secure Indebtedness not exceeding (as to DW Animation and all of its Subsidiaries) $25,000,000 in aggregate principal amount at any time outstanding.

7.3 Limitation on Fundamental Changes. In the case of DW Animation or any Subsidiary Guarantor, enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of the property, business or assets of DW Animation and its Subsidiaries, taken as a whole, except:

(a) any Subsidiary Guarantor may be merged or consolidated with or into DW Animation (provided that DW Animation shall be the continuing or surviving entity) or with or into any other Subsidiary Guarantor; and

(b) any Subsidiary Guarantor may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to DW Animation or any other Subsidiary Guarantor.

7.4 Limitation on Distributions. Declare or make any distribution or other payment in respect of any Equity Interest in DW Animation (or any warrant, option or similar right in respect thereof) or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any Equity Interest in DW Animation (or any warrant, option or similar right in respect thereof), whether now or hereafter outstanding, either directly or indirectly, whether in cash or property or in obligations of DW Animation or any Subsidiary, provided that, so long as no Event of Default shall have occurred and be continuing, DW Animation shall be permitted (a) to repurchase Equity Interests in DW Animation issued under the Employee Equity Plan, by means of cash payments (any such repurchase, an “Employee Equity Repurchase”), so long as the aggregate cash amount so expended in making such repurchases shall not exceed (i) $10,000,000 in any fiscal year plus (ii) any portion of the $10,000,000 available under clause (i) above in any previous fiscal year which has not been expended plus (iii) the aggregate cash proceeds received in connection with any sale of Equity Interests in DW Animation to any employee (other than Jeffrey Katzenberg) of DW Animation or any of its Subsidiaries after the Closing Date and on or prior to the date of such repurchase and (b) remit withholding and employment taxes to Federal, local and state taxing authorities, in an aggregate amount not to exceed $7,500,000, in connection with the delivery of shares of DW Animation Class A common stock to current or former employees of DreamWorks in connection with the Separation Transactions and the initial public offering of common stock of DW Animation.

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7.5 Limitation on Transactions with Affiliates. Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any of its Affiliate other than any such transaction (a) between a Subsidiary Guarantor and DW Animation or any other Subsidiary Guarantor which is otherwise permitted by this Agreement or (b) entered into by DW Animation or any of its Subsidiaries which is (i) otherwise permitted under this Agreement and (ii) upon terms no less favorable to DW Animation or such Subsidiary, as the case may be, than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate; provided that the provisions of this Section 7.5 shall not apply to (y) transactions expressly permitted by the Distribution Agreement or the Services Agreement, dated on or prior to the Closing Date, between DreamWorks and DW Animation and (z) the agreements listed on Schedule 7.5 entered into in connection with the Separation Transactions.

7.6 Limitation on Negative Pledge Clauses. Enter into or suffer to exist any agreement, other than in connection with Indebtedness secured by any Lien permitted by Section 7.2 (in which case, any restriction shall only be effective against the assets subject to such Lien), which restricts the ability of DW Animation or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, to exclusively secure with such property, assets or revenues the obligations of DW Animation hereunder or Guarantee Obligations in respect thereof.

7.7 Limitation on Restrictions on Subsidiary Distributions. Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of DW Animation to (a) pay dividends or make any other distributions in respect of any Equity Interest in such Subsidiary held by, or pay any Indebtedness owed to, DW Animation or any Subsidiary of DW Animation, (b) make loans or advances to DW Animation or any Subsidiary of DW Animation or (c) transfer any of its assets to DW Animation or any other Subsidiary of DW Animation, except for such encumbrances or restrictions existing under or by reason of (i) any restrictions existing under the Loan Documents or any other agreements in effect on the Closing Date, (ii) any restrictions, with respect to a Subsidiary that is not a Subsidiary on the Effective Date, under any agreement in existence at the time such Subsidiary becomes a Subsidiary, (iii) any restrictions with respect to a Subsidiary imposed pursuant to an agreement which has been entered into for the sale or disposition of all or substantially all of the capital stock or assets of such Subsidiary, or (iv) any restrictions existing under any agreement that amends, refinances or replaces any agreement containing the restrictions referred to in clause (i), (ii) or (iii) above; provided that the terms and conditions of any such agreement are no less favorable to the Lenders than those under the agreement so amended, refinanced or replaced.

7.8 Limitation on Modification of Organizational Agreements. Amend, supplement, waive, terminate or otherwise modify, or consent or agree to any amendment, supplement, waiver, termination or other modification of or to, any of the terms of any Organizational Agreement in any manner which is adverse to the interests of the Lenders.

7.9 Optional Payments and Modifications of Certain Debt Instruments. (a) Make or offer to make any payment, prepayment, repurchase or redemption or otherwise defease or segregate funds (in each case whether in the form of cash, property or securities) with respect to principal, interest or other amounts in respect of the HBO Subordinated Debt, other than (i) scheduled payments of principal and payments of interest required by the terms of the HBO Subordinated Loan Agreement, in each case made at any time when no Remedies Bar Period (as defined in the HBO Subordinated Loan Agreement) and no Default or Event of Default under Section 8.1(a) hereof is in existence, (ii) the prepayment of up to $30,000,000 of HBO Subordinated Debt on the Closing Date, together with accrued and unpaid interest thereon to the date of prepayment and (iii) the repayment of up to $50,000,000 of HBO Subordinated Debt at maturity on November 1, 2007, together with accrued and unpaid interest to such date, so long as no Default or Event of Default shall be in existence or result therefrom.

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(b) Amend, supplement, waive or otherwise modify, or consent or agree to any amendment, supplement, waiver or other modification to, any of the HBO Subordinated Debt Documents or the Universal Advance Documents in any manner which is materially adverse to the interests of the Lenders. A draft of any proposed amendment, supplement, waiver or other modification to any of the HBO Subordinated Debt Documents or Universal Advance Documents shall be furnished to the Administrative Agent no later than five Business Days prior to the proposed effective date thereof.

(c) Make or offer to make any payment, prepayment, repurchase or redemption in respect of, or otherwise optionally or voluntarily defease or segregate funds with respect to, the principal or interest in respect of any Specified Subordinated Indebtedness unless, on the date of such payment, after giving pro forma effect thereto and any financing thereof, (i) no Default or Event of Default shall be in existence (including pursuant to Section 7.1) and (ii) DW Animation would be able to borrow at least $50,000,000 of Loans in compliance with Section 5.2.

Amend, modify, waive or otherwise change, or consent or agree to any amendment, modification, waiver or other change to, any of the terms of any Specified Subordinated Indebtedness (other than any such amendment, modification, waiver or other change that would extend the maturity or reduce the amount of any payment of principal thereof or reduce the rate or extend any date for payment of interest thereon).

SECTION 8. REMEDIAL PROVISIONS

8.1 Events of Default. If any of the following events shall occur and be continuing:

(a) DW Animation shall fail to pay any principal of any Loan or any Reimbursement Obligation when due in accordance with the terms hereof; or DW Animation shall fail to pay any interest on any Loan, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms hereof; or

(b) Any representation or warranty made or deemed made by DW Animation or any other Loan Party herein or in any other Loan Document or which is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or

(c) DW Animation shall default in the observance or performance of any agreement contained in Section 7; or

(d) DW Animation or any other Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days after notice to DW Animation from the Administrative Agent or the Required Lenders; or

(e) DW Animation or any of its Subsidiaries shall (i) default in making any payment of any principal of any Indebtedness (including, without limitation, any Guarantee Obligation, but excluding the Loans) on the due date with respect thereto; or (ii) default in making any payment of any interest on

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any such Indebtedness beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created; or (iii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or beneficiary of such Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or (in the case of any such Indebtedness constituting a Guarantee Obligation) to become payable; provided that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) shall not constitute an Event of Default under this Agreement unless, at the time of such default, event or condition, one or more defaults, events or conditions of the type described in clauses (i), (ii) and (iii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding principal amount of which exceeds in the aggregate $15,000,000; provided further that a default, event or condition described in clause (i), (ii) or (iii) of this paragraph (e) with respect to Excluded Lease Debt shall not constitute an Event of Default under this Agreement unless, at the time of such default, event or condition, the amount of the Excluded Lease Debt exceeds (i) the aggregate Commitments then in effect and available minus (ii) the Facility Exposure then outstanding; or

(f) (i) DW Animation or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or DW Animation or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against DW Animation or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against DW Animation or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) DW Animation or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) DW Animation or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or

(g) (i) Any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of DW Animation or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) DW Animation or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or

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(h) One or more judgments or decrees shall be entered against DW Animation or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance) of $15,000,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or

(i) Any of the Security Documents shall cease, for any reason, to be in full force and effect or any Loan Party or any Affiliate thereof shall so assert, or any material Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby; or

(j) An amount of the Universal Advance in excess of $15,000,000 shall remain outstanding for more than five Business Days after the Universal Advance has become due and payable pursuant to the Universal Advance Documents; or

(k) The guarantee contained in Section 2 of the Guarantee and Collateral Agreement shall cease, for any reason, to be in full force and effect or any Loan Party or any Affiliate of any Loan Party shall so assert;

then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) of this Section 8.1 with respect to DW Animation, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding L/Cs shall have presented the documents required thereunder) shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to DW Animation declare the Commitments to be terminated forthwith, whereupon the Commitments shall immediately terminate; and (ii) with the consent of the Required Lenders, the Administrative Agent may, or upon the request of the Required Lenders, the Administrative Agent shall, by notice to DW Animation, declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the other Loan Documents (including, without limitation, all amounts of L/C Obligations, whether or not the beneficiaries of the then outstanding L/Cs shall have presented the documents required thereunder) to be due and payable forthwith, whereupon the same shall immediately become due and payable.

With respect to all L/Cs with respect to which presentment for a drawing shall not have occurred at the time of an acceleration pursuant to the preceding paragraph, DW Animation shall at such time deposit in a cash collateral account opened by the Administrative Agent an amount equal to the aggregate then undrawn and unexpired amount of such L/Cs. Amounts held in such cash collateral account shall be applied by the Administrative Agent to the payment of drafts drawn under such L/Cs, and the unused portion thereof after all such L/Cs shall have expired or been fully drawn upon, if any, shall be applied to repay other obligations of DW Animation hereunder and under the other Loan Documents. After all such L/Cs shall have expired or been fully drawn upon, all Reimbursement Obligations shall have been satisfied and all other obligations of DW Animation hereunder and under the other Loan Documents shall have been paid in full, the balance, if any, in such cash collateral account shall be returned to DW Animation.

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Except as expressly provided above in this Section 8.1, presentment, demand, protest and all other notices of any kind are hereby expressly waived.

SECTION 9. THE AGENTS

9.1 Appointment. Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

9.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care.

9.3 Exculpatory Provisions. Neither any Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except for its or such Person’s own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by DW Animation or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agents under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of DW Animation to perform its obligations hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of DW Animation.

9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to DW Animation), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the obligations owing by DW Animation hereunder.

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9.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or DW Animation referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges that neither the Agents nor any of their officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by any Agent hereafter taken, including any review of the affairs of DW Animation, shall be deemed to constitute any representation or warranty by such Agent to any Lender. Each Lender represents to the Agents that it has, independently and without reliance upon the Agents or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of DW Animation and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon any Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of DW Animation. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of DW Animation which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

9.7 Indemnification. The Lenders agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by DW Animation and without limiting the obligation of DW Animation to do so), ratably according to their respective Commitment Percentages in effect on the date on which indemnification is sought (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with their Commitment Percentages immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the amounts owing hereunder) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the such Agent’s gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

9.8 Agent in Its Individual Capacity. Each Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with DW Animation as though the Agent

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were not an Agent. With respect to the Loans made by it, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.

9.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 30 days’ notice to the Lenders. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall be approved by DW Animation (such approval not to be unreasonably withheld), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

9.10 The Documentation Agent and Syndication Agent. None of the Documentation Agent or the Syndication Agent in its capacity as such shall have any rights, duties or responsibilities hereunder, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against any of the Documentation Agent or the Syndication Agent in its capacity as such.

SECTION 10. MISCELLANEOUS

10.1 Amendments and Waivers. Neither this Agreement nor any other Loan Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 10.1. The Required Lenders may, or, with the written consent of the Required Lenders, the Administrative Agent may, from time to time, (a) enter into with DW Animation and, in the case of the Subsidiary Guaranty, the Subsidiary Guarantors, written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of the Lenders or of the Loan Parties hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) eliminate or reduce the voting rights of any Lender under this Section 10.1, reduce the amount or extend the scheduled date of maturity of any Loan, reduce the amount of any Reimbursement Obligation, or reduce the stated rate of any interest, fee or commission payable to any Lender hereunder or extend the scheduled date of any payment thereof or increase the amount or extend the scheduled expiration date of any Lender’s Commitment, in each case without the consent of each Lender directly affected thereby; or (ii) reduce the percentage specified in the definition of the term “Required Lenders”, consent to the assignment or transfer by DW Animation of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral, or release all or substantially all of the Subsidiary Guarantors from their obligations under the Guarantee and Collateral Agreement, in each case without the written consent of all the Lenders; or (iii) amend, modify or waive any provision of Section 9 without the written consent of the then Administrative Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon DW Animation, the other Loan Parties, the Lenders, the Administrative Agent and all future holders

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of the obligations owing hereunder. In the case of any waiver (unless otherwise specified in such waiver), DW Animation, the other Loan Parties, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

10.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission), and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of DW Animation and the Administrative Agent, and as set forth in an administrative questionnaire delivered to the Administrative Agent in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto:

DW Animation:	DreamWorks Animation SKG, Inc.
	1000 Flower Street
	Glendale, California 91201
	Attention: Kristine M. Leslie
	Telecopy: 818-695-6234
The Administrative
Agent:	JPMorgan Chase Bank Loan and
	Agency Services Group
	1111 Fannin
	Houston, Texas 77002
	Attention: Maryann Bui
	Telecopy: 713-750-2878
with a copy to:	JPMorgan Chase Bank
	1999 Avenue of the Stars, 27th Floor
	Los Angeles, California 90067
	Attention: Clark Hallren
	Telecopy: 310-860-7260

provided that any notice, request or demand to or upon the Administrative Agent or the Lenders pursuant to Section 2.2, 2.4, 2.7, 2.9, 2.10 or 3.2 shall not be effective until received.

10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

10.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.

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10.5 Payment of Expenses and Taxes. DW Animation agrees (a) except as otherwise expressly agreed by the Administrative Agent in writing, to pay or reimburse the Administrative Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of this Agreement, the other Loan Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of Simpson Thacher & Bartlett LLP, counsel to the Administrative Agent, (b) to pay or reimburse the Administrative Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the any amendment, supplement or modification to this Agreement, the other Loan Documents and any such other documents, including, without limitation, the reasonable fees and disbursements of Simpson Thacher & Bartlett, counsel to the Administrative Agent, (c) to pay or reimburse each Lender and the Administrative Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including, without limitation, the fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each Lender and of counsel to the Administrative Agent, (d) to pay, indemnify, and hold harmless each Lender and the Administrative Agent from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other similar taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (e) to pay, indemnify, and hold harmless each Lender, the L/C Issuer and the Administrative Agent and their respective officers, directors, employees, affiliates, agents and controlling persons (each, an “indemnitee”) from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, fees, charges and disbursements of counsel to such indemnitee) with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents or any actual or proposed use of proceeds of any Loan (all the foregoing in this clause (e), collectively, the “indemnified liabilities”); provided that DW Animation shall have no obligation hereunder to any indemnitee with respect to indemnified liabilities to the extent arising from the gross negligence or willful misconduct of such indemnitee. The agreements in this Section 10.5 shall survive repayment of the Loans and all other amounts payable hereunder.

10.6 Successors and Assigns; Participations and Assignments. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any affiliate of the L/C Issuer that issues any LC), except that (i) DW Animation may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by DW Animation without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section.

(b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans at the time owing to it) with the prior written consent of:

(A) DW Animation (such consent not to be unreasonably withheld); provided that no consent of DW Animation shall be required for an assignment to a Lender, an affiliate of a Lender, an Approved Fund (as defined below) or, if an Event of Default under Section 8(a) or (f) has occurred and is continuing, any other Person; and

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(B) the Administrative Agent.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitments or Loans under any Facility, the amount of the Commitments or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 unless each of DW Animation and the Administrative Agent otherwise consent; provided that (1) no such consent of DW Animation shall be required if an Event of Default under Section 8(a) or (f) has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its affiliates or Approved Funds, if any;

(B) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and

(C) the Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire.

For the purposes of this Section 10.6, “Approved Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender.

(iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) below, from and after the effective date specified in each Assignment and Assumption the Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.16, 2.17, 2.18 and 10.5). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (c) of this Section.

(iv) The Administrative Agent, acting for this purpose as an agent of DW Animation, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans and LC Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and DW Animation, the Administrative Agent, the L/C Issuer and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary.

(v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an Assignee, the Assignee’s completed administrative questionnaire (unless the Assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this

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Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

(c) (i) Any Lender may, without the consent of DW Animation or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) DW Animation, the Administrative Agent, the L/C Issuer and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver that (1) requires the consent of each Lender directly affected thereby pursuant to the proviso to the second sentence of Section 10.1 and (2) directly affects such Participant. Subject to paragraph (c)(ii) of this Section, DW Animation agrees that each Participant shall be entitled to the benefits of Sections 2.16, 2.17 and 2.18 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.7(b) as though it were a Lender, provided such Participant shall be subject to Section 10.7(a) as though it were a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under Section 2.16 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with DW Animation’s prior written consent. Any Participant that is a Non-U.S. Lender shall not be entitled to the benefits of Section 2.17 unless such Participant complies with Section 2.17(c).

(d) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or Assignee for such Lender as a party hereto.

(e) DW Animation, upon receipt of written notice from the relevant Lender, agrees to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in paragraph (d) above.

(f) Notwithstanding the foregoing, any Conduit Lender may assign any or all of the Loans it may have funded hereunder to its designating Lender without the consent of DW Animation or the Administrative Agent and without regard to the limitations set forth in Section 10.6(b). Each of DW Animation, each Lender and the Administrative Agent hereby confirms that it will not institute against a Conduit Lender or join any other Person in instituting against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding under any state bankruptcy or similar law, for one year and one day after the payment in full of the latest maturing commercial paper note issued by such Conduit Lender; provided, however, that each Lender designating any Conduit Lender hereby agrees to indemnify, save and hold harmless each other party hereto for any loss, cost, damage or expense arising out of its inability to institute such a proceeding against such Conduit Lender during such period of forbearance.

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10.7 Adjustments; Set-off. (a) If any Lender (a “benefitted Lender”) shall at any time receive any payment of all or part of its Loans or the Reimbursement Obligations, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 8.1(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender’s Loans, or interest thereon, such benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender’s Loan and/or of the Reimbursement Obligations owing to such other Lender, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

(b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right following the occurrence and during the continuance of any Event of Default, without prior notice to DW Animation, any such notice being expressly waived by DW Animation to the extent permitted by applicable law, upon any amount becoming due and payable by DW Animation hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of DW Animation. Each Lender agrees promptly to notify DW Animation and the Administrative Agent after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.

10.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with DW Animation and the Administrative Agent.

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

10.10 Integration. This Agreement and the other Loan Documents represent the agreement of DW Animation, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents.

10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

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10.12 Submission To Jurisdiction; Waivers. DW Animation hereby irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to DW Animation at its address set forth in Section 10.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

10.13 Acknowledgements. DW Animation hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents;

(b) neither the Administrative Agent nor any Lender has any fiduciary relationship with or duty to DW Animation arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Administrative Agent and Lenders, on one hand, and DW Animation, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and

(c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among DW Animation and the Lenders.

10.14 Releases of Guarantees and Liens. (a) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the Administrative Agent is hereby irrevocably authorized by each Lender (without requirement of notice to or consent of any Lender except as expressly required by Section 10.1) to take any action, including all such actions set forth in the Security Documents, requested by DW Animation having the effect of releasing any Collateral or guarantee obligations (i) to the extent necessary to permit consummation of any transaction not prohibited by any Loan Document or that has been consented to in accordance with Section 10.1 or (ii) under the circumstances described in paragraph (b) below.

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(b) At such time as the Loans, the Reimbursement Obligations and the other obligations under the Loan Documents shall have been paid in full, the Commitments have been terminated and no L/Cs shall be outstanding, the Collateral shall be released from the Liens created by the Security Documents, and the Security Documents, the guarantee contained therein (subject to any provisions relating to reinstatement), the security interests granted therein and all other obligations (other than those expressly stated to survive such termination) of the Administrative Agent and each Loan Party under the Security Documents shall terminate, all without delivery of any instrument or performance of any act by any Person, and all rights to the Collateral shall revert to the Grantors.

10.15 Confidentiality. Each of the Administrative Agent and each Lender agrees to keep confidential all non-public information provided to it by any Loan Party pursuant to this Agreement that is designated by such Loan Party as confidential; provided that nothing herein shall prevent the Administrative Agent or any Lender from disclosing any such information (a) to the Administrative Agent, any other Lender or any affiliate of any Lender, (b) to any Transferee or prospective Transferee which agrees to comply with the provisions of this Section 10.15, (c) to the employees, directors, officers, agents, attorneys, accountants, auditors and other professional advisors of such Lender or its affiliates, (d) upon the request or demand of any Governmental Authority having jurisdiction over the Administrative Agent or such Lender, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to applicable law or regulation, (f) if requested or required to do so in connection with any litigation or similar proceeding, (g) which has been publicly disclosed other than in breach of this Section 10.15, or (h) in connection with the exercise of any remedy hereunder or under any other Loan Document.

10.16 WAIVERS OF JURY TRIAL. DREAMWORKS, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

10.17 HBO Subordinated Loan Agreement. DW Animation hereby designates this Agreement as the “Senior Credit Agreement” for the purposes of the HBO Subordinated Loan Agreement. The Lenders hereby designate the Administrative Agent as the “Designated Senior Agent” for the purposes of the HBO Subordinated Loan Agreement.

10.18 Distribution Intercreditor Agreement. Each Lender acknowledges and agrees to the terms and conditions contained in the Distribution Intercreditor Agreement. Each Lender agrees to comply with the terms contained in the Distribution Intercreditor Agreement as if it were a party thereto.

10.19 Effective Date. The Agreement shall be effective as of the Effective Date; provided that the making of the representations and warranties contained in Section 4.17 and compliance with Section 7.2 shall not be required until the Closing Date.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.

DREAMWORKS ANIMATION SKG, INC.
By:	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	General Counsel/Secretary

Signature Page

Dream Works SKG, Inc. Credit Agreement

JPMORGAN CHASE BANK,
as Administrative Agent and a Lender
By:	/s/ Garrett J. Verdone
Name:	Garrett J. Verdone
Title:	Senior Vice President

Signature Page

DreamWorks SKG, Inc. Credit Agreement

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EX-10.24

Exhibit 10.24

EXECUTION COPY

LIMITED LIABILITY LIMITED PARTNERSHIP AGREEMENT

of

DWA ESCROW LLLP

dated as of October 27, 2004

TABLE OF CONTENTS

		Page
ARTICLE I
Definitions and Usage
SECTION 1.01.	Definitions	4
SECTION 1.02.	Terms and Usage Generally	11
ARTICLE II
The Partnership
SECTION 2.01.	Effectiveness of this Agreement	12
SECTION 2.02.	Formation	12
SECTION 2.03.	Name	12
SECTION 2.04.	Term	12
SECTION 2.05.	Registered Agent and Registered Office	12
SECTION 2.06.	Limited Purpose	12
SECTION 2.07.	Treatment as Partnership	13
ARTICLE III
Capital Contributions; Partners
SECTION 3.01.	Initial Capital Contributions	13
SECTION 3.02.	Admission of Partners	13
ARTICLE IV
Reports
SECTION 4.01.	Reports to Partners	13
SECTION 4.02.	Tax Returns	14
SECTION 4.03.	Other Tax Information	14
SECTION 4.04.	Fiscal Year	15
ARTICLE V
Adjusted DreamWorks Participation Percentages
SECTION 5.01.	General	15

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ARTICLE VI
Tax Matters
SECTION 6.01.	Identification, Sale and Distribution of Shares of Common Stock	15
SECTION 6.02.	Allocation of Tax Items; Tax Treatment of Certain Distributions	16
SECTION 6.03.	Amounts Withheld	16
SECTION 6.04.	Tax Matters Partner	17
ARTICLE VII
Calculations; Distributions
SECTION 7.01.	Calculations	17
SECTION 7.02.	Transactions In the Event of a Follow-on Offering	21
SECTION 7.03.	Transactions in the Event of a Universal Triggered Offering	22
SECTION 7.04.	Mandatory Share Distributions	22
SECTION 7.05.	Vulcan GP Date	23
SECTION 7.06.	General Provisions	24
SECTION 7.07.	No Set-Off	26
SECTION 7.08.	Sample Calculations	26
ARTICLE VIII
Management of the Partnership
SECTION 8.01.	General Partners	26
SECTION 8.02.	Voting of Contributed Stock	27
SECTION 8.03.	Substitute General Partner	27
SECTION 8.04.	Restrictions on Activities	28
ARTICLE IX
Transfers of Interests
SECTION 9.01.	Restrictions on Transfers	29
SECTION 9.02.	Admission of Transferees	29
SECTION 9.03.	Further Restrictions	29
ARTICLE X
Limitation on Liability, Exculpation
SECTION 10.01.	Limitation on Liability	30
SECTION 10.02.	Exculpation of Covered Persons	30
SECTION 10.03.	Indemnification	30

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ARTICLE XI
Dissolution and Termination
SECTION 11.01.	Dissolution	31
SECTION 11.02.	Winding Up of the Partnership	32
SECTION 11.03.	Claims of Partners	33
SECTION 11.04.	Termination	33
ARTICLE XII
Miscellaneous
SECTION 12.01.	Notices	33
SECTION 12.02.	No Third Party Beneficiaries	34
SECTION 12.03.	Waiver	34
SECTION 12.04.	Assignment; Amendments	34
SECTION 12.05.	Integration	34
SECTION 12.06.	Headings	35
SECTION 12.07.	Counterparts	35
SECTION 12.08.	Severability	35
SECTION 12.09.	Applicable Law	35
SECTION 12.10.	Jurisdiction; Waivers	35
SECTION 12.11.	Enforcement	35

Schedules

Schedule A - Contributed Stock

Schedule B - Initial DreamWorks Capital

Schedule C - Partners

Schedule D - Initial Capital Contributions

Schedule E - Sample Calculations

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LIMITED LIABILITY LIMITED PARTNERSHIP AGREEMENT of DWA ESCROW LLLP (the “Partnership”) dated as of October 27, 2004, by and among M&J K B LIMITED PARTNERSHIP, a Delaware limited partnership (“M&J K B”), as general partner, DG-DW, L.P. a Delaware limited partnership (“DG-DW”), as general partner, and M&J K DREAM LIMITED PARTNERSHIP, a Delaware limited partnership (“M&J K”), DW LIPS, L.P., a California limited partnership (“DW Lips”), DW INVESTMENT II, INC., a Washington corporation (“DWI II”), and the other Partners (as defined below) party hereto, as limited partners.

Preliminary Statement

WHEREAS, the parties hereto are parties to the Formation Agreement (the “Formation Agreement”), dated as of October 27, 2004;

WHEREAS, the parties hereto will contribute their shares of common stock in DreamWorks Animation SKG, Inc., a Delaware corporation (the “Company”), other than shares that will be sold in a secondary component of the IPO (as defined herein) or retained in lieu of such sale and additional shares that will be retained for later sale (or retained in lieu of such later sale), to the Partnership in exchange for Interests (as defined below) pursuant to the Formation Agreement;

WHEREAS, in accordance with the Formation Agreement and the Registration Rights Agreement, dated as of October 27, 2004 (the “Registration Rights Agreement”), among the Company, the Partnership, the parties hereto and the other parties thereto, a portion of the Contributed Stock (as defined herein) will be sold in a secondary offering;

WHEREAS, the parties hereto are party to the Seventh Amended and Restated Limited Liability Company Agreement of DreamWorks L.L.C., dated as of October 27, 2004; and

WHEREAS, M&J K B and DG-DW, as general partners of the Partnership, have duly executed and filed with the Secretary of State of the State of Delaware (i) a statement of qualification as a limited liability limited partnership and (ii) a certificate of limited partnership.

NOW, THEREFORE, the parties hereto hereby agree as follows:

Definitions and Usage

Definitions. The terms shall have the following meanings for purposes of this Agreement:

“Adjusted DreamWorks Participation Percentage” means, with respect to any Partner, the percentage set forth opposite such Partner’s name in Section 5.01.

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“Affiliate” of any specified Person means any other Person directly or indirectly Controlling, Controlled By or under direct or indirect common Control with such specified Person.

“Agreement” means this Limited Liability Limited Partnership Agreement, as it may be amended, supplemented, restated or modified from time to time.

“Applicable Law” is defined in Section 7.10.

“Bankruptcy” of a Person means (i) the filing by such Person of a voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form, of its debts under Title 11 of the United States Code (or corresponding provisions of future laws) or any other bankruptcy or insolvency law, whether foreign or domestic, or such Person’s filing an answer consenting to or acquiescing in any such petition, (ii) the making by such Person of any assignment for the benefit of its creditors or the admission by such Person in writing of its inability to pay its debts as they mature or (iii) the expiration of 60 days after the filing of an involuntary petition under Title 11 of the United States Code (or corresponding provisions of future laws), an application for the appointment of a receiver for the assets of such Person, or an involuntary petition seeking liquidation, reorganization, arrangements, composition, dissolution or readjustment of its debts or similar relief under any bankruptcy or insolvency law, provided that the same shall not have been vacated, set aside or stayed within such 60-day period. This definition of “Bankruptcy” is intended to replace the bankruptcy related events set forth in Sections 17-402(a)(4) and (a)(5) of the Delaware Act.

“Business Day” means any day other than a Saturday, a Sunday or a U.S. Federal holiday.

“Change in Control Transaction” is defined in Section 7.04(a).

“Charter” means the Restated Certificate of Incorporation of the Company, as amended or restated from time to time.

“Class A Stock” means the Company’s Class A Common Stock, par value $0.01 per share.

“Class B Stock” means the Company’s Class B Common Stock, par value $0.01 per share.

“Class B Stockholder Agreement” means the Stockholder Agreement, dated as of October 27, 2004, among the Partnership, M&J K B, M&J K, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, Jeffrey Katzenberg and David Geffen, as it may be amended, supplemented, restated or modified from time to time.

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“Code” means the Internal Revenue Code of 1986, as amended.

“Commencement Date” is defined in Section 7.05.

“Common Stock” means Class A Stock and Class B Stock.

“Company” is defined in the Preliminary Statement to this Agreement.

“Continuing Partner” means each of (i) DWI II and (ii) Lee Entertainment, L.L.C.

“Continuing Partner Minimum Ownership Shares” means, with respect to any Continuing Partner, the shares of Common Stock (including Pledged Common Stock), if any, allocated to such Continuing Partner in the schedule prepared pursuant to Section 7.01(a)(z), 7.01(b)(z) or 7.01(c)(z), as applicable, but not associated with such Continuing Partner as set forth in Article VI.

“Contributed Stock” means, with respect to each Partner, the number of shares of Common Stock (including Pledged Common Stock) set forth opposite such Partner’s name on Schedule A.

“Control” (including the term “Controlled By”) is defined in the Charter as in effect at consummation of the IPO.

“Covered Person” means (i) each Partner, (ii) each Affiliate of a Partner and (iii) each officer, director, shareholder, partner, employee, member, manager, representative, agent or trustee of a Partner or of an Affiliate of a Partner; provided that the Company, DreamWorks L.L.C. and their respective subsidiaries shall not be Covered Persons.

“Delaware Act” means the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§17-101 et seq., as amended from time to time or any successor statute.

“DG-DW” is defined in the preamble to this Agreement.

“Dissolution Additional Shares” is defined in Section 11.02(b).

“DRUPA” is defined in Section 2.02.

“DW Lips” is defined in the preamble to this Agreement.

“DWI II” is defined in the preamble to this Agreement.

“Effective Time” is defined in Section 2.04.

“Equity Security” is defined in Rule 405 under the Securities Act, and in any event includes any security having the attendant right to vote for directors or similar representatives and any general or limited partner interest in a General Partner or in a Parent.

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“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Fair Market Value” of a share of Common Stock as of any date of determination means the Volume Weighted Average Price of the Class A Stock over a 20 consecutive trading day period ended one trading day prior to the date of determination.

“Fifty Percent Return” means, (A) with respect to each Partner other than Universal, at any time, the amount necessary to reduce such Partner’s Unreturned DreamWorks Capital at such time to 50% of such Partner’s Initial DreamWorks Capital and (B) with respect to Universal, at any time, the amount necessary to reduce Universal’s Unreturned DreamWorks Capital at such time to zero.

“Final Allocation” means (A) the allocation by the Partnership of shares of Common Stock in accordance with Article VII (which, for the avoidance of doubt, shall be (a) in the case of a JK/DG Triggered Follow-on Offering or a Subsequent Follow-on Offering, pursuant to Section 7.01(a) on the date of pricing of such offering, (b) in the case of a Vulcan Triggered Follow-on Offering, pursuant to Section 7.01(b) or Section 7.01(c), as applicable, on the date of the conclusion of the Pricing Period relating to such offering, except to the extent the last sentence of Section 7.02(b) shall be applicable to such offering in which case such allocation shall occur on the date of pricing of such offering, (c) in the event that a Follow-on Offering has not been consummated prior to January 1, 2008 (July 1, 2008 in the event that a Universal Triggered Offering has been consummated), pursuant to Section 7.04 on the date of determination of the Mandatory Distribution Price or (d) in the event of a Change in Control Transaction, pursuant to Section 7.04 on the date of determination of the Mandatory Distribution Price) or (B) any allocation pursuant to Section 11.02(b).

“Fiscal Year” is defined in Section 4.04.

“Follow-on Offering” is defined in the Formation Agreement.

“Formation Agreement” is defined in the Preliminary Statement to this Agreement.

“General Partner” means (a) subject to Section 8.03, prior to the Vulcan GP Date, M&J K B and DG-DW and (b) on and after the Vulcan GP Date, DWI II, in each case, for so long as such Person continues to be a general partner of the Partnership.

“Gross Offering Price” means, with respect to a Follow-on Offering, the gross public offering price per share (calculated before deduction of any underwriting discounts or commissions) in such offering.

“Initial DreamWorks Capital” means, with respect to each Partner, the amount set forth opposite such Partner’s name on Schedule B.

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“Initial Follow-on Offering” is defined in the Formation Agreement.

“Interest” means the partnership interest of a Partner in the Partnership.

“IPO” means the initial public offering by the Company of Class A Stock.

“JK/DG Triggered Follow-on Offering” is defined in the Formation Agreement.

“Limited Partner” means DW Lips, DWI II, Lee Entertainment, L.L.C., Universal and, on and after the Vulcan GP Date, M&J K B and DG-DW, in each case for so long as such Person continues to be a limited partner of the Partnership.

“Mandatory Distribution Price” means the Volume Weighted Average Price of the Class A Stock over the 20 consecutive trading days on The New York Stock Exchange beginning on the trading date specified in the applicable sentence of Section 7.04(a).

“M&J K” is defined in the preamble to this Agreement.

“M&J K B” is defined in the preamble to this Agreement.

“Net Offering Price” means, with respect to a Follow-on Offering or the Universal Triggered Offering, the net public offering price per share (calculated after deduction of any underwriting discounts or commissions) in such offering.

“Non-Participating Partner” means (i) if a Follow-on Offering is consummated prior to the first anniversary of the Effective Time, (a) each of DW Lips, M&J K B, M&J K, DG-DW and (b) in the case of a Vulcan Triggered Follow-on Offering, any Partner other than DWI II, except in the case of clause (b), and subject to clause (a), to the extent such Partner delivers written notice to the General Partners electing to participate in such Vulcan Triggered Follow-on Offering within 10 Business Days after the date the Partnership delivers to each such Partner written notice of the Partnership’s exercise of the demand request relating to such Follow-on Offering, (ii) if a Follow-on Offering is consummated after the first anniversary of the Effective Time, (x) each of M&J K B, and DG-DW, except to the extent they deliver written notice to the other Partners electing to participate in such Follow-on Offering and (y) in the case of a Vulcan Triggered Follow-on Offering, any Partner other than DWI II, except to the extent such Partner delivers written notice to the General Partners electing to participate in such Vulcan Triggered Follow-on Offering, in the case of each of clauses (x) and (y) within 10 Business Days after the date the Partnership delivers to each such Partner written notice of the Partnership’s exercise of the demand request relating to such Follow-on Offering and (iii) in the case of a Universal Triggered Offering, all Partners other than Universal.

“Parent” means any Person that directly or indirectly owns any equity or voting interest in a Partner.

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“Participating Partner” means any Partner other than a Non-Participating Partner.

“Partner” means a General Partner or a Limited Partner.

“Partnership” is defined in the preamble to this Agreement.

“Person” is defined in the Charter (as modified in Section 2(f) of Article IV thereof) as in effect at consummation of the IPO.

“Pledge Agreement” means the Pledge Agreement, dated as of October 27, 2004, among the Partnership, JPMorgan Chase Bank, as collateral agent, and the other lenders party thereto, as it may be amended, supplemented, restated or modified from time to time.

“Pledged Common Stock” means, at any time, the shares of Common Stock then pledged as collateral for the Revolving Credit Facility. The number of shares of Pledged Common Stock (if any) contributed to the Partnership by each Partner pursuant to Section 3.01(a) is set forth opposite such Partner’s name on Schedule A.

“Pricing Period” is defined in the Formation Agreement.

“Pricing Period Price” is defined in the Formation Agreement.

“Principal” means (i) Jeffrey Katzenberg (with respect to M&J K B and any successor General Partner admitted pursuant to this Agreement that is Controlled By Jeffrey Katzenberg) and (ii) David Geffen (with respect to DG-DW and any successor General Partner admitted pursuant to this Agreement that is Controlled By David Geffen).

“Proceeding” is defined in Section 12.10.

“Registration Rights Agreement” is defined in the Preliminary Statement to this Agreement.

“Retained Shares” of any Partner means the number of shares of Common Stock retained by such Partner pursuant to Section 2.04(b)(x) of the Formation Agreement, less the number of shares sold by (or credited to) such Partner in the IPO or in any IPO “overallotment option” exercise. In the case of any Partner that does not sell shares of Common Stock in the IPO or in any IPO “overallotment option” exercise, as applicable, the number of shares of Common Stock credited in the IPO or such IPO “overallotment option” exercise, as applicable, shall be the number of shares of Common Stock (valued at the Net Offering Price in the IPO) that would result in such Partner having a Returned Capital Ratio equal to the Returned Capital Ratio of each of the Partners (other than Universal) that actually sold shares of Common Stock in the IPO or such IPO “overalloment option” exercise, as applicable, after giving effect to such sales. The number of Retained Shares of each Partner (if any) as of the Effective Time is set forth opposite such Partner’s name on Schedule A.

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“Returned Capital Ratio” of any Partner at any time means the ratio (not to exceed 100%) of the Returned DreamWorks Capital of such Partner at such time to the Initial DreamWorks Capital of such Partner.

“Returned DreamWorks Capital” of any Partner at any time means the Initial DreamWorks Capital of such Partner minus the Unreturned DreamWorks Capital of such Partner at such time.

“Revolving Credit Facility” means the revolving credit facility, dated as of October 27, 2004, among DreamWorks L.L.C. and the lenders party thereto (or any refinancing thereof that does not extend the term thereof).

“Satisfaction Event” means, with respect to each Partner, the event as a result of which the Fifty Percent Return of such Partner would be equal to zero (or such greater amount as results from the restriction set forth in the last sentence of Section 7.02(b)).

“Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations thereunder.

“7.01(a) Additional Shares” is defined in Section 7.01(a).

“7.01(b) Additional Shares” is defined in Section 7.01(b).

“7.01(c) Additional Shares” is defined in Section 7.01(c).

“SKG Minimum Ownership Shares” means with respect to each of DW Lips, M&J K B, M&J K and DG-DW, the shares of Common Stock (including Pledged Common Stock), if any, allocated to such Partner in the schedule prepared pursuant to Section 7.01(a)(z), 7.01(b)(z) and 7.01(c)(z), as applicable, but not associated with such Partner as set forth in Section 6.01.

“Subsequent Follow-on Offering” is defined in the Formation Agreement.

“Tax Matters Partner” is defined in Section 6.04(a).

“Transaction Documents” means, collectively, this Agreement, the Formation Agreement, the Pledge Agreement, the Class B Stockholder Agreement and the Vulcan Stockholder Agreement.

“Transfer” is defined in the Class B Stockholder Agreement as in effect at consummation of the IPO.

“Trigger Event” means, in respect of a General Partner, (i) the death, incapacity, retirement, Bankruptcy, commencement of liquidation proceedings, resignation, insolvency or dissolution of a General Partner or the Principal that Controls such General Partner or (ii) the failure by the applicable Principal to Control such General Partner.

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“Ultimate Parent” of any Partner means the Parent that Controls, directly or indirectly, both such Partner and each other Parent of such Partner.

“Universal” means Vivendi Universal Entertainment LLLP.

“Universal Triggered Offering” is defined in the Formation Agreement.

“Unreturned DreamWorks Capital” means, with respect to any Partner as of any time, such Partner’s Initial DreamWorks Capital less: (a) the value of any shares of Common Stock sold (or credited, as determined in accordance with the definition of “Retained Shares”) by such Partner in the IPO or in any IPO “overallotment option” exercise prior to such time (in each case, valued at the Net Offering Price in the IPO) and (b) the value of such Partner’s Retained Shares plus the value of any other shares sold by the Partnership on behalf of such Partner, if any, pursuant to Section 7.02(b), in each case, as such value is determined in accordance with the applicable provision of Section 7.01, Section 7.04 or Section 11.02, as applicable (except that any such valuation done in accordance with Section 7.01(a) shall be undone prior to performing any calculation under Section 7.01(b) or Section 7.01(c) and shall be recalculated in accordance with such other applicable provision).

“Volume Weighted Average Price” over any period means, with respect to the Class A Stock, the volume weighted average price per share for the entire applicable period on the principal national securities market or exchange on which the Class A Stock is listed or quoted.

“Vulcan Discount” means the ratio of (x) the Net Offering Price in the Vulcan Triggered Follow-on Offering to (y) the Gross Offering Price in the Vulcan Triggered Follow-on Offering.

“Vulcan GP Date” is defined in Section 7.05.

“Vulcan Stockholder Agreement” means the Stockholder Agreement, dated as of October 27, 2004, among the Company, the Partnership, M&J K B, M&J K, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, DWI II, Jeffrey Katzenberg, David Geffen and Paul Allen, as it may be amended, supplemented, restated or modified from time to time.

“Vulcan Triggered Follow-on Offering” is defined in the Formation Agreement.

Terms and Usage Generally. i)The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article and Section references are to this Agreement unless otherwise specified. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

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The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

The Partnership

Effectiveness of this Agreement. This Agreement constitutes the partnership agreement (as defined in the Delaware Act) of the parties hereto. This Agreement shall become effective at the Effective Time.

Formation. The parties hereto agree to form the Partnership as a limited partnership and unanimously agree that the Partnership shall be qualified as a limited liability limited partnership under and pursuant to Section 17-214 of the Delaware Act and Section 15-1001 of the Delaware Revised Uniform Partnership Act (6 Del. C. §§ 15-101 et seq.) (“DRUPA”) by filing with the Secretary of State of the State of Delaware a certificate of limited partnership of the Partnership and a statement of qualification as a limited liability limited partnership. The General Partners shall execute, file and record the certificate of limited partnership of the Partnership, such statement of qualification and such other documents as may be required or appropriate under the laws of the State of Delaware and of any other jurisdiction in which the Partnership may conduct business. The General Partners shall, on request, provide any Partner with copies of each such document as filed and recorded.

Name. The name of the Partnership is DWA Escrow LLLP. The General Partners may change the name of the Partnership or adopt such trade or fictitious names as they may determine, in each case consistent with the requirements of the Delaware Act, including Sections 17-102 and 17-214 thereof, and all other applicable law (e.g., fictitious name statutes). The General Partners will give all Partners prompt written notice of any such name change (or adoption of any such trade or fictitious name).

Term. The term of the Partnership shall begin on the date the certificate of limited partnership of the Partnership becomes effective (the “Effective Time”) and shall continue until the Partnership is dissolved in accordance with Section 11.01.

Registered Agent and Registered Office. The name of the registered agent for service of process is Capitol Services, Inc., and the address of the registered agent and the address of the registered office in the State of Delaware is 615 South Dupont Highway, Dover, Kent County, Delaware. Such office and such agent may be changed from time to time by the General Partners consistent with the requirements of the Delaware Act, including Sections 17-104 and 17-202 thereof.

Limited Purpose. The Partnership is formed for the sole object and purpose of, and the nature of the business to be conducted and promoted by the Partnership is limited to, holding and voting shares of Common Stock in accordance with the Transaction Documents, effecting the transactions and fulfilling the obligations contemplated in the Transaction Documents to be effected and fulfilled by the

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Partnership and making the distributions contemplated in this Agreement. Without the prior written consent of each Partner, the Partnership will not engage in any business or activities (including those activities described in Section 8.04) other than those described above. Notwithstanding anything in this Agreement to the contrary, without the need for any additional act or consent of any Person, the Partnership, and either General Partner acting on behalf of the Partnership, may execute, deliver and perform the Transaction Documents on behalf of the Partnership. The foregoing authorization shall not be construed as a limitation on the powers of Partnership or the General Partners to enter into other agreements expressly permitted by this Agreement.

Treatment as Partnership. The Partnership shall not elect to be treated as a corporation for U.S. federal income tax purposes. The parties shall treat the Partnership as a partnership for U.S. federal income tax purposes and agree not to take any position inconsistent with such treatment.

Capital Contributions; Partners

Initial Capital Contributions. ii)At the Effective Time, the Partners shall contribute to the Partnership such number of shares of Common Stock set forth opposite such Partner’s name on Schedule A, in accordance with Section 2.04 of the Formation Agreement.

In return for such capital contributions, Interests shall be issued to the Partners. Schedule D indicates the amount of capital contributions attributable to Interests for each Partner.

No Partner shall be entitled to make additional capital contributions, withdraw capital or receive distributions except as specifically provided herein. No Partner shall have any obligation to the Partnership, to any other Partner or to any creditor of the Partnership to make any capital contribution, except as specifically contemplated in Section 3.01(a).

Admission of Partners. At the Effective Time, without the need for any further action of any Person, the Persons set forth on Schedule C attached hereto who have executed this Agreement shall be admitted as Partners, and each such Person shall be shown as such in the books and records of the Partnership. Following the Effective Time, no Person shall be admitted as a Partner (except in accordance with Section 9.02) and no additional Interests shall be issued.

Reports

Reports to Partners. iii)The General Partners shall deliver a statement to each Partner of the balance of each Partner’s Unreturned DreamWorks Capital (i) as soon as practicable after consummation of a Follow-on Offering (subject to revision in

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accordance with the first sentence of each of Section 7.01(a), Section 7.01(b) and Section 7.01(c)), (ii) within 80 days after the end of each Fiscal Year and (iii) within 30 days after the end of each of the first three quarters of each Fiscal Year.

The General Partners shall deliver a draft of the schedule required to be prepared pursuant to Section 7.01(a), Section 7.01(b) or Section 7.01(c), as applicable, to each Limited Partner for its review five Business Days prior to the pricing of the Follow-on Offering or conclusion of the Pricing Period, as applicable, and a draft of the schedule required to be prepared pursuant to Section 7.04 to each Limited Partner for its review five Business Days prior to the end of the 20-trading day period used to determine the Mandatory Distribution Price. Such draft schedule shall be prepared based on, as applicable, the mid-point of the price range for the applicable offering (or, if such mid-point price shall not exist, then a good faith estimate by the underwriters for such offering of the price per share for the applicable offering) or the Pricing Period Price as calculated from the beginning of the Pricing Period to such day. If any of the Limited Partners have any objection to any such calculations, they shall give the General Partners notice thereof and the parties shall use reasonable efforts to resolve any such disputes prior to the pricing date for such offering or the end of the applicable Pricing Period.

As soon as practicable after the end of each Fiscal Year but in any event within 80 days after the end of each Fiscal Year, the Tax Matters Partner shall deliver to each Partner an Internal Revenue Service Schedule K-1 and all similar state, local or foreign forms, schedules or returns required by law to be provided to each Partner. For purposes of Sections 4.01(a), (c), (d) and (e), Section 4.02 and Section 4.03, (i) a “Partner” shall be deemed to include any Person that was a Partner at any time during the relevant taxable period or at the time of the relevant event, even if such Person is no longer a Partner at the time the relevant information is to be provided and (ii) the “Tax Matters Partner” means the Tax Matters Partner for the relevant taxable period or at the time of the relevant event, even if such Person is no longer the Tax Matters Partner at the time the relevant information is to be prepared.

As soon as practicable after consummation of a Follow-on Offering but in any event within 80 days after such consummation, the Tax Matters Partner shall deliver to each Participating Partner a statement of the Partnership taxable income or tax loss allocable to such Partner in connection with the Follow-on Offering.

As soon as practicable but within 80 days after the distribution of shares of Common Stock to a Partner, the Tax Matters Partner shall deliver to each Partner that was distributed shares of Common Stock a statement of the tax basis (in the hands of the Partnership) of the shares of Common Stock distributed to such Partner.

Tax Returns. The Tax Matters Partner shall timely cause to be prepared all tax returns (including information returns) required to be filed by the Partnership.

Other Tax Information. The Partners shall cooperate with one another and the Tax Matters Partner (on behalf of the Partnership), and the Tax Matters Partner (on behalf of the Partnership) shall cooperate with each Partner, to provide all reasonable necessary financial and tax information and related analysis with respect to Partnership tax matters.

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Fiscal Year. The fiscal year of the Partnership (the “Fiscal Year”) shall be the 12-month (or shorter) period ending on December 31 of each year, unless otherwise determined by the General Partners.

Adjusted DreamWorks Participation Percentages

General. As of the Effective Time, the Adjusted DreamWorks Participation Percentage of each Partner shall be as set forth below:

Partner	Adjusted Dream Works Participation Percentage
M&J K B	0.0723	%
M&J K	21.6963	%
DG-DW	21.7686	%
DW Lips	21.7686	%
DWI II	29.4173	%
Lee Entertainment, L.L.C.	5.2769	%
Universal	0	%

Tax Matters

Identification, Sale and Distribution of Shares of Common Stock. iv)Each share of Common Stock held by the Partnership shall, for as long as such share is held by the Partnership, be associated with the Partner that contributed that share to the Partnership. The Partners acknowledge that shares contributed by different Partners may have different tax bases to the Partnership for U.S. federal income tax purposes.

If Common Stock is to be sold by the Partnership and the cash proceeds are to be distributed to one or more Partners, then, (i) to the extent possible and on a Partner by Partner basis, the particular shares of Common Stock that are sold shall be the shares associated with the Partner receiving such cash proceeds and (ii) to the extent that clause (i) applies, the Partnership shall identify the proceeds of the sale of each such share as being specifically distributed to the Partner with which such share is associated. To the extent that any Partner is to receive more cash proceeds than the total proceeds from the sale of all shares associated with such Partner, (x) the necessary additional shares that must be sold in order to pay such additional cash distribution to such Partner shall be taken pro rata from the shares (not then needed for sale or distribution to the Partners associated with such shares) that are associated with each of the other Partners and (y) the Partnership shall use the same method to identify the proceeds of any such stock sales as being distributed to the applicable Partner.

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If shares of Common Stock are to be distributed by the Partnership to a Partner, then, to the extent possible, the particular shares distributed to any particular Partner shall be shares associated with such Partner. To the extent that any Partner is to receive more shares than the total number of shares associated with such Partner, the necessary additional shares that must be distributed to such Partner shall be taken, in the case of Universal, first from the shares associated with DWI II (to the extent not then needed for sale or distribution to DWI II) and then, in the case of any additional distribution to Universal or a distribution to any other Partner pro rata from the shares (not then needed for sale or distribution to the Partners associated with such shares) that are associated with each of the other Partners. For the avoidance of doubt, this paragraph (c) is not intended to affect the number of shares of Common Stock or cash to be distributed or allocated to any Partner in accordance with Article VII hereof.

Allocation of Tax Items; Tax Treatment of Certain Distributions. v)Any gain or loss on any sale of Common Stock by the Partnership, and any selling expense associated with any such sale, shall be allocated to the Partner that is treated as receiving the cash proceeds of such sale in accordance with clauses (b)(ii) and (b)(y) of Section 6.01. The Partners acknowledge that such gain or loss may be allocable to a Partner other than the Partner associated with the shares that are sold.

Any other item of income, gain or loss of the Partnership shall be allocated in the discretion of the Tax Matters Partner in a manner consistent with which a Partner or Partners receive the economic benefit or detriment of such item.

A distribution of shares of Common Stock by the Partnership to Universal pursuant to this Agreement (other than a distribution of shares pursuant to Section 7.08) shall be treated by the Partnership as a distribution in liquidation of Universal’s Interest and shall be reported by the Partnership as such under Section 732(b) of the Code.

The Partners agree that the allocations in clauses (a) and (b) best reflect their respective economic interests in the Partnership and agree that they shall not take any position inconsistent with such allocations, or with the treatment described in Section 6.02(c), except as otherwise required pursuant to a determination within the meaning of Section 1313(a) of the Code.

Amounts Withheld. The Partnership, as directed by the Tax Matters Partner, is authorized to withhold from distributions, including any deemed distributions, or with respect to allocations, to the Partners and to pay over to any taxing authority any amounts that it reasonably determines may be required to be so withheld pursuant to any provisions of applicable law. All amounts so withheld with respect to any Partner shall be treated as amounts distributed to such Partner pursuant to this Agreement for all purposes and shall reduce on a dollar-for-dollar basis any amounts otherwise distributable to such Partner. The Partners will cooperate to minimize the amount of any withholding that would otherwise be required pursuant to this Section 6.03.

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Tax Matters Partner. vi)DG-DW shall act as the “tax matters partner” of the Partnership within the meaning of Section 6231(a)(7) of the Code (the “Tax Matters Partner”) and in any similar capacity under applicable state, local or foreign tax law. In the event of a Trigger Event with respect to DG-DW, M&J K B shall be the Tax Matters Partner.

The Tax Matters Partner shall serve as such with all powers granted to a tax matters partner under the Code, except as expressly provided in this Agreement. The Tax Matters Partner shall be entitled to make all decisions with respect to all tax matters of the Partnership consistent with this Agreement, including with respect to tax elections of the Partnership and the calculation and allocation of the taxable income or loss of the Partnership. All matters relating to all tax returns (including information returns) filed by the Partnership, including tax audits and related matters and controversies, shall be conducted by the Tax Matters Partner. For the avoidance of doubt, the Tax Matters Partner shall be bound by Section 6.01 and Section 6.02 and agrees that it will not take a position inconsistent with such provisions, except as otherwise required pursuant to a determination within the meaning of Section 1313(a) of the Code.

Calculations; Distributions

Calculations. i)On the date of the pricing of a Follow-on Offering, the General Partners on behalf of the Partnership shall prepare and deliver to each of the Partners a written schedule setting forth as of such date and prior to giving effect to such Follow-on Offering (x) the value of each Partner’s Retained Shares (valued at the Net Offering Price in such Follow-on Offering in the case of shares representing the return of such Partner’s Fifty Percent Return as of such time and valued at the Gross Offering Price in such Follow-on Offering in the case of all other shares), (y) each Partner’s Unreturned DreamWorks Capital (if any) after crediting the value of such Partner’s Retained Shares as set forth in Section 7.01(a)(x) above (in accordance with clause (b) of the definition of Unreturned DreamWorks Capital and without duplication) and, if the amount of such credit exceeds such Partner’s Unreturned DreamWorks Capital at such time, then the number of shares representing such excess (valued at the Gross Offering Price in such Follow-on Offering) shall be set forth in such schedule and shall be referred to as such Partner’s “7.01(a) Additional Shares”, and (z) the number of shares of Common Stock each Partner would receive after giving effect to Section 7.01(a)(y) if the Partnership were allocating all shares of Common Stock then held by the Partnership (prior to giving effect to such Follow-on Offering) pursuant to the following subparagraphs (excluding, for purposes of the calculations set forth in clauses (ii) and (iii) below, Universal as a Partner):

first, to each Partner a number of shares of Common Stock (valued at the Net Offering Price in such Follow-on Offering) having a value equal to such Partner’s Fifty Percent Return as of such time (or if insufficient shares remain, then pro rata among all Partners in proportion to, and to the extent of, their Fifty Percent Return as of such time (in relation to the aggregate Fifty Percent Returns as of such time of all Partners));

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second, after giving effect to Section 7.01(a)(i), to each Partner a number of shares of Common Stock (valued at the Gross Offering Price in such Follow-on Offering) having a value equal to such Partner’s Unreturned DreamWorks Capital (or if insufficient shares remain, then pro rata among all Partners in proportion to, and to the extent of, their Unreturned DreamWorks Capital as of such time (in relation to the aggregate Unreturned DreamWorks Capital as of such time of all Partners)); and

third, any remaining shares of Common Stock to each Partner, pro rata in accordance with their Adjusted DreamWorks Participation Percentages; provided, that if any Partner has a positive number of 7.01(a) Additional Shares then the aggregate positive amount of 7.01(a) Additional Shares of all Partners shall be added to the total shares to be allocated under this Section 7.01(a)(iii), and such pro rata calculation under this Section 7.01(a)(iii) shall be made on such aggregate total amount and then each such Partner’s positive number of 7.01(a) Additional Shares shall reduce (but not below zero) the number of shares that otherwise would have been allocated to such Partner under this Section 7.01(a)(iii).

On the date of the conclusion of a Pricing Period occurring after consummation of a Vulcan Triggered Follow-on Offering, if the Pricing Period Price is less than or equal to the Gross Offering Price realized in the Vulcan Triggered Follow-on Offering, the General Partners on behalf of the Partnership shall prepare and deliver to each of the Partners a written schedule as of such date setting forth (w) the value of each Participating Partner’s Retained Shares that were sold in the Vulcan Triggered Follow-on Offering and any additional shares sold by the Partnership on behalf of such Partner, if any, pursuant to Section 7.02(b) (in each case valued at the Net Offering Price in such Follow-on Offering in the case of shares representing the return of such Participating Partner’s Fifty Percent Return at the time of such Follow-on Offering and valued at the Gross Offering Price in such Follow-on Offering in the case of all other shares) and the value of any additional Retained Shares of such Partner that were not so sold (valued at the Pricing Period Price), (x) the value of each Non-Participating Partner’s Retained Shares (valued at the Net Offering Price in the Follow-on Offering in the case of shares representing the return of such Non-Participating Partner’s Fifty Percent Return as of such time and valued at the Pricing Period Price in the case of all other shares), (y) each Partner’s Unreturned DreamWorks Capital (if any) after crediting the value of such Partner’s Retained Shares and other shares sold by the Partnership on behalf of such Partner as set forth in Section 7.01(b)(w) or Section 7.01(b)(x) above (as the case may be) (in accordance with clause (b) of the definition of Unreturned DreamWorks Capital and without duplication) and, if the amount of such credit exceeds such Partner’s Unreturned DreamWorks Capital at such time, then the number of shares representing such excess (valued at the Pricing Period Price) shall be set forth in such schedule and shall be referred to as such Partner’s “7.01(b) Additional Shares”, and (z) the number of shares of Common Stock each Partner would receive after giving effect to Section

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7.01(b)(y) if the Partnership were allocating all shares of Common Stock then held by the Partnership pursuant to the following subparagraphs (excluding, for purposes of the calculations set forth in clauses (i), (ii) and (iii) below, Universal as a Partner or a Non-Participating Partner, as the case may be):

first, to each Non-Participating Partner, a number of shares of Common Stock (valued at the Pricing Period Price (except, in the case of shares representing the return of such Non-Participating Partner’s Fifty Percent Return as of such time, the valuation price shall be the Net Offering Price in the Follow-on Offering) until each such Non-Participating Partner has a Returned Capital Ratio equal to the ratio of (x) the aggregate Returned DreamWorks Capital of all Participating Partners (other than Universal) to (y) the aggregate Initial DreamWorks Capital of all Participating Partners (other than Universal) (or if insufficient shares remain, then pro rata among all Non-Participating Partners in proportion to, and to the extent of, their Unreturned DreamWorks Capital as of such time (in relation to the aggregate Unreturned DreamWorks Capital as of such time of all Non-Participating Partners));

second, after giving effect to Section 7.01(b)(i), to each Partner, a number of shares of Common Stock (valued at the Pricing Period Price) having a value equal to such Partner’s Unreturned DreamWorks Capital (or if insufficient shares remain, then pro rata among all Partners in proportion to, and to the extent of, their Unreturned DreamWorks Capital as of such time); and

third, any remaining shares of Common Stock to each Partner, pro rata in accordance with their Adjusted DreamWorks Participation Percentages; provided, that if any Partner has a positive number of 7.01(b) Additional Shares then the aggregate positive amount of 7.01(b) Additional Shares of all Partners shall be added to the total shares to be allocated under this Section 7.01(b)(iii), and such pro rata calculation under this Section 7.01(b)(iii) shall be made on such aggregate total amount and then each such Partner’s positive number of 7.01(b) Additional Shares shall reduce (but not below zero) the number of shares that otherwise would have been allocated to such Partner under this Section 7.01(b)(iii).

On the date of the conclusion of a Pricing Period occurring after consummation of a Vulcan Triggered Follow-on Offering, if the Pricing Period Price exceeds the Gross Offering Price realized in the Vulcan Triggered Follow-on Offering, the General Partners on behalf of the Partnership shall prepare and deliver to each of the Partners a written schedule as of such date setting forth (w) the value of each Participating Partner’s Retained Shares that were sold in such Follow-on Offering and any additional shares sold by the Partnership on behalf of such Partner, if any, pursuant to Section 7.02(b) (in each case valued at the Pricing Period Price multiplied by the Vulcan Discount in the case of shares representing the return of such Participating Partner’s Fifty Percent Return at the time of such Follow-on Offering and valued at the Pricing Period Price in the case of all other shares) and the value of any additional Retained Shares of such Partner that were not so sold (valued at the Pricing Period Price), (x) the value of

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each Non-Participating Partner’s (in the Vulcan Triggered Offering) Retained Shares (valued at the Pricing Period Price multiplied by the Vulcan Discount in the case of shares representing the return of such Non-Participating Partner’s Fifty Percent Return as of such time and valued at the Pricing Period Price in the case of all other shares), (y) each Partner’s Unreturned DreamWorks Capital (if any) after crediting the value of such Partner’s Retained Shares and other shares sold by the Partnership on behalf of such Partner as set forth in Section 7.01(c)(w) or Section 7.01(c)(x) above (as the case may be) (in accordance with clause (b) of the definition of Unreturned DreamWorks Capital and without duplication) and, if the amount of such credit exceeds such Partner’s Unreturned DreamWorks Capital at such time, then the number of shares representing such excess (valued at the Pricing Period Price) shall be set forth in such schedule and shall be referred to as such Partner’s “7.01(c) Additional Shares”, and (z) the number of shares of Common Stock each Partner would receive after giving effect to Section 7.01(c)(y) if the Partnership were allocating all shares of Common Stock then held by the Partnership pursuant to the following subparagraphs (excluding, for purposes of the calculations set forth in clauses (i), (ii) and (iii) below, Universal as a Partner or a Non-Participating Partner, as the case may be):

first, to each Non-Participating Partner, a number of shares of Common Stock (valued at the Pricing Period Price (reduced, in the case of shares representing the return of such Non-Participating Partner’s Fifty Percent Return as of such time, by multiplying the Pricing Period Price by the Vulcan Discount)) until each such Non-Participating Partner has a Returned Capital Ratio equal to the ratio of (x) the aggregate Returned DreamWorks Capital of all Participating Partners (other than Universal) to (y) the aggregate Initial DreamWorks Capital of all Participating Partners (other than Universal) (or if insufficient shares remain, then pro rata among all Non-Participating Partners in proportion to, and to the extent of, their Unreturned DreamWorks Capital as of such time (in relation to the aggregate Unreturned DreamWorks Capital as of such time of all Non-Participating Partners));

second, to each Partner, after giving effect to Section 7.01(c)(i), a number of shares of Common Stock (valued at the Pricing Period Price) having a value equal to such Partner’s Unreturned DreamWorks Capital (or if insufficient shares remain, then pro rata among all Partners in proportion to, and to the extent of, their Unreturned DreamWorks Capital as of such time); and

third, any remaining shares of Common Stock to each Partner, pro rata in accordance with their Adjusted DreamWorks Participation Percentages; provided, that if any Partner has a positive number of 7.01(c) Additional Shares then the aggregate positive amount of 7.01(c) Additional Shares of all Partners shall be added to the total shares to be allocated under this Section 7.01(c)(iii), and such pro rata calculation under this Section 7.01(c)(iii) shall be made on such aggregate total amount and then each such Partner’s positive number of 7.01(c) Additional Shares shall reduce (but not below zero) the number of shares that otherwise would have been allocated to such Partner under this Section 7.01(c)(iii).

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Transactions In the Event of a Follow-on Offering. In the event of a Follow-on Offering, after preparing the schedule required by Section 7.01(a):

Immediately prior to consummation of such offering, the Partnership shall distribute to Universal in complete liquidation of its Interests the number of shares of Common Stock allocated to Universal under clause (i) of such schedule.

Each Participating Partner in such Follow-on Offering shall sell in such Follow-on Offering a sufficient number of such Partner’s Retained Shares (valued at the Net Offering Price) (or, in the case of Universal, shares received pursuant to Section 7.02(a) and its Retained Shares) to cause a Satisfaction Event (with respect to such Participating Partner) plus any additional Retained Shares permitted to be sold in such offering; provided, that in the event the sale by such Participating Partner (other than Universal) of all of its Retained Shares in such Follow-on Offering would not cause a Satisfaction Event (with respect to such Participating Partner), then the Partnership shall also sell an additional number of shares of Common Stock (not to exceed the total number of shares allocated to such Participating Partner under clause (i) of such schedule) in such Follow-on Offering on behalf of such Participating Partner as necessary to cause a Satisfaction Event (with respect to such Participating Partner). Notwithstanding the foregoing, in no event shall the Partnership sell, on behalf of any such Participating Partner, any shares that were not associated with such Participating Partner (or with Universal) as set forth in Section 6.01 at the Effective Time, and if, as a result of the foregoing (or as a result of the Partnership not being permitted to sell any shares of such Partner’s Pledged Common Stock as a result of the Pledge Agreement), there are insufficient shares available for sale by the Partnership on behalf of such Participating Partner to generate such Participating Partner’s Fifty Percent Return, then, for purposes of determining whether a Follow-on Offering was of a sufficient size to be consummated by the Partnership, a Satisfaction Event shall be deemed to occur with respect to such Participating Partner at the point the maximum number of shares associated with such Participating Partner as set forth in Section 6.01 (and not constituting Pledged Common Stock) have been sold by the Partnership (and, in the case of a Vulcan Triggered Follow-on Offering, in such event, to the extent that the total number of shares allocated to all Partners under clause (i) of such schedule equals the total number of shares held by the Partnership, then all shares held by the Partnership and not sold in the Vulcan Triggered Follow-on Offering shall be permanently allocated as set forth on such schedule and there shall be no further Pricing Period or reallocation pursuant to Section 7.01(b) or Section 7.01(c)).

In the case of a JK/DG Triggered Follow-on Offering or a Subsequent Follow-on Offering, (x) on the date of consummation of such Follow-on Offering (and the date of the closing of the exercise of any overallotment option relating to such offering, if any), the Partnership shall distribute to each Partner the net cash proceeds, if any, generated on behalf of such Partner pursuant to the proviso to the first sentence of Section 7.02(b) and (y) except as otherwise provided in Section 7.06(f) with respect to DWI II, upon the written request of any Partner from time to time, the Partnership shall distribute to such Partner a number of shares of Common Stock equal to the aggregate amount of shares of Common Stock allocated to such Partner pursuant to Section

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7.01(a)(z) less any such shares sold on behalf of such Partner in accordance with the proviso to the first sentence of Section 7.02(b) (other than, in the case of the Continuing Partners, the Continuing Partner Minimum Ownership Shares and, in the case of DW Lips, M&J K B, M&J K and DG-DW, the SKG Minimum Ownership Shares) in exchange for a proportionate amount of Interests of such Partner.

In the case of a Vulcan Triggered Follow-on Offering, (x) on the date of consummation of such Vulcan Triggered Follow-on Offering (and the date of the closing of the exercise of any overallotment option relating to such offering, if any), the Partnership shall distribute to each Partner the net cash proceeds, if any, generated on behalf of such Partner pursuant to the proviso to the first sentence of Section 7.02(b) and (y) upon the conclusion of a Pricing Period, immediately after preparing the applicable schedule required by Section 7.01(b) or Section 7.01(c), except as otherwise provided in Section 7.06(e) with respect to DWI II, upon the written request of any Partner from time to time, the Partnership shall distribute to such Partner a number of shares of Common Stock equal to the aggregate amount of shares of Common Stock allocated to such Partner pursuant to Section 7.01(b)(z) or Section 7.01(c)(z) less any such shares sold on behalf of such Partner in accordance with the proviso to the first sentence of Section 7.02(b) (other than, in the case of the Continuing Partners, the Continuing Partner Minimum Ownership Shares and, in the case of DW Lips, M&J K B, M&J K and DG-DW, the SKG Minimum Ownership Shares) in exchange for a proportionate amount of Interests of such Partner.

Transactions in the Event of a Universal Triggered Offering. In the event of a Universal Triggered Offering, immediately prior to consummation of such offering, the Partnership shall distribute to Universal the number of shares of Common Stock allocated to Universal in the schedule prepared pursuant to Section 7.01(a)(z)(i) as if such schedule were prepared for Universal on the date of the pricing of the Universal Triggered Offering (using the Net Offering Price in the Universal Triggered Offering where applicable).

Mandatory Share Distributions. ii)In the event that a Follow-on Offering has not been consummated prior to January 1, 2008 (July 1, 2008 in the event that a Universal Triggered Offering has been consummated), then at any time thereafter and prior to March 31, 2008 (September 30, 2008 in the event that a Universal Triggered Offering has been consummated), the General Partners and DWI II, acting together, shall cause the Mandatory Distribution Price to be determined (with the applicable 20-trading day period commencing on the date of notice from the General Partners to the other Partners that such price is to be calculated). In addition, subject to the prior written consent of DWI II (which consent shall not be unreasonably withheld or delayed), on the second trading day (or such other date as agreed in writing by the General Partners and DWI II) prior to consummation of a merger, consolidation, share exchange, tender offer, sale of all or substantially all of the assets of the Company or reclassification or other reorganization involving the Company and, in each case, not constituting a Control Transaction (as defined in the Charter as in effect at consummation of the IPO) (a “Change in Control Transaction”), the General Partners shall cause the Mandatory Distribution Price to be determined (with the applicable 20-trading day period

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commencing on the 20th trading day immediately prior to such second trading day). In either case, upon the determination of the applicable Mandatory Distribution Price, the General Partners on behalf of the Partnership shall prepare and deliver to each of the Partners a written schedule as of such date of determination setting forth (x) the value of each Partner’s Retained Shares (valued at the Mandatory Distribution Price), (y) each Partner’s Unreturned DreamWorks Capital (if any) after crediting the value of such Partner’s Retained Shares as set forth in Section 7.04(a)(x) above (in accordance with clause (b) of the definition of Unreturned DreamWorks Capital and without duplication) and, if the amount of such credit exceeds such Partner’s Unreturned DreamWorks Capital, then the number of shares representing such excess (valued at the Mandatory Redemption Price) shall be set forth in such schedule and shall be referred to as such Partner’s “Mandatory Additional Shares”, and (z) the number of shares of Common Stock each Partner would receive after giving effect to Section 7.04(a)(y) if the Partnership were allocating all shares of Common Stock then held by the Partnership pursuant to Section 7.01(a) (valuing such shares at the Mandatory Distribution Price and treating Mandatory Additional Shares as if they were 7.01(a) Additional Shares).

Subject to the prior written consent of DWI II (which consent shall not be unreasonably withheld or delayed), in the event of a Change in Control Transaction, immediately prior to consummation of a Change in Control Transaction, and in the event that a Follow-on Offering has not been consummated prior thereto, then on March 31, 2008 (September 30, 2008 in the event that a Universal Triggered Offering has been consummated), each Partner shall have the right to exchange its Interests for a number of shares of Common Stock equal to the aggregate amount allocated to such Partner in the schedule prepared in accordance with Section 7.04(a)(z) (provided, that in the case of the Continuing Partners, the Continuing Partner Minimum Ownership Shares shall be distributed in accordance with Section 7.05(b) rather than this Section 7.04(b) and, in the case of DW Lips, M&J K B, M&J K and DG-DW, the SKG Minimum Ownership Shares shall be distributed in accordance with Section 7.05(c) rather than this Section 7.04(b)).

Vulcan GP Date. i)At any time after the date (the “Commencement Date”) that is six months after consummation of a Follow-on Offering or the date a Partner may exercise its exchange rights pursuant to Section 7.04(b), DWI II may deliver written notice to each of the other Partners that it intends to assume the role of General Partner on the date specified in such notice (the “Vulcan GP Date”). Under no circumstances, however, shall the Vulcan GP Date be earlier than the fifth Business Day after the date of such notice or later than the date that is one month after the Commencement Date, and if no such written notice shall have been delivered prior to the date that is one month after the Commencement Date, then the Vulcan GP Date shall be deemed to occur on the date that is one month after the Commencement Date.

(i) Upon exercise of DWI II’s exchange rights under Section 7.06(e)(ii) or Section 7.06(f)(ii) (which become exercisable on the date that is six months after the Vulcan GP Date), (ii) in the case of DWI II’s Continuing Partner Minimum Ownership Shares under Section 7.04(b), any time on or after the date that is six months after the Vulcan GP Date or (iii) upon the written request of any other Continuing Partner at any time on or after the date that is six months after the Vulcan GP Date, the Partnership shall

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distribute to such Partner its Continuing Partner Minimum Ownership Shares and any other shares to which such Partner is entitled in exchange for such Partner’s equity interests in the Partnership, and such Continuing Partner shall have the right to withdraw from the Partnership at any time thereafter.

Immediately prior to the Vulcan GP Date, each of DW Lips, M&J K B, M&J K and DG-DW shall receive their respective SKG Minimum Ownership Shares and any other shares to which they are entitled in full redemption of their Interests, except to the extent such Partner delivers written notice to the General Partners electing not to be redeemed. Effective as of the Vulcan GP Date, DWI II shall become the General Partner. From and after the Vulcan GP Date, DWI II may admit, without the need for any further action or consent of any Person, one or more additional limited partners to the Partnership; provided, that such admission does not adversely affect in any way the rights or economic interests of any other Continuing Partner.

General Provisions. i)For the avoidance of doubt, any distribution or exchange under this Agreement of shares of Common Stock to any Partner shall be made solely (x) in the form of Class B Stock to any of M&J K B, M&J K or DG-DW and (y) in the form of Class A Stock to each other Partner. References in this Article VII to M&J K B, M&J K, DG-DW and DWI II shall be deemed to include their permitted transferees. Immediately upon the Final Allocation, the Partnership shall convert all remaining shares of Common Stock held by the Partnership, other than shares allocated to M&J K B, M&J K or DG-DW, to Class A Stock.

To the extent practicable and in all cases consistent with this Article VII and Article XI, and subject to Section 6.01(c), for purposes of any allocation of shares of Common Stock of the Partnership to the Partners under this Agreement (including for purposes of the calculations set forth in Sections 7.01(a)(z), 7.01(b)(z) and 7.01(c)(z)), the Partnership shall allocate shares of Common Stock in the following order of priority: first, shares of Common Stock that do not constitute Pledged Common Stock and, second, shares of Common Stock that constitute Pledged Common Stock (with the intent that the Pledged Common Stock shall be the final shares allocated and distributed under the applicable distribution provisions). In addition, if there are any Continuing Partner Minimum Ownership Shares with respect to any Partner, such shares shall be first, shares of Pledged Common Stock allocable to such Partner and, second, shares of Common Stock that do not constitute shares of Pledged Common Stock (not to exceed in the aggregate the number of Continuing Partner Minimum Ownership Shares).

No fractional share shall be issued upon the distribution of any share or shares of Common Stock under this Agreement. All shares of Common Stock (including fractions thereof) to be distributed hereunder at any time shall be aggregated for purposes of determining whether the distribution would result in the allocation or distribution of any fractional share. If, after such aggregation, the applicable calculations in Section 7.01 would result in the allocation or distribution of a fraction of a share of Common Stock, the Partnership shall, in lieu of distributing or causing the Company to issue any fractional share, round that fraction of a share up or down as reasonably determined by the General Partners.

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Except as expressly provided in this Article VII or Article XI, the General Partners shall not cause the Partnership to make any distributions.

From and after the date on which a Vulcan Triggered Follow-on Offering shall be consummated, DWI II shall have the right to exchange its equity interest in the Partnership for a number of shares of Common Stock (including Pledged Common Stock) allocable to DWI II under Section 7.01(b) or Section 7.01(c) (as applicable); provided, that the exercisability of such exchange right shall vest in two parts, (i) first, with respect to the number of shares of Common Stock equal to (A) the number of shares of Common Stock (including Pledged Common Stock) allocable to DWI II under Section 7.01(b) or Section 7.01(c) (as applicable) minus (B) the number of shares of Common Stock represented by DWI II’s Continuing Partner Minimum Ownership Shares, upon the conclusion of the Pricing Period in connection with such Vulcan Triggered Follow-on Offering and (ii) second, with respect to the number of shares of Common Stock represented by DWI II’s Continuing Partner Minimum Ownership Shares, upon the date that is six months after the Vulcan GP Date. DWI II shall tender to the Partnership (x) upon the exercise described in clause (i) above, a fraction of DWI II’s equity interest in the Partnership equal to the quotient of (A) the number of shares of Common Stock issuable upon such exercise divided by (B) the number of shares of Common Stock equal to the number in clause (i)(A) above; and (y) upon the exercise described in clause (ii) above, DWI II’s remaining equity interest in the Partnership. DWI II shall have no rights, and the Partnership shall have no obligations to DWI II, to make distributions of shares of Common Stock to DWI II pursuant to Section 7.02(d) in respect of a given Pricing Period other than pursuant to the exchange rights set forth in this Section 7.06(e). For the avoidance of doubt, this Section 7.06(e) shall not give DWI II any priority over other Partners with respect to the timing or amount of distributions of shares of Common Stock pursuant to the other provisions of this Article VII and shall not relieve DWI II of its obligations under Section 7.05.

From and after the date on which a JK/DG Triggered Follow-on Offering or a Subsequent Follow-on Offering shall be consummated, DWI II shall have the right to exchange its equity interest in the Partnership for a number of shares of Common Stock (including Pledged Common Stock) allocable to DWI II under Section 7.01(a)(z); provided, that the exercisability of such exchange right shall vest in two parts, (i) first, with respect to the number of shares of Common Stock equal to (A) the number of shares of Common Stock (including Pledged Common Stock) allocable to DWI II under Section 7.01(a) minus (B) the number of shares of Common Stock represented by DWI II’s Continuing Partner Minimum Ownership Shares, upon the closing of a JK/DG Triggered Follow-on Offering or a Subsequent Follow-on Offering, as applicable (unless an over-allotment option shall have been granted to the underwriters of such Follow-on Offering, in which case DWI II may not exercise such portion of the foregoing exchange right under this clause (i) before the earlier of the closing or expiration of such over-allotment option) and (ii) second, with respect to the number of shares of Common Stock represented by DWI II’s Continuing Partner Minimum Ownership Shares, upon the date that is six months after the Vulcan GP Date. If no JK/DG Triggered Follow-on Offering or Subsequent Follow-on Offering shall have occurred before January 1, 2008 (July 1, 2008, in the event that a Universal Triggered Offering shall have been consummated),

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then the Vulcan Subsequent Exchange Right shall expire immediately upon such date. DWI II shall tender to the Partnership (x) upon the exercise described in clause (i) above, a fraction of DWI II’s equity interest in the Partnership equal to the quotient of (A) the number of shares of Common Stock issuable upon such exercise divided by (B) such number of shares of Common Stock allocable to DWI II under Section 7.01(a); and (y) upon the exercise described in clause (ii) above, DWI II’s remaining equity interest in the Partnership. From and after the date on which a JK/DG Triggered Follow-on Offering or a Subsequent Follow-on Offering shall be consummated, DWI II shall have no rights, and the Partnership shall have no obligations to DWI II to distribute Common Stock, in each case pursuant to Section 7.02(d), unless such exchange right set forth in this Section 7.06(f) shall have expired without first having become exercisable. For the avoidance of doubt, this Section 7.06(f) shall not give DWI II any priority over other Partners with respect to the timing or amount of distributions of shares of Common Stock pursuant to the other provisions of this Article VII and shall not relieve DWI II of its obligations under Section 7.05.

(g) At or prior to the time of the distribution of any shares of Pledged Common Stock to any Partner pursuant to this Article VII, and as a condition to such distribution, to the extent not previously executed and delivered, such Partner shall execute a pledge agreement in substantially the form of the Pledge Agreement relating to the number of such shares of Pledged Common Stock so distributed, and the identical number of shares of Pledged Common Stock secured by the Pledge Agreement shall simultaneously be decreased by the number of shares of Pledged Common Stock distributed to such Partner.

No Set-Off. The General Partners shall not have any right to off-set or set-off any payment due to any Partner pursuant to this Agreement against any other payment to be made by such Partner pursuant to this Agreement, any of the Transaction Documents or otherwise.

Sample Calculations. Attached hereto as Schedule E are illustrative calculations of the amounts allocable to the Partners under this Article VII under various assumptions set forth therein. The Partnership shall calculate the amounts allocable to the Partners under this Article VII in a manner consistent with the provisions hereof as illustrated by such illustrative calculations. All schedules delivered to the Partners under this Article VII shall be no less detailed than the schedules attached hereto as Schedule E.

Management of the Partnership

General Partners. ii)Subject to the terms of this Agreement, the business and affairs of the Partnership shall be managed exclusively by the General Partners and the tax matters of the Partnership shall be managed exclusively by the Tax Matters Partner, in each case, in a manner consistent with this Agreement, without the need for, except as set forth in Section 2.06 and Section 8.04 and except in the case of a Vulcan Triggered Follow-on Offering, a Subsequent Follow-on Offering, a Universal Triggered

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Offering or as provided in Section 7.04, any consent or approval of any other Partner. Subject to Section 8.02 and the terms of this Agreement, the General Partners shall have the exclusive power and authority, on behalf of the Partnership, to effect allocations and distributions in accordance with Article VII and to take any action of any kind not inconsistent with this Agreement and to do anything and everything they deem necessary or appropriate to carry on the business and purposes of the Partnership in a manner consistent with this Agreement, including taking all actions permitted or required under the Formation Agreement. Except as expressly provided herein, the General Partners shall act jointly in all matters. No other Partner shall participate in the management and control of the business of the Partnership, and in no event shall any Partner other than the General Partners have any authority to bind the Partnership for any purpose. No other Partner or Partners shall have any right to remove or replace one or more of the General Partners, except in the case of any act or omission that constitutes fraud, bad faith or willful misconduct of a General Partner, as finally determined by a judgment of a court of competent jurisdiction which judgment is final and nonappealable, in which case such General Partner may be removed by Partners owning a majority-in-interest of the Interests then outstanding (based upon their Adjusted DreamWorks Participation Percentages). Persons dealing with the Partnership are entitled to rely conclusively upon the power and authority of the General Partners.

The General Partners are, to the extent of their rights and powers set forth in this Agreement, agents of the Partnership for the purpose of the Partnership’s business, and the actions of the General Partners taken in accordance with such rights and powers shall bind the Partnership.

Voting of Contributed Stock. (a) The General Partners shall exercise voting control over all shares of Contributed Stock (and all shares with respect to which Universal has given the Partnership a voting proxy under Section 8.02(b)) and shall vote (or act by written consent) with respect to all such shares as they deem appropriate in their sole discretion; provided, that any such vote relating to a matter addressed in the Class B Stockholder Agreement or the Vulcan Stockholder Agreement shall be in accordance with the Class B Stockholder Agreement or the Vulcan Stockholder Agreement, as applicable.

(b) Universal hereby grants to the Partnership a proxy to vote the Retained Shares of Universal, which proxy shall survive until such time as Universal transfers such shares (consistent with Section 3.06 of the Formation Agreement) or until such time as Universal receives any distribution of Class A Stock from the Partnership.

Substitute General Partner. Upon the occurrence of a Trigger Event with respect to a General Partner at any time prior to the Vulcan GP Date, then such General Partner shall immediately cease to be a General Partner and shall no longer have any right or authority to act on behalf of the Partnership as a General Partner. In such event, such General Partner shall be treated for all purposes as a Limited Partner and the remaining General Partner shall be the sole General Partner. In the event of Trigger Events with respect both of the initial General Partners, then DWI II shall, without any further action on the part of the Partners or the Partnership, become the sole General Partner and concurrently therewith, the Partnership shall convert all shares of Common Stock held by the Partnership to Class A Stock and shall continue without dissolution.

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Restrictions on Activities. Notwithstanding any other provision of this Agreement (except the third sentence of Section 2.06), the General Partners shall not, without the prior written consent of each of the other Partners, cause or permit the Partnership to do any of the following: (i) engage in any business or activity other than those expressly set forth in Section 2.06; (ii) incur any indebtedness or assume or guarantee, or otherwise provide credit support directly or indirectly for, any indebtedness or obligation of any other Person; (iii) make a general assignment for the benefit of creditors; (iv) file a petition commencing a voluntary Bankruptcy case; (v) file a petition or answer seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (vi) file an answer or other pleading admitting or failing to contest the material allegations of a petition filed against it in any proceeding seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution (to the fullest extent permitted by law) or similar relief under any statute, law or regulation, or the entry of any order appointing a trustee, liquidator or receiver of it or of its assets or any substantial portion thereof; (vii) seek, consent to or acquiesce in the appointment of a trustee, receiver or liquidator of it or of all or any substantial part of its assets; (viii) consolidate or merge with or into any other Person or convey or transfer any shares of Common Stock, cash or other property of the Partnership to any Person except in accordance with the terms of the Transaction Documents; (ix) amend the certificate of limited partnership, or take action in furtherance of any such action; (x) except as expressly contemplated in the Transaction Documents, purchase or otherwise acquire any equity interest of any class in any Person; (xi) take any act that would subject any Partner to personal liability for the debts, liabilities or obligations of the Partnership; (xii) take any act in contravention of any of the Transaction Documents; (xiii) enter into any contract or arrangement whereby any General Partner, Principal or any of their respective Affiliates would receive any fee or other compensation from the Partnership or its assets in connection with the management of the Partnership or otherwise (it being understood that the General Partners and any successor General Partners are providing services to the Partnership pursuant to this Agreement on a no-fee basis); (xiv) exercise any demand or piggy-back registration rights under the Registration Rights Agreement that would not result in a Satisfaction Event with respect to the applicable Participating Partners (or, if such offering would not result in a Satisfaction Event, fail to request that the Company withdraw any registration statement of the Company in which the Partnership was the Requesting Holder (as defined in the Registration Rights Agreement) or otherwise remove all securities of the Partnership and the Partners requested to be included in any registration statement of the Company); (xv) request that the Company withdraw any registration statement of the Company in which the Partnership was the Requesting Holder or otherwise remove any securities of the Partnership and the Partners requested to be included in any registration statement of the Company, in each case unless such offering would not result in a Satisfaction Event; (xvi) settle or compromise any material litigation involving the Partnership or any of its property; (xvii) dissolve the Partnership, other than as provided in Section 11.01; or (xviii) except as expressly contemplated in the Transaction Documents, directly or indirectly Transfer, pledge or otherwise encumber any shares of Common Stock held by the Partnership. In addition, no General Partner shall withdraw as a General Partner except as expressly permitted herein.

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Transfers of Interests

Restrictions on Transfers. Without the prior written consent of the General Partners and DWI II, (a) no Partner shall directly or indirectly Transfer all or any part of its Interests, or any rights to receive capital, profits or distributions of the Partnership pursuant thereto, (b) except in the case of any Parent of Lee Entertainment, L.L.C. and any Parent of Universal, no Parent of any Partner shall Transfer any Equity Security or other interest in such Partner or any other Parent of such Partner, or the right to receive capital or profits of such Partner or such other Parent pursuant thereto and (c) except in the case of Universal and any Parent of Universal, no Partner or any Parent of such Partner (other than the Ultimate Parent) shall issue any Equity Security or other interest, and, in each case, any such Transfer or issuance by a Partner or its Parents shall be deemed a Transfer by such Partner of Interests in violation of this Agreement and a breach of this Agreement by such Partner. To the fullest extent permitted by law, any such Transfer in violation of this Agreement shall be null and void.

Admission of Transferees. A transferee of an Interest permitted under Section 9.01 shall be admitted to the Partnership as a partner of the Partnership upon (i) the prior written consent of the General Partners and DWI II (which consent of the General Partners and DWI II shall not be unreasonably withheld or delayed) and (ii) its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement, which instrument may be a counterpart signature page to this Agreement. If a Partner Transfers all of its Interest pursuant to Section 9.01, such admission shall be deemed effective immediately prior to such transfer and, immediately following such admission, the transferor Partner shall cease to be a partner of the Partnership.

Further Restrictions. Notwithstanding anything to the contrary in this Agreement, to the fullest extent permitted by law, any Transfer that would otherwise be permitted by this Agreement shall be null and void if (a) such Transfer requires the registration of such Transferred Interest pursuant to any applicable Federal or state securities laws; (b) such Transfer subjects the Partnership to regulation under the Investment Company Act of 1940, the Investment Advisers Act of 1940 or the Employee Retirement Income Security Act of 1974, each as amended; (c) such Transfer results in a violation of applicable laws to which the Partnership is subject; (d) such Transfer is made to any Person that lacks the legal right, power or capacity to own such Interest; (e) such Transfer would cause the assets of the Partnership to constitute “plan assets” under 29 C.F.R. §2510.3-101; or (f) such Transfer would cause the Partnership to be taxable as a corporation for U.S. federal income tax purposes.

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Limitation on Liability, Exculpation

Limitation on Liability. An obligation of the Partnership incurred while the Partnership is a Delaware limited liability limited partnership, whether arising in contract, tort or otherwise, is solely the obligation of the Partnership. A General Partner is not personally liable, directly or indirectly, by way of indemnification, contribution, assessment or otherwise, for such obligation solely by reason of being or so acting as a general partner of the Partnership. No Partner shall have any liability in any manner whatsoever for any debt, liability or other obligation of the Partnership, whether such debt, liability or other obligation arises in contract, tort or otherwise, under Section 17-303(a) of the Delaware Act. No Covered Person shall be obligated personally for any debt, obligation or liability of the Partnership. The foregoing Section 10.01 shall not alter each Partner’s obligation to return funds wrongfully distributed to it if required to do so under the Delaware Act.

Exculpation of Covered Persons. iii)Except as expressly provided herein, and to the fullest extent permitted by law, no Covered Person shall be liable, including under any legal or equitable theory of fiduciary duty or other theory of liability, to the Partnership or to any other Covered Person for any losses, claims, damages or liabilities incurred by reason of any act or omission performed or omitted by such Covered Person except for any losses, claims, damages or liabilities arising from such Covered Person’s fraud, bad faith or willful misconduct. Whenever in this Agreement a Covered Person is permitted or required to make decisions, such Covered Person shall make such decisions in good faith and shall not be subject to any other or different standard (including any legal or equitable standard of fiduciary or other duty) imposed by this Agreement or any relevant provisions of law or in equity or otherwise.

A Covered Person shall be fully protected in relying in good faith upon the records of the Partnership and upon such information, opinions, reports or statements presented to the Partnership or management by any Person as to matters the Covered Person reasonably believes are within such Person’s professional or expert competence.

Indemnification. The Partnership shall, to the fullest extent permitted under the Delaware Act as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Partnership to provide broader indemnification rights than said law permitted the Partnership to provide prior to such amendment), indemnify and hold harmless any Covered Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit, investigation or proceeding, whether civil, criminal or administrative and whether by or in the right of the Partnership, by reason of the fact that he or a Covered Person of whom he is the legal representative is or was an officer of the Partnership against all expenses, liability and loss (including reasonable attorneys’ fees and judgments, fines or penalties and amounts paid or to be paid in settlement) incurred or suffered by him in connection therewith, except in a case where such expenses, liabilities or losses resulted from the fraud, bad faith or willful misconduct of such

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indemnified Person. The right to indemnification conferred in this Agreement shall be a contract right and shall include the right to be paid by the Partnership the expenses incurred in defending any such proceeding in advance of its final disposition upon receipt by the Partnership of an unsecured written promise by or on behalf of such Covered Person to repay such advances if a court of competent jurisdiction shall determine in a final, non-appealable judgment that such Covered Person is not entitled to be indemnified by the Partnership for such expenses, such advances to be paid by the Partnership within 20 days after the receipt by the Partnership of a statement or statements from the claimant requesting such advance or advances from time to time.

Dissolution and Termination

Dissolution. iv)Except as otherwise provided herein, no Partner shall withdraw from the Partnership and, to the fullest extent permitted by applicable law, no Partner shall take any action to dissolve, terminate or liquidate the Partnership or to require apportionment, appraisal or partition of the Partnership or any of its assets, or to file a bill for an accounting, except as specifically provided in this Agreement, and each Partner, to the fullest extent permitted by applicable law, hereby waives any rights to take any such actions (or have such actions taken on its behalf) under applicable law, including any right to petition a court for judicial dissolution under Section 17-802 of the Delaware Act. Notwithstanding any other provision of this Agreement, the Bankruptcy of a Partner shall not cause such Partner to cease to be a partner of the Partnership, and, upon the occurrence of such an event, the Partnership shall continue without dissolution.

The Partnership shall be dissolved and its business wound up upon the earliest to occur of any one of the following events:

the final distribution of all cash and all shares of Common Stock allocated in accordance with Article VII;

the written agreement of all the Partners to dissolve the Partnership;

the entry of a decree of judicial dissolution under Section 17-802 of the Delaware Act, in contravention of this Agreement;

an event of withdrawal of a General Partner, unless at the time there is at least one other General Partner, including a successor General Partner selected in accordance with Article VII or 8.03 (such General Partner being hereby authorized to and shall continue the business of the Partnership without dissolution); and

the first time there are no Limited Partners, unless the Partnership is continued without dissolution in accordance with the Delaware Act.

Except as provided herein, the resignation, insolvency or dissolution of a Partner or the occurrence of any other event that terminates the continued membership of a Partner in the Partnership shall not in and of itself cause a dissolution of the Partnership.

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Winding Up of the Partnership. v)Upon dissolution, the Partnership’s business shall be liquidated in an orderly manner. The General Partners shall be the liquidating trustees to wind up the affairs of the Partnership pursuant to this Agreement. If there shall be no General Partner, the remaining Partners owning at least a majority-in-interest of the Interests (based on Adjusted DreamWorks Participation Percentages) then outstanding may approve one or more liquidating trustees to act as the liquidating trustee in carrying out such liquidation. In performing their duties, the liquidating trustees are authorized to sell, distribute, exchange or otherwise dispose of the assets of the Partnership in accordance with the Delaware Act and in any reasonable manner that they shall determine to be in the best interest of the Partners.

In the event of any dissolution other than a dissolution under Section 11.01(b)(i), the General Partners on behalf of the Partnership shall prepare and deliver to each of the Partners a written schedule as of the date of the applicable written agreement (in the case of a dissolution under Section 11.01(b)(ii)) or the date of entry of the applicable decree (in the case of a dissolution under Section 11.01(b)(iii)) or the date of the event of withdrawal of a General Partner (in the case of a dissolution under Section 11.01(b)(iv)) or the first date on which there are no Limited Partners (in the case of a dissolution under Section 11.01(b)(v)) setting forth (x) the value of each Partner’s Retained Shares (valued at their Fair Market Value as of such applicable date) and (y) each Partner’s Unreturned DreamWorks Capital (if any) after crediting the value of such Partner’s Retained Shares as set forth in Section 11.02(b)(x) above (in accordance with clause (b) of the definition of Unreturned DreamWorks Capital and without duplication) and, if the amount of such credit exceeds such Partner’s Unreturned DreamWorks Capital, then the number of shares representing such excess (valued at such Fair Market Value) shall be set forth in such schedule and shall be referred to as such Partner’s “Dissolution Additional Shares”. In the event of any dissolution (other than a dissolution under Section 11.01(b)(i)), the proceeds of the liquidation of the Partnership shall be distributed in the following order and priority, after giving effect to Section 11.02(b)(y):

first, to the creditors (including any Partners or their respective Affiliates that are creditors) of the Partnership, to the extent otherwise permitted by law, in satisfaction of all of the Partnership’s liabilities (whether by payment or by making reasonable provision for payment thereof, including the setting up of any reserves which are, in the judgment of the liquidating trustee, reasonably necessary therefor);

second, to the extent such dissolution is not a dissolution under Section 11.01(b)(i), to the Partners pro rata and in proportion to and to the extent of their respective Fifty Percent Return as of such time (with shares of Common Stock being distributed in kind and valued at their Fair Market Value as of the date of the applicable written agreement (in the case of a dissolution under Section 11.01(b)(ii)) or the date of entry of the applicable decree (in the case of a dissolution under Section 11.01(b)(iii)) or the date of the event of withdrawal of a

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General Partner (in the case of a dissolution under Section 11.01(b)(iv)) or the first date on which there are no Limited Partners (in the case of a dissolution under Section 11.01(b)(v)));

third, to the extent such dissolution is not a dissolution under Section 11.01(b)(i), to the Partners pro rata in proportion to and to the extent of their respective Unreturned DreamWorks Capital (with shares of Common Stock being distributed in kind and valued at their Fair Market Value as of the date of the applicable written agreement (in the case of a dissolution under Section 11.01(b)(ii)) or the date of entry of the applicable decree (in the case of a dissolution under Section 11.01(b)(iii)) or the date of the event of withdrawal of a General Partner (in the case of a dissolution under Section 11.01(b)(iv)) or the first date on which there are no Limited Partners (in the case of a dissolution under Section 11.01(b)(v))); and

fourth, to the extent such dissolution is not a dissolution under Section 11.01(b)(i), a distribution in kind of shares of Common Stock to the Partners pro rata in accordance with their Adjusted DreamWorks Participation Percentages; provided, that if any Partner has a positive number of Dissolution Additional Shares then the aggregate positive number of Dissolution Additional Shares shall be added to the total number of shares to be allocated under this Section 11.02(b)(iv), and such pro rata distribution under this Section 11.02(b)(iv) shall be made as if such aggregate total number of shares were available for distribution and as if each Partner had received a distribution of such Partner’s Dissolution Additional Shares.

Claims of Partners. The Partners shall look solely to the Partnership’s assets for the return of their capital contributions, and if the assets of the Partnership remaining after payment of or reasonable provision for the payment of all liabilities of the Partnership are insufficient to return such capital contributions, the Partners shall have no recourse against the Partnership or any Partner.

Termination. The Partnership shall terminate when all of the assets of the Partnership, after payment of or reasonable provision for the payment of all debts and liabilities of the Partnership, shall have been distributed to the Partners in the manner provided for in this Article XI and when permitted by this Agreement, and the certificate of limited partnership of the Partnership and the statement of qualification of the Partnership as a limited liability limited partnership shall be canceled in the manner required by the Delaware Act.

Miscellaneous

Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s

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fax machine if sent on a Business Day (or otherwise on the next Business Day), (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service or (c) on the second Business Day following the date of dispatch if delivered by a recognized international courier service. All notices hereunder shall be delivered as set forth on Schedule C, or pursuant to such other instructions as may be designated in writing by the party to receive such notice

No Third Party Beneficiaries. Except as provided in Article X, this Agreement is not intended to confer any rights or remedies hereunder upon, and shall not be enforceable by, any Person other than the parties hereto.

Waiver. No failure by any party to insist upon the strict performance of any covenant, agreement, term or condition of this Agreement or to exercise any right or remedy consequent upon a breach of such or any other covenant, agreement, term or condition shall operate as a waiver of such or any other covenant, agreement, term or condition of this Agreement. Any Partner by notice given in accordance with Section 12.01 may, but shall not be under any obligation to, waive any of its rights or conditions to its obligations hereunder, or any duty, obligation or covenant of any other Partner. No waiver shall affect or alter the remainder of this Agreement but each and every covenant, agreement, term and condition hereof shall continue in full force and effect with respect to any other then existing or subsequent breach. The rights and remedies provided by this Agreement are cumulative and the exercise of any one right or remedy by any party shall not preclude or waive its right to exercise any or all other rights or remedies.

Assignment; Amendments. i)Except as otherwise provided herein, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by any of the Partners, in whole or in part (whether by operation of law or otherwise), directly or indirectly, without the prior written consent of the General Partners and DWI II, and, to the fullest extent permitted by law, any attempt to make any such assignment without such consent shall be null and void. Notwithstanding any provision of this Agreement to the contrary and without the need for any action or consent of any Person, any such transferee shall be deemed to be a Partner effective immediately upon notice thereof from the then General Partners to the Partnership. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Partners and their respective successors and assigns.

No amendment to this Agreement shall be effective unless it shall be signed in writing by each of the General Partners and Partners (including the General Partners) owning at least a majority-in-interest of the Interests then outstanding (based upon their Adjusted DreamWorks Participation Percentages); provided, that no amendment to the second sentence of Section 2.06 shall be effective unless it shall be signed in writing by each Partner; provided further, that no amendment shall affect the rights or obligations of a Partner without the consent of such Partner.

Integration. This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements

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and understandings of the parties in connection herewith, and no covenant, representation or condition not expressed in this Agreement shall affect, or be effective to interpret, change or restrict, the express provisions of this Agreement.

Headings. The titles of Articles and Sections of this Agreement are for convenience only and shall not be interpreted to limit or amplify the provisions of this Agreement.

Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument.

Severability. Each provision of this Agreement shall be considered separable and if for any reason any provision or provisions hereof are determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those portions of this Agreement which are valid.

Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without giving effect to the conflicts of law principles thereof.

Jurisdiction; Waivers. With respect to any suit, action or proceeding relating to this Agreement (collectively, a “Proceeding”), each Partner irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the States of New York and the Court of Chancery of the State of Delaware and any court of the United States located in the Borough of Manhattan in New York City; (b) waives, to the fullest extent permitted by law, any objection which such Partner may have at any time to the laying of venue of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought in an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such party; (c) consents, to the fullest extent permitted by law, to the service of process at the address set forth for notices in Section 12.01 herein; provided, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law; and (d) WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHTS TO TRIAL BY JURY IN CONNECTION WITH ANY PROCEEDING.

Enforcement. i)Each party hereto acknowledges that the other parties would not have an adequate remedy at law for money damages in the event that any of the covenants or agreements of any of the other parties to this Agreement were not performed in accordance with its terms, and it is therefore agreed that each party hereto, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach and enforcing specifically the terms and provisions hereof, and each party hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief.

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All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties as of the day and year first above written.

M&J K DREAM LIMITED PARTNERSHIP,
By	M&J K DREAM CORP.,
	General Partner
	By	/s/ Jeffrey Katzenberg
	Name:	Jeffrey Katzenberg
	Title:	President

M&J K B PARTNERSHIP,
By	M&J K DREAM CORP.,
	General Partner
	By	/s/ Jeffrey Katzenberg
	Name:	Jeffrey Katzenberg
	Title:	President

DG-DW, L.P.,
By	DG-DW, INC.,
	General Partner
	By	/s/ Richard Sherman
	Name:	Richard Sherman
	Title:	Chief Financial Officer

DW LIPS, L.P.,
By	DW SUBS, INC.,
	General Partner
	By	/s/ Michael Rutman
	Name:	Michael Rutman
	Title:	Treasurer

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DW INVESTMENT II, INC.,
	By	/s/ W. Lance Conn
	Name:	W. Lance Conn
	Title:	Vice President

LEE ENTERTAINMENT, L.L.C.,
	By	/s/ Gyeong C. Park
	Name:	Gyeong C. Park
	Title:	Authorized Person

VIVENDI UNIVERSAL ENTERTAINMENT LLLP,
	By	/s/ Karen Randall
	Name:	Karen Randall
	Title:	Executive Vice President and General Counsel

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EX-10.25

Exhibit 10.25

EXECUTION COPY

STANDSTILL AGREEMENT

Among

DREAMWORKS ANIMATION SKG, INC.,

STEVEN SPIELBERG,

DW LIPS, L.P.,

M&J K B LIMITED PARTNERSHIP,

DG-DW, L.P.

and

DW INVESTMENT II, INC.

Dated As Of October 27, 2004

STANDSTILL AGREEMENT, dated as of October 27, 2004, among DREAMWORKS ANIMATION SKG, INC., a Delaware corporation (the “Company”), DW LIPS, L.P., a California limited liability partnership (“DW Lips”), M&J K B LIMITED PARTNERSHIP, a Delaware limited partnership (“M&J K B”) (solely for purposes of Section 4.06(b)), DG-DW, L.P., a Delaware limited partnership (“DG-DW”) (solely for purposes of Section 4.06(b)), DW INVESTMENT II, INC., a Washington corporation (“DWI II”) (solely for purposes of Section 4.06(b)), and STEVEN SPIELBERG.

WHEREAS, DreamWorks L.L.C., a Delaware limited liability company (“DW”), and the Company, together with other parties, have entered into a Separation Agreement dated as of October 27, 2004, providing for the separation of the animation business (the “Separation”) from DW;

WHEREAS, after the Separation, the Company intends to sell shares of its Class A Common Stock, par value $0.01 per share (“Class A Stock”), in a public offering (the “Offering”);

WHEREAS, immediately following the consummation of the Offering, DW Lips will own approximately 12% of the Company’s issued and outstanding Class A Stock; and

WHEREAS, each of the parties desires to enter into this Agreement (as defined below);

NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

Definitions

Certain Defined Terms. As used in this Agreement:

“Affiliate” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled By or is Under Common Control With, such specified Person.

“Agreement” means this Standstill Agreement, as it may be amended, supplemented, restated or modified from time to time.

“Beneficial Owner” or “Beneficially Own” has the meaning assigned to such term in Rule 13d-3 under the Exchange Act and a Person’s beneficial ownership of Common Stock shall be calculated in accordance with the provisions of such Rule.

“Board” means the Board of Directors of the Company.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in The City of New York.

“By-laws” means the By-laws of the Company, as amended or restated from time to time.

“Charter” means the Restated Certificate of Incorporation of the Company, as amended or restated from time to time.

“Class A Stock” has the meaning assigned to such term in the recitals hereto.

“Class B Holder” means any Person who shall hold of record shares of Class B Stock.

“Class B Stock” has the meaning assigned to such term in the Vulcan Stockholder Agreement.

“Common Stock” has the meaning assigned to such term in the Vulcan Stockholder Agreement.

“Company” has the meaning assigned to such term in the preamble hereto.

“Control” (including the terms “Controlled By” and “Under Common Control With”) has the meaning assigned to such term in the Charter as in effect at consummation of the Offering.

“DG-DW” has the meaning assigned to such term in the preamble hereto.

“Director” means any member of the Board.

“DW” has the meaning assigned to such term in the recitals hereto.

“DW Lips” has the meaning assigned to such term in the preamble hereto.

“DWI II” has the meaning assigned to such term in the preamble hereto.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Family Group” has the meaning assigned to such term in the Vulcan Stockholder Agreement.

“Final Allocation” has the meaning assigned to such term in the Holdco LLLP Agreement as in effect at consummation of the Offering.

“Group” has the meaning assigned to such term in Section 13(d)(3) of the Exchange Act.

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“Holdco LLLP Agreement” means the limited liability limited partnership agreement of Holdco, dated as of October 27, 2004, as it may be amended, supplemented, restated or modified from time to time.

“KG Termination Date” has the meaning assigned to such term in the Vulcan Stockholder Agreement.

“M&J K B” has the meaning assigned to such term in the preamble hereto.

“Offering” has the meaning assigned to such term in the recitals hereto.

“Person” has the meaning assigned to such term in the Charter (as modified in Section 2(f) of Article IV thereof) as in effect at consummation of the Offering.

“Principal Holder” has the meaning assigned to such term in the Vulcan Stockholder Agreement.

“Proceeding” has the meaning assigned to such term in Section 4.09.

“SEC” means the United States Securities and Exchange Commission or any other federal agency at the time administering the Securities Act or the Exchange Act.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Separation” has the meaning assigned to such term in the recitals hereto.

“Separation Date” has the meaning assigned to such term in the Vulcan Stockholder Agreement.

“Spielberg Parties” means Steven Spielberg, DW Lips and any Person Controlled By Steven Spielberg.

“Vulcan Stockholder Agreement” means the Stockholder Agreement, dated as of October 27, 2004, among the Company, DWA Escrow LLLP, M&J K B, M&J K Dream Limited Partnership, The JK Annuity Trust, The MK Annuity Trust, Katzenberg 1994 Irrevocable Trust, DG-DW, DWI II, Jeffrey Katzenberg, David Geffen and Paul Allen as in effect at consummation of the Offering.

Other Definitional Provisions. i)The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article and Section references are to this Agreement unless otherwise specified. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.

The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

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Standstill

Standstill Restrictions. Each of Steven Spielberg and DW Lips covenants and agrees with the Company that they shall not, and shall cause each Spielberg Party not to, prior to the earlier of (i) the fifth anniversary of the date of this Agreement and (ii) the KG Termination Date, directly or indirectly, alone or in concert with others, unless specifically requested in writing by a Principal Holder or by a resolution of a majority of the Directors or pursuant to a transaction (x) in which the Company has entered into a definitive agreement or (y) the Board has recommended in favor of, take any of the actions set forth below (or take any action that would require the Company to make an announcement regarding any of the following):

effect, seek, offer, engage in, propose (whether publicly or otherwise) or cause or participate in, or assist any other Person to effect, seek, engage in, offer or propose (whether publicly or otherwise) or participate in:

any tender or exchange offer, merger, consolidation, share exchange, business combination, recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction involving the Company or any of its subsidiaries or any material portion of its or their business or any purchase of all or any substantial part of the assets of the Company or any of its subsidiaries or any material portion of its or their business; or

any “solicitation” of “proxies” (as such terms are used in the proxy rules of the SEC but without regard to the exclusion set forth in Section 14a-1(1)(2)(iv) from the definition of “solicitation”) with respect to the Company or any of its Affiliates or any action resulting in Steven Spielberg, DW Lips, any Affiliate of Steven Spielberg or DW Lips or such other Person becoming a “participant” in any “election contest” (as such terms are used in the proxy rules of the SEC) with respect to the Company or any of its subsidiaries;

propose any matter for submission to a vote of stockholders of the Company or call or seek to call a meeting of the stockholders of the Company;

seek election to, seek to place a representative on or seek the removal of any Director; provided, however, that nothing in this Section 2.01(c) shall restrict the manner in which a Spielberg Party may vote its shares of Common Stock (if any);

grant any proxy with respect to any Common Stock (other than to a Principal Holder, the Chief Executive Officer of the Company or a bona fide financial institution in connection with a bona fide recourse borrowing);

execute any written consent with respect to any Common Stock other than at the request of a Principal Holder or the Chief Executive Officer of the Company;

form, join or participate in a Group with respect to any Common Stock or deposit any Common Stock in a voting trust or subject any Common Stock to any arrangement or agreement with respect to the voting of such Common Stock or other agreement having similar effect (in each case except with the Class B Holders);

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take any other action to seek to affect the control of the management or Board of the Company or any of its Affiliates, including publicly suggesting or announcing its willingness to engage in or have another Person engage in a transaction that could reasonably be expected to result in a transaction of the type described in Section 2.01(a)(i); provided, however, that nothing in this Section 2.01(g) shall restrict the manner in which a Spielberg Party may vote its shares of Common Stock (if any);

enter into any discussions, negotiations, arrangements or understandings with any Person with respect to any of the foregoing, or advise, assist, encourage or seek to persuade others to take any action with respect to any of the foregoing (in each case except with the Class B Holders);

disclose to any Person, or otherwise induce, encourage, discuss or facilitate, any intention, plan or arrangement inconsistent with the foregoing or which would result in the Company or any of its Affiliates or any Class B Holder or any Affiliates of any Class B Holder being required to make any such disclosure in any filing with a governmental entity or being required to make a public announcement with respect thereto;

bring any action or otherwise act to contest the validity of this Article II (including this Section 2.01) or seek a release from the restrictions contained in this Article II; or

request the Company or any of its Affiliates, directors, officers, employees, representatives, advisors or agents, or any party hereto, directly or indirectly, to amend or waive this Article II, the Charter or the By-laws (or similar constituent documents) of the Company or any of its Affiliates.

Exceptions to Standstill. Notwithstanding Section 2.01, no Spielberg Party shall be subject to any of the restrictions set forth therein if (a) the Company shall have entered into a definitive agreement providing for, or, in the case of clause (ii) below, the Board shall have recommended in favor of, (i) any direct or indirect acquisition or purchase by any Person or Group of a majority of the Common Stock of the Company, (ii) any tender offer or exchange offer that if consummated would result in any Person or Group acquiring a majority of the Common Stock of the Company or (iii) any merger, consolidation, share exchange or other business combination involving the Company which, if consummated, would result in the stockholders of the Company immediately prior to the consummation of such transaction ceasing to own at least a majority of the equity interests in the surviving entity (or any direct or indirect parent of such surviving entity); (b) any Person or Group (other than the Company, any Class B Holder, any Spielberg Party or any Group that includes a Spielberg Party) acquires 25% or more of the number of then outstanding shares of Common Stock or other voting securities of the Company having the right to vote generally in the election of Directors; (c) any Class B Holder, Principal, Family Group member or any of their respective Affiliates commences (x) a “going private” transaction subject to Rule 13e-3 under Section 13(e) of the Exchange Act involving the Company or any of its material subsidiaries or (y) a transaction of the type contemplated in clause (a) above; or (d) the KG Termination Date shall have occurred.

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Term

Term. This Agreement shall become effective on the Separation Date and shall continue in effect until the earliest of (i) the KG Termination Date, (ii) the fifth anniversary hereof and (iii) such time, following the Final Allocation, as the Spielberg Parties shall cease to Beneficially Own in the aggregate at least 5% of the issued and outstanding Common Stock.

General Provisions

Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given and received (a) on the date of delivery if delivered personally, or by facsimile upon confirmation of transmission by the sender’s fax machine if sent on a Business Day (or otherwise on the next Business Day) or (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:

if to the Company, to:

DreamWorks Animation SKG, Inc.

Grandview Building

1000 Flower Street

Glendale, California 91201

Fax: (818) 659-6123

Attention: Katherine Kendrick, General Counsel

with a copy to:

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 Eighth Avenue

New York, NY 10019-7475

Fax: (212) 474-3700

Attention: Faiza J. Saeed

if to any Spielberg Party, to:

DW Lips, L.P.

c/o DreamWorks L.L.C.

100 Universal Plaza

Bungalow 477

Universal City, CA 91608

Fax: (818) 733-5222

Attention: Steven Spielberg

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(iii) if to any other party hereto, to the address of such party specified on the signature page hereto.

Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

Entire Agreement; No Third Party Beneficiaries. ii)This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.

This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York without giving effect to applicable principles of conflict of laws, except to the extent the substantive laws of the State of Delaware are mandatorily applicable under Delaware law.

Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Assignment; Amendments. iii)Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the other parties, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by, the parties and their respective successors (including any executor or administrator of a party’s estate) and permitted assigns.

No amendment to or waiver of this Agreement shall be effective unless it shall be in writing and signed by the Company and each of the parties hereto.

Enforcement. iv)Each of the Company and each party hereto acknowledges that the other parties would not have an adequate remedy at law for money damages in the event that any of the covenants or agreements of any of the other parties in this Agreement were not

7

performed in accordance with its terms, and it is therefore agreed that each of the Company and each party hereto, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such actual or potential breach and enforcing specifically the terms and provisions hereof, and each of the Company and each party hereto hereby waives (i) any and all defenses they may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief and (ii) the need to post any bond that may be required in connection with the granting of such an injunction or other equitable relief.

All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity shall be cumulative and not alternative, and the exercise or beginning of the exercise of any thereof by any party shall not preclude the simultaneous or later exercise of any other such right, power or remedy by such party.

Titles and Subtitles. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

Submission to Jurisdiction; Waivers. With respect to any suit, action or proceeding relating to this Agreement (collectively, a “Proceeding”), each party to this Agreement irrevocably (a) consents and submits to the exclusive jurisdiction of the courts of the States of New York and the Court of Chancery of the State of Delaware and any court of the United States located in the Borough of Manhattan in New York City; (b) waives any objection which such party may have at any time to the laying of venue of any Proceeding brought in any such court, waives any claim that such Proceeding has been brought in an inconvenient forum and further waives the right to object, with respect to such Proceeding, that such court does not have jurisdiction over such party; (c) consents to the service of process at the address set forth for notices in Section 4.01 herein; provided, however, that such manner of service of process shall not preclude the service of process in any other manner permitted under applicable law; and (d) waives, to the fullest extent permitted by applicable law, any and all rights to trial by jury in connection with any Proceeding.

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IN WITNESS WHEREOF, the parties hereto have duly executed this Standstill Agreement as of the date first written above.

DREAMWORKS ANIMATION SKG, INC.,
		By	/s/ Katherine Kendrick
		Name:	Katherine Kendrick
		Title:	Vice President
DW LIPS, L.P.,
	By	DW SUBS, INC., General Partner
		By	/s/ Michael Rutman
		Name:	Michael Rutman
		Title:	Treasurer
M&J K B LIMITED PARTNERSHIP,
	By	M&J K DREAM CORP., General Partner
		By	/s/ Jeffery Katzenberg
		Name:	Jeffrey Katzenberg
		Title:	President
Address:
DG-DW, L.P.,
	By	DG-DW, INC., General Partner
		By	/s/ Richard Sherman
		Name:	Richard Sherman
		Title:	Chief Financial Officer

Address:
DW INVESTMENT II, INC.,
	By	/s/ W. Lance Conn
	Name:	W. Lance Conn
	Title:	Vice President
Address:
STEVEN SPIELBERG
		/s/ Steven Spielberg

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EX-10.26

Exhibit 10.26

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (the “Agreement”) was made and entered into as of October 7, 2004, and amended and restated as of October 22, 2004, between Pacific Data Images, Inc., a California corporation (“Target” and after the Effective Time of the Merger (as defined below) the “Surviving Corporation”), DreamWorks Animation SKG, Inc., a Delaware corporation (the “Acquiror”), and DWA Acquisition Corp., a Delaware corporation (“Sub”). Target and Sub are hereinafter collectively referred to as the “Constituent Corporations.”

The Constituent Corporations hereby agree as follows:

1. The Merger.

(a) Merger of Sub With and Into Target.

(i) Agreement to Acquire Target. Subject to the terms of this Agreement (the “Merger Agreement”), Target shall be acquired by Acquiror through a merger (the “Merger”) of Sub with and into Target. The closing of the Merger (the “Closing”) will take place at 10:00 a.m., New York time, on a date to be specified by the parties (the “Closing Date”) at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, NY 10019.

(ii) Effective Time of the Merger. The Merger shall be effective (the “Effective Time”) as prescribed by law.

(iii) Surviving Corporation. At the Effective Time of the Merger, Sub shall be merged with and into Target and the separate corporate existence of Sub shall thereupon cease. Target shall be the surviving corporation in the Merger and the separate corporate existence of Target, with all its purposes, objects, rights, privileges, powers, immunities and franchises, shall continue unaffected and unimpaired by the Merger.

(b) Effect of the Merger; Additional Actions.

(i) Effects. The Merger shall have the effects set forth in Section 1107 of the California General Corporation Law (the “CGCL”) and Section 259 of the Delaware General Corporation Law.

(ii) Additional Actions. If, at any time after the Effective Time of the Merger, Target shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable (i) to vest, perfect or confirm of record or otherwise in Target its right, title or interest in, to or under any of the rights, properties or assets of either Constituent Corporation acquired or to be acquired by Target as a result of, or in connection with, the Merger or (ii) to otherwise carry out the purposes of this Agreement, each Constituent Corporation and its officers and directors shall be deemed to have granted to Target an irrevocable power of attorney to execute and deliver all such deeds, bills of sale, assignments and assurances and to take and do all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in Target and otherwise to carry out the purposes of this Agreement; and the officers and directors of Target are fully authorized in the name of each Constituent Corporation or otherwise to take any and all such actions.

2. The Constituent Corporations.

(a) Organization of Target.

(i) Incorporation. Target was incorporated under the laws of the State of California on August 13, 1980.

(ii) Authorized Stock. Target is authorized to issue one class of shares designated Common Stock in the aggregate amount of 30,000,000 shares (“Target Common Stock”) .

(iii) Outstanding Stock. As of the date of this Agreement, 11,356,610 shares of Target Common Stock were outstanding.

(b) Organization of Sub.

(i) Incorporation. Sub was incorporated under the laws of the State of Delaware on September 14, 2004.

(ii) Authorized Stock. Sub is authorized to issue an aggregate of 1,000 shares of Common Stock (“Sub Stock”).

(iii) Outstanding Stock. On the date hereof, an aggregate of 1,000 shares of Sub Stock are outstanding.

(c) Target Shareholder Approval. The holders of a majority of the outstanding shares of Target’s Common Stock are expected to approve and adopt this Agreement without a meeting by written consent in accordance with the provisions of Section 603 of the CGCL.

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3. Amended Articles of Incorporation; By-Laws and Directors and Officers of Target.

(a) Amendment of Target’s Articles of Incorporation.

(i) Authorized Stock at Merger. At the Effective Time of the Merger, Article V of the Articles of Incorporation of Target shall be amended in its entirety to read as set forth on Exhibit A attached hereto.

(ii) Articles of Incorporation of Surviving Corporation. The Articles of Incorporation of Target in effect at the Effective Time of the Merger, as amended as provided in clause (a)(i) above, shall be the Articles of Incorporation of the Surviving Corporation unless and until amended as provided by applicable law.

(b) Bylaws. The Bylaws of Target, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by California law and such Bylaws.

(c) Officers and Directors of Surviving Corporation. The directors of Sub in effect immediately prior to the Effective Time of the Merger shall be the directors of the Surviving Corporation, and the officers of Target immediately prior to the Effective Time of the Merger shall be the officers of the Surviving Corporation, in each case until the earlier of their resignation or removal or until their respective successors shall have been duly elected and qualified.

4. Effect of the Merger on the Capital Stock of the Constituent Corporations; Exchange of Certificates.

(a) Effect on Capital Stock. As of the Effective Time of the Merger, by virtue of the Merger and without any action on the part of the holder of any shares of Target Common Stock:

(i) Capital Stock of Sub. Each issued and outstanding share of capital stock of Sub shall be converted into and become one fully paid and non-assessable share of Target Common Stock. Each stock certificate of Sub evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of the Surviving Corporation.

(ii) Cancellation of Treasury Stock. All shares of Target Common Stock that are owned by Target (as treasury stock), Acquiror or Sub shall be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor.

(iii) Conversion of Target Common Stock. The issued and outstanding shares of Target capital stock (other than shares to be canceled pursuant to Section 4(a)(ii) hereof and shares, if any, held by persons exercising dissenters’ rights in accordance with Section 1300 of the CGCL) held by a holder of record of Target capital stock immediately prior to the Effective Time shall be converted, without any action on the part of such holder, into the right to receive a number of whole shares of Class A common stock of Acquiror, $.01 par value (“Acquiror Common Stock”), determined by multiplying the number of shares of Target capital

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stock held by such holder of Target capital stock by a fraction (the “Exchange Ratio”), the numerator of which is $6.50, and the denominator of which is the initial public offering price per share of Class A common stock of the Acquiror in connection with its initial public offering (the “Merger Consideration”) and rounding the product up for any fraction equal to or greater than one half, and rounding the product down for any fraction that is less than one half. The initial public offering price per share of Class A common stock of the Acquiror shall be determined by reference to the per share amount appearing under the column “Price to Public” on the cover page of the Acquiror’s prospectus, dated October 28, 2004, regarding the offering of 29,000,000 shares of Class A common stock of the Acquiror, without any deduction for underwriting discounts and commissions.

(iv) Conversion of Target Options. As of the Effective Time, each outstanding option to purchase shares of Target Common Stock granted pursuant to the PDI Inc. 1996 Equity Incentive Plan and the PDI Inc. 1998 Stock Plan (the “Target Stock Option Plans”), whether vested or unvested (a “Target Option”), will be converted into an option to purchase shares of Acquiror Common Stock (each, an “Acquiror Option”). In addition, the Target Stock Option Plans shall be terminated by resolution of the Target’s board of directors. Except as provided below, each such Target Option converted by Acquiror under this Agreement shall retain its respective vesting schedule as set forth under the applicable Target Stock Option Plan; however, the converted Target Options will be governed by the 2004 Omnibus Incentive Compensation Plan as of the Effective Time. The 2004 Omnibus Incentive Compensation Plan shall provide for terms and conditions such that the converted Target Options shall continue to be subject to the same terms and conditions that are comparable to those set forth in the applicable Target Stock Option Plan, except that (i) each such option will be exercisable for that number of whole shares of Acquiror Common Stock obtained by multiplying the number of shares of Target Common Stock that would be issuable upon exercise of such option immediately prior to the Effective Time, assuming that all vesting conditions applicable to such option were then satisfied, by the Exchange Ratio and rounded down to the nearest whole number of shares of Acquiror Common Stock, and (ii) the per share exercise price for the shares of Acquiror Common Stock issuable upon exercise of such converted Target Option will be equal to the quotient determined by dividing the exercise price per share of Target Common Stock at which such option was exercisable immediately prior to the Effective Time by the Exchange Ratio, rounded up to the nearest cent. Consistent with the terms of the Target Stock Option Plans and the documents governing the outstanding Target Options under such plans, the Merger will not terminate any of the outstanding Target Options under the Target Stock Option Plans or accelerate the exercisability or vesting of such options or the shares of Target Common Stock which will be subject to those options upon the conversion of the Target Options in connection with the Merger. It is the intention of the parties that the Target Options converted to Acquiror Options qualify, to the maximum extent permissible, following the Effective Time, as incentive stock options, as defined in Section 422 of the Code, to the extent, and only to the extent, the Target Options so converted qualified as incentive stock options prior to the Effective Time.

(iv) Dissenters’ Rights. If any holder of Target Common Stock (a “Dissenting Holder”) duly demands purchase of his, her or its shares of Target Common Stock in connection with the Merger under Chapter 13 of the CGCL (such shares being “Dissenting

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Shares”), the Dissenting Shares shall not be converted into Merger Consideration but shall be converted into the right to receive an amount in cash equal to the fair market value of such shares as may be determined to be due with respect to such Dissenting Shares pursuant to the law of the State of California. After the Effective Time of the Merger, Acquiror shall issue and deliver to any holder of shares of Target Common Stock who shall have withdrawn his, her or its demand for purchase or have failed to perfect or shall have otherwise lost his, her or its right of purchase, in any case pursuant to the CGCL, upon surrender by such Dissenting Shareholder of his, her or its, certificate or certificates representing shares of Target Common Stock, the Merger Consideration to which such Dissenting Shareholder is then entitled under Section 4(a)(iii) of this Agreement.

(b) Exchange of Certificates.

(i) Exchange Agent. Prior to the Closing Date, Acquiror shall appoint The Bank of New York to act as Exchange Agent (the “Exchange Agent”) in the Merger.

(ii) Exchange Procedures. At the Effective Time, the Exchange Agent shall mail to each holder of record of a certificate (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates held by such person shall pass, only upon proper delivery of the certificates to the Exchange Agent and shall be in a form and have such other provisions as Acquiror may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the applicable Merger Consideration. Upon surrender of a certificate for cancellation to the Exchange Agent, together with such letter of transmittal, duly completed and validly executed, and such other documents as may reasonably be required by the Exchange Agent, the holder of such certificate shall be entitled to receive in exchange therefor the Merger Consideration with respect to such shares, without interest and the certificate so surrendered shall forthwith be canceled.

(iii) No Further Ownership Rights in Target Common Stock. All Merger Consideration delivered upon the surrender of certificates that represented shares of Target Common Stock in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such shares of Target Common Stock theretofore represented by such certificates. At the close of business on the day on which the Effective Time occurs the stock transfer books of Target shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Target capital stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, certificates are presented to the Surviving Corporation or the Exchange Agent for transfer or any other reason, they shall be canceled and exchanged as provided in this Section 4.

5. TERMINATION

(a) Termination by Mutual Agreement. Notwithstanding the approval of this Agreement by the shareholders of Target, this Agreement may be terminated at any time prior to the Effective Time of the Merger by mutual written consent of the Constituent Corporations.

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(b) Effects of Termination. In the event of the termination of this Agreement, this Agreement shall become void and there shall be no liability on the part of either Target or Sub or their respective officers or directors.

6. GENERAL PROVISIONS.

(a) Amendment. This Agreement may be amended by the boards of directors of the Constituent Corporations and the Acquiror hereto any time prior to the effective time of the Merger; however, after approval hereof by the shareholders of the Constituent Corporations, no amendment shall be made which by law requires the further approval of such shareholders without obtaining such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto.

(b) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.

(c) Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to its principles governing conflicts of laws, except to the extent the laws of California or Delaware are mandatorily applicable to the Merger.

(d) Entire Agreement. This Agreement constitutes the entire agreement among such parties pertaining to the subject matter hereof and thereof, and the agreements contemplated hereby and all negotiations and drafts of the parties with regard to the transactions contemplated herein, and any and all written or oral agreements existing between the parties hereto regarding such transactions are expressly canceled.

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The parties have duly executed this Agreement as of the date first written above.

TARGET:
PACIFIC DATA IMAGES, INC.,
by	/s/ Jeffrey Katzenberg
Name:	Jeffrey Katzenberg
Title:	President

by	/s/ Ann Daly
Name:	Ann Daly
Title:	Vice President and Assistant Secretary
SUB:
DWA ACQUISITION CORP.,
by	/s/ Ann Daly
Name:	Ann Daly
Title:	President
by	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	Secretary
ACQUIROR:
DREAMWORKS ANIMATION SKG, INC.,
by	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	General Counsel and Secretary
by	/s/ Kristina Leslie
Name:	Kristina Leslie
Title:	Chief Financial Officer and Vice President

EXHIBIT A

Amendment to Pacific Data Images, Inc.’s Articles of Incorporation:

Article V

The Corporation is authorized to issue one class of shares designated “Common Stock.” The total number of shares of Common Stock that the Corporation is authorized to issue is one thousand, par value $0.01 per share.

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EX-10.27

Exhibit 10.27

SUBORDINATED LOAN AGREEMENT

dated as of

October 27, 2004

between

DREAMWORKS ANIMATION SKG, INC.

and

HOME BOX OFFICE, INC.

TABLE OF CONTENTS

ARTICLE 1         DEFINITIONS		1
SECTION 1.01	Definitions	1
SECTION 1.02	Accounting Terms	11
ARTICLE 2         LOAN		11
SECTION 2.01	Intentionally Deleted	11
SECTION 2.02	Funding of Original Subordinated Loan	11
SECTION 2.03	Subordinated Note	11
SECTION 2.04	Maturity of the Subordinated Loan	11
SECTION 2.05	Prepayments and Repayments of the Subordinated Loan	11
(a)	Mandatory Prepayments	11
(b)	Voluntary Prepayments	11
(c)	Payment Mechanics	12
SECTION 2.06	Interest	12
SECTION 2.07	Use of Proceeds.	13
ARTICLE 3         REPRESENTATIONS AND WARRANTIES		13
SECTION 3.01	Organization, Powers, Qualification, Good Standing and Subsidiaries.	13
(a)	Organization and Powers	13
(b)	Qualification and Good Standing	13
(c)	Subsidiaries	13
SECTION 3.02	Authorization, Execution and Enforceability	13
SECTION 3.03	Financial Condition	14
SECTION 3.04	Title to Properties; Liens	14
SECTION 3.05	Litigation; Adverse Facts	14
SECTION 3.06	Governmental Regulation	15
SECTION 3.07	Disclosure	15
SECTION 3.08	Governmental Authorization and Required Consents	15
SECTION 3.09	No Conflicts	16
SECTION 3.10	No Material Adverse Change	16
SECTION 3.11	Taxes	16

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SECTION 3.12		Matters Relating to Collateral	16
	(a)	Creation, Perfection and Priority of Liens	16
	(b)	Governmental Authorizations	16
	(c)	Absence of Third-Party Filings	17
ARTICLE 4	CONDITIONS PRECEDENT TO CLOSING		17
SECTION 4.01		Closing Documents	17
	(a)	Agreement and Subordinated Note	17
	(b)	DreamWorks Documents	17
	(c)	HBO License Agreement Amendment	17
	(d)	Collateral Documents	17
	(e)	Consents	17
	(f)	Corporate Documents	17
	(g)	Opinions of Counsel to DreamWorks Animation	18
	(h)	UCC Searches	18
	(i)	Closing Certificate	19
	(j)	Other Documents	19
SECTION 4.02		Additional Closing Conditions	19
ARTICLE 5	COVENANTS		19
SECTION 5.01		Financial Statements and Other Reports	19
SECTION 5.02		Conduct of Business and Maintenance of Existence	21
SECTION 5.03		Maintenance of Properties	21
SECTION 5.04		Compliance with Laws, etc.	21
SECTION 5.05		Debt	21
SECTION 5.06		Prohibition on Liens	21
SECTION 5.07		Restricted Payments	22
SECTION 5.08		Transactions with Shareholders and Affiliates.	22
SECTION 5.09		Restrictions on Organizational Documents	23
ARTICLE 6	EVENTS OF DEFAULT; REMEDIES; LIMITATION EVENTS		23
SECTION 6.01		Events of Default	23
SECTION 6.02		Remedies for Events of Default	24
SECTION 6.03		Other Remedies for Breach	25
SECTION 6.04		Limitation Events	26

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SECTION 6.05	No Effect Upon HBO License Agreement or HBO Senior Security Agreement	26
ARTICLE 7         MISCELLANEOUS		26
SECTION 7.01	Notices	26
SECTION 7.02	No Waivers; Cumulative Remedies; Amendments	26
SECTION 7.03	Indemnification	27
SECTION 7.04	Expenses; Documentary Taxes	27
SECTION 7.05	Successors and Assigns	27
SECTION 7.06	Assignment	27
SECTION 7.07	Confidentiality	28
SECTION 7.08	New York Law; Submission to Jurisdiction; Waiver of Jury Trial	28
SECTION 7.09	Severability	29
SECTION 7.10	Captions	29
SECTION 7.11	Counterparts	29

SCHEDULES

Schedule 1.01(f) -	Existing Liens
Schedule 3.01 -	Subsidiaries
Schedule 3.03 -	Certain Dispositions
Schedule 7.01 -	Addresses for Notices

EXHIBITS

Exhibit A -	Form of Animation Security Agreement
Exhibit B -	Form of Subordinated Note
Exhibit C-1 -	Form of Opinion of Cravath, Swaine & Moore LLP
Exhibit C-2 -	Form of Opinion of Katherine Kendrick, General Counsel of DreamWorks Animation

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SUBORDINATED LOAN AGREEMENT

This SUBORDINATED LOAN AGREEMENT is dated as of October 27, 2004 and entered into by and between DREAMWORKS ANIMATION SKG, INC., a Delaware corporation (“DreamWorks Animation”), and HOME BOX OFFICE, INC., a Delaware corporation (“HBO”).

R E C I T A L S

WHEREAS, HBO and DreamWorks L.L.C. (“DreamWorks”) are parties to the HBO License Agreement (as defined below);

WHEREAS, in connection with an amendment to the HBO License Agreement dated as of May 3, 2000, HBO and DreamWorks entered into that certain Subordinated Loan Agreement dated as of December 15, 2000, as amended by that certain letter agreement dated as of December 20, 2000 (the “Original Subordinated Loan Agreement”), pursuant to which HBO made a subordinated term loan to DreamWorks in an aggregate principal amount equal to One Hundred Twenty-Five Million Dollars ($125,000,000) (the “Original Subordinated Loan”); and

WHEREAS, in connection with the transactions described in that certain letter agreement dated as of October 27, 2004 (the “Transaction Agreement”) among HBO, DreamWorks Animation and DreamWorks, including, but not limited to (i) the formation, separation and initial public offering of DreamWorks Animation; (ii) the execution of an amendment to the HBO License Agreement dated of even date herewith (the “HBO License Agreement Amendment”); and (iii) the execution of the Attornment Agreement, the Animation Security Agreement (each such term, as defined below) and certain other documents in connection therewith, HBO and DreamWorks have agreed to amend and restate certain of the terms of the Original Subordinated Loan Agreement and DreamWorks Animation has agreed to assume and repay a portion of the Original Subordinated Loan in a principal amount equal to Eighty Million Dollars ($80,000,000) (of which, a principal amount equal to Thirty Million Dollars ($30,000,000) will be prepaid by DreamWorks Animation on the date of the closing of the initial public offering of DreamWorks Animation Class A Common Stock (but in no event later than December 15, 2004)).

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

SECTION 1.01 Definitions. The following terms, as used herein, have the following meanings:

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”,

“controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” means this Subordinated Loan Agreement dated as of October 27, 2004, by and between DreamWorks Animation and HBO, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

“Ancillary Services Agreement” means that certain Ancillary Services Agreement dated October 27, 2004 between DreamWorks and DreamWorks Animation, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Subordinated Loan Documents.

“Animation Security Agreement” means that certain Security Agreement dated of even date herewith between DreamWorks Animation and HBO substantially in the form of Exhibit A hereto, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms, which security agreement secures DreamWorks Animation’s obligations to HBO with respect to the Subordinated Loan and under all Subordinated Loan Documents, including, but not limited to, this Agreement and the Attornment Agreement.

“Attornment Agreement” means that certain Attornment Agreement dated of even date herewith between DreamWorks Animation and HBO, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

“Authorized Officer” means, with respect to any Person, its chairman, chief executive officer, president, chief financial officer or chief operating officer.

“Bankruptcy Code” means Title 11 of the United States Code.

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in the City of New York or City of Los Angeles are authorized or required by law to close.

“Closing” means the delivery of all of the documents set forth in Section 4.01 in form and substance satisfactory to HBO and the satisfaction of all of the additional conditions set forth in Section 4.02.

“Closing Date” means the date on which the Closing occurs.

“Collateral” has the meaning assigned to such term in the Animation Security Agreement.

“Collateral Documents” means the Animation Security Agreement and all other instruments or documents delivered by DreamWorks Animation pursuant to this Agreement or any of the other Subordinated Loan Documents in order to grant to HBO, or perfect in favor of HBO, a Lien on the Collateral as security for the Subordinated Loan.

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“Commission” means the Securities and Exchange Commission.

“Consolidated” means, when applied to an accounting term used with respect to more than one Person, such accounting term determined on a consolidated basis for such Persons in accordance with GAAP, including principles of consolidation under GAAP.

“Controlling Person” has the meaning set forth in Section 7.03.

“Debt” has the meaning assigned to the term “Indebtedness” in the Senior Credit Agreement, as such agreement may be amended, modified, amended and restated, supplemented or waived from time to time.

“Default” means any Event of Default or any event or condition which, with the giving of notice or lapse of time or both, would, unless cured or waived, become an Event of Default.

“Designated Senior Agent” means JPMorgan Chase Bank, as administrative agent under the Senior Credit Agreement, or any replacement Person designated by the Designated Senior Lenders as the Designated Senior Agent with respect to the matters set forth herein.

“Designated Senior Lenders” means, from time to time, the lenders party to the Senior Credit Agreement.

“Dollars” and “$” mean dollars in lawful currency of the United States of America.

“DreamWorks” has the meaning set forth in the Recitals to this Agreement, and includes any of its successors.

“DreamWorks Animation” has the meaning set forth in the introduction to this Agreement, and includes any of its successors.

“DreamWorks Distribution Agreement” means that certain Distribution Agreement dated October 7, 2004 between DreamWorks and DreamWorks Animation, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Subordinated Loan Documents.

“DreamWorks Loan Agreement” means that certain Amended and Restated Subordinated Loan Agreement dated of even date herewith between HBO and DreamWorks, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

“DreamWorks Services Agreement” means that certain Services Agreement dated October 7, 2004 between DreamWorks and DreamWorks Animation, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Subordinated Loan Documents.

“Eligible Assignee” means (a) any Person that is a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $1,000,000,000, calculated in accordance with GAAP; (b) any Person that is a commercial bank

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organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development (the “OECD”), or any political subdivision of any such country, and having total assets in excess of $1,000,000,000, calculated in accordance with GAAP, provided that such commercial bank is acting, through a branch or agency located in the country in which it is organized or another country that is also a member of the OECD; (c) any Affiliate of HBO; and (d) any other Person consented to by DreamWorks Animation in writing as an “Eligible Assignee” for the purposes of this Agreement. DreamWorks Animation agrees not to unreasonably withhold its consent to any request by HBO to designate any Person as an “Eligible Assignee” pursuant to clause (d) of the preceding sentence for the purposes of making an assignment pursuant to Section 7.06.

“Employee Equity Plan” means the DreamWorks Animation 2004 Omnibus Incentive Plan dated October 22, 2004, as such plan may be amended from time to time.

“Employee Equity Repurchase” has the meaning set forth in Section 5.07(a).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.

“Eurodollar Rate” means, with respect to the Subordinated Loan during a specified Interest Period, the rate per annum obtained by dividing (a) the rate of interest determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period, commencing on the first day of such Interest Period, appearing on page 3750 of the Dow Jones Markets screen as of 11:00 a.m., London time, two Business Days prior to the beginning of such Interest Period by (b) a percentage equal to 100% minus the stated maximum rate of all reserve requirements (including any marginal, emergency, supplemental, special or other reserves) applicable on the first day of such Interest Period to any member bank of the Federal Reserve System in respect of “Eurocurrency liabilities” as defined in Regulation D (or any successor category of liabilities under Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time). In the event that such rate does not appear on Page 3750 of the Dow Jones Markets screen (or otherwise on such screen), the “Eurodollar Rate” shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by HBO and DreamWorks Animation, or in the absence of such agreement, the “Eurodollar Rate” shall instead be the rate per annum equal to the rate at which the Designated Senior Agent is offered Dollar deposits at or about 11:00 a.m., New York City time, two Business Days prior to the beginning of such Interest Period, in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans (as defined in the Senior Credit Agreement) are then being conducted for delivery on the first day of such Interest Period, for a period equal to such Interest Period and in an amount comparable to the amount of the Subordinated Loan to be outstanding during such Interest Period.

“Event of Default” has the meaning set forth in Section 6.01.

“Equity Interest” means any equity, ownership or profit participation interest in a Person.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Financial Statements” has the meaning set forth in Section 3.03.

“Financing Lease” means any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee.

“Funding Date” means December 28, 2000.

“GAAP” means, subject to Section 1.02, generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other Person as may be approved by a significant segment of the accounting profession, which are applicable to the circumstances as of the time of determination.

“Guarantee Obligation” has the meaning assigned to such term in the Senior Credit Agreement, as such agreement may be amended, modified, amended and restated, supplemented or waived from time to time.

“HBO” has the meaning set forth in the introduction to this Agreement, and includes any of its successors (other than any Person to whom a sale, assignment or participation in the Subordinated Loan is made or sold).

“HBO License Agreement” means that certain License Agreement between DreamWorks and HBO dated as of March 7, 1995, as amended by that certain amendment dated as of March 7, 1995, that certain amendment dated as of January 15, 1997, that certain amendment dated as of January 15, 1998, that certain amendment dated as of June 24, 1999, that certain amendment dated as of September 14, 1999, that certain amendment dated as of May 3, 2000, that certain amendment dated as of December 26, 2000, that certain amendment dated as of September 11, 2002 and the HBO License Agreement Amendment, as the same may hereafter be amended, modified or supplemented from time to time.

“HBO License Agreement Amendment” has the meaning set forth in the Recitals to this Agreement.

“HBO Payment Account” means that certain bank account located at JPMorgan Chase Bank, 4 New York Plaza, New York, NY 10004; Account Name: Home Box Office; Account Number: 323011101; ABA Number: 021000021.

“HBO Senior Security Agreement” means that certain Security Agreement between DreamWorks and HBO dated as of March 7, 1995, as the same may hereafter be amended, modified or supplemented from time to time.

“Indemnified Parties” or “Indemnified Party” has the meaning set forth in Section 7.03.

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“Indemnifying Party” has the meaning set forth in Section 7.03.

“Interest Payment Date” has the meaning set forth in Section 2.06(b).

“Interest Period” means, initially, the period commencing on the Funding Date and ending three months thereafter, and thereafter, each period commencing on the last day of the next preceding Interest Period and ending three months thereafter; provided, that, (a) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (b) no Interest Period may extend beyond the Scheduled Maturity Date; and (c) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.

“Interest Rate” has the meaning set forth in Section 2.06(a).

“Leverage Ratio” has the meaning assigned to such term in the Senior Credit Agreement, as such agreement may be amended or waived from time to time.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, but not limited to, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing).

“Material Adverse Effect” means a material adverse effect on the ability of DreamWorks Animation and its Subsidiaries, taken as a whole, to perform their respective covenants and obligations in a timely manner under the Subordinated Loan Documents.

“Organizational Documents” of a corporation means the certificate or articles of incorporation and the bylaws of such corporation.

“Original Subordinated Loan” has the meaning set forth in the Recitals to this Agreement.

“Original Subordinated Loan Agreement” has the meaning set forth in the Recitals to this Agreement.

“Permitted Encumbrances” means the following types of Liens; provided, however, for the avoidance of doubt, any Lien on the Collateral, including, but not limited to, DreamWorks Animation’s rights to receive payments from DreamWorks or HBO in connection with the Attornment Agreement or the HBO License Agreement shall not be a Permitted Encumbrance; and, provided, further, no Permitted Encumbrance shall be construed or interpreted as having any effect or limitation on HBO’s security interest under the Animation Security Agreement:

(a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of DreamWorks Animation or its Subsidiaries, as the case may be, in conformity with GAAP;

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(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings;

(c) pledges or deposits in connection with workers’ compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements;

(d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(e) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business, which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of DreamWorks Animation or the applicable Subsidiary;

(f) Liens in existence on the date hereof and listed on Schedule 1.01(f).

(g) Liens securing Debt of DreamWorks Animation and its Subsidiaries incurred to finance the acquisition of fixed or capital assets; provided that (1) such Liens shall be created substantially simultaneously with the acquisition of such fixed or capital assets; (2) such Liens do not at any time encumber any property other than the property financed by such Debt; and (3) the amount of Debt secured thereby is not increased;

(h) Liens arising out of any financing or other transaction in which a Person purchases, factors or otherwise finances accounts receivable (or interests therein) of DreamWorks or any of its Subsidiaries;

(i) rights of licensees under access agreements pursuant to which such licensees have access to duplicating material for the purpose of making prints of films licensed to them, and rights of distributors, exhibitors, licensees and other Persons in films created in connection with the distribution and exploitation of such films in the ordinary course of business and not securing any Debt;

(j) Liens securing Debt incurred in connection with acquiring rights to films in the ordinary course of business; provided that (1) the Debt secured by such Liens does not constitute a general obligation of DreamWorks Animation or any of its Subsidiaries and that under the terms of such Debt the lender thereof has recourse only to such films and the rights pertaining thereto and, in each case, to the proceeds thereof; (2) such Liens shall be created substantially simultaneously with the acquisition or production of such films; and (3) such Liens do not at any time encumber any property other than the films being produced or acquired;

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(k) Liens securing Debt arising from advances to DreamWorks Animation or any of its Subsidiaries made by licensees of product in order to finance the production thereof; provided that the aggregate principal amount of such Debt shall not exceed (as to DreamWorks Animation and all of its Subsidiaries) $50,000,000 at any time outstanding;

(l) Liens (not otherwise permitted hereunder) that secure Debt not exceeding (as to DreamWorks Animation and all of its Subsidiaries) $25,000,000 in aggregate principal amount at any time outstanding;

(m) Liens in favor of HBO securing the obligations of DreamWorks Animation to HBO in connection with the Attornment Agreement and the Animation Security Agreement;

(n) Liens in favor of the Designated Senior Agent, on behalf of the Designated Senior Lenders, in the assets and property of DreamWorks Animation, but excluding therefrom any Liens on the Collateral, including, but not limited to, any Liens on DreamWorks Animation’s rights to receive payments of license fees from DreamWorks or HBO in connection with the Attornment Agreement or HBO License Agreement, as security for the Senior Debt;

(o) Liens securing the performance of DreamWorks Animation’s obligations to DreamWorks under the DreamWorks Distribution Agreement and the Trademark License Agreement; provided, that such Liens do not include any Liens on the Collateral, including, but not limited to, any Liens on DreamWorks Animation’s rights to receive payments of license fees from DreamWorks or HBO in connection with the Attornment Agreement or HBO License Agreement; and

(p) other Liens (not otherwise permitted hereunder) that are permitted by the Senior Credit Agreement, as such agreement or guarantee may be amended, modified, amended and restated, supplemented or waived from time to time.

“Person” means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, government (or any agency or political subdivision thereof) or other entity of any kind.

“Post-Default Rate” has the meaning set forth in Section 2.06(a).

“Projected Sources” has the meaning assigned to such term in the Senior Credit Agreement.

“Projected Uses” has the meaning assigned to such term in the Senior Credit Agreement.

“Remedies Bar Period” means a period of up to one year commencing with the delivery, as provided in Section 7.01, of written notice to HBO and DreamWorks Animation by the Designated Senior Agent but only so long as any Event of Default (as defined in the Senior

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Credit Agreement) shall have occurred and be continuing under the Senior Credit Agreement; provided, however, the Designated Senior Agent shall only be permitted to give one such notice with respect to any one Event of Default; and provided, further, that any and all Remedies Bar Periods from time to time in effect hereunder shall expire no later than 120 days after the Scheduled Maturity Date.

“Reorganization” means any voluntary or involuntary dissolution, winding-up, total or partial liquidation or reorganization, or bankruptcy, insolvency, receivership or other statutory or common law proceedings or arrangements involving DreamWorks Animation or any of its assets or the readjustment of its liabilities or any assignment for the benefit of creditors or any marshaling of its assets or liabilities.

“Restricted Payment” means (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock or membership interests of DreamWorks Animation now or hereafter outstanding, except a dividend payable solely in shares of that class of stock or membership interest to the holders of that class; (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock or membership interests of DreamWorks Animation now or hereafter outstanding; and (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock or membership interest of DreamWorks Animation now or hereafter outstanding.

“Scheduled Maturity Date” means November 1, 2007.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Credit Agreement” means: (a) that certain Credit Agreement dated as of October 27, 2004, among DreamWorks Animation, the several banks and other financial institutions from time to time parties to such Credit Agreement, HSBC Bank USA, National Association, as syndication agent, Société Générale, as documentation agent, and JPMorgan Chase Bank, as administrative agent, as the same hereafter may be modified, amended, amended and restated or supplemented (including any such modification, amendment, amendment and restatement or supplement that increases the principal amount available under such Credit Agreement); and (b) any successor or replacement senior credit facility that is designated as such by DreamWorks Animation, as such senior credit facility may be modified, amended, amended and restated or supplemented (including any such modification, amendment, amendment and restatement or supplement that increases the principal amount available under such Credit Agreement); provided, however, that only one such Senior Credit Agreement may exist at any one time.

“Senior Debt” means all principal, premium, if any, and interest (including interest accruing subsequent to the filing of, or which would have accrued but for the filing of, a petition for bankruptcy or other Reorganization, whether or not such interest is an allowable claim in such bankruptcy proceeding or other Reorganization, calculated at the rate set forth for overdue loans in the Senior Credit Agreement) of or on (including obligations under interest rate agreements entered into in connection with) Debt of DreamWorks Animation incurred under the Senior Credit Agreement, and all other amounts payable pursuant to the Senior Credit

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Agreement or any of the loan documents referred to therein, or any document executed and delivered by DreamWorks Animation in connection therewith, in each case, whether presently outstanding or hereafter created or incurred.

“Senior Lenders” means the lenders party to the Senior Credit Agreement and the term “Senior Lender” means any lender party to the Senior Credit Agreement.

“Separation Transactions” means the transactions contemplated in Article II of the Separation Agreement dated on or prior to the Closing Date among DreamWorks, DW Animation L.L.C. and DreamWorks Animation.

“Subordinated Loan” means an aggregate principal amount equal to Eighty Million Dollars ($80,000,000), which amount reflects the portion of the Original Subordinated Loan that, from and after the date hereof, is being assumed by DreamWorks Animation in accordance with the terms of this Agreement and the Subordinated Note.

“Subordinated Loan Documents” means this Agreement, the Subordinated Note, the Transaction Agreement, the Collateral Documents, the Attornment Agreement and all Subordinated Loan Documents (as defined in the DreamWorks Loan Agreement).

“Subordinated Note” means the Subordinated Note, substantially in the form set forth as Exhibit B hereto, issued by DreamWorks Animation in accordance with the terms of this Agreement, as such note may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

“Subsidiary” means, with respect to any Person, any corporation or other entity of which a majority of the capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person.

“Test Period” means, as of the last day of any fiscal quarter (each such day, a “Test Date”) ending on or after September 30, 2004, the 12 month period commencing on the date immediately succeeding such Test Date.

“Trademark License Agreement” means that certain Trademark License Agreement dated October 27, 2004 between DreamWorks and DreamWorks Animation, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms and the terms of the Subordinated Loan Documents.

“Transaction Agreement” has the meaning set forth in the Recitals to this Agreement, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with its terms.

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SECTION 1.02 Accounting Terms. Unless otherwise specified herein, all accounting terms used herein (and in any other Subordinated Loan Document and any certificate or document pursuant hereto or thereto) shall be interpreted, all accounting determinations shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP as applied from time to time under the Senior Credit Agreement.

ARTICLE 2

LOAN

SECTION 2.01 Intentionally Deleted.

SECTION 2.02 Funding of Original Subordinated Loan. Each of the parties hereto acknowledges that the Original Subordinated Loan was fully funded on the Funding Date and that a principal amount equal to Forty-Five Million Dollars ($45,000,000) is payable by DreamWorks in accordance with the terms of the DreamWorks Loan Agreement. Each of the parties hereto further acknowledges and agrees that DreamWorks Animation has assumed a principal amount equal to Eighty Million Dollars ($80,000,000), which amount shall be payable, together with interest thereon, by DreamWorks Animation in accordance with the terms hereof. The parties further acknowledge and agree that DreamWorks Animation has agreed to prepay a principal amount equal to Thirty Million Dollars ($30,000,000) on the date of the closing of the initial public offering of DreamWorks Animation Class A Common Stock (but in no event later than December 15, 2004). The parties further acknowledge and agree that amounts borrowed under the Original Subordinated Loan Agreement and subsequently repaid or prepaid may not be reborrowed.

SECTION 2.03 Subordinated Note. DreamWorks Animation shall execute and deliver to HBO on or prior to the Closing Date the Subordinated Note to evidence the Subordinated Loan to DreamWorks Animation in accordance with this Agreement, in the principal amount of the Subordinated Loan and with other appropriate insertions.

SECTION 2.04 Maturity of the Subordinated Loan. The Subordinated Loan is not subject to any scheduled interim amortization. The Subordinated Loan shall mature, and the then unpaid principal amount thereof shall become due and payable (together with interest accrued thereon), in cash, on the Scheduled Maturity Date. Notwithstanding the foregoing, all payments with respect to the Subordinated Loan are subject to the subordination provisions set forth in Section 2 of the Subordinated Note.

SECTION 2.05 Prepayments and Repayments of the Subordinated Loan.

(a) Mandatory Prepayments. DreamWorks Animation shall make a payment of principal in an amount equal to Thirty Million Dollars ($30,000,000) on the date of the closing of the initial public offering of DreamWorks Animation Class A Common Stock (but in no event later than December 15, 2004). Such payment shall be accompanied by all interest accrued on the amount so paid.

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(b) Voluntary Prepayments. Subject to the consent of the Senior Lenders as long as any Senior Debt remains unpaid (if such consent is required under the terms of the Senior Debt as in effect at the time of such prepayment), DreamWorks Animation at its option may, upon 30 days’ written notice to HBO, at any time, prepay, without premium or penalty, all or any part of the principal amount of the Subordinated Loan. Any voluntary prepayments made pursuant to this Section 2.05(b) shall be applied to reduce the outstanding principal amount of the Subordinated Loan that is unpaid at the time of such prepayment, together with accrued interest through the date of prepayment.

(c) Payment Mechanics. All payments of principal and interest with respect to the Subordinated Loan shall be made by wire transfer in Dollars in same day funds to the HBO Payment Account (or to such other account as HBO may direct in writing to DreamWorks Animation). Whenever any payment on the Subordinated Loan is stated to be due on a day that is not a Business Day, such payment shall instead be made on the next Business Day, and such extension of time shall be included in the computation of interest payable on the Subordinated Loan. Each payment made hereunder will be credited first to interest then due and the remainder of such payment will be credited to principal, and interest will thereupon cease to accrue upon the principal so credited.

SECTION 2.06 Interest.

(a) Subject to Section 6.04, the Subordinated Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate plus 0.50% (50 basis points) per annum (the “Interest Rate”); provided, that upon the occurrence and during the continuance of any of the following events: (1) an Event of Default; (2) a material default by DreamWorks under the HBO License Agreement; (3) a material default by DreamWorks Animation under the Attornment Agreement; or (4) the failure on the part of DreamWorks Animation duly to observe or perform the covenants and agreements contained in Section 5.05, the outstanding principal amount of the Subordinated Loan and, to the extent permitted by applicable law, any interest and other amounts not paid when due, shall bear interest at a rate that is 4.00% (400 basis points) per annum in excess of the Interest Rate (the “Post-Default Rate”).

(b) Subject to Section 2 of the Subordinated Note, interest on the Subordinated Loan shall be due and payable (1) quarterly in arrears on the last day of each Interest Period; (2) upon any prepayment or repayment of the Subordinated Loan (to the extent so prepaid or repaid); and (3) on the Scheduled Maturity Date (each such date, an “Interest Payment Date”), at the rate per annum determined in accordance with Section 2.06(a). Interest on the Subordinated Loan shall accrue from and including the most recent Interest Payment Date to which interest has been paid on the Subordinated Loan to but not including the date of payment, or if no interest has been paid thereon, from the date of issuance thereof until payment in full of the principal thereof. Interest shall be calculated on the basis of a 360-day year and paid for the actual number of days elapsed.

(c) Anything in this Agreement or the Subordinated Note to the contrary notwithstanding, the interest rate on the Subordinated Loan shall in no event be in excess of the maximum rate permitted by applicable law.

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SECTION 2.07 Use of Proceeds. The proceeds from the Subordinated Loan have been used to repay, in part, the senior debt of DreamWorks and for working capital and general corporate purposes.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

DreamWorks Animation represents and warrants to HBO as set forth below:

SECTION 3.01 Organization, Powers, Qualification, Good Standing and Subsidiaries.

(a) Organization and Powers. DreamWorks Animation is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware. DreamWorks Animation has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Subordinated Loan Documents to which it is a party and to carry out the transactions contemplated thereby.

(b) Qualification and Good Standing. DreamWorks Animation is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had and would not reasonably be expected to have a Material Adverse Effect.

(c) Subsidiaries. All of the Subsidiaries of DreamWorks Animation as of the Closing Date are identified in Schedule 3.01 annexed hereto. The capital stock of each of the Subsidiaries of DreamWorks Animation identified in Schedule 3.01 annexed hereto is duly authorized, validly issued, fully paid and nonassessable. Each of the Subsidiaries of DreamWorks Animation identified in Schedule 3.01 annexed hereto is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation set forth therein, has all requisite corporate power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted, and is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, in each case except where failure to be so qualified or in good standing or a lack of such corporate power and authority has not had and would not reasonably be expected to have a Material Adverse Effect. Schedule 3.01 annexed hereto correctly sets forth, as of the Closing Date, the ownership interest of DreamWorks Animation and each of its Subsidiaries in each of the Subsidiaries of DreamWorks Animation identified therein.

SECTION 3.02 Authorization, Execution and Enforceability. The execution, delivery and performance by DreamWorks Animation of each of the Subordinated Loan Documents to which it is a party and the issuance by DreamWorks Animation of the Subordinated Note have been duly and validly authorized and are within its corporate or other powers. Each of the Subordinated Loan Documents to which DreamWorks Animation is a party

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has been duly executed and delivered by DreamWorks Animation and constitutes its valid and binding agreement, enforceable against DreamWorks Animation in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law).

SECTION 3.03 Financial Condition. The audited Consolidated balance sheet of DreamWorks Animation as at December 31, 2001, December 31, 2002 and December 31, 2003, and the related Consolidated statements of income and retained earnings and of cash flows for the fiscal years ended on such dates, reported on by and accompanied by an unqualified report from Ernst & Young LLP, present fairly the Consolidated financial condition of DreamWorks Animation as at such date, and the Consolidated results of its operations and its Consolidated retained earnings and cash flows for the fiscal years then ended. The unaudited Consolidated balance sheets of DreamWorks Animation as at March 31, 2004 and June 30, 2004, and the related unaudited Consolidated statements of income and retained earnings and of cash flows for the portion of the fiscal year ended on such date, present fairly the Consolidated financial condition of DreamWorks Animation as at such date, and the Consolidated results of its operations and its Consolidated retained earnings and cash flows for the portion of the fiscal year then ended (subject to normal year-end audit adjustments). All such audited and unaudited financial statements (with the related notes and schedules thereto, the “Financial Statements”), have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by the aforementioned firm of accountants and disclosed therein). Except as set forth on Schedule 3.03 annexed hereto, DreamWorks Animation and its Subsidiaries do not have any material Guarantee Obligation, contingent liabilities or liabilities for taxes, or any long-term leases or unusual forward or long-term commitments, including any interest rate or foreign currency swap or exchange transaction or other obligation in respect of derivatives, that are not reflected in the audited financial statements as at December 31, 2003 referred to in this paragraph. Except as set forth on Schedule 3.03 annexed hereto, during the period from December 31, 2003 to and including the date hereof, there has been no sale, transfer or other disposition by DreamWorks Animation or any of its Subsidiaries of any material part of its business or property other than in the ordinary course of business and other than with respect to the transactions described in the Transaction Agreement.

SECTION 3.04 Title to Properties; Liens. DreamWorks Animation has (a) good, sufficient and legal title to (in the case of fee interests in real property); (b) valid leasehold interests in (in the case of leasehold interests in real or personal property); or (c) good title to (in the case of all other personal property), all of its properties and assets reflected in the Financial Statements, except for assets disposed of since the date of the last of the Financial Statements in the ordinary course of business or in accordance with the transactions described in the Transaction Agreement and except where the failure to have a valid leasehold interest or such title would not reasonably be expected to have a Material Adverse Effect. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens, except for Permitted Encumbrances.

SECTION 3.05 Litigation; Adverse Facts. There are no actions, suits, proceedings, arbitrations or governmental investigations (whether or not purportedly on behalf of

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DreamWorks Animation) at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign (including any environmental claims) that are pending or, to the knowledge of DreamWorks Animation, threatened against DreamWorks Animation or any property of DreamWorks Animation and that, individually or in the aggregate, would, if determined adversely, reasonably be expected to result in a Material Adverse Effect. DreamWorks Animation is not (a) in violation of any applicable laws (including, but not limited to, environmental laws and ERISA) that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect; or (b) subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect.

SECTION 3.06 Governmental Regulation. Neither DreamWorks Animation nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, as amended, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940, as amended, or under any other federal or state statute or regulation (other than Regulation X of the Board of Governors of the Federal Reserve System) which may limit its ability to incur Debt or which may otherwise render all or any portion of the Subordinated Loan unenforceable.

SECTION 3.07 Disclosure. No representation or warranty of DreamWorks Animation contained in the Subordinated Loan Documents to which it is a party or in any other document, certificate or written statement furnished to HBO by or on behalf of DreamWorks Animation for use in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact (known to DreamWorks Animation, in the case of any document not furnished by it) necessary in order to make the statements contained herein or therein not misleading in any material respect in light of the circumstances in which the same were made.

SECTION 3.08 Governmental Authorization and Required Consents. The execution and delivery by DreamWorks Animation of each of the Subordinated Loan Documents to which it is a party does not and will not, the assumption of the Subordinated Loan will not, the grant by DreamWorks Animation of the Liens purported to be created in favor of HBO pursuant to any of the Collateral Documents does not and will not and the consummation of the transactions contemplated hereby and thereby will not, require any action by or in respect of, or filing with, any governmental body, agency or governmental official or the consent, authorization or approval of any other Person except (a) such actions or filings that have been undertaken or made prior to the Closing Date and that will be in full force and effect on and as of the Closing Date or which are not required to be filed on or prior to the Closing Date; and (b) such actions or filings (1) the failure of which to take or obtain has not had and would not reasonably be expected to have a Material Adverse Effect; or (2) that relate to the security interests granted or to be granted pursuant to the Collateral Documents.

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SECTION 3.09 No Conflicts. Subject to the consent of the Senior Lenders, the execution and delivery by DreamWorks Animation of each of the Subordinated Loan Documents to which it is a party does not and will not, the assumption of the Subordinated Loan will not, the consummation of the transactions contemplated hereby and thereby will not and the compliance with the terms and provisions of the Subordinated Loan Documents to which it is a party will not (a) conflict with or result in a breach of, or require any consent under (1) the Organizational Documents of DreamWorks Animation; (2) subject to Section 3.08, any provision of applicable law or regulation, the violation of which would reasonably be expected to have a Material Adverse Effect; or (3) any agreement, judgment, injunction, order, decree or other instrument binding upon DreamWorks Animation or any of its assets, the violation of which would reasonably be expected to have a Material Adverse Effect; (b) constitute a default under, or result in the termination of, or result in the acceleration or mandatory prepayment of any Debt evidenced by, any such agreement or instrument; or (c) result in the creation or imposition of any Lien upon any property of DreamWorks Animation pursuant to the terms of any such agreement or instrument.

SECTION 3.10 No Material Adverse Change. Since December 31, 2003, and other than as a result of the transactions described in the Transaction Agreement, there has been no development or event that has had or could reasonably be expected to have a Material Adverse Effect.

SECTION 3.11 Taxes. Each of DreamWorks Animation and its Subsidiaries has filed or caused to be filed all material tax returns which, to the knowledge of DreamWorks Animation, are required to be filed and has paid all taxes shown to be due and payable on said returns or on any assessments made against it or any of its property by any governmental authority (other than any the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of DreamWorks Animation or its Subsidiaries, as the case may be); no tax Lien has been filed, and, to the knowledge of DreamWorks Animation, no claim is being asserted with respect to any such tax, fee or other charge.

SECTION 3.12 Matters Relating to Collateral.

(a) Creation, Perfection and Priority of Liens. The execution and delivery of the Collateral Documents by DreamWorks Animation, together with the actions taken on or prior to the Closing Date pursuant to Section 4.01(d), are effective to create in favor of HBO, as security for the Secured Obligations (as defined in the Animation Security Agreement), a valid and perfected first priority lien on all of the Collateral.

(b) Governmental Authorizations. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for either (1) the grant by DreamWorks Animation of the Liens purported to be created in favor of HBO pursuant to any of the Collateral Documents; or (2) the exercise by HBO of any rights or remedies in respect of any Collateral (whether specifically granted or created pursuant to any of the Collateral Documents or created or provided for by applicable law), except for Collateral filings and for advance notices of foreclosure required under applicable law.

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(c) Absence of Third-Party Filings. Except such as may have been filed in favor of HBO or with respect to Permitted Encumbrances, no effective UCC financing statement, fixture filing or other instrument similar in effect covering all or any part of the Collateral is on file in any filing or recording office.

ARTICLE 4

CONDITIONS PRECEDENT TO CLOSING

SECTION 4.01 Closing Documents. The Closing shall be deemed to have occurred upon the receipt by HBO of the following documents, each of which shall be satisfactory to HBO and its counsel in form and substance and the satisfaction of the additional closing conditions set forth in Section 4.02:

(a) Agreement and Subordinated Note. This Agreement and the Subordinated Note, each duly executed and delivered by DreamWorks Animation.

(b) DreamWorks Documents. The DreamWorks Loan Agreement and all Subordinated Loan Documents (as defined in the DreamWorks Loan Agreement), each duly executed and delivered by DreamWorks.

(c) HBO License Agreement Amendment. The HBO License Agreement Amendment, duly executed and delivered by DreamWorks and the Attornment Agreement, duly executed and delivered by DreamWorks Animation and DreamWorks.

(d) Collateral Documents. The Animation Security Agreement, duly executed and delivered by DreamWorks Animation and granting to HBO a first priority security interest in the Collateral, accompanied by (1) appropriately completed UCC-1 financing statements naming HBO as secured party and DreamWorks Animation as debtor with respect to the Collateral filed in the State of Delaware and such other jurisdictions as HBO shall determine in its sole good faith discretion; (2) a copyright mortgage, duly executed by DreamWorks Animation which has been or will be submitted for recordation with the U.S. Copyright Office; and (3) such other documents as the Animation Security Agreement shall specify or as HBO shall have reasonably requested, in order to create, perfect and establish the priority of the Lien granted by the Animation Security Agreement.

(e) Consents. All consents of other Persons, if any, in each case that are necessary in connection with the transactions contemplated by the Subordinated Loan Documents and DreamWorks Loan Agreement, and each of the foregoing shall be in full force and effect.

(f) Corporate Documents. The following documents with respect to DreamWorks Animation, each certified as indicated below:

(1) a copy of DreamWorks Animation’s certificate of incorporation certified as of a recent date by the Secretary of State of Delaware, together with copies of any agreements entered into by DreamWorks Animation governing the terms or relative rights of its shares and any agreements entered into by shareholders relating to DreamWorks Animation;

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(2) a certificate of the Secretary of State of Delaware, dated as of a recent date, and certifying as to the good standing of, and payment of taxes by, DreamWorks Animation, and if available, which lists the charter documents on file in the office of such Secretary of State;

(3) a copy of DreamWorks Animation’s foreign qualification certificate, certified as of a recent date by the Secretary of State of California and each other jurisdiction where DreamWorks Animation is qualified as a foreign corporation, together with a certificate dated as of a recent date as to the good standing and/or authority to do business of, and payment of taxes by, DreamWorks Animation issued by the Secretary of State of each jurisdiction in which DreamWorks Animation is qualified as a foreign corporation;

(4) a certificate of the secretary of DreamWorks Animation (or other person with proper authority to execute the same on behalf of DreamWorks Animation), dated the Closing Date and certifying (i) that attached to such certificate is a true and complete copy of resolutions duly adopted by the board of directors of DreamWorks Animation authorizing the execution, delivery and performance of the DreamWorks Distribution Agreement, the DreamWorks Services Agreement, the Subordinated Loan Documents to which it is a party and the Subordinated Loan under this Agreement, and that such resolutions have not been modified, rescinded or amended and are in full force and effect; (ii) that the certificate of incorporation of DreamWorks Animation has not been amended since the date of the last amendment thereto indicated on the certificate of the Secretary of State furnished pursuant to clause (1) above except to the extent specified in such certificate; and (iii) as to the incumbency and specimen signature of each officer of DreamWorks Animation executing the Subordinated Loan Documents to which it is a party and each other document to be delivered by DreamWorks Animation from time to time in connection with any Subordinated Loan Document (and HBO may conclusively rely on such certificate until HBO receives notice in writing from DreamWorks Animation); and

(5) such additional supporting documents as HBO or its counsel may reasonably request.

(g) Opinions of Counsel to DreamWorks Animation. Opinions, in substantially the form of Exhibits C-1 and C-2 attached hereto, dated the Closing Date, of Cravath, Swaine & Moore LLP, outside counsel to DreamWorks Animation, and of Katherine Kendrick, general counsel of DreamWorks Animation, covering such matters as HBO may reasonably request.

(h) UCC Searches. UCC, copyright office and other searches satisfactory to HBO in the States of California, New York and Delaware, the U.S. Copyright Office and such other jurisdictions as HBO shall determine in its sole good faith discretion, indicating that no other filings (other than in connection with Permitted Encumbrances) with regard to the Collateral are of record in any jurisdiction in which it shall be necessary or desirable for HBO to make a filing to provide HBO with a first priority perfected security interest in the Collateral pursuant to the applicable laws of the United States, any state thereof or any other jurisdiction specified by HBO in its good faith discretion.

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(i) Closing Certificate. A certificate, executed by an Authorized Officer of DreamWorks Animation, dated the Closing Date, certifying as to the matters set forth in Section 4.02(a), (b) and (c), in each case, as of the Closing Date.

(j) Other Documents. Such other documents as HBO or its counsel may reasonably request.

SECTION 4.02 Additional Closing Conditions. The Closing is subject to the satisfaction of the following additional conditions precedent:

(a) No Default or Event of Default shall have occurred and be continuing and no Event of Default (as defined in the Original Subordinated Loan Agreement) shall have occurred and be continuing under the Original Subordinated Loan Agreement.

(b) The representations and warranties made by DreamWorks Animation in Section 3 shall be true and complete in all material respects on and as of the Closing Date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).

(c) No material default by DreamWorks shall have occurred and be continuing under the HBO License Agreement and no material default by DreamWorks Animation shall have occurred and be continuing under the Attornment Agreement.

(d) All of the conditions precedent to closing set forth in the Transaction Agreement and in the DreamWorks Loan Agreement shall have been satisfied, including, but not limited to, the prepayment by DreamWorks Animation of the Subordinated Loan in a principal amount equal to Thirty Million Dollars ($30,000,000) no later than December 15, 2004.

ARTICLE 5

COVENANTS

DreamWorks Animation hereby agrees that, from and after the Closing Date and so long as any part of the Subordinated Loan remains outstanding and unpaid or any other amount is owing to HBO, and for the benefit of HBO:

SECTION 5.01 Financial Statements and Other Reports. DreamWorks Animation shall furnish to HBO:

(a) as soon as available, but in any event within 90 days after the end of each fiscal year of DreamWorks Animation, a copy of the Consolidated balance sheet of DreamWorks Animation and its Consolidated Subsidiaries as at the end of such year and the related Consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without qualification, by independent certified public accountants of nationally recognized standing;

(b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of DreamWorks Animation (commencing with

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the fiscal quarter ending on September 30, 2004), a copy of the unaudited Consolidated balance sheet of DreamWorks Animation and its Consolidated Subsidiaries as at the end of such quarter and the related unaudited Consolidated statements of income and retained earnings and of cash flows of DreamWorks Animation and its Consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year;

(c) within 15 days after the delivery of the financial statements referred to in Section 5.01(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate;

(d) concurrently with the delivery of the financial statements referred to in Section 5.01(a) and within 15 days after the delivery of the financial statements referred to in Section 5.01(b), a certificate of an Authorized Officer (1) stating that such Authorized Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate; (2) including calculations in reasonable detail with respect to compliance with Section 5.05 and Section 5.07; and (3) certifying that the financial statements delivered for such period are fairly stated in all material respects (subject to normal year end adjustments);

(e) concurrently with the delivery of the financial statements referred to in Section 5.01(a) and within 15 days after the delivery of the financial statements referred to in Section 5.01(b), projections in form and scope reasonably acceptable to HBO for the Test Period commencing immediately after the fiscal period covered by such financial statements, including an operating budget and cash flow budget of DreamWorks Animation and its Subsidiaries for such period and sufficient information in reasonable detail to support the calculation of Projected Sources and Projected Uses for such Test Period, such projections to be accompanied by a certificate of an Authorized Officer to the effect that such projections have been prepared on the basis of sound financial planning practice and that such Authorized Officer has no reason to believe they are incorrect or misleading in any material respect;

(f) promptly after the same become publicly available, copies of all periodic reports, proxy statements and other materials filed by DreamWorks Animation or any of its Subsidiaries with the Securities and Exchange Commission (or any successor thereto) or any national securities exchange, or distributed by DreamWorks Animation or any of its Subsidiaries to its security holders generally, as the case may be; and

(g) with reasonable promptness, such other information and data with respect to DreamWorks Animation or any of its Subsidiaries as from time to time may be reasonably requested by HBO.

All such financial and other statements shall be complete and correct in all material respects and shall be prepared in reasonable detail. All such financial statements shall be prepared in accordance with GAAP applied consistently throughout the periods reflected therein (except as may be approved by such Authorized Officer or accountants, as the case may be, and disclosed therein).

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SECTION 5.02 Conduct of Business and Maintenance of Existence. DreamWorks Animation shall continue to engage in the entertainment business. DreamWorks Animation shall preserve, renew and keep in full force and effect its existence and take all reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business.

SECTION 5.03 Maintenance of Properties. DreamWorks Animation shall maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all properties necessary to the operation of the business of DreamWorks Animation.

SECTION 5.04 Compliance with Laws, etc. DreamWorks Animation shall comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority (including, but not limited to, all environmental laws, ERISA and payment of taxes), noncompliance with which would reasonably be expected to cause, in the aggregate, a Material Adverse Effect.

SECTION 5.05 Debt. DreamWorks Animation shall not, directly or indirectly, create, incur, assume or directly or indirectly guaranty, or otherwise become or remain directly or indirectly liable with respect to, any Debt unless, after giving proforma effect thereto and the application of proceeds thereof, DreamWorks Animation shall be in compliance with the Leverage Ratio covenant set forth in Section 7.1(b) of the Senior Credit Agreement (or such other debt to capitalization ratio covenant as may appear in any successor or replacement Senior Credit Agreement, as such provisions may be amended or waived from time to time by DreamWorks Animation and the applicable Senior Lenders (including, but not limited to, any such amendment or waiver that results from the amendment or modification of the definition of any term that is used (or any interpretive provision that is applied) in the calculation of the Leverage Ratio covenant); provided, however, that for purposes of determining compliance by DreamWorks Animation with this Section 5.05, the maximum permitted Leverage Ratio or other debt to capitalization ratio (as such ratio may be amended or waived from time to time) shall be deemed to be increased by 0.25 over the ratio then set forth in the then-existing Senior Credit Agreement, as the case may be (in either case, as so amended or waived). By way of example, and solely for the avoidance of confusion, if the then-applicable Leverage Ratio as set forth in Section 7.1(b) of the Senior Credit Agreement were 0.60 to 1.00, DreamWorks shall be deemed to be in compliance with this Section 5.05 if the Leverage Ratio is not greater than 0.85 to 1.00.

SECTION 5.06 Prohibition on Liens. DreamWorks Animation shall not, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind of DreamWorks Animation, whether now owned or hereafter acquired, or any income, profits or proceeds therefrom, or assign or otherwise convey any right to receive income or profits therefrom, unless DreamWorks Animation shall make or cause the obligations of DreamWorks Animation to HBO hereunder and under the other Subordinated Loan Documents to be secured by such Lien equally and ratably with any and all other Debt secured thereby as long as any such Debt shall be so secured; provided, however, that such Liens may not include a Lien on the Collateral, including, but not limited to, DreamWorks Animation’s rights to receive payments of license fees from DreamWorks or HBO in connection with the Attornment

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Agreement or the HBO License Agreement. Notwithstanding the foregoing, the following Liens shall be permitted hereunder:

(a) Permitted Encumbrances; and

(b) Liens granted pursuant to the Collateral Documents.

SECTION 5.07 Restricted Payments. Subject to the last sentence of this Section 5.07, DreamWorks Animation and its Subsidiaries shall be permitted to make Restricted Payment(s) in the following circumstances:

(a) DreamWorks Animation shall be permitted to (i) repurchase Equity Interests in DreamWorks Animation issued under the Employee Equity Plan, by means of cash payments (any such repurchase, an “Employee Equity Repurchase”), so long as the aggregate cash amount so expended in making such repurchases shall not exceed (1) $10,000,000 in any fiscal year plus (2) any portion of the $10,000,000 available under clause (1) above in any previous fiscal year which has not been expended plus (3) the aggregate cash proceeds received in connection with the sale of any Equity Interests in DreamWorks Animation to any employee (other than Jeffrey Katzenberg) of DreamWorks Animation or any of its Subsidiaries after the Closing Date and on or prior to the date of such repurchase; and (ii) remit withholding and employment taxes to Federal, local and state taxing authorities, in an aggregate amount not to exceed $7,500,000, in connection with the delivery of shares of DreamWorks Animation Class A common stock to current or former employees of DreamWorks in connection with the Separation Transactions and the initial public offering of the common stock of DreamWorks Animation; and

(b) DreamWorks Animation shall be permitted to make any Restricted Payment if, at the time of making thereof, such Restricted Payment is then permitted under the terms of the Senior Credit Agreement, as such agreement or guarantee may be amended or waived from time to time.

Notwithstanding the foregoing, DreamWorks Animation shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment under Section 5.07(a) or (b) unless at the time of the proposed Restricted Payment, all interest and principal due and payable on the Subordinated Loan (including any interest and/or principal prohibited from being paid on a current basis in accordance with the Remedies Bar Period and/or the subordination provisions of Section 2 of the Subordinated Note) are being paid currently to HBO.

SECTION 5.08 Transactions with Shareholders and Affiliates. DreamWorks Animation shall not, directly or indirectly, enter into any transaction, including, but not limited to, any purchase, sale, lease or exchange of property or the rendering of any service, with any of its Affiliates (each of the foregoing, an “Affiliate Transaction”), unless such Affiliate Transaction is on terms that are no less favorable to DreamWorks Animation or the relevant Affiliate or Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by DreamWorks Animation or such Affiliate or Subsidiary with an unrelated Person; provided that this Section 5.08 shall not restrict the ability (a) of DreamWorks Animation to

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make Restricted Payments otherwise permitted under Section 5.07; (b) of DreamWorks Animation to enter into the DreamWorks Distribution Agreement; (c) of DreamWorks Animation to enter into the DreamWorks Services Agreement; (d) of DreamWorks Animation to enter into the Trademark License Agreement; (e) of DreamWorks Animation to enter into the Ancillary Services Agreement; and (f) transactions permitted by the terms of the Senior Credit Agreement, as such agreement may be amended or waived.

SECTION 5.09 Restrictions on Organizational Documents. DreamWorks Animation will not amend any of its Organizational Documents, if such amendment would materially adversely affect DreamWorks Animation’s ability to repay the Subordinated Loan in accordance with the provisions of the Subordinated Loan Documents or materially adversely affect HBO’s Lien on the Collateral.

ARTICLE 6

EVENTS OF DEFAULT; REMEDIES; LIMITATION EVENTS

SECTION 6.01 Events of Default. The occurrence of one or more of the following events shall constitute an “Event of Default” hereunder, whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body:

(a) a default in the payment of all or any part of the principal on the Subordinated Loan as and when the same shall become due and payable whether at maturity, upon any redemption, by declaration or otherwise and irrespective of whether any such payment is barred by the pendency of a Remedies Bar Period and/or the subordination provisions of Section 2 of the Subordinated Note; or

(b) a default in the payment of any installment of interest upon the Subordinated Loan or any other obligations payable under this Agreement as and when the same shall become due and payable (irrespective of whether any such payment is barred by the pendency of a Remedies Bar Period and/or the subordination provisions of Section 2 of the Subordinated Note), and continuance of such default for a period of 10 Business Days; or

(c) the Senior Lenders take remedies with respect to the Senior Debt that causes the Senior Debt to become due prior to the stated maturity thereof or the Senior Debt shall not be paid in full at its final stated maturity (as the same may be extended from time to time); or

(d) the failure of any Collateral Document to be in full force and effect at all times or the failure of HBO to have a valid and perfected first priority lien in any Collateral purported to be covered thereby unless, in each case, such failure occurs as the result of an action or failure to act by HBO; or

(e) (1) DreamWorks Animation shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to Reorganization or relief of debtors, seeking to have an order for relief entered with respect to it,

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or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts; or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or DreamWorks Animation shall make a general assignment for the benefit of its creditors; or (2) there shall be commenced against DreamWorks Animation any case, proceeding or other action of a nature referred to in clause (1) above which (i) results in the entry of an order for relief or any such adjudication or appointment; or (ii) remains undismissed, undischarged or unbonded for a period of 60 days; or (3) there shall be commenced against DreamWorks Animation any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged or stayed or bonded pending appeal within 60 days from the entry thereof; or (4) DreamWorks Animation shall take any action in furtherance of, or indicating its consent to, approval of or acquiescence in, any of the acts set forth in clause (1), (2) or (3) above; or (5) DreamWorks Animation shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due.

SECTION 6.02 Remedies for Events of Default. Upon the occurrence of each and every Event of Default, and at any time thereafter during the continuance of such Event of Default, the following shall occur and HBO may take any or all of the following actions at the same or different times:

(a) interest on the Subordinated Loan shall accrue at the Post-Default Rate;

(b) subject to the pendency of a Remedies Bar Period, by notice in writing to DreamWorks Animation, HBO may declare the entire principal amount of the Subordinated Loan, together with all accrued interest thereon, to be immediately due and payable, whereupon such amounts shall be immediately due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by DreamWorks Animation; provided, however,

(1) in the case of the occurrence of an Event of Default referred to in clause (1) or (2) of Section 6.01(e), notwithstanding any Remedies Bar Period or the provisions of Section 2 of the Subordinated Note, the principal amount then outstanding of, and the accrued interest on, the Subordinated Loan shall automatically become due and payable without presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by DreamWorks Animation; and

(2) in the case of an occurrence of an Event of Default other than an Event of Default referred to in clause (1) or (2) of Section 6.01(e), so long as any part of the Senior Debt remains unpaid, HBO shall provide to the Designated Senior Agent a copy of the notice provided to DreamWorks in accordance with this Section 6.02(b) and shall not exercise its remedies under this Section 6.02(b) until 5 Business Days after such notice is delivered to the Designated Senior Agent.

(c) subject to the pendency of a Remedies Bar Period, HBO may exercise its rights and remedies in the Collateral and against DreamWorks Animation as provided under the Animation

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Security Agreement; provided, however, so long as any part of the Senior Debt remains unpaid, HBO shall not be entitled to exercise its rights and remedies provided in this Section 6.02(c) until the Scheduled Maturity Date (but without limiting any of HBO’s other rights and remedies hereunder or under any other Subordinated Loan Document).

For the avoidance of doubt, subject to Section 6.02(c), HBO shall be entitled to exercise any and all of its rights and remedies against DreamWorks upon the conclusion of any Remedies Bar Period.

SECTION 6.03 Other Remedies for Breach.

(a) HBO shall be entitled to charge interest at the Post-Default Rate in accordance with Section 2.06(a).

(b) Subject to Section 2 of the Subordinated Note, if:

(1) any representation, warranty, certification or statement made by DreamWorks Animation in any Subordinated Loan Document shall prove to have been incorrect in any material respect when made or furnished; or

(2) DreamWorks Animation shall fail to duly observe or perform any covenants or agreements contained in the Subordinated Loan Documents to which it is a party;

HBO shall be entitled to exercise any of its equitable remedies arising by contract or under applicable law, including the right to seek injunctive relief; provided, however,

(i) in no event would such breaches or defaults give rise to any right of HBO to accelerate the maturity of the Subordinated Loan or to foreclose upon or otherwise exercise remedies in respect of the Collateral;

(ii) so long as any part of the Senior Debt remains unpaid, HBO shall provide to the Designated Senior Agent a notice of such default and shall not exercise its remedies under this Section 6.03(b) until 5 Business Days after such notice is delivered to the Designated Senior Agent; and

(iii) so long as any part of the Senior Debt remains unpaid, in the case of a breach or default with respect to Section 5.05, HBO shall not exercise its remedies under this Section 6.03(b) without the consent of the Senior Lenders (although interest on the Subordinated Loan shall accrue at the Post-Default Rate with respect to such default regardless of whether any such consent has been obtained).

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SECTION 6.04 Limitation Events. If Jeffrey Katzenberg does not continue to remain actively involved in the operation of the business of DreamWorks Animation, the interest rate on the Subordinated Loan will automatically increase by 2.00% (200 basis points) per annum in excess of the interest rate otherwise payable in accordance with Section 2.06(a).

SECTION 6.05 No Effect Upon HBO License Agreement or HBO Senior Security Agreement. For the avoidance of doubt, the parties hereby agree that nothing in this Agreement or in any other Subordinated Loan Document shall be construed or interpreted as having any impact of any kind or nature whatsoever on HBO’s rights and remedies arising under the HBO License Agreement, the HBO Senior Security Agreement, the Attornment Agreement and all related documentation. Without limiting the generality of the foregoing, for the avoidance of doubt, the parties hereby agree that nothing in this Agreement or in any other Subordinated Loan Document shall be construed so as to amend, modify or alter the calculation, amount or payment of the Annual Prepayment or License Fee (as each such term is defined in the HBO License Agreement) under the HBO License Agreement.

ARTICLE 7

MISCELLANEOUS

SECTION 7.01 Notices. All notices, demands and other communications to any party hereunder shall be in writing (including facsimile or similar writing) and shall be given to such party at its address set forth on Schedule 7.01 annexed hereto, or such other address as such party may hereafter specify in writing for the purpose (in the case of DreamWorks Animation, by notice to HBO, and in the case of HBO, by notice to DreamWorks Animation). Each such notice, demand or other communication shall be effective (a) if given by facsimile, when such facsimile is transmitted to the facsimile number specified on Schedule 7.01 annexed hereto and upon receipt of confirmation of a successful complete transmission; (b) if given by mail, four days after such communication is deposited in the mail with first class postage prepaid, addressed as aforesaid; or (c) if given by any other means, when delivered at the address specified in this Section 7.01.

SECTION 7.02 No Waivers; Cumulative Remedies; Amendments.

(a) No failure or delay on the part of any party in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to any party at law or in equity or otherwise.

(b) Any provision of this Agreement, the Subordinated Note or any other Subordinated Loan Document to which DreamWorks Animation is a party may be amended, supplemented or waived if, but only if, such amendment, supplement or waiver is in writing and is signed by DreamWorks Animation and HBO.

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SECTION 7.03 Indemnification. DreamWorks Animation (for the purposes of this Section, the “Indemnifying Party”) agrees to indemnify and hold harmless HBO, its Affiliates, and each Person, if any, who controls HBO, or any of its affiliates, within the meaning of the Securities Act or the Exchange Act (a “Controlling Person”), and the respective partners, agents, employees, officers and directors of HBO, its Affiliates and any such Controlling Person (each an “Indemnified Party” and collectively, the “Indemnified Parties”), from and against any and all losses, claims, damages, liabilities and reasonable expenses (including, but not limited to and as incurred, reasonable costs of investigating, preparing or defending any such claim or action, whether or not such Indemnified Party is a party thereto) arising out of, or in connection with the transactions contemplated by this Agreement including, but not limited to, the use of proceeds of the Subordinated Loan by DreamWorks and/or DreamWorks Animation, and the other Subordinated Loan Documents; provided that the Indemnifying Party will not be responsible for any claims, liabilities, losses, damages or expenses that are determined by judgment of a court of competent jurisdiction to result from such Indemnified Party’s gross negligence, willful misconduct or bad faith. The Indemnifying Party also agrees that (a) the Indemnified Parties shall have no liability (except in the case of HBO for breach of provisions of this Agreement) for claims, liabilities, damages, losses or reasonable expenses, including legal fees, incurred by the Indemnifying Party in connection with this Agreement or any other Subordinated Loan Document or any of the transactions contemplated hereunder or thereunder unless they are determined by judgment of a court of competent jurisdiction to result from HBO’s gross negligence, willful misconduct or bad faith; and (b) the Indemnified Parties shall in no event have any liability to the Indemnifying Party or DreamWorks Animation on any theory of liability for any special, indirect, consequential or punitive damages (as opposed to direct, actual damages) arising out of, in connection with, or as a result of this Agreement or any other Subordinated Loan Document or any of the transactions contemplated hereunder or thereunder.

The indemnification, contribution and expense reimbursement obligations set forth in this Section 7.03 (a) shall be in addition to any liability the Indemnifying Party may have to any Indemnified Party at common law or otherwise; (b) shall survive the termination of this Agreement and the payment in full of the Subordinated Loan; and (c) shall remain operative and in full force and effect regardless of any investigation made by or on behalf of HBO or any other Indemnified Party.

SECTION 7.04 Expenses; Documentary Taxes. If an Event of Default occurs, DreamWorks Animation agrees to pay all out-of-pocket expenses incurred by HBO, including reasonable fees and disbursements of counsel, in connection with such Event of Default and collection, bankruptcy, insolvency, the realization upon any Collateral and other judicial or enforcement proceedings resulting therefrom. In addition, DreamWorks Animation agrees to pay any and all stamp, transfer and other similar taxes, assessments or charges payable in connection with the execution and delivery of this Agreement or the issuance of the Subordinated Loan.

SECTION 7.05 Successors and Assigns. This Agreement shall be binding upon DreamWorks Animation and upon HBO and their respective permitted successors and assigns.

SECTION 7.06 Assignment. HBO shall have the right at any time to (a) sell, assign or

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transfer to any Eligible Assignee, with the prior written consent of DreamWorks Animation (not to be unreasonably withheld), undivided interests in the Subordinated Loan made by it or any other interest herein or any other obligation owed to it; or (b) sell participations to any Person in undivided interests in the Subordinated Loan made by it or any other interest herein or in any other obligations owed to it. Notwithstanding the foregoing, (i) each Person to whom any such sale, assignment or participation is made shall agree with HBO in writing, for the benefit of DreamWorks Animation and the Senior Lenders, to be bound by all of the provisions of the Subordinated Loan Documents, including, but not limited to, Section 7.07 and the provisions of the Subordinated Note; (ii) no such sale, assignment or transfer shall, without the prior written consent of DreamWorks Animation, require DreamWorks Animation to file a registration statement with the Commission or apply to qualify such sale, assignment or transfer under the securities laws of any state; (iii) all such assignments, sales and transfers shall be in an amount at least equal to $10,000,000; (iv) interests in the Subordinated Loan shall not be held by more than five different holders at any one time; (v) HBO shall at all times continue to hold a majority interest in the Subordinated Loan; (vi) such assignees, participants and transferees shall not have the right to participate in or consent to any amendment with respect to the Subordinated Loan Documents except for amendments with respect to any extension of the Schedule Maturity Date, any reduction of the principal amount of the Subordinated Loan or any reduction of the Interest Rate or the Post-Default Rate; and (vii) other than to an Affiliate of HBO, HBO shall not (without the prior written consent of DreamWorks Animation (not to be unreasonably withheld)) assign, transfer or sell any interest in the Subordinated Loan to a competitor of DreamWorks Animation. DreamWorks Animation may not assign or otherwise transfer its rights or obligations under this Agreement to any other Person without the prior written consent of HBO.

SECTION 7.07 Confidentiality. HBO shall hold all non-public information obtained pursuant to the requirements of this Agreement which has been identified as confidential by DreamWorks Animation in accordance with HBO’s customary procedures for handling confidential information of this nature, it being understood and agreed by DreamWorks Animation that in any event HBO may (a) with DreamWorks Animation’s prior written consent (not to be unreasonably withheld), make disclosures reasonably required by any bona fide prospective assignee, transferee or participant that agrees to be bound by this Section 7.07 in connection with the contemplated assignment or transfer by HBO of the Subordinated Loan or any participations therein; or (b) make disclosures required or requested by any governmental agency or representative thereof or pursuant to court order, subpoena or other legal process; provided that, unless specifically prohibited by applicable law, regulation or court order, HBO shall notify DreamWorks Animation of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition of HBO by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information; and provided, further, that in no event shall HBO be obligated or required to return any materials furnished by or on behalf of DreamWorks Animation.

SECTION 7.08 New York Law; Submission to Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES

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DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 7.09 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

SECTION 7.10 Captions. The table of contents and captions and section headings appearing in this Agreement are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Agreement.

SECTION 7.11 Counterparts. This Agreement may be executed in any number of counterparts each of which shall be an original with the same effect as if the signatures thereto and hereto were upon the same instrument.

(remainder of page intentionally left blank)

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

DREAMWORKS ANIMATION SKG, INC.
By:	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	General Counsel & Secretary
HOME BOX OFFICE, INC.
By:	/s/ Harold E. Akselrad
Name:	Harold E. Akselrad
Title:	General Counsel and Executive Vice President

S-1

EX-10.28

Exhibit 10.28

EXECUTION COPY

SHARE WITHHOLDING AGREEMENT (this “Agreement”), dated as of March 23, 2005, by and between DREAMWORKS L.L.C., a Delaware limited liability company (the “LLC”), and DREAMWORKS ANIMATION SKG, INC., a Delaware corporation (the “Corporation”). Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I hereof.

Recitals

WHEREAS, pursuant to the Corporation’s 2004 Omnibus Incentive Compensation Plan and the Separation Agreement, dated as of October 27, 2004, by and among the Corporation, the LLC and DreamWorks Animation L.L.C., a Delaware limited liability company, equity and equity-based awards held by employees of the LLC Group, and payable in equity of the LLC, were automatically converted in DWA Options, DWA Restricted Stock or RSUs of the Corporation;

WHEREAS employees of the LLC Group who received such DWA Options, DWA Restricted Stock and RSUs may exercise and/or settle their interests and receive Common Stock from the Corporation according to their respective vesting schedules and/or settlement dates of their interests;

WHEREAS employees of the LLC Group who elect to exercise their interests, or who hold DWA Restricted Stock or RSUs whose restrictions lapse and become deliverable, and receive Common Stock from the Corporation will be subject to tax for the difference between the Exercise Price, in the case of DWA Options, or the Purchase Price, in the case of DWA Restricted Stock and RSUs, and the Fair Market Value of the Common Stock on the date of purchase;

WHEREAS, on the IPO Date, the LLC transferred Common Stock held by it to certain holders of vested Phantom E Stock and such holders were subject to tax for the aggregate Fair Market Value of the Common Stock on the IPO Date, for which the holder could elect to pay the tax or permit the LLC to withhold a number of shares equal to the tax owed by such holder, with the withheld shares remaining in the LLC’s possession;

WHEREAS, pursuant to the 2004 Omnibus Incentive Compensation Plan, employees of the Corporation or the LLC Group can elect to pay the tax due or permit the Corporation to withhold a number of shares equal to the tax owed by each employee (the “Withheld Shares”), with the Withheld Shares remaining in the Corporation’s treasury stock;

WHEREAS, pursuant to Section 2.12(l) of the Separation Agreement, upon transfer of the Common Stock by the LLC to employees of the Corporation who held vested Phantom E Stock, the Corporation was responsible for withholding taxes from such employees and remitting such withheld taxes to the government;

WHEREAS Section 2.12(m) of the Separation Agreement contemplates that upon the conversion of interests held by employees of the LLC Group the LLC will be responsible for withholding taxes from such employees and remitting such withheld taxes to the government; and

WHEREAS the parties hereto desire that Corporation shall, from time to time, pay the LLC an amount of cash equal to the tax withholding obligations payable by the LLC with respect to the conversion of such interests by employees of the LLC Group who elect to have Withheld Shares satisfy their tax withholding obligations;

NOW, THEREFORE, in consideration of the promises, provisions and covenants contained in this Agreement, the parties hereby agree as follows:

ARTICLE I

Definitions

SECTION 1.01. Definitions. The terms shall have the following meanings for purposes of this Agreement:

“Affiliate” means (a) any entity that, directly or indirectly, is controlled by, controls or is under common control with, the Corporation and/or (b) any entity in which the Corporation has a significant equity interest, in either case as determined by the Committee.

“Agreement” is defined in the preamble hereto.

“Award” means any award granted under the 2004 Omnibus Incentive Compensation Plan.

“Award Agreement” means any written agreement, contract or other instrument or document evidencing any Award, which may, but need not, require execution or acknowledgement by a participant.

“Board” means the Board of Directors of the Corporation.

“Committee” means the compensation committee of the Board, or such other committee of the Board as may be designated by the Board to administer the 2004 Omnibus Incentive Compensation Plan.

“Common Stock” means the Class A Common Stock, $0.0l par value per share, of the Corporation.

“Corporation” is defined in the preamble hereto.

“DWA Option” means an option to purchase shares of Common Stock granted pursuant to the 2004 Omnibus Incentive Compensation Plan.

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“DWA Restricted Stock” means a share of Common Stock granted pursuant to the 2004 Omnibus Incentive Compensation Plan that is subject to certain transfer restrictions, forfeiture provisions and/or other terms and conditions of the applicable Award Agreement governing such award.

“Exercise Price” means, in the case of DWA Options, the price specified in the applicable Award Agreement as the price-per-share at which Common Stock may be purchased pursuant to such DWA Option.

“Fair Market Value” means, as set forth in the 2004 Omnibus Incentive Compensation Plan, with respect to Common Stock, as of any date, (i) the mean between the high and low sales prices of the Common Stock (A) as reported by the NYSE for such date or (B) if the Common Stock is listed on a national stock exchange, as reported on the stock exchange composite tape for securities traded on such stock exchange for such date or, with respect to each of clauses (A) and (B), if there were no sales on such date, on the closest preceding date on which there were sales of Common Stock or (ii) in the event there shall be no public market for the Common Stock on such date, the fair market value of the Common Stock as determined in good faith by the Committee.

“First Payment” is defined in Section 2.01(b).

“IPO Date” means October 27, 2004.

“LLC” is defined in the preamble hereto.

“LLC Group” means the LLC, each Subsidiary of the LLC and each other Affiliate of the LLC before or after the Separation Date (other than the Corporation and its Subsidiaries or any Person that controls the LLC before or after the Separation Date including, for the avoidance of doubt, Jeffrey Katzenberg, Steven Spielberg, David Geffen and Paul Allen).

“NYSE” means the New York Stock Exchange.

“Phantom E Stock” means phantom limited liability company interests in the LLC granted pursuant to the LLC’s Employee Equity Participation Plan.

“Purchase Price” means, in the case of DWA Restricted Stock or RSUs, the price specified in the applicable Award Agreement as the price-per-share at which the Common Stock may be purchased pursuant to such DWA Restricted Stock or RSU.

“RSU” means a restricted stock unit award granted pursuant to the 2004 Omnibus Incentive Compensation Plan that represents an unfunded and unsecured promise to deliver Common Stock, cash, other securities, other awards or other property in accordance with the terms of the applicable Award Agreement governing such award.

“2004 Omnibus Incentive Compensation Plan” means the Corporation’s 2004 Omnibus Incentive Compensation Plan for any director, officer, employee or consultant of the Corporation or any of its Affiliates.

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“Withheld Shares” is defined in the recitals hereto.

ARTICLE II

The Remittance

SECTION 2.01. The Remittance. (a) The Corporation hereby agrees to remit in cash to the LLC an amount equal to the actual amount of the withholding tax obligations arising in connection with the delivery of Common Stock upon the exercise of DWA Options or the settlement of DWA Restricted Stock or RSUs held by LLC Group employees who elect to permit the Corporation to withhold a number of shares of Common Stock with a Fair Market Value equal to the withholding tax owed by such employee.

(b) The Corporation shall remit the payment as provided for in Section 2.01(a) to the LLC on a quarterly basis, with the first payment (the “First Payment”) to be made no later than [April 30], 2005. Each subsequent payment shall be made by the Corporation to the LLC within 30 days following the last day of the applicable quarter.

(c) In consideration of the withholding of Common Stock by the LLC on behalf of employees of the Corporation on the IPO Date and the subsequent payment of the related withholding taxes by the Corporation, the First Payment (or, to the extent necessary, a subsequent payment) shall be reduced by the amount of the withholding tax obligation arising in connection with the delivery of Common Stock upon conversion of the vested Phantom E Stock held by such employees of the Corporation who elected to permit the LLC to withhold a number of shares of Common Stock with a Fair Market Value equal to the withholding tax owed by such employee. This reduction shall only be made on the First Payment date (or, to the extent necessary, a subsequent payment date) and subsequent remittances shall be calculated in accordance with Section 2.01(a).

ARTICLE III

Miscellaneous

SECTION 3.01. No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto and no provision of this Agreement shall be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

SECTION 3.02. Successors. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and permitted assigns of each party hereto.

SECTION 3.03. Descriptive Headings. The division of this Agreement into Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. Any reference in this Agreement to any “Section” is to the corresponding Section of this Agreement unless otherwise specified.

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SECTION 3.04. Severability. The provisions of this Agreement are severable, and, in the event that any one or more provisions are deemed invalid, void or unenforceable, the remaining provisions shall remain in full force and effect unless the economic or legal substance of the transactions contemplated is affected in any manner adverse to any party, in which event the parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the parties.

SECTION 3.05. Amendment. Neither this Agreement nor any term hereof may be amended, waived, supplemented or modified, except by a written instrument duly executed by the authorized representative against whom it is sought to enforce such amendment, waiver, supplement or modification.

SECTION 3.06. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.

SECTION 3.07. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, irrespective of the choice of laws principles of the State of Delaware.

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IN WITNESS WHEREOF, each of the parties hereto has caused this instrument to be signed in its name by its proper and duly authorized corporate officer this 23rd day of March 2005.

DREAMWORKS L.L.C.,
by	/s/ Brian Edwards
Name:	Brian Edwards
Title:	Vice President and General Counsel
DREAMWORKS ANIMATION SKG, INC.,
by	/s/ Katherine Kendrick
Name:	Katherine Kendrick
Title:	General Counsel and Secretary

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EX-14

Exhibit 14

DreamWorks Animation SKG, Inc.

Code of Business Conduct and Ethics

(Adopted as of October 29, 2004)

Introduction

This Code of Business Conduct and Ethics of DreamWorks Animation SKG, Inc. (the “Company”) summarizes the values, principles and business practices that guide our business conduct. This Code sets out a set of basic principles to guide employees regarding the minimum requirements expected of them; however, this Code does not provide a detailed description of all employee policies.

It is the responsibility of all the people at the Company to maintain a work environment that fosters fairness, respect and integrity; and it is our Company policy to be lawful, highly-principled and socially responsible in all our business practices. All employees are expected to become familiar with this Code and to apply these guiding principles in the daily performance of their job responsibilities. All employees of the Company are responsible for complying with this Code. This Code should also be provided to and adhered to by every agent, consultant or representative of the Company.

All employees are expected to seek the advice of supervisor, manager or other appropriate persons within the Company when questions arise about issues discussed in this Code and any other issues that may implicate the ethical standards or integrity of the Company or any of its employees. Compliance procedures are set forth in Section 18 of this Code.

The Company has established an Office of Ethics and Compliance to oversee the ethics and compliance effort and serve as a resource to employees by providing information and guidance regarding legal compliance and ethical conduct issues. If you have any questions or concerns regarding the specifics of any policy or your legal or ethical obligations, please contact your supervisor, someone in the Company’s Legal Department at 818-695-5000.

Taking actions to prevent problems is part of our Company’s culture. If you observe possible unethical or illegal conduct you are encouraged to report your concerns. If you report, in good faith, what you suspect to be illegal or unethical activities, you should not be concerned about retaliation from others. Any employees involved in retaliation will be subject to serious disciplinary action by the Company.

Failure to abide by the guidelines addressed in this Code will lead to disciplinary actions, including dismissal where appropriate. If you are in a situation which you believe may violate or lead to a violation of this Code, you are urged to follow the guidelines described in Section 18 of this Code.

For purposes of this Code, references to “employees” include employees, officers and directors of the Company.

1. Compliance with Laws, Rules and Regulations

We have a long-standing commitment to conduct our business in compliance with applicable laws and regulations and in accordance with the highest ethical principles. This commitment helps ensure our reputation for honesty, quality and integrity.

2. Conflicts of Interest

A “conflict of interest” exists when a person’s private interest interferes in any way with the interests of the Company.

A conflict situation can arise when an employee takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively. Conflicts of interest also arise when an employee or a member of his or her family, receives improper personal benefits (including personal loans, services or payment for services that the person is performing in the course of Company business) as a result of his or her position in the Company or gains personal enrichment through access to confidential information.

Conflicts of interest can arise in many common situations, despite one’s best efforts to avoid them. Employees are encouraged to seek clarification of, and discuss questions about, potential conflicts of interest with someone in the Company’s Legal Department. Any employee who becomes aware of a conflict or potential conflict should bring it to the attention of a supervisor, manager or other appropriate persons within the Company.

3. Outside Directorships and Other Outside Activities

Although activities outside the Company are not necessarily a conflict of interest, a conflict could arise depending upon your position within the Company and the Company’s relationship with your new employer or other activity. Outside activities may also be a conflict of interest if they cause you, or are perceived to cause you, to choose between that interest and the interests of the Company. The Company recognizes that the guidelines in this Section 3 are not applicable to directors that do not also serve in management positions within the Company (“Outside Directors”).

Outside Directorships

Employees of the Company may not serve as directors of any outside business organization unless such service is specifically approved by senior management. There are a number of factors and criteria that the Company will use in determining whether to approve an employee’s request for an outside business directorship. For example, directorships in outside companies are subject to certain legal limitations. Directorships in outside companies should also satisfy a number of business considerations, including (1) furthering the interests of the Company and (2) not detracting in any material way from the employee’s ability to fulfill his or her commitments to the Company. The Company will also take into consideration the time commitment and potential personal liabilities and responsibilities associated with the outside directorship in evaluating requests.

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Other Outside Engagements

We recognize that employees often engage in community service in their local communities and engage in a variety of charitable activities and we commend employees’ efforts in this regard. However, it is every employee’s duty to ensure that all outside activities, even charitable or pro bono activities, do not constitute a conflict of interest or are otherwise inconsistent with employment by the Company.

4. Gifts and Entertainment

Business gifts and entertainment are designed to build goodwill and sound working relationships among business partners. A problem would arise if (1) the receipt by one of our employees of a gift or entertainment would compromise, or could be reasonably viewed as compromising, that individual’s ability to make objective and fair business decisions on behalf of the Company or (2) the offering by one of our employees of a gift or entertainment appears to be an attempt to obtain business through improper means or use improper means to gain any special advantage in our business relationships, or could reasonably be viewed as such an attempt.

The onus is on the individual employee to use good judgment and ensure there is no violation of these principles. If you have any question or uncertainty about whether any gifts or proposed gifts are appropriate, please contact your supervisor, manager or other appropriate persons within the Company or someone in the Company’s Legal Department.

5. Insider Trading

There are instances where our employees have information about the Company, its subsidiaries or affiliates or about a company with which we do business that is not known to the investing public. Such inside information may relate to, among other things: plans; new products or processes; mergers, acquisitions or dispositions of businesses or securities; problems facing the Company or a company with which we do business; sales; profitability; negotiations relating to significant contracts or business relationships; significant litigation; or financial information.

If the information is such that a reasonable investor would consider the information important in reaching an investment decision, then the Company employee who holds the information must not buy or sell Company securities, nor provide such information to others, until such information becomes public. Further, employees must not buy or sell securities in any other company about which they have such material non-public information, nor provide such information to others, until such information becomes public. Usage of material non-public information in the above manner is not only illegal, but also unethical. Employees who involve themselves in illegal insider trading (either by personally engaging in the trading or by disclosing material non-public information to others) will be subject to immediate termination. The Company’s policy is to report such violations to the appropriate authorities and to cooperate fully in any investigation of insider trading.

The Company has additional, specific rules that govern trades in Company securities by directors, certain officers and certain employees.

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Employees may need assistance in determining how the rules governing inside information apply to specific situations and should consult the Company’s Legal Department in these cases.

6. Corporate Opportunities

Subject to the provisions of our Restated Certificate of Incorporation, employees owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. Employees are prohibited (without the consent of the Board of Directors or an appropriate committee thereof) from (1) taking for themselves personally opportunities that are discovered through the use of corporate property, information or their position, (2) using corporate property, information or their position for personal gain and (3) competing with the Company directly or indirectly.

7. Antitrust and Fair Dealing

The Company believes that the welfare of consumers is best served by economic competition. Our policy is to compete vigorously, aggressively and successfully in today’s increasingly competitive business climate and to do so at all times in compliance with all applicable antitrust, competition and fair dealing laws in all the markets in which we operate. We seek to excel while operating honestly and ethically, never through taking unfair advantage of others. Each employee should endeavor to deal fairly with the Company’s customers, suppliers, competitors and other employees. No one should take unfair advantage through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practices.

The antitrust laws of many jurisdictions are designed to preserve a competitive economy and promote fair and vigorous competition. We are all required to comply with these laws and regulations. Employees involved in marketing, sales and purchasing, contracts or in discussions with competitors have a particular responsibility to ensure that they understand our standards and are familiar with applicable competition laws. Because these laws are complex and can vary from one jurisdiction to another, employees should seek the advice of someone in the Company’s Legal Department when questions arise.

8. Discrimination and Harassment

The Company is committed to providing a work environment that values diversity among its employees. All human resources policies and activities of the Company intend to create a respectful workplace in which every individual has the incentive and opportunity to reach his or her highest potential.

We are firmly committed to providing equal employment opportunities to all individuals and will not tolerate any illegal discrimination or harassment of any kind. Examples include derogatory comments based on age, race, gender or ethnic characteristics and unwelcome sexual advances or comments. This policy applies to both applicants and employees and in all phases of employment, including recruiting, hiring, placement, training and development, transfer, promotion, demotion, performance reviews, compensation and benefits, and separation from employment.

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All levels of supervision are responsible for monitoring and complying with the Company’s policies and procedures for handling employee complaints concerning harassment or other forms of unlawful discrimination. Because employment-related laws are complex and vary from state to state and country to country, supervisors should obtain the advice of someone in the Company’s Legal Department in advance whenever there is any doubt as to the lawfulness of any proposed action or inaction.

9. Health and Safety

The Company strives to provide each employee with a safe and healthy work environment. Each employee has a responsibility to ensure that our operations and our products meet applicable government or Company standards, whichever is more stringent. All employees are required to be alert to environmental and safety issues and to be familiar with environmental, health and safety laws and Company policies applicable to their area of business. Since these laws are complex and subject to frequent changes, you should obtain the advice of someone in the Company’s Legal Department whenever there is any doubt as to the lawfulness of any action or inaction.

Threats or acts of violence and physical intimidation are not permitted. The use of illegal drugs in the workplace will not be tolerated.

10. Record-Keeping and Retention

Many persons within the Company record or prepare some type of information during their workday, such as time cards, financial reports, accounting records, business plans, environmental reports, injury and accident reports, expense reports, and so on. Many people, both within and outside the Company, depend upon these reports to be accurate and truthful for a variety of reasons. These people include our employees, governmental agencies, auditors and the communities in which we operate. Also, the Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. We maintain the highest commitment to recording information accurately and truthfully.

All financial statements and books, records and accounts of the Company must accurately reflect transactions and events and conform both to required legal requirements and accounting principles and also to the Company’s system of internal accounting. As a Company employee, you have the responsibility to ensure that false or intentionally misleading entries are not made by you, or anyone who reports to you, in the Company’s accounting records. Regardless of whether reporting is required by law, dishonest reporting within the Company, or to organizations or people outside the Company, is strictly prohibited. All officers and employees of the Company that are responsible for financial or accounting matters are also required to ensure the full, fair, accurate, timely and understandable disclosure in all periodic reports required to by filed by the Company with the Securities and Exchange Commission. This commitment and responsibility extends to the highest levels of our organization, including our chairman, chief executive officer, chief financial officer and chief accounting officer.

Properly maintaining corporate records is of the utmost importance. To address this concern, records are maintained for required periods as defined in our records and retention

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policy. These controls should be reviewed regularly by all employees and following consistently. In accordance with these policies, in the event of litigation or governmental investigation, please consult the Company’s Legal Department.

The Company recognizes that the guidelines in this Section 10 are not applicable to the Company’s Outside Directors.

11. Confidentiality

Information is one of our most valuable corporate assets, and open and effective dissemination of information is critical to our success. However, much of our Company’s business information is confidential or proprietary. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or our customers, if disclosed. Employees must maintain the confidentiality of confidential information entrusted to them by the Company, except when disclosure is authorized by the Company’s Legal Department or required by laws or regulations.

It is also our Company’s policy that all employees must treat what they learn about our customers, joint venture partners and suppliers and each of their businesses as confidential information. The protection of such information is of the highest importance and must be discharged with the greatest care for the Company to merit the continued confidence of such persons. Confidential information to such person is information it would consider private, which is not common knowledge outside of that company and which an employee of the Company has learned as a result of his or her employment by the Company. For example, we never sell confidential or personal information about our customers and do not share such information with any third party except with the customer’s consent or as required by law. No employee may disclose confidential information owned by someone other than the Company to non-employees without the authorization of the Company’s Legal Department, nor shall any such person disclose the information to others unless a need-to-know basis has been established.

Employees of the Company should guard against unintentional disclosure of confidential information and take special care not to store confidential information where unauthorized personnel can see it, whether at work, at home, in public places or elsewhere. Situations that could result in inadvertent disclosure of such information include: discussing confidential information in public (for example, in restaurants, elevators or airplanes); talking about confidential information on mobile phones; working with sensitive information in public using laptop computers; and transmitting confidential information via fax. Within the workplace, do not assume that all Company employees, contractors or subsidiary personnel should see confidential information.

The obligation not to disclose confidential information of the Company and our customers continues with an employee even after you leave the Company. As such, the Company respects the obligations of confidence Company employees may have from prior employment, and asks that employees not reveal confidential information obtained in the course of their prior employment. Company employees must not be assigned to work in a job that would require the use of a prior employer’s confidential information.

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12. Proprietary Information

Our Company depends on intellectual property, such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports, for its continued vitality. If our intellectual property is not protected, it becomes available to other companies that have not made the significant investment that our Company has made to produce this property and thus gives away some of our competitive advantage. All of the rules stated above with respect to confidential information apply equally to proprietary information.

Certain employees are required to sign a proprietary information agreement that restricts disclosure of proprietary, trade secret and certain other information about the Company, its joint venture partners, suppliers and customers. The policy set forth in this Code applies to all employees, without regard to whether such agreements have been signed. It is the responsibility of every Company employee to help protect our intellectual property. Management at all levels of the Company is encouraged to foster and maintain awareness of the importance of protecting the Company’s intellectual property.

13. Protection and Proper Use of Company Assets

Collectively, employees have a responsibility for safeguarding and making proper and efficient use of the Company’s property. Each of us also has an obligation to prevent the Company’s property from loss, damage, misuse, theft, embezzlement or destruction. Theft, loss, misuse, carelessness and waste of assets have a direct impact on the Company’s profitability and may jeopardize the future of the Company. Any situations or incidents that could lead to the theft, loss, misuse or waste of Company property should be reported immediately to the security department or to your supervisor or manager as soon as they come to your attention.

14. Relationships with Government Personnel

Employees of the Company should be aware that practices that may be acceptable in the commercial business environment (such as providing certain transportation, meals, entertainment and other things of nominal value), may be entirely unacceptable and even illegal when they relate to government employees or others who act on the government’s behalf. Therefore, you must be aware of and adhere to the relevant laws and regulations governing relations between government employees and customers and suppliers in every country where you conduct business.

It is strictly against Company policy for employees to give money or gifts to any official or any employee of a governmental entity if doing so could reasonably be construed as having any connection with the Company’s business relationship. Such actions are generally prohibited by law.

We expect our employees to refuse to make questionable payments. Any proposed payment or gift to a government official must be reviewed in advance by the Company’s Legal Department, even if such payment is common in the country of payment. Employees should be aware that they do not actually have to make the payment to violate the Company’s policy and the law — merely offering, promising or authorizing it is sufficient.

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In addition, many jurisdictions have laws and regulations regarding business gratuities which may be accepted by government personnel. For example, business courtesies or entertainment such as paying for meals or drinks are rarely appropriate when working with government officials. Gifts or courtesies that would not be appropriate even for private parties are in all cases inappropriate for government officials. Please consult the Company’s Legal Department for more guidance on these issues.

Contributions to political parties or candidates in connection with elections are discussed in Section 15.

15. Political Contributions

Election laws in many jurisdictions generally prohibit political contributions by corporations to candidates. Many local laws also prohibit corporate contributions to local political campaigns. In accordance with these laws, the Company does not make direct contributions to any candidates for federal, state or local offices where applicable laws make such contributions illegal. Contributions to political campaigns must not be, or appear to be, made with or reimbursed by Company funds or resources. Company funds and resources include (but are not limited to) Company facilities, office supplies, letterhead, telephones and fax machines.

Company employees who hold or seek to hold political office must do so on their own time, whether through vacation, unpaid leave, after work hours or on weekends. Additionally, all persons must obtain advance approval from someone within the Company’s Legal Department prior to running for political office to ensure that there are no conflicts of interest with Company business.

Employees may make personal political contributions as they see fit in accordance with all applicable laws.

The Company recognizes that the guidelines in this Section 15 are not applicable to the Company’s Outside Directors.

16. Waivers of the Code of Business Conduct and Ethics

Any change in or waiver of this Code for executive officers (including our chief executive officer, chief financial officer, controller or principal accounting officer) or directors may be made only by the Board or a Board committee and will be promptly disclosed as required by law or stock exchange regulation.

17. Failure to Comply

No Code can address all specific situations. It is, therefore, each employee’s responsibility to apply the principles set forth in this Code in a responsible fashion and with the exercise of good judgment and common sense. If something seems unethical or improper, it likely is. Always remember: If you are unsure of what to do in any situation, seek guidance before you act.

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A failure by any employee to comply with the laws or regulations governing the Company’s business, this Code or any other Company policy or requirement may result in disciplinary action up to and including termination, and, if warranted, legal proceedings. All employees are expected to cooperate in internal investigations of misconduct.

18. Reporting Illegal or Unethical Behavior; Compliance Procedures

As an employee of the Company, you are expected to conduct yourself in a manner appropriate for your work environment, and are also expected to be sensitive to and respectful of the concerns, values and preferences of others. Whether you are an employee, contractor, supplier or otherwise a member of our Company family, you are encouraged to promptly report any practices or actions that you believe to be inappropriate.

We have described in each section above the procedures generally available for discussing and addressing ethical issues that arise. Speaking to the right people is one of your first steps to understanding and resolving what are often difficult questions. As a general matter, if you have any questions or concerns about compliance with this Code or you are just unsure of what the “right thing” is to do, you are encouraged to speak with your supervisor, manager or other appropriate persons within the Company. If you do not feel comfortable talking to any of these persons for any reason, you should call someone in the Company’s Legal Department. Each of these offices has been instructed to register all complaints, brought anonymously or otherwise, and direct those complaints to the appropriate channels within the Company.

Accounting/Auditing Complaints: The law also requires that we have in place procedures for addressing complaints concerning auditing issues and procedures for employees to anonymously submit their concerns regarding accounting or auditing issues. Complaints concerning accounting or auditing issues will be directed to the attention of the Company’s Audit Committee, or the appropriate members of that committee. For direct access to the Company’s Audit Committee, please address your auditing and accounting related issues or complaints to:

Lewis Coleman

Chairman of the Audit Committee

c/o DreamWorks Animation SKG, Inc.

1000 Flower Street

Glendale, CA 91201

Also, as discussed in the Introduction to this Code, you should know that if you report in good faith what you suspect to be illegal or unethical activities, you should not be concerned about retaliation from others. Any employees involved in retaliation will be subject to serious disciplinary action by the Company. Furthermore, the Company could be subject to criminal or civil actions for acts of retaliation against employees who “blow the whistle” on U.S. securities law violations and other federal offenses.

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EX-21.1

Exhibit 21.1

List of Subsidiaries

DreamWorks Animation L.L.C.

DreamWorks, Inc.

DWA Finance I L.L.C.

DreamWorks Post-Production L.L.C.

Pacific Data Images, Inc.

Pacific Data Images L.L.C.

Pacific Productions L.L.C

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-119994) pertaining to the 2004 Omnibus Incentive Compensation Plan of DreamWorks Animation SKG, Inc. of our report dated March 17, 2005, with respect to the consolidated financial statements of DreamWorks Animation SKG, Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 2004.

/s/  ERNST & YOUNG LLP

Los Angeles, California

March 23, 2005

EX-24.1

Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Jeffrey Katzenberg, Kristina M. Leslie and Katherine Kendrick and each of them his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities:

Annual Report For the Year Ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K

(1) to sign the Annual Report for the fiscal year ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K (“2004 Form 10-K”) to be filed under the Securities Exchange Act of 1934, as amended, and any and all amendments to such 2004 Form 10-K;

(2) to file such 2004 Form 10-K (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such 2004 Form 10-K;

Registration of Common Stock

(1) to sign a Registration Statement (the “Registration Statement”) on Form S-1 and/or such other form or forms as may be appropriate, and any related Rule 462(b) Registration Statement, in connection with the registration of Class A common stock of DreamWorks Animation SKG, Inc. to be filed under the Securities Act of 1933, as amended, and any and all amendments (including post-effective amendments) to such Registration Statement;

(2) to file such Registration Statement (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, and any related Rule 462(b) Registration Statement, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such Registration Statement;

as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents of any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 21 day of March, 2005.

/s/ Jeffrey Katzenberg

Jeffrey Katzenberg

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Jeffrey Katzenberg, Kristina M. Leslie and Katherine Kendrick and each of them his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities:

Annual Report For the Year Ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K

(1) to sign the Annual Report for the fiscal year ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K (“2004 Form 10-K”) to be filed under the Securities Exchange Act of 1934, as amended, and any and all amendments to such 2004 Form 10-K;

(2) to file such 2004 Form 10-K (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such 2004 Form 10-K;

Registration of Common Stock

(1) to sign a Registration Statement (the “Registration Statement”) on Form S-1 and/or such other form or forms as may be appropriate, and any related Rule 462(b) Registration Statement, in connection with the registration of Class A common stock of DreamWorks Animation SKG, Inc. to be filed under the Securities Act of 1933, as amended, and any and all amendments (including post-effective amendments) to such Registration Statement;

(2) to file such Registration Statement (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, and any related Rule 462(b) Registration Statement, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such Registration Statement;

as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents of any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 21 day of March, 2005.

/s/ Roger Enrico

Roger A. Enrico

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Jeffrey Katzenberg, Kristina M. Leslie and Katherine Kendrick and each of them his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities:

Annual Report For the Year Ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K

(1) to sign the Annual Report for the fiscal year ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K (“2004 Form 10-K”) to be filed under the Securities Exchange Act of 1934, as amended, and any and all amendments to such 2004 Form 10-K;

(2) to file such 2004 Form 10-K (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such 2004 Form 10-K;

Registration of Common Stock

(1) to sign a Registration Statement (the “Registration Statement”) on Form S-1 and/or such other form or forms as may be appropriate, and any related Rule 462(b) Registration Statement, in connection with the registration of Class A common stock of DreamWorks Animation SKG, Inc. to be filed under the Securities Act of 1933, as amended, and any and all amendments (including post-effective amendments) to such Registration Statement;

(2) to file such Registration Statement (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, and any related Rule 462(b) Registration Statement, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such Registration Statement;

as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents of any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 21 day of March, 2005.

/s/ David Geffen

David Geffen

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Jeffrey Katzenberg, Kristina M. Leslie and Katherine Kendrick and each of them his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities:

Annual Report For the Year Ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K

(1) to sign the Annual Report for the fiscal year ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K (“2004 Form 10-K”) to be filed under the Securities Exchange Act of 1934, as amended, and any and all amendments to such 2004 Form 10-K;

(2) to file such 2004 Form 10-K (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such 2004 Form 10-K;

Registration of Common Stock

(1) to sign a Registration Statement (the “Registration Statement”) on Form S-1 and/or such other form or forms as may be appropriate, and any related Rule 462(b) Registration Statement, in connection with the registration of Class A common stock of DreamWorks Animation SKG, Inc. to be filed under the Securities Act of 1933, as amended, and any and all amendments (including post-effective amendments) to such Registration Statement;

(2) to file such Registration Statement (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, and any related Rule 462(b) Registration Statement, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such Registration Statement;

as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents of any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

This Power of Attorney is being executed solely in the undersigned’s capacity as a director of DreamWorks Animation SKG, Inc., and nothing herein shall be deemed to be a consent or waiver of any rights of the undersigned or any of his affiliates as a direct or indirect stockholder of DreamWorks Animation SKG, Inc.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 21 day of March, 2005.

/s/ Paul G. Allen

Paul G. Allen

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Jeffrey Katzenberg, Kristina M. Leslie and Katherine Kendrick and each of them his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities:

Annual Report For the Year Ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K

(1) to sign the Annual Report for the fiscal year ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K (“2004 Form 10-K”) to be filed under the Securities Exchange Act of 1934, as amended, and any and all amendments to such 2004 Form 10-K;

(2) to file such 2004 Form 10-K (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such 2004 Form 10-K;

Registration of Common Stock

(1) to sign a Registration Statement (the “Registration Statement”) on Form S-1 and/or such other form or forms as may be appropriate, and any related Rule 462(b) Registration Statement, in connection with the registration of Class A common stock of DreamWorks Animation SKG, Inc. to be filed under the Securities Act of 1933, as amended, and any and all amendments (including post-effective amendments) to such Registration Statement;

(2) to file such Registration Statement (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, and any related Rule 462(b) Registration Statement, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such Registration Statement;

as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents of any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 21 day of March, 2005.

/s/ Lewis W. Coleman

Lewis W. Coleman

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Jeffrey Katzenberg, Kristina M. Leslie and Katherine Kendrick and each of them his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities:

Annual Report For the Year Ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K

(1) to sign the Annual Report for the fiscal year ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K (“2004 Form 10-K”) to be filed under the Securities Exchange Act of 1934, as amended, and any and all amendments to such 2004 Form 10-K;

(2) to file such 2004 Form 10-K (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such 2004 Form 10-K;

Registration of Common Stock

(1) to sign a Registration Statement (the “Registration Statement”) on Form S-1 and/or such other form or forms as may be appropriate, and any related Rule 462(b) Registration Statement, in connection with the registration of Class A common stock of DreamWorks Animation SKG, Inc. to be filed under the Securities Act of 1933, as amended, and any and all amendments (including post-effective amendments) to such Registration Statement;

(2) to file such Registration Statement (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, and any related Rule 462(b) Registration Statement, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such Registration Statement;

as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents of any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 21 day of March, 2005.

/s/ Nathan Myhrvold

Nathan Myhrvold

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Jeffrey Katzenberg, Kristina M. Leslie and Katherine Kendrick and each of them his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities:

Annual Report For the Year Ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K

(1) to sign the Annual Report for the fiscal year ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K (“2004 Form 10-K”) to be filed under the Securities Exchange Act of 1934, as amended, and any and all amendments to such 2004 Form 10-K;

(2) to file such 2004 Form 10-K (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such 2004 Form 10-K;

Registration of Common Stock

(1) to sign a Registration Statement (the “Registration Statement”) on Form S-1 and/or such other form or forms as may be appropriate, and any related Rule 462(b) Registration Statement, in connection with the registration of Class A common stock of DreamWorks Animation SKG, Inc. to be filed under the Securities Act of 1933, as amended, and any and all amendments (including post-effective amendments) to such Registration Statement;

(2) to file such Registration Statement (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, and any related Rule 462(b) Registration Statement, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such Registration Statement;

as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents of any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 21 day of March, 2005.

/s/ Howard Schultz

Howard Schultz

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Jeffrey Katzenberg, Kristina M. Leslie and Katherine Kendrick and each of them her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for her and in her name, place and stead, in any and all capacities:

Annual Report For the Year Ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K

(1) to sign the Annual Report for the fiscal year ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K (“2004 Form 10-K”) to be filed under the Securities Exchange Act of 1934, as amended, and any and all amendments to such 2004 Form 10-K;

(2) to file such 2004 Form 10-K (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such 2004 Form 10-K;

Registration of Common Stock

(1) to sign a Registration Statement (the “Registration Statement”) on Form S-1 and/or such other form or forms as may be appropriate, and any related Rule 462(b) Registration Statement, in connection with the registration of Class A common stock of DreamWorks Animation SKG, Inc. to be filed under the Securities Act of 1933, as amended, and any and all amendments (including post-effective amendments) to such Registration Statement;

(2) to file such Registration Statement (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, and any related Rule 462(b) Registration Statement, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such Registration Statement;

as fully to all intents and purposes as she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents of any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 21 day of March, 2005.

/s/ Mellody Hobson

Mellody Hobson

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Jeffrey Katzenberg and Katherine Kendrick and each of them his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities:

Annual Report For the Year Ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K

(1) to sign the Annual Report for the fiscal year ended December 31, 2004 of DreamWorks Animation SKG, Inc. on Form 10-K (“2004 Form 10-K”) to be filed under the Securities Exchange Act of 1934, as amended, and any and all amendments to such 2004 Form 10-K;

(2) to file such 2004 Form 10-K (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such 2004 Form 10-K;

Registration of Common Stock

(1) to sign a Registration Statement (the “Registration Statement”) on Form S-1 and/or such other form or forms as may be appropriate, and any related Rule 462(b) Registration Statement, in connection with the registration of Class A common stock of DreamWorks Animation SKG, Inc. to be filed under the Securities Act of 1933, as amended, and any and all amendments (including post-effective amendments) to such Registration Statement;

(2) to file such Registration Statement (and any and all such amendments) with all exhibits thereto, and other documents in connection therewith, and any related Rule 462(b) Registration Statement, with the Securities and Exchange Commission; and

(3) to take such other action as may be deemed necessary or appropriate in connection with such Registration Statement;

as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents of any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney this 21 day of March, 2005.

/s/ Kristina M. Leslie

Kristina M. Leslie

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jeffrey Katzenberg, certify that:

1. I have reviewed this Annual Report on Form 10-K of DreamWorks Animation SKG, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 25, 2005	/s/    JEFFREY KATZENBERG
	Jeffrey Katzenberg, Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kristina M. Leslie, certify that:

1. I have reviewed this Annual Report on Form 10-K of DreamWorks Animation SKG, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 25, 2005	/s/ Kristina M. Leslie
	Kristina M. Leslie, Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of DreamWorks Animation SKG, Inc. (the “Company”) for the year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-K”), I, Jeffrey Katzenberg, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 25, 2005	/s/ Jeffrey Katzenberg
	Jeffrey Katzenberg, Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 10-K of DreamWorks Animation SKG, Inc. (the “Company”) for the year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-K”), I, Kristina M. Leslie, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Form 10-K fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 25, 2005	/s/    KRISTINA M. LESLIE
	Kristina M. Leslie, Chief Financial Officer (Principal Financial and Accounting Officer)